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  1. #21
    Join Date
    Feb 2007
    Location
    San Diego, California
    Quote Originally Posted by fuse View Post
    If you work in the financial industry, I understand and respect your perspective.

    I don’t know that I would change my portfolio based on this thread. I do think if someone shared “hey, I had some luck with $abc” it might pique my curiousity and give me an opportunity to learn something.
    The free version of my professional thoughts on this broad subject came out this week. If anybody wants a link I'll gladly share.

    Quote Originally Posted by rthomas View Post
    I'm a believer in indexing - you don't really need a lot of paid advice for this to work.
    The research data says otherwise. The biggest issues in personal finance are not the investment choices per se. They are dealing with the bad markets that inevitably come, issues of risk need and risk capacity, asset location, spending priorities in retirement and the like. You may be different (the research data also is clear that almost everyone thinks s/he is in the "different" category), but most people would benefit a lot with good, professional advice.

    Quote Originally Posted by rthomas View Post
    Pick your index (mine has been the S&P 500), put money in regularly (I've been adding a little bit each month since 1995), don't look until 20 years later, and you will have an account full of fun coupons.
    Diversification among indexes is as important as diversification among individual securities.

  2. #22
    Quote Originally Posted by RPS View Post

    You may be different (the research data also is clear that almost everyone thinks s/he is in the "different" category), but most people would benefit a lot with good, professional advice.
    I could be convinced, but how to differentiate between good professional advice and a waste of money? I’ll admit that I stopped trying after only finding people who wanted a percentage of assets under management, which I am not interested in paying.
    Carolina delenda est

  3. #23
    Quote Originally Posted by RPS View Post

    Diversification among indexes is as important as diversification among individual securities.
    Don't disagree. And that is why I asked about opinions on when a possible correction may occur in the other thread.
    ~rthomas

  4. #24
    Join Date
    Feb 2007
    Location
    San Diego, California
    Quote Originally Posted by cato View Post
    I could be convinced, but how to differentiate between good professional advice and a waste of money? I’ll admit that I stopped trying after only finding people who wanted a percentage of assets under management, which I am not interested in paying.
    There is a growing consensus that a retainer basis is the way to go that is best for clients. But I suspect it won't be market dominant anytime soon because it is so hard to build a sustainable business using that model. I know a few very good people nationally who do it (unaffiliated with me so no conflict of interest) if you would like a referral. All have a public profile and written work in the public domain so you could do plenty of DD before you called.

    Quote Originally Posted by rthomas View Post
    Don't disagree. And that is why I asked about opinions on when a possible correction may occur in the other thread.
    As I wrote in that thread, there are too many variables to make such a prediction with any degree of accuracy. We can make probabilistic guesses about expected returns based upon valuations that have been roughly accurate over ten years or so, but those guesses mean almost nothing in the near term. An example I use regularly: ESPN had its 35 “experts” – people whose whole job is to follow and pontificate about Major League Baseball – predict the outcome of the 2017 season. Not a single one of them called for an Astros v. Dodgers World Series and nobody had Houston winning it all. Nobody. Does anybody doubt that the world economy and the markets are far more complex than a MLB season?

    To paraphrase Buffett: Listening to or forming such opinions about the future is a waste of time (2013 Berkshire letter).

    There is an interesting side note, however. If you are at least ten years away from retirement, a big correction would almost surely be fantastic for you. You could buy more during your peak earning years at much lower prices.

  5. #25
    Join Date
    Nov 2007
    Location
    Vermont
    I do some friendly advising for a few friends, and am appalled by the "professional" advice most of them get, people who simply want to pump up their own fees. For that reason, I am a big fan of indexing, personally, though I certainly agree that really solid (if you can find some) fee based advisors are worth the investment.

    But seriously there is a reason why the financial services industry has evolved from 10% of the economy to 20%. Lots of people fondling other peoples' money. And most of them have a huge conflict of interest.

    Perfect example of what I see: I have a friend who has $800K in some very suitable index funds via Vanguard...I was pleasantly surprised by what he had, and some of the rudimentary advice
    they gave him as he aged (at no cost), obvious stuff like fewer equities the older you are. The fees for these funds are VERY low, .1% kind of stuff. Terrific for most people.

    But he had decided to go see a local financial advisor to see what he had to say. The advisor wanted to put him in some managed funds, and of course the advisor got 1% per year of the
    managed money...SO, even before investment results are in, the advisor gets $8k/year, and then the managed fund he suggested had a fee of 1.5% per year, another $12k regardless of the investment performance..so he was going to pay $20k/ year to invest in a fund which had roughly a 70% likelihood of underperforming something like a S&P 500 Index Fund.
    Clearly the advisor's motivation is a big fat commission from the managed fund. This is very very very common.

    Yes, there are people with many other issues who would do well to have their money managed, but I have seen SO many examples of people like the above example who are simply being screwed.

  6. #26
    Join Date
    Feb 2007
    Location
    San Diego, California
    Quote Originally Posted by budwom View Post
    Perfect example of what I see: I have a friend who has $800K in some very suitable index funds via Vanguard...I was pleasantly surprised by what he had, and some of the rudimentary advice they gave him as he aged (at no cost), obvious stuff like fewer equities the older you are. The fees for these funds are VERY low, .1% kind of stuff. Terrific for most people.
    Three brief comments.

    1. Vanguard is an excellent firm.

    2. The leading factor in the success or failure of any investment is fees. In fact, the relationship between fees and performance is an inverse one. Every investor needs to count costs.

    3. There is very robust debate about the conventional advice that one should continue to decrease equity exposure as one ages. There are excellent people on both sides of the debate (see here, for example).

  7. #27
    Join Date
    Nov 2007
    Location
    Vermont
    I agree with all of those. The thing about fees is that, lots of people I've encountered pay ludicrous fees, but that fact is obscured by the rising market, i.e. they get their statement and
    their account is rising in value...they'd be appalled if they saw what their accounts would be worth if they had paid more reasonable fees...

    as for your point on % of equities, I definitely agree, that's why I don't like blanket formulae like withdraw 4% of your assets each year, or determine % of equities based on age...it DOES vary
    by the personal circumsances of people for sure. Decreasing % of equities was appropriate for my friend, but it's hardly a blanket rule.

  8. #28
    Join Date
    Feb 2007
    Location
    San Diego, California
    Quote Originally Posted by budwom View Post
    The thing about fees is that, lots of people I've encountered pay ludicrous fees, but that fact is obscured by the rising market, i.e. they get their statement and their account is rising in value...they'd be appalled if they saw what their accounts would be worth if they had paid more reasonable fees...
    The SEC provides a helpful chart in this regard, available here.

  9. #29
    Join Date
    Feb 2007
    Location
    NYC

    TIAA

    Any opinions on TIAA? My wife and I have academic jobs, and 403b's managed through TIAA. It just seemed simpler to let them manage our non-403b investments as well.

  10. #30
    Join Date
    Nov 2007
    Location
    Vermont
    Quote Originally Posted by heifer View Post
    Any opinions on TIAA? My wife and I have academic jobs, and 403b's managed through TIAA. It just seemed simpler to let them manage our non-403b investments as well.
    how do they perform vs things like the S&P 500, and what fees do they charge? That info should be readily available...

  11. #31
    Quote Originally Posted by heifer View Post
    Any opinions on TIAA? My wife and I have academic jobs, and 403b's managed through TIAA. It just seemed simpler to let them manage our non-403b investments as well.
    My retirement account is also in TIAA CREF and it is a really good firm, but...

    https://www.nytimes.com/2017/10/21/b...firm-tiaa.html

    They can be pushy to get you to invest in actively managed accounts - as many investment firms do. So be aware.
    ~rthomas

  12. #32
    Join Date
    May 2007
    Location
    Tennessee
    Quote Originally Posted by budwom View Post
    I do some friendly advising for a few friends, and am appalled by the "professional" advice most of them get, people who simply want to pump up their own fees. For that reason, I am a big fan of indexing, personally, though I certainly agree that really solid (if you can find some) fee based advisors are worth the investment.

    But seriously there is a reason why the financial services industry has evolved from 10% of the economy to 20%. Lots of people fondling other peoples' money. And most of them have a huge conflict of interest.

    Perfect example of what I see: I have a friend who has $800K in some very suitable index funds via Vanguard...I was pleasantly surprised by what he had, and some of the rudimentary advice
    they gave him as he aged (at no cost), obvious stuff like fewer equities the older you are. The fees for these funds are VERY low, .1% kind of stuff. Terrific for most people.

    But he had decided to go see a local financial advisor to see what he had to say. The advisor wanted to put him in some managed funds, and of course the advisor got 1% per year of the
    managed money...SO, even before investment results are in, the advisor gets $8k/year, and then the managed fund he suggested had a fee of 1.5% per year, another $12k regardless of the investment performance..so he was going to pay $20k/ year to invest in a fund which had roughly a 70% likelihood of underperforming something like a S&P 500 Index Fund.
    Clearly the advisor's motivation is a big fat commission from the managed fund. This is very very very common.

    Yes, there are people with many other issues who would do well to have their money managed, but I have seen SO many examples of people like the above example who are simply being screwed.
    Good post, and I'd just add this. Not sure what time frame your 70% is based on, but suppose for the sake of argument it's a 1-year comparison. As time goes on, the % chance of cumulatively underperforming an appropriate benchmark, after expenses/fees, goes WAY up, to the point that after 10 years or 20 years you're left with just a handful of names, most of which can't be known (with confidence) in advance.

  13. #33
    Join Date
    Nov 2007
    Location
    Vermont
    Quote Originally Posted by cspan37421 View Post
    Good post, and I'd just add this. Not sure what time frame your 70% is based on, but suppose for the sake of argument it's a 1-year comparison. As time goes on, the % chance of cumulatively underperforming an appropriate benchmark, after expenses/fees, goes WAY up, to the point that after 10 years or 20 years you're left with just a handful of names, most of which can't be known (with confidence) in advance.
    There are a lot of analyses looking at various time periods, but I think the 70% is (as you say) conservative. A 2016 survey by S&P Dow Jones found that over a 10 year period, 82% of Large Cap managers, 88% of Mid Cap managers, and 88% of small cap managers failed to beat their appropriate index benchmarks...another study showed that in one year, 65% of funds failed to beat the S&P 500, and over five years (your point, of course) that jumped to 81%.

  14. #34
    Quote Originally Posted by RPS View Post
    The free version of my professional thoughts on this broad subject came out this week. If anybody wants a link I'll gladly share.

    The research data says otherwise. The biggest issues in personal finance are not the investment choices per se. They are dealing with the bad markets that inevitably come, issues of risk need and risk capacity, asset location, spending priorities in retirement and the like. You may be different (the research data also is clear that almost everyone thinks s/he is in the "different" category), but most people would benefit a lot with good, professional advice.

    Diversification among indexes is as important as diversification among individual securities.
    Please do, I’d be interested.

  15. #35
    Quote Originally Posted by rthomas View Post
    My retirement account is also in TIAA CREF and it is a really good firm, but...

    https://www.nytimes.com/2017/10/21/b...firm-tiaa.html

    They can be pushy to get you to invest in actively managed accounts - as many investment firms do. So be aware.
    CREF real estate is differentiating...they own their own assets. Other than that, they provide a lot of tools, but beware the 'risk analysis' that results in high-fee funds as a part of your portfolio. They do have some good choices, you just have to know to use them.

    As an aside, I spent a lot of time looking for a source on non-biased (or maybe better said omni-biased) information on personal investing. Bogleheads.org forum is one I use for research on topics I need updates on. You have to wade through some opinions on both sides of a topic, but for me it usually points me in the right direction for more info.

  16. #36
    Join Date
    Feb 2007
    Location
    San Diego, California
    Quote Originally Posted by budwom View Post
    There are a lot of analyses looking at various time periods, but I think the 70% is (as you say) conservative. A 2016 survey by S&P Dow Jones found that over a 10 year period, 82% of Large Cap managers, 88% of Mid Cap managers, and 88% of small cap managers failed to beat their appropriate index benchmarks...another study showed that in one year, 65% of funds failed to beat the S&P 500, and over five years (your point, of course) that jumped to 81%.
    You are referring to the SPIVA Scorecard, which regularly looks at active v. passive performance across sectors, markets and countries.

    Quote Originally Posted by fuse View Post
    Please do, I’d be interested.
    I PMed the link to you.

    Quote Originally Posted by fidel View Post
    As an aside, I spent a lot of time looking for a source on non-biased (or maybe better said omni-biased) information on personal investing. Bogleheads.org forum is one I use for research on topics I need updates on. You have to wade through some opinions on both sides of a topic, but for me it usually points me in the right direction for more info.
    Bogelheads has good information available on it, but has its weaknesses and sacred cows (don't we all). The financial blogosphere is an astonishing source of free and powerful insight. I'll provide links to some favorites (none affiliated with me) if anyone is interested.

  17. #37
    Quote Originally Posted by RPS View Post
    You are referring to the SPIVA Scorecard, which regularly looks at active v. passive performance across sectors, markets and countries.

    I PMed the link to you.

    Bogelheads has good information available on it, but has its weaknesses and sacred cows (don't we all). The financial blogosphere is an astonishing source of free and powerful insight. I'll provide links to some favorites (none affiliated with me) if anyone is interested.
    I'd be interested in what other sites you frequent. (Feel free to PM me if you don't want it public for some reason.) I, too, frequent Bogleheads. I think it contains great content -- the userbase skews very conservative though. If you followed the advice of the masses there, hardly anybody would be able to afford buying a house, particularly in HCOL locations. But you usually get some diversity of thought with rationales behind it, so the OP can decide for him or herself what conclusion to come to. Obviously, it also is overwhelmingly low cost index investing proponents and not trying to time the market, which is the camp I fall in as well...

  18. #38
    Quote Originally Posted by RPS View Post
    You are referring to the SPIVA Scorecard, which regularly looks at active v. passive performance across sectors, markets and countries.

    I PMed the link to you.

    Bogelheads has good information available on it, but has its weaknesses and sacred cows (don't we all). The financial blogosphere is an astonishing source of free and powerful insight. I'll provide links to some favorites (none affiliated with me) if anyone is interested.
    All I can say is a public thank you.
    Much (all?) of what you wrote is way above my head. Going to take a few read throughs to absorb what I can. Impressive, detailed analysis.

  19. #39
    Join Date
    Feb 2007
    Location
    San Diego, California
    Quote Originally Posted by Bluedog View Post
    I'd be interested in what other sites you frequent. (Feel free to PM me if you don't want it public for some reason.)
    I have no issue with going public. I simply wanted to avoid being seen as self-promoting. My favorites follow, in no particular order (except that I'm first). I have no business relationships with anyone else on this list, but they are all friends of mine, so bear that in mind.

    Above the Market (me)
    Jason Zweig
    The Reformed Broker (Josh Brown)
    Cliff Asness
    A Wealth of Common Sense (Ben Carlson)
    Corey Hoffstein
    Jeremy Schwartz
    Dan Egan
    Brian Portnoy
    Meb Faber
    The Retirement Researcher (Wade Pfau)
    The Big Picture (Barry Ritholtz)
    Blair duQuesnay
    Ben Johnson
    Peter Lazaroff
    Bps and pieces (Phil Huber)
    The Research Puzzle (Tom Brakke)
    The Irrelevant Investor (Michael Batnick)
    Michael Kitces
    Larry Hamtil
    GreenbackD (Tobias Carlisle)
    Of Dollars and Data (Nick Magiulli)
    Peter Huminski (a Wahoo though)

    If you don't want to wade through or follow this many, you might read Tadas Viskanta's Abnormal Returns, a daily aggregation of the best finance writing.

  20. #40
    Join Date
    Feb 2007
    Location
    San Diego, California
    As soon as I hit the "submit" button, I remembered two great sites I should have included. I'm sure I missed others.

    Econompic
    Bason Asset Management (James Osborne)

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