Jack Bogle - Two Fund Portfolio

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Taylor Larimore
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Re: Jack Bogle - Two Fund Portfolio

Post by Taylor Larimore »

Kal1981 wrote: Tue Sep 06, 2022 1:23 am For those with 2 funds, VOO or VTI and BND, aren’t you concerned about how high valuations are for US equities? I know there’s 2 camps here regarding whether or not to diversify with international. I’m not concerned about that. I’m curious about the expected returns of US stocks based on a high CAPE10.
Kal1981:

I am not a market-timer and pay no attention to valuations.

I am a buy-and-hold total stock & bond market index investor.

Result: I have enjoyed a comfortable and worry-free retirement for many years.

Best wishes.
Taylor
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Re: Jack Bogle - Two Fund Portfolio

Post by JSPECO9 »

Kal1981 wrote: Tue Sep 06, 2022 1:23 am For those with 2 funds, VOO or VTI and BND, aren’t you concerned about how high valuations are for US equities? I know there’s 2 camps here regarding whether or not to diversify with international. I’m not concerned about that. I’m curious about the expected returns of US stocks based on a high CAPE10.
No. Even if I did care about valuations, the S&P 500 forward P/E is 16.5 as of September 2, 2022. Nothing crazy in my opinion. If over the course of my investment career valuations come down, that would have a minimal effect on my returns.
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Re: Jack Bogle - Two Fund Portfolio

Post by Trance »

I have no idea how people can not hold international. The emerging market alone constitutes 85% of the human race and companies like TSMC which incredibly important to the global economy.
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Re: Jack Bogle - Two Fund Portfolio

Post by visualguy »

Trance wrote: Tue Sep 06, 2022 11:27 am I have no idea how people can not hold international. The emerging market alone constitutes 85% of the human race and companies like TSMC which incredibly important to the global economy.
It doesn't appear that percentage of the human race and the existence of some important companies are the right criteria. Indexing ex-US has been just awful for an awfully long time, and has underperformed US significantly in the long run. Unless you think the market has been somehow mispricing ex-US for so many years, not sure why you would put a meaningful chunk of your life's savings in indexing European, Japanese, Chinese, etc. stock markets. The few hot companies there that actually care much about shareholders are nothing but drops in an ocean of stagnation from a stock investment perspective.
Last edited by visualguy on Tue Sep 06, 2022 7:08 pm, edited 1 time in total.
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Re: Jack Bogle - Two Fund Portfolio

Post by Marseille07 »

Kal1981 wrote: Tue Sep 06, 2022 1:23 am For those with 2 funds, VOO or VTI and BND, aren’t you concerned about how high valuations are for US equities? I know there’s 2 camps here regarding whether or not to diversify with international. I’m not concerned about that. I’m curious about the expected returns of US stocks based on a high CAPE10.
Valuations aren't that crazy if you look at TTM.

Besides, there are no such things as expected returns.
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Re: Jack Bogle - Two Fund Portfolio

Post by JSPECO9 »

visualguy wrote: Tue Sep 06, 2022 7:06 pm
Trance wrote: Tue Sep 06, 2022 11:27 am I have no idea how people can not hold international. The emerging market alone constitutes 85% of the human race and companies like TSMC which incredibly important to the global economy.
It doesn't appear that percentage of the human race and the existence of some important companies are the right criteria. Indexing ex-US has been just awful for an awfully long time, and has underperformed US significantly in the long run. Unless you think the market has been somehow mispricing ex-US for so many years, not sure why you would put a meaningful chunk of your life's savings in indexing European, Japanese, Chinese, etc. stock markets. The few hot companies there that actually care much about shareholders are nothing but drops in an ocean of stagnation from a stock investment perspective.
I think it's great that so many people invest internationally. Keeps U.S. stocks from Japan-like euphoria/bubble. I hope ex-US inflows continue to be strong, I hope less people invest in the U.S. Better for us U.S. only folks.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

JSPECO9 wrote: Tue Sep 06, 2022 8:05 pm
visualguy wrote: Tue Sep 06, 2022 7:06 pm
Trance wrote: Tue Sep 06, 2022 11:27 am I have no idea how people can not hold international. The emerging market alone constitutes 85% of the human race and companies like TSMC which incredibly important to the global economy.
It doesn't appear that percentage of the human race and the existence of some important companies are the right criteria. Indexing ex-US has been just awful for an awfully long time, and has underperformed US significantly in the long run. Unless you think the market has been somehow mispricing ex-US for so many years, not sure why you would put a meaningful chunk of your life's savings in indexing European, Japanese, Chinese, etc. stock markets. The few hot companies there that actually care much about shareholders are nothing but drops in an ocean of stagnation from a stock investment perspective.
I think it's great that so many people invest internationally. Keeps U.S. stocks from Japan-like euphoria/bubble. I hope ex-US inflows continue to be strong, I hope less people invest in the U.S. Better for us U.S. only folks.
I agree and would like nothing more than for International to perform more competitively with the US. It has been a while and has challenged a lot of investor strategies and beliefs.

Perhaps the future will be different.

Best.
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by enad »

abuss368 wrote: Tue Sep 06, 2022 8:10 pm I agree and would like nothing more than for International to perform more competitively with the US. It has been a while and has challenged a lot of investor strategies and beliefs.

Perhaps the future will be different.

Best.
Tony
Do you think that part of the difference between Europe of the 70's-90's is different from Europe today because before each member state had their own currency vs. a common currency? If so, maybe that's why it doesn't act as true diversification? Before you had US on the one side and a bunch of countries on the other side, and today its US on the one side and the Euro on the other. Just wondering out loud
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Re: Jack Bogle - Two Fund Portfolio

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Kal1981 wrote: Tue Sep 06, 2022 1:23 am For those with 2 funds, VOO or VTI and BND, aren’t you concerned about how high valuations are for US equities? I know there’s 2 camps here regarding whether or not to diversify with international. I’m not concerned about that. I’m curious about the expected returns of US stocks based on a high CAPE10.
I am not concerned. I am a long-term buy-and-hold investor, so I ignore valuations.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

I have always ignored valuations and stayed the course with our investing. That has worked. Regardless of what funds we invested in.

I have no control over valuation so why stress or change a strategy over it.

Best.
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Christina Benz interviews Mr. Bogle to discuss international investing.

“Why Jack Bogle Doesn't Own Non-U.S. Stocks”.

I enjoyed listening to Mr. Bogle and always learn from him.

https://www.youtube.com/watch?v=P54trh0Rre8

Thank you sir.
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by enad »

I did my 2-Fund portfolio using the S&P 500 and a Vanguard Intermediate Term Treasury, then listened to this interview with Christine Benz and Jack Bogle on how the Bond Index could be better. I think Jack preferred that the Bond Index change to include just US debt and more corporate but seeing that wasn't going to happen he tried getting Vanguard to create one and that didn't happen. He stopped short of recommending a 2-bond fund solution as he was always about simplicity. I had enough VGIT in my portfolio that I sold off 1/3 of it (dollar wise) to purchase Vanguard Intermediate Corporate Bond VCIT which approximates Total Bond since I did not want to sell everything and buy the Total Bond Index.

https://www.morningstar.com/articles/67 ... -be-better

There is an earlier one from 2013 in which Jack and Christine discuss the same issues. So I still have a 60/40 allocation to the S&P500 / Total Bond (via 2/3 VGIT and 1/3 VCIT). I wonder why Vanguard wouldn't oblige him with such a bond fund?
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

enad wrote: Fri Sep 09, 2022 11:39 pm I did my 2-Fund portfolio using the S&P 500 and a Vanguard Intermediate Term Treasury, then listened to this interview with Christine Benz and Jack Bogle on how the Bond Index could be better. I think Jack preferred that the Bond Index change to include just US debt and more corporate but seeing that wasn't going to happen he tried getting Vanguard to create one and that didn't happen. He stopped short of recommending a 2-bond fund solution as he was always about simplicity. I had enough VGIT in my portfolio that I sold off 1/3 of it (dollar wise) to purchase Vanguard Intermediate Corporate Bond VCIT which approximates Total Bond since I did not want to sell everything and buy the Total Bond Index.

https://www.morningstar.com/articles/67 ... -be-better

There is an earlier one from 2013 in which Jack and Christine discuss the same issues. So I still have a 60/40 allocation to the S&P500 / Total Bond (via 2/3 VGIT and 1/3 VCIT). I wonder why Vanguard wouldn't oblige him with such a bond fund?
I think Vanguard Intermediate Bond Index (BIV) most closely approximates what Bogle has described in his books, which is 50% treasuries and 50% corporates.
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Re: Jack Bogle - Two Fund Portfolio

Post by enad »

anon_investor wrote: Fri Sep 09, 2022 11:48 pm
enad wrote: Fri Sep 09, 2022 11:39 pm I did my 2-Fund portfolio using the S&P 500 and a Vanguard Intermediate Term Treasury, then listened to this interview with Christine Benz and Jack Bogle on how the Bond Index could be better. I think Jack preferred that the Bond Index change to include just US debt and more corporate but seeing that wasn't going to happen he tried getting Vanguard to create one and that didn't happen. He stopped short of recommending a 2-bond fund solution as he was always about simplicity. I had enough VGIT in my portfolio that I sold off 1/3 of it (dollar wise) to purchase Vanguard Intermediate Corporate Bond VCIT which approximates Total Bond since I did not want to sell everything and buy the Total Bond Index.

https://www.morningstar.com/articles/67 ... -be-better

There is an earlier one from 2013 in which Jack and Christine discuss the same issues. So I still have a 60/40 allocation to the S&P500 / Total Bond (via 2/3 VGIT and 1/3 VCIT). I wonder why Vanguard wouldn't oblige him with such a bond fund?
I think Vanguard Intermediate Bond Index (BIV) most closely approximates what Bogle has described in his books, which is 50% treasuries and 50% corporates.
I was planning on using VFITX,the actively managed Vanguard Intermediate Term US Treasury Bond Fund, in-lieu of VGIT the passively managed Vanguard Intermediate Term US Treasury Bond Fund, but went with VGIT instead on account of expenses. Taylor's comment that it may not yield as much income as the Total Bond market fund had me thinking. I had already bought all my positions and did not want to sell them all and buy BND (the Total Bond Market), so I bought enough shares of Vanguard's Intermediate Term Corporate Bond ETF VCIT to mimic the Total Bond Market fund, then I saw the video/interview I posted and modeled using different percentages of VGIT/VCIT and today, added BIV as a benchmark. In order to replicate it's performance I had to use 33% IT Gov and 67% IT Corp here in order to match the performance of BIV. Thank-you for pointing out what was in Jack's books regarding the bond index. I will have to think about it. I am not in a hurry, having just replicated the Total Bond Market without selling all of one fund to buy all of another.
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Re: Jack Bogle - Two Fund Portfolio

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abuss368 wrote: Fri Sep 09, 2022 10:11 pm Christina Benz interviews Mr. Bogle to discuss international investing.

“Why Jack Bogle Doesn't Own Non-U.S. Stocks”.

I enjoyed listening to Mr. Bogle and always learn from him.

https://www.youtube.com/watch?v=P54trh0Rre8

Thank you sir.
Tony
It interesting that when asked about the lower valuations in ex-US, Bogle responds that it just as much means they are riskier. Yet he made market timing moves out of US stocks during the US dot com bubble because of valuations were too high. Seems to be an inconsistency there in his logic (not that I would suggest investing in ex-US due to valuations).
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

burritoLover wrote: Sat Sep 10, 2022 9:53 am
abuss368 wrote: Fri Sep 09, 2022 10:11 pm Christina Benz interviews Mr. Bogle to discuss international investing.

“Why Jack Bogle Doesn't Own Non-U.S. Stocks”.

I enjoyed listening to Mr. Bogle and always learn from him.

https://www.youtube.com/watch?v=P54trh0Rre8

Thank you sir.
Tony
It interesting that when asked about the lower valuations in ex-US, Bogle responds that it just as much means they are riskier. Yet he made market timing moves out of US stocks during the US dot com bubble because of valuations were too high. Seems to be an inconsistency there in his logic (not that I would suggest investing in ex-US due to valuations).
I think part of his market timing at the dot com bubble was risk tolerance, as he said in interviews that he was having heart trouble and wanted to ensure wife and kids would be taken care of.
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Re: Jack Bogle - Two Fund Portfolio

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anon_investor wrote: Sat Sep 10, 2022 11:09 am
burritoLover wrote: Sat Sep 10, 2022 9:53 am
abuss368 wrote: Fri Sep 09, 2022 10:11 pm Christina Benz interviews Mr. Bogle to discuss international investing.

“Why Jack Bogle Doesn't Own Non-U.S. Stocks”.

I enjoyed listening to Mr. Bogle and always learn from him.

https://www.youtube.com/watch?v=P54trh0Rre8

Thank you sir.
Tony
It interesting that when asked about the lower valuations in ex-US, Bogle responds that it just as much means they are riskier. Yet he made market timing moves out of US stocks during the US dot com bubble because of valuations were too high. Seems to be an inconsistency there in his logic (not that I would suggest investing in ex-US due to valuations).
I think part of his market timing at the dot com bubble was risk tolerance, as he said in interviews that he was having heart trouble and wanted to ensure wife and kids would be taken care of.
So valuations being low mean riskier future returns on the one hand, but being high on the other also means riskier future returns? That does not compute.
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

burritoLover wrote: Sat Sep 10, 2022 11:13 am
anon_investor wrote: Sat Sep 10, 2022 11:09 am
burritoLover wrote: Sat Sep 10, 2022 9:53 am
abuss368 wrote: Fri Sep 09, 2022 10:11 pm Christina Benz interviews Mr. Bogle to discuss international investing.

“Why Jack Bogle Doesn't Own Non-U.S. Stocks”.

I enjoyed listening to Mr. Bogle and always learn from him.

https://www.youtube.com/watch?v=P54trh0Rre8

Thank you sir.
Tony
It interesting that when asked about the lower valuations in ex-US, Bogle responds that it just as much means they are riskier. Yet he made market timing moves out of US stocks during the US dot com bubble because of valuations were too high. Seems to be an inconsistency there in his logic (not that I would suggest investing in ex-US due to valuations).
I think part of his market timing at the dot com bubble was risk tolerance, as he said in interviews that he was having heart trouble and wanted to ensure wife and kids would be taken care of.
So valuations being low mean riskier future returns on the one hand, but being high on the other also means riskier future returns? That does not compute.
I assume the dot com run up had his equity allocation quite high. He said in interviews that he shifted to fixed income.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

anon_investor wrote: Sat Sep 10, 2022 11:17 am
burritoLover wrote: Sat Sep 10, 2022 11:13 am
anon_investor wrote: Sat Sep 10, 2022 11:09 am
burritoLover wrote: Sat Sep 10, 2022 9:53 am
abuss368 wrote: Fri Sep 09, 2022 10:11 pm Christina Benz interviews Mr. Bogle to discuss international investing.

“Why Jack Bogle Doesn't Own Non-U.S. Stocks”.

I enjoyed listening to Mr. Bogle and always learn from him.

https://www.youtube.com/watch?v=P54trh0Rre8

Thank you sir.
Tony
It interesting that when asked about the lower valuations in ex-US, Bogle responds that it just as much means they are riskier. Yet he made market timing moves out of US stocks during the US dot com bubble because of valuations were too high. Seems to be an inconsistency there in his logic (not that I would suggest investing in ex-US due to valuations).
I think part of his market timing at the dot com bubble was risk tolerance, as he said in interviews that he was having heart trouble and wanted to ensure wife and kids would be taken care of.
So valuations being low mean riskier future returns on the one hand, but being high on the other also means riskier future returns? That does not compute.
I assume the dot com run up had his equity allocation quite high. He said in interviews that he shifted to fixed income.
If I recall (and perhaps Taylor will see this post and be able to add), Mr. Bogle was unsure of his health in the late 1990s. He had (or was scheduled) heart replacement surgery.

That combined with the Dot.com run up had really shifted his asset allocation, and by extension risk, to be heavily weighed towards stocks. He subsequently rebalanced (there are Morningstar interviews) stocks to bonds.

Best.
Tony
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Re: Jack Bogle - Two Fund Portfolio

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Heart trouble would make sense as to why someone might want to pull some risk off the table but that would be true regardless of market conditions and Bogle made a point to say it was due to market conditions: "But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%."

I guess it's possible that he felt valuations in the US (at least at relatively "extreme" levels) could be acted on more than ex-US. He probably wouldn't be a buyer of ex-US at any price.
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Re: Jack Bogle - Two Fund Portfolio

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burritoLover wrote: Sat Sep 10, 2022 1:50 pm Heart trouble would make sense as to why someone might want to pull some risk off the table but that would be true regardless of market conditions and Bogle made a point to say it was due to market conditions: "But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%."

I guess it's possible that he felt valuations in the US (at least at relatively "extreme" levels) could be acted on more than ex-US. He probably wouldn't be a buyer of ex-US at any price.
The quote is from page 237 of his book Enough. His heart surgery was in 1996 and it reinvigorated him. He also said that he made this one time change to his allocation and has stuck with it since. In 1999 he'd have been 70 years old and that was the year he officially stepped down from the board at Vanguard, and even though he said he never really retired it could also be an asset allocation most of us would do at or near retirement albeit in a more gradual way vs. a sudden way. He could have made the wrong call but history shows he made the right one. To me market timing implies an active hands on approach whereas a change in asset allocation is just that even if sudden. I prefer to remember him as Saint Jack for the all the good he has done.
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Re: Jack Bogle - Two Fund Portfolio

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enad wrote: Sun Sep 11, 2022 9:32 am
burritoLover wrote: Sat Sep 10, 2022 1:50 pm Heart trouble would make sense as to why someone might want to pull some risk off the table but that would be true regardless of market conditions and Bogle made a point to say it was due to market conditions: "But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%."

I guess it's possible that he felt valuations in the US (at least at relatively "extreme" levels) could be acted on more than ex-US. He probably wouldn't be a buyer of ex-US at any price.
The quote is from page 237 of his book Enough. His heart surgery was in 1996 and it reinvigorated him. He also said that he made this one time change to his allocation and has stuck with it since. In 1999 he'd have been 70 years old and that was the year he officially stepped down from the board at Vanguard, and even though he said he never really retired it could also be an asset allocation most of us would do at or near retirement albeit in a more gradual way vs. a sudden way. He could have made the wrong call but history shows he made the right one. To me market timing implies an active hands on approach whereas a change in asset allocation is just that even if sudden. I prefer to remember him as Saint Jack for the all the good he has done.
Changing your stock/bond allocation based on valuations is a clear-cut case of market timing - there's no way around that. Bogle mentioned a low dividend yield (low 1%) with high valuations was his reasoning at that time - would be interesting if he were still alive what he thought of similar conditions in 2021 where S&P 500 dividend yield was as low as around 1.3%? and CAPE was high 30's. Even now dividend yield is only about 1.6% (compared to around 3.8% for ex-US developed).
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Re: Jack Bogle - Two Fund Portfolio

Post by enad »

burritoLover wrote: Sun Sep 11, 2022 9:43 am
enad wrote: Sun Sep 11, 2022 9:32 am
burritoLover wrote: Sat Sep 10, 2022 1:50 pm Heart trouble would make sense as to why someone might want to pull some risk off the table but that would be true regardless of market conditions and Bogle made a point to say it was due to market conditions: "But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%."

I guess it's possible that he felt valuations in the US (at least at relatively "extreme" levels) could be acted on more than ex-US. He probably wouldn't be a buyer of ex-US at any price.
The quote is from page 237 of his book Enough. His heart surgery was in 1996 and it reinvigorated him. He also said that he made this one time change to his allocation and has stuck with it since. In 1999 he'd have been 70 years old and that was the year he officially stepped down from the board at Vanguard, and even though he said he never really retired it could also be an asset allocation most of us would do at or near retirement albeit in a more gradual way vs. a sudden way. He could have made the wrong call but history shows he made the right one. To me market timing implies an active hands on approach whereas a change in asset allocation is just that even if sudden. I prefer to remember him as Saint Jack for the all the good he has done.
Changing your stock/bond allocation based on valuations is a clear-cut case of market timing - there's no way around that. Bogle mentioned a low dividend yield (low 1%) with high valuations was his reasoning at that time - would be interesting if he were still alive what he thought of similar conditions in 2021 where S&P 500 dividend yield was as low as around 1.3%? and CAPE was high 30's. Even now dividend yield is only about 1.6% (compared to around 3.8% for ex-US developed).
I can see your point, but he also says he went from 65% equities to 35%, whereas a true market timer would have gotten out of the market entirely, so that's why I prefer to think of it as a strategic asset allocation based on many factors including his age, health, and of course the crazy market valuations. He's always preached how future returns are based on dividend yields. Jack could have been a lot wealthier than he was, but he said he had "enough" something that many of us never realize. Jack worried whether he would be remembered, so I doubt he would have said something that could be construed as tarnishing his image.

Best wishes to all of you
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Re: Jack Bogle - Two Fund Portfolio

Post by Taylor Larimore »

Tony wrote: "perhaps Taylor will see this post and be able to add."
Tony, I'll try:

*Mr. Bogle titled one of his books: "Stay the Course." He meant it.

*In "Common Sense on Mutual Funds -- 10th Anniversary Edition" on page 28 he wrote:
"The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly 50 years in this business I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who had done it successfully and consistently."
The idea that Mr. Bogle recommends market-timing is ridiculous.

Best wishes.
Taylor
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Re: Jack Bogle - Two Fund Portfolio

Post by burritoLover »

enad wrote: Sun Sep 11, 2022 10:57 am
burritoLover wrote: Sun Sep 11, 2022 9:43 am
enad wrote: Sun Sep 11, 2022 9:32 am
burritoLover wrote: Sat Sep 10, 2022 1:50 pm Heart trouble would make sense as to why someone might want to pull some risk off the table but that would be true regardless of market conditions and Bogle made a point to say it was due to market conditions: "But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%."

I guess it's possible that he felt valuations in the US (at least at relatively "extreme" levels) could be acted on more than ex-US. He probably wouldn't be a buyer of ex-US at any price.
The quote is from page 237 of his book Enough. His heart surgery was in 1996 and it reinvigorated him. He also said that he made this one time change to his allocation and has stuck with it since. In 1999 he'd have been 70 years old and that was the year he officially stepped down from the board at Vanguard, and even though he said he never really retired it could also be an asset allocation most of us would do at or near retirement albeit in a more gradual way vs. a sudden way. He could have made the wrong call but history shows he made the right one. To me market timing implies an active hands on approach whereas a change in asset allocation is just that even if sudden. I prefer to remember him as Saint Jack for the all the good he has done.
Changing your stock/bond allocation based on valuations is a clear-cut case of market timing - there's no way around that. Bogle mentioned a low dividend yield (low 1%) with high valuations was his reasoning at that time - would be interesting if he were still alive what he thought of similar conditions in 2021 where S&P 500 dividend yield was as low as around 1.3%? and CAPE was high 30's. Even now dividend yield is only about 1.6% (compared to around 3.8% for ex-US developed).
I can see your point, but he also says he went from 65% equities to 35%, whereas a true market timer would have gotten out of the market entirely, so that's why I prefer to think of it as a strategic asset allocation based on many factors including his age, health, and of course the crazy market valuations. He's always preached how future returns are based on dividend yields. Jack could have been a lot wealthier than he was, but he said he had "enough" something that many of us never realize. Jack worried whether he would be remembered, so I doubt he would have said something that could be construed as tarnishing his image.

Best wishes to all of you
I don't think it is an all or nothing to define market timing and that is a pretty large move. Tactical asset allocation is not buy and hold - it is based on current market conditions. Obviously, Bogle didn't recommend market timing to individual investors - although I think he said small changes in your stock/bond allocation is acceptable when you are nervous.
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Re: Jack Bogle - Two Fund Portfolio

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burritoLover wrote: Sun Sep 11, 2022 11:24 am
enad wrote: Sun Sep 11, 2022 10:57 am
burritoLover wrote: Sun Sep 11, 2022 9:43 am
enad wrote: Sun Sep 11, 2022 9:32 am
burritoLover wrote: Sat Sep 10, 2022 1:50 pm Heart trouble would make sense as to why someone might want to pull some risk off the table but that would be true regardless of market conditions and Bogle made a point to say it was due to market conditions: "But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%."

I guess it's possible that he felt valuations in the US (at least at relatively "extreme" levels) could be acted on more than ex-US. He probably wouldn't be a buyer of ex-US at any price.
The quote is from page 237 of his book Enough. His heart surgery was in 1996 and it reinvigorated him. He also said that he made this one time change to his allocation and has stuck with it since. In 1999 he'd have been 70 years old and that was the year he officially stepped down from the board at Vanguard, and even though he said he never really retired it could also be an asset allocation most of us would do at or near retirement albeit in a more gradual way vs. a sudden way. He could have made the wrong call but history shows he made the right one. To me market timing implies an active hands on approach whereas a change in asset allocation is just that even if sudden. I prefer to remember him as Saint Jack for the all the good he has done.
Changing your stock/bond allocation based on valuations is a clear-cut case of market timing - there's no way around that. Bogle mentioned a low dividend yield (low 1%) with high valuations was his reasoning at that time - would be interesting if he were still alive what he thought of similar conditions in 2021 where S&P 500 dividend yield was as low as around 1.3%? and CAPE was high 30's. Even now dividend yield is only about 1.6% (compared to around 3.8% for ex-US developed).
I can see your point, but he also says he went from 65% equities to 35%, whereas a true market timer would have gotten out of the market entirely, so that's why I prefer to think of it as a strategic asset allocation based on many factors including his age, health, and of course the crazy market valuations. He's always preached how future returns are based on dividend yields. Jack could have been a lot wealthier than he was, but he said he had "enough" something that many of us never realize. Jack worried whether he would be remembered, so I doubt he would have said something that could be construed as tarnishing his image.

Best wishes to all of you
I don't think it is an all or nothing to define market timing and that is a pretty large move. Tactical asset allocation is not buy and hold - it is based on current market conditions. Obviously, Bogle didn't recommend market timing to individual investors - although I think he said small changes in your stock/bond allocation is acceptable when you are nervous.
In Words from the Wise, an interview with Jack Bogle (AQR Capital Management) May 5, 2015 here, Jack is asked:

"Ilmanen: Would there be some valuation level or some other signal that would lead you to suggest an actionable market timing strategy?"

And he answers:

"Bogle: Well, I measure valuations primarily by the fundamental return (dividend yield plus earnings growth), not by the speculative return (P/E expansion/contraction). I believe that today’s fundamentals continue to be OK, though not great. So, what would be a high level? If we got back to a 1% dividend yield and a 30 P/E — as we witnessed around the year 2000 — I’d be scared to death. That’s a condition that cannot prevail indefinitely. But we’re not there — yet.

I evaluate the stock market on a long-term basis only, as we discussed earlier. I just don’t do market timing and all of my 64-plus years in this crazy business reaffirms the value of that stance."

So Jack did not believe he was doing Market Timing something that Taylor affirmed. Still others may see it differently.
Taylor Larimore wrote: Sun Sep 11, 2022 11:10 am
The idea that Mr. Bogle recommends market-timing is ridiculous.

Best wishes.
Taylor
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burritoLover
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Re: Jack Bogle - Two Fund Portfolio

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enad wrote: Sun Sep 11, 2022 7:07 pm In Words from the Wise, an interview with Jack Bogle (AQR Capital Management) May 5, 2015 here, Jack is asked:

"Ilmanen: Would there be some valuation level or some other signal that would lead you to suggest an actionable market timing strategy?"

And he answers:

"Bogle: Well, I measure valuations primarily by the fundamental return (dividend yield plus earnings growth), not by the speculative return (P/E expansion/contraction). I believe that today’s fundamentals continue to be OK, though not great. So, what would be a high level? If we got back to a 1% dividend yield and a 30 P/E — as we witnessed around the year 2000 — I’d be scared to death. That’s a condition that cannot prevail indefinitely. But we’re not there — yet.

I evaluate the stock market on a long-term basis only, as we discussed earlier. I just don’t do market timing and all of my 64-plus years in this crazy business reaffirms the value of that stance."

So Jack did not believe he was doing Market Timing something that Taylor affirmed. Still others may see it differently.
That's from 2015 and itss interesting because the S&P 500 hit a 1.27% dividend yield and a P/E of about 36 in late 2021, which would have fit his criteria for market timing. And he would have be right again as the markets had a downturn for most of 2022.
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Re: Jack Bogle - Two Fund Portfolio

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burritoLover wrote: Mon Sep 12, 2022 6:54 am That's from 2015 and itss interesting because the S&P 500 hit a 1.27% dividend yield and a P/E of about 36 in late 2021, which would have fit his criteria for market timing. And he would have be right again as the markets had a downturn for most of 2022.
Only he doesn't have a criteria for market timing since he stated he is not a market timer.
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Re: Jack Bogle - Two Fund Portfolio

Post by burritoLover »

enad wrote: Thu Sep 22, 2022 12:22 pm
burritoLover wrote: Mon Sep 12, 2022 6:54 am That's from 2015 and itss interesting because the S&P 500 hit a 1.27% dividend yield and a P/E of about 36 in late 2021, which would have fit his criteria for market timing. And he would have be right again as the markets had a downturn for most of 2022.
Only he doesn't have a criteria for market timing since he stated he is not a market timer.
Well, he did do it during dot com - maybe that was a one off and he would be merely "scared to death" but not do anything about it 2021 had he been alive.
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Re: Jack Bogle - Two Fund Portfolio

Post by enad »

burritoLover wrote: Thu Sep 22, 2022 12:25 pm
enad wrote: Thu Sep 22, 2022 12:22 pm
burritoLover wrote: Mon Sep 12, 2022 6:54 am That's from 2015 and itss interesting because the S&P 500 hit a 1.27% dividend yield and a P/E of about 36 in late 2021, which would have fit his criteria for market timing. And he would have be right again as the markets had a downturn for most of 2022.
Only he doesn't have a criteria for market timing since he stated he is not a market timer.
Well, he did do it during dot com - maybe that was a one off and he would be merely "scared to death" but not do anything about it 2021 had he been alive.
So when he said: "I evaluate the stock market on a long-term basis only, as we discussed earlier. I just don’t do market timing and all of my 64-plus years in this crazy business reaffirms the value of that stance." Do you believe he was not telling the truth?
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Re: Jack Bogle - Two Fund Portfolio

Post by burritoLover »

enad wrote: Thu Sep 22, 2022 12:37 pm
burritoLover wrote: Thu Sep 22, 2022 12:25 pm
enad wrote: Thu Sep 22, 2022 12:22 pm
burritoLover wrote: Mon Sep 12, 2022 6:54 am That's from 2015 and itss interesting because the S&P 500 hit a 1.27% dividend yield and a P/E of about 36 in late 2021, which would have fit his criteria for market timing. And he would have be right again as the markets had a downturn for most of 2022.
Only he doesn't have a criteria for market timing since he stated he is not a market timer.
Well, he did do it during dot com - maybe that was a one off and he would be merely "scared to death" but not do anything about it 2021 had he been alive.
So when he said: "I evaluate the stock market on a long-term basis only, as we discussed earlier. I just don’t do market timing and all of my 64-plus years in this crazy business reaffirms the value of that stance." Do you believe he was not telling the truth?
Well, when he said: ""But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%", what would you call that exactly? If someone comes on to the forums and says they are really worried about the conditions in the market and they want to change to reduce their equity allocation before anything bad happens - would you not call that market timing?
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Re: Jack Bogle - Two Fund Portfolio

Post by enad »

burritoLover wrote: Thu Sep 22, 2022 12:44 pm
enad wrote: Thu Sep 22, 2022 12:37 pm
burritoLover wrote: Thu Sep 22, 2022 12:25 pm
enad wrote: Thu Sep 22, 2022 12:22 pm
burritoLover wrote: Mon Sep 12, 2022 6:54 am That's from 2015 and itss interesting because the S&P 500 hit a 1.27% dividend yield and a P/E of about 36 in late 2021, which would have fit his criteria for market timing. And he would have be right again as the markets had a downturn for most of 2022.
Only he doesn't have a criteria for market timing since he stated he is not a market timer.
Well, he did do it during dot com - maybe that was a one off and he would be merely "scared to death" but not do anything about it 2021 had he been alive.
So when he said: "I evaluate the stock market on a long-term basis only, as we discussed earlier. I just don’t do market timing and all of my 64-plus years in this crazy business reaffirms the value of that stance." Do you believe he was not telling the truth?
Well, when he said: ""But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%", what would you call that exactly? If someone comes on to the forums and says they are really worried about the conditions in the market and they want to change to reduce their equity allocation before anything bad happens - would you not call that market timing?
No, I would call that panic and fear.

If Jack said he did not time the market how can you draw any other conclusions? My understanding of a market timer is someone who actively tries to time the market by getting in and out at the right time. Jack never did that.

I don't have anything more to add to this.

Best Wishes.
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