chart/article in Times boglehead idea sucessful

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
sometimesinvestor
Posts: 1160
Joined: Wed May 13, 2009 6:54 am

chart/article in Times boglehead idea sucessful

Post by sometimesinvestor » Fri Mar 23, 2012 8:25 pm

Here is article
http://www.nytimes.com/2012/03/22/your- ... 7MUF79JBdA

Here is chart

http://www.nytimes.com/interactive/2012 ... your-money

Results show that a balanced portfolio(roughly 50-50) underperformed The S+P 500 from Jan 95-Feb 2012 by about 1 point /yearbut with less volatilty so that an elderly couple with some handholding by an advisor was able to stay the course and not sell at the wrong time(or the right time). Vanguard funds and DFA funds are utilised. Of course if the clock had started in 2000 the portfolio would have done much better than the S+P 500.

I think the article may be useful for encouraging people to take a boglehead approach

livesoft
Posts: 56581
Joined: Thu Mar 01, 2007 8:00 pm

Re: chart/article in Times boglehead idea sucessful

Post by livesoft » Fri Mar 23, 2012 8:39 pm

That's a nice feel-good article. A small (and value) quibble is that the Vanguard portfolio to match the DFA portfolio probably does not really match due to the different small- and value-tilts within the named funds.

I believe you cannot take the same percentages of Vanguard funds with similar names as the DFA funds and call that a DFA-like Vanguard portfolio. I believe one needs to have less large-cap and more small-cap and more value Vanguard fund percentages to arrive at the same place. This is a rather common flaw in Vanguard vs DFA comparisons ... if you get my tilt.
This signature message sponsored by sscritic: Learn to fish.

User avatar
bob90245
Posts: 6511
Joined: Mon Feb 19, 2007 8:51 pm

Re: chart/article in Times boglehead idea sucessful

Post by bob90245 » Fri Mar 23, 2012 9:02 pm

sometimesinvestor wrote:Here is chart

http://www.nytimes.com/interactive/2012 ... your-money

Would the chart be better representative if they used a log scale on the Y axis? I know these linear charts make the steep ups and downs more dramatic looking.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.

User avatar
#Cruncher
Posts: 2418
Joined: Fri May 14, 2010 2:33 am
Location: New York City
Contact:

Re: chart/article in Times boglehead idea sucessful

Post by #Cruncher » Fri Mar 23, 2012 9:30 pm

bob90245 wrote:... these linear charts make the steep ups and downs more dramatic looking.
More dramatic than what? For me no chart would be more dramatic than actually living through the ups and downs. :wink:

By the way, I did a comparison using the Vanguard Total Stock and Total Bond market funds for a similar period that showed an 80:20, 60:40, and even 40:60 stock:bond allocation did slightly better than 100% stocks. See: Vanguard TSM & TBM Allocations Returns 1996 - 2011.

Post Reply