Avoiding the echo chamber?

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bananas
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Avoiding the echo chamber?

Post by bananas »

Hey all,

Since around January of this year, I've rapidly educated myself on investing for retirement, from knowing next to nothing to having read multiple books, a dozen boglehead wiki articles and hundreds of posts on here.

All the books I read were actually recommended by the white coat investor (Millionaire Next Door, A Random Walk Down Wall Street, Commonsense on Mutual Funds, and currently reading A Splendid Exchange) and I've settled very confidently on the three-fund portfolio starting 80/20 stocks/bonds and planning on adjusting that over my career.

So far, everything I've read from the above sources has all pointed to the same lessons and principles; keep costs low, diversify through buying the market, dollar cost averaging, no active manager consistently beats the market, spend time in the market and avoid timing the market, etc. It all makes sense and the rationale is sound.

I'm 29 and I anticipate another 35-40+ years of working, saving and investing. My only certainty at this age is that I can't possibly have learned all I need for the rest of my life. I read many posts on here and they all continue to recommend the same lessons -- to the point that i can predict what will be said in replies to most OPs. I've tried google searches but most of the results are obviously hollow attempts by active fund managers claiming they have the "insider knowledge" of the next boom.

My fear is that I will get lazy and overconfident in my knowledge (as i already begin to), that I won't know when the next "Index fund" revolution in investing happens because I think I've learned everything I need to. I can't fathom what development in the world or change to the market would undo all the Boglehead tenets I've internalized and espouse to others, but I don't know where else to look or what else to read to stay current.

How do the rest of you give yourselves reality checks? What else (or where else) do the rest of you read to strengthen your knowledge of investing?
mhalley
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Re: Avoiding the echo chamber?

Post by mhalley »

I imagine if there is some revolution in investing it will be posted here. Look at all the bitcoin threads. :oops:
KlangFool
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Re: Avoiding the echo chamber?

Post by KlangFool »

bananas wrote: Wed May 29, 2019 1:41 pm
My fear is that I will get lazy and overconfident in my knowledge (as i already begin to), that I won't know when the next "Index fund" revolution in investing happens because I think I've learned everything I need to. I can't fathom what development in the world or change to the market would undo all the Boglehead tenets I've internalized and espouse to others, but I don't know where else to look or what else to read to stay current.
bananas,

1) Unless you plan to work as a personal financial advisor, why do you need to learn more?

2) Unless there is something new that will give you 3% more per year than your current strategy, why should you care?

3) If you can reach your goal within your time period with your current strategy, why should you bother with any new strategy?

4) For example, I save 1 year of expense every year. I can reach my number in 20+ years even with 0% real return. My current portfolio/strategy gives me 1% to 2% real return. It is good enough. Why should I aim for more?

5) Money is just a tool to live your life. It is not the end goal.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
DesertDiva
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Re: Avoiding the echo chamber?

Post by DesertDiva »

It simply takes time and discipline to reach a goal. The reality is that markets go up and down. They change. The best course is to set a course and follow it. Many questions on this forum could be answered simply by starting at the beginning. That’s why I often recommend that people read the “getting started” section or go back to the core Bogleheads recommended reading list. Over time you will see that most of what we see and hear in the media is of entertainment value only.
bloom2708
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Re: Avoiding the echo chamber?

Post by bloom2708 »

If you keep looking for "something else" you have a very good chance of finding "something else" with regards to your plan.

That "something else" may or may not give you more return than your current plan.

Maybe stop searching (too hard) and just follow topics that interest you. Something may look interesting. That doesn't mean you have to do anything. In fact, doing nothing (staying the course) is almost always the best course of action.

If I would change one thing about your plan it is to not plan or expect to work until 65 or 70. Set your goals and see where you are at 50. Our goals have 55 set as a target. What if we fail and it is 57 or 58? What if we over achieve and hit 52 or 54? Super.

It is similar to car shopping tends to lead to car buying. If you are always shopping (for some investment nirvana), your mind will eventually convince you to try "something else". You can read about a dozen or more threads a day where someone has figured out "something else" that is going to "win". Just wait 10 or 15 or 20 years and look back after sticking with your "something else" and then you will know where that "something else" falls on the win spectrum. Tough to have the patience and willpower to find your "something else" and stick with it.

Good luck on your journey!
Last edited by bloom2708 on Wed May 29, 2019 2:28 pm, edited 1 time in total.
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retiredjg
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Re: Avoiding the echo chamber?

Post by retiredjg »

What you need to do is get bored with all of this and move on to other interesting areas of life. Check in here on the forum a few times a year (or even a few times a month) to be sure nothing important is happening.

:D A bored investor is a good investor.
cresive
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Re: Avoiding the echo chamber?

Post by cresive »

bananas wrote: Wed May 29, 2019 1:41 pm Hey all,

Since around January of this year, I've rapidly educated myself on investing for retirement, from knowing next to nothing to having read multiple books, a dozen boglehead wiki articles and hundreds of posts on here.

All the books I read were actually recommended by the white coat investor (Millionaire Next Door, A Random Walk Down Wall Street, Commonsense on Mutual Funds, and currently reading A Splendid Exchange) and I've settled very confidently on the three-fund portfolio starting 80/20 stocks/bonds and planning on adjusting that over my career.

So far, everything I've read from the above sources has all pointed to the same lessons and principles; keep costs low, diversify through buying the market, dollar cost averaging, no active manager consistently beats the market, spend time in the market and avoid timing the market, etc. It all makes sense and the rationale is sound.

I'm 29 and I anticipate another 35-40+ years of working, saving and investing. My only certainty at this age is that I can't possibly have learned all I need for the rest of my life. I read many posts on here and they all continue to recommend the same lessons -- to the point that i can predict what will be said in replies to most OPs. I've tried google searches but most of the results are obviously hollow attempts by active fund managers claiming they have the "insider knowledge" of the next boom.

My fear is that I will get lazy and overconfident in my knowledge (as i already begin to), that I won't know when the next "Index fund" revolution in investing happens because I think I've learned everything I need to. I can't fathom what development in the world or change to the market would undo all the Boglehead tenets I've internalized and espouse to others, but I don't know where else to look or what else to read to stay current.

How do the rest of you give yourselves reality checks? What else (or where else) do the rest of you read to strengthen your knowledge of investing?

It seems that you are on the top of a saturation curve of information. You have spent a year learning all you can about investing, etc. Take that as a job well done. Within your learning, you must have learned the basics, typical "special" cases where the nuances of markets alter basic concepts, etc. You have been around the block and can probably go toe-to-toe with an average financial advisor. Again, congratulations!

What you should find from now on is incremental gains. The steep part of your learning curve has been climbed. Now you are on the shallow portion. You will read many articles where you already know, have enacted, etc. 90%. However, you will still glean something that you hadn't thought of, or something that may have you tweak your perspective. I enjoy reading a lot of MSN articles, new books, etc. However, they are easy reads because my understanding is greater and much of the information I already know. However, you will never know everything, and even if you did, you may forget something.

If you have taken as much time as you say in learning as much as you have, I doubt you will let your skill wane.

Good luck,
Ben
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Svensk Anga
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Re: Avoiding the echo chamber?

Post by Svensk Anga »

Well you could read all the factor investing threads and their links and ever after wonder if you are missing out by sticking to your three fund portfolio. :annoyed

At some point, you need to devise a decumulation plan. Really that starts today with asset location decisions, but at 10 years prior to retirement, give or take, you should be planning in more detail. Bear in mind that retirement may come sooner than you might desire. There are plenty of differing opinions among Bogleheads about how to devise a decumulation plan and how much is safe to withdraw. I would not expect a consensus within 25-30 years when you will need it. (I like the plan described by Bill Bernstein in "Ages of the Investor". The plan described by Oblivious Investor Mike Piper also looks solid. See here: https://obliviousinvestor.com/an-ideal- ... -strategy/ )

Other than that, I'm not so sure that you need to do anything other than follow through with implementing your IPS.
get_g0ing
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Re: Avoiding the echo chamber?

Post by get_g0ing »

bloom2708 wrote: Wed May 29, 2019 2:21 pm If you keep looking for "something else" you have a very good chance of finding "something else" with regards to your plan.

That "something else" may or may not give you more return than your current plan.

Maybe stop searching (too hard) and just follow topics that interest you. Something may look interesting. That doesn't mean you have to do anything. In fact, doing nothing (staying the course) is almost always the best course of action.

If I would change one thing about your plan it is to not plan or expect to work until 65 or 70. Set your goals and see where you are at 50. Our goals have 55 set as a target. What if we fail and it is 57 or 58? What if we over achieve and hit 52 or 54? Super.

It is similar to car shopping tends to lead to car buying. If you are always shopping (for some investment nirvana), your mind will eventually convince you to try "something else". You can read about a dozen or more threads a day where someone has figured out "something else" that is going to "win". Just wait 10 or 15 or 20 years and look back after sticking with your "something else" and then you will know where that "something else" falls on the win spectrum. Tough to have the patience and willpower to find your "something else" and stick with it.

Good luck on your journey!
Excellent, excellent post. Great advice sir. :sharebeer
barnaclebob
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Re: Avoiding the echo chamber?

Post by barnaclebob »

With index fund investing the "revolution" is the stock market itself but with extremely low cost.

Right now the only real games in town are the stock market, real estate, or owning a business and that's not likely to change any time soon.
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Hub
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Re: Avoiding the echo chamber?

Post by Hub »

You could spend another 6-12 months on slice and dice with Swedroe and Ferri books if you want to keep on the same path while digging a bit deeper.

Agree with the previous post that said to start running numbers as if you'll retire by 50 or whatever. An aggressive savings rate starting at 29 may have you a millionaire by 40.
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Blimpalot
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Re: Avoiding the echo chamber?

Post by Blimpalot »

Before I learned how to drive a car, it seemed like an incredibly complex and difficult endeavor. So many things to know and try to remember! It took a little time, and then a little practice, and soon driving the car was pretty easy, and the basic rules of safe driving became like second nature: seatbelt on (always), eyes on the road, hands on the wheel, signal and look before changing lanes, leave plenty of room between me and the car ahead, slow down in rain or fog or snow, don't drive under the influence, avoid distractions, obey traffic laws.

I'm now 51 years old. I've been driving for 35 years. Almost all of what I know about how to drive I learned decades ago. I don't feel like I need to learn a whole lot more about it. Following the basic rules has served me well. They are time-tested. If applied consistently, they work. They don't ensure that I will never have an accident, but following them consistently greatly reduces the odds. I don't feel the need to learn much, if anything, new. Following the rules I learned decades ago has served me for decades and I trust will continue to do so as long as I continue to drive.

I view investment principles the same way. If you learn the rules that govern effective investing, the only thing you need to worry about is applying those rules consistently to have success over the years. It doesn't mean nothing will ever go wrong, but you greatly reduce the odds of experiencing personal financial catastrophe. If the experience of generations condensed into books like A Random Walk or The Simple Path to Wealth or this discussion board is received and applied, it will yield a bountiful harvest.

I guess what I am saying is "no need to reinvent the wheel" (or the rules of the investing road). Not to say you shouldn't pay attention, be aware of what's going on, learn more if you are interested in the topic. But just as I don't question the basic rules of smart driving, I feel no need to question the basics of smart investing.

The basics are timeless and enduring.
"Nothing I see can be taken from me."--Tom Marshall
GCD
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Re: Avoiding the echo chamber?

Post by GCD »

bananas wrote: Wed May 29, 2019 1:41 pm So far, everything I've read from the above sources has all pointed to the same lessons and principles; keep costs low, diversify through buying the market, dollar cost averaging, no active manager consistently beats the market, spend time in the market and avoid timing the market, etc. It all makes sense and the rationale is sound.

How do the rest of you give yourselves reality checks? What else (or where else) do the rest of you read to strengthen your knowledge of investing?
The more you read the more you will become convinced that investing really is that simple. Don't overcomplicate it.
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Quirkz
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Re: Avoiding the echo chamber?

Post by Quirkz »

About every 5 years or so I make time to read a few books, get involved on a discussion site like this one, and spend a little time revisiting my financial holdings. That's often enough to keep up with trends but not so often it becomes a chore or continual obsession. An occasional refresher is good.
Blimpalot wrote: Wed May 29, 2019 4:33 pm I'm now 51 years old. I've been driving for 35 years. Almost all of what I know about how to drive I learned decades ago. I don't feel like I need to learn a whole lot more about it. Following the basic rules has served me well. They are time-tested. If applied consistently, they work. They don't ensure that I will never have an accident, but following them consistently greatly reduces the odds. I don't feel the need to learn much, if anything, new. Following the rules I learned decades ago has served me for decades and I trust will continue to do so as long as I continue to drive.
Sort of tangential, and I'm definitely not singling out Blimpalot, but another area where I wish it was more common for people to take a 5-year refresher is driving. Most people are getting by on decades-old knowledge, and while it's "good enough" most of the time, I'd bet if given a pop quiz most drivers would get 20% of the questions wrong, and are making small but potentially dangerous mistakes on a daily basis. When and where do people have the right of way? Did you know you're supposed to stop at the white line, and not parallel with the stop sign, or 6 inches into traffic? How do you handle that rarely seen roundabout? Did you know you should signal first and then brake, rather than the other way around? Most drivers could do well with a refresher.

So, looping back to the main topic, keeping engaged with a subject is definitely valuable, but a solid knowledge will get you pretty far, too, so that it doesn't have to be an ongoing job.
Rus In Urbe
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Re: Avoiding the echo chamber?

Post by Rus In Urbe »

Blimpalot wrote:
The basics are timeless and enduring.
+1 This.

You might think you've learned it all. Yes, the principles are really, really simple. That's all there is to it.

But your hardest lesson will come in your first serious market downturn. Then you will find out whether you really "learned it" or not.

Learning to manage your own fear and greed (and desire to tinker) is much more difficult!

Good luck to you!
I'd like to live as a poor man with lots of money. ~Pablo Picasso
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9-5 Suited
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Re: Avoiding the echo chamber?

Post by 9-5 Suited »

I think it's a lot like physical fitness ... there's a near infinite amount to learn, many variations, and potential tweaks that can be made. But once you learned about moderating your diet, limiting bad carbs, and exercising regularly, then you basically learned just about all you need to know ...

If you really enjoy investing theory and such, then just like a Crossfit enthusiast by all means spent time researching more and more. But in general I think occasional perusal of a few Boglehead authors is a fine way to go.
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bananas
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Re: Avoiding the echo chamber?

Post by bananas »

Thanks for all the replies and words of encouragement. I'm glad to hear there isn't something I'm definitely missing and will just stay the course.

:sharebeer
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iceport
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Re: Avoiding the echo chamber?

Post by iceport »

retiredjg wrote: Wed May 29, 2019 2:26 pm What you need to do is get bored with all of this and move on to other interesting areas of life. Check in here on the forum a few times a year (or even a few times a month) to be sure nothing important is happening.

:D A bored investor is a good investor.
:thumbsup
:sharebeer
8-)
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afan
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Re: Avoiding the echo chamber?

Post by afan »

You can switch from the watered down books written for the public to the academic finance literature written for schlaors.

The top academic finance journals are
Journal of Finance
Journal of Financial Economics
Review of Financial Studies

The Journal of Accounting Research is a top academic journal but it tends not to publish as many papers of interest for investing.

By the time a study gets into one of these journals you can be sure it has been conducted with rigorous methods and has been subjected to extensive review by other experts (overwhelmingly professors with doctorate degrees in funance or ecomonics).

The articles are not advertising for a broker or investment firm, unlike much of what gets offered to the public. The articles can be heavy on math, but the math can be learned.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
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Schlabba
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Re: Avoiding the echo chamber?

Post by Schlabba »

Put your money to work and move on with the rest of your life.

I have the same problem as you do. I keep coming to this forum hoping to learn something new. :D
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goodenyou
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Re: Avoiding the echo chamber?

Post by goodenyou »

The genius of successful investing is it's simplicity. Convincing yourself to continue to believe it often requires continuing education. IMO, there is a law of diminishing returns when it comes to leaning about investing and finance from a standpoint of trying to beat the market. I would argue that it is detrimental, and leads to a dangerous over-confidence. But, that is my opinion.

I recently listened to an interview with Aswath Damodaran. He is arguably a leading authority in corporate valuation and corporate finance. He made a comment about all the time, energy and effort it takes to value a company, and whether it is even worth the exercise. He said, to paraphrase, "I don't think it makes any difference in the improvement in my investing return or it will even beat an indexed fund, but I do it because I enjoy the intellectual exercise."
"Ignorance more frequently begets confidence than does knowledge" | “At 50, everyone has the face he deserves”
Fallible
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Re: Avoiding the echo chamber?

Post by Fallible »

bananas wrote: Wed May 29, 2019 1:41 pm
What else (or where else) do the rest of you read to strengthen your knowledge of investing?
You've learned the basics of wise investing and have followed through. :-) Now the focus is to stay the course, which means to maintain the right course, one that will always reflect your own unique needs as they change over a lifetime. A way to do this is to now deepen your investing knowledge by reading more of the best investing minds in their books and blogs. Start with the wiki's reading list:

https://www.bogleheads.org/wiki/Books:_ ... nd_reviews

Warren Buffett has said that "Investing is simple, but it's not easy." You're experiencing the simple part and are now discovering the "not easy" part, being aware of and avoiding behavioral errors that can mess up the best laid plans.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Lee_WSP
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Re: Avoiding the echo chamber?

Post by Lee_WSP »

The Bogle strategy boils down to cutting costs and being average. Average returns are still great returns, just as a middle class lifestyle in America is pretty awesome.
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