RTP NC Local Chapter meetings in 2012

This article is  supplied  by Bogleheads® forum member Steve Thorpe.

RTP, NC Chapter Meeting Sat March 17, 2012


Bullington  Warehouse

Meeting 10 of the Research Triangle Park Bogleheads was held at the Bullington Warehouse Community Room.  Eight locals and one guest from Richmond were in attendance and as usual the conversation was delightful. A few of the topics we touched on:
Larry Swedroe and RC Balaban’s book “Investment Mistakes Even Smart Investors Make and How to Avoid Them”, and What was your biggest investment mistake and what did you learn from it?

Here are a few valuable lesson-teaching mistakes from the book, as well as from our own life experiences:

  •  Not considering the order of preference for tax efficient asset location
  • Being overconfident in one’s own skills
  • Holding on to assets too long because you don’t want to admit you made a mistake
  •  Letting tax considerations dominate your investment choices
  • Being too conservative
  • Watching your investments like a hawk, getting nervous and making changes based on emotion. Essentially – not having a plan that you stick to.

Maximizing tax-advantaged space

The 401(k) contribution limit in 2012 is $17,000. Or is it? Actually there are ways to increase the overall tax-deferred savings beyond that – perhaps far beyond that. How? Does it make sense? Let’s discuss! Here’s a link on the topic: $54K Tax Advantaged Space Per Year

This option wasn’t something available to any of us, though certainly many of us wished our employers did have the option. The topic referenced above describes essentially a “back-door Roth IRA on steroids” – awesome if you have the income and plan options!

Related topics of discussion included Health Savings Accounts (HSAs),  high-deductible health plans (HDHP), Flexible Spending Accounts (FSAs) and  “limited FSAs.”

Asset allocation thesis update


Ed Tower

Duke University Economics Professor Ed Tower brought his honors student Yunze Chen to talk about his developing thesis on asset allocation, which is polishing up a Wellington study. The thesis studies questions such as: Do market timing / asset allocation funds outperform similar baskets of Vanguard index funds? Are these fund managers good? If they are good, does it actually reflect smartness?

This was a fascinating discussion! One especially interesting data point in the handouts was how excellently the Vanguard Wellington fund performed when measured by Net Alpha %. I look forward to checking out any papers which may result from this work.

Other topics

    •  The importance of diversification, including internationally
    •  GMO’s web page with monthly predictions of 7-year real rates of returns
    • Wade Pfau’s blog, in particular this post “How low can the stock market go?”
    • Compressed due diligence time due to the information age
    • High frequency trading – is it a tax on all investors, or a benefit to investors because of increased liquidity?
    • Milton Friedman’s view that profitable speculation is a stabilizing influence
    •  IBonds
    • Steve Jobs biography
    •  Irrational Exuberance

Planning for our next meeting

We agreed to choose a book to review, and to vote on our next meeting date (probably June 16 or June 23), through our local yahoo email group.

Also Ed Tower suggested an informal meeting next month, to review the final thesis and celebrate over beers. What could be better than that?


RTP, NC Chapter Meeting 9:30 AM Sat June 23, 2012


Bullington Warehouse

We had yet another fun gathering this morning. We met over much fine conversation, bagels, OJ, and  delicious homemade “Blueberry Buckle”. For those unable to join us, here I post a few short highlights.

What is the most controversial view that you hold about investing?

Being a Boglehead might actually be considered controversial, at least in the general population.

Non-market capitalization-weighted indexes may be preferable to cap-weighted. It could help avoid a few humongous stocks having too large of an influence over one’s returns. Also could allow the smaller-cap stocks to actually have an impact.

Is indexing the way to significant wealth? Actually maybe no – starting a business could be a great way (albeit with high risk). Real estate could be one way to go into business.

In Bill’s work as a bankruptcy attorney, he’s seen a lot of train wrecks related to real estate investing – in particular regarding over-leveraging. He’s also seen a tendency towards household budget volatility being directly correlated with the square footage of one’s household.

Show and Tell

Billy shared a few thoughts on a book he’s recently read, Victor Canto’s “Understanding Asset Allocation: An Intuitive Approach to Maximizing Your Portfolio”. The author characterizes his approach as not being static allocation, and not tactical allocation, but rather its cyclical asset allocation. Canto looks at long-term trends in the macro environment, regulatory changes, and other factors to decide how to adjust one’s target allocation. Canto argues for active management during a small cap cycle, and for passive management during a large cap cycle. As you might imagine, this Boglehead crowd was quite skeptical of both active management and the ability to figure out (in advance) what cycle we are in!

Bill recently read Michael Lewis’ “Boomerang”, an investigation of bubbles beyond our shores that is apparently a fascinating read.

Dan shared spreadsheets calculating financial metrics related to the solar panels recently installed on his house. It turns out with all the federal and state tax advantages, in about 10-15 years they expect to break even on this investment. All while being green to boot! Thanks Dan for this very interesting show-and-tell.

I demonstrated use of Simba’s excellent backtesting spreadsheet, comparing my own target asset allocation vs. a bunch of other sample portfolios. It is easy to get lost in this great spreadsheet for hours and hours! Although I caution users to view its calculations with caution, particularly with respect to planning. Remember, it is all based on historical data, and we simply don’t know what the future data might look like. That said, I do find it a very educational spreadsheet. Thank you Simba for this!

I also shared a few brief takeaways from Jim C. Otar’s book “Unveiling the Retirement Myth.”

Thanks everyone — as always it was great to see you!


RTP, NC Chapter Meeting Sat September 22, 2012


Full Steam Brewery

Yesterday the RTP chapter enjoyed a beautiful mid-day gathering on the Full Steam Brewery’s patio. I counted 8 of us total and as usual, the crowd and conversation were both very enjoyable. Not to mention the delicious micro-brewed beer!

Topics ranged all over the Boglehead map…. and beyond. Some that I can recall offhand are:

  • Different fund share classes (e.g. Investor, Admiral, Signal, Institutional, Institutional-Plus, ETF.)
  • Third Party Administrators
  • Strategies for claiming social security benefits
  • Various strategies on when to withdraw from which accounts
  • Jack Bogle’s latest book
  • Real estate investing
  • DFA vs. Vanguard
  • The Bogleheads Forum

Thanks to all who attended!


RTP, NC Chapter Meeting Sat November 3, 2012


Bullington Warehouse

Yesterday morning we had yet another fun gathering in Durham, North Carolina. For those unable to join us, here I post a few short highlights: We met over much fine conversation, bagels & cider.

We welcomed Ed Tower’s guests Grace, Jeffrey and Tony who are here on a four-month visit from Beijing. How lucky we are to make new international friends and learn more about China!

National reunion recap

Ed and Dan were our chapter’s delegates to the national meeting last month, and both indicated it was a fantastic meeting. Highlights included:

  • Presentations by Jack Bogle, and getting to meet him in person.
  •  A trip to the Vanguard corporate headquarters, complete with presentations from high-level Vanguard “crew members.”
  •  Various other panel presentations with Boglehead luminaries such as Christine Benz from Morningstar, and advisors / authors Allan Roth, Rick Ferri, Bill Bernstein.
  • Casual side-conversations with well-known Bogleheads such as author Mike Piper (a.k.a. the “Oblivious Investor”)

Ed Tower & Chao Yang’s paper on enhanced indexing vs. traditional indexing

Ed and Chao wrote a paper for the national reunion titled “Vanguard vs. The Enhanced Indexers, DFA, RAFI, and Wisdom Tree: Is Traditional Indexation Passe?”

Here I quote from the abstract to whet your appetite; Ed promises this paper will soon be posted on the web:

Vanguard provides low cost cap-weighted mutual funds: traditional index funds. The asset allocation of DFA’s core funds is determined by fundamentals as well as market cap. RAFI’s allocation depends on four fundamental factors—dividends, cash flow, sales, and book equity value. WisdomTree’s is also determined by fundamentals alone. All three now have a long enough track record so we can compare them with corresponding portfolios of Vanguard mutual funds. We examined fund returns from March 2007 through June 2012. Three results stand out. Focusing on US funds only, DFA and RAFI had lower returns than portfolios of Vanguard funds that mimicked their style; WisdomTree out-returned Vanguard. Thus, some, but not all fundamental indexers have performed well.

Part of the paper’s conclusion reads “Two cheers for traditional indexation and one for enhanced indexation!”

Ed, thank you very much for sharing your results with the group – including hard copies of the paper that we can all enjoy after the meeting!

Other topics

Dan is quite interested in the book “Behavioral Finance and Wealth Management: How to Build Optimal Portfolios That Account for Investor” by Michael Pompian. Apparently (per Amazon) it is a nice piece that “takes a practical approach to the science of behavioral finance and puts it to use in the real world. Pompian supposedly reveals 20 of the most prominent individual investor biases and helps you properly modify your asset allocation decisions based on the latest research on behavioral anomalies of individual investors”. Only problem is, it’s a bit pricy as books go! So Dan is shopping around for a good deal.

Dan shared tales of shopping around regional hospitals for medical services. What an obfuscated system we have, where it is virtually impossible to get a straight answer to a simple question like “What do you charge to deliver a baby?” Interestingly, it seems if you offer up front to pay cash, that very day, you can very likely get a discount of 60% or more!

Our new friends, visiting North Carolina from Beijing, shared experiences on personal finance in China. They described banks as being typical providers of investment services/products in China. They described uncertainties regarding fees/expenses on financial products, which may actually have high loads/commissions/expense ratios. That is not surprising to me – I expect the majority of financial product providers worldwide do their best to avoid advertising how much they’re charging their customers! Our guests also shared experiences in picking stocks, managing personal finances, keeping out of debt and investing in real estate.

Apparently Bill Bernstein has a forthcoming book “Masters of the Word: How Media Shaped History” due out shortly after the New Year. It is about communications technology, from 100,000 BC to the present. Bill may be a guest lecturer on this book in one of Ed’s classes (via Skype), and Ed may invite RTP Boglehead Chapter members to join. I hope this does happen as I certainly did enjoy an earlier Skype presentation given by Bill.

Thanks to everyone who attended! I wish you all a Happy Thanksgiving & look forward to seeing you again in a few months.


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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