"Just Stand There" vs. incorporating new info

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burritoLover
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

guppyguy wrote: Mon Dec 06, 2021 10:44 am
burritoLover wrote: Mon Dec 06, 2021 10:35 am My thought processes for my recent round of proposed changes:

1. My SCV allocation has no EM - I would like to have exposure there as it now makes up 25% of equities which puts me underweight on EM across the portfolio.

2. 5-10% allocation to gold - this is a tough one but I wanted an allocation to something uncorrelated to stocks/bonds.

3. Starting to buy i-bonds each year - my 5% bond allocation is entirely in the TDFs in the 401k.

4. I feel like I want to increase my SCV allocation. We are maxing out 401ks and I have a very high risk tolerance. We will not be eating cat food if all we had to show for it was the 401k at retirement, short of extremely high inflation over 20-25 years.
If you don't mind sharing, how far away from retirement are you in terms of not only years left working but % of additional retirement funds required?

The reason I ask is that you will not be the same person later and that all of these ideas, while having some debatable merit, probably will not make that much of a difference. Is the extra alpha worth not only the increased ER but the increase time (and temptation) you will take in checking your portfolio all the time for rebalancing events?

I think you're handling the soap a bunch, because I do to, so it's easy to spot. Not a judgement, as I don't know you.
Ha - yeah, I am definitely resembling the quote in my signature.

The 401k is the "safe" allocation - TDFs at our retirement age, which is about 20-25 years from now.

Roth IRA and taxable is my more risky bets (mostly SCV). Granted these are still globally diversified "passive" index funds - more risky, sure, but it isn't individual stocks. I am ok with these underperforming the market - I will not bail even if this occurs over 20+ years. My problem is I keep wanting to tweak based on new things I learn. For example, I wasn't aware that a 25% SCV allocation has, historically, about the same volatility as a 100% market portfolio. Now, I know, that going forward, that may not hold, but I was thinking the volatility was much higher previously when I allocated 15%.
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Re: "Just Stand There" vs. incorporating new info

Post by guppyguy »

burritoLover wrote: Mon Dec 06, 2021 10:56 am
guppyguy wrote: Mon Dec 06, 2021 10:44 am
burritoLover wrote: Mon Dec 06, 2021 10:35 am My thought processes for my recent round of proposed changes:

1. My SCV allocation has no EM - I would like to have exposure there as it now makes up 25% of equities which puts me underweight on EM across the portfolio.

2. 5-10% allocation to gold - this is a tough one but I wanted an allocation to something uncorrelated to stocks/bonds.

3. Starting to buy i-bonds each year - my 5% bond allocation is entirely in the TDFs in the 401k.

4. I feel like I want to increase my SCV allocation. We are maxing out 401ks and I have a very high risk tolerance. We will not be eating cat food if all we had to show for it was the 401k at retirement, short of extremely high inflation over 20-25 years.
If you don't mind sharing, how far away from retirement are you in terms of not only years left working but % of additional retirement funds required?

The reason I ask is that you will not be the same person later and that all of these ideas, while having some debatable merit, probably will not make that much of a difference. Is the extra alpha worth not only the increased ER but the increase time (and temptation) you will take in checking your portfolio all the time for rebalancing events?

I think you're handling the soap a bunch, because I do to, so it's easy to spot. Not a judgement, as I don't know you.
Ha - yeah, I am definitely resembling the quote in my signature.

The 401k is the "safe" allocation - TDFs at our retirement age, which is about 20-25 years from now.

Roth IRA and taxable is my more risky bets (mostly SCV). Granted these are still globally diversified "passive" index funds - more risky, sure, but it isn't individual stocks. I am ok with these underperforming the market - I will not bail even if this occurs over 20+ years. My problem is I keep wanting to tweak based on new things I learn. For example, I wasn't aware that a 25% SCV allocation has, historically, about the same volatility as a 100% market portfolio. Now, I know, that going forward, that may not hold, but I was thinking the volatility was much higher previously when I allocated 15%.
Just one question:
If you woke up today and your total retirement portfolio with whatever safe withdrawal rate you plan on (ie 3-4%) enabled you to cover all of your expenses in retirement (after accounting for social security/pensions etc), what are you gaining with an additional couple of basis points of risk premium, which may or may not show up for 10+ years? And what are you giving up, in regards to your time/attention/and fees?

This is the question that got me out of the constant tinker mode.....we have 15 years left to retirement and because of a lot of luck and living beneath our means, we've basically hit our number. SCV/gold/bitcoin risk premiums have nearly zippo utility value in our lives from here, nor did they contribute to get here. They are all interesting/seductive pursuits but don't really matter.

This forum (and others like RR) are both a blessing and a curse. Nobody is saying you are wrong in your choices, but this place can be a very good sounding board.

Best wishes
Gup
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David Jay
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Re: "Just Stand There" vs. incorporating new info

Post by David Jay »

shess wrote: Mon Dec 06, 2021 10:24 amThere is a software-engineering saying by Brian Kernighan...
Now there's a blast from the past. Kernighan(and Ritchie).
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
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Re: "Just Stand There" vs. incorporating new info

Post by TxFrog »

As someone who made radical changes to their portfolio early this year, this is a concept I struggle with.

For many years I was a active investor. My portfolio was 100% active mutual funds with only 10% of equities in international funds. I found this forum earlier this year and read the The Bogleheads’ Guide to Investing and A Random Walk Down Wall Street. Based on the new information from those books and this forum, I went from 100% active to 100% passive and increased international to 40% of equities.

I definitely didn’t “Just Stand There”, but I also didn’t make make my changes to just chase the latest hot trend (e.g. ARK funds, tech stocks, crypto, etc.).
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

guppyguy wrote: Mon Dec 06, 2021 11:17 am
burritoLover wrote: Mon Dec 06, 2021 10:56 am
guppyguy wrote: Mon Dec 06, 2021 10:44 am
burritoLover wrote: Mon Dec 06, 2021 10:35 am My thought processes for my recent round of proposed changes:

1. My SCV allocation has no EM - I would like to have exposure there as it now makes up 25% of equities which puts me underweight on EM across the portfolio.

2. 5-10% allocation to gold - this is a tough one but I wanted an allocation to something uncorrelated to stocks/bonds.

3. Starting to buy i-bonds each year - my 5% bond allocation is entirely in the TDFs in the 401k.

4. I feel like I want to increase my SCV allocation. We are maxing out 401ks and I have a very high risk tolerance. We will not be eating cat food if all we had to show for it was the 401k at retirement, short of extremely high inflation over 20-25 years.
If you don't mind sharing, how far away from retirement are you in terms of not only years left working but % of additional retirement funds required?

The reason I ask is that you will not be the same person later and that all of these ideas, while having some debatable merit, probably will not make that much of a difference. Is the extra alpha worth not only the increased ER but the increase time (and temptation) you will take in checking your portfolio all the time for rebalancing events?

I think you're handling the soap a bunch, because I do to, so it's easy to spot. Not a judgement, as I don't know you.
Ha - yeah, I am definitely resembling the quote in my signature.

The 401k is the "safe" allocation - TDFs at our retirement age, which is about 20-25 years from now.

Roth IRA and taxable is my more risky bets (mostly SCV). Granted these are still globally diversified "passive" index funds - more risky, sure, but it isn't individual stocks. I am ok with these underperforming the market - I will not bail even if this occurs over 20+ years. My problem is I keep wanting to tweak based on new things I learn. For example, I wasn't aware that a 25% SCV allocation has, historically, about the same volatility as a 100% market portfolio. Now, I know, that going forward, that may not hold, but I was thinking the volatility was much higher previously when I allocated 15%.
Just one question:
If you woke up today and your total retirement portfolio with whatever safe withdrawal rate you plan on (ie 3-4%) enabled you to cover all of your expenses in retirement (after accounting for social security/pensions etc), what are you gaining with an additional couple of basis points of risk premium, which may or may not show up for 10+ years? And what are you giving up, in regards to your time/attention/and fees?

This is the question that got me out of the constant tinker mode.....we have 15 years left to retirement and because of a lot of luck and living beneath our means, we've basically hit our number. SCV/gold/bitcoin risk premiums have nearly zippo utility value in our lives from here, nor did they contribute to get here. They are all interesting/seductive pursuits but don't really matter.

This forum (and others like RR) are both a blessing and a curse. Nobody is saying you are wrong in your choices, but this place can be a very good sounding board.

Best wishes
Gup
I just started investing for retirement last year (I'm in my late 40's), so certainly if I had got off my butt in my 20's and had done so, I would likely be taking less risk now. I'm not expecting just a couple of basis points if this strategy is successful, but I also realize I could be worse off than the market portfolio - that is risk and I'm willing to take it.
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Re: "Just Stand There" vs. incorporating new info

Post by goingup »

burritoLover wrote: Mon Dec 06, 2021 10:56 am I am ok with these underperforming the market - I will not bail even if this occurs over 20+ years. My problem is I keep wanting to tweak based on new things I learn. For example, I wasn't aware that a 25% SCV allocation has, historically, about the same volatility as a 100% market portfolio. Now, I know, that going forward, that may not hold, but I was thinking the volatility was much higher previously when I allocated 15%.
For investors who tinker endlessly (not saying that is you), they don't acknowledge that they bailed on an asset class. The change is justified by finding the next new thing. Self discipline in investing is really hard.
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Re: "Just Stand There" vs. incorporating new info

Post by HomerJ »

burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

HomerJ wrote: Mon Dec 06, 2021 12:13 pm
burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
It is perhaps used as a marketing term at times but so can a term like "diversification". Doesn't mean that they aren't valid when not used for manipulation.
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Re: "Just Stand There" vs. incorporating new info

Post by HomerJ »

iceport wrote: Mon Dec 06, 2021 9:03 am
burritoLover wrote: Mon Dec 06, 2021 8:35 am All this has progressed over a year and half. I've been heavily influenced by the "Rational Reminder" podcast and Larry Swedroe's writings. Not just about SCV. I always think the latest iteration is the last (and I do have an IPS each time), but, inevitably, I end up changing it. Sometimes that does involve selling but primarily I try to do it with new contributions.
Hmmm... I really like reading what Larry has to say, but his articles should come with a warning label. While it's interesting to learn new things — and Larry certainly has a wealth of knowledge to share — after reading Larry's thoughts on various topics I am almost always left with a nagging sense that there is something I need to do to take advantage of the information. And that's where the danger lies.

It's all interesting stuff to know, but ultimately unactionable. At least that's the way I treat it, and I think I'm better off for it. :wink:
This.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: "Just Stand There" vs. incorporating new info

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burritoLover wrote: Mon Dec 06, 2021 12:16 pm
HomerJ wrote: Mon Dec 06, 2021 12:13 pm
burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
It is perhaps used as a marketing term at times but so can a term like "diversification". Doesn't mean that they aren't valid when not used for manipulation.
No, it's a way to make you think it's "scientific".

It absolutely is used to manipulate you into giving it more respect.

It's ALL evidence-based. All back-testing, no matter how poorly it does going forward, is technically "evidence-based" since it's uses actual data points from the past (i.e. evidence)
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

HomerJ wrote: Mon Dec 06, 2021 12:19 pm
burritoLover wrote: Mon Dec 06, 2021 12:16 pm
HomerJ wrote: Mon Dec 06, 2021 12:13 pm
burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
It is perhaps used as a marketing term at times but so can a term like "diversification". Doesn't mean that they aren't valid when not used for manipulation.
No, it's a way to make you think it's "scientific".

It absolutely is used to manipulate you into giving it more respect.

It's ALL evidence-based. All back-testing, no matter how poorly it does going forward, is technically "evidence-based" since it's uses actual data points from the past (i.e. evidence)
I don't take "evidence-based" to mean back-testing. Something that back-tests well alone is meaningless. I don't believe in higher risk-adjusted returns - or at least not something that I think I can accomplish.
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Re: "Just Stand There" vs. incorporating new info

Post by sizzlefuzz »

goingup wrote: Mon Dec 06, 2021 9:08 am I like Rick Ferri's observation:

The Education of an Index Investor:
1. Born in darkness;
2. Finds indexing enlightenment;
3. Over-complicates everything;
4. Embraces simplicity.

Maybe you're at #3? :D
I've not heard this observation, but now that I read this I agree wholeheartedly. Luckily, my step 3 was only a 4-6 week period when I thought I "knew everything".
Mid 30s | AA: 91/9 | Investing early & often
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Re: "Just Stand There" vs. incorporating new info

Post by nigel_ht »

burritoLover wrote: Mon Dec 06, 2021 8:20 am Bogle famously said "Don’t do something, just stand there". Certainly you shouldn't change anything based on current economic conditions or returns, but what about incorporating new information? I find that I have evolved my portfolio as I learn about different concepts. For example, I once had all TDFs in all accounts, including taxable, until I realized that TDFs can have very high capital gain distributions so I went with a 3-funder in taxable. Then I learned about small cap value, researched it, and felt that I wanted to take on that additional risk so I added an allocation there. Then Avantis came out with a new EM value fund and I want to now add that. And I kind of want to add an allocation to gold as well just so that money is not all tied up in equity/bonds.

I feel like I'm doing more harm than good but I can't seem to stick with one portfolio.
Well...my rules of thumb are:

Don't make changes quickly.
Try not to change more than one thing at a time.

Perhaps, more succinctly.

Don't make huge changes.

As far as "Don't do something, just stand there" and "Stay the course" go...these are also just rules of thumb. If you don't have mastery, heed them but part of getting good at something is know when to break the rules of thumb and when not to.

The other thing I find useful is challenging assumptions and seeing how things turn out. One of the assumptions here is that over 20 years the market always wins. But what if Nikkei? What changes should be made for that? Is it worth it given how unlikely it would be?

We make a lot of assumptions and it's good to dive deeper. I've added SCV not because I'm tilting for performance but because one of the underlying strategies is diversification.

The assumption is that Total Market is diverse enough but when you look at it...is it really? After looking at it, I decided not. Same for VTI so I added VXUS.

I also go back to Eisenhower quote...plans are worthless, planning is everything.

The IPS is just a plan, your current operational plan as it happens. Going through the thought exercise of "What if Nikkei?" is also just another plan. If you simply say "Nobody knows nuthin" and don't look deeper to explore options and contingencies you may end up unhappy with how things turn out.

I also differ from most folks here in thinking that making tactical changes based on current conditions is any better or worse that strategic changes based on new knowledge. "Ignore the noise" isn't the same as "ignoring signal". Valuation isn't noise, its signal. That doesn't impact strategy but can change how to implement the strategy.
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Re: "Just Stand There" vs. incorporating new info

Post by HomerJ »

burritoLover wrote: Mon Dec 06, 2021 12:24 pm
HomerJ wrote: Mon Dec 06, 2021 12:19 pm
burritoLover wrote: Mon Dec 06, 2021 12:16 pm
HomerJ wrote: Mon Dec 06, 2021 12:13 pm
burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
It is perhaps used as a marketing term at times but so can a term like "diversification". Doesn't mean that they aren't valid when not used for manipulation.
No, it's a way to make you think it's "scientific".

It absolutely is used to manipulate you into giving it more respect.

It's ALL evidence-based. All back-testing, no matter how poorly it does going forward, is technically "evidence-based" since it's uses actual data points from the past (i.e. evidence)
I don't take "evidence-based" to mean back-testing. Something that back-tests well alone is meaningless. I don't believe in higher risk-adjusted returns - or at least not something that I think I can accomplish.
Forget back-testing. That's not my point.

It's just a meaningless phrase that sounds good. It's total marketing.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: "Just Stand There" vs. incorporating new info

Post by bertilak »

burritoLover wrote: Mon Dec 06, 2021 12:16 pm
HomerJ wrote: Mon Dec 06, 2021 12:13 pm
burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
It is perhaps used as a marketing term at times but so can a term like "diversification". Doesn't mean that they aren't valid when not used for manipulation.
"Evidence-based investing" fits into the category I mentioned earlier: "there is always another investment idea with a better salesman, who is usually masquerading as an impartial, independent, expert."

"Diversification" is one of those "important concepts" I mentioned in the same post. It is one of the reasons we even have cap-weighted index funds.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

bertilak wrote: Mon Dec 06, 2021 12:30 pm
burritoLover wrote: Mon Dec 06, 2021 12:16 pm
HomerJ wrote: Mon Dec 06, 2021 12:13 pm
burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
It is perhaps used as a marketing term at times but so can a term like "diversification". Doesn't mean that they aren't valid when not used for manipulation.
"Evidence-based investing" fits into the category I mentioned earlier: "there is always another investment idea with a better salesman, who is usually masquerading as an impartial, independent, expert."

"Diversification" is one of those "important concepts" I mentioned in the same post. It is one of the reasons we even have cap-weighted index funds.
Evidence-based investing to me means peer-reviewed academic research. There are numerous examples of investment firms misusing valid terms, including "diversification". You can't tell me that is not the case. I've seen one firm touting the benefits of bitcoin diversification.
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Re: "Just Stand There" vs. incorporating new info

Post by Nathan Drake »

I think it’s fine to tweak your portfolio over time as you gain new insights into portfolio construction.

My portfolio started with simply S&P 500 and then grew into one that has both international funds and factors. I am even “sinning a little” by overweighting international and allocating a very high percentage to factors, based on valuations.

I think you still need to have a long term outlook and not shift 100% to any given asset class, but if you have a core portfolio you can stick with and feel comfortable “sinning” a bit there’s nothing wrong with that.

My portfolio is still very simple at only 5 funds
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Re: "Just Stand There" vs. incorporating new info

Post by marcopolo »

burritoLover wrote: Mon Dec 06, 2021 8:35 am All this has progressed over a year and half. I've been heavily influenced by the "Rational Reminder" podcast and Larry Swedroe's writings. Not just about SCV. I always think the latest iteration is the last (and I do have an IPS each time), but, inevitably, I end up changing it. Sometimes that does involve selling but primarily I try to do it with new contributions.
You should go back and read all the articles where Larry was extolling the virtues about the "information" about CCFs and REITs. Only to turn around years later and essentially give up on them based on "new information", after pretty poor performance.

I have always wondered how one reconciles the "stay the course" message with "incorporate new information", and when does the later simply become performance chasing.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: "Just Stand There" vs. incorporating new info

Post by bertilak »

burritoLover wrote: Mon Dec 06, 2021 12:38 pm Evidence-based investing to me means peer-reviewed academic research. There are numerous examples of investment firms misusing valid terms, including "diversification". You can't tell me that is not the case. I've seen one firm touting the benefits of bitcoin diversification.
Does "evidence-based investing" have a well-known, well-defined meaning in the investment literature? Google didn't help much.

Is it simply the opposite of fantasy-based or wishful-thinking-based or willy-nilly-based? Is it something we should be glad to learn about to keep us from going off the deep end of evidence-free investing?
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

marcopolo wrote: Mon Dec 06, 2021 12:47 pm
burritoLover wrote: Mon Dec 06, 2021 8:35 am All this has progressed over a year and half. I've been heavily influenced by the "Rational Reminder" podcast and Larry Swedroe's writings. Not just about SCV. I always think the latest iteration is the last (and I do have an IPS each time), but, inevitably, I end up changing it. Sometimes that does involve selling but primarily I try to do it with new contributions.
You should go back and read all the articles where Larry was extolling the virtues about the "information" about CCFs and REITs. Only to turn around years later and essentially give up on them based on "new information", after pretty poor performance.

I have always wondered how one reconciles the "stay the course" message with "incorporate new information", and when does the later simply become performance chasing.
He's given reasons behind abandoning CCFs and REITs. I mean if it was due to poor performance, why did he stick with small cap value which has had a pretty poor 10 years relative to the market? That said, I seek out other sources of information - not just one person.
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Re: "Just Stand There" vs. incorporating new info

Post by bertilak »

marcopolo wrote: Mon Dec 06, 2021 12:47 pm
burritoLover wrote: Mon Dec 06, 2021 8:35 am All this has progressed over a year and half. I've been heavily influenced by the "Rational Reminder" podcast and Larry Swedroe's writings. Not just about SCV. I always think the latest iteration is the last (and I do have an IPS each time), but, inevitably, I end up changing it. Sometimes that does involve selling but primarily I try to do it with new contributions.
You should go back and read all the articles where Larry was extolling the virtues about the "information" about CCFs and REITs. Only to turn around years later and essentially give up on them based on "new information", after pretty poor performance.

I have always wondered how one reconciles the "stay the course" message with "incorporate new information", and when does the later simply become performance chasing.
New information might be new tax laws, new investment vehicles (like when ETFs became available), changes in personal situations (closing in on retirement, divorce, windfalls, birth of a child, death in the family, moving to a different country). Reacting to those has nothing to do with performance chasing. The most common "new information" is probably getting closer to retirement or simply getting wiser (e.g., tuning out the blather).
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

bertilak wrote: Mon Dec 06, 2021 12:52 pm
burritoLover wrote: Mon Dec 06, 2021 12:38 pm Evidence-based investing to me means peer-reviewed academic research. There are numerous examples of investment firms misusing valid terms, including "diversification". You can't tell me that is not the case. I've seen one firm touting the benefits of bitcoin diversification.
Does "evidence-based investing" have a well-known, well-defined meaning in the investment literature? Google didn't help much.

Is it simply the opposite of fantasy-based or wishful-thinking-based or willy-nilly-based? Is it something we should be glad to learn about to keep us from going off the deep end of evidence-free investing?
I think we are just getting caught up on the name here. Let's just call it "peer-reviewed academic studies". A lot of concepts about diversification, for example, do not come out of thin air - they are based on research. It is not infallible. Finance is not a science. But, I'd rather be informed via objective studies than intuition or feelings.
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Re: "Just Stand There" vs. incorporating new info

Post by marcopolo »

burritoLover wrote: Mon Dec 06, 2021 1:04 pm
marcopolo wrote: Mon Dec 06, 2021 12:47 pm
burritoLover wrote: Mon Dec 06, 2021 8:35 am All this has progressed over a year and half. I've been heavily influenced by the "Rational Reminder" podcast and Larry Swedroe's writings. Not just about SCV. I always think the latest iteration is the last (and I do have an IPS each time), but, inevitably, I end up changing it. Sometimes that does involve selling but primarily I try to do it with new contributions.
You should go back and read all the articles where Larry was extolling the virtues about the "information" about CCFs and REITs. Only to turn around years later and essentially give up on them based on "new information", after pretty poor performance.

I have always wondered how one reconciles the "stay the course" message with "incorporate new information", and when does the later simply become performance chasing.
He's given reasons behind abandoning CCFs and REITs. I mean if it was due to poor performance, why did he stick with small cap value which has had a pretty poor 10 years relative to the market? That said, I seek out other sources of information - not just one person.
Reasons, excuses, rationalizations...

Tomato, Tomatoe.

Always easy to come up with a reason after the fact.

How will you determine if his latest recommendation is the next CCF (to be discarded soon), or the next SCV (stay the course)?
Once in a while you get shown the light, in the strangest of places if you look at it right.
EnjoyIt
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Re: "Just Stand There" vs. incorporating new info

Post by EnjoyIt »

iceport wrote: Mon Dec 06, 2021 9:03 am
burritoLover wrote: Mon Dec 06, 2021 8:35 am All this has progressed over a year and half. I've been heavily influenced by the "Rational Reminder" podcast and Larry Swedroe's writings. Not just about SCV. I always think the latest iteration is the last (and I do have an IPS each time), but, inevitably, I end up changing it. Sometimes that does involve selling but primarily I try to do it with new contributions.
Hmmm... I really like reading what Larry has to say, but his articles should come with a warning label. While it's interesting to learn new things — and Larry certainly has a wealth of knowledge to share — after reading Larry's thoughts on various topics I am almost always left with a nagging sense that there is something I need to do to take advantage of the information. And that's where the danger lies.

It's all interesting stuff to know, but ultimately unactionable. At least that's the way I treat it, and I think I'm better off for it. :wink:
I love Mr Swedroe's work and writing, but, at the end of the day, he is also a salesman. He profits from assets under management and it would make sense that his "new information" will want you to do something, preferably through his firm, Buckingham Strategic Wealth.
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Re: "Just Stand There" vs. incorporating new info

Post by mikejuss »

My portfolio used to be 10 different index funds. Now it's just 3 index funds. It took me about a year to figure this out.
Last edited by mikejuss on Mon Dec 06, 2021 1:21 pm, edited 1 time in total.
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Re: "Just Stand There" vs. incorporating new info

Post by marcopolo »

burritoLover wrote: Mon Dec 06, 2021 9:12 am
goingup wrote: Mon Dec 06, 2021 9:08 am I like Rick Ferri's observation:

The Education of an Index Investor:
1. Born in darkness;
2. Finds indexing enlightenment;
3. Over-complicates everything;
4. Embraces simplicity.

Maybe you're at #3? :D
I've seen that before and I'm probably a bit of a hypocrite in that I tell others the same thing when they are adopting the latest fad. But I try to think that I'm adopting evidenced-based info into these changes, not something that has back-tested well recently. But maybe I'm deluding myself.
What is the difference between "evidence based" and "back tested well"? Aren't most of the academic studies based on back testing whatever theory is being put forth?
What other "evidence" is there?
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Re: "Just Stand There" vs. incorporating new info

Post by HomerJ »

burritoLover wrote: Mon Dec 06, 2021 1:07 pm
bertilak wrote: Mon Dec 06, 2021 12:52 pm
burritoLover wrote: Mon Dec 06, 2021 12:38 pm Evidence-based investing to me means peer-reviewed academic research. There are numerous examples of investment firms misusing valid terms, including "diversification". You can't tell me that is not the case. I've seen one firm touting the benefits of bitcoin diversification.
Does "evidence-based investing" have a well-known, well-defined meaning in the investment literature? Google didn't help much.

Is it simply the opposite of fantasy-based or wishful-thinking-based or willy-nilly-based? Is it something we should be glad to learn about to keep us from going off the deep end of evidence-free investing?
I think we are just getting caught up on the name here. Let's just call it "peer-reviewed academic studies". A lot of concepts about diversification, for example, do not come out of thin air - they are based on research. It is not infallible. Finance is not a science. But, I'd rather be informed via objective studies than intuition or feelings.
Finance is not a hard science. That's the important thing to remember. Not enough data points, too many variables, and "rules" change all the time. Human governments can change the rules and even human emotions are involved.

Imagine trying to put a man on the moon if physics rules were changed by Congress every so often or by the President with an executive order, or if the gravitational constant was affected daily by investor sentiment.

Be careful to not put too much weight on "new information" coming from peer-reviewed academic studies.
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Re: "Just Stand There" vs. incorporating new info

Post by EnjoyIt »

burritoLover wrote: Mon Dec 06, 2021 8:35 am All this has progressed over a year and half. I've been heavily influenced by the "Rational Reminder" podcast and Larry Swedroe's writings. Not just about SCV. I always think the latest iteration is the last (and I do have an IPS each time), but, inevitably, I end up changing it. Sometimes that does involve selling but primarily I try to do it with new contributions.
This statement bothers me, the bold is my emphasis.

What is the point of having an IPS if you keep changing it. Plenty of studies show that those who just leave their portfolio be, do better than those who make constant changes. I think you are your worst enemy. If you are going to be making IPS changes, they should be done over the course of a few years and not just months do to the latest thing you learned or read.

Please read your own signature.

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Last edited by EnjoyIt on Mon Dec 06, 2021 1:17 pm, edited 2 times in total.
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Re: "Just Stand There" vs. incorporating new info

Post by nigel_ht »

HomerJ wrote: Mon Dec 06, 2021 12:19 pm
burritoLover wrote: Mon Dec 06, 2021 12:16 pm
HomerJ wrote: Mon Dec 06, 2021 12:13 pm
burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
It is perhaps used as a marketing term at times but so can a term like "diversification". Doesn't mean that they aren't valid when not used for manipulation.
No, it's a way to make you think it's "scientific".

It absolutely is used to manipulate you into giving it more respect.

It's ALL evidence-based. All back-testing, no matter how poorly it does going forward, is technically "evidence-based" since it's uses actual data points from the past (i.e. evidence)
It is scientific. Start with a hypothesis or model. Test against historical data. Analyze results. Publish.

Oceanography, astrophysics, climatology, etc all have to employ these techniques. Sometimes you can create a new instrument to examine phenomena and gather new information but a lot of times you test hypothesis against already collected data you already have.

The reason we peer review is because we often do it wrong whether deliberately or otherwise. I don't over estimate the value of peer reviews but I do believe that for the most part it works well enough. At least, generally anyway, the math is right...the conclusion...eh...

That Shiller changes his CAPE model (Now with Excess Yield!) in response to new data isn't a bug but a feature. It's how science works.

Understanding how his new model works give you certain insights...Excess CAPE will start looking bad when rates rise. Sentiment, already shaky, will turn further bearish. But regardless of what the market does, the risk free rate of return rises and becomes a more viable option in the face of existing inflation. That's worth a little tinkering if you are overweight in stocks but suffer from TINA. TINA stops being true and moving quickly to your naturally comfortable AA is worthwhile if you've been avoiding rebalancing.
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Re: "Just Stand There" vs. incorporating new info

Post by marcopolo »

burritoLover wrote: Mon Dec 06, 2021 12:38 pm
bertilak wrote: Mon Dec 06, 2021 12:30 pm
burritoLover wrote: Mon Dec 06, 2021 12:16 pm
HomerJ wrote: Mon Dec 06, 2021 12:13 pm
burritoLover wrote: Mon Dec 06, 2021 8:42 amevidenced-based investing
"evidence-based investing" is a marketing term.
It is perhaps used as a marketing term at times but so can a term like "diversification". Doesn't mean that they aren't valid when not used for manipulation.
"Evidence-based investing" fits into the category I mentioned earlier: "there is always another investment idea with a better salesman, who is usually masquerading as an impartial, independent, expert."

"Diversification" is one of those "important concepts" I mentioned in the same post. It is one of the reasons we even have cap-weighted index funds.
Evidence-based investing to me means peer-reviewed academic research. There are numerous examples of investment firms misusing valid terms, including "diversification". You can't tell me that is not the case. I've seen one firm touting the benefits of bitcoin diversification.
Doesn't bitcoin provide an independent source of risk?
Not one I am likely to incorporate, but seems like it would indeed diversify risk.
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Re: "Just Stand There" vs. incorporating new info

Post by Taylor Larimore »

burritoLover wrote: Mon Dec 06, 2021 8:20 am Bogle famously said "Don’t do something, just stand there". Certainly you shouldn't change anything based on current economic conditions or returns, but what about incorporating new information? I find that I have evolved my portfolio as I learn about different concepts. For example, I once had all TDFs in all accounts, including taxable, until I realized that TDFs can have very high capital gain distributions so I went with a 3-funder in taxable. Then I learned about small cap value, researched it, and felt that I wanted to take on that additional risk so I added an allocation there. Then Avantis came out with a new EM value fund and I want to now add that. And I kind of want to add an allocation to gold as well just so that money is not all tied up in equity/bonds.

I feel like I'm doing more harm than good but I can't seem to stick with one portfolio.
BurritolLover:

I'm not surprised that you are "doing more harm than good" when you chase investment marketing.

My advice: Simply go back to what experts recommend -- then stay-the-course:

viewtopic.php?f=10&t=156591

Best wishes.
Taylor
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Re: "Just Stand There" vs. incorporating new info

Post by bertilak »

burritoLover wrote: Mon Dec 06, 2021 1:07 pm
bertilak wrote: Mon Dec 06, 2021 12:52 pm
burritoLover wrote: Mon Dec 06, 2021 12:38 pm Evidence-based investing to me means peer-reviewed academic research. There are numerous examples of investment firms misusing valid terms, including "diversification". You can't tell me that is not the case. I've seen one firm touting the benefits of bitcoin diversification.
Does "evidence-based investing" have a well-known, well-defined meaning in the investment literature? Google didn't help much.

Is it simply the opposite of fantasy-based or wishful-thinking-based or willy-nilly-based? Is it something we should be glad to learn about to keep us from going off the deep end of evidence-free investing?
I think we are just getting caught up on the name here. Let's just call it "peer-reviewed academic studies". A lot of concepts about diversification, for example, do not come out of thin air - they are based on research. It is not infallible. Finance is not a science. But, I'd rather be informed via objective studies than intuition or feelings.
OK, "peer-reviewed academic studies" is good. I thought you were referring to some new investment policy. What you say is certainly better than "follow Yahoo's evidence-based recommendations." Today: "Market check: All 11 sectors in the green" (Mon, December 6, 2021, 12:19 PM).
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

marcopolo wrote: Mon Dec 06, 2021 1:09 pm
burritoLover wrote: Mon Dec 06, 2021 1:04 pm
marcopolo wrote: Mon Dec 06, 2021 12:47 pm
burritoLover wrote: Mon Dec 06, 2021 8:35 am All this has progressed over a year and half. I've been heavily influenced by the "Rational Reminder" podcast and Larry Swedroe's writings. Not just about SCV. I always think the latest iteration is the last (and I do have an IPS each time), but, inevitably, I end up changing it. Sometimes that does involve selling but primarily I try to do it with new contributions.
You should go back and read all the articles where Larry was extolling the virtues about the "information" about CCFs and REITs. Only to turn around years later and essentially give up on them based on "new information", after pretty poor performance.

I have always wondered how one reconciles the "stay the course" message with "incorporate new information", and when does the later simply become performance chasing.
He's given reasons behind abandoning CCFs and REITs. I mean if it was due to poor performance, why did he stick with small cap value which has had a pretty poor 10 years relative to the market? That said, I seek out other sources of information - not just one person.
Reasons, excuses, rationalizations...

Tomato, Tomatoe.

Always easy to come up with a reason after the fact.

How will you determine if his latest recommendation is the next CCF (to be discarded soon), or the next SCV (stay the course)?
I do seek out what Larry writes (among others) but I don't follow the Larry playbook step-by-step. I take in available info from many sources and make a decision. For example, I wouldn't invest in the alts that Larry recommends (re-insurance, alternative lending, etc). I also listen to Bogle but I don't believe he's right about international.
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Re: "Just Stand There" vs. incorporating new info

Post by bertilak »

burritoLover wrote: Mon Dec 06, 2021 1:19 pm I do seek out what Larry writes (among others) but I don't follow the Larry playbook step-by-step. I take in available info from many sources and make a decision. For example, I wouldn't invest in the alts that Larry recommends (re-insurance, alternative lending, etc). I also listen to Bogle but I don't believe he's right about international.
I find what Lary has to say interesting (enlightening?) but I, too, chose not to follow his SCV advice.

About Bogle and international. What I got out of his advice was not that international was "bad" but that there were uncertainties making it not worth the trouble. I HAVE invested in international but have started to question the wisdom of that. I'm just letting it ride (not rebalancing back into it). Maybe it will do really well and maybe it will continue to lag TSM.
Last edited by bertilak on Mon Dec 06, 2021 1:29 pm, edited 1 time in total.
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Re: "Just Stand There" vs. incorporating new info

Post by nigel_ht »

HomerJ wrote: Mon Dec 06, 2021 1:14 pm
burritoLover wrote: Mon Dec 06, 2021 1:07 pm
bertilak wrote: Mon Dec 06, 2021 12:52 pm
burritoLover wrote: Mon Dec 06, 2021 12:38 pm Evidence-based investing to me means peer-reviewed academic research. There are numerous examples of investment firms misusing valid terms, including "diversification". You can't tell me that is not the case. I've seen one firm touting the benefits of bitcoin diversification.
Does "evidence-based investing" have a well-known, well-defined meaning in the investment literature? Google didn't help much.

Is it simply the opposite of fantasy-based or wishful-thinking-based or willy-nilly-based? Is it something we should be glad to learn about to keep us from going off the deep end of evidence-free investing?
I think we are just getting caught up on the name here. Let's just call it "peer-reviewed academic studies". A lot of concepts about diversification, for example, do not come out of thin air - they are based on research. It is not infallible. Finance is not a science. But, I'd rather be informed via objective studies than intuition or feelings.
Finance is not a hard science. That's the important thing to remember. Not enough data points, too many variables, and "rules" change all the time. Human governments can change the rules and even human emotions are involved.

Imagine trying to put a man on the moon if physics rules were changed by Congress every so often or by the President with an executive order, or if the gravitational constant was affected daily by investor sentiment.

Be careful to not put too much weight on "new information" coming from peer-reviewed academic studies.
Whether or not finance is a hard science, backtesting or hindcasting is an acceptable method to test hypothesis.

While the rules change, one of the reasons why the developed world is less risky than EM is because the rules change more slowly and generally following rube goldbergian procedures to do so.
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

marcopolo wrote: Mon Dec 06, 2021 1:14 pm
burritoLover wrote: Mon Dec 06, 2021 9:12 am
goingup wrote: Mon Dec 06, 2021 9:08 am I like Rick Ferri's observation:

The Education of an Index Investor:
1. Born in darkness;
2. Finds indexing enlightenment;
3. Over-complicates everything;
4. Embraces simplicity.

Maybe you're at #3? :D
I've seen that before and I'm probably a bit of a hypocrite in that I tell others the same thing when they are adopting the latest fad. But I try to think that I'm adopting evidenced-based info into these changes, not something that has back-tested well recently. But maybe I'm deluding myself.
What is the difference between "evidence based" and "back tested well"? Aren't most of the academic studies based on back testing whatever theory is being put forth?
What other "evidence" is there?
Well, you can back-test and find that companies that begin with the letter "A" have historically higher returns than all other company names. Does that mean you should concentrate your portfolio in individual stocks starting with "A"? Of course not. So any conclusion has to have some reasonable basis. You can also test across different markets, different assets classes, different countries, different time periods, different economic environments and see if your conclusions persist. You can also see what happens "out-of-sample", after publishing your results. And your peers can question your conclusions.

There's no guarantee about anything, but I think it helps inform my decisions even if it makes my portoflio worse (not something I can know ahead of time).
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Re: "Just Stand There" vs. incorporating new info

Post by KlangFool »

burritoLover wrote: Mon Dec 06, 2021 1:30 pm
if it makes my portoflio worse (not something I can know ahead of time).
burritoLover,

You could know this ahead of time. And, if you don't, why should you make the change?

It is very simple.

If you know that even if you are proven correct, it still doesn't matter, you are guaranteed to lose.

If you are right, it won't matter.

If you are wrong, you lose a lot of money.

If you make this kind of bet/gamble, you are in a lose/lose situation. You would not win.

For every single change that you made to your portfolio, what is the maximum possible gain if you are right. Did you do the calculation? If not, how do you know that it matters?

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Re: "Just Stand There" vs. incorporating new info

Post by nigel_ht »

burritoLover wrote: Mon Dec 06, 2021 1:30 pm
marcopolo wrote: Mon Dec 06, 2021 1:14 pm
burritoLover wrote: Mon Dec 06, 2021 9:12 am
goingup wrote: Mon Dec 06, 2021 9:08 am I like Rick Ferri's observation:

The Education of an Index Investor:
1. Born in darkness;
2. Finds indexing enlightenment;
3. Over-complicates everything;
4. Embraces simplicity.

Maybe you're at #3? :D
I've seen that before and I'm probably a bit of a hypocrite in that I tell others the same thing when they are adopting the latest fad. But I try to think that I'm adopting evidenced-based info into these changes, not something that has back-tested well recently. But maybe I'm deluding myself.
What is the difference between "evidence based" and "back tested well"? Aren't most of the academic studies based on back testing whatever theory is being put forth?
What other "evidence" is there?
Well, you can back-test and find that companies that begin with the letter "A" have historically higher returns than all other company names. Does that mean you should concentrate your portfolio in individual stocks starting with "A"? Of course not. So any conclusion has to have some reasonable basis. You can also test across different markets, different assets classes, different countries, different time periods, different economic environments and see if your conclusions persist. You can also see what happens "out-of-sample", after publishing your results. And your peers can question your conclusions.

There's no guarantee about anything, but I think it helps inform my decisions even if it makes my portoflio worse (not something I can know ahead of time).
Either you believe the scientific method works or not.

Granted that for this outcome you want to look from confounding variables that impacted the analysis but at the end of the day if nobody can show otherwise then buying companies that start with the letter A should work until the data says otherwise...probably because everybody started investing in companies that start with A or every company renamed itself to start with A. The missing SCV outperformance may or may not be in this category...

More likely you forgot to account for something.
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Re: "Just Stand There" vs. incorporating new info

Post by UpperNwGuy »

burritoLover wrote: Mon Dec 06, 2021 8:42 am I had a late start to retirement investing - in my late 40's. I'm not influenced by financial news such as CNBC but I do read a number of white papers, blogs, etc about evidenced-based investing and that is usually where I end up learning something interesting and making changes.
Don't read blogs and white papers about "evidence-based investing." That phrase is dangerous and can lead you down a lot of blind alleys.
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

KlangFool wrote: Mon Dec 06, 2021 1:39 pm
burritoLover wrote: Mon Dec 06, 2021 1:30 pm
if it makes my portoflio worse (not something I can know ahead of time).
burritoLover,

You could know this ahead of time. And, if you don't, why should you make the change?

It is very simple.

If you know that even if you are proven correct, it still doesn't matter, you are guaranteed to lose.

If you are right, it won't matter.

If you are wrong, you lose a lot of money.

If you make this kind of bet/gamble, you are in a lose/lose situation. You would not win.

For every single change that you made to your portfolio, what is the maximum possible gain if you are right. Did you do the calculation? If not, how do you know that it matters?

KlangFool
If the risky part of my portfolio underperforms, I'm making enough contributions that retirement is not going to be cat-food city. I think at worst (if return of the entire portfolio is 0%), I'll have a somewhat frugal but enjoyable retirement. On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
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Re: "Just Stand There" vs. incorporating new info

Post by invest4 »

asif408 wrote: Mon Dec 06, 2021 8:27 am

…as someone once said, the enemy of a good plan is the dream of a perfect plan.
Very often, I believe it is this…the pursuit of “optimization”, typically based on back testing and / or some belief or prediction of the future…whether their own or someone else’s.

I did a lot of this in my 30s…eventually realizing I knew nothing and shifted toward vanilla indexing with 3 or 4 funds.

Of course, I remain very interested to learn (knew nothing about TIPs or I-Bonds for example) and consider whether or not it may make sense for my long term portfolio (no for me as of now).

However, most often I am satisfied with the simplicity of the portfolio I have and the returns it provides. Instead, I am more focused on saving, allocation, and all the other interesting learning, planning and eventually executing on items related to Social Security, healthcare, withdrawal plan, and on and on. YMMV.

Also, a quick note of thanks to all who continue to give of their time and knowledge along the way.
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Re: "Just Stand There" vs. incorporating new info

Post by RetiredAL »

burritoLover wrote: Mon Dec 06, 2021 8:20 am Bogle famously said "Don’t do something, just stand there".
My take on that quote is about impulse control. Impulse control is about making analyzed/planned changes to one's portfolio, not knee-jerks.

There is no perfect investment style. Gut-n-Nuf is very broad, yet it is an individual term. Many of us deviate from the basic 3 fund concept, for our own reasons. If what you are doing in the aggregate doesn't at least approximate the Gut-n-Nuf 3 fund portfolio, you should be asking yourself why you are where you are at. For some, an AA of 35/65 is Gut-n-Nuf, others feel 60/40 is.

Years (20+) before I started following this site, I had this prime investing directive -- why do you have (or want to buy) an investment that over time is returning less than the SP500 index. This concept quickly narrowed my fund selection.
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Re: "Just Stand There" vs. incorporating new info

Post by HomerJ »

nigel_ht wrote: Mon Dec 06, 2021 1:47 pm Either you believe the scientific method works or not.
Scientific method does not work well in economics.

Not enough data points, too many variables, and the rules change, so data from 30 years ago may not have followed the same rules as today, which limits relevant data points even more.

It's that simple. You admit finance is not a hard science, but you still think the scientific method can work in finance the same way it works when doing repeatable experiments in physics.

You can get some economic information and models out of the limited data using the scientific method, but you're not going to find a way to generate consistent results in investing.

You mention Oceanography, and weather forecasting as sciences where data is limited, a ton of variables, and it's also hard to do repeatable experiments, but those prove my point. The models are rough and non-exact, with large error bands, same as economics.

And those don't even have the huge negative impact of human emotions and government laws being involved like in economics.

Granted that for this outcome you want to look from confounding variables that impacted the analysis but at the end of the day if nobody can show otherwise then buying companies that start with the letter A should work until the data says otherwise...probably because everybody started investing in companies that start with A or every company renamed itself to start with A. The missing SCV outperformance may or may not be in this category...

More likely you forgot to account for something.
Ding! Ding! Ding! The economic models ALWAYS fail to account for something. Because there are so many intertwined variables. And it's hard to separate them. And new variables can be created by government action.

An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.
- Laurence J. Peter.
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Re: "Just Stand There" vs. incorporating new info

Post by Beensabu »

Yeah. Done that.

Saving money on taxes is different than "shiny new fund". Yeah?

Sometimes, you just need to recognize you have a problem. There needs to be a cut off point where you're not allowed to "optimize" based on learning something new anymore. Mine was almost 5 years in.
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Re: "Just Stand There" vs. incorporating new info

Post by HomerJ »

burritoLover wrote: Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
I would suggest that you accept the market return, and not look for ways to beat the market.
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

Beensabu wrote: Mon Dec 06, 2021 2:12 pm Yeah. Done that.

Saving money on taxes is different than "shiny new fund". Yeah?

Sometimes, you just need to recognize you have a problem. There needs to be a cut off point where you're not allowed to "optimize" based on learning something new anymore. Mine was almost 5 years in.
After this one last time right - ha. Sounds like you were able to pull it off.
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Re: "Just Stand There" vs. incorporating new info

Post by burritoLover »

HomerJ wrote: Mon Dec 06, 2021 2:13 pm
burritoLover wrote: Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
I would suggest that you accept the market return, and not look for ways to beat the market.
The problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.
Nathan Drake
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Re: "Just Stand There" vs. incorporating new info

Post by Nathan Drake »

HomerJ wrote: Mon Dec 06, 2021 2:13 pm
burritoLover wrote: Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
I would suggest that you accept the market return, and not look for ways to beat the market.
Which market return? There are many markets, all with similar long term returns, some better than others with academic backing, that manifest at different times

If the goal is to diversify across these market returns, then yes, own meaningful exposure to ALL of them…not just one
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KlangFool
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Re: "Just Stand There" vs. incorporating new info

Post by KlangFool »

burritoLover wrote: Mon Dec 06, 2021 1:52 pm
If the risky part of my portfolio underperforms, I'm making enough contributions that retirement is not going to be cat-food city. I think at worst (if return of the entire portfolio is 0%), I'll have a somewhat frugal but enjoyable retirement. On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
burritoLover,

That is not the question.

You have a portfolio consist of X, Y, and Z. The question is

A) Why are you adding SCV?

How much more gain do you hope to get? If it is not good enough, why make the change? If you do not know, why are you making the change?

B) Why are you adding EM Value?

Ditto

C) Why are you adding gold?

Ditto.

<< On the other hand, if the premium from these changes is say, 2-3% or more over 25 years>>

Is this 2% to 3% more per year? If yes, please explain how could this be mathematically possible? How many percent of your portfolio is in SCV? EM V? Gold?

If not, what is the actual possible premium of those decision (A), (B), and (C) if you are right?

KlangFool
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Marseille07
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Re: "Just Stand There" vs. incorporating new info

Post by Marseille07 »

Iirc, didn't you have a similar thread before? Not saying you can't post similar threads, but I see some struggles in staying the course.

I'm not sure if there's a solution. Those who can stay the course don't care for "new info" as you put it.
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