Who takes financial chances and why is this forum so financially conservative?

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Clever_Username
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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Clever_Username » Tue Jun 13, 2017 3:48 pm

CppCoder wrote:
staythecourse wrote: In my career about 20 minutes into a conversation I can figure out the math oriented folks as they want logic for EVERYTHING. Only problem is life doesn't work that way.
But shouldn't life work that way? Quick, am I mathematically oriented or not? :D
If you were, wouldn't your user name be ErlangCoder or PrologCoder instead?
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Re: Who takes financial chances and why is this forum so financially conservative?

Post by *3!4!/5! » Tue Jun 13, 2017 4:06 pm

staythecourse wrote:I do agree with you the board is a little nuts about the "numbers" needed. For a rational bunch of folks they think it is somehow rational to try to eliminate ALL risks. No offense to many great posters on this board, but I see certain personality traits consistent by occupation. For engineers and computer guys they are very inflexible and detail oriented. That makes many on here GREAT investors and lousy at accepting that there are no absolutes in life. In my career about 20 minutes into a conversation I can figure out the math oriented folks as they want logic for EVERYTHING. Only problem is life doesn't work that way.
Yeah! That's why no-one ever invented the concept of probability! :oops:

simple man
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Re: Who takes financial chances and why is this forum so financially conservative?

Post by simple man » Tue Jun 13, 2017 4:20 pm

Reminds me of the classic argument:
"You're a pessimist."
"I'm a realist."
You're a pessimist."
"I'm a realist."
repeat... :oops:

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by CppCoder » Tue Jun 13, 2017 4:51 pm

Clever_Username wrote:
CppCoder wrote:
staythecourse wrote: In my career about 20 minutes into a conversation I can figure out the math oriented folks as they want logic for EVERYTHING. Only problem is life doesn't work that way.
But shouldn't life work that way? Quick, am I mathematically oriented or not? :D
If you were, wouldn't your user name be ErlangCoder or PrologCoder instead?
Do you think mathematical software is not written in C++?

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Meaty
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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Meaty » Tue Jun 13, 2017 5:06 pm

It's probably fair to say the membership of this board is more conservative financially than the average person. That said, the average person has nearly $0 saved.

I lean to the less conservative side of bogleheads - I max all tax advantaged space each year plus more, but I'm 100% stocks (age 33) and am considering a move geographically that would put me in the tough spot of having to move if I need a new job
"Discipline equals Freedom" - Jocko Willink

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Clever_Username » Tue Jun 13, 2017 5:11 pm

CppCoder wrote:
Clever_Username wrote:
CppCoder wrote:
staythecourse wrote: In my career about 20 minutes into a conversation I can figure out the math oriented folks as they want logic for EVERYTHING. Only problem is life doesn't work that way.
But shouldn't life work that way? Quick, am I mathematically oriented or not? :D
If you were, wouldn't your user name be ErlangCoder or PrologCoder instead?
Do you think mathematical software is not written in C++?
Oh, I know it is. I've even written some. But I so rarely get a chance to make a joke about programming paradigms and you set me up perfectly. Thanks by the way :-)
"What was true then is true now. Have a plan. Stick to it." -- XXXX, [i]Layer Cake[/i]

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Dottie57 » Tue Jun 13, 2017 5:15 pm

bligh wrote:Sometimes.. when I think no one is watching.... I buy lottery tickets. :moneybag

Pssst.. I do too. shhhhhhh....

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by likegarden » Tue Jun 13, 2017 5:51 pm

I am retired and took a lot of financial chances all my life, but was lucky. Since retirement and finding the Bogleheads I became conservative.
I grew up and became an engineer in Europe. After 3 not-so-good jobs I found this large US company with a future pension. During all those years I had no idea about investing, but wife and I kept saving. Since we had no internet then, and reliable financial education seemed to be missing, we did not know we were taking financial chances.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Vanguard Fan 1367 » Tue Jun 13, 2017 5:57 pm

I am 64 and have 88 12 stock to bond ratio. And my bonds are Long Term Corporate. Lots of folks on here would think that is taking a financial chance. :shock:

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by peppers » Tue Jun 13, 2017 6:11 pm

I will be visiting a betting establishment and participate in some games of chance.

Does that count?
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Re: Who takes financial chances and why is this forum so financially conservative?

Post by itstoomuch » Tue Jun 13, 2017 6:19 pm

OP,
Have no idea if BH people are finally conservative. Perhaps the perception exists because don't know their experiences, current situation, future expectations or even their age.

I'm fiscally careful with our +1.1 funding ratio, not necessarily conservative.
I'm also fairly aggressive in my Discretionary Acct, where I have less than 10% Indexes, and mostly individual stocks and cash, no bonds. My time of Indexing is past (may come again when I get tied of investing) :greedy
See notes below.
Ymmv
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Re: Who takes financial chances and why is this forum so financially conservative?

Post by denovo » Tue Jun 13, 2017 6:21 pm

triceratop wrote:
TomCat96 wrote:I just wanted to say for those of you who don't know, there's a subreddit called FIRE which stands for Financially Independent, Retire Early, which is essentially the younger version of bogleheads.

By definition, most are not yet retired. If you're looking for advice (and implicit higher risk tolerance) from the younger crowd, that might be more up your alley.
I do think however their discussion is a little more disorganized.
Boglehead philosophy applies to all age groups. I don't think a young person would necessarily want advice from a younger crowd, they would want advice tailored for a younger person. Older, more experienced, more knowledgeable investors may have the best advice for young investors.
Could be, in theory, if generic older person is keeping up to date with recent developments, but people tend to be anchored in their own experiences. There's countless older Bogleheads who discuss paying for college expenses by working in the summer which is impossible these days or talking about 2x income for home price which is frankly not realistic in most parts of the country.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by CppCoder » Tue Jun 13, 2017 6:24 pm

Clever_Username wrote:
CppCoder wrote:
Do you think mathematical software is not written in C++?
Oh, I know it is. I've even written some. But I so rarely get a chance to make a joke about programming paradigms and you set me up perfectly. Thanks by the way :-)
Well, in that case, you're welcome. :)

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by triceratop » Tue Jun 13, 2017 6:32 pm

CppCoder wrote:
Clever_Username wrote:
CppCoder wrote:
Do you think mathematical software is not written in C++?
Oh, I know it is. I've even written some. But I so rarely get a chance to make a joke about programming paradigms and you set me up perfectly. Thanks by the way :-)
Well, in that case, you're welcome. :)
Real mathematical programmers use Fortran. :twisted:

(I too have used C++ for math)
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by bhough » Tue Jun 13, 2017 6:53 pm

Everyone is going to tell me how retarted I am for doing this, but here is a risk I took last year:

Sat next to a person on a plan who works in development for a publicly owned Mall Reit based in Tennessee. She said that the analysts beat up her company's stock as it was middle market, not top market and their rents/Sq foot were lower. She thought her company was undervalued. So I went home, looked it up and their dividend yield was 10%. Same or higher dividend for > 10 years. PE < 10. So I borrowed $80,000 against a line of credit I had already at my bank which was at 4% (variable) and purchased the stock. It has paid out $8000 so far and is set to pay out another $2000 next month. However, it has declined in value given the retail scare. I'm holding for the long term, so the price doesn't bother me.

Probably not smart due to 1) stock picking 2)I'm paying ordinary marginal tax rates as this is not a qualified dividend 3) My gamble is leveraged I could lose the investment and still owe the money. I have mixed feelings about this investment, but it certainly qualifies as risky. Slowly paying off the LOC with the dividends. (mathematically, I'm still ahead at my tax rate even if i'm paying 4% on the money, assuming the dividend doesn't go down,...)

I also bought a house one time on a credit card for $42,000, but paid that off and am now renting it for $750/month. Bought it in Pennsylvania in January in 2009 when no one was loaning money and nothing was selling. Also bought a house without running water recently for $22,000, fixed it up and am now renting it out for $725. Both are probably unwise investments mathematically speaking if you believe in the efficient market, etc. (of which I also have mixed feelings). I'm not sure I'd do any of these things 5 years from now.

But I'm probably not the typical poster here. Just directly answering your question. It is probably more appropriate to quietly invest in 3 index funds like Mr Larrimore and most here recommend. The more I read here, the less of this stuff I'm probably going to do.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by warowits » Tue Jun 13, 2017 6:56 pm

rgs92 wrote: But you really can't rest until you have at least a million and a half for a couple (or the equivalent in pensions). And this is in addition to social security.
Two years ago I would have said this is insane. I would have assumed you were being sarcastic, because that is massively more than the average person saves. Now thanks to Bogleheads I have a spreadsheet plotting a course to basically this exact destination.
There are an army of people whose pay checks depend on convincing people to invest in ways that are against their self interest. This forum is the volunteer army that fights back!

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Vanguard Fan 1367 » Tue Jun 13, 2017 7:14 pm

warowits wrote:
rgs92 wrote: But you really can't rest until you have at least a million and a half for a couple (or the equivalent in pensions). And this is in addition to social security.
Two years ago I would have said this is insane. I would have assumed you were being sarcastic, because that is massively more than the average person saves. Now thanks to Bogleheads I have a spreadsheet plotting a course to basically this exact destination.
I agree with you. I used to think it was insane to as Bogle says, take what the market gives you in returns. I passed up a lot of returns between 1982 and 2014 when I became a Boglehead. For now I feel quite comfortable with the Vanguard Total Stock index and some other Vanguard Stock index funds.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by 3CT_Paddler » Tue Jun 13, 2017 7:22 pm

This board naturally has a large contingent of white collar workers who own a significant amount of stocks and bonds. Boglehead investing says little about investing time in real estate or small businesses. Most white collar workers I know are not out there taking big risks. Nothing wrong with it, it's just reality. The entrepreneurial risk takers are putting all of their equity into their business. Now that is a gross generalization, but I think if you polled Bogleheads you would find it is largely salaried workers who do not own their own business.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by dbr » Tue Jun 13, 2017 7:28 pm

3CT_Paddler wrote:This board naturally has a large contingent of white collar workers who own a significant amount of stocks and bonds. Boglehead investing says little about investing time in real estate or small businesses. Most white collar workers I know are not out there taking big risks. Nothing wrong with it, it's just reality. The entrepreneurial risk takers are putting all of their equity into their business. Now that is a gross generalization, but I think if you polled Bogleheads you would find it is largely salaried workers who do not own their own business.
I think you are right. But this forum is a forum for people who have money from savings to invest (meaning they have lived beneath their means and have savings) doing so following the tenets of investing in mutual funds as inspired by John Bogle. This is not a forum for small businessmen, owners of rental real estate, farmers, and so on and certainly not for inventors, entrepreneurs, and the ilk. Perhaps when the time comes that someone cashes out or inherits from one of the former, they would come here to talk about mutual fund investing. This forum is also not much interested in stock picking, trading, or speculating.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by avalpert » Tue Jun 13, 2017 7:37 pm

3CT_Paddler wrote:This board naturally has a large contingent of white collar workers who own a significant amount of stocks and bonds. Boglehead investing says little about investing time in real estate or small businesses. Most white collar workers I know are not out there taking big risks. Nothing wrong with it, it's just reality. The entrepreneurial risk takers are putting all of their equity into their business. Now that is a gross generalization, but I think if you polled Bogleheads you would find it is largely salaried workers who do not own their own business.
Given the number of doctors with their own practices and other questions taht come up around 1099s, solo 401ks etc. I'm not so sure that we don't have an overpresentation of small business owners relative to the overall economy.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by itstoomuch » Tue Jun 13, 2017 7:38 pm

dbr wrote:
3CT_Paddler wrote:This board naturally has a large contingent of white collar workers who own a significant amount of stocks and bonds. Boglehead investing says little about investing time in real estate or small businesses. Most white collar workers I know are not out there taking big risks. Nothing wrong with it, it's just reality. The entrepreneurial risk takers are putting all of their equity into their business. Now that is a gross generalization, but I think if you polled Bogleheads you would find it is largely salaried workers who do not own their own business.
I think you are right. But this forum is a forum for people who have money from savings to invest (meaning they have lived beneath their means and have savings) doing so following the tenets of investing in mutual funds as inspired by John Bogle. This is not a forum for small businessmen, owners of rental real estate, farmers, and so on and certainly not for inventors, entrepreneurs, and the ilk. Perhaps when the time comes that someone cashes out or inherits from one of the former, they would come here to talk about mutual fund investing. This forum is also not much interested in stock picking, trading, or speculating.
guilty of 4 of the mentioned :D :oops: .
YMMV
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Re: Who takes financial chances and why is this forum so financially conservative?

Post by dbr » Tue Jun 13, 2017 7:40 pm

avalpert wrote:
3CT_Paddler wrote:This board naturally has a large contingent of white collar workers who own a significant amount of stocks and bonds. Boglehead investing says little about investing time in real estate or small businesses. Most white collar workers I know are not out there taking big risks. Nothing wrong with it, it's just reality. The entrepreneurial risk takers are putting all of their equity into their business. Now that is a gross generalization, but I think if you polled Bogleheads you would find it is largely salaried workers who do not own their own business.
Given the number of doctors with their own practices and other questions taht come up around 1099s, solo 401ks etc. I'm not so sure that we don't have an overpresentation of small business owners relative to the overall economy.
Somehow I don't think of doctors and dentists as small businessmen, but I should stand corrected. I suspect the small business model in medicine may be going the way of buggy whips, however. I guess we could include many accountants and lawyers, though.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by timboktoo » Tue Jun 13, 2017 7:47 pm

What one person considers conservative another person may consider risky. It sounds cliché, but it's true.

- Tim

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by One Ping » Tue Jun 13, 2017 7:56 pm

triceratop wrote:Real mathematical programmers use Fortran. :twisted:
I resemble that remark! :sharebeer
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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Gadget » Tue Jun 13, 2017 8:03 pm

triceratop wrote:
TomCat96 wrote:I just wanted to say for those of you who don't know, there's a subreddit called FIRE which stands for Financially Independent, Retire Early, which is essentially the younger version of bogleheads.

By definition, most are not yet retired. If you're looking for advice (and implicit higher risk tolerance) from the younger crowd, that might be more up your alley.
I do think however their discussion is a little more disorganized.
Boglehead philosophy applies to all age groups. I don't think a young person would necessarily want advice from a younger crowd, they would want advice tailored for a younger person. Older, more experienced, more knowledgeable investors may have the best advice for young investors.
+1. I'm 33. I think I relate more to the people on other forums, but this forum just seems more practical and knowledgeable on average. I go here to learn. Or maybe I'm just an old person at heart.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by bayview » Tue Jun 13, 2017 8:21 pm

Dottie57 wrote:
bligh wrote:Sometimes.. when I think no one is watching.... I buy lottery tickets. :moneybag
Pssst.. I do too. shhhhhhh....
My late father-in-law (an engineer) used to say that lottery tickets were a tax on stupidity. The more stupid you were, the more you paid, and yet we are all a bit stupid, so we shouldn't feel bad about buying the occasional ticket.

This cheers me up when I buy a lottery ticket < once a year.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by MoonOrb » Tue Jun 13, 2017 8:28 pm

This forum is financially conservative because values that are embraced widely across this forum include things like Living Within Your Means, Buying and Holding, Being Satisfied With the Market Return, Diversifying, etc. Not every single person will do every one of those things, but you can think of them as key Boglehead principles, and this is a forum that attracts people who generally ascribe to those key principles.

It's a little like asking a forum designed for long distance runners, "Why is everyone around here in such great cardiovascular shape?"

Taking financial chances isn't entirely antithetical to Boglehead-ism, but taking unnecessary risks with long-term investing does run counter to many of the core principles embraced by many here. Put another way, this forum is made up substantially of people who have bought into the idea that slow and steady wins the race and are comfortable with that. So it's going to skew rather conservative.

But more than that, the forum is going to seem conservative because it's mostly going to be those ideas that are being discussed and approved of. The vast majority of posts are going to center around strategies that enable one to get their fair share of the market's return without taking on unnecessary risk, and it's going to be a distinct minority of posts that talk about things like: quitting one's job and selling one's house and car and moving overseas at age 30; borrowing money at a low-ish interest rate and then investing that money; purchasing a house in a HCOL area with no money down when only one spouse had a job and the economy was looking pretty bleak; turning down an extremely high-paying job without any other job offer in hand and just assuming that another job could be found, etc. Those aren't examples I chose randomly; they're from my life. But those aren't the types of things I'd make posts about on this forum--here, I'd be more likely to make posts about when I should rebalance, whether there are ways to even further reduce my expenditures, and so on.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by triceratop » Tue Jun 13, 2017 8:29 pm

bayview wrote:
Dottie57 wrote:
bligh wrote:Sometimes.. when I think no one is watching.... I buy lottery tickets. :moneybag
Pssst.. I do too. shhhhhhh....
My late father-in-law (an engineer) used to say that lottery tickets were a tax on stupidity. The more stupid you were, the more you paid, and yet we are all a bit stupid, so we shouldn't feel bad about buying the occasional ticket.

This cheers me up when I buy a lottery ticket < once a year.
I have found that simply thinking about winning the lottery gives me the same satisfaction that actually purchasing a ticket does (I only bought one, in college). So one does not have to spend money to "play the game".
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by bayview » Tue Jun 13, 2017 8:31 pm

triceratop wrote:
bayview wrote:
Dottie57 wrote:
bligh wrote:Sometimes.. when I think no one is watching.... I buy lottery tickets. :moneybag
Pssst.. I do too. shhhhhhh....
My late father-in-law (an engineer) used to say that lottery tickets were a tax on stupidity. The more stupid you were, the more you paid, and yet we are all a bit stupid, so we shouldn't feel bad about buying the occasional ticket.

This cheers me up when I buy a lottery ticket < once a year.
I have found that simply thinking about winning the lottery gives me the same satisfaction that actually purchasing a ticket does (I only bought one, in college). So one does not have to spend money to "play the game".
Yes, my four $1 total purchases over my entire life gave me quite a thrill. (and $0 ROI)
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Dottie57 » Tue Jun 13, 2017 8:33 pm

triceratop wrote:
bayview wrote:
Dottie57 wrote:
bligh wrote:Sometimes.. when I think no one is watching.... I buy lottery tickets. :moneybag
Pssst.. I do too. shhhhhhh....
My late father-in-law (an engineer) used to say that lottery tickets were a tax on stupidity. The more stupid you were, the more you paid, and yet we are all a bit stupid, so we shouldn't feel bad about buying the occasional ticket.

This cheers me up when I buy a lottery ticket < once a year.
I have found that simply thinking about winning the lottery gives me the same satisfaction that actually purchasing a ticket does (I only bought one, in college). So one does not have to spend money to "play the game".

I buy my ticket when I really want to quit my job. It buy too many tickets. :o

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by McGilicutty » Tue Jun 13, 2017 8:51 pm

Different people get their rocks off in different ways. Personally, spending money unnecessarily has never appealed to me. I get more of a thrill by seeing how much I can save versus seeing how much I can spend.

However, unlike a lot of Bogleheads, I do like to invest in individual stocks. Most Bogleheads find this to be a pointless exercise because I am unlikely to beat the market over the long term. However, it's something that I enjoy, so I've dedicated about 10% of my portfolio to individual stocks.

If you find this message board to be too conservative for you, there are plenty of other message boards out there. The Motley Fool has message boards for individual stocks. However, if you want to post where most of the people there post, you will have to pay at least $50 per year. reddit.com/r/wallstreetbets has some YOLO risk takers on it. You just have to keep searching until you find the site or sites that match your particular personality.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by patrick » Tue Jun 13, 2017 9:29 pm

It all depends on who you compare us to. There are plenty of people out there who think that the stock market is like a casino and any involvement with it is too risky. The "conservative" 60/40 portfolios you may see here are quite reckless by their standards.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by GerryL » Tue Jun 13, 2017 10:27 pm

bayview wrote:
triceratop wrote:
bayview wrote:
Dottie57 wrote:
bligh wrote:Sometimes.. when I think no one is watching.... I buy lottery tickets. :moneybag
Pssst.. I do too. shhhhhhh....
My late father-in-law (an engineer) used to say that lottery tickets were a tax on stupidity. The more stupid you were, the more you paid, and yet we are all a bit stupid, so we shouldn't feel bad about buying the occasional ticket.

This cheers me up when I buy a lottery ticket < once a year.
I have found that simply thinking about winning the lottery gives me the same satisfaction that actually purchasing a ticket does (I only bought one, in college). So one does not have to spend money to "play the game".
Yes, my four $1 total purchases over my entire life gave me quite a thrill. (and $0 ROI)
My fantasy goal is to be the first person ever to win the lottery who has never bought a ticket. Over the years I have taken in maybe about $75 from tickets that people have given me as gifts or that I won in radio contests. I imagine myself standing before the cameras receiving a giant check, and when they ask the inevitable question, "So, how many tickets do you usually buy each week?" I'll announce "I've never bought a lottery ticket. Ever."

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by whodidntante » Tue Jun 13, 2017 10:40 pm

I have a tendency to take on enormous risk if I think I have an edge, and I like the foot on the other end of the see saw that Bogleheads provides. It's precisely because I don't agree with a lot of the advice here that keeps me interested. I don't think I am able to invest as conservatively as some do here; I would feel physical pain if I had 50% of my money in bonds in this low rate environment, and I am unable to feel good about paying off my low rate mortgage.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by AlohaJoe » Tue Jun 13, 2017 10:58 pm

I don't think it is quite correct to say this forum is financially conservative. At the very least, it is more complicated than a simple "conservative" or "not conservative" label conveys.

As other posters have noted, Bogleheads invest in stocks (albeit generally via index funds) which is definitely not "conservative" relative to most people. The Federal Reserve claims that only 13.8% of US households own stocks. Other surveys aren't quite as low but most find that fewer than 50% of people have any stocks. In part, that's because they don't have enough money. But the surveys also always find high levels of fear, uncertainty, and distrust as reasons why people don't invest in equities.

One recent study asked people what was the best investment for money they wouldn't need for a few years:
  • 27% said real estate
  • 23% said cash (!!!)
  • 17% said stocks
That's a start contrast to Bogleheads who, almost universally, accept that stocks are the best investment overall (albeit with downsides such as volatility and crashes that warrant the inclusion of other assets in a portfolio to provide moderation).

Another area where Bogleheads are often "not conservative" is when you look at their career. It is by no means as majority but my general impression is Bogleheads has more than its fair share of people who have taken large risks in their career. Entrepreneurs, CEOs, business owners, high-level executives, and others earning well into the six-figures post here fairly often. People rarely get to positions like that without taking on a fair amount of career risk.

Even something "safe" like becoming a doctor means taking on staggering amounts of debt (with no real guarantee that you'll actually enjoy being a working doctor), which is definitely a kind of risk.

So I don't think it is clear cut that Bogleheads are financially conservative. If I had to boil it down to one thing (and to characterise an entire forum with broad brushes), I'd say that Bogleheads are extremely future-focused. Thinking about the future so much means they are risky in some ways (investing in equities that (usually) win out after decades) and conservative in other ways (fears about "what if I get laid off when I'm 50 and never find work again?")
ThankYouJack wrote:Who has taken a chance and how did it work out?
To directly answer this question: sometimes yes, sometimes not really, sometimes unclear.

I bought a house once -- which was a chance, given that I was new to the area and to the job. I ended up not liking the area or the job after two or three years but stuck around much longer, in part because of the house. When I went to sell the house it was right around the housing crash of 2007-2009 and it took ~9 months to sell. I ended up selling it for exactly the same price I had bought it for years before. When you factor in Realtor fees, taxes, home improvements (landscaping, hardwood floors, etc) I'm certain I was down tens of thousands of dollars.

So that taking that risk didn't really pay off.

I sold nearly every worldly possession I had and moved to a new country where I didn't have a job lined up. I figured things would work out somehow. It did.

So that was a risk that paid off.

I quit that job, which was a risk. When I quit the CEO called me up and asked if I was really sure I wanted to walk away from over a million dollars in unvested RSUs. I left and started my own company which....didn't make me as much as those RSUs would have...but still did okay enough that I wasn't in a position to complain. And you have to balance out the "easy to count" stuff like money against the "harder to count stuff" like fewer 5am conference calls with corporate HQ.

So that was a risk that was unclear.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by bogglizer » Tue Jun 13, 2017 11:04 pm

IMHO, Bogleheads are mainly people who overvalue downside risk. "You could lose everything in a downturn, and spend the remainder of your days under a bridge eating cat food!" People who overvalue upside risk are buying lottery tickets and penny stocks as a retirement plan.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by TD2626 » Tue Jun 13, 2017 11:16 pm

AlohaJoe wrote:I don't think it is quite correct to say this forum is financially conservative. At the very least, it is more complicated than a simple "conservative" or "not conservative" label conveys.

As other posters have noted, Bogleheads invest in stocks (albeit generally via index funds) which is definitely not "conservative" relative to most people. The Federal Reserve claims that only 13.8% of US households own stocks. Other surveys aren't quite as low but most find that fewer than 50% of people have any stocks. In part, that's because they don't have enough money. But the surveys also always find high levels of fear, uncertainty, and distrust as reasons why people don't invest in equities.

One recent study asked people what was the best investment for money they wouldn't need for a few years:
  • 27% said real estate
  • 23% said cash (!!!)
  • 17% said stocks
That's a start contrast to Bogleheads who, almost universally, accept that stocks are the best investment overall (albeit with downsides such as volatility and crashes that warrant the inclusion of other assets in a portfolio to provide moderation).
I agree that people on the forum appear to take calculated risks - even very risk calculated risks - when the situation warrants. Some people on the forum take massive risks (there are people with very heavy tilts to small value, for example). Others take little risks (retirees with TIPS heavy portfolios). I think generally, true Bogleheads who are taking the risks often are doing so because they know the returns that can come with equity investments and because they are comfortable with the volatility that comes with the large risks. (Willingness - Ability - Need).

Yes, many Bogleheads are older and are doing what is best for their situation - investing in bonds very heavily. But they are doing what is appropriate for their situation.

Also -- is common sense financially conservative? If your definition of conservative is avoiding concentrated positions in things like individual "hot" stocks and speculative-grade bonds, then yes, the forum is conservative. If the definition of conservative is avoiding things like small-value, then no, many do recommend that aggressive move.

The public in general is often too financially conservative - i.e. they don't invest in stocks at all. Bogleheads invest some in stocks and some in bonds/cash.

Then again, many in the general public don't invest at all. They spend it all. Spending everything entails a 100% chance of loosing 100% of what you spent, while investing in stocks only entails a large (but not 100%) chance of loosing 50-90% or more of your money in a decade-long Great Depression. What's more aggressive - a 100% chance of loss or a <100% chance of loss?

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by McGilicutty » Wed Jun 14, 2017 12:00 am

ThankYouJack wrote: Who has taken a chance and how did it work out?
I forgot to mention a chance that I took the other day. As I'm sure most Bogleheads know, Gain has won Consumer Report's Best Laundry Detergent for the Money for the last 3 years in a row. So of course, being a prudent person, I use Gain laundry detergent. Well, the other day I was at Dollar General and noticed that Cheer was 0.1 cents per ounce cheaper than Gain. Now, there probably aren't many Bogleheads who would switch laundry detergents without performing the necessary research first, but that's exactly what I did. I didn't consult Consumer Reports, I didn't read any Amazon reviews, I didn't even make a post to any of the many Living Below Your Means message boards that I follow. Nope -- nada. I just went for it and bought the Cheer right then and there.

Well, I'll be darned if this risk didn't pan out. Not only did I save 10 cents, but when I got home and did my laundry I couldn't tell the difference between the clothes I had washed in Gain and the clothes I had washed in Cheer! Wow! What a rush!

Now, I don't advise that everyone live as recklessly as I did that day, but sometimes you just gotta' cut loose and take a risk. If you get lucky like I did, it might just pan out. YMMV.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by jharkin » Wed Jun 14, 2017 6:20 am

avalpert wrote: Given the number of doctors with their own practices and other questions taht come up around 1099s, solo 401ks etc. I'm not so sure that we don't have an overpresentation of small business owners relative to the overall economy.
I agree on both (small business ownesrs and MD's) and we also seem to havea a lot of corporate C-suite types and silicon valley software developers making 2,3,400k salaries in their 20s. As everyone says, its natural self selection considering the topic of this forum.

As far as being conservative - yes I would agree there is a lot of very conservative decision making. Its not just the folks who plan for 2% SWR's etc.... its also the post after post of people with 2-5MM net worth's who are afraid to drive a car newer than a 1995 Honda, or spend $200 to replace a 5 year old cell phone.

. . .

To answer the OP question, Ive taken risks. (prepares to get stoned) Im a single income household with kids and only a 6 figure net worth and I took out a big car loan on a new car!!. By BH standards I'm driving 180mph on the autobahn with no seat belt in a convertible. Or charging into a machine gun nest on D-Day with no helmet.

.... But to counter that, like everything its a matter of degree. On the flip side I bought a house that cost only 2x annual salary and I'm about 35% in bonds at 41 years old. Balance that against all the folks in here buying million dollar houses and stretching to 4-5-6x income I think it balances out.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by MoonOrb » Wed Jun 14, 2017 6:42 am

Also I think a lot of the feeling that this community is anti-risk can be attributed to a vocal group of posters who are vehemently debt-averse, as well as to the widely-held notion that there are some risks that are to be avoided completely, namely, the risk of running out of money in retirement when it is no longer feasible to earn money via working.

These concepts come up in many, many threads, and could lead one to conclude that this forum is largely made up of people unwilling to take on financial risk.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by qwertyjazz » Wed Jun 14, 2017 6:59 am

The forum topics here also give a biased view of people's risk. I am not sure how to take intelligent calculated risk on individual stocks. But I think you can take risk in smaller markets like real estate. But that is hyperlocalized and would be hard to post on an international board. You could also take even more well compensated risk on an individual business. But that thread would get locked down as it is not personal finance if you asked for advice on it.
I think that Boglehead philosophy is about minimizing unnecessary, uncompensated risk in financial markets. So therefore, it appears Bogleheads are risk adverse when posting on the field that the message board discusses.
G.E. Box "All models are wrong, but some are useful."

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by BlueCable » Wed Jun 14, 2017 7:04 am

staythecourse wrote: For engineers and computer guys they are very inflexible and detail oriented.
Trust me, you want your engineers to be detail-oriented!

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by rai » Wed Jun 14, 2017 7:32 am

This forum has all shapes and sizes.

I think the key unifying theme is to be aware of saving/investment for the future with a tilt away from stock picking or market timing.

Sure some people do pick stocks or trade options (me) but overall I'm more concerned about saving, that is making more than I spend so that I can invest a lot for retirement.

I see some on here, I don't think it's a majority but there is definitely a sizable group who I think of as pathologically thrifty. I don't dislike this group but I could do without some of the discussions about if they should spend an extra $3 a month on name brand laundry detergent? This is surely somewhere down a rabbit hole. First a few dollars one way or another is not really going to make a difference, but my main point is that these people might become obsessed with pinching a penny until it bleeds to an extent that they miss out on some pleasures of life. Often it's so they can maybe retire young, but to me it's too much that they might miss out on just so they can retire early and re-use their tea bags or whatever cheaper tricks they can think up.

It's not that I think this forum is solely about *where to find the best price or Rammen noodles?* but I think the forum is tilted in that direction or at least in the consumer sub forum.

it takes all kinds, I do believe that I am firmly tilted on the side of spending money (while still having enough to invest). I don't begrudge spending xxx on a nice stereo or a nice car or whatever and while maybe I'm over spending relative to many, I feel ok and actually think helping the economy by consuming is not a bad thing.

If I pay a landscaper to do my lawn instead of doing it myself or if I buy a new car rather than keep the same car for 300K miles, I don't dwell on how much money I'm not saving, I think of my time being valuable and how I like nice things and also think that "everybody has to eat" in other words the lawn care people and the car salesman and dealers etc..

If the whole country felt like some here let's be as frugal as humanly possible the whole economy would collapse.
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by WoodSpinner » Wed Jun 14, 2017 7:48 am

Great question!

When I was in my 20s I scored a great contracting gig as a programmer and DBA. Worked a year and took a year off to travel and explore. No regrets at all. Some of those experiences were life-changing events and I wouldn't be the same person today without them.

However sitting here 30 some years later My risk tolerance has changed significantly and Am a bit amazed at the risks I took and wonder just when I grew up to be an adult and much more risk adverse. :D

I did finally quit contracting, took a substantial pay cut and went to work at a MegaCorp. Started saving, got married, bought a condo, lost my wife, got remarried, adopted my daughter, bought a house and now I am about to retire. Goal is to do more travel, teach, photograph, go back to school etc. Starting to remember the feeling of being 23 and carefree.

Seems like a big circle--except now I am on much firmer grounds. I can't wait to hit the road again and start exploring with my DW. Main worry thus time is health--guess I no longer feel invincible.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by carolinaman » Wed Jun 14, 2017 8:10 am

I do not believe this forum is financially conservative. You will find subsets of all types of people here: risk takers, ultra conservatives and everything in between. On balance, it is a mature group who understand the risks of investing and risks of other financial matters. Someone used the term "prudent" to describe the group overall which seems right. No doubt, there are outliers, those very aggressive risk takers and those ultra conservation. It is hard to say where you fall unless you tell us more about the reasons why you think we are too conservative and what risks you consider worth taking.

We are a risk calculating group and make no apologies for that. The reward must be commensurate with the risk. Why take a risk if there is not sufficient reward? The impact of some risks is too great to ignore and must be mitigated. That is why we have life insurance, auto liability and other forms of insurance.

Tell us more about what you are thinking.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by rai » Wed Jun 14, 2017 8:11 am

jebmke wrote:
Flashes1 wrote:The only thing about the forum members I would stereotype with being conservative is with cars and a house (and I defy that stereotype in a big way!).
I think on cars and houses you have to distinguish between people who are financially "conservative" and those that just don't give a hoot about cars or houses other than basic functionality. I'm one of the latter. My ultimate goal is to have less house and no car. Money has nothing to do with it.
This is a key point.

I'll give an example I'm a big time car guy. I have been reading about cars since I was 18 and always dreaming. My best friend in Medical school on our first meeting and still we just talk about cars.

Over the years I've spent more than most on cars, I've owned 3 sports cars. I was always thinking if I could or if I should buy a really nice car.

But at the same time I do have a side of me that would rather save than spend. So I try to find a balance. My friend who never married, he has (I'm not kidding) 5 cars/suvs and likely (I'm not kidding) $500K spent on those five cars. He's even gone over the edge of the world where he has so many cars that he leaves one with a friend either because he doesn't have the room or doesn't drive it that much.

Me with kids in private schools and then private colleges have spent far more on education and child care than my friend has on cars. It's kind of funny, I'll laugh at him when he said he spent $150K on one car but I am spending $70K one year on colleges, private schools or 529 plans.

Which one of us is more crazy?

Well one time I decide to buy a $70K car for myself and while I loved it, always in the back of my mind was "gosh darn I could have invested $40K in Apple and have got a nice $30K car instead". I'm not saying I was obsessed, but in the back of my mind it was there. Hey buddy nice car, I'd think, too bad you don't have $100K in stocks instead. So when that expensive car started to cost way more because it needed tires that cost 2x what normal tires cost and it needed a repair that cost $2000+ for a minor thing. I sold the car (massive loss) but I don't hold it as a total waste because I loved having that car. In fact I'm now looking to get an even better car. But this time, I'm thinking from a point of having my kids education 80% paid for, so I can actually buy with less guilt/remorse.

I'm still able to save a lot for retirement and feel that since I work hard, and I really love cars a lot, that I should really have something nice rather than just A-B reliable car that costs very little.

Everyone needs to find their balance. Don't go broke on cars, but my friend loves cars, and he'd far rather have $$$$ cars than retire at 50 and drive a $16K Hyundai for the rest of his life.
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by Vanguard Fan 1367 » Wed Jun 14, 2017 9:15 am

whodidntante wrote:I have a tendency to take on enormous risk if I think I have an edge, and I like the foot on the other end of the see saw that Bogleheads provides. It's precisely because I don't agree with a lot of the advice here that keeps me interested. I don't think I am able to invest as conservatively as some do here; I would feel physical pain if I had 50% of my money in bonds in this low rate environment, and I am unable to feel good about paying off my low rate mortgage.
The great Peter Lynch says in one of his books that people don't realize the downside potential of bonds. The great Buffet and others also aren't too excited about bonds in this low interest environment. So I agree with you that even though I am of the age to have more than 50 percent of my money in bonds I do not do that. I do appreciate a lot of the Boglehead philosophy of index funds and not paying AUM fees.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by dbr » Wed Jun 14, 2017 9:21 am

It is indeed a mistake to confuse being conservative with being "safe." Also, it might be the biggest risk one can take is signing up for certain costs in fees and expenses hoping to get investments that will outperform. An even bigger risk is signing up for scam guarantees in certain kinds of annuities and insurance products.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by SQRT » Wed Jun 14, 2017 9:31 am

I'm not a boglehead. As such, I generally ignore direct investing topics here. Pick my own stock, buy and hold, dividend focused, outperformed appropriate benchmarks significantly for 20 years. Not as diversified as I would like and thus assume more risk than most posters here would feel comfortable with. I am a little surprised at the conservative nature of posters here and on other sites. Retirees who say, "my WR is only 1-2% of my portfolio" seem overly conservative or not very creative in their spending?

Retired 11 years. Almost 67 years old. Took much more risk around my retirement in 2006. Multi million dollar margin loans, huge employee option positions, virtually no diversification. Certainly, don't recommend this approach but it did work out very well for me. Lucky I guess. Should have known better (CPA, MBA, CFA). Anyway, not surprising that most of these type of sites skew very conservative, everybody has to decide on their own risk tolerance and invest accordingly.
Last edited by SQRT on Wed Jun 14, 2017 11:13 am, edited 1 time in total.

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Re: Who takes financial chances and why is this forum so financially conservative?

Post by takeshi » Wed Jun 14, 2017 9:37 am

ThankYouJack wrote:Maybe it's just me, but it seems like this forum is getting more financially conservative.
Be careful assuming trends based on forum posts on any discussion forum site on any topic. Post can easily skew perception. Take technical discussion, fora for example. People post when they have problems which makes those who don't consider their data sources easily think that there are nothing but problems. This site certainly has skewing just as any other discussion forum.

Even if this forum is becoming more financially conservative why would it matter? You should be doing what works best for you, not just following the herd. Others are doing whatever it is they think is best for them for whatever reasons whether or not their priorities are in line with your own.

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