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View Poll Results: How much of an indexer are you?
Heavy indexer: 85% or more in indices 94 49.47%
Primarily indexer: More than 65%, but less than 85% 40 21.05%
Balanced: Between 35-65% indexed 31 16.32%
Primarily managed: Less than 35% indexed, but more than 15% 11 5.79%
Heavy manager: 15% or less indexed 14 7.37%
Voters: 190. You may not vote on this poll

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Old 08-05-2015, 03:25 PM   #41
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Many of these index v. active v. something else arguments seem to miss the point.

With low-cost index funds, and buy/hold/rebalance, you get 1) low fees, 2) broad diversification, and 3) a mechanism that requires minimal upkeep, and removes much of the angst of guessing picking which funds/stocks will "outperform". Nothing magic about it...
That's one side of the argument. You seem to miss the point that non-indexers make:

1) Overall returns after fees and taxes are what's most important.
2) You can choose to get broad enough diversification with any plan. Being a little less broadly diversified by trying not to invest in losers is a better strategy.
3) What angst? What you call guessing they would call research. If you can get a 1% better return on a $1M portfolio for a few hours/month work, that's a nice payoff, and some people actually enjoy it, or at least don't hate it.

In disclosure, I'm in the "primarily indexer" category myself so I lean towards your side, but I respect that some people actually can do better fairly consistently. I did during the dotcom boom but not since so I've learned that it works better for me not to try.
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Old 08-06-2015, 06:59 AM   #42
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That's one side of the argument. You seem to miss the point that non-indexers make:

1) Overall returns after fees and taxes are what's most important.
2) You can choose to get broad enough diversification with any plan. Being a little less broadly diversified by trying not to invest in losers is a better strategy.
3) What angst? What you call guessing they would call research. If you can get a 1% better return on a $1M portfolio for a few hours/month work, that's a nice payoff, and some people actually enjoy it, or at least don't hate it.

In disclosure, I'm in the "primarily indexer" category myself so I lean towards your side, but I respect that some people actually can do better fairly consistently. I did during the dotcom boom but not since so I've learned that it works better for me not to try.

You just made my point, though. I don't argue that my way can't be beaten, but being more "active" would be more w*rk, and cause more angst (for me). I like the set-and-mostly-forget aspect. Plus, there's no guarantee that I could do better... But I don't have any religious fervor about it, say like a Boglehead might.
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Old 08-06-2015, 08:00 AM   #43
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You just made my point, though. I don't argue that my way can't be beaten, but being more "active" would be more w*rk, and cause more angst (for me). I like the set-and-mostly-forget aspect. Plus, there's no guarantee that I could do better... But I don't have any religious fervor about it, say like a Boglehead might.
Well, your post before implied (to me, anyway) there were 3 simple points that active investors were missing, but as you say this time, it is an individual choice.

It seems to me that nearly all active investors understand it's not for everyone, and don't have a problem with people who prefer to index. I do, however, see a lot of posts from indexers that say that active investors are being foolish for trying to beat the market. You may not have any religious fervor but your previous post came out that way, to me. You didn't say this was why you are an indexer, instead you said that many were missing those points, as if it were a no-brainer. My reply was that they weren't missing them at all, but that they had counterpoints to each of them.

I wasn't really looking for another round of active vs passive arguments, though I suppose it's inevitable. I was pretty sure that REWahoo's poll wasn't going to tell us much since holding a small amount of a Fido Spartan Index fund in a 401K doesn't make one an indexer, and I wanted to see more granularity to see how diverse we are in strategies.
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Old 08-06-2015, 08:24 AM   #44
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Didn't mean to be unclear... I don't subscribe to the passive portfolio as being the best way, as some do. I was trying to describe my reasons for holding index funds, and buy/hold/rebalance, and thus my rationalization for it being the best way for me. No religious fervor of any kind here.

I do think there's a fair amount of evidence that many active funds don't consistently beat the "market", but at least some of that involves the funds getting too big, from people chasing performance.

Anyway, for granularity's sake:

HOLDING%
BIV10
BSV24.2
IGR9.64
VTI35.27
VGK5.4
VPL5.29
CASH10.16

All index ETFs except for cash. I posted my returns since 2008 on another thread, and though my holdings were slightly different for part of that period, it was still index ETFs.
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Old 08-06-2015, 08:56 AM   #45
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But I don't have any religious fervor about it, say like a Boglehead might.
I'm an indexer but to be honest, I'm happy that there are plenty of non-indexers. Without them, indexing wouldn't really work all that well.
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Old 08-07-2015, 12:21 AM   #46
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Of my 8 funds, only 3 are managed but about 45% of my cash is in those 3 funds. Wellesley, Primecap and Windsor.
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Old 08-07-2015, 12:32 PM   #47
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I'm an indexer but to be honest, I'm happy that there are plenty of non-indexers. Without them, indexing wouldn't really work all that well.
And all of us indexers own plenty of financial firms that benefit greatly from active management fees, account churning, frequent trading, etc.

I'll keep paying 0.0x% for most investments, let Vanguard's computers spin away, and appreciate the charitable contributions to my well being from the benevolence of the active management fans.
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Old 08-07-2015, 02:58 PM   #48
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As a result of folks here, I've moved some assets into Wellesley which is managed. Also have a significant amount in taxable funds from monthly investments made back in the 80's ("extra" $$ from LBYM before having kids mostly) - really don't want to take the capital gains hit by selling them. We're probably 60 index/40 active but I didn't go check the spreadsheet before voting.
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Old 08-07-2015, 03:06 PM   #49
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90% indexed between Vanguard and Fido (in 401k), 10% active at Fido. My actives at Fido have done very well over the years, better than S&P 500. When I got started investing in early 90s the consensus on indexers wasn't as strong so I hedged my bets, I was way more into actives then. But I've also been buy-and-hold no matter what the fund was until a couple of years before retirement, then I cut back on the mix from almost 100% stock to current 60/35/5. Still plan on doing buy/hold/rebalance for as long as I can handle it, I'm totally not into chasing returns when I only need 2.5% WR to live on.
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Old 08-08-2015, 04:14 AM   #50
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i used the fidelity insight newsletter since the 1980's with great success.

compared to the s&p 500 it blew it away . the key is just occasionally swapping funds for other funds that better fit the big picture.

it really did not matter if an individual fund beat its index all the time as long as the portfolio working as a team did.

my benchmark was always if i just bought a total market fund how did my total portfolio compare .

but now that i retired it was to cumbersome maintaining two portfolio's since they offered nothing around a 50/50 mix .

the income and capital preservation model was to conservative and the growth and income model was to aggressive.

so rather than run the two which had a lot of over lap in bond funds i created my own model .

i kept two actively managed fidelity funds , blue chip growth and growth and income and all the rest are index funds .

since the day i made the switch i am at a loss so time will tell which is better .

expenses have dropped , no doubt but if performance dropped then it wasn't such a smart move on my behalf . the past had the expenses well worth it.

so now here is the new model

fidelity growth and income fund FDGRX - held this for many many years now .

fidelity blue chip growth FBGRX- had this for many years now

vanguard total market index vti

vanguard extended market index vxf etf

vanguard veu all world index etf

that is the equity side.

the bond side uses

vanguard admiral total bond fund (now only 10% of the portfolio)

fidelity floating rate high yield

vanguard bsv short term bond

vanguard vtip short term inflation proof bond etf
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Old 08-08-2015, 08:40 AM   #51
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Looking through this stream I was curious what bucket you put pensions in. Are they considered bonds for calculation purposes? or are people not using them for their percentage calculations?
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Old 08-08-2015, 08:45 AM   #52
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i don't count them as part of our investable assets at all.

they are kept separate like social security is in our calculations .

we subtract out pension and social security and then structure the portfolio around what we need to provide the difference .
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Old 08-08-2015, 09:00 AM   #53
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i don't count them as part of our investable assets at all.

they are kept separate like social security is in our calculations .

we subtract out pension and social security and then structure the portfolio around what we need to provide the difference .
Now that you have explained it, it makes a lot of sense. Thank you.
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Old 08-08-2015, 11:53 AM   #54
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Looking through this stream I was curious what bucket you put pensions in. Are they considered bonds for calculation purposes? or are people not using them for their percentage calculations?
My intent for the poll was to not include classic pensions, because you don't have a choice to index or not. For a 401K or similar retirement plan, you usually do.

For asset allocation purposes, I calculate my allocation both without the small pension and 3/4 social security, and with them (estimated a present value figure for both and include as bonds) and keep 115-age in equities between the two values. But this is an "indexer or not" thread, not stock vs bond AA thread.

Edit: I don't want to infer that one should include pension and SS as bond income, just that I choose to. I realize many don't. Do what you're comfortable with. Again, the topic is better taken in another thread.
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Old 08-08-2015, 12:13 PM   #55
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I know that I won't move my money around and I'll be achieving very good returns. YMMV.
I like indexing because it's so easy to move your money around and there are so many choices with totally different focuses. I can be 100% international small cap value one day and 100% USA S and P 500 the next. Or, actually, within the same day if I want.

There are so many indexes! And it's so easy to move, especially if you play the index game with ETF's.

There's nothing passive or stable about indexing! Investing passively or holding positions or AA's over long periods of time can be accomplished with index funds for sure. But indexing doesn't mean passive, stable investing. That's entirely up to the investor!
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Old 08-08-2015, 04:51 PM   #56
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My intent for the poll was to not include classic pensions, because you don't have a choice to index or not. For a 401K or similar retirement plan, you usually do.
Thanks. Sometime ago I had clicked between 65% and 85% indexing, and after redoing my calculations that is still correct.

Index (stock+bond) 72%
Non-index (stock+bond) 15%
Cash 13%

The stock bond cash split is
Stock 62%
Bond 26%
Cash 12%
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