(By the way... the "wiki way" is not to comment, but to "be bold" and go edit the article yourself

I know improvement when I see it. Thanks!sscritic wrote:I took a whack at the first couple of paragraphs, substituting my grammar and word choice for yours without making any substantive changes. The fun of a wiki is that you can go and change it all back if you don't like what I did.
I take your point, I could go so far as to say I agree with it, but I don't see it as something for the Wiki article, certainly not the one on "Three-fund portfolio." I'm not sure exactly how much "sensible opinion" the Wiki editors will allow--one might imagine a "fair and balanced" article presenting pros and cons of the TR funds, but I don't think I'm going to write one myself.Beagler wrote:From the Wiki:"It is often recommended for and by Bogleheads attracted by "the majesty of simplicity" (Bogle's phrase), and for beginners who want a little more "hands-on" control than they would get in an all-in-one fund like a Target Retirement fund."
Actually, VG seems to be providing their own hands-on active management if the TR funds.
If you want to set *your own* asset allocation and not have the %equities or % international ratcheted up every few years, then the 3-fund portfolio might be for you.
Hi nisi and sommerfeld:sommerfeld wrote:I added sections on "Asset location" (which account gets which fund if your money is split between taxable and tax-advantaged -- mostly a link to the existing article) and "Combining funds" (what to do if your 401(k) doesn't offer a total stock market fund).
Keeping VG's "hands off" the asset allocation is a major advantage. The investor can set the AA and know it won't be manipulated every few years, as has been the case with VG's TR funds.richard wrote:Unless I was reading to quickly, the article doesn't explain why you would choose a TFP over a TR fund. The two reasons which spring to mind are
1) Control asset location for more tax efficiency
2) You prefer a mix not available in a TR fund.
Wanting to be more "hands on" doesn't seem a great reason.
Apologies if this was covered.
Hi DLS:DLS724 wrote:Taylor,* Larger portfolios may benefit from adding TIPS, REIT, or a Small-Cap Value fund in tax-deferred acounts.
A quick question, for clarification: How large is a "larger portfolio"?
Thank you,
DLS
Hi elgob:elgob.bogle wrote:Nice Wiki page. I couldn't log in there, but I can here. It seems (no specific reference) that the 3-fund port as described generally fits those in the accumulation phase. You might note that Vanguard's Target Retirement Income fund is comprised of only 6% International Equities, thus there is a broader range than noted, with lowest percentage likely intended for those drawing down their accounts or living off them.
elgob
https://personal.vanguard.com/us/insigh ... t-09272010Vanguard also plans to increase the international equity exposure of Vanguard Target Retirement Funds, Vanguard LifeStrategy® Funds, and Vanguard STAR® Fund from approximately 20% to approximately 30% of the equity allocations.
The quote seems to gloss over the fact that "the three fund portfolio" started by nisi is at its core the same as the first "lazy three fund portfolio" by Schultheis in the wiki.On the other hand, three-fund portfolios are simpler than the genres called "Coffeehouse portfolios" (William Schultheis's term), "couch potato" portfolios, or "lazy portfolios", which are intended to be easy for do-it-yourselfers but are nevertheless slice-and-dice portfolios using six or more funds.
This is the first I heard that Schultheis had endorsed a three fund portfolio. There is no attribution for this. Even if this is so, it is not what Bill is currently advocating.idahospud wrote:When you come down to it though, this three fund portfolio is the same as the first of Schultheis's "lazy portfolios",as listed in the wiki. ... The quote seems to gloss over the fact that "the three fund portfolio" started by nisi is at its core the same as the first "lazy three fund portfolio" by Schultheis in the wiki.
Wiki article link: Three-fund portfolio3-fund portfolio wrote:Some see advantages...
*Independence from Vanguard's small course changes in the Target Retirement funds (as when they increased stock allocation in 2006, and changed domestic-to-international ratio in 2010)
Several, the most significant was authored by Eugene Fama and Ken French in 1992. It's the basis of their three factor model where small and value are unique risk factors.antiqueman wrote:Has any studies shown whether adding reits, small, etc has had a SIGNIFICANT higher return over 20 years or longer?
As you stated, the 1992 paper (link) concluded that small and value stock performance could not be predicted. It never stated that you would have better performance. A subtle point, but I thought to mention it.bob90245 wrote:Several, the most significant was authored by Eugene Fama and Ken French in 1992. It's the basis of their three factor model where small and value are unique risk factors.
Whether or not performance could or could not be predicted, their research shows that over the long term small outperformed large and value outperformed growth. And here is the graphic from Ken French's website:LadyGeek wrote:As you stated, the 1992 paper (link) concluded that small and value stock performance could not be predicted. It never stated that you would have better performance. A subtle point, but I thought to mention it.bob90245 wrote:Several, the most significant was authored by Eugene Fama and Ken French in 1992. It's the basis of their three factor model where small and value are unique risk factors.
LadyGeek, Barry Barnitz,bob90245 wrote:This is the first I heard that Schultheis had endorsed a three fund portfolio. There is no attribution for this. Even if this is so, it is not what Bill is currently advocating.idahospud wrote:When you come down to it though, this three fund portfolio is the same as the first of Schultheis's "lazy portfolios",as listed in the wiki. ... The quote seems to gloss over the fact that "the three fund portfolio" started by nisi is at its core the same as the first "lazy three fund portfolio" by Schultheis in the wiki.
http://www.coffeehouseinvestor.com/the- ... e-returns/
Those comments ignore history. From when I first discovered Bill Schultheis and his Coffeehouse Portfolio several years ago, he was after more diversification than what was available from large growth stocks that were all the rage in the late 1990's. Many investors did in fact did a lot worst by chasing the hot sectors that drove up the Total Stock Market with unsustainable high returns. This is why Schultheis included ignored sectors (which at the time were lagging) like value, small and REITs in his Coffeehouse Portfolio.idahospud wrote:bob,
I found this 2008 article on Bill Schultheis. The article includes this paragraph:
Schultheis suggests a starting point for investors is a total stock market index fund. He adds a total bond market and a total international stock market fund to the mix. "There are a lot worse things you can do than investing through a three-index-fund portfolio," Schultheis said.
This may not be a ringing endorsement of a 'three fund portfolio' but according to Schultheis it is a 'starting point' and many investors could 'do a lot worse'.
bob90245 wrote:Those comments ignore history. From when I first discovered Bill Schultheis and his Coffeehouse Portfolio several years ago, he was after more diversification than what was available from large growth stocks that were all the rage in the late 1990's. Many investors did in fact did a lot worst by chasing the hot sectors that made up the Total Stock Market. This is why Schultheis included ignored sectors (which at the time were lagging) like value, small and REITs in his Coffeehouse Portfolio.idahospud wrote:bob,
I found this 2008 article on Bill Schultheis. The article includes this paragraph:
Schultheis suggests a starting point for investors is a total stock market index fund. He adds a total bond market and a total international stock market fund to the mix. "There are a lot worse things you can do than investing through a three-index-fund portfolio," Schultheis said.
This may not be a ringing endorsement of a 'three fund portfolio' but according to Schultheis it is a 'starting point' and many investors could 'do a lot worse'.
Not all investors want the sort of fluid asset allocation that VG's TR funds are apparently providing. In particular, the ratcheting up of the %equities a few years ago comes to mind (really messes up the age=bonds). And using the TFP you can set your own int'l allocation. (Didn't VG just bump its int'l allocation by 50%? Is that what every TR fund investor wants?). With a TFP you can roll your own and be sure it won't be changed on you.LadyGeek wrote:I own a targeted retirement fund because I don't want to manage the allocations myself. Why is this implied as a disadvantage? The domestic-to-international ratio change was perceived as welcome and long overdue.
Wiki article link: Three-fund portfolio3-fund portfolio wrote:Some see advantages...
*Independence from Vanguard's small course changes in the Target Retirement funds (as when they increased stock allocation in 2006, and changed domestic-to-international ratio in 2010)
Not at all! With WIKI, having verifiable sources is fundamental and you helped bring this detail to light.bob90245 wrote:Hmm... Well, it looks like I'm on the losing side of this argument.
I, for one, do not have a short memory. In my previous plan, I tried the simple approach persuaded that TSM was all an equity investor ever needed. Then I got badly burned in the 2000-2002 meltdown. So I switched to the Coffeehouse Portfolio in order to avoid the mistake of putting all my equity eggs in one basket (Large Growth TSM).
Just the opposite. "Hi" refers to high book/price ratio, which means that "hi" is value.realitytruthprozac wrote:But, does "Hi" mean "Hi growth", where Low means "value" ?