Collective thoughts [investing mini-reference]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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Robert T
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Collective thoughts [investing mini-reference]

Post by Robert T »

.
Some integrated thoughts on various aspects of personal financial investments which may be useful to others.

0. Use a sound framework for making decisions

1. Personalize

2. Structure exposure to risks rewarded with premium returns

3. Diversify globally

4. Minimize costs

5. Policy targets and sample portfolios
Last edited by Robert T on Sun Oct 20, 2019 1:37 pm, edited 64 times in total.
SmallHi
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Post by SmallHi »

We should make this a sticky!

Great stuff, Robert!

SH
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Re: Collective thoughts

Post by docneil88 »

Muchas gracias Robert T! Best, Neil
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Post by empb »

Just wanted to give this a quick bump for anyone who's unaware this post exists. It's been an unbelievably helpful resource for me (among others I'm sure). If you bookmark one thread on this site, this is it.
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hollowcave2
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good post

Post by hollowcave2 »

Good post with good advice.

The advice, Avoid Mistakes, is easier said than done and nearly impossible to achieve in practice. Everyone wants to avoid mistakes, but we will make them, and we'll learn from them. The best we can hope for, IMHO, is to avoid the really dumb mistakes, which can be avoided through learning and discipline.



:shock:
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Post by JimB66 »

empb wrote:Just wanted to give this a quick bump for anyone who's unaware this post exists.
Thanks empb. This new forum member was in fact unaware of this post. Bookmarked.
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Post by pkcrafter »

empb, thanks for bringing up this excellent piece of work from Robert T. He obviously put a lot of work and time into this post.

I looked at several links including this fascinating video on the 1929 crash. Much to learn about risk and behavior here and I highly recommend viewing it.

Here is the link. While this video is a full hour, you might skim through, but I ended up watching almost all of it. The parallel between 1929 and 2000 is remarkable. This video shows what investor sentiment/speculation can do, but it also demonstrates that while investors run with and support speculation, somewhere down inside they know they are on the top of a house of cards. When the fall began it's as if everyone knew it was going to happen and they wanted out in a panic. In other words, the fear was present, but suppressed in favor of the risk of more gains. Also interesting to see how one man tried to turn the tide by publicly buying and almost succeeded. You can't always be a contrarian and make money. You can be right and lose money if the market disagrees with you.

The behavioral experts would call what's going on irrational. We can call it normal human behavior. We have to understand the most common emotional pitfalls and learn to control them if we want to be good investors.

http://www.pbs.org/wgbh/americanexperie ... sh/player/



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When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Post by daniel »

Great post Robert! Thanks for sharing -- super helpful
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Post by exoilman »

Thanks

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Post by 1210sda »

As Small Hi said three years ago... we should make this a sticky.

What does it take to make this a sticky....a formal request ??

Personally, by means of this post, it is now in my "view your posts". Sort of my own personal sticky.

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Post by conundrum »

Thanks empb for the bump and great thanks to Robert T for the original post.

Drum :lol:
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Post by Judsen »

By means of this post, it is now in my "view your posts".

Or I can search the forum site for Ichabod Crane and find it.
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Post by empb »

pkcrafter wrote:empb, thanks for bringing up this excellent piece of work from Robert T. He obviously put a lot of work and time into this post.

I looked at several links including this fascinating video on the 1929 crash. Much to learn about risk and behavior here and I highly recommend viewing it.

Here is the link. While this video is a full hour, you might skim through, but I ended up watching almost all of it. The parallel between 1929 and 2000 is remarkable. This video shows what investor sentiment/speculation can do, but it also demonstrates that while investors run with and support speculation, somewhere down inside they know they are on the top of a house of cards. When the fall began it's as if everyone knew it was going to happen and they wanted out in a panic. In other words, the fear was present, but suppressed in favor of the risk of more gains. Also interesting to see how one man tried to turn the tide by publicly buying and almost succeeded. You can't always be a contrarian and make money. You can be right and lose money if the market disagrees with you.

The behavioral experts would call what's going on irrational. We can call it normal human behavior. We have to understand the most common emotional pitfalls and learn to control them if we want to be good investors.

http://www.pbs.org/wgbh/americanexperie ... sh/player/



Paul
Hi Paul,

Thanks for pointing this out. The anecdote about Livermore having an apartment on the other side of the park so his wife didn't have to cross the city to get changed was especially eye-opening. Here's to hoping my SV portfolio produces similar returns!
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Post by Noobvestor »

I'd like to rebump this for sheer awesomeness with a bull v bear face-off:

Image
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Post by empb »

Really should be a sticky.
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Post by Cruncher »

Moderators,

Please sticky.

I have not had a chance to read through this all yet. Some may not apply, but wow, what work Robert has put together.

Please?


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Re: Collective thoughts

Post by ST Nathan »

This is absolutely fantastic and deserves another bump. Robert, after seeing the quality of several of your other posts, I clicked through to your profile specifically hoping that you'd put together something like this, but not even imagining that it would be so comprehensive. Thank you!
--- | Searchtempest Nathan
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Re: Collective thoughts

Post by xram »

Bump.....
VTI, VBR, VTWV, SCHH, VXUS, VEA, VWO, VSS, FM, VNQI, VBTLX, VFITX, SCHP, VWITX, IBONDS, EEBONDS, EF(EverBank), UTAH-529
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Re: Collective thoughts

Post by gkaplan »

You're bumping a year-old thread.
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Re: Collective thoughts

Post by LadyGeek »

It deserves the bump, as this thread is referenced in the wiki from:
It's also referenced from our sister Canadian site's wiki finiki, the Canadian financial Wiki:
I also moved this thread to the Investing - Theory, News & General forum, as the content is more appropriate here (general investing, theory).
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Re: Collective thoughts

Post by Noobvestor »

Time flies ... I can't believe I last bumped this two years ago! Still one of the most useful bookmarks I have under 'financial' ...
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Re: Collective thoughts

Post by pkcrafter »

gkaplan wrote:You're bumping a year-old thread.
Yes, but it's actually a six year old original post, and it's timeless and worth discovery by newer members.

Thanks again, Robert.


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Re: Collective thoughts

Post by LadyGeek »

I agree. This thread is now a sticky.
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Re: Collective thoughts

Post by ClosetIndexer »

I think the single most fortuitous event in my investing history was clicking on Robert T's profile (because everything I saw his name attached to was fantastic), and then finding this post linked there.
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Re: Collective thoughts

Post by hoops777 »

AHHHHHH.What do all those guys know. :D
K.I.S.S........so easy to say so difficult to do.
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Re: Collective thoughts

Post by michaelsieg »

Thanks for your great contributions Robert.
This is the only thread I have bookmarked and reading your posts has changed the way I approach investing more than any book I have read. Thanks again
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Re: Collective thoughts

Post by Robert T »

.
Thanks to all for your kind words - pleased it is useful to you. I have just updated some of the links as some no-longer worked. I also see that with the earlier 'change over' the links are now to the relevent threads and not to the direct posts (if not the first in the thread). Anyway it seems easy enough to find the relevant posts in the respective threads.

Best,

Robert
.
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Re: Collective thoughts

Post by Blue »

Agree- Love, love, love Robert T's analytical approach to investing.

Curious what your view on liquidity premium is and the pros/cons of trying to capture this premium?
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Re: Collective thoughts

Post by nedsaid »

This is a well thought out set of thoughts and investment philosophies. I like what I read.

It is important that an investor develop certain convictions and strongly held convictions at that. These convictions should be borne out by experience and well supported research.

A few of mine:
Pay attention to valuations.
Buy good stuff and keep it.
Be broadly diversified across asset classes.
Boring is good, boring that pays a dividend is better.
In really bad markets, the only thing that goes up is correlation.
An investor makes his money during bear markets, it just doesn't feel like it at the time.
Pay attention to investor sentiment and money flows.
The buy decision is much easier than the sell decision.
Don't invest all your money in one country, even if it is your own.
Investing is mostly behavioral.

If you have strongly held convictions they will help you stick with your plan when things look bad.

The Original Poster had a great post and I will have to take more time going through it. Looks really good.
A fool and his money are good for business.
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Re: Collective thoughts

Post by garlandwhizzer »

nedsaid wrote:
It is important that an investor develop certain convictions and strongly held convictions at that. These convictions should be borne out by experience and well supported research.

A few of mine:
Pay attention to valuations.
Buy good stuff and keep it.
Be broadly diversified across asset classes.
Boring is good, boring that pays a dividend is better.
In really bad markets, the only thing that goes up is correlation.
An investor makes his money during bear markets, it just doesn't feel like it at the time.
Pay attention to investor sentiment and money flows.
The buy decision is much easier than the sell decision.
Don't invest all your money in one country, even if it is your own.
Investing is mostly behavioral.
I agree with every one of these.

Garland Whizzer
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Re: Collective thoughts [investing mini-reference]

Post by FinancialDave »

I appreciate the fact that the OP has taken the time to apparently edit the chart over the last 6 years to show the tracking results.

Robert, since you like to edit, I saw just one minor thing in section 0. I believe "Write it done" should be "Write it down."

Great post

fd
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Re: Collective thoughts [investing mini-reference]

Post by HIinvestor »

Thanks SO MUCH, Robert! This is such a treasure trove of organized information! It would be great if it could be stickied, so it doesn't fall to the bottom of the thread. It is a great place for newbie investors and even not so new investors who are tried to be more informed about the issues (and convince our partners about the long-term benefits of international holdings, for example).
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Re: Collective thoughts [investing mini-reference]

Post by LadyGeek »

^^^ Take a look in the forum view: Investing - Theory, News & General. It's already a sticky - and should remain so.
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Re: Collective thoughts [investing mini-reference]

Post by Investor101 »

Thank you for an excellent post...it's like a mini library.
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Re: Collective thoughts [investing mini-reference]

Post by kayanco »

This is excellent resource for all!
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Re: Collective thoughts [investing mini-reference]

Post by hitlist »

Thank you for this excellent post. It has helped me connect the dots and increased a level of understanding that I didn't have before
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Re: Collective thoughts [investing mini-reference]

Post by Day9 »

This is such an amazing resource I cannot even articulate it. Thanks so much Robert T. I check this quite often and I would be grateful if you continue to update it with any new insights.
I'm just a fan of the person I got my user name from
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Re: Collective thoughts [investing mini-reference]

Post by BeaglesRule »

Day9 wrote:This is such an amazing resource I cannot even articulate it. Thanks so much Robert T. I check this quite often and I would be grateful if you continue to update it with any new insights.
Ditto. Thank you so much Robert T.
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Re: Collective thoughts [investing mini-reference]

Post by backpacker »

Those interested can check the live returns of Robert's ETF portfolio in portfolio visualizer. The first portfolio is Robert's portfolio. The second substitutes growth funds for value funds. The third is an untitled market portfolio.
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Re: Collective thoughts [investing mini-reference]

Post by SeeMoe »

Whew ! This is simple advice for who exactly ? I'm exhausted already,...may bookmark it though .
SeMoe.. :shock:
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Re: Collective thoughts [investing mini-reference]

Post by dratkinson »

SeeMoe wrote:Whew ! This is simple advice for who exactly ?
For those who wish to look under the hood. Otherwise, follow the resulting simplified action steps in the recommended "how-to" investing books. Just like we don't need to understand Tesla on AC power generation/distribution to buy any small appliance, plug it in, and have it work. Remember to take a voltage converter if you go overseas.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.
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Re: Collective thoughts [investing mini-reference]

Post by Robert T »

.
It provides a collection of thoughts (and linked references) for those interested in the detail of some of the issues reflected in the OP. It was fairly time consuming searching for previous analysis in specific past posts and was easier to organize them and link them in one post. Part of this is genuine interest and enjoyment in the analysis, part to provide the bedrock for portfolio choice to stay the course.

Staying the course with a particular investment strategy/asset allocation sounds simple but is not easy to do, particularly with the blizzard of new mutual funds/ETFs etc. coming to market, each with their own marketing spin. Reviewing previous analysis on various topics helps me to stay the course – so far, so good with no change over the last 13+ years in my mix of stocks and bonds, US:foreign developed:EM stocks, extent of small cap and value tilt (size and value load targets) in stocks, and duration and credit quality of bonds (term and default load targets). Hopefully it is also helpful to others.

From Swensen’s “Unconventional Success”:
  • “Investment success requires the conviction that comes from a fundamental understanding of the rationale for building the portfolio to certain specifications”

    “Real conviction proves necessary to stick with an out-of-favor strategy in the face of apparent poor results and obvious public skepticism. Investors ultimately reap rewards only if they maintain positions in the face of market woes. Individuals who prove unable to withstand the inevitable market traumas frequently end up whipsawed, abandoning sensible strategies just as the out-of-favor moves into the limelight”

    “Unless investors adopt firmly held convictions regarding the efficacy of target portfolios, nearly certain disappointment results. Confidence stems from deep understanding developed by matching fundamental acceptance of basic investment principles with clear knowledge of individual risk preferences.’
Robert
.
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SeeMoe
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Re: Collective thoughts [investing mini-reference]

Post by SeeMoe »

dratkinson wrote:
SeeMoe wrote:Whew ! This is simple advice for who exactly ?
For those who wish to look under the hood. Otherwise, follow the resulting simplified action steps in the recommended "how-to" investing books. Just like we don't need to understand Tesla on AC power generation/distribution to buy any small appliance, plug it in, and have it work. Remember to take a voltage converter if you go overseas.
So you are saying keep it ( investing) simple, I Think by your post . Foreign travelers need power converters . Yes, agree ?
But what I Was referring to was the huge amount of investor information the original post covered,....
SeeMoe.. :confused
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Re: Collective thoughts [investing mini-reference]

Post by LadyGeek »

SeeMoe, let me try to explain. This forum covers a wide range of investing experience. From the very basic "I have no idea what any of this means" to the most experienced "I eat this stuff for lunch" level. Covering everyone in one fell swoop is not possible.

This discussion is at the "I eat this stuff for lunch" level. It's a very comprehensive tutorial on how to do simple investing, but explained in a very complicated way. If you understand it, that's great. If you don't, that's OK.

Don't feel intimidated if you don't understand anything in this thread.

New investors are encouraged to start with the wiki: Getting started

I also recommend the free download: If You Can: How Millennials Can Get Rich Slowly by William Bernstein
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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Re: good post

Post by SeeMoe »

hollowcave2 wrote:Good post with good advice.

The advice, Avoid Mistakes, is easier said than done and nearly impossible to achieve in practice. Everyone wants to avoid mistakes, but we will make them, and we'll learn from them. The best we can hope for, IMHO, is to avoid the really dumb mistakes, which can be avoided through learning and discipline.

"The early dumb mistakes" still, 33 years later, astound me! Often wonder where I would be ,folio wise, had I have had a " keep it simple" three fund folio with monthly AIP back in the day. In any event I learned the hard way, and didn't give up the ghost.
SeeMoe.. :annoyed

:shock:
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Re: Collective thoughts [investing mini-reference]

Post by SeeMoe »

LadyGeek wrote:SeeMoe, let me try to explain. This forum covers a wide range of investing experience. From the very basic "I have no idea what any of this means" to the most experienced "I eat this stuff for lunch" level. Covering everyone in one fell swoop is not possible.

This discussion is at the "I eat this stuff for lunch" level. It's a very comprehensive tutorial on how to do simple investing, but explained in a very complicated way. If you understand it, that's great. If you don't, that's OK.

Don't feel intimidated if you don't understand anything in this thread.

New investors are encouraged to start with the wiki: Getting started

I also recommend the free download: If You Can: How Millennials Can Get Rich Slowly by William Bernstein
Just found your post Lady. Saved the Wm. Bernstein article. Thank you...
SeeMoe.. :!:
"By gnawing through a dike, even a Rat can destroy a nation ." {Edmund Burke}
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Re: Collective thoughts [investing mini-reference]

Post by Lovely Rita »

Ummm...could this be found in the wiki?
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Re: Collective thoughts [investing mini-reference]

Post by laohan »

Great post, thanks for stickying.
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Re: Collective thoughts [investing mini-reference]

Post by honduranhurricane »

Great post, wanted to have it in my posts thread. Thanks. (is there a 'favorites' button, or something like it?)
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Re: Collective thoughts [investing mini-reference]

Post by LadyGeek »

Yes, you can bookmark or subscribe to the topic. See this thread: Selecting a post to follow. If you need help, just ask in that thread.
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