RTP NC Local Chapter Meetings in 2010

This article is provided by Bogleheads forum member Steve Thorpe.

RTP, NC Area Chapter Meeting 9:30 AM Jan 16, 2010


Edward Tower, Ph.D. Our host

Today we had the 2nd Research Triangle Park Diehards chapter meeting, this time hosted in Professor Ed Tower’s living room. We were greeted with hot apple cider, a fire burning in the fireplace, Krispy Kreme donuts, and especially by Ed’s welcoming personality and wealth of knowledge. About 10 Bogleheads attended today, which was approximately twice the turnout as the first meeting back in October.

Ed shared some comments about his paper “Vanguard versus DFA & WisdomTree, and the Value Added by Dan Wiener’s Independent Adviser for Vanguard Investors”. Some of my takeaways were: Wiener has four portfolios, one of which has done reasonably well while the others are not exceptional. One strength of Wiener was moving to value just prior to the crash in 2000. Ed also spoke of the benefits of value investing, as long as transaction costs and expense ratios are kept low then any value method meeting these criteria is OK. (WisdomTree or otherwise). Ed also pointed out how life can be quite unpredictable and unexpected curveballs can be thrown your way at any time.

Many favorite (and familiar) books were identified as favorites during today’s discussion, including:

  • William Bernstein’s “Intelligent Asset Allocator
  •  William Bernstein’s “The Birth of Plenty
  • William Bernstein’s “The Investor’s Manifesto
  • Charles Ellis’ “Winning the Loser’s Game
  • Rick Ferri’s “All About Asset Allocation
  • Rick Ferri’s “All About Index Funds” (my personal fave!)
  • Rick Ferri’s “The ETF Book
  • Mark Hebner’s “Index Funds: The 12-Step Program for Active Investors
  • Michael Lewis’ “Liar’s Poker
  • Burton Malkiel’s “A Random Walk Down Wall Street”
  • Robert Shiller’s “Irrational Exuberance
  • Larry Swedroe’s “The Only Guide to a Winning Investment Strategy You’ll Ever Need” (a wonderful intro to investing book)
  • David Swensen’s “Pioneering Portfolio Management

Surprisingly to me, Burton Malkiel and Charles Ellis’ recently published book “The Elements of Investing” got lukewarm reviews at best from this Boglehead audience. (I haven’t read it though given the authors would have expected rave reviews)

During our two hour discussion we touched on numerous other topics including:

  • The marketriders.com asset allocation site
  • The wealthtrack.com investment site
  • Jeremy Grantham’s asset class real return forecasts for domestic and international equities.
  • Paul Merriman’s “Ultimate Buy and Hold” portfolio
  • Don’t put all your eggs in one basket
  • “Liar’s Poker” may be a useful book to help convince doubting friends/family that in investing you really get what you DON’T pay for. In other words, ditch the high-cost (lying?) broker for a low cost passive strategy!
  • Nominal Bonds: Short Term vs. Long Term? Which one and why?
  • Difficulty of convincing others of Bogleheadism’s benefits
  • Rick Ferri and Larry Swedroe’s disagreements vs. similarities
  • Malcolm Gladwell’s “Outliers: The Story of Success
  • Fidelity’s habit of giving different names to each share class of the same fund, as a sneaky way to charge more for the same investment.
  • Stupid investor tricks during the tech bubble (I refuse to identify who performed said tricks, for fear of self-incrimination)
  • Ed’s son Wells Tower’s book “Everything Ravaged, Everything Burned
  • Ed mentioned a study that showed when expense ratios increase, performance decreases – even when netting out the difference from expenses!
  • Moral turpitude
  • Monkeys and dartboards vs. professional money managers
  • Indexing Goes Hollywood
  • Ed shared a couple excel graphs hot off his printer from just before the meeting, showing real returns vs. earnings yields

One can’t do justice to the discussion in this short summary. Suffice it to say it was a joyful conversation with a fine group of fellow Bogleheads. I definitely encourage other interested Triangle area forum members to attend a future meeting.

Ed: thank you very much for a fantastic morning!

RTP, NC Chapter Meeting 12 Noon Apr 17, 2010


Edward Tower, Ph.D. Our host

Earlier today five Bogleheads enjoyed the 3rd Research Triangle Park, NC chapter meeting. Ed Tower kindly hosted the event at his Raleigh home, where we enjoyed delightful springtime weather and his very relaxing back porch.

Two hours flew by in a heartbeat! Our intriguing conversation was all over the map and its difficult to recap it in these notes. However to give a flavor for those who were unable to attend I’ll mention a few of the topics below:

  • A couple of books that came out at the peak of the 2000 dot.com bubble: Shiller’s “Irrational Exuberance” and Smithers & Wright’s “Valuing Wall Street“. These were quite influential on Ed’s investment approach.
  • Mutual funds with an Islamic investment philosophy that avoid investing in highly leverage companies and appear to be less volatile than many other equity approaches
  • Happiness being based on YOU and your innate baseline level of happiness, much more so than factors like the amount of $ you have, investment gains/losses, etc. whose effects on happiness are rather ephemeral
  • Bill Bernstein is a very smart guy!
  • It is fun to compare and contrast different RIA firms’ ADV forms, which are all publicly available
  • Schwab’s private investment services
  • Yield (risk-seeking) bond funds vs. “boring” (lower-risk) bond funds
  • The first Bogleheads book
  • Long-held Walmart stock that’s significantly appreciated in value over a few decades
  • Upcoming babies and “sympathetic weight gain” on the part of soon-to-be-daddies (you know who you are! )
  • 0% long-term capital gains tax rates for certain tax brackets that expire after 2010
  • Suitability of different asset classes for taxable vs. tax-advantaged accounts
  • Burton G. Malkiel’s “A Random Walk Down Wall Street
  • Being a police officer
  • Simba’s excellent backtesting spreadsheet
  • The Permanent Portfolio
  • dandan14 shared a detailed spreadsheet he developed to help evaluate expected returns on possible real estate investment opportunities
  • Recapturing depreciation when selling long-held real estate
  • I shared a spreadsheet demonstrating an MSN plugin that automatically downloads the latest prices for ticker symbols you enter
  • A different tab on the same spreadsheet showed the use of conditional formatting to adjust the cell colors (green vs. yellow vs. red) to make it easy to identify when your asset classes are nearing or exceeding your risk tolerance bands
  • Due to our active conversation, time passed very quickly and unfortunately we didn’t have a chance to watch Bill Bernstein’s BH 8 presentation

What a fun time!

RTP, NC Chapter Meeting Sat July 31, 2010


Bullington Warehouse

The 4th RTP Bogleheads meeting was held this morning in Durham, NC. As usual we had an intriguing and fun discussion touching on many topics.

Handling the constant investing tug-of-war between one’s head and one’s stomach is DIFFICULT. We spoke for quite a while regarding portfolio allocation strategies and implementation techniques.

Timing the lows and highs of the market is pretty much impossible, except by the luck of random chance.

GMO’s 7-Year Asset Class Return Forecasts, along with their “estimate of net value expected to be added from active management”(:roll:!) included in the fine print. Much conversation ensued about GMO vs. Vanguard and GMO’s claim. As it turns out, GMO’s expectation of added value hasn’t regularly occurred in the past…. not a surprise to a typical Boglehead! (Seems “added” in this context may be a code word for “subtracted”)

Ed gave us a 100,000 foot view of doing mutual fund regressions in Excel, which culminated with examples of several graphs comparing historical results of Vanguard and GMO. This was extremely interesting to the whole group. Thank you Ed!

Thailand’s culture is fascinating! (Ed just returned from a summer teaching there)


Franco Modiglani

Modigliani and Modigliani’s “M-squared”, expressed in percentage terms, evaluates the annualized risk-adjusted performance of a portfolio in relation to the market benchmark. It is similar to the more commonly known Sharpe ratio. Curiously this paper was written by a 80-something grandfather and his granddaughter! After the meeting I found this very interesting obituary of the grandfather, others may enjoy it.

Nassim Taleb’s excellent book “Fooled by Randomness” was recommended to the group.

Malcolm Gladwell’s “What the Dog Saw: And Other Adventures” was recommended…. this is a compilation of the author’s favorite work from The New Yorker, where he has been a staff writer since 1996.

High yield bonds had moderate interest among the group.

CCFs had very little interest among most of the group members.

I shared my copies of “The Bogleheads Guide to Retirement Planning” and Bill Bernstein’s “The Investor’s Manifesto” with the group.

I had so much fun this morning – it is a joy speaking face-to-face with Bogleheads! (esp. since I know so few of us in “real life”)

RTP, NC Chapter Meeting Sat Nov 6, 2010


Bullington Warehouse

This morning we had another RTP Bogleheads chapter meeting, this time with 9 attendees and as usual the conversation was delightful. A few highlights.

Ed Tower

Ed Tower shared a few highlights from the recent Bogleheads 9 meeting in Philadelphia (Two slides):

Upside of Irrationality

We briefly discussed Dan Ariely’s recent book “Upside of Irrationality“. Some of the group members’ takeaways (Three slides):

Nanette Byrnes

Nanette Byrnes shared some information about her blog site Portfolioist.com, “A forum for news, ideas and commentary on the art and science of smarter investing” (Two slides):

Dan Griffin

Dan Griffin shared a few highlights from his savvydollar.org site, “North Carolina’s Source for Savings” (Two slides):

We spoke some about ETFs and Admiral share funds:

  • ETFs have lower expense ratios than many funds
  • Though with the recent reduced Admiral share class minimums, that is now a moot point in certain cases.
  • ETFs have potential issues such as NAV vs. Market differences, transaction costs, bid-ask spreads
  • Of course ETFs don’t have short-term trading fees as certain mutual funds do.
  • My take: debating ETFs vs. Admiral share class is (to use a phrase I’ve heard Taylor Larimore use) is like “dancing on the head of a pin”. As long as an investor sticks to their IPS’s asset allocation and doesn’t excessively trade, it really doesn’t matter.

Plus the conversation touched on many other topics, including:

  • Difficulty (impossibility for some!) of rebalancing back into equities during the market trough in March 2009
  • Bill Sharpe had an intriguing paper from the 1970’s on holding mostly bonds with a small percentage of options.
  • Widely varying philosophies among investment luminaries (strictly sticking to percentages vs. knowing to “get out of the way from an oncoming train”). My own view – we just don’t have a clue about the future! Sticking to a percentages is a fine strategy, as long as that includes healthy allocations to fixed income and an appropriate rebalancing strategy.
  • ETF cash holding requirements
  • Wisdom of the Crowds” was recommended as a great book
  • Rick Ferri’s new book on indexing

Barry Barnitz, administrator of both the Bogleheads® wiki and of Financial Page, a Bogleheads® blog. In addition I serve as an administrator of finiki, the Canadian financial wiki, as an administrator of la Wiki Bogleheads® España, and as an administrator of the John C. Bogle Center for Financial Literacy site.

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