10 Questions for John Bogle

Recommended reading, economic debates, predictions and opinions.
User avatar
Bylo Selhi
Diamond Ring
Diamond Ring
Posts: 24694
Joined: 16 Feb 2005 10:36
Location: Waterloo, ON
Contact:

Re: 10 Questions for John Bogle

Post by Bylo Selhi » 19 Sep 2012 11:23

Sedulously eschew obfuscatory hyperverbosity and prolixity.

George$
Gold Ring
Gold Ring
Posts: 2612
Joined: 18 Feb 2005 20:46
Location: Toronto

Re: 10 Questions for John Bogle

Post by George$ » 31 Oct 2012 09:28

Bylo Selhi wrote:Bogle's new book is out: The Clash of the Cultures: Investment vs. Speculation • $20 tax-exempt and shipped to Canada from Book Depository. (As opposed to buying from their owners for CA$22.53 plus tax plus shipping.)

I placed my order earlier today.
Bylo - I missed this at the time - was away in northern Quebec in August. Have you read it? Is it good. I ordered my copy a couple of days ago.

One reason for this note - is that the following quote from Jack Bogle is astounding - wow -
So, if you want to look at it hard-nosed, 99.2% of what goes on in the market is speculation and 0.8% is an investment in the stock market.
99.2% of market $'s is simply moving equity paper around and around via trades

0.8% of market $'s generates new companies and markets - and provides the capital for it

---- later ---- from Bogle in video and text at recent Morningstar-
Bogle's Outlook for the Market -- The Vanguard founder expects muted returns of less than 5% for stocks and 0% for bonds after inflation.
“The search for truth is more precious than its possession.” Albert Einstein

gouthro
Silver Ring
Silver Ring
Posts: 552
Joined: 07 Jul 2005 10:01

Re: 10 Questions for John Bogle

Post by gouthro » 31 Oct 2012 12:40

Interesting video. Jack Bogel suggests weighting bond portfolio towards corporates rather than government bonds. Maybe 60 or 70 percent corporate in a bond portfolio. Just a question, perhaps even uninformed, but isn't the whole point of a bond ^portfolio is that it is completely safe? And are you not putting some kind of insecurity in your supposedly secure bond portfolio by buying corporate bonds? If you were going to go with a publicly traded company wouldn't you be better with dividends and the possibility of capital growth, rather than bonds, which may not really pay out what you put into them?
Joe

George$
Gold Ring
Gold Ring
Posts: 2612
Joined: 18 Feb 2005 20:46
Location: Toronto

Re: 10 Questions for John Bogle

Post by George$ » 31 Oct 2012 13:22

gouthro wrote:Interesting video. Jack Bogel suggests .... but isn't the whole point of a bond ^portfolio is that it is completely safe?
How can it be "completedly safe"? - Can't an unexpected inflation bubble kill your return of bonds? (Germany got so hit before WW II)
gouthro wrote:..
And are you not putting some kind of insecurity in your supposedly secure bond portfolio by buying corporate bonds?
Can't they all default at some points?

I was recently reading about the California public pensions - read -
Dale Kasler of the Sacramento Bee reports,
CalPERS sues Compton over missed payments:
A second California city has fallen behind on its payments to CalPERS, prompting a lawsuit by the big pension fund.

Compton owes $2.7 million to the California Public Employees' Retirement System, the pension fund said Monday.

CalPERS sued the city in Sacramento Superior Court after Compton failed to make its required payments for September.
What does a "guarantee" or "promise" - about the future really mean?
“The search for truth is more precious than its possession.” Albert Einstein

gouthro
Silver Ring
Silver Ring
Posts: 552
Joined: 07 Jul 2005 10:01

Re: 10 Questions for John Bogle

Post by gouthro » 31 Oct 2012 14:59

Well, George, perhaps we should add the little word 'relatively' to the safe. People buy bonds because they see them as 'relatively' safe investments. That is why Jack Bogel was recommending them.

joe

George$
Gold Ring
Gold Ring
Posts: 2612
Joined: 18 Feb 2005 20:46
Location: Toronto

Re: 10 Questions for John Bogle

Post by George$ » 31 Oct 2012 17:08

gouthro wrote:Well, George, perhaps we should add the little word 'relatively' to the safe. People buy bonds because they see them as 'relatively' safe investments. That is why Jack Bogel was recommending them.

joe
I would always defer to what Jack Bogle states - he is a great indivudal - who knows so much more than I do. But it may not all be as simple or some as you say. Government bonds vs Corporate bonds - or how long to hold, 2 years vs 20 years etc.

Jack Bogle's recent video points how difficult the times are - see -
The Vanguard founder expects muted returns of less than 5% for stocks and 0% for bonds after inflation.

Or look carefully at what Bill Gross wrote in his May 2012 monthly outlook-
Wall Street Food Chain
In particular look at what chart-1 states about what bonds did in the past and what choices it has for the future.

And a short while I studied a hypothetical 40-year- RRSP DC pension - via various holdings of only bonds or only equities etc - out come is about the same.
Look at the last two pages and the memo
(But no guarantee the next 40 years would look the same.]

Best.

George-II
“The search for truth is more precious than its possession.” Albert Einstein

gouthro
Silver Ring
Silver Ring
Posts: 552
Joined: 07 Jul 2005 10:01

Re: 10 Questions for John Bogle

Post by gouthro » 06 Nov 2012 18:53

Patrick McKeough weighs in on the bonds vs stocks debate. In general, he feels that it was reasonable to hold bonds years ago, when there was a good yield. In fact he recommended that people hold a substantial proportion of bonds. With today's miserly return and the possibility of infation cutting into bonds, he tends to think that it is more reasonable to hold stocks. If one does hold bonds, however, he thinks it better to hold a short term bond index--xsb, i believe.
http://www.tsinetwork.ca/daily/retireme ... -strategy/

joe

ig17
Gold Ring
Gold Ring
Posts: 2262
Joined: 21 Feb 2005 20:54

Re: 10 Questions for John Bogle

Post by ig17 » 06 Nov 2012 19:13

gouthro wrote:If one does hold bonds, however, he thinks it better to hold a short term bond index--xsb, i believe.
XSB YTM 1.52% - MER 0.28% = 1.24%. That's worse than cash (HISA).

User avatar
Shakespeare
Diamond Ring
Diamond Ring
Posts: 20374
Joined: 15 Feb 2005 23:25
Location: Lethbridge, AB
Contact:

Re: 10 Questions for John Bogle

Post by Shakespeare » 06 Nov 2012 19:15

That's worse than cash (HISA).
Also worse than a GIC ladder, which will get 2.2 or so at the cost of liquidity.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

User avatar
adrian2
Diamond Ring
Diamond Ring
Posts: 11190
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: 10 Questions for John Bogle

Post by adrian2 » 07 Nov 2012 09:48

ig17 wrote:
gouthro wrote:If one does hold bonds, however, he thinks it better to hold a short term bond index--xsb, i believe.
XSB YTM 1.52% - MER 0.28% = 1.24%. That's worse than cash (HISA).
In a non-registered account, after tax, the comparison to a HISA is even worse.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

User avatar
DavidR
Gold Ring
Gold Ring
Posts: 1543
Joined: 30 Oct 2005 08:33
Location: Toronto

Re: 10 Questions for John Bogle

Post by DavidR » 07 Nov 2012 09:58

Shakespeare wrote:
That's worse than cash (HISA).
Also worse than a GIC ladder, which will get 2.2 or so at the cost of liquidity.
I think the advice "if you want to hold bonds, hold short-term ones rather than long-term ones" is not bad.
The bigger issue is: Why don't more 'brokers' and 'financial advisors' discuss the advantages of GICs etc?
Seems to me that for many Joe Average investors, whether they are in accumulation or withdrawal phases, there is no need for the liquidity of bonds, so why pay for it?

User avatar
ghariton
Diamond Ring
Diamond Ring
Posts: 11559
Joined: 18 Feb 2005 18:59
Location: Ottawa

Re: 10 Questions for John Bogle

Post by ghariton » 07 Nov 2012 12:34

DavidR wrote: Seems to me that for many Joe Average investors, whether they are in accumulation or withdrawal phases, there is no need for the liquidity of bonds, so why pay for it?
True for Joe Average. But if you're a business or an institution, the limit on deposit insurance is much too low to be of much use. Short-term bonds are the only way to get a government guarantee.

Bonds are also useful as collateral, GICs not so much. Again, probably doresn't affect people on this forum -- I'm just explaining why there is a demand for short term government bonds, even though they are yielding about 1% nominal.

George
The plural of anecdote is NOT data.

User avatar
Bylo Selhi
Diamond Ring
Diamond Ring
Posts: 24694
Joined: 16 Feb 2005 10:36
Location: Waterloo, ON
Contact:

Re: 10 Questions for John Bogle

Post by Bylo Selhi » 07 Nov 2012 12:46

ghariton wrote:I'm just explaining why there is a demand for short term government bonds, even though they are yielding about 1% nominal.
Presumably that 1% nominal yield is a confirmation of the degree of such demand.

Does any discount broker offer a service that automatically rolls over maturing GICs?

Something alone these lines: The client sets the ladder/rung criteria, e.g. 3 rungs, 1, 2 and 3 years. As each rung matures the broker buys a new 3-yr GIC from the highest-paying institution. The client might also be able to specify CDIC-only (vs. credit union) and that they're willing to accept a lower rate if they're already maxed out insurance-wise with the highest-paying institution.

AFAIK discount brokers get a 25bp commission from the issuer so they've got an incentive to offer something like this.
Sedulously eschew obfuscatory hyperverbosity and prolixity.

User avatar
IdOp
Gold Ring
Gold Ring
Posts: 2773
Joined: 16 Feb 2006 11:27
Location: On the Pacific sea bed, 100 mi off the CA coast.
Contact:

Re: 10 Questions for John Bogle

Post by IdOp » 07 Nov 2012 13:58

Bylo Selhi wrote:Something alone these lines: The client sets the ladder/rung criteria, e.g. 3 rungs, 1, 2 and 3 years. As each rung matures the broker buys a new 3-yr GIC from the highest-paying institution. The client might also be able to specify CDIC-only (vs. credit union) and that they're willing to accept a lower rate if they're already maxed out insurance-wise with the highest-paying institution.
IMHO if a client needs this kind of hand-holding, they shouldn't be at a discount broker. It could also lead to higher costs, disputes, etc. OTOH if discount brokers figure it could bring in enough new money, maybe we should expect to see it soon, similar to RBCDI practice accounts, BMO AdviceDirect, etc.

User avatar
Shakespeare
Diamond Ring
Diamond Ring
Posts: 20374
Joined: 15 Feb 2005 23:25
Location: Lethbridge, AB
Contact:

Re: 10 Questions for John Bogle

Post by Shakespeare » 07 Nov 2012 14:02

IMHO if a client needs something like this, they shouldn't be at a discount broker.
Yep. Don't know about the others, but it only takes a few seconds to scroll through the RBCDI offerings to find a renewal option.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

User avatar
Bylo Selhi
Diamond Ring
Diamond Ring
Posts: 24694
Joined: 16 Feb 2005 10:36
Location: Waterloo, ON
Contact:

Re: 10 Questions for John Bogle

Post by Bylo Selhi » 07 Nov 2012 14:28

My point is that some people buy ST bond ETFs/funds because of convenience compared to running a ST bond ladder. My idea would provide convenience with some additional revenue opportunity for the broker, especially compared to ETFs.

On reflection I suppose that could be construed as advice. Perhaps that issue can be addressed by instead notifying the client as a rung matures and including in the notification a list of potential replacement rungs.

When I ran a small business we sometimes rolled T-bills every 30 to 60 days. I'd get a courtesy call or e-mail from their fixed income people before each maturity to remind me to give them renewal instructions. I found that very convenient.
Sedulously eschew obfuscatory hyperverbosity and prolixity.

gouthro
Silver Ring
Silver Ring
Posts: 552
Joined: 07 Jul 2005 10:01

Re: 10 Questions for John Bogle

Post by gouthro » 07 Nov 2012 14:49

Perhaps i should have used the term 'fixed income' rather than bonds or etf's in my last post. While the discussion of whether to use etf's or GiC's or bonds, etc, is useful, in the context of this thread I posted this mostly to indicate McKeoug's preference for stocks over fixed income in this particular environment. Although, as I say, I appreciate the discussion on the types of fixed income, his point, and perhaps I fogged it up a bit, is in today's world--forget fixed income and go for stocks.
jo

User avatar
Shakespeare
Diamond Ring
Diamond Ring
Posts: 20374
Joined: 15 Feb 2005 23:25
Location: Lethbridge, AB
Contact:

Re: 10 Questions for John Bogle

Post by Shakespeare » 07 Nov 2012 15:54

That ignores the 'risk control' function of fixed income.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

gouthro
Silver Ring
Silver Ring
Posts: 552
Joined: 07 Jul 2005 10:01

Re: 10 Questions for John Bogle

Post by gouthro » 07 Nov 2012 17:54

Shakespeare wrote:That ignores the 'risk control' function of fixed income.
Well, I don't know if he ignores it. He is aware of it. He says that those who can't sleep at night, because of their portfolio, should get some. But, for himself, and those who can afford to take a risk because of pensions, etc., and who can sleep at night, he thinks ( perhaps I misrepresent him here but I hope not) that there is more risk of losing money in fixed income today. He believes, as many do, that stocks, while more volatile than fixed income, will provide a much better return, especially with todays rates. Whether you believe that or not and are willing to act on it is the question.
joe

User avatar
Shakespeare
Diamond Ring
Diamond Ring
Posts: 20374
Joined: 15 Feb 2005 23:25
Location: Lethbridge, AB
Contact:

Re: 10 Questions for John Bogle

Post by Shakespeare » 07 Nov 2012 18:04

That's not what you posted earlier.
“A wise man should be prepared to abandon his baggage at any time.” -- R.A. Heinlein, The Door Into Summer.

BRIAN5000
Gold Ring
Gold Ring
Posts: 5660
Joined: 08 Jun 2007 23:27

Re: 10 Questions for John Bogle

Post by BRIAN5000 » 07 Nov 2012 20:11

The bigger issue is: Why don't more 'brokers' and 'financial advisors' discuss the advantages of GICs etc?
Any advisor I've talked to wants to discuss the GIC's I hold but only to sell them and buy more stocks.
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

gouthro
Silver Ring
Silver Ring
Posts: 552
Joined: 07 Jul 2005 10:01

Re: 10 Questions for John Bogle

Post by gouthro » 08 Nov 2012 08:34

Shakespeare wrote:That's not what you posted earlier.
Sorry about that. I posted this because I thought it was just following along with the earlier discussion.
joe

Taggart
Gold Ring
Gold Ring
Posts: 6021
Joined: 05 Dec 2005 07:34

Re: 10 Questions for John Bogle

Post by Taggart » 14 Jan 2013 17:03

Today's interview with Jack Bogle on CNBC.

Shine
Gold Ring
Gold Ring
Posts: 2022
Joined: 13 Dec 2010 01:32

Re: 10 Questions for John Bogle

Post by Shine » 15 Jan 2013 01:56

[quoteToday's interview with Jack Bogle on CNBC.]

I mean no offense to Mr Bogle however, the video/article suggests that of the $120 Billion pulled out of active funds approximately $30 Billion has been moved into ETF funds. What about the other $90 Billion, or 75% of funds pulled from active management - to where did that move? Any data on that?

Regards

User avatar
Bylo Selhi
Diamond Ring
Diamond Ring
Posts: 24694
Joined: 16 Feb 2005 10:36
Location: Waterloo, ON
Contact:

Re: 10 Questions for John Bogle

Post by Bylo Selhi » 15 Jan 2013 08:47

Shine wrote:of the $120 Billion pulled out of active funds approximately $30 Billion has been moved into ETF funds. What about the other $90 Billion, or 75% of funds pulled from active management - to where did that move? Any data on that?
Perhaps conventional open-end index funds. In the US, unlike in Canada, the MERs on such funds, especially at Vanguard, are competitive with ETFs. Yet they provide for no-fee investment/redemption and all the administrative, educational, planning, etc. services a fundco like Vanguard can offer retail investors.
Sedulously eschew obfuscatory hyperverbosity and prolixity.

Post Reply

Who is online

Users browsing this forum: No registered users and 1 guest