Another brilliant Ben Carlson column

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sleepysurf
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Another brilliant Ben Carlson column

Post by sleepysurf »

In his latest Wealth of Common Sense blog post, Ben Carlson succinctly summarizes the Bogleheads philosophy by stating... "The Stock Market Will Pick the Winners For You."

This is a great column to share with those still trying to "find the needles in the haystack." It includes great historical perspectives as well.
Retired 2018 | currently ~64/33/3 (partially sliced and diced, with a slowly rising equity glide path)
Mr. Buzzkill
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Re: Another brilliant Ben Carlson column

Post by Mr. Buzzkill »

Interesting read.

Given the tendency to underperformance for the top 10, would anyone invest in an SP490 index fund… the 500 minus the top 10?

I’m sure some BH folks would criticize it as being active management.
A strategy that works only in bull markets isn’t much of a strategy. Anyway, four dollars a pound.
MarkRoulo
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Re: Another brilliant Ben Carlson column

Post by MarkRoulo »

Mr. Buzzkill wrote: Sat Jun 03, 2023 4:51 pm Interesting read.

Given the tendency to underperformance for the top 10, would anyone invest in an SP490 index fund… the 500 minus the top 10?

I’m sure some BH folks would criticize it as being active management.
You might find this interesting (and it might even have accurate data!).

https://www.vcm.com/assets/etf-insights ... ration.pdf

I don't know if by "return spread" the chart is supposed to be the percent difference between the two classes of stock the "percentage point" difference in returns between the two classes of stock. It really matters here :-)

If the difference is large and actually achievable in a real mutual fund (rather than in a computer back-test), it seems like the sort of thing that Fidelity would have, though, no?
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Hacksawdave
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Re: Another brilliant Ben Carlson column

Post by Hacksawdave »

Yes, the haystack works.

When the tech boom and dotcom craze began in 1997, one of the most disliked stocks was Apple. By buying the haystack, each one share equivalent of AAPL at $35 a share is now worth $33,285, plus the acquired dividends of $1,365 over time.

JDS Uniphase, one of the big up-and-comers of the dotcom era hit a high of $243 in 2000 just before the burst. It no longer trades. The haystack also contained such ‘winners’ as Enron, General Motors, Lehman Brothers, Pacific Gas and Electric, TWA, WorldCom….

Buying and holding the haystack worked for me and still does.
Mr. Buzzkill
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Re: Another brilliant Ben Carlson column

Post by Mr. Buzzkill »

MarkRoulo wrote: Sat Jun 03, 2023 5:13 pm
Mr. Buzzkill wrote: Sat Jun 03, 2023 4:51 pm Interesting read.

Given the tendency to underperformance for the top 10, would anyone invest in an SP490 index fund… the 500 minus the top 10?

I’m sure some BH folks would criticize it as being active management.
You might find this interesting (and it might even have accurate data!).

https://www.vcm.com/assets/etf-insights ... ration.pdf

I don't know if by "return spread" the chart is supposed to be the percent difference between the two classes of stock the "percentage point" difference in returns between the two classes of stock. It really matters here :-)

If the difference is large and actually achievable in a real mutual fund (rather than in a computer back-test), it seems like the sort of thing that Fidelity would have, though, no?
Ignore the provocative name of this site that I just found

https://bondsareforlosers.com/the-sp-490/
A strategy that works only in bull markets isn’t much of a strategy. Anyway, four dollars a pound.
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Stinky
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Re: Another brilliant Ben Carlson column

Post by Stinky »

Mr. Buzzkill wrote: Sat Jun 03, 2023 4:51 pm Interesting read.

Given the tendency to underperformance for the top 10, would anyone invest in an SP490 index fund… the 500 minus the top 10?

I’m sure some BH folks would criticize it as being active management.
That’s a really interesting idea.

I expect that such a fund would be pretty tax inefficient, especially as it sells shares (and realizes capital gains) of companies that reach the top 10.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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Fat-Tailed Contagion
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Re: Another brilliant Ben Carlson column

Post by Fat-Tailed Contagion »

S&P 500 - Top 10 = S&P 490 Strategy ETF
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” | ― Benjamin Graham, The Intelligent Investor (75/25 - 50/50 - 25/75)
Fallible
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Re: Another brilliant Ben Carlson column

Post by Fallible »

Even more than "brilliant" - wise.
Then ChatGPT seemingly comes out of nowhere, gets 100+ million users and AI takes the tech world by storm. Out of all the innovations we’ve been beaten over the head with during this cycle, no one was really talking about the potential for AI yet here we are.

This stuff is not easy.

So what’s my strategy?
I prefer to let the indexes pick the winners for me. Sure, that’s boring and it’s not going to get me rich overnight but I have time.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
yules
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Re: Another brilliant Ben Carlson column

Post by yules »

Mr. Buzzkill wrote: Sat Jun 03, 2023 4:51 pm Interesting read.

Given the tendency to underperformance for the top 10, would anyone invest in an SP490 index fund… the 500 minus the top 10?

I’m sure some BH folks would criticize it as being active management.
Nah, if you buy and hold the SP400, it’s not active management. It’s no more active than people who decide not to hold international funds, and there are many of those here.

Yules
Rajsx
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Re: Another brilliant Ben Carlson column

Post by Rajsx »

Go ahead, buy VUG !
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Lawrence of Suburbia
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Re: Another brilliant Ben Carlson column

Post by Lawrence of Suburbia »

I thought the top stocks were what had been outperforming! What'd I get wrong?!
74% VTHRX/8% DODWX/12% TIAA Traditional/6% SWVXX
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Stinky
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Re: Another brilliant Ben Carlson column

Post by Stinky »

Lawrence of Suburbia wrote: Sun Jun 04, 2023 10:57 pm I thought the top stocks were what had been outperforming! What'd I get wrong?!
The top stocks got there by outperforming.

But, now that they’re top stocks, maybe they WON’T be outperforming? :oops:

Got that?
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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watchnerd
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Re: Another brilliant Ben Carlson column

Post by watchnerd »

sleepysurf wrote: Sat Jun 03, 2023 3:57 pm In his latest Wealth of Common Sense blog post, Ben Carlson succinctly summarizes the Bogleheads philosophy by stating... "The Stock Market Will Pick the Winners For You."

This is a great column to share with those still trying to "find the needles in the haystack." It includes great historical perspectives as well.
I don't think that's a Bogleheads thing.

That's just indexing, in general.

Also, many Bogleheads don't really believe in it, in practice, when you look at their US vs international splits or factor tilts.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
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