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tony

This Index Card Says It ALL

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Ken

I personally enjoy your posts even when I may not agree with you. Not everything you post interests me but I am sure plenty of folks don't always like what I post either. Its all good. Different opinions is what creates the dynamic of this board. Non of us should take anything said too personally. I started this conversation in the first place by posting this index card . 

Peace and love to all

Tony

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Ken

Ed has got your number. I agree with him that you are trying to sell something, and it's your philosophy of an active manager type that you are trying to sell to us. As you know, we nor the Bogleheads are active manager types. We are DIYers, and our philosophies differ big time. DIYers do not need advisers. It's pretty simple. 

We have had this conversation before and because you are in sales, you have to do SOMETHING! The active/passive debate has been settled years ago. Vanguard keeps growing and growing, soon it will reach 5 Trillion dollars in assets! Wow!

You take our criticism personally because selling is part of you. Bogle and Buffett are not sales people, never have. Neither is Mr. Money Mustache. Your subtlety is obvious here.  If you want to educate the k12 market, read Scott Dauenhauer's book: https://www.amazon.com/Wild-West-Providing-Fiduciary-Employees-ebook/dp/B01AGRT4SA#customerReviews But Scott's book alone will not change your investing philosophy. Quoting Bogle and Buffett will not work either. When you say the future predictions are rock solid from decades of past returns, you know that is not the total picture because averages leave out the volatility and the short-term losses, which can be massive, that are also in the FACT record. Changing investing philosophies will take a major metamorphosis. It can be done, but you have to be "sold" on passive investing philosophy. This broker who wrote this piece got the picture when he worked at Goldman Sachs (http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html  

Good luck to you Ken,

Steve

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16 hours ago, sschullo said:

Can you explain a little more? 

Oh.. I was in the process of exchanging 403b accounts and it took longer than expected.  If the money in the accounts had been transferred last summer when I moved from AXA to Security Benefit, then I would have had a little bit longer with the upward trend in an account with better returns and lower expense ratios and fees. Instead, the money literally transferred the week before the tumble.   It'll be a long while yet before I'm ready to retire, so I expect that the market will continue to go up and down... but the down part right now is making me wince.

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IMUA,

It always takes longer than expected as we know for these transfers to happen but in the  financial scheme of things it wasn't really all that long a time

It probably wouldn't have made all that much difference over such a short period of time unless you transferred into more aggressive investments. Regardless, where your assets were  if the investments were similar the losses would have been similar.  You will be fine long term. 

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THank you, I'm keeping my fingers crossed.  I did go more aggressive... went from a 60/40 AA to a 90/10 in mimic of Vanguard's 2045 fund. Ah well... I know the markets eventually go up and I'm not retiring any time soon.  

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That is a pretty significant change. Obviously it is a personal decision, but if you'd like to share then I'm curious what precipitated such a shift?

I began with a 25% allocation to bonds almost a decade ago. As the years went by and I started to understand myself and the markets better that allocation just kept dropping. A couple years ago I finally hit the point where my bonds are equal to exactly the size of my emergency fund, a fixed dollar amount rather than a percentage of the portfolio. If I get a year or two into a big crash and feel fine, then I may finally shift to 100% stocks.

I don't have an IPS, but I did follow the general guidance to only make incremental changes to guard against emotional decisions. So it has been a really slow process for me. I'm curious how things went for you?

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Quote

That is a pretty significant change. Obviously it is a personal decision, but if you'd like to share then I'm curious what precipitated such a shift?

If she is young and has decades to go its not a bad move if she understands to reign in that aggressiveness as she gets older. And like Dan points out, if she keeps investing in her new set up , those stocks are now on sale!!. My question to you IMUA is why did you mimic the Vanguard 2045? If available I would have gone directly into that fund and let Vanguard manage it for you.

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10 minutes ago, tony said:

If she is young and has decades to go its not a bad move

I agree. It is an allocation that's very similar to my own and one with a higher expected return! I like it.

I had a fair amount of internal consternation between the cautious advice I was receiving (age in bonds, no drastic allocation changes, etc) and what I felt was best for me. It was a bit of a struggle to end up so stock heavy for me.

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Ed

When i was 100 % stocks and ran into this site, I read  Steve talking about his bond allocation. I thought to myself "thats silly and too conservative" and kept going with all stocks. Keep in mind this was at time I felt pretty good about myself. I had just vanquished all my bad moves with annuities ALONG WITH THE SALESPEOPLE THAT SOLD THEM:(   to hell , stocks were rising and  I was on the right road with Vanguard. Finally I had it all figured out right ?. Well, sort of. Then came two big recessions and dramatic stock pullbacks that cost me 65% of all the money I had saved in a blink of an eye. It was back to the classroom for me. I eventually starting adding bonds as I could slowly and today I feel comfortable that I have a good mix of bonds and index funds. Granted,  I   am  almost twice your age SO MY PERSPECTIVE IS DIFFERENT.. I think as you get older you will realize that playing it safe is not a bad thing. Having some bonds does not hurt your portfolio performance all that much . I think  I read a chart once that showed that over time a balanced portfolio of stocks and bonds was pretty close to the performance of an all stock portfolio with much less volatility. Bogle's age in bonds is not a bad guideline  if you will be living totally on your savings in retirement but if you  are going to have a pension, that pension  and SS could maybe count as part of your fixed income and you won't have to be so strictly invested in bonds .

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When I opened the AXA account, it was with the idea that I was going to be saving to have something above the pension I was already contributing to.   It wasn't a lot because I didn't understand exactly what it meant to contribute to an annuity, and when asked about my "risk aversion" I figured I was so-so.  That's how I came up with 60/40.  After finding this board and doing more reading about portfolios, etc.  I took a look at what some portfolios looked like around the time I'm probably going to retire.     I knew that Vanguard has that slide from aggressive to conservative, so I figured I'd just copy/approximate based on what was available from Security Benefit DI funds, and rebalance to copy as necessary.    

 

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3 hours ago, tony said:

two big recessions and dramatic stock pullbacks that cost me 65%...I think as you get older you will realize that playing it safe is not a bad thing

That's tough. If you lost 65% does that imply you were in something other than total market index funds at the time? I don't remember either crash in the 2000s losing that much? Maybe 55% in 2008 and maybe 45% in early 2000s? I've spoken with people who were invested almost entirely in a single tech stock in the early 2000s and they're basically unwilling to invest in anything now.

I plan to assess my asset allocation once we recover from the next crash (for psychological reasons). Then I plan to assess again well into retirement when I'm closer to death and my financial picture is more clear than it is today (for financial reasons).

I've read the boglehead stuff (or maybe it was Swedroe) on risk...ability, willingness, and need. I'm not sure how useful that is because ability seems to negate need, essentially leaving you with just your willingness. For instance, if I was exceedingly rich late in life then need drops close to 0 while ability skyrockets.

2 hours ago, Imua808 said:

hat's how I came up with 60/40.  After finding this board and doing more reading about portfolios, etc.  I took a look at what some portfolios looked like around the time I'm probably going to retire. I knew that Vanguard has that slide from aggressive to conservative, so I figured I'd just copy/approximate based on what was available from Security Benefit DI funds, and rebalance to copy as necessary.  

Nice. I wish I'd been that decisive (oh well, no big deal).

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Don't know exactly how much I lost the last recession but I will never forget the  2000 drop. Yes I owned a bunch of Janus Funds which was a very bad idea as they were all clones of each other even though the funds had different names. They were all heavily invested in techs. There was no such thing as diversification if you own multiple janus Funds .I was so stupid.I didn't know that. I was so shell shocked at the time. I was saving like crazy and ended up with less money than even your non saver had. I thought it was all over. I blew it. But I sold those funds and while still foolishly stayed 100% stocks my mutual fund selection and allocation was more reasonable so I think the big fall of 2008 was bad but not as bad as the tech bubble bursting. I have learned a lot since then . I kept investing and buying more shares and began adding bonds and wow it all came back pretty good! Had I freaked out and sold the loses would have been permanent.

I know I have told my stories before but since we add new folks all the time, I thought I should  tell it again.

 

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5 minutes ago, tony said:

They were all heavily invested in techs. I was so stupid.

Huge difference between stupidity and ignorance. Even more difference between ignorance and ignorance in a system that is designed to keep you ignorant.

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I hope you younger folks can learn from us older folks so you can avoid our mistakes. Unfortunately folks like my stubborn brother seems to want to learn the hard way. He is 57 and has no margin for error if he wants to retire on time. So what is he investing in? Gold, precious metals, individual stocks (his company he works for) and some really aggressive mutuals. I with him luck.

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