|
The 4 Pillars - a question
05-24-2005, 03:39 PM
|
#1
|
Recycles dryer sheets
Join Date: Nov 2004
Posts: 140
|
The 4 Pillars - a question
I am plowing through Bernstein's book and I have many questions, but I'll just ask one now. He gives a sample portfolio that starts with 35% U.S. stock market (the "total market," not just the S&P 500). What is the difference? What in Vanguard would give me the total market?
Thanks!
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
Re: The 4 Pillars - a question
05-24-2005, 04:03 PM
|
#2
|
Confused about dryer sheets
Join Date: May 2005
Posts: 5
|
Re: The 4 Pillars - a question
If you are looking at the "total" US Stock Market, Vanguard offers the Vanguard Index Total Stock Market Fund (VTSMX).*
I've used the Vanguard Vipers (VTI) ETF to give me exposure to the "total US market".
Hope this helps.
Mister Bill
|
|
|
Re: The 4 Pillars - a question
05-24-2005, 04:09 PM
|
#3
|
Thinks s/he gets paid by the post
Join Date: Oct 2003
Posts: 1,319
|
Re: The 4 Pillars - a question
As to the difference, the 500 are all large cap stocks while the TMI contains mid and small caps in about 25% of its make-up.
__________________
We are, as I have said, one equation short. – Keynes
|
|
|
Re: The 4 Pillars - a question
05-24-2005, 06:17 PM
|
#4
|
Recycles dryer sheets
Join Date: Nov 2004
Posts: 140
|
Re: The 4 Pillars - a question
OK, thanks. I see the difference. I'll check out those 2 funds.
|
|
|
Re: The 4 Pillars - a question
05-24-2005, 06:24 PM
|
#5
|
Thinks s/he gets paid by the post
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
|
Re: The 4 Pillars - a question
The correlation and return between the S&P500 and total market is very, very close despite a minor difference in composition.
__________________
May we live in peace and harmony and be free from all human sufferings.
|
|
|
Re: The 4 Pillars - a question
05-24-2005, 06:47 PM
|
#6
|
Thinks s/he gets paid by the post
Join Date: Mar 2004
Posts: 1,318
|
Re: The 4 Pillars - a question
Quote:
Originally Posted by Spanky
The correlation and return between the S&P500 and total market is very, very close despite a minor difference in composition.
|
It points out the huge weight that the biggest 20 or so 'megacaps' have on all the US indices that include them. I don't go for the Total cap weighted indexes, but slice up and index the small (either microcap or small -- the smallest 4% or 12% or so of U.S. stocks) and large, with value tilts on both. It overweights small vis-a-vis their capitalization, but my goal is to have a portfolio whose slices interact well together to reduce volatility at an acceptable yield, not to 'own the market' in the same proportions that everyone else does. Basically, it's Modern Portfolio Theory, with a smidgen of Efficient Frontier thinking tossed in for spice.
__________________
ER for 10 years; living off 4.3% of savings (and a few book royalties ;-)
|
|
|
Re: The 4 Pillars - a question
05-24-2005, 06:54 PM
|
#7
|
Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,855
|
Re: The 4 Pillars - a question
Quote:
Originally Posted by ESRBob
It points out the huge weight that the biggest 20 or so 'megacaps' have on all the US indices that include them.* I don't go for the Total cap weighted indexes, but slice up and index the small (either microcap or small -- the smallest 4% or 12% or so of U.S. stocks) and large, with value tilts on both.*
|
And.... away we go! Anyone care to start up the "value premium" debate for smooch?
__________________
*
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
|
|
|
Re: The 4 Pillars - a question
05-25-2005, 12:45 PM
|
#8
|
Moderator Emeritus
Join Date: Feb 2005
Location: San Diego
Posts: 5,267
|
Re: The 4 Pillars - a question
Nords, quck, I'm sure you can put together an eloquent synopsis and head that off!
|
|
|
Re: The 4 Pillars - a question
05-25-2005, 02:21 PM
|
#9
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
|
Re: The 4 Pillars - a question
I'm not Nords, but I could play him in a made-for-tv movie if I have some time to take a few surfing lessons and dust off my tae kwon do skills.
Bad stocks are good to own. Good stocks are bad to own. Bad stocks really arent that bad and pay good dividends. Much of historical returns consist of good dividends. Good stocks arent really that good and dont pay dividends. See the part about most historical returns consisting of dividends. Good stocks dont usually stay good stocks for long.
Value has higher volatility, but a higher income stream meaning you need to sell shares less frequently.
TSM has a slightly lower return than the s&p500 with slightly less volatility, over long periods of time.
Owning half s&p500 and half "vanguard extended market" gives you more of a balance of large cap with mid/small cap.
Owning large and small cap value indexes or cheap managed funds gives you high income, good appreciation, and higher long term portfolio values and safe withdrawal rates.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
|
|
|
Re: The 4 Pillars - a question
05-25-2005, 03:58 PM
|
#10
|
Recycles dryer sheets
Join Date: Nov 2004
Posts: 140
|
Re: The 4 Pillars - a question
TH,
I actually recognize most of that from the book. I have it from the library now, but I'm going to purchase it, because I'll definately need a second reading. I called Vanguard today for forms to start the moving process. This board has soooo much good information!
|
|
|
Re: The 4 Pillars - a question
05-25-2005, 04:04 PM
|
#11
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
|
Re: The 4 Pillars - a question
If you do a search on "book report four pillars" I wrote a lengthy synopsis and we had some discussion around it, might be helpful for those who dont want to go through the whole read
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
|
|
|
Re: The 4 Pillars - a question
05-25-2005, 06:21 PM
|
#12
|
Dryer sheet aficionado
Join Date: May 2005
Posts: 31
|
Re: The 4 Pillars - a question
Quote:
Originally Posted by You dont know me
If you do a search on "book report four pillars" I wrote a lengthy synopsis and we had some discussion around it, might be helpful for those who dont want to go through the whole read
|
Just read your book report and I give it an A-. Well done. Help me with one question which I'm sure is dumb:
Buy a portfolio consisting of 60% total stock market and 40% short term corporate or short term bond index, perhaps moving some towards intermediate bonds over time to take advantage of rising interest rates while protecting yourself from short term interest rate risk. Add 5-10% reits, 5-10% foreign stocks, 10-20% small cap and large cap value stocks, 3-5% emerging market stocks, 3-5% foreign bonds, and/or 3% precious metals to reduce volatility, increase returns, and give yourself something to do.
I assume that the 5-10% REITS.....etc is a portion of the 60% equities So if I take the lower end of each range, I might have 30% in REITS, foreign, small cap etc, 30% in total market equities and 40% ST bonds Is that the idea?
Thanks. You guys are good.
|
|
|
Re: The 4 Pillars - a question
05-25-2005, 07:16 PM
|
#13
|
Thinks s/he gets paid by the post
Join Date: Dec 2002
Posts: 3,875
|
Re: The 4 Pillars - a question
Quote:
Originally Posted by You dont know me
If you do a search on "book report four pillars" I wrote a lengthy synopsis and we had some discussion around it, might be helpful for those who dont want to go through the whole read
|
I don't care to read the book or the synopsis.
JG
|
|
|
Re: The 4 Pillars - a question
05-26-2005, 12:17 PM
|
#14
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
|
Re: The 4 Pillars - a question
I'd rather you didnt anyway.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
|
|
|
Re: The 4 Pillars - a question
05-26-2005, 06:58 PM
|
#15
|
Thinks s/he gets paid by the post
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
|
Re: The 4 Pillars - a question
Quote:
Originally Posted by Arin38
I assume that the 5-10% REITS.....etc is a portion of the 60% equities So if I take the lower end of each range, I might have 30% in REITS, foreign, small cap etc, 30% in total market equities and 40% ST bonds Is that the idea?
|
Berstein's 60/40 Portfolio:
Large Vanguard 500 Index VFINX 12.0%
Large Value Vanguard Value Index VIVIX 15.0%
Small Vanguard Small Index NAESX 3.0%
Small Value Vanguard Small Value Index (IRA) VISVX 9.0%
Real Estate Vanguard REIT VGSIX 6.0%
Small Value Vanguard Precious Metals VGPIX 1.8%
Small Value Vanguard European Stock Index VESIX 3.0%
Small Value Vanguard Pacific Stock Index VPACX 3.0%
Emerging Markets Vanguard Emerg Mkt Stk Idx VEIEX 3.0%
Small Value Vanguard International Value VTRIX 4.2%
Bonds fixed-income% is 40%
__________________
May we live in peace and harmony and be free from all human sufferings.
|
|
|
Re: The 4 Pillars - a question
05-29-2005, 10:48 AM
|
#16
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
|
Re: The 4 Pillars - a question
Quote:
Originally Posted by Grand Banks
If you do a search on "book report four pillars" I wrote a lengthy synopsis and we had some discussion around it, might be helpful for those who dont want to go through the whole read
|
Read the whole thing in one sitting................
__________________
Have Funds, Will Retire
...not doing anything of true substance...
|
|
|
Re: The 4 Pillars - a question
05-29-2005, 11:43 AM
|
#17
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
|
Re: The 4 Pillars - a question
The book or the synopsis?
If you read the entire book in one sitting without losing your will to live or developing narcolepsy, I am most impressed!
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
|
|
|
Re: The 4 Pillars - a question
05-29-2005, 12:54 PM
|
#18
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
|
Re: The 4 Pillars - a question
I feel that way about most "popular" means of entertainment, like reality TV and/or hip-hop...
BTW, the book!
__________________
Have Funds, Will Retire
...not doing anything of true substance...
|
|
|
Re: The 4 Pillars - a question
05-29-2005, 02:59 PM
|
#19
|
Recycles dryer sheets
Join Date: Nov 2004
Posts: 140
|
Re: The 4 Pillars - a question
I read the book report. Thanks, it was very well done. I need to read the book again, but now I'm into "John Bogle on Investing". I'm sure I'll need to read that slowly.
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|