It's usually the 1% + fees that CFP charges that cost investors the most. As Fisher Investment's slogan saids, You make more we make more. You loose more we still make it. 2 -3 stock funds works without the 1% fee
It would be great to bring this to reality in a future video for folks who max 401K contribution with its limited investment choices and have nothing left to contribute to x-factor models. Thanks for the great videos!
I love Vanguard and I know and read a lot of things about Fama?French model (which i love as well). My Vanguard portfolio has a lot of small cap value and growth, energy, even some FTSE index which oddly enough performed 135% from 2014 point of my investment. REITS were very good (until recently) and also VIVA (value index), not to mention their international index. For me Vanguard all the way, but diversified in many "morningstar boxes". By the way, you should take all these videos you make and make a longer one hour presentation (based on whatever criteria you want) . Editing is a breeze for these youtube videos. Cheers!
Thanks! I appreciate it. Maybe I’ll stitch them together someday. Yeah, I have nothing against Vanguard. They’ve been great for investors. I use some of their funds, I’m just using them as a stand in for a market portfolio because everyone equates Vanguard with a market portfolio. I will say, the Vanguard value fund isn’t great. If you look at the regression, it isn’t a very deep value tilt. You can compare using Portfolio Visualizer. Also, if you want a deep value tilt in a fund, AlphaArchitect and Bridgeway both offer great funds.
i do love your videos. Yea stitch something together, make it cool. I am an editor in Hwood, and I can tell you a lot of these financial UA-cam videos are ok but they are video podcasts, so I feel a longer version would be more engaging, especially now-a-days when people would rather watch something than read. (nobody reads scripts in Hwood, they want a sizzle) Keep up the good work! @@foundryfinancial
You are awesome . Would love to make part of clients or community!!’ Thanks for the video. Ould you make a special about HSA ACCOUNT, Roth and market management ?? Thanks for your time.
Growing up and working professionally at VG for 23+ years, I’ll stick with my TotStk fund. Interesting approach and certainly can work with work. I’m retired and do not want to spend time looking at my investments much these days. I think you and your clients should do well!
Thanks, Chris! And I think Vanguard has done more for the investor than any other firm out there. For most people, unless they’re using an advisor or spend a lot of time researching, I think a simple Vanguard market approach is best. I used the cover to grab attention, but I almost felt bad because I love Vanguard and its legacy!!
I once worked in the back office of a mutual fund company. I told an analyst there that they could beat the SPX every year if they fired all of the analysts and traders, and put their salaries, along with the clients money in a vanguard SPX fund.
Larry Swedroe, a value investor in his book: The Incredible Shrinking Alpha, P. 45 Warren Buffet beat the S&P 500 by 10.3% from 1985 - 2004, but from 2004 - 2019, just 0.3%. Larry writes with so many smarter people in investing, there are just cannot get big alpha.
Great book. But, also, the time period you’re using seems unique in that a few companies beat expected growth substantially. But even so during that same period a well balanced portfolio handily beat a market weight. To be fair, I’m less interested in alpha and more interested in asset allocation. As you can see in the video there was a massive sequence of return risk with just the S&P 500.
It’s true. EXCEPT, the sequence of return risk would have wiped you out years ago. Planning for retirement is a whole different way of investing. You have to diversify or it’ll wipe you out if you need to pull cash out.
If you Google around you can find the tickers, although they’ve update the portfolio. I want to stay away from talking about percentages or funds, because I want to stay far away from specific investing advice.
@@foundryfinancial Ok, thanks. Tough to get more than a high-level understanding of your video though as I understand the other portfolios, but not the DFA Balanced Strategy.
@Bill-vk7fh yeah, makes sense. It’s pretty easy to find the breakdown with some Google research. Also, there’s a guy, Eric Nelson, on Twitter that often posts a link to a backtest he created using the tickers.
You should do the same analysis for *every* given 20 to 30 year time period. The results are surprising and worth the time spent researching and spreadsheeting.
You can use some Vanguard funds, they’re a great company! But also look at companies like Dimensional funds and Avantis. But, as I said in the video, most people are better off with a simple market weight portfolio - unless you really understand the strategy.
Higher than a market weight. For example if small value is 1% of a market weighted portfolio a tilt could be taking it to 8% of the total portfolio. Not recommending that, just giving an example.
It's 100% not coincidental that these factors haven't outperformed in recent years. These effects have been arbitraged out by large funds like AQR, which have many tens of billions of dollars to deploy. To factor chase like this, you need to be a very sophisticated investor to get continued outperformance. The 2-3 index fund portfolio is still the right solution.
After the 2000 - 2003, DFA growth grew, Schwab came out with the Fundamental indexes, and Wisdom Tree came out with value indexes. Value is not doing well.
But a balanced equity portfolio still held up much better in regards to a sequence of return risk. In addition, it’s more than just value. DFA uses high probability, which is a blend when value struggles. Also, all value is not the same. Just look at QVAL.
Great information in this video. It all makes sense, but what if a person is, say, 70 and they have enough money to cover their living expenses from other funds for some 5-7 years, but at the same time they simply don’t have 25 years of “play time” to maximize returns over the long term. In other words, they may well be alive for 25+ years still, but the main stage of life’s financial game has passed. Then what?
So are you making a case for ETFs or individual stocks? Until recently, mutual funds was the only wrapper for index funds and active funds. Or are you just equating mutual funds with active funds? I’m a bit confused…
@@foundryfinancial I can buy the same stocks individually that are held in a mutual fund or an etf and not pay any fees. People are naive to how the fees/expenses are actually calculated and the tax implications.
Did anything surprise you?
It's usually the 1% + fees that CFP charges that cost investors the most. As Fisher Investment's slogan saids, You make more we make more. You loose more we still make it. 2 -3 stock funds works without the 1% fee
This was 20 minutes very well spent. Thank you, Kevin.
It would be great to bring this to reality in a future video for folks who max 401K contribution with its limited investment choices and have nothing left to contribute to x-factor models. Thanks for the great videos!
I consider all accounts in my retirement portfolio. Basically my 401K stinks for other than the USA market.
I got out of the market in 2/2021. Thought I was a rock star. Didn't get back in. Looks like I am a fool.
It’s impossible to time this stuff and fear is powerful when things seem to be imploding.
Did exactly the same 10/16/87 - Friday before Black Monday. Not back in for 2 years, after full recovery. Learned my lesson, haven’t sold since.
Bogleheads often tilt a portfolio designed by Rick Ferri. Total stock market, Total Intl, and Total Bond, with an extra dose of small cap value
Great class. Very interesting. Really glad you understand it all. 😊
I love Vanguard and I know and read a lot of things about Fama?French model (which i love as well). My Vanguard portfolio has a lot of small cap value and growth, energy, even some FTSE index which oddly enough performed 135% from 2014 point of my investment. REITS were very good (until recently) and also VIVA (value index), not to mention their international index. For me Vanguard all the way, but diversified in many "morningstar boxes". By the way, you should take all these videos you make and make a longer one hour presentation (based on whatever criteria you want) . Editing is a breeze for these youtube videos. Cheers!
Thanks! I appreciate it. Maybe I’ll stitch them together someday.
Yeah, I have nothing against Vanguard. They’ve been great for investors. I use some of their funds, I’m just using them as a stand in for a market portfolio because everyone equates Vanguard with a market portfolio.
I will say, the Vanguard value fund isn’t great. If you look at the regression, it isn’t a very deep value tilt. You can compare using Portfolio Visualizer. Also, if you want a deep value tilt in a fund, AlphaArchitect and Bridgeway both offer great funds.
i do love your videos. Yea stitch something together, make it cool. I am an editor in Hwood, and I can tell you a lot of these financial UA-cam videos are ok but they are video podcasts, so I feel a longer version would be more engaging, especially now-a-days when people would rather watch something than read.
(nobody reads scripts in Hwood, they want a sizzle)
Keep up the good work! @@foundryfinancial
Do you actually make money for your customers after your fees, compared to VTI?
You are awesome . Would love to make part of clients or community!!’ Thanks for the video. Ould you make a special about HSA ACCOUNT, Roth and market management ?? Thanks for your time.
Growing up and working professionally at VG for 23+ years, I’ll stick with my TotStk fund.
Interesting approach and certainly can work with work. I’m retired and do not want to spend time looking at my investments much these days.
I think you and your clients should do well!
Thanks, Chris! And I think Vanguard has done more for the investor than any other firm out there. For most people, unless they’re using an advisor or spend a lot of
time researching, I think a simple Vanguard market approach is best. I used the cover to grab attention, but I almost felt bad because I love Vanguard and its legacy!!
I once worked in the back office of a mutual fund company. I told an analyst there that they could beat the SPX every year if they fired all of the analysts and traders, and put their salaries, along with the clients money in a vanguard SPX fund.
Good history lesson
Confirming line of thought
Larry Swedroe, a value investor in his book: The Incredible Shrinking Alpha, P. 45 Warren Buffet beat the S&P 500 by 10.3% from 1985 - 2004, but from 2004 - 2019, just 0.3%. Larry writes with so many smarter people in investing, there are just cannot get big alpha.
Great book. But, also, the time period you’re using seems unique in that a few companies beat expected growth substantially. But even so during that same period a well balanced portfolio handily beat a market weight. To be fair, I’m less interested in alpha and more interested in asset allocation. As you can see in the video there was a massive sequence of return risk with just the S&P 500.
500,000 in the Nasdaq 100 (QQQ) in 1999. Would have returned over $6 million.
It’s true. EXCEPT, the sequence of return risk would have wiped you out years ago. Planning for retirement is a whole different way of investing. You have to diversify or it’ll wipe you out if you need to pull cash out.
I had a friend who invested in QQQ and when market went down it took almost ten years to get money back. Hang in there man!
Interesting vid...I stick to my 2-3 fund portfolio now after doing some factor-tilting at the start.
Go with whatever works for you. Cheers.
Thanks, Ben!
That was plenty of information for me. 😇But I am interested in the sneak peek and the film when it comes out.
How is the DFA Balanced Strategy invested fund-wise ? Is there a ticker or tickers with percentages ?
If you Google around you can find the tickers, although they’ve update the portfolio. I want to stay away from talking about percentages or funds, because I want to stay far away from specific investing advice.
@@foundryfinancial Ok, thanks. Tough to get more than a high-level understanding of your video though as I understand the other portfolios, but not the DFA Balanced Strategy.
@Bill-vk7fh yeah, makes sense. It’s pretty easy to find the breakdown with some Google research. Also, there’s a guy, Eric Nelson, on Twitter that often posts a link to a backtest he created using the tickers.
You should do the same analysis for *every* given 20 to 30 year time period. The results are surprising and worth the time spent researching and spreadsheeting.
Vanguard is easy to find and select on apps like Etrade. Would love to move towards a balanced portfolio like you showed. How do we create one?
You can use some Vanguard funds, they’re a great company! But also look at companies like Dimensional funds and Avantis. But, as I said in the video, most people are better off with a simple market weight portfolio - unless you really understand the strategy.
@@foundryfinancial Thank you. I think I wasn’t understanding the terminology but I’m getting the picture now. Appreciate your time!
What is the definition of tilt? Is it a higher % of value, small cap than say large growth?
Higher than a market weight. For example if small value is 1% of a market weighted portfolio a tilt could be taking it to 8% of the total portfolio. Not recommending that, just giving an example.
What are the examples of DFA balance strategies? Target funds?
It was their model portfolio for years. They’ve changed it now. Just Google DFA Balanced Equity portfolio and you should find a sense of what it was.
@foundryfinancial are you saying fidelity freedom target funds are following this DFA balance portfolio to an extent?
It's 100% not coincidental that these factors haven't outperformed in recent years. These effects have been arbitraged out by large funds like AQR, which have many tens of billions of dollars to deploy. To factor chase like this, you need to be a very sophisticated investor to get continued outperformance. The 2-3 index fund portfolio is still the right solution.
Excellent
After the 2000 - 2003, DFA growth grew, Schwab came out with the Fundamental indexes, and Wisdom Tree came out with value indexes. Value is not doing well.
But a balanced equity portfolio still held up much better in regards to a sequence of return risk. In addition, it’s more than just value. DFA uses high probability, which is a blend when value struggles. Also, all value is not the same. Just look at QVAL.
Sounds like higher volatility.
Portfolio Visualizer changed the model - only 10 years of free data unless you pay a hefty subscription price.
Ugh. I just saw that. Super frustrating.
Great information in this video. It all makes sense, but what if a person is, say, 70 and they have enough money to cover their living expenses from other funds for some 5-7 years, but at the same time they simply don’t have 25 years of “play time” to maximize returns over the long term. In other words, they may well be alive for 25+ years still, but the main stage of life’s financial game has passed. Then what?
Mutual Funds are a complete scam and aren't transparent about their expenses and ratios. People are fools to invest in them.
So are you making a case for ETFs or individual stocks? Until recently, mutual funds was the only wrapper for index funds and active funds. Or are you just equating mutual funds with active funds? I’m a bit confused…
@@foundryfinancial I can buy the same stocks individually that are held in a mutual fund or an etf and not pay any fees. People are naive to how the fees/expenses are actually calculated and the tax implications.
I really enjoyed your video and love Errol Morris . Can I add my email in a more private place?
Thank you. Just email me at kevin@foundryfinancial.org and I’ll send the link.
Simple Path to Wealth - VTSAX and Chill