"The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
Taylor Larimore
Advisory Board
Posts: 30204
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

"The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by Taylor Larimore »

Bogleheads:

You will be interested in this MarketWatch article by Paul Merriman in which he makes reference to Mr. Bogle and and the Bogleheads.

The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "My preferred index fund happens to be the total stock market which includes large, medium, and small stocks."
"Simplicity is the master key to financial success." -- Jack Bogle
User avatar
abuss368
Posts: 23109
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by abuss368 »

Thanks Taylor although not sure I would want 4 US Index funds from a complexity stand point (and we have not yet added the international side).

Interesting small value tilt.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
abuss368
Posts: 23109
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by abuss368 »

The article also mentions that Mr. Bogle recommended the Three Fund Portfolio later on (which would include international). This may be a reference to the forward in your book, Taylor, "The Three Fund Portfolio".

While Mr. Bogle no longer owned international (although he has said he owned every Vanguard fund at one time), and may have said it is not needed, he was clear that if selecting to use an index fund with 20%. Mr. Bogle also said it may be time for international to out perform US. No one knows.
John C. Bogle: “Simplicity is the master key to financial success."
fortyofforty
Posts: 2083
Joined: Wed Mar 31, 2010 12:33 pm

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by fortyofforty »

Thanks, Taylor. On a personal note, please be mindful of COVID-19, since it seems to hit people in your age group hardest. :sharebeer
User avatar
Topic Author
Taylor Larimore
Advisory Board
Posts: 30204
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by Taylor Larimore »

fortyofforty wrote: Wed Mar 11, 2020 7:48 pm Thanks, Taylor. On a personal note, please be mindful of COVID-19, since it seems to hit people in your age group hardest. :sharebeer
fortyofforty:

I appreciate your concern.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: “People matter, and caring about the human being with whom we serve — and whom we serve — must be the soul of any institution worth its salt.”
"Simplicity is the master key to financial success." -- Jack Bogle
User avatar
1789
Posts: 1869
Joined: Fri Aug 16, 2019 3:31 pm

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by 1789 »

Taylor Larimore wrote: Wed Mar 11, 2020 2:58 pm Bogleheads:

You will be interested in this MarketWatch article by Paul Merriman in which he makes reference to Mr. Bogle and and the Bogleheads.

The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "My preferred index fund happens to be the total stock market which includes large, medium, and small stocks."

Thanks for sharing Taylor. This is the most i like

"Market timing leads to trouble more often than not. The same goes for owning individual stocks."
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
User avatar
JaneyLH
Posts: 530
Joined: Wed Oct 16, 2013 7:16 pm

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by JaneyLH »

In answering one of the reader's comments on the article, Mr. Merriman implies that Mr. Bogle would have agreed that Merriman's approach would yield better results than the 3-fund portfolio. "I am sorry John Bogle is not here to read your comment. I mean it in a nice way when I say, he would have had a great laugh with that comment. I believe he was actually a very humble guy who lived to help others. He would be the first to admit that my recommended asset allocation would likely make more money than the simple 3 fund portfolio."

Is the overweighting of value and small cap stocks in a portfolio a proven better approach than buying the total market? If the tradeoff is between the psychological discomfort of having a portfolio that tracks somewhat differently than the Vanguard 500/Vanguard Total Stock Market (which Mr. Merriman sees as substantially the same) and better overall return, why wouldn't Bogleheads choose the better return? We've learned to live with psychological discomfort!
RomeoMustDie
Posts: 280
Joined: Sat Mar 14, 2020 6:07 pm

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by RomeoMustDie »

JaneyLH wrote: Tue Mar 31, 2020 4:27 pm In answering one of the reader's comments on the article, Mr. Merriman implies that Mr. Bogle would have agreed that Merriman's approach would yield better results than the 3-fund portfolio. "I am sorry John Bogle is not here to read your comment. I mean it in a nice way when I say, he would have had a great laugh with that comment. I believe he was actually a very humble guy who lived to help others. He would be the first to admit that my recommended asset allocation would likely make more money than the simple 3 fund portfolio."

Is the overweighting of value and small cap stocks in a portfolio a proven better approach than buying the total market? If the tradeoff is between the psychological discomfort of having a portfolio that tracks somewhat differently than the Vanguard 500/Vanguard Total Stock Market (which Mr. Merriman sees as substantially the same) and better overall return, why wouldn't Bogleheads choose the better return? We've learned to live with psychological discomfort!
Depends on if hypothetical long term gains are worth the increased volatility and risk exposure.

Maybe small cap stocks will underperform in the age of COVID.
MoneyMarathon
Posts: 992
Joined: Sun Sep 30, 2012 3:38 am

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by MoneyMarathon »

He understood completely. But he told me that, despite their favorable long-term returns, small-cap indexes were too risky for most investors.

He was not referring to the statistical risk of loss, but to a psychological risk: That a portfolio that’s very different from widely followed indexes like the S&P 500 will “spook” investors and lead them to sell when they should hang on. He felt strongly that most investors need a portfolio that has very little tracking error with the giant S&P 500 index.

To him, that concern led straight to a total market index fund, which nominally includes value stocks and small-cap stocks — but not enough to make a meaningful difference in return.

In the U.S. stock market, the returns and risks of the “total market” are nearly identical to those of the S&P 500 index.

Over the past 10 years, the Vanguard 500 Index Fund Admiral Shares returned 14.32%, compared with 14.44% for the Vanguard Total Stock Market Index Fund Admiral Shares.

Bogle’s concern is undoubtedly valid for many investors. But I believe in education enough to think investors who understand the facts can use their knowledge of history to keep the faith through thick and thin while they seek the likely higher rewards from straying from the total-market-index fold.
I agree with Bogle here.

I don't like investing in instruments with "lottery like" returns, where a few years of outperformance within several decades make up for a larger number of years of underperformance.

I suffer not only from a cognitive bias of wanting to see equal or better returns in most years, but I also have doubts that these rare "lottery" effects have been shown in a rigorous way to be likely to show up again in the future.

So instead of playing the lottery with my investments, I prefer stock investments that are either total market, or that mimic the total market enough in order to meet or exceed their return in most years.

For example, this is why I like the Quality and Dividend Growth factors. They show excess returns in most years.
bondsr4me
Posts: 1553
Joined: Fri Oct 18, 2013 7:08 am

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by bondsr4me »

One sentence sums it up:
“Neither Jack Bogle’s approach nor mine is wrong. But they might be right for different kinds of investors.”
Investing is an “individual” endeavor.
Every investor has different risk tolerances, goals, and time horizons for their investments.
There is no investment that is right for every investor.
We are all different and have to choose investments that are right for us.
palaheel
Posts: 434
Joined: Wed Mar 22, 2017 7:35 am

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by palaheel »

Merriman's podcast describing his interview with Jack Bogle is at https://paulmerriman.com/10-lessons-jac ... dex-funds/. He respects Bogle tremendously. They didn't completely agree, but I don't know two intelligent people who do.
Markets crash. Markets recover. Inflation takes your money FOREVER.
User avatar
tetractys
Posts: 4836
Joined: Sat Mar 17, 2007 3:30 pm
Location: Along the Salish Sea

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by tetractys »

Two GREAT investment counselors among a sage group, with slightly different audiences. Paul Merriman for those able to maintain steadiness with some complexity, and Jack Bogle, hero to the simple masses.
Ferdinand2014
Posts: 1835
Joined: Mon Dec 17, 2018 6:49 pm

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by Ferdinand2014 »

A strategy that adds multiple funds, deviates from the overall market and is likely to underperform for long periods off time, would fail as an investment strategy for the vast majority of investors simply based on human behavior.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
BionicBillWalsh
Posts: 317
Joined: Sun Oct 21, 2018 1:56 am
Location: Sandwich Islands

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by BionicBillWalsh »

I'm not sure the point of Merriman's article. It seems like an "I'm great by association" sort of piece that adds nothing other than complexity to an individual investor's portfolio. For him to say that Jack would agree with him that his returns would be superior is so laughable that I'm actually quite surprised that Taylor posted it.

It is blasphemy masked as a puff piece to Bogle.
Jerry Garcia: If I knew the way...I would take you home.
User avatar
Topic Author
Taylor Larimore
Advisory Board
Posts: 30204
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by Taylor Larimore »

BionicBillWalsh wrote: Tue Mar 31, 2020 7:42 pm I'm not sure the point of Merriman's article. It seems like an "I'm great by association" sort of piece that adds nothing other than complexity to an individual investor's portfolio. For him to say that Jack would agree with him that his returns would be superior is so laughable that I'm actually quite surprised that Taylor posted it.

It is blasphemy masked as a puff piece to Bogle.
BionicBillWalsh:

I posted it because I believe that investors should understand all sides of a situation before making a decision.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
"Simplicity is the master key to financial success." -- Jack Bogle
BionicBillWalsh
Posts: 317
Joined: Sun Oct 21, 2018 1:56 am
Location: Sandwich Islands

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by BionicBillWalsh »

Taylor Larimore wrote: Tue Mar 31, 2020 7:59 pm
BionicBillWalsh wrote: Tue Mar 31, 2020 7:42 pm I'm not sure the point of Merriman's article. It seems like an "I'm great by association" sort of piece that adds nothing other than complexity to an individual investor's portfolio. For him to say that Jack would agree with him that his returns would be superior is so laughable that I'm actually quite surprised that Taylor posted it.

It is blasphemy masked as a puff piece to Bogle.
BionicBillWalsh:

I posted it because I believe that investors should understand all sides of a situation before making a decision.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
I respect the heck out of you and what you do. I just feel that Merriman is taking some liberties that he shouldn't be taking.

I may have met the Dalai Lama once. I don't think I'm allowed to speak for him.
Jerry Garcia: If I knew the way...I would take you home.
User avatar
calmaniac
Posts: 331
Joined: Fri Jan 30, 2015 3:32 pm

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by calmaniac »

BionicBillWalsh wrote: Tue Mar 31, 2020 7:42 pm It is blasphemy masked as a puff piece to Bogle.
Bingo.

I have learned a huge amount on the Bogleheads site and from the books and other resources that have flowed from the discussions. I am incredibly grateful to all of those who have played a role in its development. My view of "Bogleheadism", is that it is comprised of data-driven investing, independent thinking, intense curiosity, thriftiness, and a healthy dash of skepticism. It is not simply reiterating Jack Bogle's canon, but rather applying those ideas to an ever-evolving investment landscape.

Thus, BionicBillWalsh I am struck by your use of the word "blasphemy".

To me, this implies a dogmatic approach to Bogle's teaching. Three funds or you go to hell. Am I a blasphemer because I use 5 funds?

I would like to think there is room for a more nuanced approach. Just as different people are comfortable with different asset allocations, they may also find slightly different investing approaches more suitable. I think Paul Merriman is a wonderful personal finance educator and is someone who has dedicated his life to teaching others about personal finance for zero personal gain.
63 yo,1y til go part-time. AA 70/30: 30% S&P, 16% value, 14% intl, 10% EM, 30% short/int govt bonds. My mil pension + DW's now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses.
BionicBillWalsh
Posts: 317
Joined: Sun Oct 21, 2018 1:56 am
Location: Sandwich Islands

Re: "The lessons of Vanguard’s Jack Bogle have helped countless investors — but his picks could be improved"

Post by BionicBillWalsh »

calmaniac wrote: Tue Mar 31, 2020 8:52 pm
BionicBillWalsh wrote: Tue Mar 31, 2020 7:42 pm It is blasphemy masked as a puff piece to Bogle.
Bingo.

I have learned a huge amount on the Bogleheads site and from the books and other resources that have flowed from the discussions. I am incredibly grateful to all of those who have played a role in its development. My view of "Bogleheadism", is that it is comprised of data-driven investing, independent thinking, intense curiosity, thriftiness, and a healthy dash of skepticism. It is not simply reiterating Jack Bogle's canon, but rather applying those ideas to an ever-evolving investment landscape.

Thus, BionicBillWalsh I am struck by your use of the word "blasphemy".

To me, this implies a dogmatic approach to Bogle's teaching. Three funds or you go to hell. Am I a blasphemer because I use 5 funds?

I would like to think there is room for a more nuanced approach. Just as different people are comfortable with different asset allocations, they may also find slightly different investing approaches more suitable. I think Paul Merriman is a wonderful personal finance educator and is someone who has dedicated his life to teaching others about personal finance for zero personal gain.
I don't know Merriman or his intentions. The skepticism you mention above is just a ring, ring, ringing away.

-Throwing out a title on Marketwatch telling Bogleheads they can increase their yields (very click-baity)
-Loosely associating yourself with a luminary in the field via a one time interview.
-Recommending something that is counter to what said luminary intended while throwing in links in the article to your personal website chock full of places to put your credit card information
-It seems sleazy.
Jerry Garcia: If I knew the way...I would take you home.
Post Reply