This is why I simply own the world market. I know some people will do better than me and some will do worse, but I will earn my fair share of world equity returns. What's not to like?Nathan Drake wrote: ↑Mon Dec 06, 2021 2:23 pmWhich market return? There are many markets, all with similar long term returns, some better than others with academic backing, that manifest at different timesHomerJ wrote: ↑Mon Dec 06, 2021 2:13 pmI would suggest that you accept the market return, and not look for ways to beat the market.burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
If the goal is to diversify across these market returns, then yes, own meaningful exposure to ALL of them…not just one
"Just Stand There" vs. incorporating new info
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Re: "Just Stand There" vs. incorporating new info
Re: "Just Stand There" vs. incorporating new info
Well, I have nothing against some International and SCV, as long as you hold the allocation steady over the long-run.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pmThe problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.HomerJ wrote: ↑Mon Dec 06, 2021 2:13 pmI would suggest that you accept the market return, and not look for ways to beat the market.burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
If you start going heavier on SCV or large growth or International because you think they will out-perform soon, that's when you get into trouble.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: "Just Stand There" vs. incorporating new info
Why not have a total market portfolio with a 5-10% SCV tilt and call it a decade. Be done. Stop screwing around and making perpetual changes that add very little and likely doing harm.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pmThe problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.HomerJ wrote: ↑Mon Dec 06, 2021 2:13 pmI would suggest that you accept the market return, and not look for ways to beat the market.burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
A time to EVALUATE your jitters: |
viewtopic.php?p=1139732#p1139732
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Re: "Just Stand There" vs. incorporating new info
The same could be said about going heavily into US TSM which is dominated by certain types of stocks, yet many do itHomerJ wrote: ↑Mon Dec 06, 2021 2:34 pmWell, I have nothing against some International and SCV, as long as you hold the allocation steady over the long-run.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pmThe problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.HomerJ wrote: ↑Mon Dec 06, 2021 2:13 pmI would suggest that you accept the market return, and not look for ways to beat the market.burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
If you start going heavier on SCV or large growth or International because you think they will out-perform soon, that's when you get into trouble.
Truth is it’s just fine being 100% SCV if you can stay the course
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Re: "Just Stand There" vs. incorporating new info
These changes are primarily for diversification. I'm adding EM because my EM exposure in underweight due to not having EM SCV. I'm adding gold because it is uncorrelated to both stocks and bonds (I'm a little iffy on this one but just hedging my bets here). I do hope for some premium over market with SCV but it is primarily to diversify against long-term underperformance of large caps.KlangFool wrote: ↑Mon Dec 06, 2021 2:28 pmburritoLover,burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm
If the risky part of my portfolio underperforms, I'm making enough contributions that retirement is not going to be cat-food city. I think at worst (if return of the entire portfolio is 0%), I'll have a somewhat frugal but enjoyable retirement. On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
That is not the question.
You have a portfolio consist of X, Y, and Z. The question is
A) Why are you adding SCV?
How much more gain do you hope to get? If it is not good enough, why make the change? If you do not know, why are you making the change?
B) Why are you adding EM Value?
Ditto
C) Why are you adding gold?
Ditto.
<< On the other hand, if the premium from these changes is say, 2-3% or more over 25 years>>
Is this 2% to 3% more per year? If yes, please explain how could this be mathematically possible? How many percent of your portfolio is in SCV? EM V? Gold?
If not, what is the actual possible premium of those decision (A), (B), and (C) if you are right?
KlangFool
- burritoLover
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Re: "Just Stand There" vs. incorporating new info
5-10% SCV portfolio is still dominated by large caps - it isn't enough to move the needle.EnjoyIt wrote: ↑Mon Dec 06, 2021 2:34 pmWhy not have a total market portfolio with a 5-10% SCV tilt and call it a decade. Be done. Stop screwing around and making perpetual changes that add very little and likely doing harm.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pmThe problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.HomerJ wrote: ↑Mon Dec 06, 2021 2:13 pmI would suggest that you accept the market return, and not look for ways to beat the market.burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
Re: "Just Stand There" vs. incorporating new info
burritoLover,burritoLover wrote: ↑Mon Dec 06, 2021 2:37 pmThese changes are primarily for diversification. I'm adding EM because my EM exposure in underweight due to not having EM SCV. I'm adding gold because it is uncorrelated to both stocks and bonds (I'm a little iffy on this one but just hedging my bets here). I do hope for some premium over market with SCV but it is primarily to diversify against long-term underperformance of large caps.KlangFool wrote: ↑Mon Dec 06, 2021 2:28 pmburritoLover,burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm
If the risky part of my portfolio underperforms, I'm making enough contributions that retirement is not going to be cat-food city. I think at worst (if return of the entire portfolio is 0%), I'll have a somewhat frugal but enjoyable retirement. On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
That is not the question.
You have a portfolio consist of X, Y, and Z. The question is
A) Why are you adding SCV?
How much more gain do you hope to get? If it is not good enough, why make the change? If you do not know, why are you making the change?
B) Why are you adding EM Value?
Ditto
C) Why are you adding gold?
Ditto.
<< On the other hand, if the premium from these changes is say, 2-3% or more over 25 years>>
Is this 2% to 3% more per year? If yes, please explain how could this be mathematically possible? How many percent of your portfolio is in SCV? EM V? Gold?
If not, what is the actual possible premium of those decision (A), (B), and (C) if you are right?
KlangFool
Your portfolio is either between 95% to 90% stock and you believe that you achieve diversification by tilting to different factors within the stock. Is my understanding correct?
KlangFool
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Re: "Just Stand There" vs. incorporating new info
I believe this is what's called a Tilt-a-Whirl portfolio.
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Re: "Just Stand There" vs. incorporating new info
The maxed out TDFs in 401k will glide path me to about something like 70/30 overall at retirement - I'll likely supplement that glidepath about 10 years out with more bonds in taxable to hit about 60/40. And I plan to add i-bonds each year.KlangFool wrote: ↑Mon Dec 06, 2021 2:46 pmburritoLover,burritoLover wrote: ↑Mon Dec 06, 2021 2:37 pmThese changes are primarily for diversification. I'm adding EM because my EM exposure in underweight due to not having EM SCV. I'm adding gold because it is uncorrelated to both stocks and bonds (I'm a little iffy on this one but just hedging my bets here). I do hope for some premium over market with SCV but it is primarily to diversify against long-term underperformance of large caps.KlangFool wrote: ↑Mon Dec 06, 2021 2:28 pmburritoLover,burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm
If the risky part of my portfolio underperforms, I'm making enough contributions that retirement is not going to be cat-food city. I think at worst (if return of the entire portfolio is 0%), I'll have a somewhat frugal but enjoyable retirement. On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
That is not the question.
You have a portfolio consist of X, Y, and Z. The question is
A) Why are you adding SCV?
How much more gain do you hope to get? If it is not good enough, why make the change? If you do not know, why are you making the change?
B) Why are you adding EM Value?
Ditto
C) Why are you adding gold?
Ditto.
<< On the other hand, if the premium from these changes is say, 2-3% or more over 25 years>>
Is this 2% to 3% more per year? If yes, please explain how could this be mathematically possible? How many percent of your portfolio is in SCV? EM V? Gold?
If not, what is the actual possible premium of those decision (A), (B), and (C) if you are right?
KlangFool
Your portfolio is either between 95% to 90% stock and you believe that you achieve diversification by tilting to different factors within the stock. Is my understanding correct?
KlangFool
- vanbogle59
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Re: "Just Stand There" vs. incorporating new info
The scientific method is the wrong tool for this task. Might as well try to use it for writing poetry.nigel_ht wrote: ↑Mon Dec 06, 2021 1:47 pmEither you believe the scientific method works or not.burritoLover wrote: ↑Mon Dec 06, 2021 1:30 pmWell, you can back-test and find that companies that begin with the letter "A" have historically higher returns than all other company names. Does that mean you should concentrate your portfolio in individual stocks starting with "A"? Of course not. So any conclusion has to have some reasonable basis. You can also test across different markets, different assets classes, different countries, different time periods, different economic environments and see if your conclusions persist. You can also see what happens "out-of-sample", after publishing your results. And your peers can question your conclusions.marcopolo wrote: ↑Mon Dec 06, 2021 1:14 pmWhat is the difference between "evidence based" and "back tested well"? Aren't most of the academic studies based on back testing whatever theory is being put forth?burritoLover wrote: ↑Mon Dec 06, 2021 9:12 amI've seen that before and I'm probably a bit of a hypocrite in that I tell others the same thing when they are adopting the latest fad. But I try to think that I'm adopting evidenced-based info into these changes, not something that has back-tested well recently. But maybe I'm deluding myself.
What other "evidence" is there?
There's no guarantee about anything, but I think it helps inform my decisions even if it makes my portoflio worse (not something I can know ahead of time).
Granted that for this outcome you want to look from confounding variables that impacted the analysis but at the end of the day if nobody can show otherwise then buying companies that start with the letter A should work until the data says otherwise...probably because everybody started investing in companies that start with A or every company renamed itself to start with A. The missing SCV outperformance may or may not be in this category...
More likely you forgot to account for something.
You can't even do repeatable experiments. Last I checked, that was important.
My understanding of the advice "Just stand there" is that the haystack average is all that is available to everyone. After that, it's a zero sum game (and FEES!). If you try to beat the average, you are trying to win a zero sum game. Trust me, if I thought I could, I would. But I don't, so I don't.
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Re: "Just Stand There" vs. incorporating new info
Why do we care that a total market fund is essentially a large cap fund?
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
Re: "Just Stand There" vs. incorporating new info
Have you ever played the lottery? Of course you have — we all have.
You don't go out and buy $10,000 worth of lottery tickets each week. You spend maybe $5 or $10 on quick-picks. When you lose your $5 or $10, as you inevitably will, you say "who cares?" and tear up the lottery ticket.
You wouldn't put your money on a specific lottery number because some maniac on TV tells you to. Not falling prey to marketing is a valuable trait. I come across new investment ideas all the time, research them, and find that I reject many more ideas than I commit funds to.
I wouldn't say the odds are necessarily stacked against you. This isn't Las Vegas where the odds are very deliberately stacked against you. I'd give any discretionary pick at least even odds, possibly better if you've done your due diligence. Just today I added two themed index ETF's. Each represents about 0.3% of my total portfolio. My discretionary picks have been net profitable. That said, the bulk of my profits come overwhelmingly from investments in a major stock index, IOW "the haystack".
You don't go out and buy $10,000 worth of lottery tickets each week. You spend maybe $5 or $10 on quick-picks. When you lose your $5 or $10, as you inevitably will, you say "who cares?" and tear up the lottery ticket.
I've found this works exceedingly well but I think 10% is a little much. 5% seems more like it to me. It scratches that stock/fund picking itch. If one of your picks takes off then congratulations! If one of your picks goes kaput then it makes an insignificant dent in your portfolio and you can do some tax-loss harvesting.Why not invest 90% of your funds in a three fund portfolio, then set aside 10% for "fun" money that you can use to invest in any new stuff you are interested in?
You wouldn't put your money on a specific lottery number because some maniac on TV tells you to. Not falling prey to marketing is a valuable trait. I come across new investment ideas all the time, research them, and find that I reject many more ideas than I commit funds to.
I wouldn't say the odds are necessarily stacked against you. This isn't Las Vegas where the odds are very deliberately stacked against you. I'd give any discretionary pick at least even odds, possibly better if you've done your due diligence. Just today I added two themed index ETF's. Each represents about 0.3% of my total portfolio. My discretionary picks have been net profitable. That said, the bulk of my profits come overwhelmingly from investments in a major stock index, IOW "the haystack".
Financial decisions based on emotion often turn out to be bad decisions.
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Re: "Just Stand There" vs. incorporating new info
It may be silly to you, but it’s not silly in practicalityTriple digit golfer wrote: ↑Mon Dec 06, 2021 3:01 pm Why do we care that a total market fund is essentially a large cap fund?
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
Why is investing in a momentum based priced weighted method the only logical path? It can be if that’s what enables you to stick with it, but that doesn’t mean it’s optimal for everyone
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Re: "Just Stand There" vs. incorporating new info
(While I'm quite certain you know the answer, I'll play along. I got a few more minutes today )Nathan Drake wrote: ↑Mon Dec 06, 2021 3:06 pm Why is investing in a momentum based priced weighted method the only logical path?
Because it's the average. And in the end, EVERYONE gets that average.
So, if you can get the average for "free" and have to "pay extra" for a chance to beat it, the average wins, on average.
Edit: wait, momentum based??? you mean market based???
Re: "Just Stand There" vs. incorporating new info
First, the distinction of hard vs soft isn't universal and itself is more philosophical than objective.HomerJ wrote: ↑Mon Dec 06, 2021 2:11 pmScientific method does not work well in economics.
Not enough data points, too many variables, and the rules change, so data from 30 years ago may not have followed the same rules as today, which limits relevant data points even more.
It's that simple. You admit finance is not a hard science, but you still think the scientific method can work in finance the same way it works when doing repeatable experiments in physics.
You can get some economic information and models out of the limited data using the scientific method, but you're not going to find a way to generate consistent results in investing.
You mention Oceanography, and weather forecasting as sciences where data is limited, a ton of variables, and it's also hard to do repeatable experiments, but those prove my point. The models are rough and non-exact, with large error bands, same as economics.
And those don't even have the huge negative impact of human emotions and government laws being involved like in economics.
Ding! Ding! Ding! The economic models ALWAYS fail to account for something. Because there are so many intertwined variables. And it's hard to separate them. And new variables can be created by government action.Granted that for this outcome you want to look from confounding variables that impacted the analysis but at the end of the day if nobody can show otherwise then buying companies that start with the letter A should work until the data says otherwise...probably because everybody started investing in companies that start with A or every company renamed itself to start with A. The missing SCV outperformance may or may not be in this category...
More likely you forgot to account for something.
An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.
- Laurence J. Peter.
Second, Meteorology and Oceanography employ quantitative research methods. Run the same data twice, get the same answer. It may be the wrong answer but its the same one. Weather and currents do what they do based on the underlying physics of the environment. The models try to predict that. The correctness of the models are judged on how close they match empirical data past, present and future.
Social sciences are harder to do well than physical sciences but it doesn't make them not science.
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Re: "Just Stand There" vs. incorporating new info
It is the market cap based average, which due to the link to price, also happens to be heavily momentum based (investing most at any one time of the current “winners”)vanbogle59 wrote: ↑Mon Dec 06, 2021 3:21 pm(While I'm quite certain you know the answer, I'll play along. I got a few more minutes today )Nathan Drake wrote: ↑Mon Dec 06, 2021 3:06 pm Why is investing in a momentum based priced weighted method the only logical path?
Because it's the average. And in the end, EVERYONE gets that average.
So, if you can get the average for "free" and have to "pay extra" for a chance to beat it, the average wins, on average.
Edit: wait, momentum based??? you mean market based???
If you seek diversification of sequence of returns or higher expected returns (with more risk), you do not need to pay much more in terms of ER
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Re: "Just Stand There" vs. incorporating new info
Question for you: Are the following funds cap-weighted?Nathan Drake wrote: ↑Mon Dec 06, 2021 3:06 pmIt may be silly to you, but it’s not silly in practicalityTriple digit golfer wrote: ↑Mon Dec 06, 2021 3:01 pm Why do we care that a total market fund is essentially a large cap fund?
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
Why is investing in a momentum based priced weighted method the only logical path? It can be if that’s what enables you to stick with it, but that doesn’t mean it’s optimal for everyone
VOO
VXUS
AVUV
AVDV
AVES
The labels are silly. Wanting to hold a lower percentage in each company is not. But in that case, one wouldn't use cap-weighted funds at all. That means index funds are out.
It begs the question, in that case, why aren't there a lot of actively managed funds beating the index? Isn't it as simple as not using momentum-based pricing?
Re: "Just Stand There" vs. incorporating new info
The point is to not change your AA based on what you think the market will do. I don't care if you go heavily into TSM or heavily into SCV.Nathan Drake wrote: ↑Mon Dec 06, 2021 2:36 pmThe same could be said about going heavily into US TSM which is dominated by certain types of stocks, yet many do itHomerJ wrote: ↑Mon Dec 06, 2021 2:34 pmWell, I have nothing against some International and SCV, as long as you hold the allocation steady over the long-run.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pmThe problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.HomerJ wrote: ↑Mon Dec 06, 2021 2:13 pmI would suggest that you accept the market return, and not look for ways to beat the market.burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
If you start going heavier on SCV or large growth or International because you think they will out-perform soon, that's when you get into trouble.
Truth is it’s just fine being 100% SCV if you can stay the course
Don't go changing it constantly on every new article you read that supposedly gives you "new information"
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: "Just Stand There" vs. incorporating new info
Research shows that active management actually does best the index on average, it just doesn’t do so net of fees.Triple digit golfer wrote: ↑Mon Dec 06, 2021 3:27 pmQuestion for you: Are the following funds cap-weighted?Nathan Drake wrote: ↑Mon Dec 06, 2021 3:06 pmIt may be silly to you, but it’s not silly in practicalityTriple digit golfer wrote: ↑Mon Dec 06, 2021 3:01 pm Why do we care that a total market fund is essentially a large cap fund?
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
Why is investing in a momentum based priced weighted method the only logical path? It can be if that’s what enables you to stick with it, but that doesn’t mean it’s optimal for everyone
VOO
VXUS
AVUV
AVDV
AVES
The labels are silly. Wanting to hold a lower percentage in each company is not. But in that case, one wouldn't use cap-weighted funds at all. That means index funds are out.
It begs the question, in that case, why aren't there a lot of actively managed funds beating the index? Isn't it as simple as not using momentum-based pricing?
Reduce the fees. Invest in areas that are not perfectly correlated and may employ higher risk. Enjoy better SORR and absolute returns over time
The labels gave meaning because they convey the amount of risk and expected returns for each asset class type
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Re: "Just Stand There" vs. incorporating new info
HomerJ wrote: ↑Mon Dec 06, 2021 3:32 pmThe point is to not change your AA based on what you think the market will do. I don't care if you go heavily into TSM or heavily into SCV.Nathan Drake wrote: ↑Mon Dec 06, 2021 2:36 pmThe same could be said about going heavily into US TSM which is dominated by certain types of stocks, yet many do itHomerJ wrote: ↑Mon Dec 06, 2021 2:34 pmWell, I have nothing against some International and SCV, as long as you hold the allocation steady over the long-run.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pmThe problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.
If you start going heavier on SCV or large growth or International because you think they will out-perform soon, that's when you get into trouble.
Truth is it’s just fine being 100% SCV if you can stay the course
Don't go changing it constantly on every new article you read that supposedly gives you "new information"
If you are a relatively new investor it may be impossible for a few years to even know what your baseline AA should be
I see no problem starting with simplicity (TDF, TSM, etc), and then adding to that core where you find assets you have conviction in and can stick with it for the long term
That was my process; additive over time, not exclusionary
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Re: "Just Stand There" vs. incorporating new info
How can active beat the index? Isn't the index just the aggregate and therefore active should equal index before fees?Nathan Drake wrote: ↑Mon Dec 06, 2021 3:33 pmResearch shows that active management actually does best the index on average, it just doesn’t do so net of fees.Triple digit golfer wrote: ↑Mon Dec 06, 2021 3:27 pmQuestion for you: Are the following funds cap-weighted?Nathan Drake wrote: ↑Mon Dec 06, 2021 3:06 pmIt may be silly to you, but it’s not silly in practicalityTriple digit golfer wrote: ↑Mon Dec 06, 2021 3:01 pm Why do we care that a total market fund is essentially a large cap fund?
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
Why is investing in a momentum based priced weighted method the only logical path? It can be if that’s what enables you to stick with it, but that doesn’t mean it’s optimal for everyone
VOO
VXUS
AVUV
AVDV
AVES
The labels are silly. Wanting to hold a lower percentage in each company is not. But in that case, one wouldn't use cap-weighted funds at all. That means index funds are out.
It begs the question, in that case, why aren't there a lot of actively managed funds beating the index? Isn't it as simple as not using momentum-based pricing?
Reduce the fees. Invest in areas that are not perfectly correlated and may employ higher risk. Enjoy better SORR and absolute returns over time
The labels gave meaning because they convey the amount of risk and expected returns for each asset class type
- vanbogle59
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Re: "Just Stand There" vs. incorporating new info
All of the faculty in every university's Social Science departments will agree with you. Thus the name.
But it's a white wash. Always has been.
If there were not important differences between their methods and conclusions then instead of screaming that they deserve the second part of their name, social scientists would be demonstrating that they shouldn't have to include the first part.
"I'm not a Social Scientist, I'm just a Scientist who studies xxxxx"
And Newton's Laws would sit right next to Kahneman's.
It's different. Look, I'm not saying Psychology is Astrology.
But I will say that when someone tells me Economics will soon deliver results like Chemistry, they are probably reaching for my wallet.
And they're wrong. Scientism is not science. Thank you, Dr. Hayek.
https://www.nobelprize.org/prizes/econo ... k/lecture/
Re: "Just Stand There" vs. incorporating new info
You know what else is a social science?
- Anthropology
- Comparative Media Studies
- Economics (Economics; Mathematical Economics; Computer Science, Economics, and Data Science)
- Global Languages (French, German, Spanish)
- History
- Humanities (African & African Diaspora Studies, American Studies, Ancient and Medieval Studies, Asian and Asian Diaspora Studies, Latin American and Latino/a Studies, Russian and Eurasian Studies, Women's and Gender Studies)
- Linguistics
- Literature
- Music
- Philosophy
- Political Science
- Theater Arts
- Writing
There is a real reason Economics is in the same list as Music and Theater, and not in the list with Physics and Chemistry.
Last edited by HomerJ on Mon Dec 06, 2021 3:40 pm, edited 1 time in total.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: "Just Stand There" vs. incorporating new info
Average of ALL participants, not just fundsTriple digit golfer wrote: ↑Mon Dec 06, 2021 3:36 pmHow can active beat the index? Isn't the index just the aggregate and therefore active should equal index before fees?Nathan Drake wrote: ↑Mon Dec 06, 2021 3:33 pmResearch shows that active management actually does best the index on average, it just doesn’t do so net of fees.Triple digit golfer wrote: ↑Mon Dec 06, 2021 3:27 pmQuestion for you: Are the following funds cap-weighted?Nathan Drake wrote: ↑Mon Dec 06, 2021 3:06 pmIt may be silly to you, but it’s not silly in practicalityTriple digit golfer wrote: ↑Mon Dec 06, 2021 3:01 pm Why do we care that a total market fund is essentially a large cap fund?
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
Why is investing in a momentum based priced weighted method the only logical path? It can be if that’s what enables you to stick with it, but that doesn’t mean it’s optimal for everyone
VOO
VXUS
AVUV
AVDV
AVES
The labels are silly. Wanting to hold a lower percentage in each company is not. But in that case, one wouldn't use cap-weighted funds at all. That means index funds are out.
It begs the question, in that case, why aren't there a lot of actively managed funds beating the index? Isn't it as simple as not using momentum-based pricing?
Reduce the fees. Invest in areas that are not perfectly correlated and may employ higher risk. Enjoy better SORR and absolute returns over time
The labels gave meaning because they convey the amount of risk and expected returns for each asset class type
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
- vanbogle59
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Re: "Just Stand There" vs. incorporating new info
Huh?Nathan Drake wrote: ↑Mon Dec 06, 2021 3:33 pm Research shows that active management actually does best the index on average, it just doesn’t do so net of fees.
The only way to get that result is to define "the index" as something other than the whole haystack.
Re: "Just Stand There" vs. incorporating new info
Exactly which is why all your little additions are a complete waste of your time. Pick something and just stand there.burritoLover wrote: ↑Mon Dec 06, 2021 2:38 pm5-10% SCV portfolio is still dominated by large caps - it isn't enough to move the needle.EnjoyIt wrote: ↑Mon Dec 06, 2021 2:34 pmWhy not have a total market portfolio with a 5-10% SCV tilt and call it a decade. Be done. Stop screwing around and making perpetual changes that add very little and likely doing harm.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pmThe problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.HomerJ wrote: ↑Mon Dec 06, 2021 2:13 pmI would suggest that you accept the market return, and not look for ways to beat the market.burritoLover wrote: ↑Mon Dec 06, 2021 1:52 pm On the other hand, if the premium from these changes is say, 2-3% or more over 25 years, then I am not going to object to having an even nicer retirement.
A time to EVALUATE your jitters: |
viewtopic.php?p=1139732#p1139732
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Re: "Just Stand There" vs. incorporating new info
20-25% of each asset class type is meaningfulEnjoyIt wrote: ↑Mon Dec 06, 2021 3:58 pmExactly which is why all your little additions are a complete waste of your time. Pick something and just stand there.burritoLover wrote: ↑Mon Dec 06, 2021 2:38 pm5-10% SCV portfolio is still dominated by large caps - it isn't enough to move the needle.EnjoyIt wrote: ↑Mon Dec 06, 2021 2:34 pmWhy not have a total market portfolio with a 5-10% SCV tilt and call it a decade. Be done. Stop screwing around and making perpetual changes that add very little and likely doing harm.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pmThe problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.
I’d hate to recognize the pitfalls of 100% US TSM only to stand there and see it go nowhere for a very long time (decade or longer)
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: "Just Stand There" vs. incorporating new info
I wasn’t addressing your portfolio. I was addressing OP and his desire to add another fund and a desire to add gold. Eventually you have a bunch of little pieces worth 5-10%.Nathan Drake wrote: ↑Mon Dec 06, 2021 4:00 pm20-25% of each asset class type is meaningfulEnjoyIt wrote: ↑Mon Dec 06, 2021 3:58 pmExactly which is why all your little additions are a complete waste of your time. Pick something and just stand there.burritoLover wrote: ↑Mon Dec 06, 2021 2:38 pm5-10% SCV portfolio is still dominated by large caps - it isn't enough to move the needle.EnjoyIt wrote: ↑Mon Dec 06, 2021 2:34 pmWhy not have a total market portfolio with a 5-10% SCV tilt and call it a decade. Be done. Stop screwing around and making perpetual changes that add very little and likely doing harm.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pm
The problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.
I’d hate to recognize the pitfalls of 100% US TSM only to stand there and see it go nowhere for a very long time (decade or longer)
Even worse changing those pierces based on some news or media is far more harmful than beneficial.
A time to EVALUATE your jitters: |
viewtopic.php?p=1139732#p1139732
- vanbogle59
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Re: "Just Stand There" vs. incorporating new info
Me too.Nathan Drake wrote: ↑Mon Dec 06, 2021 4:00 pm I’d hate to recognize the pitfalls of 100% US TSM only to stand there and see it go nowhere for a very long time (decade or longer)
The only thing worse would be to have selected one of the active managers who did worse and charged more.
No one can control the market. You can control the fees. And you can choose the average or take your chances in a zero sum game.
Re: "Just Stand There" vs. incorporating new info
And let’s be honest, if the global market is doing poorly, odds are individual pieces of that market are doing poorly also. Maybe not as poorly, maybe some recover sooner, but stocks follow the trajectory of stocks.Nathan Drake wrote: ↑Mon Dec 06, 2021 4:00 pm20-25% of each asset class type is meaningfulEnjoyIt wrote: ↑Mon Dec 06, 2021 3:58 pmExactly which is why all your little additions are a complete waste of your time. Pick something and just stand there.burritoLover wrote: ↑Mon Dec 06, 2021 2:38 pm5-10% SCV portfolio is still dominated by large caps - it isn't enough to move the needle.EnjoyIt wrote: ↑Mon Dec 06, 2021 2:34 pmWhy not have a total market portfolio with a 5-10% SCV tilt and call it a decade. Be done. Stop screwing around and making perpetual changes that add very little and likely doing harm.burritoLover wrote: ↑Mon Dec 06, 2021 2:21 pm
The problem I have with market equity returns - which universally means market cap weighted index funds is that you are heavily concentrated in large cap stocks (especially growth stocks). Which is why a total stock market fund has 0.2% return difference compared to the S&P 500 over 50 years. You think you are adding diversification going total market, but they are overwhelmed by large caps. Even if you don't believe in factors, adding an SCV tilt should bring more diversification to your portfolio - it is the antithesis of large cap growth. That is my primary motivation. And it is the same motivation for having a globally diversified portfolio.
I’d hate to recognize the pitfalls of 100% US TSM only to stand there and see it go nowhere for a very long time (decade or longer)
Nothing wrong with having conviction in an asset class. Something wrong with changing that conviction with the phases of the moon.
A time to EVALUATE your jitters: |
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Re: "Just Stand There" vs. incorporating new info
I agree that feature creep in a portfolio is not worthwhile. It should be meaningful and provide something another asset class doesn’tEnjoyIt wrote: ↑Mon Dec 06, 2021 4:06 pmI wasn’t addressing your portfolio. I was addressing OP and his desire to add another fund and a desire to add gold. Eventually you have a bunch of little pieces worth 5-10%.Nathan Drake wrote: ↑Mon Dec 06, 2021 4:00 pm20-25% of each asset class type is meaningfulEnjoyIt wrote: ↑Mon Dec 06, 2021 3:58 pmExactly which is why all your little additions are a complete waste of your time. Pick something and just stand there.burritoLover wrote: ↑Mon Dec 06, 2021 2:38 pm5-10% SCV portfolio is still dominated by large caps - it isn't enough to move the needle.
I’d hate to recognize the pitfalls of 100% US TSM only to stand there and see it go nowhere for a very long time (decade or longer)
Even worse changing those pierces based on some news or media is far more harmful than beneficial.
Vineviz has suggested that there is not much benefit to adding more than 5 types of funds, yiure basically just replicating the same thing
I personally wouldn’t want to add something like gold with a return less than inflation just to provide some skewed outcome on 5% of my portfolio during times when the market may tank
I’d rather just ride out the recession and hope that I’m adequately diversified for the dispersion of recovery scenarios for each asset class type
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Re: "Just Stand There" vs. incorporating new info
Not necessarily true; two very different outcomes during 00-09 for SCV vs TSM, same with the 70s.EnjoyIt wrote: ↑Mon Dec 06, 2021 4:09 pmAnd let’s be honest, if the global market is doing poorly, odds are individual pieces of that market are doing poorly also. Maybe not as poorly, maybe some recover sooner, but stocks follow the trajectory of stocks.Nathan Drake wrote: ↑Mon Dec 06, 2021 4:00 pm20-25% of each asset class type is meaningfulEnjoyIt wrote: ↑Mon Dec 06, 2021 3:58 pmExactly which is why all your little additions are a complete waste of your time. Pick something and just stand there.burritoLover wrote: ↑Mon Dec 06, 2021 2:38 pm5-10% SCV portfolio is still dominated by large caps - it isn't enough to move the needle.
I’d hate to recognize the pitfalls of 100% US TSM only to stand there and see it go nowhere for a very long time (decade or longer)
Nothing wrong with having conviction in an asset class. Something wrong with changing that conviction with the phases of the moon.
The risk premiums are not perfectly correlated
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: "Just Stand There" vs. incorporating new info
I don't think it counts unless it's been at least a year. It probably gets way easier after that.burritoLover wrote: ↑Mon Dec 06, 2021 2:15 pmAfter this one last time right - ha. Sounds like you were able to pull it off.Beensabu wrote: ↑Mon Dec 06, 2021 2:12 pm Yeah. Done that.
Saving money on taxes is different than "shiny new fund". Yeah?
Sometimes, you just need to recognize you have a problem. There needs to be a cut off point where you're not allowed to "optimize" based on learning something new anymore. Mine was almost 5 years in.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Re: "Just Stand There" vs. incorporating new info
I am a big fan of Total Market investing.Triple digit golfer wrote: ↑Mon Dec 06, 2021 3:01 pm Why do we care that a total market fund is essentially a large cap fund?
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
But, concentration to a few massive companies does add idiosyncratic risk. Consider something like Enron fraud situation. if it had been 3 separate, independent companies, it seems unlikely they would have all failed so spectacularly.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Re: "Just Stand There" vs. incorporating new info
The biggest holding in VTI is only 5%. Multiple Enronsmarcopolo wrote: ↑Mon Dec 06, 2021 5:10 pmI am a big fan of Total Market investing.Triple digit golfer wrote: ↑Mon Dec 06, 2021 3:01 pm Why do we care that a total market fund is essentially a large cap fund?
Large, mid, small, value, growth - these are ALL arbitrary labels.
If we changed the thresholds on large, mid, and small caps and therefore the holdings changed in large cap index funds and therefore performance changed compared to a total market index, would that make you feel differently? It shouldn't.
All this being scared of investing so much in one company is irrational fear. Amazon is 3% of the stock market and people may feel that's just too much. Amazon can also easily be split up into about 5 or 6 different companies. Online shopping, grocery, cloud computing, streaming, web services, and whatever else they do. Would you feel differently if Amazon split into 5 separate companies that collectively made up 3% of the total stock market, but were only 0.60% of the market each?
Instead of Amazon at 3% of the market, would you feel differently if it were Amazon 0.6%, Nile 0.6%, Yangtze 0.6%, Mississippi 0.6%, Missouri 0.6%?
This is all so silly to me. Just buy the market and be happy with its returns. It's very liberating to not care about all the arbitrary labels that the financial porn industry puts out there.
But, concentration to a few massive companies does add idiosyncratic risk. Consider something like Enron fraud situation. if it had been 3 separate, independent companies, it seems unlikely they would have all failed so spectacularly.
Vanguard/Fidelity | 76% US Stock | 16% Int'l Stock | 8% Cash
Re: "Just Stand There" vs. incorporating new info
Music and theater aren't social sciences. Neither are most of the things you've listed. And what you've listed as the humanities also aren't humanities.HomerJ wrote: ↑Mon Dec 06, 2021 3:39 pmYou know what else is a social science?
"Social science" is just a phrase. They are not similar to the "hard" sciences just because they have "science" in the name.
- Anthropology
- Comparative Media Studies
- Economics (Economics; Mathematical Economics; Computer Science, Economics, and Data Science)
- Global Languages (French, German, Spanish)
- History
- Humanities (African & African Diaspora Studies, American Studies, Ancient and Medieval Studies, Asian and Asian Diaspora Studies, Latin American and Latino/a Studies, Russian and Eurasian Studies, Women's and Gender Studies)
- Linguistics
- Literature
- Music
- Philosophy
- Political Science
- Theater Arts
- Writing
There is a real reason Economics is in the same list as Music and Theater, and not in the list with Physics and Chemistry.
If you're going to have such strong negative feelings toward something, you should at least learn what it is you hate.
Languages, history, literature, music, and philosophy are liberal arts, also known as the humanities.
Economics, political science, anthropology...plus sociology and a few other fields are social sciences.
The difference is that literature, music, etc. don't conduct studies in an attempt to explain the world.
Economics, etc. does that. That's why they are sciences.
The things you've listed as "humanities" are hard to qualify - most of them are taught as social sciences, from a sociological perspective. But Russian and Eurasian studies may have a language focus, a history focus, or a literature focus.
Theater Arts and Writing (in the sense of creative writing) is Art, which is another category.
The reason Economics is in the same list as Theater Arts isn't because they are all social sciences. It's because you pulled this list from some weird source.
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Re: "Just Stand There" vs. incorporating new info
I prefer to just stand there... and soak in all the Bogleheads information that confirms my reasons for just standing there.
Make sure you check out my list of certifications. The list is short, and there aren't any. - Eric 0. from SMA
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Re: "Just Stand There" vs. incorporating new info
And THAT is why I would never be 100% SCV. I would not be willing to stay the course when TSM was dominating SCV (which is has been doing).Nathan Drake wrote: ↑Mon Dec 06, 2021 2:36 pm Truth is it’s just fine being 100% SCV if you can stay the course
Re: "Just Stand There" vs. incorporating new info
This is a good point. In most first-aid training programs, one of the first things they drill into you is to NOT jump in and start doing chest compressions. First you need to evaluate the scene looking for all of the problems that aren't obvious, so that you can avoid adding to the victim count. Standing back and giving it a minute often results in a better response than jumping in immediately.RetiredAL wrote: ↑Mon Dec 06, 2021 2:08 pmMy take on that quote is about impulse control. Impulse control is about making analyzed/planned changes to one's portfolio, not knee-jerks.burritoLover wrote: ↑Mon Dec 06, 2021 8:20 am Bogle famously said "Don’t do something, just stand there".
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Re: "Just Stand There" vs. incorporating new info
In addition to this, which also applies to me, I would never put 100% of my portfolio or even 100% of my equities into such a small corner of the market. I wouldn't invest in stocks and exclude every single large company. How does one invest in stocks and exclude Microsoft, Amazon, Google, Chase, Visa, Home Depot, the list goes on and on.UpperNwGuy wrote: ↑Mon Dec 06, 2021 7:40 pmAnd THAT is why I would never be 100% SCV. I would not be willing to stay the course when TSM was dominating SCV (which is has been doing).Nathan Drake wrote: ↑Mon Dec 06, 2021 2:36 pm Truth is it’s just fine being 100% SCV if you can stay the course
Re: "Just Stand There" vs. incorporating new info
As long as they are using quantitative research methods with the same rigor as expected in any other discipline it’s science.vanbogle59 wrote: ↑Mon Dec 06, 2021 3:38 pmAll of the faculty in every university's Social Science departments will agree with you. Thus the name.
But it's a white wash. Always has been.
If there were not important differences between their methods and conclusions then instead of screaming that they deserve the second part of their name, social scientists would be demonstrating that they shouldn't have to include the first part.
"I'm not a Social Scientist, I'm just a Scientist who studies xxxxx"
And Newton's Laws would sit right next to Kahneman's.
It's different. Look, I'm not saying Psychology is Astrology.
But I will say that when someone tells me Economics will soon deliver results like Chemistry, they are probably reaching for my wallet.
And they're wrong. Scientism is not science. Thank you, Dr. Hayek.
https://www.nobelprize.org/prizes/econo ... k/lecture/
Dr. Hayek can point out when it hasn’t been applied with rigor or that there are weaknesses when applied to his domain but it doesn’t change the outcome even if the results aren’t necessarily deterministic. It’s still math, statistics, and quantitative research design…just applied to a difficult dynamic domain.
And I’ve never had any psychologist tell me “I’m a social scientist” and I’ve met quite a few. At most it’s something along the lines of “Im a research psychologist studying X”. No different than “I’m a research chemist” or “I’m a heliophysicist”.
I don’t think I’ve met any economists. I’m sure they are like everyone else.
Re: "Just Stand There" vs. incorporating new info
It turns out that you and I have a lot in common. I have incorporated new information quite a few times over the years, some of it had to do with asset classes and some of it has to do with newer investment vehicles. I started investing in 1984 when I bought my first mutual fund, I bought my first stock in 1989, my first index fund in 1995, my first ETF in 2004. In terms of asset classes I have been Value oriented with a taste for aggressive investments, pretty much bought my Growth oriented funds at American Century and my Value individual stocks with my broker. I found that I like the Mid/Small-Caps and accessed these through active mutual funds. I started buying my first Value mutual fund in about 1995, a REIT fund came along about the same time and I bought that. Then came TIPS. In 2007-2008, I started buying Small-Cap Value, Micro-Caps, and International Mid/Small-Cap. In recent years, I added International Small-Cap Value.burritoLover wrote: ↑Mon Dec 06, 2021 8:20 am Bogle famously said "Don’t do something, just stand there". Certainly you shouldn't change anything based on current economic conditions or returns, but what about incorporating new information? I find that I have evolved my portfolio as I learn about different concepts. For example, I once had all TDFs in all accounts, including taxable, until I realized that TDFs can have very high capital gain distributions so I went with a 3-funder in taxable. Then I learned about small cap value, researched it, and felt that I wanted to take on that additional risk so I added an allocation there. Then Avantis came out with a new EM value fund and I want to now add that. And I kind of want to add an allocation to gold as well just so that money is not all tied up in equity/bonds.
I feel like I'm doing more harm than good but I can't seem to stick with one portfolio.
Got some grief in another thread when I responded to what I perceived as changing economic conditions (higher inflation), pausing on purchasing any more bonds, and switching bonds (mostly GNMA's) for TIPS. Over the last year, the allocation within my bonds to TIPS went from 12% to 18% of my bonds. A very modest shift but really not a change in strategy. It was really regret from not buying TIPS when I had a chance to buy them cheaper, pretty much holding my nose and buying anyway. Not an advocate of market timing or tactical asset allocation but I have practiced both in very mild forms, particularly where I saw opportunity. Valuations are a factor in whatever shifts that I made. From a Boglehead point of view, I have sinned a little, a venial but not mortal sin. Father (Taylor) Larimore will give me absolution if absolutely necessary.
You raise a really excellent issue. When do you stay the course? When do you make changes regarding investment vehicles, asset classes, or as you put it new information? I think it is important to stay within your lane, things that you actually know something about. Also important to stay with a consistent philosophy. Market timing can be done with investment strategies too and this is not a prescription for good long term investment performance. If you are Value oriented, you want to stay a Value investor. If you are a Growth guy or guy, stick with that. I also think that your investment style needs to fit your personality. Okay, I admit it, I am cheap so I gravitate towards the relative bargain of Value stocks. I also am a cautious person but I get a a bit of wildness every once in a while. Value oriented but also has a taste for aggressive investments. So for me, pushing the limits is driving 56 mph in a 55 mph zone. Not one to push the envelope too hard. I was born to be mild.
As far as the Avantis ETFs, which I could buy anytime I would like, I have not bought even though I am a big fan of what they are doing. So far, I have stuck with the factor investments that I already have. I have decided that such things as Fidelity Large Cap Index, iShares S&P 600 Small Value Index ETF, Wisdom Tree International Small Cap Dividend, Vanguard Small Cap Value Index ETF, iShares Micro Cap Index ETF, and a SPDR International Small Cap ETF are plenty well good enough. At some point, I might do an analysis of my factor products and see if I can replace some of them with the Avantis ETFs. So far I haven't seen a compelling reason to switch.
As far as Gold, it is intriguing, I have thought this over many times but I never bought. I see it as portfolio insurance and so far have not been willing to pay the premiums of a drag upon investment performance. Plus Gold might not go up in value when you believe your portfolio most needs the insurance to kick in. Asset classes have a mind of their own, they don't care about our forecasts or performance expectations. It seems that Gold works if you have the discipline to keep this asset class rebalanced. If your investment plan says 5% in Gold, keep your allocation at 5% and don't let it drift. It seems to be part of the secret of such portfolios as the Harry Browne Permanent Portfolio.
A fool and his money are good for business.
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Re: "Just Stand There" vs. incorporating new info
Historically SCV does better than TSM 80% of the time, which is similar to the rate that TSM does better than tbills.UpperNwGuy wrote: ↑Mon Dec 06, 2021 7:40 pmAnd THAT is why I would never be 100% SCV. I would not be willing to stay the course when TSM was dominating SCV (which is has been doing).Nathan Drake wrote: ↑Mon Dec 06, 2021 2:36 pm Truth is it’s just fine being 100% SCV if you can stay the course
I like that TSM and SCV differ over certain periods so I told and include both, but I would argue the volatility would be harder to stick to rather than the underperformance vs. TSM.
In general I don't think it's good to constantly benchmark yourself to what any part of your portfolio is doing.
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Re: "Just Stand There" vs. incorporating new info
Maybe you are doing changes too quickly and without careful consideration?burritoLover wrote: ↑Mon Dec 06, 2021 8:20 am I feel like I'm doing more harm than good but I can't seem to stick with one portfolio.
Adding a SCV tilt to a 3-funder is one thing. Jumping between different funds and gold is another.
I've now considered adding a small SCV tilt for around a year. I'll be considering it for at least 6 more months before making any moves. I will carefully analyze all the options (VBR, VIOV, AVUV)
I'm also considering going for a golden butterfly style of portfolio near retirement, which is around 20 years from now. Plenty of time to consider and do research.
What I'm trying to say is: It's okay to educate oneself and evaluate all the options, but any changes have to be done after very careful consideration and not by going back and forth, and especially not acting on impulses.
P.S. In this board there is a bit too much fanaticism about the 3-fund portfolio. It's a nice portfolio for sure, but there are many other very good ways to build one's portfolio...
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
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Re: "Just Stand There" vs. incorporating new info
I do hold SCV.... as a subset of TSM.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:03 pmHistorically SCV does better than TSM 80% of the time, which is similar to the rate that TSM does better than tbills.UpperNwGuy wrote: ↑Mon Dec 06, 2021 7:40 pmAnd THAT is why I would never be 100% SCV. I would not be willing to stay the course when TSM was dominating SCV (which is has been doing).Nathan Drake wrote: ↑Mon Dec 06, 2021 2:36 pm Truth is it’s just fine being 100% SCV if you can stay the course
I like that TSM and SCV differ over certain periods so I told and include both, but I would argue the volatility would be harder to stick to rather than the underperformance vs. TSM.
In general I don't think it's good to constantly benchmark yourself to what any part of your portfolio is doing.
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Re: "Just Stand There" vs. incorporating new info
So, you don't actually need to use ALL of that pesky scientific method. Only the "rigor" and mathy bits.
Yeah Phrenology!
Like I said. Much of the world agrees with you. They don't have a problem using the same label for Psychology and Chemistry.
I know I'm in the minority. When someone shows me the first reproducible Sociology experiment, I will change my position.
Yes. Seems like others would listen. Unfortunately, not many.
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Re: "Just Stand There" vs. incorporating new info
That's not holding SCV at all. There's 0 meaningful exposure to SCV in a TSM fundUpperNwGuy wrote: ↑Mon Dec 06, 2021 8:12 pmI do hold SCV.... as a subset of TSM.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:03 pmHistorically SCV does better than TSM 80% of the time, which is similar to the rate that TSM does better than tbills.UpperNwGuy wrote: ↑Mon Dec 06, 2021 7:40 pmAnd THAT is why I would never be 100% SCV. I would not be willing to stay the course when TSM was dominating SCV (which is has been doing).Nathan Drake wrote: ↑Mon Dec 06, 2021 2:36 pm Truth is it’s just fine being 100% SCV if you can stay the course
I like that TSM and SCV differ over certain periods so I told and include both, but I would argue the volatility would be harder to stick to rather than the underperformance vs. TSM.
In general I don't think it's good to constantly benchmark yourself to what any part of your portfolio is doing.
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Re: "Just Stand There" vs. incorporating new info
In that case, it is much too small for me to want to invest in it.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:16 pmThat's not holding SCV at all. There's 0 meaningful exposure to SCV in a TSM fundUpperNwGuy wrote: ↑Mon Dec 06, 2021 8:12 pmI do hold SCV.... as a subset of TSM.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:03 pmHistorically SCV does better than TSM 80% of the time, which is similar to the rate that TSM does better than tbills.UpperNwGuy wrote: ↑Mon Dec 06, 2021 7:40 pmAnd THAT is why I would never be 100% SCV. I would not be willing to stay the course when TSM was dominating SCV (which is has been doing).Nathan Drake wrote: ↑Mon Dec 06, 2021 2:36 pm Truth is it’s just fine being 100% SCV if you can stay the course
I like that TSM and SCV differ over certain periods so I told and include both, but I would argue the volatility would be harder to stick to rather than the underperformance vs. TSM.
In general I don't think it's good to constantly benchmark yourself to what any part of your portfolio is doing.
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Re: "Just Stand There" vs. incorporating new info
This does not logically followUpperNwGuy wrote: ↑Mon Dec 06, 2021 8:17 pmIn that case, it is much too small for me to want to invest in it.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:16 pmThat's not holding SCV at all. There's 0 meaningful exposure to SCV in a TSM fundUpperNwGuy wrote: ↑Mon Dec 06, 2021 8:12 pmI do hold SCV.... as a subset of TSM.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:03 pmHistorically SCV does better than TSM 80% of the time, which is similar to the rate that TSM does better than tbills.UpperNwGuy wrote: ↑Mon Dec 06, 2021 7:40 pm
And THAT is why I would never be 100% SCV. I would not be willing to stay the course when TSM was dominating SCV (which is has been doing).
I like that TSM and SCV differ over certain periods so I told and include both, but I would argue the volatility would be harder to stick to rather than the underperformance vs. TSM.
In general I don't think it's good to constantly benchmark yourself to what any part of your portfolio is doing.
Why invest in TSM when you can just invest in the top 5 largest stocks?
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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Re: "Just Stand There" vs. incorporating new info
This does not logically follow.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:18 pmThis does not logically followUpperNwGuy wrote: ↑Mon Dec 06, 2021 8:17 pmIn that case, it is much too small for me to want to invest in it.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:16 pmThat's not holding SCV at all. There's 0 meaningful exposure to SCV in a TSM fundUpperNwGuy wrote: ↑Mon Dec 06, 2021 8:12 pmI do hold SCV.... as a subset of TSM.Nathan Drake wrote: ↑Mon Dec 06, 2021 8:03 pm
Historically SCV does better than TSM 80% of the time, which is similar to the rate that TSM does better than tbills.
I like that TSM and SCV differ over certain periods so I told and include both, but I would argue the volatility would be harder to stick to rather than the underperformance vs. TSM.
In general I don't think it's good to constantly benchmark yourself to what any part of your portfolio is doing.
Why invest in TSM when you can just invest in the top 5 largest stocks?
Why invest in the top 5 largest stocks when I can invest in 3500 stocks?