I had a meeting with David Swensen tonight!

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abuss368
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I had a meeting with David Swensen tonight!

Post by abuss368 » Thu Apr 19, 2012 8:56 pm

An event was held at my University tonight with the guest being David Swensen. As an alumni, I was invited back for the event.

We had 20 - 25 faculty, professors, and a few students doing some homework on the event.

Mr. Swensen was great to say the least.

He discussed a variety of topics and provided excellent insight.

While the forum does not like politics, I will try to present all items that were discussed and also not include banned topics. Although the meeting really did not touch base on politics too much.


Highlights:

* He met privately with President Obama recently in the oval office. He explained to the President that the systematic risks of the mega banks is too great. Banking should be small and simple.

* Executive compensation needs to come down, and in the financial sector, this is already underway (i.e. Citi a couple of days ago).

* Derivatives need to be put on an exchange and regulated. Wall Street is fighting this due to the risks of loss of fees.

* He had a meeting on Lehman Brothers recently. As of today, 3 1/2 years since the firm imploded, there are estimates of derivatives exposure of $10 TRILLION to $30/$40 TRILLION. No one still knows the impact or understands it.

* The Euro will in all probability fail and disolve. He was not sure if that was 2, 5, or 7 years from now. However, he believes the Federal Reserve is already underway in being proactive with the risks.

* He likes a tax system with the rates increasing with income. He does not like that 40% - 50% of citizens pay no tax. We all need to "have skin in the game". We need to increase taxes on the wealthy, and all classes, but find the right mix. We can not burden the poor as much.

* Favors the Buffett rule with taxes.

* Government needs to find the right mix with higher taxes and reduced spending to solve the deficit. Either alone with not do it as the debt is too big now.

* Wanted to write his book Unconventional Success first and not write a book on endowments at all. The publisher made him write that book first.

* Stands behind his 5-6 portfolio recomendation in Unconventional Success after all these years without exception or change for the individual investor (i.e. no International Bonds still).

* Unless individual investors have a full time department, research staff, all hours of the day to research, at a very low costs, there should be no stocks or active investments. We should all be passive investors in the funds he recommended in his book.

* The problem is most investors are in the middle between active and passive. This concerns him. We need to continue to get the passive approach out there.

* Discussed Vanguard for a while, and encouraged everyone to place their assets with the firm as it is non-profit. There is no struggle between a profit orientation and a fiduciary responsibility.

* Believes the US and China (more the US) will carry the global economy forward over the next few years and decades.

* The last couple of years made him realize you are foolish to bet against the United States. No other country on the planet gets things done, responds to a crisis, supports capitalism, as we do.

* Believes the markets will be volitile for the next few years, possibly 5 - 10 years.

* Our debts and deficits are unsustainable and coming to a head soon. The fact that they are now out in the open and being discussed is a very good thing.

* Corporations have done a great job in building cash and paying off/down debt.

* The Individual has paid down some debt, and this is good, but he believes the individual has another 5 - 10 years of deleveraging ahead.

* Blames Alan Greenspan more than anyone on low rates, cheap money, excessive risks, bubbles, etc.

* No mention of the election.

An amazing and unbelievable event.

We all thanked Mr. Swensen for his time and our questions.
Last edited by abuss368 on Fri Apr 20, 2012 3:03 pm, edited 4 times in total.
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Re: I had a meeting with David Swensen tonight!

Post by peppers » Thu Apr 19, 2012 9:09 pm

Thank you for sharing Mr. Swensen's perspective.
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Re: I had a meeting with David Swensen tonight!

Post by SteveB3005 » Thu Apr 19, 2012 9:15 pm

Very nice report, thank you. I think Mr. Swensen has a good message on diversity and the importance of using the highest quality bonds.

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Re: I had a meeting with David Swensen tonight!

Post by DickBenson » Thu Apr 19, 2012 10:10 pm

abuss368 wrote: * Unless individual investors have a full time department, research staff, all hours of the day to research, at a very low costs, there should be no stocks or active investments. We should all be passive investors in the funds he recommended in his book.

* Discussed Vanguard for a while, and encourage everyone to place their assets with the firm as it is non-profit. There is no struggle between a profit orientation and a fiduciary responsibility.
Did he make any comments about his tenure as an active Trustee at TIAA-CREF.

A couple of decades ago participants in the TIAA-CREF program had to be very passive as there were only two choices to be made.... the CREF Stock Mutual Fund and TIAA Traditional. Now they are creating many (actively managed} funds from which participants can choose. This seems to run counter to his suggestion that "we should all be passive investors".

Dick

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Re: I had a meeting with David Swensen tonight!

Post by wjo » Thu Apr 19, 2012 11:37 pm

Thanks for the summary - good recap.

Good sense from Mr. Swensen as well. Glad that he is talking about these things.

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Re: I had a meeting with David Swensen tonight!

Post by abuss368 » Fri Apr 20, 2012 8:36 am

Two points to follow up:

* He made no reference to TIAA-CREF. The only institution he recommended that investors place their assets with was Vanguard. He talked extensively about the organization and how they are the best.

* I should have also noted, he had much to say on the subject of ETF's. He is not a fan of them, and believes they are out of control with all the offerings and speculation. He noted there are now statistics showing investors are moving away from ETF's and into index funds again. He mentioned that too many investors have been burned with the narrow focus of many ETF's. He further believes Congress should have never allowed the inverse or leveraged ETF's as this is not investing but speculating. Investors would be better served with index funds.

An amazing meeting with Mr. Swensen.
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Re: I had a meeting with David Swensen tonight!

Post by Lbill » Fri Apr 20, 2012 11:15 am

Thanks for the report, very interesting.
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Re: I had a meeting with David Swensen tonight!

Post by matjen » Fri Apr 20, 2012 11:55 am

Thank you for the report. I found his book to be one of the handful of must reads.
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Re: I had a meeting with David Swensen tonight!

Post by ofcmetz » Fri Apr 20, 2012 12:46 pm

Sounds like it was a wonderful time. How lucky of you to have such a great opportunity to attend. Thanks for sharing your summary of his comments for us.
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Re: I had a meeting with David Swensen tonight!

Post by FabLab » Fri Apr 20, 2012 1:31 pm

Nice synopsis. Thanks much, abuss!
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Re: I had a meeting with David Swensen tonight!

Post by sschullo » Fri Apr 20, 2012 1:48 pm

Thanks
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Re: I had a meeting with David Swensen tonight!

Post by Choy » Fri Apr 20, 2012 1:54 pm

Great to read some thoughts from him. Thanks for summarizing!

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Re: I had a meeting with David Swensen tonight!

Post by jginseattle » Fri Apr 20, 2012 4:59 pm

Thanks for posting this. I consider Unconventional Success a must read for investors.

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Re: I had a meeting with David Swensen tonight!

Post by Easy Rhino » Fri Apr 20, 2012 5:17 pm

Thanks for the update. It actually sounded like he spent a lot of discussion on politics (or at least policy). I would have asked him if he thought it was wise that other colleges tried to copy his Yale setup.

Or heck, if he's modified his Yale setup after the crisis.

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Re: I had a meeting with David Swensen tonight!

Post by fishndoc » Fri Apr 20, 2012 8:44 pm

* He met privately with President Obama recently in the oval office. He explained to the President that the systematic risks of the mega banks is too great. Banking should be small and simple.
Glad to hear that people like Swensen are being asked their views by Washington - hopefully our leaders will listen.
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Re: I had a meeting with David Swensen tonight!

Post by livesoft » Fri Apr 20, 2012 9:13 pm

Name-dropping within name-dropping ... that is so cool! :)
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"Unconventional Success" --A Gem

Post by Taylor Larimore » Fri Apr 20, 2012 9:46 pm

Bogleheads:

You can read more of the best ideas from Mr. Swensen's book, Unconventional Success, here:

UNCONVENTIONAL SUCCESS--a Gem

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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The meeting with David Swensen!

Post by shawcroft » Sun Apr 22, 2012 4:33 pm

Thanks for summarizing his remarks. I, like many other Bogleheads, would have loved to have attended and listened to the discussion.
The six "well-diversified" asset classes Swensen noted in his 2005 book (Unconventional Success) were: Domestic equity, Foreign developed equity, Emerging market equity, Real Estate, US Treasury Bonds, and TIPS. He placed municipal bonds in a grouping of "noncore assets".
Since many of us probably hold municipal bonds in bond funds, does anyone know if David Swensen has ever discussed his thoughts on what role ( if any) municipal bonds might have in a portfolio?
Shawcroft

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Re: I had a meeting with David Swensen tonight!

Post by Whiggish Boffin » Sun Apr 22, 2012 9:46 pm

Could we get him to come to Bogleheads 11? Or 12? He has lots of fans who'd love to met him.

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Re: I had a meeting with David Swensen tonight!

Post by More Please » Mon Apr 23, 2012 8:30 am

Thank you so much! I was surprised to read that they expect the Euro to fail! We were living in Italy when the Euro was introduced. The price of groceries went up, it was tough on the average citizen.

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Re: I had a meeting with David Swensen tonight!

Post by abuss368 » Sun May 06, 2012 4:13 pm

No problem. I thought most folks would be interested in my meeting with Mr. Swensen. I was happy to pass it on.
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Re: I had a meeting with David Swensen tonight!

Post by 6miths » Sun May 06, 2012 4:26 pm

Thanks for the sharing a great summary of the meeting.
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Re: I had a meeting with David Swensen tonight!

Post by pitt76 » Sun May 06, 2012 6:28 pm

Did I not read on here that he had made a change in his recommended portfolio ? I think he moved 5% from reits to EM and moved his bond fund from short to intermediate treasuries. Please correct me if I am wrong.

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Re: I had a meeting with David Swensen tonight!

Post by bobamis » Sun May 06, 2012 8:00 pm

Thank you for the information. I'm a fan of David Swensen and basically follow his recommendations in Unconventional Success. However, I do have municipal bonds, which Mr. Swensen does not endorse as a core investment category. Based on his reasons for having bonds in your portfolio, muni's fail on several points: 1. Alignment of interests (weighted toward seller rather than buyer, more balanced with Treasuries), 2) Callability, 3) Credit Risk, 4) potential changes in tax law, potentially negating the tax free status of muni's. If you understand Mr. Swensen's reasons for owning bonds, I can't argue with his assessment!

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Re: I had a meeting with David Swensen tonight!

Post by stratton » Sun May 06, 2012 8:03 pm

bobamis wrote:Thank you for the information. I'm a fan of David Swensen and basically follow his recommendations in Unconventional Success. However, I do have municipal bonds, which Mr. Swensen does not endorse as a core investment category. Based on his reasons for having bonds in your portfolio, muni's fail on several points: 1. Alignment of interests (weighted toward seller rather than buyer, more balanced with Treasuries), 2) Callability, 3) Credit Risk, 4) potential changes in tax law, potentially negating the tax free status of muni's. If you understand Mr. Swensen's reasons for owning bonds, I can't argue with his assessment!
Look at Baird Intermediate Muni (BMBIX) which as a lot more AAA/AA muni bonds than Vanguard has in their funds. 0.3% ER. $25K minimum at Vanguard.

Paul
...and then Buffy staked Edward. The end.

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Re: I had a meeting with David Swensen tonight!

Post by bobamis » Sun May 06, 2012 8:43 pm

pitt76 wrote:Did I not read on here that he had made a change in his recommended portfolio ? I think he moved 5% from reits to EM and moved his bond fund from short to intermediate treasuries. Please correct me if I am wrong.
That is correct, at least regarding moving 5% from REITs to EM. Don't know about a change from short to intermediate treasuries. see: http://www.yalealumnimagazine.com/issue ... ml#sidebar (changed noted in sidebar). (Entire article is interesting reading :happy)

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Re: I had a meeting with David Swensen tonight!

Post by lazyday » Mon May 07, 2012 2:17 pm

thanks abuss, glad to have chance to see some of Swensen's latest opinions.

On his changes to basic portfolio from Unconventional Success: yes, he made a small change moving 5% from REITs to EM, at a time when both were down about the same amount in the '08-09 crisis and many reits seemed vry risky, underwater in debt. (dont recall if he gave that or any reason, there is or was a video somewhere i think.)

He never specified short term for the bonds though. Someone from here contacted him IIRC, and he said a mix of short and long might be appropriate. That was hinted at in the book too IIRC--wasnt there a table of sample ETFs (or funds?) which included both a long and short term bond fund? Maybe not if my memory is worse than I think...

He may have somewhere said intermediate, perhaps later. I'm not sure it's extremely important whether choose long+short or intermediate, and might depend on the person, size of port, desire of simplicity or optimization.

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Re: I had a meeting with David Swensen tonight!

Post by CyberBob » Mon May 07, 2012 2:39 pm

pitt76 wrote:Did I not read on here that he had made a change in his recommended portfolio ? I think he moved 5% from reits to EM and moved his bond fund from short to intermediate treasuries. Please correct me if I am wrong.
He's never recommended holding only short treasuries. Articles discussing Swensen's portfolio from his book sometimes mention long-term bonds and sometimes short-term. Both are incorrect. The confusion probably arises because in his book he only mentions 'treasuries' without too many particulars. To add to the confusion, other articles that speak of a barbell of both short and long-term bonds. Swensen was emailed directly and his answer was that you should match the duration of the overall treasury market, which at the time of his email was slightly over 5 years.

Swensen's response:
  • Thank you for your nice message - In response to your question about the bond portfolio, I would try to match the market characteristics - See the following chart -

    Durations as of August 31, 2006:
    Lehman US Treasury Index - 5.07
    IShares 1-3 Treasury (SHY) - 1.67
    IShares 7-10 Treasury (IEF) - 6.45
    IShares 20+ Treasury (TLT) - 13.00

    The easiest way to match the market would be to own some of the 1-3 Treasury (70%) and some of the 20+ Treasury (30%) so the weighted average duration matches the market's 5.07 years -

    I hope this helps -

    David Swensen
But rather than using two ETF's, the easiest way would probably be to simply own the Vanguard Intermediate-Term Treasury fund, which has a duration just a bit above 5 years.

Bob

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Re: I had a meeting with David Swensen tonight!

Post by Leesbro63 » Mon May 07, 2012 3:52 pm

Is this a snarky way of saying "I missed the rebound from 2009"?

"* The last couple of years made him realize you are foolish to bet against the United States. No other country on the planet gets things done, responds to a crisis, supports capitalism, as we do."

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Re: I had a meeting with David Swensen tonight!

Post by Beagler » Mon May 07, 2012 9:40 pm

Shouldn't this thread be titled "I attended a meeting where David Swensen spoke last night? " The current title strongly suggests that OP met privately with David Swensen.
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Re: I had a meeting with David Swensen tonight!

Post by abuss368 » Fri May 25, 2012 9:10 pm

Beagler wrote:Shouldn't this thread be titled "I attended a meeting where David Swensen spoke last night? " The current title strongly suggests that OP met privately with David Swensen.
Beagler,

Thank you for your very kind and thoughtful response. I am very glad to have had the opportunity with Mr. Swensen, and looked forward to providing a very detailed summary to the forum.

I am thankful that you found the post informative and useful.

Kind regards.
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Re: I had a meeting with David Swensen tonight!

Post by pascalwager » Sat May 26, 2012 3:40 am

But rather than using two ETF's, the easiest way would probably be to simply own the Vanguard Intermediate-Term Treasury fund, which has a duration just a bit above 5 years.
Holding the two funds (ST and LT) might make it easier to modify the portfolio bonds duration as the overall treasury index duration changed.
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Re: I had a meeting with David Swensen tonight!

Post by Beagler » Sat May 26, 2012 7:16 am

abuss368 wrote:
Beagler wrote:Shouldn't this thread be titled "I attended a meeting where David Swensen spoke last night? " The current title strongly suggests that OP met privately with David Swensen.
I am very glad to have had the opportunity with Mr. Swensen,..."
How ironic that the syntax of your statement is the kernel of my post.

Thank you for posting a synopsis of the points made by Mr. Swensen as he addressed the gathering you attended.
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.

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Re: I had a meeting with David Swensen tonight!

Post by 555 » Sat May 26, 2012 9:59 am

Beagler wrote:Shouldn't this thread be titled "I attended a meeting where David Swensen spoke last night? " The current title strongly suggests that OP met privately with David Swensen.
Yes, but he seemed closer when viewing through binoculars.

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Re: I had a meeting with David Swensen tonight!

Post by abuss368 » Sat May 26, 2012 12:06 pm

Beagler wrote:
abuss368 wrote:
Beagler wrote:Shouldn't this thread be titled "I attended a meeting where David Swensen spoke last night? " The current title strongly suggests that OP met privately with David Swensen.
I am very glad to have had the opportunity with Mr. Swensen,..."
How ironic that the syntax of your statement is the kernel of my post.

Thank you for posting a synopsis of the points made by Mr. Swensen as he addressed the gathering you attended.
Hi Beagler,

I am glad you found the detailed summary useful. There is another meeting being planned presently. Should I have the excellent opportunity again, I will definately provide feedback for all.

Kind regards.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: I had a meeting with David Swensen tonight!

Post by Whiggish Boffin » Sat May 26, 2012 12:35 pm

Please tell him he has lots of Boglehead fans, and ask if he'd come to Bogleheads 12 in 2013? (I realize he's pretty busy, but it's not far away...)

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Re: I had a meeting with David Swensen tonight!

Post by pascalwager » Tue May 29, 2012 2:22 am

Did Mr. Swensen discuss the very low treasury yields and suggest any bond modifications thereto?
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Re: I had a meeting with David Swensen tonight!

Post by InVestFuture » Tue May 29, 2012 3:27 am

I do not believe this is the lecture the OP is referring to, but this is an interesting lecture by Swensen:
http://www.youtube.com/watch?v=wRdx7kVNQ_E

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Re: I had a meeting with David Swensen tonight!

Post by abuss368 » Tue May 29, 2012 8:56 am

Mr. Swensen did recommned the portfolio from his book Unconventional Success without exception. He mentioned that portfolio still stands and he thinks it will continue to benefit the individual investor. I did not come away with any sense that the portfolio has changed. He took the time to mention each of the funds and percentages again.

He did have some comments about the low rates, and that they will have to increase in the future. How soon is anyone's guess. However, I did not hear anything that Treasuires and TIPS should be substituted.
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Re: I had a meeting with David Swensen tonight!

Post by grok87 » Fri Aug 10, 2018 2:39 pm

just bumping this interesting thread from a few years ago. I guess if one follows Swensen and holds a separate allocation to EM it might be time to rebalance.
Keep calm and Boglehead on. KCBO.

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Re: I had a meeting with David Swensen tonight!

Post by iceport » Fri Aug 10, 2018 2:57 pm

grok87 wrote:
Fri Aug 10, 2018 2:39 pm
just bumping this interesting thread from a few years ago. I guess if one follows Swensen and holds a separate allocation to EM it might be time to rebalance.
Hi grok,

My portfolio strongly resembles Swensen's model portfolio, and I do have a dedicated allocation to EM with a small tilt. But last time I checked (last weekend), I was just under but very close to my target for EM. Are you asking because of today's ~2% clobbering? I doubt that will be enough to get me anywhere close to my 20% rebalancing band.

Are you getting close to rebalancing? Do you use defined rebalancing bands?
"Discipline matters more than allocation.” ─William Bernstein

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Re: I had a meeting with David Swensen tonight!

Post by grok87 » Fri Aug 10, 2018 3:17 pm

iceport wrote:
Fri Aug 10, 2018 2:57 pm
grok87 wrote:
Fri Aug 10, 2018 2:39 pm
just bumping this interesting thread from a few years ago. I guess if one follows Swensen and holds a separate allocation to EM it might be time to rebalance.
Hi grok,

My portfolio strongly resembles Swensen's model portfolio, and I do have a dedicated allocation to EM with a small tilt. But last time I checked (last weekend), I was just under but very close to my target for EM. Are you asking because of today's ~2% clobbering? I doubt that will be enough to get me anywhere close to my 20% rebalancing band.

Are you getting close to rebalancing? Do you use defined rebalancing bands?
thanks iceport.
i'm actually doing lazy Swensen right now and just think of all my international as a lump. Basically i just invest in Vanguard Total International and i have in Vanguard Total World.
i'm thinking about putting a little in EM though.
Keep calm and Boglehead on. KCBO.

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Re: I had a meeting with David Swensen tonight!

Post by iceport » Fri Aug 10, 2018 3:56 pm

grok87 wrote:
Fri Aug 10, 2018 3:17 pm
iceport wrote:
Fri Aug 10, 2018 2:57 pm
grok87 wrote:
Fri Aug 10, 2018 2:39 pm
just bumping this interesting thread from a few years ago. I guess if one follows Swensen and holds a separate allocation to EM it might be time to rebalance.
Hi grok,

My portfolio strongly resembles Swensen's model portfolio, and I do have a dedicated allocation to EM with a small tilt. But last time I checked (last weekend), I was just under but very close to my target for EM. Are you asking because of today's ~2% clobbering? I doubt that will be enough to get me anywhere close to my 20% rebalancing band.

Are you getting close to rebalancing? Do you use defined rebalancing bands?
thanks iceport.
i'm actually doing lazy Swensen right now and just think of all my international as a lump. Basically i just invest in Vanguard Total International and i have in Vanguard Total World.
i'm thinking about putting a little in EM though.
Coincidentally, I was recently prompted by a reference to the Vanguard total world index fund in another post to review my EM exposure. As a percent of all equity, the total world fund holds 9.6% EM. My own (target) EM allocation is barely above that, at 9.7% of equity, and I am over-weighting. The disconnect, of course, is that my EM is overweight only as a percent of foreign equity, and my foreign allocation (aside from an international real estate allocation that I view separately as part of the REIT/real estate allocation... confused yet?) is less than market weight.

Still, I noticed a couple of things. The first is how modest my EM overweight is, in the big picture. The second is how small a percentage of the whole portfolio, including fixed income and all, the EM allocation really is. In fleeting moments of weakness, I find myself tempted to bump it up. :greedy I've successfully resisted that urge to tinker for over a year now. 8-)
"Discipline matters more than allocation.” ─William Bernstein

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Taylor Larimore
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Re: I had a meeting with David Swensen tonight!

Post by Taylor Larimore » Fri Aug 10, 2018 5:38 pm

Bogleheads:

This Topic was started about six years ago.

It is interesting to see how David Swensen's Yale Unconventional Portfolio has performed compared with Allan Roth's Second Grader's Starter Three-Fund Portfolio (8/09/2018):

Portfolio---------------------------------------------------5-Years----10-Years (annualized return)

Yale U's Unconventional -------------------------------- 7.37%-------6.59%
Second Grader's Three-Fund Portfolio-----------------9.54%-------7.72%

Lesson learned: Portfolios do not need to be complicated to be successful.

Past performance does not forecast future performance

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: I had a meeting with David Swensen tonight!

Post by triceratop » Fri Aug 10, 2018 5:48 pm

Taylor Larimore wrote:
Fri Aug 10, 2018 5:38 pm
Bogleheads:

This Topic was started about six years ago.

It is interesting to see how David Swensen's Yale Unconventional Portfolio has performed compared with Allan Roth's Second Grader's Starter Three-Fund Portfolio (8/09/2018):

Portfolio---------------------------------------------------5-Years----10-Years (annualized return)

Yale U's Unconventional -------------------------------- 7.37%-------6.59%
Second Grader's Three-Fund Portfolio-----------------9.54%-------7.72%

Lesson learned: Portfolios do not need to be complicated to be successful.

Past performance does not forecast future performance

Best wishes.
Taylor
No, it's not really interesting at all, in my view. Just to cut to the chase: the outperforming portfolio in Taylor's example over a strong bull market period has 1/3 the bond allocation (and substantially less inflation protection) than the underperforming one does. I trust discerning readers will be able to tell if it is a good comparison.

edit: to clarify, I deeply appreciate Taylor and his perspectives, but at times strongly disagree with the nature of some posts. When I find such posts I attempt to correct the record to the best of my ability and according to my opinion.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: I had a meeting with David Swensen tonight!

Post by Better2bWise » Fri Aug 10, 2018 5:59 pm

abuss368 wrote:
Thu Apr 19, 2012 8:56 pm

* The Euro will in all probability fail and dissolve. He was not sure if that was 2, 5, or 7 years from now. However, he believes the Federal Reserve is already underway in being proactive with the risks.

* The last couple of years made him realize you are foolish to bet against the United States. No other country on the planet gets things done, responds to a crisis, supports capitalism, as we do.

* Corporations have done a great job in building cash and paying off/down debt.

I believe that these facts would back John Bogles bias in that International index funds are less desirable than Domestic index funds. What do you think?

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Re: I had a meeting with David Swensen tonight!

Post by staythecourse » Fri Aug 10, 2018 6:12 pm

Taylor Larimore wrote:
Fri Aug 10, 2018 5:38 pm
Bogleheads:

This Topic was started about six years ago.

It is interesting to see how David Swensen's Yale Unconventional Portfolio has performed compared with Allan Roth's Second Grader's Starter Three-Fund Portfolio (8/09/2018):

Portfolio---------------------------------------------------5-Years----10-Years (annualized return)

Yale U's Unconventional -------------------------------- 7.37%-------6.59%
Second Grader's Three-Fund Portfolio-----------------9.54%-------7.72%

Lesson learned: Portfolios do not need to be complicated to be successful.

Past performance does not forecast future performance

Best wishes.
Taylor
I think the overlying theme this represents is that there is no secret sauce (Mr. Swensen or Mr. Roth) and that the returns are more in line a representation of its underlying asset allocation. No different then what the BSB and BHB studies already showed us for the ?10-20 years ago. The one advantage we do know is that passive management is a whole much less expensive and more tax efficient then active management is as a whole.

This is why tracking any performance is a waste of time as they often represent the underlying benchmarks on a % allocation basis so its returns going forward or backward is a reflection of that asset allocation. Even if there is positive alpha there is no predictable way to well predict that alpha going forward. This was the original spirit in the SEC putting the "past performance is no guarantee of future peformance".

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: I had a meeting with David Swensen tonight!

Post by abuss368 » Fri Aug 10, 2018 9:01 pm

grok87 wrote:
Fri Aug 10, 2018 2:39 pm
just bumping this interesting thread from a few years ago. I guess if one follows Swensen and holds a separate allocation to EM it might be time to rebalance.
Thanks!
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: I had a meeting with David Swensen tonight!

Post by abuss368 » Fri Aug 10, 2018 9:06 pm

Taylor Larimore wrote:
Fri Aug 10, 2018 5:38 pm
Bogleheads:

This Topic was started about six years ago.

It is interesting to see how David Swensen's Yale Unconventional Portfolio has performed compared with Allan Roth's Second Grader's Starter Three-Fund Portfolio (8/09/2018):

Portfolio---------------------------------------------------5-Years----10-Years (annualized return)

Yale U's Unconventional -------------------------------- 7.37%-------6.59%
Second Grader's Three-Fund Portfolio-----------------9.54%-------7.72%

Lesson learned: Portfolios do not need to be complicated to be successful.

Past performance does not forecast future performance

Best wishes.
Taylor
Hi Bogleheads -

I started this thread but over the years I have resisted the urge to complicate our investment portfolio. Taylor and Mr. Bogle are right: simplicity is the master key to financial success!
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: I had a meeting with David Swensen tonight!

Post by abuss368 » Fri Aug 10, 2018 9:13 pm

David Swensen’s Unconvential Success investment portfolio has been hurt by TIPS, REITs, and Emerging Markets. Years earlier this portfolio was leading the pack.

Strive for simplicity.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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