Author Topic: Bogleheads Forum  (Read 9010 times)

dustinst22

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Re: Bogleheads Forum
« Reply #100 on: December 24, 2018, 02:14:15 PM »
Finding work after age 50 is difficult. DH knows from personal experience.

Or in a market downturn.  Or after several years out of your field.   Having a large employment gap means you may not be able to work in your field again, at least not without a lot of effort.

sol

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Re: Bogleheads Forum
« Reply #101 on: December 24, 2018, 02:48:20 PM »
Or in a market downturn.  Or after several years out of your field.   Having a large employment gap means you may not be able to work in your field again, at least not without a lot of effort.

Fortunately, you don't have to work in your field ever again.  Why is that always everyone's default plan?  In every single scenario I've ever run using various allocations and a 4% SWR, a half time minimum wage job for 20 hours per week is more than enough to see you through safely, though I suppose if your 4% is 200k per year then it might not be enough.  Maybe that's why the bogleheads don't see it as a viable option?

Remember that you don't need a job that covers your expenses, you only need a job that reduces your withdrawal rate to 3.0 or 3.5%.  An inflation adjusted 3.0% has historically never failed, for any length of time, in any market conditions.  So even if we're repeating the worst economic period in US history, 3% will be fine even if you retired at age 25 on the eve of disaster. 

So if you need a job, just find one that makes enough money to close the gap between 3% and whatever you want to spend that year.

As an example, a typical mustachian retirement plan is to retire with $1,000,000 and plan to spend $40k/year.  That's a 4% SWR.  A 3% SWR would mean you can still safely withdraw $30k, so you need to earn another $10k that year.  A minimum wage job in my state pays $13.50 an hour, and would generate virtually zero tax burden because your income is so low.  You might even qualify for the EITC!  Earning 10k at 13.50 an hour means you have to work 740 hours, or 20 hours per week for nine months of the year.  At minimum wage. 

There are LOTS of jobs I could handle in my retirement for 20 hours per week for 9 months per year.  None of them are in my old field.  If I found one that paid more than the legally mandated minimum wage, I could work even less.  I expect most of us, being conscientious and hard working individuals, would not stay at minimum wage indefinitely.

But personally I won't look for another job.  I think it would be much easier to cut my spending from 40k to 30k than to go back to work, even part time for only part of the year.

dustinst22

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Re: Bogleheads Forum
« Reply #102 on: December 24, 2018, 03:58:43 PM »
I understand this logic.  If I had to return to work,  I would want it to be something I enjoy -- minimum wage jobs wouldn't fit that bill for me.

Zikoris

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Re: Bogleheads Forum
« Reply #103 on: December 24, 2018, 04:13:13 PM »
I understand this logic.  If I had to return to work,  I would want it to be something I enjoy -- minimum wage jobs wouldn't fit that bill for me.

I don't think anyone has ever argued that it's easy to find an absolutely perfect job, doing exactly what you want to do, immediately during a recession - just that a person could find something doable that would see them through the temporary situation. But this is good, we've moved from "finding a job is difficult" to "finding a perfect job is difficult", which is progress.

dustinst22

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Re: Bogleheads Forum
« Reply #104 on: December 24, 2018, 04:18:56 PM »
What I'm getting at is that if you enjoy your field of work, which many boggleheads appear to, there is nothing wrong with working a little longer to ensure a larger safety margin so that you won't one day have to possibly work at walmart.
« Last Edit: December 24, 2018, 04:22:22 PM by dustinst22 »

use2betrix

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Re: Bogleheads Forum
« Reply #105 on: December 24, 2018, 04:23:44 PM »
I understand this logic.  If I had to return to work,  I would want it to be something I enjoy -- minimum wage jobs wouldn't fit that bill for me.

Interesting - I actually feel that the lower paying jobs would be more enjoyable. I could be a personal trainer, work on ski patrol, etc. those are not high paying jobs typically.

My current field is very high paying, and not something I would do if it didn’t pay so well.

As was mentioned earlier in this thread, if someone has 1 mil at a 4% withdrawal rate, in the event of an emergency or massive downturn, I’d be surprised if most people that are able to save 1 mil couldn’t find a job paying around 30k-40k in another field.

aaahhrealmarcus

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Re: Bogleheads Forum
« Reply #106 on: December 24, 2018, 04:31:14 PM »
Just came here to say I live in rural MO and I know very few people who earn OVER $40k per year, so this whole debate seems pretty laughable to me

nereo

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Re: Bogleheads Forum
« Reply #107 on: December 24, 2018, 04:59:55 PM »
I understand this logic.  If I had to return to work,  I would want it to be something I enjoy -- minimum wage jobs wouldn't fit that bill for me.
I think you misunderstood.  The suggestion isn’t that you should find a minimum wage job (and one you dislike) - it’s merely being used as an example as to how little one needs to earn in order to offset a depressed portfolio.  In other words, you do not need to earn at or near your previous salary.  You also don’t need to work full time.  The bar is that low.  Many don’t appreciate just how low.

Papa bear

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Re: Bogleheads Forum
« Reply #108 on: December 24, 2018, 07:29:52 PM »
So I worked and ran a temp office back starting in 2009.  There were a LOT of highly trained and educated, former 100k+ job holders who were desperate for 10/hr admin roles or AP clerks.

We didn’t run into too many “I haven’t worked in 5 years and now I need a job” types, but the people who were recently laid off or recently out of work had a much better chance of getting that coveted 10/hour short term temp job.

When you’re going back to work in a recession, you weren’t recently part of the work force. There will be 8-10% unemployment of people who are “in” the workforce.  You’re now competing for the same 2% of job openings that those 10% are too.  And these temp gigs? 8-12 weeks if you’re lucky. There were a lot of 2-4 week projects. Then go sit on your butt for a month or 2 before something else might come along.

It won’t be easy to find a job.  Might be impossible if your resume says you have “been off for personal reasons” the last 10 years and now you’re 45, 55, or 65. There’s a lot of better looking candidates out there.

You may have to make your money elsewhere.  Figure out how to make money outside of W2 work.  Got that figured out? Good. You’ll be just fine.


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Zikoris

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Re: Bogleheads Forum
« Reply #109 on: December 24, 2018, 09:55:54 PM »
So I worked and ran a temp office back starting in 2009.  There were a LOT of highly trained and educated, former 100k+ job holders who were desperate for 10/hr admin roles or AP clerks.

We didn’t run into too many “I haven’t worked in 5 years and now I need a job” types, but the people who were recently laid off or recently out of work had a much better chance of getting that coveted 10/hour short term temp job.

When you’re going back to work in a recession, you weren’t recently part of the work force. There will be 8-10% unemployment of people who are “in” the workforce.  You’re now competing for the same 2% of job openings that those 10% are too.  And these temp gigs? 8-12 weeks if you’re lucky. There were a lot of 2-4 week projects. Then go sit on your butt for a month or 2 before something else might come along.

It won’t be easy to find a job.  Might be impossible if your resume says you have “been off for personal reasons” the last 10 years and now you’re 45, 55, or 65. There’s a lot of better looking candidates out there.

You may have to make your money elsewhere.  Figure out how to make money outside of W2 work.  Got that figured out? Good. You’ll be just fine.


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You know you're a Mustachian when the idea of working for four weeks followed by two months off sounds like a sweet deal. That's what people with a 60%+ savings rate are doing already, technically - one month of working provides for two months of not working.

Hula Hoop

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Re: Bogleheads Forum
« Reply #110 on: December 25, 2018, 04:30:03 AM »
I guess I'm lucky that I'm a native English speaker living in an non-English speaking culture.  My backup plan during FIRE has always been English teaching.  I taught English to adults when I first arrived here 13 years ago and had no problems getting a job with no experience as I have a professional degree and can teach the specialized English of that profession.  I really enjoyed English teaching but found a job in my profession which pays a lot more (but more stress and less fun).  I'd like to continue English teaching in FIRE so I guess my FIRE plan is pretty safe even if it ends up being a lean FIRE and/or a recession happens.  The economy is already terrible here but people are still desperate to learn English both for themselves and for their children.

EscapeVelocity2020

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Re: Bogleheads Forum
« Reply #111 on: December 25, 2018, 10:09:56 AM »
In retirement (and ER especially), people are probably better served by the more sophisticated investing advice that Bogleheads offers, but the MMM Forum offers more interaction with folks that are paving the way for ER.  A conundrum for ER's is that you need a high allocation to stocks for their outperformance, but then you are exposed to sequence of return risk during draw-down.  I think both forums have their place as long as you know what you are looking for and not just listening to what you want to hear.

I have heard equally as much disdain for MMM on BH as I have heard for BH on MMM.  I try to put worthwhile posts out there on both fora trying to help and ignore things like 'BH's are all going to die miserable and rich at their desk' comments.

nereo

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Re: Bogleheads Forum
« Reply #112 on: December 25, 2018, 10:49:56 AM »
So I worked and ran a temp office back starting in 2009.  There were a LOT of highly trained and educated, former 100k+ job holders who were desperate for 10/hr admin roles or AP clerks.

We didn’t run into too many “I haven’t worked in 5 years and now I need a job” types, but the people who were recently laid off or recently out of work had a much better chance of getting that coveted 10/hour short term temp job.

When you’re going back to work in a recession, you weren’t recently part of the work force. There will be 8-10% unemployment of people who are “in” the workforce.  You’re now competing for the same 2% of job openings that those 10% are too.  And these temp gigs? 8-12 weeks if you’re lucky. There were a lot of 2-4 week projects. Then go sit on your butt for a month or 2 before something else might come along.

It won’t be easy to find a job.  Might be impossible if your resume says you have “been off for personal reasons” the last 10 years and now you’re 45, 55, or 65. There’s a lot of better looking candidates out there.

You may have to make your money elsewhere.  Figure out how to make money outside of W2 work.  Got that figured out? Good. You’ll be just fine.


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Again, the assumption doesn’t involve finding a temp job during a recession, as discussed above.

dustinst22

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Re: Bogleheads Forum
« Reply #113 on: December 25, 2018, 11:05:48 AM »


Again, the assumption doesn’t involve finding a temp job during a recession, as discussed above.

His point is that this might be all that is available during a deep recession (when you'd need to return to work). Hence why such high qualified people were desperate for these positions.  He was on the front lines of this so his perspective is interesting imo.  You'd be competing for low paying/quality jobs with people who are already in the work force.  It was very difficult for someone who hadn't worked in awhile to get any type of work in 2008-2010.
« Last Edit: December 25, 2018, 11:07:56 AM by dustinst22 »

Zikoris

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Re: Bogleheads Forum
« Reply #114 on: December 25, 2018, 11:35:06 AM »


Again, the assumption doesn’t involve finding a temp job during a recession, as discussed above.

His point is that this might be all that is available during a deep recession (when you'd need to return to work). Hence why such high qualified people were desperate for these positions.  He was on the front lines of this so his perspective is interesting imo.  You'd be competing for low paying/quality jobs with people who are already in the work force.  It was very difficult for someone who hadn't worked in awhile to get any type of work in 2008-2010.

I don't know that there's ever been a time when a very intelligent, capable person with complete time flexibility was unable to find a one or two day a week minimum wage job. It's really not hard to beat the competition for those types of jobs.

TomTX

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Re: Bogleheads Forum
« Reply #115 on: December 25, 2018, 11:41:01 AM »


Again, the assumption doesn’t involve finding a temp job during a recession, as discussed above.

His point is that this might be all that is available during a deep recession (when you'd need to return to work). Hence why such high qualified people were desperate for these positions.  He was on the front lines of this so his perspective is interesting imo.  You'd be competing for low paying/quality jobs with people who are already in the work force.  It was very difficult for someone who hadn't worked in awhile to get any type of work in 2008-2010.

I don't know that there's ever been a time when a very intelligent, capable person with complete time flexibility was unable to find a one or two day a week minimum wage job. It's really not hard to beat the competition for those types of jobs.

And as nereo mentioned - it doesn't even have to be during the recession. An ER with 4% SWR would have been fine waiting til 2011, or 2012 or 2013 to pick up that part time job for awhile.

CanuckExpat

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Re: Bogleheads Forum
« Reply #116 on: December 25, 2018, 12:05:10 PM »
A couple anecdotes about these topics.

When you’re going back to work in a recession, you weren’t recently part of the work force. There will be 8-10% unemployment of people who are “in” the workforce.  You’re now competing for the same 2% of job openings that those 10% are too.  And these temp gigs? 8-12 weeks if you’re lucky. There were a lot of 2-4 week projects. Then go sit on your butt for a month or 2 before something else might come along.

It won’t be easy to find a job.  Might be impossible if your resume says you have “been off for personal reasons” the last 10 years and now you’re 45, 55, or 65. There’s a lot of better looking candidates out there.

You may have to make your money elsewhere.  Figure out how to make money outside of W2 work.  Got that figured out? Good. You’ll be just fine.

A few years back, I interviewed for a position, and based on my conversation with the hiring manager, I got the impression he was an interesting guy who only does work he finds enjoyable. I stalked him after the fact and noticed from his LinkedIn that around the time of the dot com bust he "tried early retirement for a few years" and "rode my motorcycle around the world, having adventures". Few years later there were a series of startups with him listed as founder, obvious gaps in between. And then sometime around the present, back in W2 role at large established tech company, his title was  head of xyz impressive sounding thing at impressive sounding company. The gaps and retiring into a recession didn't seem to prove a problem.

Remember that you don't need a job that covers your expenses, you only need a job that reduces your withdrawal rate to 3.0 or 3.5%.  An inflation adjusted 3.0% has historically never failed, for any length of time, in any market conditions.  So even if we're repeating the worst economic period in US history, 3% will be fine even if you retired at age 25 on the eve of disaster. 

So if you need a job, just find one that makes enough money to close the gap between 3% and whatever you want to spend that year.

As an example, a typical mustachian retirement plan is to retire with $1,000,000 and plan to spend $40k/year.  That's a 4% SWR.  A 3% SWR would mean you can still safely withdraw $30k, so you need to earn another $10k that year.  A minimum wage job in my state pays $13.50 an hour, and would generate virtually zero tax burden because your income is so low.  You might even qualify for the EITC!  Earning 10k at 13.50 an hour means you have to work 740 hours, or 20 hours per week for nine months of the year.  At minimum wage. 

Or spend less, as has been said. A lot of the argument seems to be around whether it is possible to consciously cut your spending in retirement during a recession. But you may do it without even realizing. We had aimed for $40,000 annually in spending, and we weren't looking to cut costs, but it turned out that in the first two years of retirement we've spent approximately $25,000 and $30,000 annually. It's a worrying upward trend :) But there is a lot of safety factor built into just living a normal frugal life. The first year included a not entirely fully planned for pregnancy, and the second year included bumming around South East Asia for a month and replacing transmission that unexpectedly failed, so presumably there is fat to cut if shit hits the fan.

I realize the plural of anecdotes isn't data, but I think it does illustrate that where there's a will, there's a way.

Car Jack

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Re: Bogleheads Forum
« Reply #117 on: December 27, 2018, 02:48:06 PM »
Within the Bogleheads® investment philosophy there is plenty of room for individual flavoring.  It's possible to deviate from the one dimensional line between 100% VTSAX and 100% VBTLX without committing apostasy.

I agree, tons of room! 

But the questions wasn't "why do bogleheads deviate from Bogle's recommendation?" it was "why do boggleheads insist that you HAVE to deviate from Bogle's recommendation?"  Bogle said you don't need it, the bogleheads say you do need it.  This isn't a question of whether you have the freedom to choose, it's a question of why that community insists that you don't.

I don't mean to come down on the BH crowd, we all have our blind spots and their advice is generally good for people who expect to work long profitable careers and then retire into the 1%.

I think that's a huge generalization.  I would expect anyone to read, learn and make their own strategy.  As I'm a buy and hold investor and hugely focused on expenses and live below my means and invest mainly in a 3 fund portfolio, I fit right into both Boglehead and MMM philosophy.

If I explain the minute details, I do hold some Berkshire Hathaway because I'm thinking forward to where I'm going to want no dividends.  My asset allocation is 50/50 stock/bond, but I "float" my international.  I've heard nobody do this.  It's because as a beginner, I made international 25% of my equity and after listening to Jack Bogle, decided that I sorta agree.  So rather than make a big AA change, I decided "well, let's let international do what they do".  It works for me.  I also have a huge amount of US Savings Bonds from before I trusted the market.  Several hundred thousand dollars worth.  That's pretty unusual, but I have seen a few people with 6 figures in Savings Bonds, so I'm not completely alone there.  I suspect that some have acquired so much from back when a manufactured spend scheme was to buy savings bonds on treasury direct with a credit card for no fee, up to $30k per person and cashable after only 6 months.  I did it for first class upgrades for my family to Aruba and did it for 3 or 4 years until they killed the program.  Eventually, I was able to afford to not cash in any more and just let the bonds grow.  Need a new car....sell some bonds.  It's my back up emergency fund now but I only do paper bonds so only my federal return gets me new bonds.

AdrianC

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Re: Bogleheads Forum
« Reply #118 on: December 27, 2018, 06:39:29 PM »
I think most of these so-called asset classes are just advertising.  They're brokerage wrappers, ways to convince you to buy more of their products.  You need an emerging markets fund!  You need international blue chips!  You need REITs!  No, you really don't.  You need to own the index in the most successful economy in the world, that's it.  Then if you want to, you can lower your long-term returns and control your short-term volatility by adding bonds.  Then if you want to, you can branch out into other assets for fun but they are by no means necessary.

I don't have a link to it but I recall a vanguard paper showing that with 30% international you had the same return but lower volatility. The only reason I know to not diversify and get this benefit is recency bias.

Indeed. Plus international has other possible benefits, such as risk reduction.

In Vanguard’s canned portfolios the equity portion is 60% US and 40% international. It’s possible they know what they’re doing.

sol

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Re: Bogleheads Forum
« Reply #119 on: December 27, 2018, 06:55:28 PM »
It’s possible they know what they’re doing.

Totally possible.

But they're working with the same data that we're working with.  They recommended an increasing international allocation in the late 2000s, when it looked like international markets had real benefits based on the preceding ten years of data suggesting significant stabilization in emerging markets.  Then we had 10 years when international as a whole, and emerging markets in particular, drastically underperformed US equities. 

I'm not saying it's a terrible idea, just that it became popular right at the exact wrong time and anyone who jumped on that particular bandwagon lost out.  Maybe things will "correct" going forward and international will finally live up to its promised benefits.  Maybe not.  You don't know, I don't know, and the Vanguard research team doesn't know.

As to the "risk reduction" benefits, I'm still not totally convinced.  A helicopter with two rotors is twice as likely to crash, not half as likely to crash.  The only truly proven risk reduction strategy is a long time horizon.
« Last Edit: December 27, 2018, 06:59:47 PM by sol »

Pigeon

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Re: Bogleheads Forum
« Reply #120 on: December 27, 2018, 07:44:34 PM »
I read both MMM and BH and personally fall somewhere in the middle.  I don't think BHs are any more critical of MMM readers than vice versa. 

BH readers, in general, are considerably older.  I'm older than most here.  One big difference I think is that people here are much less realistic about the costs of health care and and the increased expenses that many will want to incur to maintain a pleasant living situation as they age. 

"But I have good genes and live a healthy lifestyle" is great, but it's no guarantee of anything.  If you see enough friends and relatives get old, you see that some of the last people you'd think would develop chronic health issues at an early age do.  Having a lot of money gives you options and options are good.  I'm not that far from average retirement age.  I can see the appeal of a whole lot of "luxuries" that I would have scoffed at as being ridiculous when I was 30. 

I also don't feel "danger" from working too long.  I don't hate my job, have decent flexibility and am pretty happy.  I've got way more free time now that my kids are close to being fledged.

I can completely see why many BH are skeptical of retiring at 35 and planning to live off a modest stash.  On the other hand, I find some of the handwringing there about buying this or that extravagant car kind of funny too. 

You can just take what you want both places, smile and move on.

dustinst22

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Re: Bogleheads Forum
« Reply #121 on: December 27, 2018, 09:27:11 PM »

I'm not saying it's a terrible idea, just that it became popular right at the exact wrong time and anyone who jumped on that particular bandwagon lost out.  Maybe things will "correct" going forward and international will finally live up to its promised benefits.  Maybe not.  You don't know, I don't know, and the Vanguard research team doesn't know.



I think this misses the point of why you should invest internationally.  It has nothing to do with recent performance.  It's logical to invest on a global scale for precisely the same reasons we use index funds in the first place.  Why restrict yourself to only local companies?  As Dodge would say, "The dozen large companies in NY state are closely linked to both the international economy, and the US economy.  Why shouldn't I just buy them? GE often follows movements in the S&P 500, why not just own one stock?"

I won't try to summarize his legendary post, but I think this is one of the best posts on this forum ever written and why it's so important to consider investing globally:

https://forum.mrmoneymustache.com/investor-alley/statistics-personal-experience-and-risk-management/msg629210/#msg629210
« Last Edit: December 27, 2018, 09:36:58 PM by dustinst22 »

Radagast

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Re: Bogleheads Forum
« Reply #122 on: December 27, 2018, 09:41:55 PM »
A helicopter with two rotors is twice as likely to crash, not half as likely to crash.
I tried to think of a fancy way to say "that is the worst analogy I have ever seen" but I decided to just say it.

sol

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Re: Bogleheads Forum
« Reply #123 on: December 27, 2018, 10:11:29 PM »
A helicopter with two rotors is twice as likely to crash, not half as likely to crash.
I tried to think of a fancy way to say "that is the worst analogy I have ever seen" but I decided to just say it.

Fair enough.  I'm still unconvinced.

Diversification can be taken too far, right?  Do I need to diversify into beanie babies and cryptocurrencies?  Sports memorabilia and fine art?  How do we choose which asset classes are appropriate to hold, and which merely expose us to new kinds of risk?

Why not just stick with what's been proven to work?  I feel like part of the push for more and different types of diversification is counterproductive.  People have taken an idea developed for holdings within a class and applied it to whole classes, even whole markets, and I'm not sure the reasoning holds up under closer inspection.

If someone wants to hold international funds, I'm all for it.  I just wish they could articulate why they want to hold international funds, beyond "diversification" into something different.  There are hundreds of currencies in the world, do I need to hold them all?  I would argue that diversifying into every currency is a stupid idea.  Diversifying into every international stock market is probably a stupid idea too, for the exact same reasons.

Radagast

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Re: Bogleheads Forum
« Reply #124 on: December 27, 2018, 11:29:55 PM »
A helicopter with two rotors is twice as likely to crash, not half as likely to crash.
I tried to think of a fancy way to say "that is the worst analogy I have ever seen" but I decided to just say it.

Fair enough.  I'm still unconvinced.

Diversification can be taken too far, right?  Do I need to diversify into beanie babies and cryptocurrencies?  Sports memorabilia and fine art?  How do we choose which asset classes are appropriate to hold, and which merely expose us to new kinds of risk?
Sure there is a line. It depends on the time you want to put in. Vanguard and pretty much every broker offers four-(plus)-fund portfolios that are every bit as easy as VTSAX, so that seems like a good line. If you aren't comfortable managing four funds yourself then use those. I can see reducing that to three funds DIY because foreign bonds don't seem sufficiently useful to justify the time. So for me three or four asset classes is the limit. Lower than that and you have no excuse. I also see value in something that is not a financial instrument, such as a house, but I realize not everybody wants the time associated with those.

Quote
Why not just stick with what's been proven to work?  I feel like part of the push for more and different types of diversification is counterproductive.  People have taken an idea developed for holdings within a class and applied it to whole classes, even whole markets, and I'm not sure the reasoning holds up under closer inspection.
What has been proven to work?

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If someone wants to hold international funds, I'm all for it.  I just wish they could articulate why they want to hold international funds, beyond "diversification" into something different.  There are hundreds of currencies in the world, do I need to hold them all?  I would argue that diversifying into every currency is a stupid idea.  Diversifying into every international stock market is probably a stupid idea too, for the exact same reasons.
What are you looking for? "In case the US stock market happens to go nowhere for two decades, as it has in the past, while collectively international stocks meddle forward?" "In case the dollar devaluates dramatically taking the US economy and bonds with it, and the other economies as well, except their currencies appreciate thus giving me real gains in US terms?" "In case the US economy crashes and burns but other countries do great?" "Because I don't know if the future is brighter for Apple, Samsung, Huawei, or a company from Chile I haven't heard of yet?" "If you don't know where the needles are in the haystack buy as much haystack as possible?"

Can you articulate why you think investments should stop at the US border, beyond "the US has been better since 1990"?

"In a canoe up shit creek, with two paddles, plus an undersized spare" Why not that analogy?

Andy R

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Re: Bogleheads Forum
« Reply #125 on: December 28, 2018, 12:21:10 AM »
If someone wants to hold international funds, I'm all for it.  I just wish they could articulate why they want to hold international funds, beyond "diversification" into something different. 

So you consider the idea of diversifying from all your assets in one US bank into all US banks valid because you are spreading the risk, but somehow you think it doesn't make sense to spread it through to banks outside the US??

Why don't people articulate why they want to hold international funds, beyond "diversification"?
Because there is no need to find another reason. Diversification IS the reason. If you diversify throughout all companies and sectors by using a total market index, then you are doing that for diversification. Your question is no different from someone telling you to articulate why you want to hold total market funds, beyond "diversification" into something different.

There are hundreds of currencies in the world, do I need to hold them all?  I would argue that diversifying into every currency is a stupid idea.  Diversifying into every international stock market is probably a stupid idea too, for the exact same reasons.

Holding international funds is not for the sake of diversifying currency, that is largely a side effect. The purpose is to diversify into companies in other markets in the same way that you would invest in banks throughout the US rather than just in one city.

It seems your problem is specific to currency risk associated with international funds.
Currency risk is a real risk, and unlike market risk, it is not rewarded/compensated, and this is one valid argument against (unhedged) world-wide diversification. If currency risk is your problem, then state this as being the problem, rather than a blanket statement that investing internationally is "probably a stupid idea". Investing internationally is not a stupid idea. Your inability to comprehend the separation of the two concepts is the problem.

As someone from a smaller country, I have no choice by to have to deal with the trade off between diversification of markets vs currency risk. This is a whole discussion with a host of upsides and downsides that need to be taken into account. Sure since your country makes up half the world index and has a very diverse industry within your country, you can invest only in domestic equities and will probably be ok. Just because you can doesn't mean some diversification, even with some currency risk, wouldn't improving the outcome further, or that it is stupid.

steveo

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Re: Bogleheads Forum
« Reply #126 on: December 28, 2018, 02:35:22 PM »
As someone from a smaller country, I have no choice by to have to deal with the trade off between diversification of markets vs currency risk.

I also have to diversify into international equities because I am from a smaller country. The currency risk is of course an issue however you can now buy hedged funds as well. The fee is a little higher but I intend to use a 50% hedged and 50% un-hedged approach.

The argument for utilising international funds if you are from the US is probably not as strong as if you are from a small country but my personal opinion is that it is still a good idea. My take is invest in a minimal amount of funds and get the best diversification that you can get at the lowest possible cost. The most rational approach I've seen is a two fund portfolio. You invest in an international stock portfolio and a home country domiciled bond fund based on your risk profile. There may be better options available but this to me is the simplest approach with the best possible risk-reward pay off over the longer term. Sure some options will beat this approach but picking those options today is impossible.

Eric

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Re: Bogleheads Forum
« Reply #127 on: December 28, 2018, 04:52:55 PM »
Diversification can be taken too far, right?  Do I need to diversify into beanie babies and cryptocurrencies?  Sports memorabilia and fine art?  How do we choose which asset classes are appropriate to hold, and which merely expose us to new kinds of risk?

Except that no one is actually suggesting that you diversify into further asset classes.  The idea is to continue to diversify within the same asset class that you've already decided you want to own.

It's the exact same reason for why you own the S&P 500 or total US market instead of just the Dow.  In fact, it's the exact same reasoning for using index funds in the first place.  That reason is diversification, and you already use it to justify your current investing behavior.

beee

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Re: Bogleheads Forum
« Reply #128 on: December 31, 2018, 04:00:18 PM »
"Because I don't know if the future is brighter for Apple, Samsung, Huawei, or a company from Chile I haven't heard of yet?"

That's my reasoning too. I have no idea whether Tesla or Ford or Toyota or BMW or XXX will own the electric cars market. But one of the companies will probably do it. Better to own all of them then.

wannabe-stache

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Re: Bogleheads Forum
« Reply #129 on: January 04, 2019, 06:37:56 PM »
@bacchi and @Andy R I also agree that point #6 is questionable. Depending on your exact field you likely won't be able to get a job earning nearly as much money as you did before, and you may well not be able to get any job at all DURING a recession.

However I don't think that there is strong consensus on this point on the forums either. Here's a nice long debate on the exact topic: https://forum.mrmoneymustache.com/welcome-to-the-forum/jobs-you-can-realistically-get-in-a-fire-failure-situation/

So it boils down to your specific skillset, and for most of us how much the idea of working a relatively low skill job (likely several years after the recovery from a recession) bothers you. I really REALLY don't care for that kind of work, so I don't factor "I could always get a new job" into my calculations at all.

Good post.  Amidst a thread full of bullshit posts attacking someone for disagreeing with anything MMM has to say (Boofinator).  this is why i spend my time at BH now.

So just to clarify @wannabe-stache, when you say bullshit posts, you're talking about me, right? I just don't want there to be any ambiguity here.

to be honest i don't even remember to whom it was directed. if it makes you feel better, assume it was or wasn't directed at you.  like a hardy boys novel, pick your path.

jinga nation

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Re: Bogleheads Forum
« Reply #130 on: January 08, 2019, 10:48:04 AM »
I come here for the face punches and go to BH to learn about the best $5,000 watch
Ah, I see you're a fan of Petrocelli.
Have you followed Taylor's recommendation to get a Toyota Corolla?

harvestbook

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Re: Bogleheads Forum
« Reply #131 on: January 09, 2019, 08:39:44 AM »
I love Taylor but always have to get in a dig every time he declares that the Second Grader's 90/10 three-fund portfolio beat all the 60/40 lazy portfolios over ten years. The key to investing success is clearly to be seven years old, live with your parents, and not have any bills due tomorrow.

If everyone followed his advice they'd probably be better off, though.