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How do Bogleheads cope with not beating the market?

Posted: Mon Oct 12, 2020 11:12 pm
by Register44
:arrow:

Re: How do Bogleheads cope with not beating the market?

Posted: Mon Oct 12, 2020 11:25 pm
by Bungo
I know that I won't underperform the market, which is more than most active investors can say long-term. Good enough for me.

Re: How do Bogleheads cope with not beating the market?

Posted: Mon Oct 12, 2020 11:43 pm
by Brianmcg321
I feel about the same as not being able to beat Michael Jordan in basketball, or Tiger Woods in golf. Even if I practiced daily for the next ten years, they would still beat me. Badly. The market is unkind and can destroy you financially.

Re: How do Bogleheads cope with not beating the market?

Posted: Mon Oct 12, 2020 11:47 pm
by 000
I have beat the market this year with my active plays, but am nevertheless going all passive because it's not worth the work.

That is, until a juicy opportunity catches my eye :twisted:

To your question, consider how much you might reasonably outperform via your optimizations versus the time involved.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 12:14 am
by reln
Register44 wrote: Mon Oct 12, 2020 11:12 pm I realize I am finally becoming an investor instead of a speculator. I felt really good and less stressed when I finally completed a buy and hold asset allocation portoflio. But then I got a little bored and thought I have all this free time to fill.

Shouldn't I apply it to optimizing / tweaking the portfolio? Well I did and I made it worse. So I swore that off and went back to the set allocations.

Then a few months go by and I tweak it again, and I am already regretting it. I feel so much less stressed and happy when I have the static asset allocation set and forget. But then there is the nagging feeling that I am being lazy, need to work harder, and that I am missing off on 20% per year returns that I could have if I just "put in the work." Yet enough research tells me I am far better off accepting the market return.

So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
I cope with it by setting my expectation to equal the market.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 12:21 am
by clown
I suggest reframing how you see things.
  • By going passive with broad based low-cost index funds, or ETFs if you prefer, you get everything the market has to offer.
  • Your returns are not "just average" because most investors get less than the market return.
  • Focus on the really long run, not just a year or three or five. Over the long run, the chances of beating the market are very very low. Plus it is energy intensive.
  • Although it is possible to see what advisor / who / what strategy beat the market in the past, nobody can pick next year's winner with any consistency.
  • When you see ads for gurus that "predicted the great recession" or "predicted the bull market," know that they only emphasize their one lucky correct pick but not their 20 other picks that did not work out.
  • Don't focus on "beating" the market. No investor in history has successfully done that over the long term.
  • Read MANY legit investing books by recognized academic authorities and investment practicioners, not flash-in-the-pan authors.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 12:52 am
by rascott
Attempting to beat the market is akin to attempting to beat a casino. You may have periods where you come out ahead. Possibly even way ahead .... but you'd obliviously should know that the longer you play the most certain you are to come out less than even.

Coming out "even" over a lifetime means you'll get the market returns.... which is what index funds offer you, minus a tiny expense.

If you played in a casino game everyday for your entire life and came out even that'd be a major miracle. Once you accept and understand the math, and the probabilities stacked against you. Taking the guaranteed market return looks like a no- brainer.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 1:09 am
by UKFred
The easiest way to cope with this is to establish a small ‘play’ fund - perhaps 5% or 10% of your overall portfolio and actively tweak this to your heart’s satisfaction. Then you can compare the performance of this part of your portfolio with the set market allocation portfolio. If you beat the market, you can congratulate yourself on being the next Warren Buffet and if you don’t, then no harm done.

Any portfolio needs discipline to do well and you can only be disciplined if it chimes with your personality. If you are a ‘fiddler’, don’t try to fight it. Work with it.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 1:11 am
by TheDDC
Register44 wrote: Mon Oct 12, 2020 11:12 pm I realize I am finally becoming an investor instead of a speculator. I felt really good and less stressed when I finally completed a buy and hold asset allocation portoflio. But then I got a little bored and thought I have all this free time to fill.

Shouldn't I apply it to optimizing / tweaking the portfolio? Well I did and I made it worse. So I swore that off and went back to the set allocations.

Then a few months go by and I tweak it again, and I am already regretting it. I feel so much less stressed and happy when I have the static asset allocation set and forget. But then there is the nagging feeling that I am being lazy, need to work harder, and that I am missing off on 20% per year returns that I could have if I just "put in the work." Yet enough research tells me I am far better off accepting the market return.

So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
First define "market". Are you referring to the S&P? Just invest in VTSAX and you will beat it. You invest in a mix of small and mid-cap funds as well as the S&P itself. If you want to beat the market even more, overweight in something hot like VIGAX/VUG. I invest in both VTSAX and VIGAX and I have beat the S&P. It's not hard to do even with passive funds!

-TheDDC

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 1:16 am
by JBTX
Register44 wrote: Mon Oct 12, 2020 11:12 pm I realize I am finally becoming an investor instead of a speculator. I felt really good and less stressed when I finally completed a buy and hold asset allocation portoflio. But then I got a little bored and thought I have all this free time to fill.

Shouldn't I apply it to optimizing / tweaking the portfolio? Well I did and I made it worse. So I swore that off and went back to the set allocations.

Then a few months go by and I tweak it again, and I am already regretting it. I feel so much less stressed and happy when I have the static asset allocation set and forget. But then there is the nagging feeling that I am being lazy, need to work harder, and that I am missing off on 20% per year returns that I could have if I just "put in the work." Yet enough research tells me I am far better off accepting the market return.

So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
You just have to come to believe the facts and the logic.

fact: there is substantial evidence that a majority of fund managers lag the major indices. This has been shown again and again. The longer you go, the more likely the index wins. If most fund managers who do this for a living can't beat the index, why do you think you can?

Logic: an index just follows the average performance of all active investors. By definition. But without most of the fees. So by definition and math, the index is going to beat most active participants long term, due to absence of fees.

Logic: you have guys on Wall Street with advanced math and physics degrees creating algorithms to try to get even slight edges and inefficiencies. They do rapid electronic trading, and in some cases are set up right next to exchange servers, and even have shorter telecommunication paths allowing them to anticipate large trades. You are competing against them. Why do you think you can beat them?

Fact: Alan Greenspan, fed chairman of the late 90s, was widely regarded as one of the smartest and most informed persons alive in terms of macroeconomic data. Late 90s he claimed "irrational exuberance". But after that the markets more than doubled before they crashed in 2000. Even after they crashed, they were higher when he declared irrational exuberance.

Fact: Investor Jeremy Grantham has studied and quantified financial bubbles throuhgout history. He was also able to call the bubbles in Japan, US in 2000 and US in 2007. Problem is, he called them so far in advance (like Greenspan) he missed so.much upside he has lagged the major indices.

Now given all of that, what makes you think you can do better?

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 1:47 am
by mega317
You need to find something else to fill your time.
Register44 wrote: Mon Oct 12, 2020 11:12 pm But then I got a little bored and thought I have all this free time to fill.

Shouldn't I apply it to optimizing / tweaking the portfolio?
No. You should apply it to reading, or exercising, or spending time with/talking to family, or improving your job skills, or learning a new skill, or sleeping, or traveling, or volunteering, or meditating, or playing video games, or creating something, or posting more than your paltry 0.3 times a day on Bogleheads.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 2:23 am
by AlohaJoe
How do you cope with not being the most handsome man? Don't you feel lazy knowing you could put in extra work at the gym and in skincare routines to be more handsome?

How do you cope with not being smarter? Don't you feel lazy knowing you could put in extra work reading and researching things to be smarter?

How do you cope with not being a better employee at your company? Don't you feel lazy knowing you could put in extra effort and hours to beome a better employee?

How do you cope with not being a better parent? Don't you feel lazy knowing you could put in extra time on mindfulness training, conflict resolution training, and so on to become a better parent?

Why do you see investing as different from all the other things where you've stopped making an extra effort in life?

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 2:45 am
by shess
Register44 wrote: Mon Oct 12, 2020 11:12 pm So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
In my work, my goal was to find work which would pay me well enough, that would be interesting to work on, to do a good job at that work, and to work with people I enjoyed working with. My goal was NOT to "beat" anyone, and when I noticed myself gravitating towards such comparisons, I stepped back to address the issues causing that mindset, because I did better work when I was focussing on my own work, and not on other people's work.

When I go for bike rides, my goal is to do interesting routes, to lightly push my capabilities, and to enjoy myself. I'm not genetically gifted, so when I find myself making excessive comparisons between my performance and that of other people I ride with, I make sure to spend more time doing solo rides, and/or making sure I don't only ride with younger and fitter people. Because I ride my bike for fitness and enjoyment, not for competition.

Likewise, the market is a tool I use to realize certain of my financial goals. It doesn't matter if I beat it or not. My biggest concern is really to avoid errors.

(Also, I'll be honest: For a few decades, I was committed to using all my analytical skills to beat the market. Then, one day, I realized that in 20 years, I had no conclusive proof that I'd accomplished anything over what the market had done. So I shifted to a 3-fund portfolio and set aside all that stress, and in the past 10 years I have no conclusive proof that I've done worse than I was doing before.)

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 2:56 am
by JustinR
You deal with it by understanding that it's impossible, other than luck.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 4:11 am
by dogagility
Register44 wrote: Mon Oct 12, 2020 11:12 pm So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
Easy, I know that continually tweaking my investments reduces the size of my portfolio. When your only goal is to increase your net worth and you realize that an activity costs you money, it's not difficult to stop the activity.

I suspect you either 1) enjoy tinkering with investments to pass the time or 2) have not yet internalized that the practice is costing you money.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 4:12 am
by GoldenGoose
Easy for you guys to say to ignore the market and stay the course. You follow the market and see the rally. You look at the individual stocks and see some of them gaining 10% 20%. You read BH forum and see others up YTD 30% 40%. You look at your passive index funds and you see they are up 1% or 2%. No wonder people have anxiety. If you are a firm believer in passive investing, just plow your money in an index fund, turn off the tv, stop reading and posting in the BH forums and resist the urge of checking your returns. Can you do all that?

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:00 am
by Schlabba
GoldenGoose wrote: Tue Oct 13, 2020 4:12 am Easy for you guys to say to ignore the market and stay the course. You follow the market and see the rally. You look at the individual stocks and see some of them gaining 10% 20%. You read BH forum and see others up YTD 30% 40%. You look at your passive index funds and you see they are up 1% or 2%. No wonder people have anxiety. If you are a firm believer in passive investing, just plow your money in an index fund, turn off the tv, stop reading and posting in the BH forums and resist the urge of checking your returns. Can you do all that?
Register44 wrote: Mon Oct 12, 2020 11:12 pm I realize I am finally becoming an investor instead of a speculator. I felt really good and less stressed when I finally completed a buy and hold asset allocation portoflio. But then I got a little bored and thought I have all this free time to fill.

Shouldn't I apply it to optimizing / tweaking the portfolio? Well I did and I made it worse. So I swore that off and went back to the set allocations.

Then a few months go by and I tweak it again, and I am already regretting it. I feel so much less stressed and happy when I have the static asset allocation set and forget. But then there is the nagging feeling that I am being lazy, need to work harder, and that I am missing off on 20% per year returns that I could have if I just "put in the work." Yet enough research tells me I am far better off accepting the market return.

So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
It is hard. I have a friend who started investing around the same time as I and he is way ahead of me. He was putting his money in the NASDAQ and I put it in a world index.

I can endlessly repeat to myself that in the long term the NASDAQ cannot outperform forever, I am making the right choice, its not about the short term but about the long term, etc. but at the end of the day it is just not easy to ignore the actual results.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:14 am
by JustinR
GoldenGoose wrote: Tue Oct 13, 2020 4:12 am Easy for you guys to say to ignore the market and stay the course. You follow the market and see the rally. You look at the individual stocks and see some of them gaining 10% 20%. You read BH forum and see others up YTD 30% 40%. You look at your passive index funds and you see they are up 1% or 2%. No wonder people have anxiety. If you are a firm believer in passive investing, just plow your money in an index fund, turn off the tv, stop reading and posting in the BH forums and resist the urge of checking your returns. Can you do all that?
Yes, that's actually the recommended Bogleheads behavior.

The most successful investors will be those who never look at their portfolio.

Investing is counter-intuitive in this way, which is why so many people fail at it.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:23 am
by goblue100
Schlabba wrote: Tue Oct 13, 2020 5:00 am
It is hard. I have a friend who started investing around the same time as I and he is way ahead of me. He was putting his money in the NASDAQ and I put it in a world index.
People are very eager to share when they did something right. They won't tell you when they zigged when they should have zagged. So you think they are always doing 20% better than you, and I can promise you they are not. If they were, they would all be in mansions and on their yachts.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:24 am
by GoldenGoose
JustinR wrote: Tue Oct 13, 2020 5:14 am
GoldenGoose wrote: Tue Oct 13, 2020 4:12 am Easy for you guys to say to ignore the market and stay the course. You follow the market and see the rally. You look at the individual stocks and see some of them gaining 10% 20%. You read BH forum and see others up YTD 30% 40%. You look at your passive index funds and you see they are up 1% or 2%. No wonder people have anxiety. If you are a firm believer in passive investing, just plow your money in an index fund, turn off the tv, stop reading and posting in the BH forums and resist the urge of checking your returns. Can you do all that?
Yes, that's actually the recommended Bogleheads behavior.

The most successful investors will be those who never look at their portfolio.

Investing is counter-intuitive in this way, which is why so many people fail at it.
If so then this board should be as dead as a door knob.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:25 am
by GoldenGoose
goblue100 wrote: Tue Oct 13, 2020 5:23 am
Schlabba wrote: Tue Oct 13, 2020 5:00 am
It is hard. I have a friend who started investing around the same time as I and he is way ahead of me. He was putting his money in the NASDAQ and I put it in a world index.
People are very eager to share when they did something right. They won't tell you when they zigged when they should have zagged. So you think they are always doing 20% better than you, and I can promise you they are not. If they were, they would all be in mansions and on their yachts.
How do you know that they are not?

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:29 am
by goblue100
GoldenGoose wrote: Tue Oct 13, 2020 5:25 am

How do you know that they are not?
Because they still drive the same old car and haven't moved to their mansion. You may say it is discipline, but if they were compounding 20% more a year than the market returns they would have SO much money.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:30 am
by GoldenGoose
Schlabba wrote: Tue Oct 13, 2020 5:00 am
GoldenGoose wrote: Tue Oct 13, 2020 4:12 am Easy for you guys to say to ignore the market and stay the course. You follow the market and see the rally. You look at the individual stocks and see some of them gaining 10% 20%. You read BH forum and see others up YTD 30% 40%. You look at your passive index funds and you see they are up 1% or 2%. No wonder people have anxiety. If you are a firm believer in passive investing, just plow your money in an index fund, turn off the tv, stop reading and posting in the BH forums and resist the urge of checking your returns. Can you do all that?
Register44 wrote: Mon Oct 12, 2020 11:12 pm I realize I am finally becoming an investor instead of a speculator. I felt really good and less stressed when I finally completed a buy and hold asset allocation portoflio. But then I got a little bored and thought I have all this free time to fill.

Shouldn't I apply it to optimizing / tweaking the portfolio? Well I did and I made it worse. So I swore that off and went back to the set allocations.

Then a few months go by and I tweak it again, and I am already regretting it. I feel so much less stressed and happy when I have the static asset allocation set and forget. But then there is the nagging feeling that I am being lazy, need to work harder, and that I am missing off on 20% per year returns that I could have if I just "put in the work." Yet enough research tells me I am far better off accepting the market return.

So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
It is hard. I have a friend who started investing around the same time as I and he is way ahead of me. He was putting his money in the NASDAQ and I put it in a world index.

I can endlessly repeat to myself that in the long term the NASDAQ cannot outperform forever, I am making the right choice, its not about the short term but about the long term, etc. but at the end of the day it is just not easy to ignore the actual results.
My understanding is that the future is technology so nasdaq will outperform. Yes the other sectors will perform too but they wont be as great. There will be some bumps in the road but I do believe tech will outperform in the long run. So buy and hold.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:33 am
by GoldenGoose
goblue100 wrote: Tue Oct 13, 2020 5:29 am
GoldenGoose wrote: Tue Oct 13, 2020 5:25 am

How do you know that they are not?
Because they still drive the same old car and haven't moved to their mansion. You may say it is discipline, but if they were compounding 20% more a year than the market returns they would have SO much money.
You are assuming again. They didnt say compounding 20%. And who are "they" that drive "the same old car"? Do you expect them to drive lambos or Ferraris? Or own a yatch? Couple planes? Vacation houses?

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:37 am
by goblue100
GoldenGoose wrote: Tue Oct 13, 2020 5:33 am
goblue100 wrote: Tue Oct 13, 2020 5:29 am
GoldenGoose wrote: Tue Oct 13, 2020 5:25 am

How do you know that they are not?
Because they still drive the same old car and haven't moved to their mansion. You may say it is discipline, but if they were compounding 20% more a year than the market returns they would have SO much money.
You are assuming again. They didnt say compounding 20%. And who are "they" that drive "the same old car"? Do you expect them to drive lambos or Ferraris? Or own a yatch? Couple planes? Vacation houses?
The question asked in the op was "How do Bogleheads cope with not beating the market". I know human nature is that people are loud mouthed when they do something right, and they won't say when they messed it up. If you want to believe everyone is crushing the market, have at it. I'll believe what I want to believe, and I'll cope with not beating the market.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:46 am
by GoldenGoose
goblue100 wrote: Tue Oct 13, 2020 5:37 am
GoldenGoose wrote: Tue Oct 13, 2020 5:33 am
goblue100 wrote: Tue Oct 13, 2020 5:29 am
GoldenGoose wrote: Tue Oct 13, 2020 5:25 am

How do you know that they are not?
Because they still drive the same old car and haven't moved to their mansion. You may say it is discipline, but if they were compounding 20% more a year than the market returns they would have SO much money.
You are assuming again. They didnt say compounding 20%. And who are "they" that drive "the same old car"? Do you expect them to drive lambos or Ferraris? Or own a yatch? Couple planes? Vacation houses?
The question asked in the op was "How do Bogleheads cope with not beating the market". I know human nature is that people are loud mouthed when they do something right, and they won't say when they messed it up. If you want to believe everyone is crushing the market, have at it. I'll believe what I want to believe, and I'll cope with not beating the market.
I do believe people who reported getting 30% 40% gain but that is NOT everyone, like you or OP for example. Coping with this issue could be done productively or destructively.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:48 am
by Tingting1013
goblue100 wrote: Tue Oct 13, 2020 5:37 am
GoldenGoose wrote: Tue Oct 13, 2020 5:33 am
goblue100 wrote: Tue Oct 13, 2020 5:29 am
GoldenGoose wrote: Tue Oct 13, 2020 5:25 am

How do you know that they are not?
Because they still drive the same old car and haven't moved to their mansion. You may say it is discipline, but if they were compounding 20% more a year than the market returns they would have SO much money.
You are assuming again. They didnt say compounding 20%. And who are "they" that drive "the same old car"? Do you expect them to drive lambos or Ferraris? Or own a yatch? Couple planes? Vacation houses?
The question asked in the op was "How do Bogleheads cope with not beating the market". I know human nature is that people are loud mouthed when they do something right, and they won't say when they messed it up. If you want to believe everyone is crushing the market, have at it. I'll believe what I want to believe, and I'll cope with not beating the market.
This reminds of the thread where people asked how to deal with others who make a lot more money than they do.

The answer? Pretend they’re all up their eyeballs in debt. :oops:

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 5:56 am
by 3funder
My goal is to invest as much money as I can so that my retirement savings will "look like something" one day. Beating the market simply never entered into my thought process. I'm not trying to sound more enlightened than anyone else; I just don't factor superiority of returns relative to the market into my decision making. To me, it is a function of having an appropriate asset allocation for my age/time horizon and risk tolerance, which, at age 36, is approximately 80/20.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 7:37 am
by TheoLeo
By knowing that I don´t compete with "the market" but with other individual retail investors that have the same goal as I have. I don´t really know how well they are doing, but by following the boglehead investment philosophy, I know that I can avoid major behavioral mistakes and that will make the biggest difference over a lifetime.

I think long term investment success mainly boils down to: 1. Time in the market 2. Avoiding major mistakes (selling at the bottom, missing out on big run ups by bad market timing, being not diversified enough, paying high fees etc.)

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 7:50 am
by Dave55
No need to cope at all. I could care less about beating the market, the market returns work for me.


Dave

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 7:53 am
by jebmke
The only sound in my head is from ringing in my ears.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 7:55 am
by 260chrisb
You know what; I honestly don't care, will never likely care, and really have never given it a lot of thought. This mind set of having to always be the best, have the best, beat the market, blah, blah, blah. Now more than ever in my life after over 25 years of investing and saving I see what an investment portfolio can do in good times and bad times and have for many years believed that a consistent and disciplined approach using solid investment instruments from established companies will generate acceptable returns. This approach has worked, will very likely continue to work, and I'm not planning to change it anytime soon. I couldn't care less about beating anyone else or the market and never will. Nor in my opinion should you!

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:06 am
by balbrec2
JustinR wrote: Tue Oct 13, 2020 2:56 am You deal with it by understanding that it's impossible, other than luck.
I could never understand this obsession with beating the market.
When all the work necessary to do so occasionally, is taken into account,
I had decided way back when that good enough is good enough. I have a life to live!

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:11 am
by dcabler
Register44 wrote: Mon Oct 12, 2020 11:12 pm I realize I am finally becoming an investor instead of a speculator. I felt really good and less stressed when I finally completed a buy and hold asset allocation portoflio. But then I got a little bored and thought I have all this free time to fill.

Shouldn't I apply it to optimizing / tweaking the portfolio? Well I did and I made it worse. So I swore that off and went back to the set allocations.

Then a few months go by and I tweak it again, and I am already regretting it. I feel so much less stressed and happy when I have the static asset allocation set and forget. But then there is the nagging feeling that I am being lazy, need to work harder, and that I am missing off on 20% per year returns that I could have if I just "put in the work." Yet enough research tells me I am far better off accepting the market return.

So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
Over the years, I've learned more but I've never made changes to my portfolio without at least 6+ months of consideration. Secondly, I stopped comparing my performance against anything else including "the market". There will always be a better portfolio than what you've come up with - you just won't know until afterwards. The only thing that matters is whether you're meeting your goals, not somebody else's idea of what a "good" portfolio should be.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:18 am
by Nowizard
It gets easier as time goes by, but there is a sizeable contingent who allocate, either formally or informally, a small portion to active trading. There are few, I suspect, who never waver from a strict, Boglehead philosophy, but many who follow the primary tenants.

Tim

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:21 am
by GoldenGoose
dcabler wrote: Tue Oct 13, 2020 8:11 am
Register44 wrote: Mon Oct 12, 2020 11:12 pm I realize I am finally becoming an investor instead of a speculator. I felt really good and less stressed when I finally completed a buy and hold asset allocation portoflio. But then I got a little bored and thought I have all this free time to fill.

Shouldn't I apply it to optimizing / tweaking the portfolio? Well I did and I made it worse. So I swore that off and went back to the set allocations.

Then a few months go by and I tweak it again, and I am already regretting it. I feel so much less stressed and happy when I have the static asset allocation set and forget. But then there is the nagging feeling that I am being lazy, need to work harder, and that I am missing off on 20% per year returns that I could have if I just "put in the work." Yet enough research tells me I am far better off accepting the market return.

So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
Over the years, I've learned more but I've never made changes to my portfolio without at least 6+ months of consideration. Secondly, I stopped comparing my performance against anything else including "the market". There will always be a better portfolio than what you've come up with - you just won't know until afterwards. The only thing that matters is whether you're meeting your goals, not somebody else's idea of what a "good" portfolio should be.
Well said. All this about beating the market and keep up with the market is non sense.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:23 am
by UpperNwGuy
I don't understand why a coping strategy is required when no problem exists.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:29 am
by dziuniek
re: the comment on I believe the technology is the future so nasdaq will go up more than the rest of the market.

Technology was always the future, but that doesn't mean it's technology in apps, search engines or fancier smartphones.

Oil had it's time to shine too.

Look what NASA did for technology when we sent folks up to the moon. So much cool stuff came from that. Were all the companies who came up with that stuff be in NASDAQ today?

All I am saying is that not all technology which happen to be great advancements happen to be in the NASDAQ only.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:33 am
by JoMoney
*shrug* maybe it came from experience, but I just accepted that trying to "beat the market" is a losers game.
Once I became familiar with the concept/simple proof that beating 'the market' is zero-sum (for any amount some person/portfolio beats the market aggregate there has to be a corresponding amount that under-performs), then it becomes obvious that the masses of professionals can't beat themselves. Regardless if I believe those that beat it are doing so by luck or skill, it's not a game I want to play with my investments. I don't need/want the gambling coin-flip element, and to the extent skill is involved I know for certain I don't have an advantage (which means if skill/information does exist, I'm at a disadvantage).

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:40 am
by 260chrisb
UpperNwGuy wrote: Tue Oct 13, 2020 8:23 am I don't understand why a coping strategy is required when no problem exists.

Love this!! :D

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:45 am
by AerialWombat
I have no desire to beat the market, because with such a desire would also come the inherent roller coaster ride of volatility. I would get nauseous and panic sell.

I know this for myself.

Thus, my goal is to merely beat inflation. My conservative portfolio will do this with just the market returns on my small equities portion, so I am content.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:48 am
by JoeRetire
Register44 wrote: Mon Oct 12, 2020 11:12 pm So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?
Nothing to squelch, since I don't have a voice in my head that wants me to actively trade.

I wonder what separates those of us who don't have this voice, from those of us who do? Age? Experience? Background? Hobbies that prevent us from getting so bored?

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 8:51 am
by KlangFool
Register44 wrote: Mon Oct 12, 2020 11:12 pm

So tried and true Bogleheads how do you squelch that voice in your head that wants you to actively trade and convince yourself that less is more?

Register44,

<<convince yourself that less is more>>

That is the WRONG question. The correct question and answer are ENOUGH.


I know my goal and I can reach my goal with a nominal 5% return. My portfolio is good ENOUGH to reach my goal. I do not need more.


You have to calculate and define your goal. And, you need to find out the return that you need to get there. Then, you know you have ENOUGH.


Only folks that did not do the above calculation has the problem of needing MORE.

What is your number? When can you reach your number at your current saving rate with a reasonable return rate?

KlangFool

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 9:05 am
by Toons
Never needed to "beat the market"
Never gave it any thought,
To reach our financial goal
"Financial independence."
Compounding did the work.
Investing.
Reinvesting .
Decades.
:happy

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 9:09 am
by nydoc
By not trailing the market.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 9:11 am
by tibbitts
balbrec2 wrote: Tue Oct 13, 2020 8:06 am
JustinR wrote: Tue Oct 13, 2020 2:56 am You deal with it by understanding that it's impossible, other than luck.
I could never understand this obsession with beating the market.
When all the work necessary to do so occasionally, is taken into account,
I had decided way back when that good enough is good enough. I have a life to live!
In fairness I think what has made accepting average (or even a little below) okay for so many people is that it's still been successful, in that it's been good enough to achieve the goals most people have. If that turns out not to be the case for an extended period, I suspect we'll see a gradual attitude change, even here. After all we're already seeing that with regard to international equities, and bonds in general.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 9:28 am
by TomatoTomahto
AerialWombat wrote: Tue Oct 13, 2020 8:45 am . . . Thus, my goal is to merely beat inflation. My conservative portfolio will do this with just the market returns on my small equities portion, so I am content.
My calculations hope for 0% real. Anything better is gravy. If it’s worse, but not too much worse, I’m okay. If it’s a lot worse, well, I’ll cross that bridge when I get to it.

Comparison is the theft of joy.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 9:30 am
by Chicken Little
JustinR wrote: Tue Oct 13, 2020 2:56 am You deal with it by understanding that it's impossible, other than luck.
This is false.

A lot of people rally around that to be able to subscribe to indexing. The relevant point is not whether anyone can beat the market, or whether it’s possible to beat the market, but the likelihood that you can beat the market. Especially if that’s not even your job.

You can cite all the muckers & grinders who make their living off fees, but it’s silly to pretend there aren’t individuals who outperform. I would be hesitant to conclude that since you don’t know who they are, that they don’t exist.

Let me ask you, if you could beat the market, why would you need to set up a fund?

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 9:36 am
by vitaflo
Register44 wrote: Mon Oct 12, 2020 11:12 pm But then there is the nagging feeling that I am being lazy, need to work harder, and that I am missing off on 20% per year returns that I could have if I just "put in the work."
Use this feeling and apply it to your career and job, not the market. Most of your portfolio value will come from your sweat equity, not the performance of your corporate equity. This is a mistake many people make. They want to double up their investment returns but don't put in the time and effort to double up their income.

You need income (and savings) for any investment returns to matter. Once you have a high enough income and savings, then investment returns don't matter as much. You also have direct control over your income. You have no control over the market. Don't put time and energy into something you have no real control over. Focus on the things you can like income and spending. It will have a much larger affect on your portfolio long term.

Re: How do Bogleheads cope with not beating the market?

Posted: Tue Oct 13, 2020 10:04 am
by Frank Grimes
Extra effort can help the layperson succeed in many fields of life but ordinary investing isn't one of them. The extra effort trying to "beat the market" has no guarantee of helping and may actually result in lower performance, especially over a longer period of time. It's like wondering why someone would settle for winning 6 out of 10 coin flips and not striving for better than that. Sure, you might be able to get 7 or better but you probably won't and your extra effort won't change the result. And yeah I put 6 of 10 because adhering to the rest of BH principles actually gets you above average returns when you avoid tax drags and high expenses.