Sacramento Area local chapter meetings in 2015 (May, June, July)

This article is composed by Bogleheads® forum member, Digarei with an assist from fellow member, Allocationist .

May 9, 2015 – Meeting Summary

aiolibodega

Aioli Bodega Espanola

The meeting was held May 9, 2015 from 11AM to 1PM at Aioli Bodega Espanola restaurant at 1800 L Street in Sacramento.

Nine (9) members confirmed and participated in what is only our second meeting since the chapter was formed in March. We all enjoyed a prix fixe lunch prepared by the restaurant owner. Everyone enjoyed the meal, but the most popular dish was the “fresh wild salmon with lemon caper sauce and saffron rice”.

Digarei called the meeting to order.

Allocationist volunteered to take notes although he cautioned he may miss a few meetings each year due to travel.

Initial discussions focused on future meetings including frequency, day of week, time, location and desire to maximize attendance, and to include those who have expressed interest but haven’t attended either of our first two meetings. The group was uncertain why some folks inquired about attending but did not. We encourage those who haven’t attended to come to a future meeting.

A consensus evolved that, short-term, we would meet at the same restaurant on a Saturday around 10:30AM about once a month. We are going to experiment with having our meeting first then eating lunch. We’re going to work on finding a smoother way of settling the food/drink tab with the restaurant. Members were open to ordering off the menu in the future.

The bulk of the meeting focused on each of our past best and worst financial decisions. This led to some interesting discussions and follow-up questions.

Some of the best decisions:

• Moving assets from a higher expense firm to Vanguard.
• Discovering the Boglehead philosophy and the bogleheads.org online forum.
• Purchasing Inflation Savings Bonds during the late 1990’s dot com boom.
• Getting the right job with excellent pay and benefits.
• Paying off your mortgage.
• Maxing out tax-deferred investment accounts.

Some of the worst decisions:

• Investing in numismatic coins due to high transaction costs and uncertainty about coin grading.
• Purchasing a house without fully researching the neighborhood.
• Trying to time the stock/bond market.
• Paying too high a cost for financial management and/or advice.
• Purchasing illiquid private investments including partnerships.
• Carrying too much debt.

Towards the end of the meeting we talked about possible topics for our next meeting. They included asset allocation, ideas for saving money and suggestions for better aligning spouse/partner values on spending, investing and other financial matters.

June 13, 2015 – Meeting Summary

Our third local chapter meeting was held from 10:30 AM to 12:30 PM at Aioli Bodega Espanola restaurant at 1800 L Street in Sacramento’s midtown. Though it proved to be a warm day last Saturday, our location on the patio was shaded and quite comfortable during the meeting and the lunch that followed.

In attendance were Eight (8) members and one (1) guest. Following introductions, we focused on a topic requested by one of our members before our first meeting in April. The agenda summarized it this way:

  1. What decisions lead us to the allocations we currently hold or aspire to have?
    What’s your present asset allocation? (and how did you arrive at it?)
  2. .What portion of your equity position is invested in foreign stocks? And, what if any impact has John Bogle’s well-publicized criticisms about non-US holdings had on your thinking—or on your portfolio’s target asset allocation? How much international fund exposure do you have?Bogle says: “it’s a bad idea”. Do you agree?

In a round-robin discussion members talked about how their own investments are allocated among asset classes, % international stocks and in some cases the rationale or experiences that shaped their investing decisions. As might be expected in a gathering of Bogleheads, there was great variation in investing style and risk assessment, not to mention asset class preferences, among members. Seated one next to the other on one side of the table, three members, with investments targeting…

    1. 100% of investible assets in a brokered annuity product (IRA)
    2. 90/10 stock/bond split with 40-50% International (Thrift Savings Plan)
    3. 25% stocks + alternative investments and 0% International (Taxable?)

There were no fisticuffs or unkind remarks exchanged between them—while I was looking.

Yet even in a small and highly selective enclave, familiar patterns and practices emerge. Among relatively new and younger investors, 4 out of 5 members’ portfolios are invested in 80-90% equities, 30-50% of which is international stock.

Diversity in allocation seems more pronounced among boomer/early Gen X BH forum members; it is likely that even in our small group this can be seen:

  1. 25% equities and 0% international
  2. 50/50 w/10% or 30% foreign stock
  3. 60/40 slice n’dice – sans corp bonds, munis

The chair confessed to pulling back last year after ten+ years @ 90-95% stocks.

No one was in a hurry to disparage Jack Bogle’s dismissal of International stocks even if many of us don’t practice these preachings. And not once was the subject of International Bonds broached. We hope to have a more in-depth discussion of asset allocation in the context of creating/modifying a long-term investment plan during a series of meetings beginning in September 2015 (“How to Invest”).

Our second topic gave members a chance to give a 30 second cold reading on one aspect of Saving (/Investing) Money from those listed on the Lazy Learning diagram. Designed to be lightning fast and entertaining, I didn’t do a good job of conveying this. We’ll try again (with a different topic) another time!

No decisions were taken by members during this meeting, which adjourned on time. Many were able to stay on to enjoy Lunch and/or dessert/coffee after the meeting. If anyone is interested in sharing the paella for lunch after our next meeting, let’s put in an order upon arrival.

July 11, 2015 – Meeting Summary

Three months after our first meeting, SABH members met for a fourth time to talk about investing, and to share our expertise and knowledge, successes and missteps with each other. On this occasion, the focus was on achieving Financial Independence and interpreting the first five Bogleheads principles. Though not among them, the following observation surely informs the kind of common sense needed by investors who don’t wish to repeat others’ mistakes.

Good judgment comes from experience,

• • • and experience comes from bad judgment. – Mulla Nasreddin Hoja 1208 CE

TEN (10) persons attended the meeting held from 10:30 AM to 12:30 PM at Reda Bellarbi’s ‘Aioli Bodega Espanola’ restaurant, 18th and L Streets, Sacramento. On the back patio, where most of us chose to remain afterward for tapas, vinos tintos, cerveza o solamente café y pastel, we had some relaxed conversation, alfresco.

Joining us for the first time was a language instructor, a retired project manager and a woman on the verge of… financial independence.

Following introductions, an excerpt from an exchange on the Bogleheads forum was recited. Initiated by an investor panicked over various country-specific crises, the poster is concerned that these economic troubles may forecast a steep decline in the S&P 500.

If America’s flagship index were to drop -25% would that be a good time to change the proportion of stocks to bonds in his portfolio? (well, maybe) Or should he just “stay the course, no matter what?” The right answer came 5 minutes later in the form of a post containing only a quote box listing all ten principles that undergird the Bogleheads Investment philosophy, with principle #10 in bold font.

The response was an exhortation from BH forum poster longinvest to “Stay the Course” – maintain the same allocation of assets in the teeth of market turmoil and bad or worrisome economic news as before, per plan. Subsequent posters used many more words to say essentially the same thing.

Discussion of the first 5 principles by our group demonstrated that most of us were quite familiar with the foundational elements of successful investing. Later, there was violent agreement between us in how we chose to define ‘Financial Independence (FI)’ and its components. We stipulated that one has achieved FI when work for compensation ceases to be a requirement for meeting one’s needs or wants. No elaboration can improve upon this.

Discussion of future topics

Members present were asked what kinds of investing subjects they would like to see on the agenda going forward.

Agenda topics for this year were formulated in March and April, incorporating a number of member suggestions, repackaged so that there would be some consistency month to month and then sent to all members in mid-April for approval. In August, we’ll complete the current section (“Planning For The Future”) and start a new one in September (“How To Invest”). Scheduled later this year are sections exploring topics on Taxes and Social Security.

Members who attended Saturday’s meeting said they were interested in the subject of taxes (hurray! for mild enthusiasm!) but a question put to the group about how much time we should devote to Social Security was received with all of the quiet attentiveness one affords an older relative who has suddenly spoken out of turn and off-topic. Polite smiles all around; a collective sigh. Then—finally!—a change of subject, and we can laugh again.

“I’m glad we’re here today–instead of somewhere else.”

In view of the group’s measured reaction, the coordinator has decided to employ a more experienced advocate in the matter so that each of us will be able to learn something relevant and of immediate interest when we finally broach this subject next January.

To procure the desired outcome—and to avoid due process (not to mention, impeachment!) along with the embarrassment of being outvoted-I plan to recruit a number of 55-67 year olds who will give me the votes I need–for a handful of gorp.

Steve (“hollowcave2”) suggested that we discuss ETFs and what (if any) changes to our investments or investing behavior have followed from their use. The chapter coordinator thought that ETFs would fit well into the material scheduled for September and said he would add it as a topic. The meeting was concluded shortly before 12:30 PM.

About

Barry Barnitz, administrator of both the Bogleheads® wiki and of Financial Page, a Bogleheads® blog

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July 2015
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