Why don't investors like "boring"?

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tvubpwcisla
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Why don't investors like "boring"?

Post by tvubpwcisla » Thu Mar 26, 2020 5:35 am

Some of the best returns out there often come from the most boring financial plans, stocks, and index funds that slowly chug along and pay dividends. They seem focused on the power of compounding and also crash more gentle during market corrections. I hear all the time from investors they are not interested because the company or fund is "boring". I'm curious why investors don't like boring when it has proven to be so successful?

:?
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Cheez-It Guy
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Re: Why don't investors like "boring"?

Post by Cheez-It Guy » Thu Mar 26, 2020 6:00 am

Because many are guided by emotion rather than facts and data, and in times of crisis it is natural to want to feel like you have some control (even when you don't), and a boring buy-and-hold index fund strategy is not so amenable to that.

RadAudit
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Re: Why don't investors like "boring"?

Post by RadAudit » Thu Mar 26, 2020 6:10 am

Because someone somewhere might be making more money than they are.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

dknightd
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Re: Why don't investors like "boring"?

Post by dknightd » Thu Mar 26, 2020 6:47 am

Most people do not like boring because, well, it is boring ;)
Investing in index funds is more exciting than investing in bank CDs. Especially lately.
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds.

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firebirdparts
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Re: Why don't investors like "boring"?

Post by firebirdparts » Thu Mar 26, 2020 6:53 am

Everybody is looking for a way to make a slow profit.
A fool and your money are soon partners

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nisiprius
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Re: Why don't investors like "boring"?

Post by nisiprius » Thu Mar 26, 2020 6:54 am

1) I believe quite a lot of investors do. According to the Investment Company Institute,
At the end of 2017, approximately $1.1 trillion was invested in target date mutual funds. Net cash flows into target date funds have grown significantly. For example, target date mutual funds received $67.6 billion in net new cash flow during 2017, compared to $56.2 billion in 2007 and $4 billion in 2002.
and
At year-end 2015, on average, 401(k) plan participants in their twenties had 28 percent of their 401(k) assets invested in equity funds, 47 percent in target date funds.
2) There is always a disconnect between what you read, which is sourced directly or indirectly from people trying to sell stuff, and what people really do. The financial press, from the Wall Street Journal to Kiplinger's, doesn't want "boring." I'm not really sure what incentivizes financial advisors, but it isn't "boring" either. Who is going to pay 1% AUM year after year to get told "yep, the three index funds... or the six ETFs... I set you up with six years ago are still fine, don't change anything?" It is becoming increasingly evident that this is not a sustainable business model even for the roboadvisor firms.
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Re: Why don't investors like "boring"?

Post by RadAudit » Thu Mar 26, 2020 9:47 am

nisiprius wrote:
Thu Mar 26, 2020 6:54 am
There is always a disconnect between what you read, which is sourced directly or indirectly from people trying to sell stuff, and what people really do.
Thanks for the info and the reminder.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

chevca
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Re: Why don't investors like "boring"?

Post by chevca » Thu Mar 26, 2020 9:49 am

I love it! :happy

cashboy
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Re: Why don't investors like "boring"?

Post by cashboy » Thu Mar 26, 2020 10:23 am

three-funder.

it can be boring.

i love boring!
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CDs - CASH - Canned Beans - Rice - Bottled Water)

J295
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Re: Why don't investors like "boring"?

Post by J295 » Thu Mar 26, 2020 10:33 am

I prefer boring when it comes to investing

It’s just a guess on my part, but it seems reasonable to think that some people don’t like boring when it comes to investing because their ego enjoys “winning” or some other ego gratification.

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Re: Why don't investors like "boring"?

Post by 22twain » Thu Mar 26, 2020 10:55 am

People who crave "excitement" in their investments, and view it as a hobby, are probably more likely to post on financial forums than people who are satisfied with plain-vanilla investments and have other things to occupy their time.
My investing princiPLEs do not include absolutely preserving princiPAL.

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Phineas J. Whoopee
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Re: Why don't investors like "boring"?

Post by Phineas J. Whoopee » Thu Mar 26, 2020 7:58 pm

This poster does not speak for me.
PJW

Thesaints
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Re: Why don't investors like "boring"?

Post by Thesaints » Thu Mar 26, 2020 8:02 pm

It's not so much as seeking adventure, as it is the "illusion of control". Something hardwired in human brain and one of those things which are a disadvantage for the individual, but an evolutionary advantage for society.

Iridium
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Re: Why don't investors like "boring"?

Post by Iridium » Thu Mar 26, 2020 8:48 pm

tvubpwcisla wrote:
Thu Mar 26, 2020 5:35 am
Some of the best returns out there often come from the most boring financial plans, stocks, and index funds that slowly chug along and pay dividends. They seem focused on the power of compounding and also crash more gentle during market corrections. I hear all the time from investors they are not interested because the company or fund is "boring". I'm curious why investors don't like boring when it has proven to be so successful?

:?
A lifetime of experiences demonstrates to us the power of hard work and methodical study. We wouldn't expect people to be passive in their career growth, to stay the course on illness, or to marry the entire dating pool. If folks accepted being average and never strived for more in their everyday life, they are unlikely to develop the career that will allow them to invest. Who would have thought that investing is the one place in one's life where a lack of ambition is a good thing?

Randolph Mortimer
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Re: Why don't investors like "boring"?

Post by Randolph Mortimer » Thu Mar 26, 2020 8:58 pm

tvubpwcisla wrote:
Thu Mar 26, 2020 5:35 am
Some of the best returns out there often come from the most boring financial plans, stocks, and index funds that slowly chug along and pay dividends. They seem focused on the power of compounding and also crash more gentle during market corrections. I hear all the time from investors they are not interested because the company or fund is "boring". I'm curious why investors don't like boring when it has proven to be so successful?

:?
Impatience, FOMO, and ego.

Normchad
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Re: Why don't investors like "boring"?

Post by Normchad » Thu Mar 26, 2020 9:04 pm

People commonly believe they are smarter than the average bear. This is especially true for people that are successful and make a lot of money.

It’s not surprising that engineers, doctors, lawyers etc, who have always been the smartest people in the room. believe they can outperform the market as well.

So that’s bad enough.

But on top of that, we all have mental biases and weaknesses. And the people peddling newsletters, talk shows, and active management know what those are and know how to manipulate us. That’s why it’s good to “ignore the noise”, because we are susceptible to that manipulation given enough time and effort.

adave
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Re: Why don't investors like "boring"?

Post by adave » Thu Mar 26, 2020 9:20 pm

I don't believe I can beat the market and hold most of my wealth in index products. However, I like to dabble in individual stocks mostly so I can chat about them a parties with other :sharebeer

It's always ends the conversation when everyone is talking stocks and I drop that I only use index products :happy

ionball
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Re: Why don't investors like "boring"?

Post by ionball » Thu Mar 26, 2020 9:30 pm

I like my investments to be boring. Then look for fun and excitement somewhere else.

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willthrill81
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Re: Why don't investors like "boring"?

Post by willthrill81 » Thu Mar 26, 2020 9:31 pm

I would take a completely boring investment that had a guaranteed, inflation-adjusted annual return of 5% in perpetuity any day of the week. :D
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Unladen_Swallow
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Re: Why don't investors like "boring"?

Post by Unladen_Swallow » Thu Mar 26, 2020 9:37 pm

I like boring.


Some think boring is the quiet before a storm, so they panic.
Some are really bored, so they do something.
Some feel smart if they were constantly tweaking.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

bigfry
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Re: Why don't investors like "boring"?

Post by bigfry » Thu Mar 26, 2020 10:03 pm

I've been actively trying to make my overall portfolio more and more boring. Although I use the word simple which in the investing world probably means the same thing as boring.
Keep it simple, stupid.

james22
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Re: Why don't investors like "boring"?

Post by james22 » Fri Mar 27, 2020 4:22 am

Because Ackman made $2.6B on his $27M bet.

That's why.

Rus In Urbe
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Re: Why don't investors like "boring"?

Post by Rus In Urbe » Fri Mar 27, 2020 4:32 am

*
For investors who don't like "boring," Jack Bogle had the famous remark:

Don't Do Something, Just Stand There.

That's hard for a lot of people to do, apparently.

I'm with the boring crowd. I know what I don't know...and over the years, that's made me a lot of money.

Cheers to all my Boring BH friends! :beer Rus.
I'd like to live as a poor man with lots of money. ~Pablo Picasso

xxd091
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Re: Why don't investors like "boring"?

Post by xxd091 » Fri Mar 27, 2020 4:46 am

We are programmed as “animals” not stand still, be alert and keep moving
It is hard wired into our genes
An animal (ape-our ancestors) that stands still for a long period of time on the savannah gets eaten by a predator!
Investing mantras that advocate “stay the course” etc are therefore counterintuitive and very hard for that reason
Most investors will struggle to hold their positions
This is especially true at this time of Coronavirus and social isolation -older retired members confined to barracks and watching their portfolios go down
Serious willpower required
xxd091

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Portfolio7
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Re: Why don't investors like "boring"?

Post by Portfolio7 » Fri Mar 27, 2020 10:04 am

willthrill81 wrote:
Thu Mar 26, 2020 9:31 pm
I would take a completely boring investment that had a guaranteed, inflation-adjusted annual return of 5% in perpetuity any day of the week. :D
This. Once you get past the urge to gamble, or make up lost ground, or avoid falling behind.... you are left with volatility and the lack of a guaranteed outcome.
"An investment in knowledge pays the best interest" - Benjamin Franklin

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Re: Why don't investors like "boring"?

Post by watchnerd » Fri Mar 27, 2020 10:20 am

willthrill81 wrote:
Thu Mar 26, 2020 9:31 pm
I would take a completely boring investment that had a guaranteed, inflation-adjusted annual return of 5% in perpetuity any day of the week. :D
I think Bernie Madoff sold those.
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Re: Why don't investors like "boring"?

Post by Dottie57 » Fri Mar 27, 2020 10:21 am

willthrill81 wrote:
Thu Mar 26, 2020 9:31 pm
I would take a completely boring investment that had a guaranteed, inflation-adjusted annual return of 5% in perpetuity any day of the week. :D
+1

GreatLaker
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Re: Why don't investors like "boring"?

Post by GreatLaker » Fri Mar 27, 2020 10:22 am

https://www.beingguru.com/2019/05/warre ... rich-slow/

Jeff Bezos, founder, chairman, CEO, and president of Amazon is the richest man in the world. Once in a meeting with Warren Buffett, he asked America’s most prolific investor, your investment thesis is so simple. You’re the second richest guy in the world, and it’s so simple. Why doesn’t everyone just copy you?”

Warren Buffett responded Jeff by saying, “Because nobody wants to get rich slow.”

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willthrill81
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Re: Why don't investors like "boring"?

Post by willthrill81 » Fri Mar 27, 2020 10:23 am

watchnerd wrote:
Fri Mar 27, 2020 10:20 am
willthrill81 wrote:
Thu Mar 26, 2020 9:31 pm
I would take a completely boring investment that had a guaranteed, inflation-adjusted annual return of 5% in perpetuity any day of the week. :D
I think Bernie Madoff sold those.
Too bad that his guarantee was not really so.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Why don't investors like "boring"?

Post by Fallible » Fri Mar 27, 2020 6:00 pm

tvubpwcisla wrote:
Thu Mar 26, 2020 5:35 am
...
I'm curious why investors don't like boring when it has proven to be so successful? ...
Those who think index investing is boring (or at least say it is) are likely to be active managers for obvious reasons, or indexers tempted for various reasons to increase risk in hopes of making more money (more money being a reason active managers say indexing is boring).

Then there are indexers who are happy, even relieved, to find it boring, in the sense that, even though it is simple but not easy, it saves them money and time. :-)
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

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