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Preaching to the Choir !
Old 12-29-2014, 07:49 PM   #1
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Preaching to the Choir !

I still like reading what Bogle says and it makes me feel all warm and fuzzy.

Bogle's 'scary math' shows up in retirement balances - MarketWatch
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Old 12-29-2014, 08:02 PM   #2
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Well, I think from Mr. Bogle we get his honest opinion. He has obviously been around a very long time and he is certainly worth listening to.
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Old 12-29-2014, 08:11 PM   #3
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I just heard today that 90% of the active fund manager in 2014 failed to even match the S&P 500 index benchmark.
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Old 12-30-2014, 05:08 AM   #4
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guess they shouldn't be fund managers.

but never forget while active fund managers drop the ball for many reasons including many funds are just to darn small to efficiantly pay to keep the lights on and pay staff.

many of those funds have never and will never do well and most of the funds out there that are listed have little investor money.

i bet if you look at the managed funds investors have the bulk of the money in the claims about active vs index would be very different.

just the top fidelity funds have hundreds of billions in them and they did very well with many beating their indexs easily the last 5 years..

those funds may have more investor money than 75% of the bottom funds all added up.

personally i never think much of the active vs managed statistics just for that reason.

i would tend to think that the odds and outcomes are very different when you follow the money and not the managers.

2014 nothing saw much action except the s&p 500 and large size stocks . you could have been the best stock picker in the world and 2014 didn't matter if it wasn't a big company .

there really is no accurate way to compare since it is our total portfolio that we need to track. a dynamically adjusted portfolio like i have used for 25 years now every so often swaps out a managed fund for a better fund that fits the big picture better.

neither fund may beat their index that year but working together they did.

get the point? there really is only how you did and whether in your own mix could you have done something better than you did?


in my case there are no equals in etf's or index funds that i could have used as then the entire portfolio is different.

personally i think folks get to wrapped up in this managed vs index crap and it really indicates little portfolio wise.

just having a worse tax strategy by retirement can un-do the effects of decades of lower expenses . your buy and sell points far out weight index vs passive returns when the the long term top performing managed funds which have the bulk of investor money is considered.

about the only thing i can compare my portfolio to is what if i just bought an s&p 500 or total market fund instead.

well 25 years later starting with the same 100k i am 450k ahead using my plain ole fidelity funds in an effective portfolio..

but i can't compare against anything else except my own performance since there are no equals to many of those funds.


i always liken it to the statistics of living here in nyc. if we look at our odds of being mugged they can be pretty high since we have lots of bad neighborhoods but the fact is most of us avoid those neighborhoods and so the chances of being mugged are sooooo tiny as to not even be a thought.

in fact we don't even have to know what the best areas are , we just need to avoid the known bad ones and we are way ahead.

my opinion is i think folks need to concentrate more on having the right allocations to fit the bigger picture and the right retirement tax planning strategy in effect early on and put less attention on vanguards brilliant marketing strategy of making it seem indexing and expenses are all that counts.

reminds me of the shrewd guy who pounds the car dealer down to the lowest price ,then goes to work on the finance guy and hammers him. a few years later he is back trading the car in at a wholsale price blowing everything he did on the buy side..

in the mean time grandma paid more for the car, got a higher rate of interest but sold the car more favorably in the end.

grandma wins!

Fidelity beat benchmarks by $35 billion, but does anyone care? | Reuters
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Old 12-30-2014, 06:13 AM   #5
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I suspect investors can do fine in a few well chosen active funds but it doesn't seem worth the effort to try to ferret them out and then have to watch their management to make sure they stay the same. Then, even with all that effort the statistics that sway me more than "70%+ active funds don't match their index," are the ones that show that funds that do beat their index overwhelmingly don't do so for long. Lots of effort to essentially do the same you could with a dart thrown at a choice of indexes?
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Old 12-30-2014, 06:15 AM   #6
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it really takes no work at all. most of the top are just fine and will likely be fine. but again so many other factors surpass that it becomes a moot point in the scheme of things. it is all about the portfolio and tax strategy.

a portfolio is not about a fund ,it is the interaction of all the funds. some don't even have to beat any index they just need not to have other parts not fall as far and you win..

i do believe actively managed funds work better as a team when you actively adjust . funds weighted for a weak dollar are great when the dollar is falling but you want to switch when the dollar strengthens. high yield was great to own when the value was there. there was no better fund to own than fidelity capital and income. it has an amazing record. but it isn't the fund to own now when valuations are high.


my own feeling is buy and die portfolios are going to be less and less a do as rates rise . 40 years of a bond bull market let sitting static in bonds and stocks come out okay.

but falling bonds may alter that stratagey to a bit more hands on and nudging dynamically. no market timing but like steering a ship just a nudge here and there to hold it on course.

any way i would love to see how investors in mananaged funds actually had the funds do that they put their money in and then compare to indexing , that would be interesting to have it weighted by dollars.

counting a few thousand poor performers with little investor money in the comparison really means little. it means many actively managed funds suck but that does not mean investors in actively managed funds as a group under performed or under performed badley.
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Old 12-30-2014, 08:55 AM   #7
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Originally Posted by frayne View Post
I still like reading what Bogle says and it makes me feel all warm and fuzzy.
Made me feel better too.
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Old 12-30-2014, 09:02 AM   #8
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i enjoy hearing him speak. he is brilliant too. he created an entire market segment and marketed it so well.

he isn't wrong ,all those things in a perfect world would add to the bottom line but there are so many other important issues that as long as you picked long term good performers and it is part of a total portfolio of things it all gets lost in the sauce and things have a way of equaling out .

in the real world we will do some things well and other things not so well. they will add to and take away from other things we did.

i never had the lowest expenses or funds that beat their indexes every year. but i made it up in other areas with better buy and sell points exchanging funds for better suited funds. not funds i thought would beat their index but better funds weighted for the world around me.
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Old 12-30-2014, 09:09 AM   #9
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I still like reading what Bogle says and it makes me feel all warm and fuzzy.

Bogle's 'scary math' shows up in retirement balances - MarketWatch
+1

He is a brilliant guy and much of what he has said seems to have held true over the years. I originally found the ER forum from a link in a post on the M*star Vanguard Diehards forum, before it self destructed and split off to Bogleheads. So, Bogle has been my (investing) hero for a long time.

That said, even though most of my portfolio is in index funds, I also still keep 30% in an active fund (Wellesley). I just do this to cover all bases.
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Old 12-30-2014, 10:17 AM   #10
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Bogle is a hero, although going out 40 years I suspect his disinterest in foreign markets (versus the S&P) is likely to exact a bit of a penalty.
My core active Fidelity funds (Contrafund; Low Price; Select Biotech) have served me well. DW has very restricted options, so 40% of her 401k is in Spartan S&P Index and 25% in International Value, which hasn't done well comparatively this year.
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Old 12-30-2014, 11:26 AM   #11
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+1

He is a brilliant guy and much of what he has said seems to have held true over the years. I originally found the ER forum from a link in a post on the M*star Vanguard Diehards forum, before it self destructed and split off to Bogleheads. So, Bogle has been my (investing) hero for a long time.

That said, even though most of my portfolio is in index funds, I also still keep 30% in an active fund (Wellesley). I just do this to cover all bases.
Bogle gave the general investing public simple/inexpensive/successful index investing. It has paid off well for Vanguard and the general investing public. Vanguard also offers a variety of actively managed funds, as do all the other major fund companies. IIRC, Fidelity Spartan index funds were added to match the successful Vanguard offerings. I remember looking at Fidelity Magellan in its glory days (anyone remember that great fall from grace), and deciding that indexing was much simpler and didn't suffer from manager/portfolio turnover like managed funds appeared to follow.

Problem with managed funds is figuring out which under performing fund will turn around and be the next big winner and which will fall from grace or suffer an unexpected departure of a successful manager. I chose Dodge and Cox Balanced fund early on as it was managed by committee - all their funds are this way (don't have any holdings with them now).

I find the one area not properly addressed in actively managed funds is Balanced Funds. There are active and indexed balanced funds, but I've found that Vanguard's Wellington (one of the oldest mutual funds out there, and where Bogle got his start) and Wellesley to be good core holdings for any investor. Balanced funds will keep your holdings proportioned to their target stock/bond balance automatically - allowing one to simply invest and allow them to take care of the rest. I recommend Wellington/Wellesley balanced funds to anyone looking to do simple investing. I also recommend a simple index portfolio of Stock/Intl. Stock/Bond funds to those looking to put together a easily managed index portfolio. Anything more than that, and you're on your own (and you had better have educated yourself in how the market works)....

I've tried slicing and dicing with many specialty funds over the years, but found in the long run - I didn't have the dedication to manage my portfolio to beat simple indexing. Since retiring - I've moved the funds to balanced holdings as my wife has zero interest in investing, and I probably won't know when I've lost my edge to manage what I'd call a nice portfolio. Thanks to people like Jack Bogle - one can invest quite successfully with just a little investing knowledge. We can also credit Jack/Vanguard with bringing accountability (benchmarks) to mutual fund investing over the years.
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