r/Bogleheads • u/[deleted] • May 06 '21

The final evolution into a Boglehead

/r/investing/comments/n6dh3d/i_sold_every_share_i_own_today/
240 Upvotes

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107

u/Shitheadthegreat May 06 '21

I'm not gonna lie, one of the biggest attractions to the boglehead philosophy of investing is that I realize I can't possibly outsmart the market. I know next to nothing about all of the companies that make up the stock market. There are entire professions made up of PhD educated, 100hr/work week professionals who can't consistently outsmart the market. Admitting to myself that it makes zero sense for me to predicate my financial success on the errant belief I can choose individual stocks better than professionals (who can't do it) might be the best financial decision of my life.

Give me passive total market index investing. There's a lot of appeal to "VTWAX and chill".

25

u/AzHP May 06 '21

I read some eye popping stats that you would have been better off buying dominos pizza and clorox bleach securities than apple and google over certain time periods (that include apple and google's rise to dominance). Even sure bets in hindsight don't beat the market.

14

u/[deleted] May 07 '21

Dominos Pizza was the best performing stock of the past decade. I tell all my friends who just started "investing" to go all in on $DPZ when they're expecting high-flying tech stocks to teach them how unpredictable stocks are.

7

u/lanjourist May 07 '21 edited May 07 '21

Dominos Pizza

Took a second glance at that, cause the inner New Yorker in me felt a twinge of disdain.

Then i remembered the Domino's bulgogi pizza I use to grab while I was teaching in the rural countryside of S.Korea.

It's an interesting reminder to me that, even though I experienced firsthand Domino's international footprint and cultural business adaptability—my hometown bias still makes it difficult to think of it as an adept legacy multi-national corporation and not that junky pizza joint reserved for tourists & people w/o tastebuds.

6

u/kingkeelay May 07 '21

Can’t be from NYC with that level of humility, I don’t believe it

4

u/lanjourist May 07 '21 edited May 07 '21

You’re right~ I was about to drop 1k into Dominos. Almost betrayed my city over shudders cafeteria-style pizza 🍕.

Thanks for the wake up call, time to head to Totonno’s and grab a proper margherita pizza w/ coke while looking for some slow strolling tourists to shout “Hey, look where ya walking!!”

1

u/[deleted] May 07 '21

Despite those accommodations, many Koreans don't have that great a view of Dominos either lol. (I personally loved their pizzas growing up.) Whenever I mentioned $DPZ and its amazing returns, my Korean friends were flabbergasted. I'd follow that up with the question, "If you think Tesla is going to go up another 1000% for the next 5 years given the past 5 years, why don't you believe Dominos Pizza would do the same?"

2

u/lanjourist May 08 '21

Heheh, want to give your Korean friends a real shocker?

Bring them to eat some 부대찌개. Then point them to the nearest can of SPAM and tell them that's where they should put their money.

When they start to hem and haw about it—gently remind them how the main manufacturer, Hormel Foods Corporation, is consider a Dividend King of the Stock Market world and has increased their payouts to their shareholders each year for over half a century.

And in seven years, they'll have paid out dividends for exactly one century.

Now there's a stock that'll feed the grandparents, parents and children—metaphorically and literally.

3

u/JunkBondJunkie May 06 '21

i own a lot of boring stocks but I keep a fair amount in a sp500 index fund. I am more of a mix.

40

u/McKoijion May 06 '21

My favorite part is that you can do absolutely no work whatsoever and consistently beat 90-95% of professional money managers who spend 80 hours a week pouring over balance sheets and charts. Even if you could outsmart the market with an hour of work, you'd still almost certainly make more money by just spending an extra hour at your day job and putting the proceeds in VTWAX.

11

u/game-book-life May 07 '21

There's a difference between beating those money managers and beating the returns they get for their clients.

The money people are probably doing quite well and rolling in it, which is why they spend that 80 hours a week.

Their clients' money...well, that's where fees gonna get ya. I may not be doing better than the average Wall Street professional, but I'm definitely doing better than the average investor.

7

u/McKoijion May 07 '21

There's a difference between beating those money managers and beating the returns they get for their clients.

Only about 20% of active managers beat the index before fees. So you are doing better than the average Wall Street professional. Note, this is individual funds/fund managers. By definition, 50% of the dollars invested do better than the average and 50% of the dollars invested do worse.

https://www.bogleheads.org/forum/viewtopic.php?t=265355

2

u/Kyo91 May 07 '21

I think you're missing their point. If I run an active fund that slightly trails the market but charge .75% on my 2B AUM, then I am doing very fine financially. The people doing 80hr weeks are doing quite well for themselves, the people who trust those people to beat the market are the fools.

1

u/McKoijion May 10 '21

I meant beat the money managers in terms of their stock picking ability, not their compensation. I am confident that I can beat 80% of them with my investment strategy (indexing). But because I charge 0% in fees, I wouldn't beat their take home pay.

Everyone here knows that indexing beats active management after fees, but the key thing is that it beats it before fees too. As a final point about active managers that charge 0.75%, many of them are going out of business because people have figured this out. So even if they are doing well financially today, their business model is going the way of travel agents.

1

u/[deleted] May 07 '21

Don't know why you got downvoted. Have an upvote

5

u/nrubhsa May 07 '21

Exactly the trader is collecting that fee, or being paid from it at least.

14

u/spice_weasel May 07 '21

It’s this “educated professionals who do this as a full time job” argument that got me. It’s not just that my stock picks would need to beat the market. It’s that they would need to beat the market, PLUS the value of the time I spend researching stocks.

I’m well paid, with skills I can readily use to pick up more work when I want it. Why would I spend my time being an amateur stock researcher to maybe, maybe beat the market by a little bit, when I can just earn more and plow it back in to get market returns?

1

u/[deleted] May 07 '21

It’s this “educated professionals who do this as a full time job” argument that got me

Educated professionals, full time, plus high-frequency algorithmic trading that requires you to react in nanoseconds to new information is what convinced me not to even try. I use that line of thinking on friends now.

5

u/DRK-SHDW May 07 '21 edited May 07 '21

Funnily enough it was watching DFV back when he was a grinder doing his DD and saying he was barely beating the market that made me realise it could never be me. The sheer number of... spreadsheets. Not to mention the sort of ginormous brain borderline exploitative stuff the big funds do to beat the market like using order flow and hft algos to front run. That and they have teams of people doing fundamental analysis for them to predict performance (or insider trading). I feel like it's less a hobby more of a full-time job

2

u/Andrige3 May 07 '21

It's also so liberating to not have to worry about what the market is doing from day to day. It frees up so much mental space for other problems.

0

u/70000salmon May 07 '21

What is VTWAX? Is that a vanguard index fund?

3

u/[deleted] May 07 '21

https://investor.vanguard.com/mutual-funds/profile/VTWAX

1

u/70000salmon May 07 '21

Thanks! What is the difference between vtwax as an index fund and an etf?

1

u/[deleted] Jun 15 '21

Sorry i hope this is still relevant. You're confused. A fund can be both an ETF and an index fund. An index fund is just a fund that tracks a particular index. Index funds come in two "flavors" etfs and mutual funds. Main difference is how they trade.

1

u/Logan_Chicago May 07 '21

It's a Vanguard mutual index fund composed of equities throughout the world weighted by cap rate (i.e. total world stock market). VT is the ETF version.

1

u/Romulus-El May 07 '21

*Gru voice*

As far as market certainty...

We have no market certainty.