"Jack Bogle's Simple Advice for Investors"

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Taylor Larimore
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"Jack Bogle's Simple Advice for Investors"

Post by Taylor Larimore »

Bogleheads:

Before he died, Jack Bogle was interviewed by AARP magazine. I found his words of wisdom well worth re-reading. Below are a few of Jack's investment gems in the article:
"Only about $4 trillion (is held by individuals in stocks). The largest share—$17 trillion—is held by institutions."

"Investing in dollars is a loser’s game. You have to buy stocks and bonds."

"I want to be clear that you should always have some cash reserves, particularly when you are older."

"You want some bonds in your portfolio, for safety. But you need stocks for growth."

"Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag. Given this absolute uncertainty, the most logical strategy is to invest as broadly as possible and benefit from the compounding dividend yields and long term earnings growth of American — and global  — corporations."

"And when you allocate your assets, you also have to think about how much you get from Social Security."

"I would limit yourself to 20 percent of your portfolio in foreign stocks. I don’t do it myself."

(annuities) "They’re highly complex and are sold by people who may not understand them themselves. Variable annuities are very dangerous because they can’t always deliver what they promise."
Jack Bogle's Simple Advice for Investors

Thank you, Jack.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: "Jack Bogle's Simple Advice for Investors"

Post by DSBH »

I have graduated from individual stock trading (half of the time using the "Technical Analysis" method aka "Buy Low Sell Lower" strategy), to Fidelity Magellan / sector funds / emerging market funds, to 50/10/40 happy retiree (50% US stock, 10% international stock, 40% intermediate bond index) low cost investing (~ the 3-fund portfolio) & annual re-balancing while also trying to be tax efficient. Simplicity is so sophisticated.

Thank you Mr. Bogle, Mr. Larimore, and Bogleheads.

DSBH
John C. Bogle: "Never confuse genius with luck and a bull market".
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Re: "Jack Bogle's Simple Advice for Investors"

Post by zebra21345 »

Age 63, probably will retire in 2 years.

Like DSBH, In my 401k/Roth Ira Funds currently at just about 50/10/40. (50% Vanguard Total Stk Mkt Index, 10% Vanguard International Growth, 40% Vanguard Intermediate Bond Index). It’s been a long process to get to a three fund portfolio.

For many years, i had a myriad of funds and individual stocks and i was always chasing performance and constantly adjusting my portfolio. It became so tiring.

Reading thoughts from Jack Bogel over the years, i became an Index convert about 25 years ago which was reinforced by the Bogleheads and this forum that i have joined in the last couple of years.

But i have to credit Taylor Larimore 1000% for getting me on the final road to common sense/simplicity in my investments based on his Three Fund Portfolio as outlined in his book. I have refined my fund selections more in line with Taylors recommendations. While i have not built my portfolio identical to the one Taylor recommends, I have come very close.

Jack B is no longer around to thank, but Taylor you are and again my heartfelt thank you for your great advice to all of us out here. Your book is fantastic and should be required reading for every one.......................

RM
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Re: "Jack Bogle's Simple Advice for Investors"

Post by abuss368 »

Thanks Taylor. Interesting Mr. Bogle recommended 20% of portfolio to international and not 20% of stocks.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "Jack Bogle's Simple Advice for Investors"

Post by flaccidsteele »

Bogle was a Legend. The best
Taylor Larimore wrote: Fri Aug 28, 2020 11:04 am "Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag. Given this absolute uncertainty, the most logical strategy is to invest as broadly as possible and benefit from the compounding dividend yields and long term earnings growth of American — and global  — corporations."
Anybody else notice the irony in the aforementioned quote?

“Nobody knows what the stock market is going to do...”

“Given this absolute uncertainty...”

Yet the course of action recommended depends on the absolute certainty that the US market always recovers. Always. It’s never different this time 🇺🇸

Bogle is right. And I agree with it 👍
Last edited by flaccidsteele on Fri Aug 28, 2020 11:19 pm, edited 1 time in total.
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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Re: "Jack Bogle's Simple Advice for Investors"

Post by flaccidsteele »

abuss368 wrote: Fri Aug 28, 2020 10:58 pm Thanks Taylor. Interesting Mr. Bogle recommended 20% of portfolio to international and not 20% of stocks.
He didn’t do it himself and I always felt that he only said it to appease the segment of his followers that cried about it
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Jerry476 »

If Jack Bogle didn’t need 20% of his portfolio in foreign stocks, why would I need 20% of my portfolio in foreign stocks? Each of us has to determine if Jack was right, wrong or somewhere in between. I’ll line up with Jack, fellow Bogleheads. For me, it’s 60% Total Stock Market and 40% Intermediate Bond Index. There’s nothing more satisfying than simplicity.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by statefan03 »

abuss368 wrote: Fri Aug 28, 2020 10:58 pm Thanks Taylor. Interesting Mr. Bogle recommended 20% of portfolio to international and not 20% of stocks.
To clarify, he said 20% should be a LIMIT, not his recommendation.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by RJC »

I try to follow Jack's advice. Simplicity is where it's at.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by burritoLover »

Just goes to show you that great minds can also be irrational and contradictory even with their own advice.
Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag. Given this absolute uncertainty, the most logical strategy is to invest as broadly as possible
"I would limit yourself to 20 percent of your portfolio in foreign stocks. I don’t do it myself."
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
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Re: "Jack Bogle's Simple Advice for Investors"

Post by abuss368 »

Jerry476 wrote: Sat Aug 29, 2020 12:34 am If Jack Bogle didn’t need 20% of his portfolio in foreign stocks, why would I need 20% of my portfolio in foreign stocks? Each of us has to determine if Jack was right, wrong or somewhere in between. I’ll line up with Jack, fellow Bogleheads. For me, it’s 60% Total Stock Market and 40% Intermediate Bond Index. There’s nothing more satisfying than simplicity.
Jack Bogle has always said “simplicity is the master key to financial success.”
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "Jack Bogle's Simple Advice for Investors"

Post by abuss368 »

RJC wrote: Sat Aug 29, 2020 7:26 am I try to follow Jack's advice. Simplicity is where it's at.
Exactly. I have all of Mr. Bogle’s books on my shelf. I refer to them as questions arise.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "Jack Bogle's Simple Advice for Investors"

Post by columbia »

burritoLover wrote: Sat Aug 29, 2020 7:50 am Just goes to show you that great minds can also be irrational and contradictory even with their own advice.
Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag. Given this absolute uncertainty, the most logical strategy is to invest as broadly as possible
"I would limit yourself to 20 percent of your portfolio in foreign stocks. I don’t do it myself."

That depends of one's definition of necessary. :)


Is it necessary to invest in total stock market over the S&P 500? It isn't for me. Preferences vary.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Call_Me_Op »

How does the recommendation to limit foreign stocks to 20% square against the following statement?

"Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag."
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
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Re: "Jack Bogle's Simple Advice for Investors"

Post by burritoLover »

columbia wrote: Sat Aug 29, 2020 7:59 am
burritoLover wrote: Sat Aug 29, 2020 7:50 am Just goes to show you that great minds can also be irrational and contradictory even with their own advice.
Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag. Given this absolute uncertainty, the most logical strategy is to invest as broadly as possible
"I would limit yourself to 20 percent of your portfolio in foreign stocks. I don’t do it myself."

That depends of one's definition of necessary. :)


Is it necessary to invest in total stock market over the S&P 500? It isn't for me. Preferences vary.
Sure, as long as you accept the fact that the S&P 500 has had long periods of poor performance in the past, even decade long periods of under-performing short-term treasuries. That can happen again in the future.

I think a lot of investors believe they are guaranteed to get 10+% returns on the S&P 500 forever. And then when Bogle is wishy-washy on international diversification, that solidifies their position to be all-in on U.S.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
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Re: "Jack Bogle's Simple Advice for Investors"

Post by backpacker61 »

DSBH wrote: Fri Aug 28, 2020 2:37 pm to Fidelity Magellan
Yep; been there, got the t-shirt.
Stayed in it way too long.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by lostdog »

flaccidsteele wrote: Fri Aug 28, 2020 11:18 pm
abuss368 wrote: Fri Aug 28, 2020 10:58 pm Thanks Taylor. Interesting Mr. Bogle recommended 20% of portfolio to international and not 20% of stocks.
He didn’t do it himself and I always felt that he only said it to appease the segment of his followers that cried about it
+1

The older demographic.

On the bogleheads reddit, which is the younger demographic, 30% to world market cap is recommended.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by abuss368 »

columbia wrote: Sat Aug 29, 2020 7:59 am
burritoLover wrote: Sat Aug 29, 2020 7:50 am Just goes to show you that great minds can also be irrational and contradictory even with their own advice.
Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag. Given this absolute uncertainty, the most logical strategy is to invest as broadly as possible
"I would limit yourself to 20 percent of your portfolio in foreign stocks. I don’t do it myself."

That depends of one's definition of necessary. :)


Is it necessary to invest in total stock market over the S&P 500? It isn't for me. Preferences vary.
Not at all and in my opinion a debate of S&P 500 vs. Total Stock is not worth it. Over the long term the two funds mirror each other. The difference is a rounding error.

At one time the S&P 500 was the only good fund in an employer plan. I was happy to select and move on.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Robot Monster »

Taylor Larimore wrote: Fri Aug 28, 2020 11:04 am "Investing in dollars is a loser’s game. You have to buy stocks and bonds."

"You want some bonds in your portfolio, for safety. But you need stocks for growth."
That the need to buy stocks is stated twice, I feel duly obligated to state if someone is in 100% wealth preservation mode--and they don't need growth--they therefore don't need stocks.

I realize Bogle's advice was intended for a general audience of people who do indeed require growth, yet can't help but find the unequivocal statement of "needing stocks" annoying.

(You can argue stocks are needed for diversity's sake, yet that is not what Bogle stated.)
"Happiness comes from being connected in the right ways to: other people, your work, something larger than yourself."
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Dave55 »

Thanks Taylor, the basics stated simply.

Dave
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Robot Monster »

Jerry476 wrote: Sat Aug 29, 2020 12:34 am If Jack Bogle didn’t need 20% of his portfolio in foreign stocks, why would I need 20% of my portfolio in foreign stocks? Each of us has to determine if Jack was right, wrong or somewhere in between. I’ll line up with Jack, fellow Bogleheads. For me, it’s 60% Total Stock Market and 40% Intermediate Bond Index. There’s nothing more satisfying than simplicity.
What you say makes complete sense, I applaud your desire for simplicity, and have no problem whatsoever you going 100% US. That said, I cannot but help feel a slight tinge of sadness at the thought of all the great companies you're missing out on e.g. Nestle, Total SA, Novartis, AstraZeneca. (Fun fact: I took those names from Wellington Fund's portfolio holdings.) I will console myself at the thought of all the great US companies you do own. *wipes away small tear*
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Re: "Jack Bogle's Simple Advice for Investors"

Post by columbia »

Robot Monster wrote: Sat Aug 29, 2020 9:37 am
Taylor Larimore wrote: Fri Aug 28, 2020 11:04 am "Investing in dollars is a loser’s game. You have to buy stocks and bonds."

"You want some bonds in your portfolio, for safety. But you need stocks for growth."
That the need to buy stocks is stated twice, I feel duly obligated to state if someone is in 100% wealth preservation mode--and they don't need growth--they therefore don't need stocks.

I realize Bogle's advice was intended for a general audience of people who do indeed require growth, yet can't help but find the unequivocal statement of "needing stocks" annoying.

(You can argue stocks are needed for diversity's sake, yet that is not what Bogle stated.)
A reasonable assumption is that very few (although including him at the time) have 100% of their future liabilities funded. Hence the need to take on stock market risk.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Greenman72 »

Call_Me_Op wrote: Sat Aug 29, 2020 8:11 am How does the recommendation to limit foreign stocks to 20% square against the following statement?

"Absolutely no one knows what the stock market is going to do tomorrow, let alone next year. Nor which sector, style or region will lead and which will lag."
I think the point was "limit your foreign stocks to 20% of total" is contradictory to "invest as broadly as possible".
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Re: "Jack Bogle's Simple Advice for Investors"

Post by AlwaysLearningMore »

Robot Monster wrote: Sat Aug 29, 2020 10:36 am I cannot but help feel a slight tinge of sadness at the thought of all the great companies you're missing out on e.g. Nestle, Total SA, Novartis, AstraZeneca. (Fun fact: I took those names from Wellington Fund's portfolio holdings.) I will console myself at the thought of all the great US companies you do own. *wipes away small tear*
Image

Image

Looks like far, far more sympathy is due those who've placed a substantial stake in international.

:beer
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Re: "Jack Bogle's Simple Advice for Investors"

Post by AlwaysLearningMore »

And for a comparison of two 60/40 (equity/FI) portfolios: LifeStrategy mod. growth VSMGX (holding both domestic and int'l stocks and bonds in the ratio currently proposed by VG) and Vanguard Balanced Index VBIAX, (holding US stocks and bonds)

Image

Image
Last edited by AlwaysLearningMore on Sat Aug 29, 2020 1:49 pm, edited 1 time in total.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Alchemist »

AlwaysLearningMore wrote: Sat Aug 29, 2020 1:25 pm Looks like far, far more sympathy is due those who've placed a substantial stake in international.

:beer
Even more striking is that VTIAX is basically where it was at the end of October 2007, 13 years ago. Or that since inception it is still behind U.S. Total Bond market as measured by VTBLX. A 60/40 TSM/TBM portfolio had higher returns than a 60/40 VTSAX/VTIAX portfolio at a fraction of the volatility and risk for the 24 years we have live fund data.

https://www.portfoliovisualizer.com/bac ... tion3_1=40
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Robot Monster »

AlwaysLearningMore wrote: Sat Aug 29, 2020 1:25 pm Looks like far, far more sympathy is due those who've placed a substantial stake in international.

:beer
Nicely done. :beer But please be careful. The past performance argument inevitably leads one straight into the jaws of QQQ (which mightily and magnificently outperformed Total Stock.)
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Robot Monster »

Alchemist wrote: Sat Aug 29, 2020 1:48 pm
AlwaysLearningMore wrote: Sat Aug 29, 2020 1:25 pm Looks like far, far more sympathy is due those who've placed a substantial stake in international.

:beer
Even more striking is that VTIAX is basically where it was at the end of October 2007, 13 years ago.
2007 was indeed an unfortunate time to be going full throttle into international. If I'm not mistaken, at the time, it was handily outperforming the US market? Let's see...

Yes, from Jan 2003 - Dec 2007 international outperformed US, and therefore pity goes to those that piled into international then. Recency-bias certainly did not play out well for these poor fools.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Big Dog »

abuss368 wrote: Fri Aug 28, 2020 10:58 pm Thanks Taylor. Interesting Mr. Bogle recommended 20% of portfolio to international and not 20% of stocks.
Umm, that's not what he said, which was to limit yourself to no more than 20% international of portfolio. In other words, if you choose to do international, limit it to 20% of total. (He did not recommend that everyone go (20%) international.)
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Re: "Jack Bogle's Simple Advice for Investors"

Post by 1rl9DS5gl2 »

I recognize that what I'm about to say is heresy on this site, but as a 73 year old who's been investing for about 40 years I'm really glad I was sold some variable annuities about 15 years ago. The interest rate environment was totally different, which allowed the issuers (Met Life and AXA/Equitable) to guarantee a 6% distribution against a fictional benefit base (as opposed to the much lower actual cash value) until I run that cash value down close to $0, at which point I will annuitize the contracts which will increase my annual distribution. Bottom line: I'm currently getting a little over $60K per year to supplement my SS payment (which can be viewed as another annuity with the additional benefit of being inflation adjusted). I've parted ways with the guy who sold me these products but am really happy he did. The income they provide feels like an old time pension and unless the companies go bankrupt should be there as long as either my wife or I are alive. I believe there's an exception to every rule even Jack Bogle's.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by GoldenFinch »

1rl9DS5gl2 wrote: Sat Aug 29, 2020 3:08 pm I recognize that what I'm about to say is heresy on this site, but as a 73 year old who's been investing for about 40 years I'm really glad I was sold some variable annuities about 15 years ago. The interest rate environment was totally different, which allowed the issuers (Met Life and AXA/Equitable) to guarantee a 6% distribution against a fictional benefit base (as opposed to the much lower actual cash value) until I run that cash value down close to $0, at which point I will annuitize the contracts which will increase my annual distribution. Bottom line: I'm currently getting a little over $60K per year to supplement my SS payment (which can be viewed as another annuity with the additional benefit of being inflation adjusted). I've parted ways with the guy who sold me these products but am really happy he did. The income they provide feels like an old time pension and unless the companies go bankrupt should be there as long as either my wife or I are alive. I believe there's an exception to every rule even Jack Bogle's.
Ultimately, if you have what you need to live on for the rest of your life, it’s all good.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by chw »

Taylor, thank you for your diligence in continuing to promote the many facets of Jack’s advice and wisdom that he accumulated over his life, and more of the same from you. Most here would be well served to follow it.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by 1rl9DS5gl2 »

GoldenFinch wrote: Sat Aug 29, 2020 3:12 pm
1rl9DS5gl2 wrote: Sat Aug 29, 2020 3:08 pm I recognize that what I'm about to say is heresy on this site, but as a 73 year old who's been investing for about 40 years I'm really glad I was sold some variable annuities about 15 years ago. The interest rate environment was totally different, which allowed the issuers (Met Life and AXA/Equitable) to guarantee a 6% distribution against a fictional benefit base (as opposed to the much lower actual cash value) until I run that cash value down close to $0, at which point I will annuitize the contracts which will increase my annual distribution. Bottom line: I'm currently getting a little over $60K per year to supplement my SS payment (which can be viewed as another annuity with the additional benefit of being inflation adjusted). I've parted ways with the guy who sold me these products but am really happy he did. The income they provide feels like an old time pension and unless the companies go bankrupt should be there as long as either my wife or I are alive. I believe there's an exception to every rule even Jack Bogle's.
Ultimately, if you have what you need to live on for the rest of your life, it’s all good.
I do and it gives me tremendous peace of mind. It also allows me to be aggressive with the other assets in my portfolio which I intend to leave to my kids.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Big Dog »

1rl9DS5gl2 wrote: Sat Aug 29, 2020 3:08 pm I recognize that what I'm about to say is heresy on this site, but as a 73 year old who's been investing for about 40 years I'm really glad I was sold some variable annuities about 15 years ago. The interest rate environment was totally different, which allowed the issuers (Met Life and AXA/Equitable) to guarantee a 6% distribution against a fictional benefit base (as opposed to the much lower actual cash value) until I run that cash value down close to $0, at which point I will annuitize the contracts which will increase my annual distribution. Bottom line: I'm currently getting a little over $60K per year to supplement my SS payment (which can be viewed as another annuity with the additional benefit of being inflation adjusted). I've parted ways with the guy who sold me these products but am really happy he did. The income they provide feels like an old time pension and unless the companies go bankrupt should be there as long as either my wife or I are alive. I believe there's an exception to every rule even Jack Bogle's.
Not heresy to buy low and sell high, which is essentially what you did: purchased a product (annuity) and watch its value increase as interest rates dropped. But, to be fair to this 20:20 hindsight, its only right to go back and calculate what that lump sum ~15 year ago (to the insurance company) might be worth today. :greedy
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Re: "Jack Bogle's Simple Advice for Investors"

Post by 1rl9DS5gl2 »

Big Dog wrote: Sat Aug 29, 2020 3:48 pm
1rl9DS5gl2 wrote: Sat Aug 29, 2020 3:08 pm I recognize that what I'm about to say is heresy on this site, but as a 73 year old who's been investing for about 40 years I'm really glad I was sold some variable annuities about 15 years ago. The interest rate environment was totally different, which allowed the issuers (Met Life and AXA/Equitable) to guarantee a 6% distribution against a fictional benefit base (as opposed to the much lower actual cash value) until I run that cash value down close to $0, at which point I will annuitize the contracts which will increase my annual distribution. Bottom line: I'm currently getting a little over $60K per year to supplement my SS payment (which can be viewed as another annuity with the additional benefit of being inflation adjusted). I've parted ways with the guy who sold me these products but am really happy he did. The income they provide feels like an old time pension and unless the companies go bankrupt should be there as long as either my wife or I are alive. I believe there's an exception to every rule even Jack Bogle's.
Not heresy to buy low and sell high, which is essentially what you did: purchased a product (annuity) and watch its value increase as interest rates dropped. But, to be fair to this 20:20 hindsight, its only right to go back and calculate what that lump sum ~15 year ago (to the insurance company) might be worth today. :greedy
Here's the thing. I'm not a particularly successful investestor. For much of that 40 years I joked that I could make a good living as a contrarian indicator: you give me 5% of your money, I invest it and you do the exact opposite with the other 95%. It would have been a valuable service. Not so much lately but, depending on how long my wife and I live, those annuities could very well prove to be the best investments I ever made.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Robot Monster »

Alchemist wrote: Sat Aug 29, 2020 1:48 pm
AlwaysLearningMore wrote: Sat Aug 29, 2020 1:25 pm Looks like far, far more sympathy is due those who've placed a substantial stake in international.

:beer
Even more striking is that VTIAX is basically where it was at the end of October 2007, 13 years ago. Or that since inception it is still behind U.S. Total Bond market as measured by VTBLX. A 60/40 TSM/TBM portfolio had higher returns than a 60/40 VTSAX/VTIAX portfolio at a fraction of the volatility and risk for the 24 years we have live fund data.

https://www.portfoliovisualizer.com/bac ... tion3_1=40
BTW, it might interest you to know that an equal weight Australia/Canada/Switzerland stock portfolio from '97-2020 performed a lot better than the regular international index, and even had vaguely the same resulting performance as a US 60/40 portfolio (with obviously a lot more volatility.)
https://www.portfoliovisualizer.com/bac ... tion6_2=40
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Alchemist »

Robot Monster wrote: Sat Aug 29, 2020 2:10 pm

2007 was indeed an unfortunate time to be going full throttle into international. If I'm not mistaken, at the time, it was handily outperforming the US market? Let's see...
The point is that just about any time in the last 24 years VTIAX has existed has been a poor time for a U.S. investor to add it to their portfolio. That Four year run up from 2003-2007 just led to a deeper crash in 2008.

There seems to be an odd disconnect between results and recommendations. International stocks have neither added return nor lessened volatility for U.S. investors since Vanguard debut'd the first international index fund. Yet the recommendations from Vanguard and other mainstream sources have been to add increasingly large amounts of international stocks to a U.S. investors portfolio. How many decades does this have to be a bad idea before this recommendation is revised?

Bogle was right 30 years ago. Nothing about his recommendation (poor growth prospects in developed international markets, extreme risk in emerging) has changed.
Robot Monster wrote: Sat Aug 29, 2020 6:14 pm BTW, it might interest you to know that an equal weight Australia/Canada/Switzerland stock portfolio from '97-2020 performed a lot better than the regular international index, and even had vaguely the same resulting performance as a US 60/40 portfolio (with obviously a lot more volatility.)
https://www.portfoliovisualizer.com/bac ... tion6_2=40
Um no, I do not find a 100% equity portfolio with more than double the risk (both std deviation and max drawdown) of a 60/40 TSM/TBM portfolio to be interesting.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Robot Monster »

Alchemist wrote: Mon Aug 31, 2020 4:46 am
Robot Monster wrote: Sat Aug 29, 2020 2:10 pm 2007 was indeed an unfortunate time to be going full throttle into international. If I'm not mistaken, at the time, it was handily outperforming the US market? Let's see...
The point is that just about any time in the last 24 years VTIAX has existed has been a poor time for a U.S. investor to add it to their portfolio.
The comment I was reacting to was, "Even more striking is that VTIAX is basically where it was at the end of October 2007, 13 years ago." Merely pointing out the significance of the year 2007, as it pertains to international stocks. I understand the larger argument relating to its (basically) 30 year underperformance, and it's counterargument (such as looking at a longer historical time period.) The reason why I showed you the Australia/Canada/Switzerland portfolio is that that portfolio significantly outperformed the market-cap international index.

From Jan 1997 - Jun 2020 $10,000 has turned into:
U.S. -- $63,692
Switzerland -- $54,173
Australia -- $45,627
Canada -- $44,040
Japan -- $14,432

I find it not only interesting, but outright amusing that the country the market-cap international index leans into is Japan--its the top holding! If the winning formula is to pick that which has performed best over the relatively recent past, seems perhaps unfortunate that the passive index has chained itself to such an apparently losing strategy. Surely actively managed international funds would correct this, right? A no-brainer, right? Yet, the actively managed Vanguard International Core Stock Fund, just like its passive cousin, has Japan as its top country-allocation! (Even Vanguard International Growth chooses Japan as its third top country-allocation.)

Now let us look at the net assets for single-country-funds for those countries. Surely people are taking the opportunity with these to pounce on the best performing international countries, then piling mindlessly into Japan, an I right? Shockingly:
iShares MSCI Australia ETF -- $1,257,461,425
iShares MSCI Canada ETF -- $2,280,373,618
iShares MSCI Switzerland ETF -- $1,718,614,287
iShares MSCI Japan ETF -- $9,899,103,170

So strange.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Alchemist »

Robot Monster wrote: Mon Aug 31, 2020 8:55 am So strange.
I am having trouble following your argument. Is your point about recency bias?

I can see that as being relevant for some of the reasons some people may be drastically changing their portfolio's today. But most of us with 100% U.S. TSM equity portfolio's have been at this allocation for quite some time. For me it has been my entire investment career started more than a decade ago during the GFC. Back then a recency bias led portfolio would have left me with some slice/dice complex monstrosity of SCV, emerging markets, and commodities. Thankfully I chose a simpler path.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Robot Monster »

Alchemist wrote: Tue Sep 01, 2020 5:23 am
Robot Monster wrote: Mon Aug 31, 2020 8:55 am So strange.
I am having trouble following your argument. Is your point about recency bias?

I can see that as being relevant for some of the reasons some people may be drastically changing their portfolio's today. But most of us with 100% U.S. TSM equity portfolio's have been at this allocation for quite some time. For me it has been my entire investment career started more than a decade ago during the GFC. Back then a recency bias led portfolio would have left me with some slice/dice complex monstrosity of SCV, emerging markets, and commodities. Thankfully I chose a simpler path.
While it may be true you did not, a decade ago, employ a recency bias formula for choosing investments (which is commendable), the argument you're using now certainly has, let's say, a recency bias flavor. In your words:

"The point is that just about any time in the last 24 years VTIAX has existed has been a poor time for a U.S. investor to add it to their portfolio."

My interpretation:
- don't invest in international, because it's underperformed for so long

and,
- invest what has performed best in that period (which is how I landed on Australia/Canada/Switzerland for an international portfolio)

If this is not what you meant to imply, or if I misconstrued your words, then I apologize. However, many people have said something like this. It's what I think of as the "performance argument"; that you were saying something that approximated it made me lump you together with these folks.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Whakamole »

Big Dog wrote: Sat Aug 29, 2020 2:38 pm
abuss368 wrote: Fri Aug 28, 2020 10:58 pm Thanks Taylor. Interesting Mr. Bogle recommended 20% of portfolio to international and not 20% of stocks.
Umm, that's not what he said, which was to limit yourself to no more than 20% international of portfolio. In other words, if you choose to do international, limit it to 20% of total. (He did not recommend that everyone go (20%) international.)
That's not what he said. Quote: "I would limit yourself to 20 percent of your portfolio in foreign stocks. I don’t do it myself."

Which means he didn't limit himself to 20% in foreign stocks. Perhaps he owned more than 20%.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Munir »

abuss368 wrote: Sat Aug 29, 2020 7:55 am
RJC wrote: Sat Aug 29, 2020 7:26 am I try to follow Jack's advice. Simplicity is where it's at.
Exactly. I have all of Mr. Bogle’s books on my shelf. I refer to them as questions arise.
It's good to understand what one is doing and getting a sense of control over investments by keeping them simple. But are there any studies or data that support the contention that simplicity in investing is a winner? Simplicity is attractive, easy to understand & follow, and can demonstrate the lack of need for a financial adviser, but I don't remember any data that shows it provides a better performance than a more complicated portfolio with multiple mutual funds.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by hcs77135 »

Taylor,

Thank you for posting these simple/profound points.

Can you say what Jack Bogle meant when he said, "when you allocate your assets you have to think about how much you get from social security"? Did he believe that one should impute an asset value to the SS income stream and consider it as part of one's fixed income allocation, as opposed to simply viewing SS as income? And if he viewed SS as income, was he saying that SS should/could have an impact on AA in terms of how much risk one takes?

Thank you.
Last edited by hcs77135 on Tue Sep 01, 2020 12:57 pm, edited 1 time in total.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by abuss368 »

Munir wrote: Tue Sep 01, 2020 10:39 am
abuss368 wrote: Sat Aug 29, 2020 7:55 am
RJC wrote: Sat Aug 29, 2020 7:26 am I try to follow Jack's advice. Simplicity is where it's at.
Exactly. I have all of Mr. Bogle’s books on my shelf. I refer to them as questions arise.
It's good to understand what one is doing and getting a sense of control over investments by keeping them simple. But are there any studies or data that support the contention that simplicity in investing is a winner? Simplicity is attractive, easy to understand & follow, and can demonstrate the lack of need for a financial adviser, but I don't remember any data that shows it provides a better performance than a more complicated portfolio with multiple mutual funds.
I would expect that owning the market at the lowest cost possible with total index funds is a simple and winning strategy.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Taylor Larimore »

hcs77135 wrote: Tue Sep 01, 2020 12:29 pm Taylor,

Thank you for posting these simple/profound points.

Can you say what Jack Bogle meant when he said, "when you allocate your assets you have to think about how much you get from social security"? Did he believe that one should impute an asset value to the SS income stream and consider it as part of one's fixed income allocation, as opposed to simply viewing SS as income? What are others' views on this question?

Thank you.
llhcs7135:

Mr. Bogle answer to your question:
“Social Security is a huge, fixed-income investment, worth somewhere between $300,000 and $400,000” in present cash value. Lumping this value in with bonds allows a retiree, who at 65 can expect to live another 20 years, to sleep well at night with a higher proportion in stocks."
Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Munir »

Deleted- duplicate.
Last edited by Munir on Tue Sep 01, 2020 1:01 pm, edited 1 time in total.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Munir »

abuss368 wrote: Tue Sep 01, 2020 12:39 pm
Munir wrote: Tue Sep 01, 2020 10:39 am
abuss368 wrote: Sat Aug 29, 2020 7:55 am
RJC wrote: Sat Aug 29, 2020 7:26 am I try to follow Jack's advice. Simplicity is where it's at.
Exactly. I have all of Mr. Bogle’s books on my shelf. I refer to them as questions arise.
It's good to understand what one is doing and getting a sense of control over investments by keeping them simple. But are there any studies or data that support the contention that simplicity in investing is a winner? Simplicity is attractive, easy to understand & follow, and can demonstrate the lack of need for a financial adviser, but I don't remember any data that shows it provides a better performance than a more complicated portfolio with multiple mutual funds.
I would expect that owning the market at the lowest cost possible with total index funds is a simple and winning strategy.
My question is if there are any data or studies that objectively demonstrate that simplicity improves performance.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Robot Monster »

Munir wrote: Tue Sep 01, 2020 12:59 pm
abuss368 wrote: Tue Sep 01, 2020 12:39 pm
Munir wrote: Tue Sep 01, 2020 10:39 am
abuss368 wrote: Sat Aug 29, 2020 7:55 am
RJC wrote: Sat Aug 29, 2020 7:26 am I try to follow Jack's advice. Simplicity is where it's at.
Exactly. I have all of Mr. Bogle’s books on my shelf. I refer to them as questions arise.
It's good to understand what one is doing and getting a sense of control over investments by keeping them simple. But are there any studies or data that support the contention that simplicity in investing is a winner? Simplicity is attractive, easy to understand & follow, and can demonstrate the lack of need for a financial adviser, but I don't remember any data that shows it provides a better performance than a more complicated portfolio with multiple mutual funds.
I would expect that owning the market at the lowest cost possible with total index funds is a simple and winning strategy.
My question is if there are any data or studies that objectively demonstrate that simplicity improves performance.
No, but we do have a quote from Bruce Lee! "One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity." Chuck Norris's advice is even simpler--just a roundhouse kick to the face.
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Re: "Jack Bogle's Simple Advice for Investors"

Post by Taylor Larimore »

Munir:

If you will use the link at the bottom of this and my opening post I think you will find several studies plus lots of reasons to keep investing simple.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Never underrate either the majesty of simplicity or its proven effectiveness as a long-term strategy for productive investing."
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: "Jack Bogle's Simple Advice for Investors"

Post by abuss368 »

Munir wrote: Tue Sep 01, 2020 12:59 pm
abuss368 wrote: Tue Sep 01, 2020 12:39 pm
Munir wrote: Tue Sep 01, 2020 10:39 am
abuss368 wrote: Sat Aug 29, 2020 7:55 am
RJC wrote: Sat Aug 29, 2020 7:26 am I try to follow Jack's advice. Simplicity is where it's at.
Exactly. I have all of Mr. Bogle’s books on my shelf. I refer to them as questions arise.
It's good to understand what one is doing and getting a sense of control over investments by keeping them simple. But are there any studies or data that support the contention that simplicity in investing is a winner? Simplicity is attractive, easy to understand & follow, and can demonstrate the lack of need for a financial adviser, but I don't remember any data that shows it provides a better performance than a more complicated portfolio with multiple mutual funds.
I would expect that owning the market at the lowest cost possible with total index funds is a simple and winning strategy.
My question is if there are any data or studies that objectively demonstrate that simplicity improves performance.
Not sure. I know of one which Taylor has provided from the academic world I believe - Robert N (may have that wrong as it has been a while). Not sure on anything else but if you search and find something that could benefit the forum, please share!
John C. Bogle: “Simplicity is the master key to financial success."
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