The Boglehead is anti-entrepreneur?

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Ron Scott
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The Boglehead is anti-entrepreneur?

Post by Ron Scott »

I told a former colleague I used the BH forums and his response was “Yeah, they don’t like our tribe.”

What he meant was we believed in taking risk. He built and sold a company: I had 80% of my NW tied to my company stock for more than 15 years. Both of us had borrowed heavily at times to maximize our positions. We were all in and willing to either soar or crash. And we LOVED our work; “FIRE” was the last thing on our minds. We were invested in ourselves.

The way we looked at these things was that America (NY and CA in particular) is the land of the entrepreneur, where the system encouraged us to create the future instead of just reacting to it, and with hard work and luck you could reach the promised land.

We were lucky and won our games, never bottoming out. I retired and invest 80% of my money like Jack Bogle says to, and with 20% still in that company stock, still going strong.

I agree with him to some extent that BHs don’t like the entrepreneurial way of life, or maybe just ignore it as someone else’s cross to bear. BHs play Steady Eddie to the entrepreneur’s Fool?

Would you advise a young person in their 20s or 30s, inclined to the entrepreneurial life, to go for it or stick to the Steady Eddie approach, and why?
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Re: The Boglehead is anti-entrepreneur?

Post by nisiprius »

Would you advise a young person in their 20s or 30s, inclined to the entrepreneurial life, to go for it or stick to the Steady Eddie approach, and why?
If someone were an entrepreneur I'd think they'd know it by their late twenties or early thirties. I can't imagine a born entrepreneur paying attention to advice, anyway. It seems to me that part of what it takes to be an entrepreneur is to know it without someone else having to tell you.

My advice when it has been asked is that people should study, major in, and go for the career that calls to them, because it is really soul-corroding to do something you hate just because someone has told you that the money is good. People can and do make livings at almost anything, and anything you do--well, work is work, but it is easier to get up and get to work and make it through the day when things are not going well if you at least believe that what you are doing is intrinsically worth doing.

On the other hand, if someone came to me and said "I want to be a teacher," or "an airline pilot," or even "a musician," would I say to them "That's not entrepreneurial? You'll never get really rich doing that?" No, I'd say "go for it." OK, if they said "musician" I might give them a copy of the book, "This Business of Music," and ask them to look through it to get some realistic idea of what the money part of it is like.

Now, with regard to investing, if you are basically starting a business, and that means you have to put every penny you have into the business leaving nothing left for investing in index funds, sure, that's you, that's what you do.

Most people aren't entrepreneurs. If the question is "how should a non-entrepreneur invest for retirement? Should a mass affluent investor, saving money out of salary,
  • listen to people who can get them in on a local real estate deal?
  • Try to pick the stock of the next Apple, because nobody is going to get rich investing in index funds?
  • follow the the Bogleheads investment philosophy?
my answer is the latter.
Last edited by nisiprius on Sat Sep 15, 2018 6:09 am, edited 3 times in total.
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Re: The Boglehead is anti-entrepreneur?

Post by GoldenFinch »

I see two different strategies here so that you can do both (be a risk taker and a Boglehead):

- You start your own business and continually reinvest/plow the profits into it seeking to grow the business and reap the rewards

- You collect a salary while running your business and save a portion of your salary in a 401k/IRA/taxable in a three fund portfolio

...then you retire (or not) when and if you feel like it.

That is what our entrepreneurial family does.
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Re: The Boglehead is anti-entrepreneur?

Post by student »

I don't think so. I believe that the underlying principle here is to understand risk and be able to look as risk vs reward. Many are not as risk tolerant as they think. I do not recall seeing threads with people against being entrepreneurial. I see threads with positive advice for people who wants to start a business.
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Re: The Boglehead is anti-entrepreneur?

Post by HEDGEFUNDIE »

Let’s say someone came to us with a stable six figure 9-5 MegaCorp job, and well on his way to a comfortable retirement in his 50s. And he wants to know whether he should scratch the entrepreneurial itch of his that he’s had for years.

How many of us would advise him to take he plunge?
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Re: The Boglehead is anti-entrepreneur?

Post by nisiprius »

HEDGEFUNDIE wrote: Sat Sep 15, 2018 6:08 am Let’s say someone came to us with a stable six figure 9-5 MegaCorp job, and well on his way to a comfortable retirement in his 50s. And he wants to know whether he should scratch the entrepreneurial itch of his that he’s had for years.

How many of us would advise him to take he plunge?
As above, the fact that he or she is asking for advice seems like a red flag to me. They'd be an idiot to ask me for advice. They should talk to someone who's done it. And in the unlikely event that it really happened, my advice would be highly conditional on the exact nature of the itch.

Is it "because I want a shot at being rich" or "because I desperately want to create this specific product or start this specific business?"

If it were an abstract "should I be 'an entrepreneur,'" I'd discourage it. But it's hard to imagine that in the abstract. Weird.

If it were the 1990s, and it was "I can't stand it. The four of us were asked to design a 2" disk drive and we did, and it's really sweet, and the higher-ups canned the project because they say their customers want bigger drives, not smaller ones. There's nothing like it on the market and we're sure there's a market for it and it has this, that, and the other innovation that we don't think anyone else is working on. Look, see, because it was so small we were able to make the housing out of abrodized catalan, nobody's ever done that, we think we can cut the cost 18% right there. We want to start our own disk drive company, we have a line on some companies that could use this product, and we're pretty sure we can buy the rights and deal with the noncompete clauses. Should we do it?" I'd ask some questions, and maybe ask if they've read High-Tech Ventures by Gordon Bell. If it sounded like they were serious and had thought about it and had, not certainties, but nuts-and-bolts answers to the money questions, I wouldn't tell them not to do it.

I can't imagine that such a question wouldn't also be accompanied by a request that I personally invest money in their company, though. And that would be a pretty tough sell.
Last edited by nisiprius on Sat Sep 15, 2018 6:49 am, edited 4 times in total.
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Re: The Boglehead is anti-entrepreneur?

Post by JoMoney »

Maybe, but I tend to think someone with the right motivations isn't going to get talked out their aspirations by an Internet message board.
On another note, what do you think the percentage of successful entrepreneurs is relative to the ones that try and fail?

I hope there are many out there who send their assistants back to tell us they proved us wrong.

Five Reasons 8 Out Of 10 Businesses Fail
90% Of Startups Fail: Here's What You Need To Know About The 10%
Why 96 Percent of Businesses Fail Within 10 Years
DEAR ENTREPRENEURS: Here's How Bad Your Odds Are Of Success
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Re: The Boglehead is anti-entrepreneur?

Post by AlohaJoe »

I think this post demonstrates a misunderstanding of Bogleheads, entrepreneurialism, and the average investor.

Are Bogleheads more conservative than the average person? Absolutely not. This isn't even remotely in question. Bogleheads embrace equity investing in amounts that are vastly higher than the average person. Bogleheads are (even if grudging about it) much more willing to take risk than most people in the world. Bogleheads principles are ultimately about how to take that risk in smart ways.

What part of the Bogleheads principles are at odds with taking risk or being an entrepreneur?
1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course
I consider myself a Boglehead. I use margin. My asset allocation is around 97/10 right now. I founded a company in a 3rd world country where it is not legally possible for me to ever be a citizen and there's a history of state appropriation of businesses. I have no TIPS or any other kind of inflation protected bonds. I don't even hold any US Treasuries at the moment. I even hold some funds that aren't index funds. Yet my investment plan accords with every single one of the Boglehead principles, given my personal situation.

Bogleheads thinking is a toolkit. It doesn't force you to use "age in bonds". It doesn't force you to have a "liability matching portfolio". It doesn't even force you to invest in US stocks! You can take that same toolkit and apply it to very risky portfolios. Many Bogleheads do that, though they are rarely the more prolific posters. But if you read here long enough you'll see enough posts from people talking about being 100/0 their entire life, or 90/10 until they draw on Social Security, or whatever.

The average entrepreneur starts their business at age 42. It is a myth that entrepreneurs are all 20 & 30 years old. 40 year olds start businesses because that's how long it takes people to understand a market segment well enough to see what needs are going unfulfilled. I would tell a 20-something to look for unmet needs. If it takes them until age 40 to do that....then they're basically on par.

Is there any mismatch between having high-risk human capital and (relatively) low-risk investment capital? Absolutely not! It is a key tenet (though admittedly underdiscussed on Bogleheads) of much of the research that underpins Boglehead investing. It is also a point often made by Boglehead authors like Zvi Bodie & Moshe Milevsky.

On the contrary, most people would argue that having financial security enables entrepreneurialism. This is seen most clearly in the tech industry with the large numbers of people who cash out on IPOs and go on to self-fund their own businesses. Those people are putting their own capital at risk, to be sure, but they are not risking their entire personal fortunes. Failure means a loss of status, not a trip to the bread line.

What's more, it is a classic mistake to think that just because you are good at one thing means you are good at something else. You are good at feeding a sales pipeline, or capital allocation, or building a great team? That's great! But what does it have to do with creating alpha in investing? They are unrelated skills. It is a similar category error that Goldman Sachs types make when they go "hey, I'm good at investment banking so I'll come in and run Sears!"
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Re: The Boglehead is anti-entrepreneur?

Post by cdu7 »

Bogleheads simply say that the most statistically certain way of maximizing investment returns is to minimize fees, keep things simple, and diversify. Starting a business is a completely different category of thing and I have read countless stories on here of dedicated bogleheads who are also self made persons / business owners. I’ve also heard from many entrepreneurs who are literally clueless about investments once they made their money and then end up getting massively ripped off by predatory financial advisors.

Saying they are incompatible is a lot like saying being an entrepreneur is incompatible with being good at working on cars, or being good at home cooking. Being a bogle head simply means learning a particular skill, that’s it.

So in general, no, being an entrepreneur is very compatible with being a bogle head.
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Re: The Boglehead is anti-entrepreneur?

Post by convert949 »

nisiprius wrote: Sat Sep 15, 2018 5:57 am
Would you advise a young person in their 20s or 30s, inclined to the entrepreneurial life, to go for it or stick to the Steady Eddie approach, and why?
If someone were an entrepreneur I'd think they'd know it by their late twenties or early thirties. I can't imagine a born entrepreneur paying attention to advice, anyway. It seems to me that part of what it takes to be an entrepreneur is to know it without someone else having to tell you.
...
Most people aren't entrepreneurs. If the question is "how should a non-entrepreneur invest for retirement? Should a mass affluent investor, saving money out of salary,
  • listen to people who can get them in on a local real estate deal?
  • Try to pick the stock of the next Apple, because nobody is going to get rich investing in index funds?
  • follow the the Bogleheads investment philosophy?
my answer is the latter.
Being a person who founded and owned a small business for 25 years, I say that both apply... Certainly, during the early days of any business, you are concentrating both emotionally and financially in working to have the business succeed. This leaves you with little time to be a Boglehead even if you had any money. I for one, have always been a Vanguard customer with most of the savings (as I became able to save) in Municipal Bond Funds. The money I foolishly invested with Brokers of various backgrounds and moral levels was wholly unsuccessful.

Upon selling the business, I signed up first with a financial planner who loved insurance products for one half and left the other half in Vanguard Bond Funds. I soon became apparent that the Boglehead way, If I had followed it all along, would have left me way ahead in the amount of retirement assets that (1) I had accumulated along the way just like the Corporate guy and then (2) MERELY applied the same principles to the proceeds from the sale of my business.

I do agree that entrepreneurs are wired differently but as Taylor says "There is more than one road to Dublin"...
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Re: The Boglehead is anti-entrepreneur?

Post by BrooklynInvest »

My wife's an entrepreneur, built a medium-sized marketing agency from the bottom up after unrewarding corporate and agency gigs. Her income exceeds my middle management/megacorp gig.

She left her corporate gig and took the plunge. Something I wouldn't/couldn't do. We do rely on my fairly stable healthcare. That was a key.

At the same time she's a cautious investor concerned about losses. For our separate savings her 3-fund asset allocation is more conservative than mine even though I'm quite a bit closer to retirement.

In some ways her more risky and variable income stream warrants a more conservative investment approach?
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Re: The Boglehead is anti-entrepreneur?

Post by J295 »

Interesting question. Thanks for posting.

My sense is that BH as a group are rather cautious. Of course, that doesn’t mean everyone in the group is cautious or is cautious and all aspects of their life.

I enjoy reading about those of us here that have taken a more entrepreneurial or otherwise less cautious route.
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Re: The Boglehead is anti-entrepreneur?

Post by stan1 »

You don't have to spend a lot of time on this board to see that there is an incredible level of risk aversity that creeps into just about every thread, whether that's in buying underwear some place other than Costco, travelling out of the US to a NATO ally like Turkey, buying a car that isn't a Toyota, buying a house that costs more than 2x gross income (excluding bonus or side gig or spouses salary if of child bearing age), investing in companies like Toyota or Samsung based outside the US, operating a business renting property to others, seeking a government job just because it has a pension, or in general taking any risk. It's easy for someone to peruse the board for a few hours and get the idea there's not a lot of risk takers here. Perception is sometimes different than reality of course.
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Re: The Boglehead is anti-entrepreneur?

Post by convert949 »

J295 wrote: Sat Sep 15, 2018 7:25 am Interesting question. Thanks for posting.

My sense is that BH as a group are rather cautious. Of course, that doesn’t mean everyone in the group is cautious or is cautious and all aspects of their life.

I enjoy reading about those of us here that have taken a more entrepreneurial or otherwise less cautious route.
Good point although it could be argued that risk taking in ones career (like starting a business) is different in that you have some knowledge (and therefore control) over your ability to succeed. The opposite is true of investing where we take risk based on our ability, desire and need but markets are out of our control.

As an entrepreneur, I find myself to be just the opposite in that while I took many risks in my career, I am a very cautious investor.
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Re: The Boglehead is anti-entrepreneur?

Post by UpperNwGuy »

If Bogleheads were risk-takers, many more of them would have asset allocations of 100% stock, and they would be tilting like crazy towards the sector of the day. And Bogleheads who liked bonds would buy high-yield bonds. I am not a risk-taker, and I have never been tempted to do anything that could be described as entrepreneurial.
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Re: The Boglehead is anti-entrepreneur?

Post by timmy »

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Someone mentioned above that you'd know if you were an Entrepreneur in your 20s/30s. Maybe. I've seen enough examples to say that maybe that's generally true but there's no reason you can't start later. It is likely (on average) harder because of obligations, etc. That's why I found this book attractive.

Since reading this book, I've fussed with a few ideas. They've each made some profit (low 4-figures per year). I can't see them scaling or maybe I don't want to scale them (same thing :confused). Anyway, it's given me some confidence that I can make money on my own (w/o job). I'm now thinking hard about how I might build on my profession, and build a business from that perspective.

Going to the OP, I'd say the statement is overly general. I do think the tendency on this board is ... go to school, get a good job, save, etc. ... and that is generally good default advice.
Last edited by timmy on Sat Sep 15, 2018 8:47 am, edited 1 time in total.
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Re: The Boglehead is anti-entrepreneur?

Post by The Wizard »

I would say that a fair number of Bogleheads members are not entrepreneurs (I wasn't) and many prefer to retire earlier rather than later, with sufficient retirement income, but not excessive.
If one has larger than "needed" retirement income and/or assets, there's a tendency to say that person worked 2-3 years too long.

There are lots of exceptions and outliers to my summary above but you can definitely sense that vibe here...
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Re: The Boglehead is anti-entrepreneur?

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (career guidance).
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Re: The Boglehead is anti-entrepreneur?

Post by JackoC »

convert949 wrote: Sat Sep 15, 2018 8:15 am
J295 wrote: Sat Sep 15, 2018 7:25 am Interesting question. Thanks for posting.

My sense is that BH as a group are rather cautious.
Good point although it could be argued that risk taking in ones career (like starting a business) is different in that you have some knowledge (and therefore control) over your ability to succeed. The opposite is true of investing where we take risk based on our ability, desire and need but markets are out of our control.

As an entrepreneur, I find myself to be just the opposite in that while I took many risks in my career, I am a very cautious investor.
You make a good point. Control is a key element in one comparison of career risk to financial risk: diversification. There is an expected return for taking undiversified career risk in an efficient market (including building your own company or having a big position in a company where you are a key insider), unlike for taking undiversified stock risk (in companies in which one is not a key insider). Simply because one is to a large degree unavoidable if one seeks to maximize $ return on their labor, and the other is fairly easily avoidable. Extremely few if anyone can ride a bunch of diversified 'side hustles' to real wealth. That's a way to do OK if your main job stinks, or do well if your main job is only OK. But almost everyone who goes from normal to really rich committed to one thing career wise for a key period, and took a serious risk of failure.

I do get the general impression that most people here are career risk averse. But people in general are. In many or most ways this board skews far away from US averages, but I'm not sure in this case. There might be some cases where people here new and self taught in the concepts of finance get confused about investing in one stock as an outsider or non-control employee v the different situation of building a company or otherwise taking high career risk for high possible gain. But mainly it's that most people, including here, are satisfied to do OK financially and weigh the downside of career failure more heavily than the upside.

But I think this forum is probably less investment risk averse than the general public, practically speaking. There might be a tendency here to try to talk down the actual risk of being heavily invested in the stock market which in fact is fairly risky, even in the long run. IOW make fairly risky investing seem more compatible with a risk averse temperament. But most of the public left to their own devices naturally take less stock risk than is typically considered standard here (and in reputable personal investment advice books and websites generally, not just here). Also the discussion here is oriented toward taking smart and avoiding dumb investment risks the rest of the general public often takes.
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Re: The Boglehead is anti-entrepreneur?

Post by Fallible »

Ron Scott wrote: Sat Sep 15, 2018 5:37 am I told a former colleague I used the BH forums and his response was “Yeah, they don’t like our tribe.”

What he meant was we believed in taking risk.
...
I agree with him to some extent that BHs don’t like the entrepreneurial way of life, or maybe just ignore it as someone else’s cross to bear. BHs play Steady Eddie to the entrepreneur’s Fool?
...
I thought this was interesting, but then had these questions: Because Bogleheads invest based on the BH philosophy they don’t believe in taking risk? Or don't take risks in other areas of their lives? Or can't handle risk? Or don't think a born entrepreneur should be one? Risk is not relative? There are not different kinds of risk? That investing itself, even BH style, is not risky? That the understanding of and approach to risk doesn't depend on the individual? That risk taken by some entrepreneurs doesn't vary, that some isn’t more recklessness than calculated risk (where luck must come in)? That an entrepreneur, depending on his/her success, can’t invest wisely, can't be a "steady Eddie" in other areas of life?

Or maybe this is about two different things, a vocation and an investment style that have little to do with each other?
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Re: The Boglehead is anti-entrepreneur?

Post by aristotelian »

I am not "against" entrepreneurship. However, it is fundamentally different and inherently riskier than investing. These forums are focused on investing. I would have nothing to contribute to discussions of entrepreneurship.
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Re: The Boglehead is anti-entrepreneur?

Post by Freefun »

Just because you're a BH in investing doesn't mean you're anti-entrepreneur or risk averse.
I like the BH philosophy investment because of its simplicity and its proven to work.
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Re: The Boglehead is anti-entrepreneur?

Post by Ron Scott »

convert949 wrote: Sat Sep 15, 2018 8:15 am
J295 wrote: Sat Sep 15, 2018 7:25 am Interesting question. Thanks for posting.

My sense is that BH as a group are rather cautious. Of course, that doesn’t mean everyone in the group is cautious or is cautious and all aspects of their life.

I enjoy reading about those of us here that have taken a more entrepreneurial or otherwise less cautious route.
Good point although it could be argued that risk taking in ones career (like starting a business) is different in that you have some knowledge (and therefore control) over your ability to succeed. The opposite is true of investing where we take risk based on our ability, desire and need but markets are out of our control.

As an entrepreneur, I find myself to be just the opposite in that while I took many risks in my career, I am a very cautious investor.

Interesting indeed.

While willing to commit to a high-risk financial strategy for so many years, tying my fortune to the efforts of a group of colleagues, I have no interest in closing my eyes, believing good things will happen, and trusting the broader market with a majority of my worth.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.
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Re: The Boglehead is anti-entrepreneur?

Post by randomguy »

Ron Scott wrote: Sat Sep 15, 2018 5:37 am I told a former colleague I used the BH forums and his response was “Yeah, they don’t like our tribe.”

What he meant was we believed in taking risk. He built and sold a company: I had 80% of my NW tied to my company stock for more than 15 years. Both of us had borrowed heavily at times to maximize our positions. We were all in and willing to either soar or crash. And we LOVED our work; “FIRE” was the last thing on our minds. We were invested in ourselves.

The way we looked at these things was that America (NY and CA in particular) is the land of the entrepreneur, where the system encouraged us to create the future instead of just reacting to it, and with hard work and luck you could reach the promised land.

We were lucky and won our games, never bottoming out. I retired and invest 80% of my money like Jack Bogle says to, and with 20% still in that company stock, still going strong.

I agree with him to some extent that BHs don’t like the entrepreneurial way of life, or maybe just ignore it as someone else’s cross to bear. BHs play Steady Eddie to the entrepreneur’s Fool?

Would you advise a young person in their 20s or 30s, inclined to the entrepreneurial life, to go for it or stick to the Steady Eddie approach, and why?
Entrepreneurship has pretty much nothing to do with bogleheadism. The core is live below (not as cheap) your means, invest in low cost diversified funds, and stay the course. Not much there about entrepreneurship. The only part this is questionable is the discussion of risk. Taking out loans or sink tons of your money into a bussiness might not be considered bogleheads. Your business may or may not require you to do that.

In the end you will find the idea of a monolithic boglehead is wrong. We have people who believe in driving 1k cars and 100k cars. As long as both are below their means, then their really isn't a conflict. We have people that want to retire at 35 and some that want to work to 85. Again nothing to do with bogleheadism. And we have tons of people that work for the man and a bunch of others who are the man. Nothing reallly to do with bogleheadism. And investing wise you will have the super conservative people to the pretty darn aggressive. It is a pretty big tent.
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Re: The Boglehead is anti-entrepreneur?

Post by DH0 »

I recall reading an analysis (possibly here) that there are three routes to wealth. It's obviously an oversimplification, but the concept rings true.

1. The Entrepreneur – start your own business

2. The Executive – quickly rise through the ranks of a successful business

3. The Saver – diligently save and invest

I've listed them in the order of fastest (and capable of generating the most wealth) to slowest, but also most to least difficult. Bogleheads tend to cluster around #3. I intentionally use the word 'difficult' instead of 'risk' – I'm of the opinion that many people overestimate the risk of nontraditional/entrepreneurial careers. Yes, there is less visibility but not necessarily more risk.
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Re: The Boglehead is anti-entrepreneur?

Post by Wakefield1 »

Does an entrepreneur have to risk everything owned,put everything at risk? (Some do)
Is a person that puts,say, 30% of all they own at risk in a business or venture,an entrepreneur?
I believe in instinct and "Genetics is Destiny". (Almost everyone is good at something,just not maybe what someone else expects of them.)
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Re: The Boglehead is anti-entrepreneur?

Post by vitaflo »

Ron Scott wrote: Sat Sep 15, 2018 5:37 am Would you advise a young person in their 20s or 30s, inclined to the entrepreneurial life, to go for it or stick to the Steady Eddie approach, and why?
I'd say go for it, but I own multiple businesses and I'm fully aware there's survivorship bias in my opinion because I've been successful. Not everyone is cut out for starting a business (someone has to be an employee), and even with the perfect game plan a string of bad luck can sink you.

But to me it's all about managing risk. Bogleheads are so good at that I'm not sure why more don't try to start businesses. I never bit off more than I could chew with mine, and always took educated risks. This means I don't have $100m businesses (like some of my peers have), but I also didn't go into debt enough where I would ever declare bankruptcy (like some of my peers have).

I've said this before on the forum but the easiest way IMO to reach your goals is to increase your income. It's something not discussed here much, and I'm always confused as to why. All the threads about tilts and AA's and the like really don't make meaningful difference compared to increasing sweat equity. Yet there are thousands of threads on the former but few on how to maximize the later.

Owning a business just accelerates income increases, in ways you simply can't get as an employee. And you have much more control over it than whatever the markets are doing day to day. But I can understand why most people don't want to take the risk.
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Re: The Boglehead is anti-entrepreneur?

Post by TomCat96 »

Ron Scott wrote: Sat Sep 15, 2018 5:37 am I told a former colleague I used the BH forums and his response was “Yeah, they don’t like our tribe.”

What he meant was we believed in taking risk. He built and sold a company: I had 80% of my NW tied to my company stock for more than 15 years. Both of us had borrowed heavily at times to maximize our positions. We were all in and willing to either soar or crash. And we LOVED our work; “FIRE” was the last thing on our minds. We were invested in ourselves.

The way we looked at these things was that America (NY and CA in particular) is the land of the entrepreneur, where the system encouraged us to create the future instead of just reacting to it, and with hard work and luck you could reach the promised land.

We were lucky and won our games, never bottoming out. I retired and invest 80% of my money like Jack Bogle says to, and with 20% still in that company stock, still going strong.

I agree with him to some extent that BHs don’t like the entrepreneurial way of life, or maybe just ignore it as someone else’s cross to bear. BHs play Steady Eddie to the entrepreneur’s Fool?

Would you advise a young person in their 20s or 30s, inclined to the entrepreneurial life, to go for it or stick to the Steady Eddie approach, and why?

Unlike others, I actually do see bogleheads as being anti-entrepreneurial, at least to the extent you might get pushback by not towing the party line. By definition an entrepreneur needs to invest money and capital in a narrow manner to make money. What does he/she know that the market does not? Whatever market you want to break into, surely some analysts have performed computations as to whether or not that segment is worth investing into.

Yet, I have no problem diverging from boglehead philosophy when I need to. I routinely see patterns in the market that others do not see. And I'm willing to bet my entire future on it, on a continuous basis. What I'm not going to do is spend time and resources trying to convince others of that.

The same should go for any entrepreneur in their respective market(s) of expertise.

The boglehead way of life is system that works within a particular context, with a particular amount of efficacy. It is for me, the maximum reasonable baseline one can expect. It is the default. If you cannot beat the returns of the boglehead way, there's no point in proceeding with your business idea, unless you deliberately want to underperform the market.

When I came on this website, I was more interested in learning why the boglehead method works, instead of questioning whether it does or not. It is at it's heart, a mathematical mechanism. I cannot achieve the potential of the boglehead way by being invested only in the biotech sector in my stock allocation. But why is the biotech sector, or any other sector alone, not diversified enough? Why do I need more diversification? Precsisely how much more diversification do I need? Why do I need bonds at all? How much do bonds improve scenarios? Does the fact that non-defaulted bonds converge to the value of their cash flows ensure less risk at the cost of time?

Learning all that is a tool that has been useful in my life in the framing of risk, and capital allocation.

The fact that the rest of boglehead dogma works for those who are less risk inclined, for people who have been retired more than a decade, for people who don't know what they are doing with money is an interesting footnote, but a bit orthogonal to my purposes.
Like all things in life, you take what you need, and move on.

As for the young man, I would tell him about bogleheads. but I would expect that if he had what it takes, he would proceed forth regardless of what anyone else says. Boglehead doctrine is a stepping stone. There is no need to ignore your stepping stones.
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Re: The Boglehead is anti-entrepreneur?

Post by DH0 »

For me, it come's down to where you're putting your human capital. Are your working for someone else or for yourself?
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Re: The Boglehead is anti-entrepreneur?

Post by bottlecap »

I just depends on who you are. If you are truly an entrepreneur, you don’t have money to invest in a 401k. You are using your capital.

But if you are not actively running a company with your own money, then the BH way is the way to go.

JT
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Re: The Boglehead is anti-entrepreneur?

Post by whodidntante »

Building a company is a concentrated risk. It sometimes leads to riches but the more likely outcome is languishing or failure. But we working stiffs aren't immune to failure. Something could happen today that obliterates my human capital, and then I would find out how good that employer provided disability insurance really is. Some people don't even have disability insurance. Building wealth isn't just about keeping costs low. You also need sufficient good fortune because you can't invest what you never make.
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Re: The Boglehead is anti-entrepreneur?

Post by bhsince87 »

The term "Boglehead" wouldn't exist if not for the work of one of the greatest, most disruptive financial entrepreneurs of all time!
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Re: The Boglehead is anti-entrepreneur?

Post by Mickey7 »

Another way to think about this is that all Bogleheads are entrepreneurs. Our business is in developing a successful portfolio for retirement. We assume a level of risk that is appropriate to our need.
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Re: The Boglehead is anti-entrepreneur?

Post by randomguy »

bottlecap wrote: Sat Sep 15, 2018 4:50 pm I just depends on who you are. If you are truly an entrepreneur, you don’t have money to invest in a 401k. You are using your capital.

But if you are not actively running a company with your own money, then the BH way is the way to go.

JT
Sure for some random definition of entrepreneurships. There are plenty of people who have built business and have enough cash flow to fund the expansion they want while still paying themselves plenty to fully fund a 401(k). I mean the whole point of building a bussiness is to have an income stream that you can spend on things you want. Like retirement.
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Re: The Boglehead is anti-entrepreneur?

Post by randomguy »

whodidntante wrote: Sat Sep 15, 2018 4:50 pm Building a company is a concentrated risk. It sometimes leads to riches but the more likely outcome is languishing or failure. But we working stiffs aren't immune to failure. Something could happen today that obliterates my human capital, and then I would find out how good that employer provided disability insurance really is. Some people don't even have disability insurance. Building wealth isn't just about keeping costs low. You also need sufficient good fortune because you can't invest what you never make.
Building a company is far too vague of term to be useful. Trying to start the next Amazon is one thing. The odds of failure there are insanely high. Starting a new dentist office is another thing. Odds there are pretty high for success. And a ton in between. Starting a software consulting company when you have 3 clients lined up and with almost zero capital requirement is not the same as starting a restaurant where you are taking out 200k in loans to set up a space.
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Re: The Boglehead is anti-entrepreneur?

Post by bottlecap »

randomguy wrote: Sat Sep 15, 2018 5:01 pm
bottlecap wrote: Sat Sep 15, 2018 4:50 pm I just depends on who you are. If you are truly an entrepreneur, you don’t have money to invest in a 401k. You are using your capital.

But if you are not actively running a company with your own money, then the BH way is the way to go.

JT
Sure for some random definition of entrepreneurships. There are plenty of people who have built business and have enough cash flow to fund the expansion they want while still paying themselves plenty to fully fund a 401(k). I mean the whole point of building a bussiness is to have an income stream that you can spend on things you want. Like retirement.
I know entrepreneurs who invest. And it’s smart to. But the sentiment from the OP's friend is that the entrepreneur can get a better return on their capital. When that's the thought, and often, it is, most, if not all of the money goes into the business. It’s not a random definition. It’s based on the sentiment expressed int the OP.

JT
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Re: The Boglehead is anti-entrepreneur?

Post by randomguy »

bottlecap wrote: Sat Sep 15, 2018 5:08 pm
randomguy wrote: Sat Sep 15, 2018 5:01 pm
bottlecap wrote: Sat Sep 15, 2018 4:50 pm I just depends on who you are. If you are truly an entrepreneur, you don’t have money to invest in a 401k. You are using your capital.

But if you are not actively running a company with your own money, then the BH way is the way to go.

JT
Sure for some random definition of entrepreneurships. There are plenty of people who have built business and have enough cash flow to fund the expansion they want while still paying themselves plenty to fully fund a 401(k). I mean the whole point of building a bussiness is to have an income stream that you can spend on things you want. Like retirement.
I know entrepreneurs who invest. And it’s smart to. But the sentiment from the OP's friend is that the entrepreneur can get a better return on their capital. When that's the thought, and often, it is, most, if not all of the money goes into the business. It’s not a random definition. It’s based on the sentiment expressed int the OP.

JT
That quote is far to vague to read anything into. I consider myself an entrepreneur. I think building a company that has make something like 10 million in sales lets me say that. But if you want to say I am not an entrepreneur because I took 9 million out as profit instead of ploughing it back in, you are free to do that. I think that is a very limiting description:) And yes I would have ploughed a good chunk of the money back into the company if I thought the expect return was high enough to justify. I didn't. Maybe I was right. Maybe I was wrong.

For extreme examples about guys like Zuckerberg or Bezos. Would you say they aren't entrepreneurs because they didn't plough all their money into their company but instead diversified along the way (i.e. all those private placements where he sold stock).
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Re: The Boglehead is anti-entrepreneur?

Post by Nate79 »

Nothing wrong with starting ones own business (my family is full of small businesses and self employed) but it is very risky. Something like only 1/3 small businesses make it to 10 years and 1/4 to 15 years. Using debt to fund the small business magnifies the risk.
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Re: The Boglehead is anti-entrepreneur?

Post by golfCaddy »

Bogleheads believe at their core in diversification, which is at odds with a certain type of entrepreneurship. One can imagine if a younger Zuckerberg posted on bogleheads, his VCs offered to buy out his 50% stake in a then $100M company and 100% of his assets were in the startup, bogleheads would be screaming at him to sell and diversify. A few might tell him to see if he could keep 5% of his net worth in the company as fun money.
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Re: The Boglehead is anti-entrepreneur?

Post by golfCaddy »

randomguy wrote: Sat Sep 15, 2018 5:42 pm For extreme examples about guys like Zuckerberg or Bezos. Would you say they aren't entrepreneurs because they didn't plough all their money into their company but instead diversified along the way (i.e. all those private placements where he sold stock).
Zuckerberg isn't remotely diversified. Even today, something like 98% of his net worth is tied up in FB. Pre-IPO, I'm betting it was close to 100%.
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Re: The Boglehead is anti-entrepreneur?

Post by bottlecap »

randomguy wrote: Sat Sep 15, 2018 5:42 pm
bottlecap wrote: Sat Sep 15, 2018 5:08 pm
randomguy wrote: Sat Sep 15, 2018 5:01 pm
bottlecap wrote: Sat Sep 15, 2018 4:50 pm I just depends on who you are. If you are truly an entrepreneur, you don’t have money to invest in a 401k. You are using your capital.

But if you are not actively running a company with your own money, then the BH way is the way to go.

JT
Sure for some random definition of entrepreneurships. There are plenty of people who have built business and have enough cash flow to fund the expansion they want while still paying themselves plenty to fully fund a 401(k). I mean the whole point of building a bussiness is to have an income stream that you can spend on things you want. Like retirement.
I know entrepreneurs who invest. And it’s smart to. But the sentiment from the OP's friend is that the entrepreneur can get a better return on their capital. When that's the thought, and often, it is, most, if not all of the money goes into the business. It’s not a random definition. It’s based on the sentiment expressed int the OP.

JT
That quote is far to vague to read anything into. I consider myself an entrepreneur. I think building a company that has make something like 10 million in sales lets me say that. But if you want to say I am not an entrepreneur because I took 9 million out as profit instead of ploughing it back in, you are free to do that. I think that is a very limiting description:) And yes I would have ploughed a good chunk of the money back into the company if I thought the expect return was high enough to justify. I didn't. Maybe I was right. Maybe I was wrong.

For extreme examples about guys like Zuck, erberg or Bezos. Would you say they aren't entrepreneurs because they didn't plough all their money into their company but instead diversified along the way (i.e. all those private placements where he sold stock).
Sorry, I was just responding to the sentiment expressed in the OP's post. I don't know you and wasn't talking about you.

JT
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Re: The Boglehead is anti-entrepreneur?

Post by HomerJ »

Ron Scott wrote: Sat Sep 15, 2018 5:37 am I told a former colleague I used the BH forums and his response was “Yeah, they don’t like our tribe.”

What he meant was we believed in taking risk. He built and sold a company: I had 80% of my NW tied to my company stock for more than 15 years. Both of us had borrowed heavily at times to maximize our positions. We were all in and willing to either soar or crash.
If you had crashed, would you have posted this thread?

I submit you can't honestly answer that.
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Re: The Boglehead is anti-entrepreneur?

Post by Grt2bOutdoors »

Go for it!
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Re: The Boglehead is anti-entrepreneur?

Post by HEDGEFUNDIE »

golfCaddy wrote: Sat Sep 15, 2018 8:13 pm Bogleheads believe at their core in diversification, which is at odds with a certain type of entrepreneurship. One can imagine if a younger Zuckerberg posted on bogleheads, his VCs offered to buy out his 50% stake in a then $100M company and 100% of his assets were in the startup, bogleheads would be screaming at him to sell and diversify. A few might tell him to see if he could keep 5% of his net worth in the company as fun money.
Exactly. Because Bogleheads mistake the money as the end. Whereas for a Zuck-type entrepreneur, the money is merely a side effect of the world-changing product, which is the actual end. If he had cashed out, he would have just taken the money to build something new.
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Re: The Boglehead is anti-entrepreneur?

Post by DH0 »

golfCaddy wrote: Sat Sep 15, 2018 8:13 pm Bogleheads believe at their core in diversification, which is at odds with a certain type of entrepreneurship. One can imagine if a younger Zuckerberg posted on bogleheads, his VCs offered to buy out his 50% stake in a then $100M company and 100% of his assets were in the startup, bogleheads would be screaming at him to sell and diversify. A few might tell him to see if he could keep 5% of his net worth in the company as fun money.
There's no reason why an entrepreneur can't diversify - if you have an attractive business you will be able to raise money from investors rather than concentrating all of your assets in one venture. Facebook raised plenty of money and I've heard Zuck took enough cards off the table in the first few years to make sure that he would never go hungry. Entrepreneurship is about where you put your human capital. I've found it most at odds with the conservative 'stay the course' mindset because it is a road less traveled than a traditional career as a doctor/lawyer/SWE maxing out a 401k/working for a W2.
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Re: The Boglehead is anti-entrepreneur?

Post by AlphaLess »

What is the expression?
"To each his own".

BHs are all about minimizing risk.

Successful entrepreneurs usually take risks that in hindsight were not good risks to take, and ex post fact, are lucky. Of course, they are also successful, but there is an element of success, which makes you well off, and an additional element of luck, which makes you much much better off.

IMHO, on average, entrepreneurs don't do so well: considering time, money invested, and outcomes.
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Re: The Boglehead is anti-entrepreneur?

Post by Ron Scott »

HomerJ wrote: Sat Sep 15, 2018 8:32 pm
Ron Scott wrote: Sat Sep 15, 2018 5:37 am I told a former colleague I used the BH forums and his response was “Yeah, they don’t like our tribe.”

What he meant was we believed in taking risk. He built and sold a company: I had 80% of my NW tied to my company stock for more than 15 years. Both of us had borrowed heavily at times to maximize our positions. We were all in and willing to either soar or crash.
If you had crashed, would you have posted this thread?

I submit you can't honestly answer that.
So that means you admit you're asking a stupid question. I'll buy that...
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Re: The Boglehead is anti-entrepreneur?

Post by golfCaddy »

DH0 wrote: Sat Sep 15, 2018 9:01 pm There's no reason why an entrepreneur can't diversify - if you have an attractive business you will be able to raise money from investors rather than concentrating all of your assets in one venture. Facebook raised plenty of money and I've heard Zuck took enough cards off the table in the first few years to make sure that he would never go hungry.
Zuckerberg has 98% of his wealth in FB. If you believe having 98% of your investments in a single stock qualifies as diversified, I don't think you understand what the term means.
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Re: The Boglehead is anti-entrepreneur?

Post by JBTX »

I would say it is more likely the opposite is true - an entrepreneur has no patience of piddling and plodding for 30+ years and then living a frugal lifestyle by spending 3-4% of your savings and then you die. That seems utterly ridiculous to some of them.
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Re: The Boglehead is anti-entrepreneur?

Post by 22twain »

golfCaddy wrote: Sat Sep 15, 2018 9:08 pm
DH0 wrote: Sat Sep 15, 2018 9:01 pm I've heard Zuck took enough cards off the table in the first few years to make sure that he would never go hungry.
Zuckerberg has 98% of his wealth in FB. If you believe having 98% of your investments in a single stock qualifies as diversified, I don't think you understand what the term means.
2% of 60 billion is 1.2 billion. That's still a lot of money in my book. 8-)
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