"The market portfolio is the most sensible decision"

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: 29197
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

"The market portfolio is the most sensible decision"

Post by Taylor Larimore » Tue Mar 24, 2020 2:27 pm

Bogleheads:

On March 22, 2015, I made a post titled: "The market portfolio is the most sensible decision -- Jack B." In that post I quoted from Jack's speech "The Telltale Chart" in which Mr. Bogle discusses heavily promoted "slice & dice", small-cap stocks, value stocks and the validity of early statistics. He concluded (underline mine):
Like Dr. Fama, I believe that the market portfolio is the most sensible decision. It takes the need for judgement out of your decision making; it reduces costs; it increases tax-efficiency; it avoids the need to pore over past market data to figure out why the data are what they are. Then, if you accept the data, you have to decide whether or not the patterns it has revealed will persist during the span of years remaining on your investment horizon."
I ran a comparison of an investor who, 15 years ago, followed Jack's advice and invested $10,000 in Vanguard Total Stock Market Index Fund (VTSAX) and compared it with an investor who put the same amount in DFA Small-Cap Value Fund (DFSVX). This is the ending portfolio value for each investor -- a HUGE difference (more than the original investment):

VTSAX: $26,489
DFSVX: $14,978
.........$11,511

Bill Bernstein quote: "When I disagree with Jack Bogle I am usually wrong."

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. -- "Never think you know more than the market. Nobody does."
"Simplicity is the master key to financial success." -- Jack Bogle

restingonmylaurels
Posts: 427
Joined: Tue Apr 14, 2015 11:02 am

Re: "The market portfolio is the most sensible decision"

Post by restingonmylaurels » Tue Mar 24, 2020 2:54 pm

Taylor Larimore wrote:
Tue Mar 24, 2020 2:27 pm
Bogleheads:

On March 22, 2015, I made a post titled: "The market portfolio is the most sensible decision -- Jack B." In that post I quoted from Jack's speech "The Telltale Chart" in which Mr. Bogle discusses heavily promoted "slice & dice", small-cap stocks, value stocks and the validity of early statistics. He concluded (underline mine):
Like Dr. Fama, I believe that the market portfolio is the most sensible decision. It takes the need for judgement out of your decision making; it reduces costs; it increases tax-efficiency; it avoids the need to pore over past market data to figure out why the data are what they are. Then, if you accept the data, you have to decide whether or not the patterns it has revealed will persist during the span of years remaining on your investment horizon."
I ran a comparison of an investor who, 15 years ago, followed Jack's advice and invested $10,000 in Vanguard Total Stock Market Index Fund (VTSAX) and compared it with an investor who put the same amount in DFA Small-Cap Value Fund (DFSVX). This is the ending portfolio value for each investor -- a HUGE difference (more than the original investment):

VTSAX: $26,489
DFSVX: $14,978
.........$11,511

Bill Bernstein quote: "When I disagree with Jack Bogle I am usually wrong."

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. -- "Never think you know more than the market. Nobody does."
Taylor,

I completely understand your point. I will say though there can be some exceptions. I have held the VG Health Care fund (VGHAX) since long before 2005, instead of the TSM fund.

The returns from Jan 2005 to Feb 2020 (per PortfolioVisualizer):
VTSAX: $33,996
VGHAX: $47,254
......... $13,258

I know many BHers view this merely as luck. I feel that identifying (I spent lots of time verifying this fund decades ago) and constantly reaffirming a great VG active fund (also e.g. Wellesley, Wellington, etc) is worth the trouble.

If one is not willing to do that, then I think your advice is spot on.

Call_Me_Op
Posts: 7703
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: "The market portfolio is the most sensible decision"

Post by Call_Me_Op » Tue Mar 24, 2020 3:06 pm

If you go much longer than 15 years, however, you will get a very different result. The past decade or so has been tough on small and value stocks.

Besides, I do not think that by "the most sensible decision," Jack necessarily meant "highest expected return."
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

User avatar
abuss368
Posts: 18834
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 market portfolio is the most sensible decision"

Post by abuss368 » Tue Mar 24, 2020 7:15 pm

Taylor Larimore wrote:
Tue Mar 24, 2020 2:27 pm
Bogleheads:

On March 22, 2015, I made a post titled: "The market portfolio is the most sensible decision -- Jack B." In that post I quoted from Jack's speech "The Telltale Chart" in which Mr. Bogle discusses heavily promoted "slice & dice", small-cap stocks, value stocks and the validity of early statistics. He concluded (underline mine):
Like Dr. Fama, I believe that the market portfolio is the most sensible decision. It takes the need for judgement out of your decision making; it reduces costs; it increases tax-efficiency; it avoids the need to pore over past market data to figure out why the data are what they are. Then, if you accept the data, you have to decide whether or not the patterns it has revealed will persist during the span of years remaining on your investment horizon."
I ran a comparison of an investor who, 15 years ago, followed Jack's advice and invested $10,000 in Vanguard Total Stock Market Index Fund (VTSAX) and compared it with an investor who put the same amount in DFA Small-Cap Value Fund (DFSVX). This is the ending portfolio value for each investor -- a HUGE difference (more than the original investment):

VTSAX: $26,489
DFSVX: $14,978
.........$11,511

Bill Bernstein quote: "When I disagree with Jack Bogle I am usually wrong."

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. -- "Never think you know more than the market. Nobody does."
Wow! Thanks for sharing Taylor. I would also ask, what if that same investor 15 years ago followed Mr. Bogle's advice and invested in Total Stock Index only and avoided Total International. Would they be better off for listening to Jack?
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

dru808
Posts: 532
Joined: Sat Oct 15, 2011 2:42 pm

Re: "The market portfolio is the most sensible decision"

Post by dru808 » Tue Mar 24, 2020 8:09 pm

What if you listened to someone’s advice and threw all your money into qqq 15 years ago?

I was under the impression bogleheads weren’t supposed to pay attention to past performance?
75/25 - schk, schd, vdigx, vigi / vwelx, vsmgx / govt

User avatar
Topic Author
Taylor Larimore
Advisory Board
Posts: 29197
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: "The market portfolio is the most sensible decision"

Post by Taylor Larimore » Tue Mar 24, 2020 8:45 pm

abuss368 wrote:
Tue Mar 24, 2020 7:15 pm

Wow! Thanks for sharing Taylor. I would also ask, what if that same investor 15 years ago followed Mr. Bogle's advice and invested in Total Stock Index only and avoided Total International. Would they be better off for listening to Jack?
Abuss368:

No question about it. Looking back, investors "would be better off for listening to Jack" who has said "international investing is not needed."

Looking forward, we don't know. Both my 3-fund portfolio and your 2-fund portfolio, will do well. Both portfolios use simple, low-cost, diversified, total market index funds.

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

User avatar
abuss368
Posts: 18834
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 market portfolio is the most sensible decision"

Post by abuss368 » Tue Mar 24, 2020 8:59 pm

Taylor Larimore wrote:
Tue Mar 24, 2020 8:45 pm
abuss368 wrote:
Tue Mar 24, 2020 7:15 pm

Wow! Thanks for sharing Taylor. I would also ask, what if that same investor 15 years ago followed Mr. Bogle's advice and invested in Total Stock Index only and avoided Total International. Would they be better off for listening to Jack?
Abuss368:

No question about it. Looking back, investors "would be better off for listening to Jack" who has said "international investing is not needed."

Looking forward, we don't know. Both my 3-fund portfolio and your 2-fund portfolio, will do well. Both portfolios use simple, low-cost, diversified, total market index funds.

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."
Many thanks Taylor!
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

User avatar
1789
Posts: 1085
Joined: Fri Aug 16, 2019 3:31 pm

Re: "The market portfolio is the most sensible decision"

Post by 1789 » Tue Mar 24, 2020 9:56 pm

dru808 wrote:
Tue Mar 24, 2020 8:09 pm
What if you listened to someone’s advice and threw all your money into qqq 15 years ago?

I was under the impression bogleheads weren’t supposed to pay attention to past performance?
I agree that past performance is close to meaningless to predict future. I believe part of this issue is psychological. Regardless of the stock indexes one hold, people compare results to TSM/SP500. In that case cherry picking periods of 10-15 years doesn't tell much. SCV outperformed everything else if you look at last 30 years. QQQ outperformed until 2000 and then get slaughtered by 78%. LCG outperformed US TSM/ SP500 in last decade so on and so forth. However, i do think that holding US TSM/SP500 is an efficient and simplest form of solution to be in stock market.
"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)

Dandy
Posts: 6167
Joined: Sun Apr 25, 2010 7:42 pm

Re: "The market portfolio is the most sensible decision"

Post by Dandy » Wed Mar 25, 2020 8:51 am

So then while the 3 fund portfolio is very good should it be supplemented by inflation protected securities fund, international bond fund, and any other major equity or fixed income product/ that isn't included or very much under represented? If not, why?

I'm more of a fan of domestic U.S. market diversity vs a global diversity. I include inflation protected fund and a decent allocation to FDIC products and money market funds. So, I'm asking more to understand what seems to be a generalized statement about investing like the market but the default recommendation is often the 3 fund portfolio (not knocking the portfolio) which seems to omit "large" and/or important market segments.

Vanguard seems to have taken up the mantle of global diversity in a significant break from Mr. Bogle. I don't always sense that from the Bogleheads, though by recommending VG TD funds or Life Strategy funds they do.

User avatar
Topic Author
Taylor Larimore
Advisory Board
Posts: 29197
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: "The market portfolio is the most sensible decision"

Post by Taylor Larimore » Wed Mar 25, 2020 11:49 am

Dandy wrote:
Wed Mar 25, 2020 8:51 am
So then while the 3 fund portfolio is very good should it be supplemented by inflation protected securities fund, international bond fund, and any other major equity or fixed income product/ that isn't included or very much under represented? If not, why?
Dandy:

The financial industry spends millions of marketing dollars each year to convince us to buy their funds and services. All of us are tempted to add funds that we think will do better than simple total market index funds. The Three-Fund Portfolio holds over 15,000 individual securities. I believe that more diversification is costly and unnecessary.

Please read my "Simplicity" link below.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
"Simplicity is the master key to financial success." -- Jack Bogle

lostdog
Posts: 2506
Joined: Thu Feb 04, 2016 2:15 pm

Re: "The market portfolio is the most sensible decision"

Post by lostdog » Wed Mar 25, 2020 12:00 pm

Taylor Larimore wrote:
Tue Mar 24, 2020 2:27 pm
Bogleheads:

On March 22, 2015, I made a post titled: "The market portfolio is the most sensible decision -- Jack B." In that post I quoted from Jack's speech "The Telltale Chart" in which Mr. Bogle discusses heavily promoted "slice & dice", small-cap stocks, value stocks and the validity of early statistics. He concluded (underline mine):
Like Dr. Fama, I believe that the market portfolio is the most sensible decision. It takes the need for judgement out of your decision making; it reduces costs; it increases tax-efficiency; it avoids the need to pore over past market data to figure out why the data are what they are. Then, if you accept the data, you have to decide whether or not the patterns it has revealed will persist during the span of years remaining on your investment horizon."
I ran a comparison of an investor who, 15 years ago, followed Jack's advice and invested $10,000 in Vanguard Total Stock Market Index Fund (VTSAX) and compared it with an investor who put the same amount in DFA Small-Cap Value Fund (DFSVX). This is the ending portfolio value for each investor -- a HUGE difference (more than the original investment):

VTSAX: $26,489
DFSVX: $14,978
.........$11,511

Bill Bernstein quote: "When I disagree with Jack Bogle I am usually wrong."

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. -- "Never think you know more than the market. Nobody does."
Thank you for this Taylor. :D

Would an investor also do OK with Vanguard Total World and Vanguard Total Bond in the long term?

Thanks again.
Global Market Cap Equity || Taxable: VTSAX+VTIAX || IRA: VTWAX

rgs92
Posts: 2521
Joined: Mon Mar 02, 2009 8:00 pm

Re: "The market portfolio is the most sensible decision"

Post by rgs92 » Wed Mar 25, 2020 12:23 pm

I just want to thank Taylor for stepping in with all these valuable posts during this stressful period. These clear and succinct pieces are just what is needed (well, at least speaking for myself) among the tidal wave of comments about quick reactions to the current events.

CommitmentDevice
Posts: 81
Joined: Tue Apr 02, 2019 3:25 am

Re: "The market portfolio is the most sensible decision"

Post by CommitmentDevice » Wed Mar 25, 2020 12:44 pm

I agree that the market portfolio is the most sensible decision, in that:
  • Nobody knows what portfolio is going to do best
  • I am persuaded by the arguments that the market portfolio has the highest chance of doing best
However, I don't put much weight in the fact that the market portfolio happened to beat out small cap value over the past 15y. Dice were rolled. The market portfolio's numbers came up. I believe the dice are weighted in favor of the market portfolio, but a single roll sure doesn't prove it.

pkcrafter
Posts: 13906
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: "The market portfolio is the most sensible decision"

Post by pkcrafter » Wed Mar 25, 2020 2:30 pm

Thank you, Taylor. You are the Bogleheads' rock, the ballast, the port in a storm. Your beliefs and recommendations have never varied, and they represent the best advice any "average" investor could get as the resulting simple portfolio plus buy and hold will, over time, bring investors into the top 20% of investor returns for the selected AA.

It's been 22 years since we "met" on the old Diehards forum, and I still hold the same portfolio.

regards,

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

User avatar
abuss368
Posts: 18834
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 market portfolio is the most sensible decision"

Post by abuss368 » Wed Mar 25, 2020 2:38 pm

1789 wrote:
Tue Mar 24, 2020 9:56 pm
However, i do think that holding US TSM/SP500 is an efficient and simplest form of solution to be in stock market.
You are in good company as both Jack Bogle and Warren Buffett agree with you.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

User avatar
abuss368
Posts: 18834
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 market portfolio is the most sensible decision"

Post by abuss368 » Wed Mar 25, 2020 2:43 pm

Dandy wrote:
Wed Mar 25, 2020 8:51 am
So then while the 3 fund portfolio is very good should it be supplemented by inflation protected securities fund, international bond fund, and any other major equity or fixed income product/ that isn't included or very much under represented? If not, why?

I'm more of a fan of domestic U.S. market diversity vs a global diversity. I include inflation protected fund and a decent allocation to FDIC products and money market funds. So, I'm asking more to understand what seems to be a generalized statement about investing like the market but the default recommendation is often the 3 fund portfolio (not knocking the portfolio) which seems to omit "large" and/or important market segments.

Vanguard seems to have taken up the mantle of global diversity in a significant break from Mr. Bogle. I don't always sense that from the Bogleheads, though by recommending VG TD funds or Life Strategy funds they do.
Hi Dandy -

I think there is always a temptation to tinker and alter a portfolio. The financial media and the marketing machine do not help matters. It is important to select a portfolio that you are comfortable with and can stay the course.

In my opinion international bonds won't really make a difference one way or another. Vanguard's research paper essentially said the same thing. Inflation bonds could be included if an investor believes they have a higher risk to unexpected inflation. Vanguard includes them in the Target Retirement fund.

When in doubt chose the easiest option. Simplicity is the master key to financial success.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

CFM300
Posts: 1730
Joined: Sat Oct 27, 2007 5:13 am

Re: "The market portfolio is the most sensible decision"

Post by CFM300 » Wed Mar 25, 2020 2:56 pm

Using Portfolio Visualizer, I ran a comparison of an investor who followed Jack's advice beginning in 2002, the year in which he gave "The Telltale Chart" speech in which he said, "The market portfolio is the most sensible decision."

$10,000 invested in the total US stock market vs. US small cap value.

These are the ending portfolio values for each investor -- an INSIGNIFICANT difference (slightly in favor of small value):

$39,081 - US Stock Market
$39,949 - US Small Cap Value

Dandy
Posts: 6167
Joined: Sun Apr 25, 2010 7:42 pm

Re: "The market portfolio is the most sensible decision"

Post by Dandy » Wed Mar 25, 2020 4:07 pm

Dandy:

The financial industry spends millions of marketing dollars each year to convince us to buy their funds and services. All of us are tempted to add funds that we think will do better than simple total market index funds. The Three-Fund Portfolio holds over 15,000 individual securities. I believe that more diversification is costly and unnecessary.
I understand and somewhat agree. But there are some gaps in the " market".

"The market portfolio is the most sensible decision" quote doesn't address the scope of the "market". Vanguard seems to feel it includes a more global market allocation. Equities are where the big risk/reward is and the 3 fund portfolio covers global equities even if it may not always be globally weighted.

On the fixed income side, which is less important, it leaves out inflation protected securities which are a small portion of the fixed income market but which may be important for retirees (although inflation hasn't been much during the last decade or so) I'm surprised there hasn't been more effort to have the Total Bond Fund include them. It doesn't address money markets or FDIC products which aren't expensive and not overly complicated but are a rather large portion of the US fixed income market.

I guess allocations to "cash or cash-like" products which once were always referenced are no longer in vogue. But, again retirees might benefit from some allocation to these products beyond an emergency fund despite the historic low yields we have seen for awhile.

I guess my ideal US "total market" portfolio for retirees would add inflation protected securities, ideally to the Total Bond Fund, and some cash or cash-like assets in addition to the 3 funds. The early Vanguard TD funds may have done this if I recall correctly. Ideally, it would be nice to have a series of funds covering that definition of "the market"

User avatar
abuss368
Posts: 18834
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 market portfolio is the most sensible decision"

Post by abuss368 » Wed Mar 25, 2020 6:46 pm

CFM300 wrote:
Wed Mar 25, 2020 2:56 pm
Using Portfolio Visualizer, I ran a comparison of an investor who followed Jack's advice beginning in 2002, the year in which he gave "The Telltale Chart" speech in which he said, "The market portfolio is the most sensible decision."

$10,000 invested in the total US stock market vs. US small cap value.

These are the ending portfolio values for each investor -- an INSIGNIFICANT difference (slightly in favor of small value):

$39,081 - US Stock Market
$39,949 - US Small Cap Value
Interesting but your right. That difference is a rounding error. For the same time period however, what is the Jack Bogle Two Fund Portfolio at 70/30?
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

CFM300
Posts: 1730
Joined: Sat Oct 27, 2007 5:13 am

Re: "The market portfolio is the most sensible decision"

Post by CFM300 » Wed Mar 25, 2020 7:06 pm

abuss368 wrote:
Wed Mar 25, 2020 6:46 pm
For the same time period however, what is the Jack Bogle Two Fund Portfolio at 70/30?
$35,372

xxd091
Posts: 142
Joined: Sun Aug 21, 2011 4:41 am
Location: UK

Re: "The market portfolio is the most sensible decision"

Post by xxd091 » Wed Mar 25, 2020 7:26 pm

Just a small point Taylor
For non US Bogleheads an International Portfolio is required
This is one way we can easily and cheaply access US stocks ie my international portfolio is over 50% US equities and over 50% US bonds
This has proved a great success
xxd091

User avatar
Topic Author
Taylor Larimore
Advisory Board
Posts: 29197
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: "The market portfolio is the most sensible decision"

Post by Taylor Larimore » Wed Mar 25, 2020 7:30 pm

CFM300 & Abuss368:

The portfolios are fundamentally different. One contains bonds; the other none.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There is simply no way under the sun to forecast a fund's future absolute returns based on its past record"
"Simplicity is the master key to financial success." -- Jack Bogle

Dandy
Posts: 6167
Joined: Sun Apr 25, 2010 7:42 pm

Re: "The market portfolio is the most sensible decision"

Post by Dandy » Wed Mar 25, 2020 7:40 pm

Hi Dandy -

I think there is always a temptation to tinker and alter a portfolio. The financial media and the marketing machine do not help matters. It is important to select a portfolio that you are comfortable with and can stay the course.

In my opinion international bonds won't really make a difference one way or another. Vanguard's research paper essentially said the same thing. Inflation bonds could be included if an investor believes they have a higher risk to unexpected inflation. Vanguard includes them in the Target Retirement fund.
I tend to agree. But "we say buy the market or buy the whole haystack instead of looking for the needle" etc. But, we then send a conflicting saying of "keep it simple" and advocate funds that fall a bit short of those mantras. It is often mentioned that inflation is a significant risk for retirees and express some concern about pensions or annuities that aren't COLA protected --yet seem ok that it is not included in otherwise good portfolio suggestions that are mentioned.

I ignore the financial media for the most part and just look at what is missing from my investments that might be important. Adding some inflation protection when I'm well into retirement seems rational if not necessary. I haven't seen any media "experts" hyping inflation protection assets given the low inflation we've had.

This isn't a big deal --probably just too much time staying home instead of going out and spending some assets. :oops:

CFM300
Posts: 1730
Joined: Sat Oct 27, 2007 5:13 am

Re: "The market portfolio is the most sensible decision"

Post by CFM300 » Wed Mar 25, 2020 8:16 pm

Taylor Larimore wrote:
Wed Mar 25, 2020 7:30 pm
The portfolios are fundamentally different. One contains bonds; the other none.
Not these:

2002-2020
$39,081 - 100% US Stock Market
$39,949 - 100% US Small Cap Value

crystalbank
Posts: 251
Joined: Wed Nov 01, 2017 12:21 am

Re: "The market portfolio is the most sensible decision"

Post by crystalbank » Wed Mar 25, 2020 8:21 pm

Small Cap funds will likely outperform Total Market going forward because they shed more in this downturn.

BUT, I won't be tilting my portfolio with Small Cap. I used to be tilted Small Cap Blend until last month and I used this crash to TLH everything into a total market fund. I realized that having a complex portfolio with tilts eats away returns as much as market timing.

Lesson learned - Simplicity always beats complex in the long run.

User avatar
abuss368
Posts: 18834
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 market portfolio is the most sensible decision"

Post by abuss368 » Wed Mar 25, 2020 8:54 pm

CFM300 wrote:
Wed Mar 25, 2020 7:06 pm
abuss368 wrote:
Wed Mar 25, 2020 6:46 pm
For the same time period however, what is the Jack Bogle Two Fund Portfolio at 70/30?
$35,372
Makes sense. 30% in bonds.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

User avatar
abuss368
Posts: 18834
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 market portfolio is the most sensible decision"

Post by abuss368 » Thu Mar 26, 2020 1:28 pm

Taylor Larimore wrote:
Wed Mar 25, 2020 7:30 pm
CFM300 & Abuss368:

The portfolios are fundamentally different. One contains bonds; the other none.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There is simply no way under the sun to forecast a fund's future absolute returns based on its past record"
Right. Thanks Taylor. I was just curious.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

Post Reply