Bogleheads® Chapter Series – A Journey from Active Portfolio Manager to Retired Passive Investor

00:00:00.000 | Welcome to the Bogleheads chapter series.

00:00:04.000 | This episode was jointly hosted by the Tampa Bay and

00:00:07.200 | Retired Life Stage Chapters and recorded March 13th, 2024.

00:00:11.520 | It features Betsy Pecor, CFA, sharing perspectives

00:00:15.600 | about her journey from active portfolio manager

00:00:18.280 | to retired passive investor.

00:00:20.000 | Bogleheads are investors who follow John Bogle's

00:00:23.000 | philosophy for attaining financial independence.

00:00:25.400 | This recording is for informational purposes only

00:00:28.200 | and should not be construed as personalized investment advice.

00:00:31.120 | And again, hello everybody.

00:00:40.920 | I'm Alan, one of the coordinators for the Tampa

00:00:43.160 | Bay and also the Retired Life Stage Chapter.

00:00:45.400 | We have a very unique meeting on tap tonight

00:00:47.720 | with one of our Tampa Bay local chapter

00:00:49.880 | members, Betsy Pecor, CFA.

00:00:51.960 | Betsy is a former active portfolio manager who

00:00:54.880 | will share perspectives about her journey from

00:00:56.880 | being an active portfolio manager, now becoming

00:00:59.720 | a passive investor in retirement.

00:01:01.440 | And Betsy's husband, Chris, will be assisting us

00:01:04.200 | tonight as a moderator, along with Lady Geek

00:01:07.440 | helping, and I believe Henry is on as well,

00:01:10.360 | and Jim from Chicago.

00:01:11.720 | I appreciate your help.

00:01:12.640 | Raj or Robert, if you're on, shoot me a PM

00:01:16.320 | and I'll make you co-hosts.

00:01:17.640 | Rather than me muddling up Betsy's introduction,

00:01:22.640 | I'll turn the mic over to Betsy's husband,

00:01:24.400 | Chris, and let him do that.

00:01:26.240 | No, actually he's very kindly offered to formally

00:01:28.320 | introduce her and serve as moderator

00:01:30.360 | for her presentation.

00:01:31.440 | Thank you very much, Chris.

00:01:32.920 | And I will turn the mic over to you now.

00:01:35.200 | Thanks Alan.

00:01:37.360 | I'm glad to be here for this and share Betsy's perspective.

00:01:43.240 | So I'd like to introduce my best friend, my wife,

00:01:49.160 | a mother of two great kids, my partner in life,

00:01:54.120 | and a 25-year veteran of Wall Street, small scap,

00:01:58.080 | small cap, scap, right?

00:02:00.040 | Cap, stock analysis and investing.

00:02:02.800 | I just, I didn't want to read her resume,

00:02:06.440 | but I wanted to hit, there's, I'd say,

00:02:08.880 | seven different moments that shaped her investing career.

00:02:12.840 | It all started back in 1988 when she graduated

00:02:20.160 | from UVM, University of Vermont,

00:02:22.000 | with a physical therapy degree.

00:02:24.080 | You say, how the heck did that, where is that relevant?

00:02:28.440 | Well, number one, she was able to graduate

00:02:31.960 | with a degree in physical therapy,

00:02:33.560 | which is no small task.

00:02:34.880 | It introduced her to the healthcare systems.

00:02:38.680 | And as she found out later on,

00:02:41.720 | she did learn that bedside manner was not her forte.

00:02:45.080 | So that's one of the reasons why she got out of it.

00:02:48.480 | She did start an investment club in 1997

00:02:53.480 | in one of our, in our neighborhood where we lived,

00:02:56.680 | in Tampa, actually.

00:02:58.280 | And then while she was still in physical therapy,

00:03:02.520 | she was trying to get her master's degree

00:03:05.920 | in healthcare management at USF.

00:03:08.200 | And she, she bumped into a guy named Keith Shillett,

00:03:13.440 | who, who talked to her a little bit about switching

00:03:18.160 | to finance, and that's when she switched to a finance major.

00:03:22.560 | Coincidentally, she also did an internship

00:03:27.520 | with Raymond James during that time while she was in school.

00:03:30.200 | In around 2000, January 2000, we moved to Vermont

00:03:35.680 | and she got her first finance job.

00:03:38.640 | So ended her physical therapy career,

00:03:41.800 | got into finance at a company called National Life

00:03:45.960 | in their corporate finance department, not in investing.

00:03:48.920 | But that didn't take long because within 11 months,

00:03:52.520 | she was hounding the Sentinel Investments

00:03:56.760 | equity folks at lunch and whatnot in the elevators

00:04:00.960 | to to get a job in the investment side.

00:04:03.920 | So that's when she became an equity analyst.

00:04:06.720 | And then finally, you know, 13 years

00:04:10.320 | after she had her career with Sentinel,

00:04:14.600 | she was able to get a job at Raymond James

00:04:17.080 | and the Eagle Asset Small Cap and Smith Funds.

00:04:21.160 | So with that, I'm super proud to introduce my wife, Betsy.

00:04:25.680 | Wow. So hello, everyone.

00:04:29.400 | And thank you, Mr.

00:04:31.280 | Peacore, for the kind introduction.

00:04:34.640 | When I attended my first Tampa Bay chapter meeting

00:04:37.600 | for the Bogleheads, I saw Alan kind of raise his eyebrows.

00:04:42.200 | You know, I told him what my past career was as an active manager.

00:04:46.320 | And I think he was thinking, why would an active stock picker

00:04:51.560 | be at a Boglehead meeting?

00:04:54.400 | Was I there to abuse the members?

00:04:56.480 | Or was I just plain lost?

00:05:00.720 | What he and other members didn't realize is that I was actually there

00:05:04.280 | to learn from all of them

00:05:06.920 | to have a deeper understanding of the Boglehead way.

00:05:10.200 | Yes, I was very lucky in my 25 year career managing small cap stocks.

00:05:14.880 | We were able to successfully beat our bogey.

00:05:17.840 | We gave our clients the return they wanted

00:05:20.720 | and at the right level of standard deviation or risk.

00:05:23.760 | And actually, even to this day, I do still feel

00:05:28.800 | that there could be advantages to owning both active and passive products,

00:05:33.840 | especially when it comes to small and micro cap land.

00:05:38.000 | But for me and my time and my life of investing,

00:05:42.240 | it's all about Bogle right now.

00:05:44.920 | And I will give a shout out in case they're here.

00:05:48.040 | They might listen to the YouTube after to my daughter's boyfriend, Spencer.

00:05:51.880 | At Christmas in 2021, he did present me

00:05:55.760 | with a Jack Bogle book on passive ETF and passive investing.

00:06:01.440 | So thanks, Spence.

00:06:04.560 | So sorry about this.

00:06:09.720 | I have to go through two different two different screens to get to where I want.

00:06:13.680 | So for this agenda, there will be two parts to the presentation.

00:06:18.160 | Part one will be what I call the active management slides.

00:06:21.480 | I would like to give an overview of how my team looked at the world of small caps.

00:06:25.680 | I'll provide a number of slides to describe our rigorous investment process.

00:06:31.240 | And you'll hear that term quite a bit throughout this presentation,

00:06:34.200 | because it's very important to long term success.

00:06:36.720 | This include how we found our investments or what you guys might say stock picked.

00:06:42.480 | Then show you a couple of tools we used every day

00:06:46.200 | on a daily basis to kind of monitor the portfolio and some on a quarterly basis.

00:06:50.680 | And finally, I'll show you an attribution analysis.

00:06:54.120 | And I'm not I know we have a savvy group here, but I'm not sure how familiar

00:06:57.520 | you are with how we were judged by our clients and our

00:07:01.840 | and our bosses for how we got paid.

00:07:04.680 | And then part two will be the fun part, that's retirement.

00:07:07.160 | I'll show a brief slide of how to compare the two sides

00:07:10.200 | of active management versus passive investing.

00:07:12.720 | Then my adorable spouse will come back into the screen

00:07:17.360 | and will answer a few questions that we anticipate people might ask out there.

00:07:23.560 | But then I'll open it up to Q&A.

00:07:26.520 | Oh, and before I move on,

00:07:29.560 | I did put little quotes in purple.

00:07:32.480 | So in case you get bored looking at the presentation of the slides,

00:07:36.120 | you can always read the quotes.

00:07:37.800 | And they are something that I tried to live by.

00:07:40.760 | And somehow they resonate with me and I hope they resonate with you.

00:07:44.800 | I should have had you do this, Chris.

00:07:51.480 | OK, so here's the bio we start.

00:07:55.160 | Actually, I do want to read the first quote.

00:07:57.600 | And boy, did you ever need this when you were in a.

00:07:59.760 | I got it there, I think.

00:08:01.720 | And boy, did you ever need this on my job?

00:08:04.840 | You are never as dumb as you think you are when you are wrong.

00:08:08.040 | But you are never as smart as you think you are when you are right.

00:08:11.920 | And since most of the time I was only 60 percent right,

00:08:16.640 | that was a good thing because I was beating most of my voting.

00:08:19.760 | I guess I'll point out I was not a typical analyst, as my husband said.

00:08:24.680 | My bachelor of science degree was in physical therapy.

00:08:27.560 | I stayed in PT for about seven years before I decided

00:08:30.560 | that the health care industry was not for me.

00:08:33.280 | And I really didn't want to hear about everybody's aches and pains every day.

00:08:36.280 | So I always enjoyed following stocks.

00:08:40.000 | I think I bought my first company when I was 18 years old.

00:08:43.000 | And if you need to know, it was Outback Steakhouse.

00:08:45.200 | I can't remember if I made money or not, but we'll give it that.

00:08:49.080 | It also helped that my eldest brother, who still remains in finance,

00:08:54.720 | he started out as a chemical engineer for Pfizer.

00:08:58.400 | And he also decided to pivot.

00:09:00.160 | And now he's made his way up to the big ranks and Fidelity Investments.

00:09:04.400 | He was the one who helped me open my first brokerage account.

00:09:07.600 | So anyhow, I decided in 1998 or 1997

00:09:13.320 | that I would follow this passion as a career.

00:09:16.080 | And I went back to school, like Chris said,

00:09:17.840 | and I obtained my MBA in finance and entrepreneurship.

00:09:21.440 | It took a lot of time and energy

00:09:24.520 | and also a move back from Florida to Vermont to break into this business.

00:09:29.120 | Because you don't get many looks if you don't have a Ivy League degree

00:09:34.520 | or or at least a background in finance or mathematics.

00:09:38.680 | But I had the I had the passion and I had the drive.

00:09:42.360 | And I definitely desired a career in small caps.

00:09:45.120 | So my first foray, as Chris mentioned, was at Sentinel Investments.

00:09:49.600 | Sentinel was owned by National Life.

00:09:51.600 | There I was hired as an equity analyst and began.

00:09:55.160 | And because of my undergraduate degree, the team put me in charge of health care.

00:10:00.480 | We did very well.

00:10:03.080 | And the product grew from a little over 200 million to three billion,

00:10:07.000 | which is which is a fantastic feat.

00:10:09.320 | And then we actually stopped assets from coming in.

00:10:11.880 | As one might suspect, though, our team,

00:10:16.400 | who at the time had been together for over a decade, began to be pursued by suitors.

00:10:21.240 | And in 2012, we decided to leave and work for Eagle Asset Management,

00:10:25.640 | which is a division of Raymond James Financial.

00:10:27.960 | This was good news to me because it was sort of karma.

00:10:32.360 | I started my internship where being pro bono equity analyst to now

00:10:37.880 | I was being paid in the higher ranks.

00:10:40.680 | Let's put it that way as a portfolio manager.

00:10:44.000 | Raymond James also provided the team more flexibility to build new products.

00:10:48.600 | We didn't have to run a mutual fund.

00:10:49.920 | We could run SMAs or separately managed accounts

00:10:53.080 | and more resources to help us sell the products.

00:10:55.960 | OK.

00:10:59.600 | Just hold on a second.

00:11:05.600 | Sorry about that.

00:11:07.240 | So the world of small caps, and I didn't put much on this slide,

00:11:11.680 | I just really enjoy this quote, find what you love and do it

00:11:15.120 | every weekend for the rest of your life.

00:11:17.440 | Find what you're good at and do it every weekday.

00:11:19.400 | So, again, I think the group that we have here is pretty financial savvies,

00:11:24.360 | but just so that you know, the market capitalizations by my team as definition.

00:11:28.160 | And this is when I ended my career.

00:11:31.440 | Small cap was defined as 500 million to five billion.

00:11:34.560 | My team, of course, stayed up towards that one billion mark because of liquidity.

00:11:39.440 | And we let our winners run all the way to 10 billion.

00:11:42.480 | Mid cap was five billion to 20 billion and large cap was 20 billion and above.

00:11:48.520 | So the world of small caps, so how did I fall into it?

00:11:56.920 | I lucked out. I lucked out.

00:11:59.600 | There was an open at Sentinel Investments on the small company fund.

00:12:03.280 | This fund was managed by an extremely passionate

00:12:06.640 | and somewhat odd portfolio managers if you've ever met a portfolio manager, not me.

00:12:10.880 | They're they're somewhat different.

00:12:13.640 | And that said, he and the other analysts who I worked for

00:12:16.480 | taught me a great deal about proper investment process thing.

00:12:20.960 | There goes the term in case you're drinking a beer and.

00:12:23.960 | And it really became they really became my mentors into the business.

00:12:28.520 | So the positives, I was excited to follow small caps.

00:12:34.080 | It was an area on the street where I think you could really add value

00:12:37.040 | as an active manager.

00:12:38.520 | It's just easier to beat the Russell 2000 than the S&P 500.

00:12:42.120 | And I'm sure you could find many statistics that show so.

00:12:44.480 | Plus, there's a lot more companies to follow.

00:12:48.240 | And you could really find your own niche or in a specialty industry.

00:12:53.320 | I also enjoyed the fact that I could talk to the CEOs

00:12:58.320 | and CFOs of many of my companies frequently.

00:13:02.280 | And you didn't just get put in front of some division head

00:13:05.160 | that my counterparts who followed large companies would only have access to.

00:13:10.960 | Because unless you have a significant amount of AOM or assets

00:13:15.120 | under management, such as the T-Rows and the Fidelity's of the world,

00:13:18.120 | you're not speaking to the corner office.

00:13:21.520 | Takeout premiums were very exciting.

00:13:25.720 | I remember Phillips.

00:13:29.360 | They received a big package for me personally.

00:13:32.360 | Because they took out one of my companies for four Fridays in a row

00:13:36.800 | for a pretty significant premium.

00:13:39.000 | Thank you, Phillips.

00:13:40.600 | And we developed our own big picture.

00:13:43.760 | Everyone talked about the market, the S&P 500, the Dow Jones.

00:13:47.720 | But I'll tell you, we were able to see signs and symptoms

00:13:51.160 | of a different market from the smaller guys, and it gave us an advantage.

00:13:54.600 | The negatives of following small caps.

00:13:57.440 | Well, later in my career, the market cap moved up.

00:14:00.040 | It became difficult for us to trade as we grew assets.

00:14:02.600 | Volatility, both up and down, as you know.

00:14:05.880 | It wouldn't be so it wouldn't surprise me to see a stock move 50 percent

00:14:09.600 | upside or downside.

00:14:11.720 | And of course, the coverage of our companies was slim,

00:14:14.080 | which could be an advantage, but we never used the price targets

00:14:18.680 | that you'll see the sell side post.

00:14:21.000 | But we did like to hear what they said about our companies,

00:14:23.720 | because sometimes misinformation was an opportunity for us.

00:14:27.760 | All right, here we go.

00:14:30.040 | Get in there.

00:14:30.800 | The ever important investment process.

00:14:38.040 | This is key for when I was an active manager and now as a retiree.

00:14:43.160 | It's basically the same process, although in Vermont, in retirement,

00:14:48.960 | I'm using passive investments instead of small companies.

00:14:52.680 | I'm learning new tools and techniques.

00:14:55.000 | Instead of small companies, I'm learning new tools to monitor my progress.

00:14:59.080 | And I'll be checking our performance, my husband and I,

00:15:02.280 | at the end of the year with a different type of analysis.

00:15:04.760 | But for the next nine boring slides,

00:15:08.880 | I'll review the components of the investment process

00:15:12.800 | as an active manager.

00:15:15.760 | Investment will be the first five slides of how we describe

00:15:20.240 | how we found our very high quality companies.

00:15:23.640 | Then I'll give you two slides that show just a sampling of our tools

00:15:27.000 | that we used again to monitor and then finally evaluation,

00:15:30.520 | which is the attribution analysis, which I described to you.

00:15:33.680 | Find your investment.

00:15:41.280 | So, again, I'm not going to go over these slides

00:15:44.200 | as you probably all beg me not to in any big detail,

00:15:48.360 | but I just really want to demonstrate the due diligence

00:15:52.000 | that our team put

00:15:54.640 | when we found any of our companies or an investment idea.

00:15:57.880 | And the order of these slides, by the way, is key to our success.

00:16:02.760 | Our search always started with management.

00:16:05.960 | And I used to love it when my companies grew.

00:16:10.360 | Interesting enough that is that a CEO would come from a larger company.

00:16:15.000 | They had the right experience to lead the company, hopefully

00:16:20.000 | to mid cap or even large cap level.

00:16:22.200 | For example, I would love to see when a CEO or a leader

00:16:27.040 | from J&J, Medtronic or Stryker showed up as the CEO of one of my companies.

00:16:32.240 | Product and market.

00:16:41.480 | We always needed to know the secret sauce

00:16:44.320 | of our companies in one line.

00:16:48.400 | So this was not only important for our clients.

00:16:51.000 | But for also for my teammates, a good analyst

00:16:55.080 | can give an elevator pitch on any of their companies on any given day.

00:17:00.240 | Can you do that with your passive investments?

00:17:03.480 | Sorry, I have to do that.

00:17:06.920 | Let's see, manufacturing,

00:17:14.720 | marketing and distributions.

00:17:17.920 | Operations, logistics and sales are tricky for small companies.

00:17:22.320 | They had to outsource many of the functions, as you probably read about.

00:17:27.160 | So you had to be not only aware of your company,

00:17:29.920 | but you had to be aware of the company that they outsource

00:17:32.440 | their product or their their manufacturing to.

00:17:35.120 | These relationships are sometimes very key to operations.

00:17:38.640 | Research and development.

00:17:45.520 | And again, this is just another aspect of the company

00:17:48.640 | that we had to do to be that had to be heavily investigated.

00:17:52.120 | It can be a game changer.

00:17:54.880 | What I found interesting to me was always to listen to the CFOs of my companies

00:17:59.280 | and how they allocated those research dollars to the division leaders.

00:18:03.000 | Some would do a competition among the division leaders to see who

00:18:07.040 | who could come up with the best product or service,

00:18:09.160 | and they would receive the bulk of the R&D dollars.

00:18:11.680 | But some would just use the numbers.

00:18:15.200 | And finally, last but not least.

00:18:19.040 | Was our financial accounting.

00:18:24.800 | Now, I will tell you, we always say valuation for last.

00:18:28.120 | We wanted to find all those aspects that I just described to you

00:18:32.280 | in those four other slides before we did any valuation work.

00:18:36.560 | This could be this was tricky doing valuation on small cap companies,

00:18:40.720 | and we didn't want to waste our time.

00:18:42.960 | There were so many companies out there to study.

00:18:45.880 | So if they didn't have those high quality attributes,

00:18:48.320 | we said goodbye without any valuation work.

00:18:50.840 | So also what this did for us when we were doing our work,

00:18:55.640 | it allowed us to determine if we were going to give a premium

00:18:59.200 | or a discount to some of these to some of the model

00:19:02.800 | to what the model spit out for us.

00:19:05.520 | And we always, always determined a fair value

00:19:08.320 | of where we got into the company and a price target of where we would exit

00:19:12.520 | based on what we came up with.

00:19:14.760 | And again, we use a number of tools and models to determine this.

00:19:17.560 | And that's basically the find the investment part of the investment process.

00:19:22.320 | So now a couple of slides on on a sampling of our tools.

00:19:26.760 | Something that passed, yes.

00:19:33.880 | So first, I have to start with a quote, because I was a practice

00:19:36.920 | and physical therapist, but man, is it more important now than ever?

00:19:41.800 | Bend your knees.

00:19:44.800 | So anyway, that's that's just a little.

00:19:49.040 | The next, like I said, this is this tool here is what we call a val table.

00:19:53.880 | And I know as much as far as I went, not my other team members.

00:19:58.600 | I ran it every morning.

00:20:00.720 | And through the years, as you note at the top, this was 2003

00:20:04.320 | of the value table that I gave you, but the columns continually changed.

00:20:08.400 | So we we evolved our process, but not far from where we where we came from.

00:20:12.360 | But they changed throughout the years.

00:20:14.640 | But it was a quick and dirty way of where to concentrate your time.

00:20:17.720 | And maybe I should focus more time on certain areas.

00:20:20.920 | This particular value table was mine.

00:20:24.760 | And yes, those are my scribble notes.

00:20:27.080 | And yes, I somewhat remember what I wrote there.

00:20:35.480 | The next tool, again, these are just a sampling

00:20:38.600 | was called our sector strategy tool.

00:20:41.760 | It was a one pager.

00:20:43.640 | This tool was basically a deep dive that each of us did every quarter.

00:20:47.320 | And of course, I'm presenting you with the health care sector as that was my forte.

00:20:50.640 | This tool was used quarterly, like I said, to determine

00:20:56.520 | if a particular sector was on track and always make sure

00:20:59.800 | that we didn't miss out on something.

00:21:01.800 | And it was a good way to compare the sector performances among the portfolio.

00:21:05.960 | And I know this sounds between the two tools like we traded quite often,

00:21:09.400 | but really, we traded less, our turnover rate, I think, was less than 20%,

00:21:14.160 | which is actually really good for an actively managed portfolio.

00:21:18.120 | And that also includes all the money that kept coming into us.

00:21:21.880 | So it included all our small program trades that we had to do to to invest that money.

00:21:26.560 | All right, the last two slides, hopefully I didn't bore you too much,

00:21:34.200 | is our attribution analysis.

00:21:36.480 | So I love this quote, and I said it often to my clients as I was leaving the profession,

00:21:44.520 | the best way to double your money is to fold it in half and put it in your pocket.

00:21:48.840 | I still, I still crack myself up.

00:21:53.480 | So anyways, attribution analysis.

00:21:55.760 | And I'm not sure you folks are familiar with this, but this is how we were paid.

00:22:00.920 | So we were paid not only by the returns that our companies delivered to the portfolio,

00:22:05.920 | but by which I think is measured by selection interaction.

00:22:11.760 | And that's in the third to the last column.

00:22:14.920 | But we also were paid by allocation effect.

00:22:19.760 | So did we put enough weight into the particular holding to make a difference from the index?

00:22:27.160 | And in this case, the index is in that second set of columns, the Russell 2000.

00:22:30.960 | So, for example, under health care equipment, the very first line you'll see there,

00:22:37.040 | I opened it up to the Massimo Corporation.

00:22:39.880 | And Massimo, if you look to the right, was up 62.37% in 2016.

00:22:48.320 | Woohoo! Good stock pick, Betsy.

00:22:50.480 | We owned it the entire year, but so did the index.

00:22:55.440 | So guess what? I got a big fat zero for stock selection or selection interaction, as it's called here.

00:23:00.880 | But we own 98 basis points of it, and the index only owned 15 BIPs.

00:23:08.240 | So I received a positive contribution of 26 basis points towards the health care performance.

00:23:15.240 | So 2016, as you can see here, was a very good year for the health care sector.

00:23:20.280 | It was up 5.3% over the index.

00:23:24.560 | So just to bring it back to reality, my performance was up 28%.

00:23:29.400 | The index was down 7.36%.

00:23:34.160 | And health care was the number one performing sector for the sector.

00:23:39.520 | But if you looked, and many of you probably are, looking down at the bottom to see the total,

00:23:44.960 | you'll notice that, yes, we had a good year.

00:23:47.440 | We were up 19.2% or 19.92%.

00:23:51.480 | The index was up 21%.

00:23:54.920 | Unfortunately, so yes, we lost in 2016 by 1.40%.

00:24:00.200 | But I can't end on that.

00:24:02.120 | I can't end where the portfolio does crap.

00:24:04.560 | So the very next year, 2017, I will present to you.

00:24:13.320 | And of course, health care was towards the bottom of the barrel.

00:24:18.280 | But luckily, if you notice, if you're able to read these tables and I circled it,

00:24:24.400 | my stock selection was awful, down 71 basis points.

00:24:28.400 | But because I over-weighted the sector by 17%, the index only had 15%,

00:24:34.440 | my allocation effect was up 70 basis points

00:24:38.880 | for an overall contribution of only negative 1%.

00:24:42.360 | So that's not bad, or negative one basis point.

00:24:45.480 | So if you look at total on the bottom, though,

00:24:51.600 | the portfolio product had a good year.

00:24:54.200 | We were up 20.6%.

00:24:56.680 | The index was only up 14.6%.

00:25:00.400 | So we beat the index overall by 5.96%.

00:25:03.640 | Now, as I describe this whole investment process,

00:25:09.120 | the investment, the tools, the evaluation,

00:25:12.040 | I hope it somehow kind of feels familiar to all of you Bogleheads.

00:25:18.240 | Again, in this case, the investment is based on small cap individual companies.

00:25:23.200 | The tools were developed by very, very incredibly intelligent IT people

00:25:29.640 | who worked for both Bloomberg and Faxit.

00:25:32.120 | Those are the two platforms that I used while I was an active manager,

00:25:35.440 | Bloomberg and Faxit.

00:25:37.120 | And evaluation, of course, is the attribution analysis.

00:25:40.440 | So I'll end my active part of the presentation.

00:25:48.280 | We're just like, OK, what's what's a day in the life

00:25:51.560 | and what was a day in the life of an active manager or analyst?

00:25:54.920 | Every morning at 6 a.m., I was checking company company news or holdings.

00:25:59.840 | Then I was checking the market news.

00:26:02.720 | Then I prepare for a team meeting, which we had at eight o'clock every morning.

00:26:05.640 | Then we had between two to ten calls set up with the sell side,

00:26:10.600 | the buy side, management teams, competitive companies, others.

00:26:13.200 | We were always searching for new ideas.

00:26:15.240 | We built models.

00:26:16.800 | We had a team exercise that we did

00:26:19.280 | and a team exercise is exactly what it's actually what it means.

00:26:23.320 | Literally, we would exercise.

00:26:26.160 | So one person would go out for a run.

00:26:28.440 | We anything we did for 30 to 60 minutes to get us away from the market every day,

00:26:33.640 | except maybe during earnings seasons or when we had clients.

00:26:36.200 | All right, on to the fun part.

00:26:44.560 | And retirement.

00:26:48.080 | Now, this is what I anticipated retirement to be.

00:26:50.640 | I started to be this amazingly fun life with with paddleboard

00:26:56.240 | and mountain biking and hiking and just big views.

00:27:00.120 | But wow, for someone who has always been in control, at least financially,

00:27:06.800 | I felt a total disarray and I'll explain why.

00:27:12.120 | The I had to consolidate over 20 different accounts

00:27:15.360 | with so many different moving pieces, stocks, bonds, alternatives.

00:27:19.480 | There were HSAs.

00:27:21.320 | They were backdoor loss that I needed to convert to regular loss.

00:27:24.640 | And then, oh, my God, I had a husband who was retiring seven months later

00:27:29.200 | and I had screwed up his personal portfolio just as much as I screwed up mine.

00:27:32.560 | So there was chaos.

00:27:35.320 | And the real kicker.

00:27:37.720 | Was when I transferred all my separately managed accounts in kind,

00:27:42.480 | I ended up with over one hundred and fifty, yes, one hundred and fifty

00:27:47.360 | different individual companies or stocks that span from micro to large.

00:27:52.800 | But at least I felt I could.

00:27:55.840 | I had confidence that I could consolidate these equity positions over time.

00:27:59.320 | But oh, no, the confidence slowly began to be waning.

00:28:04.320 | Because I realized one of these SMAs that I had transferred over

00:28:08.040 | had over a hundred individual bond positions in government,

00:28:13.120 | munis, corporates, ABS, ABS.

00:28:16.960 | I had no clue what that asset backed securities,

00:28:19.640 | of which I knew nothing about bonds.

00:28:22.400 | Now, you might ask yourself, so how did someone so knowledgeable

00:28:27.520 | in markets allow herself and her spouse's personal portfolio

00:28:32.240 | to become so complex?

00:28:34.640 | Well, I'll give you the answer.

00:28:36.840 | It was my gang compliance department at Raymond James.

00:28:39.640 | They encouraged us all, all active managers to hire

00:28:43.680 | a Raymond James financial advisor and allow some of our assets

00:28:48.520 | to be managed by a person basically given up our trading rights.

00:28:52.600 | Because the SEC likes to see that among those of us

00:28:59.080 | who manage assets, reduce our conflict of interest.

00:29:02.360 | So just like some of you out there who have experienced,

00:29:05.800 | Chris and I sat down with a financial advisor,

00:29:08.840 | a really good guy who proceeded to go through our goals,

00:29:12.560 | our investment risk levels, and kind of et cetera, et cetera,

00:29:16.760 | to follow a certain plan until we hit retirement.

00:29:19.400 | And just like all of you out there.

00:29:23.280 | I came to the conclusion that after I retired because I had to pay

00:29:26.480 | my financial advisor, just like you, that I would say goodbye to him.

00:29:30.240 | Who is still a good friend, by the way, and become a do it yourself.

00:29:34.040 | But I need a serious new plan.

00:29:38.040 | And after much research, including just like all of you,

00:29:42.080 | I read retirement articles on Morningstar, on Motley Fool,

00:29:45.760 | on brokerage sites where like houses like Fidelity and Charles Schwab.

00:29:50.480 | I listened to 100 podcasts and I watched many YouTube videos.

00:29:55.040 | And I finally decided to go with the Bogleheads.

00:29:58.200 | Yay. So the ever important investment process comes back to us.

00:30:07.880 | But in this case, we're not looking at individual companies.

00:30:12.280 | They are well known, maybe a few.

00:30:15.800 | I still have not so well known passive ETFs in a very diversified categories

00:30:20.840 | that I think will provide my husband and I solid returns for the next 30 to 40 years.

00:30:25.000 | Tools, I have brought it down to just a few tools

00:30:29.960 | to monitor both our cash flow and our portfolio.

00:30:32.320 | So just for example, I use Tiller for budgeting, although I was a mint person forever.

00:30:37.000 | That helps with budgeting.

00:30:39.040 | I use personal capital, similar to Allen, to monitor my overall portfolio.

00:30:43.200 | But I also, like many of you, have a self-built Excel file

00:30:47.360 | that I created many years ago and I keep tweaking.

00:30:50.080 | And now I have it linked to a service called Why Sheets

00:30:52.760 | that just provides pricing and dividend data that I will never let go.

00:30:57.240 | And evaluation.

00:30:58.800 | So now I use new retirement to build a fairly sophisticated plan

00:31:04.080 | with a bunch of well thought out assumptions.

00:31:06.920 | And it's all based on assumptions now.

00:31:08.920 | But that's similar to what I did when I planned a price target of fair value

00:31:12.000 | to determine if if we can continue to live the retirement style that we like

00:31:16.720 | and not outlive our assets.

00:31:18.920 | I also use e-money with Fidelity for a double check.

00:31:22.520 | And I still question myself whether I should consult with a financial advisor,

00:31:27.680 | maybe a fee only advisor once a year just to confirm our plan.

00:31:31.080 | So in summary.

00:31:34.240 | Let's see if I can find the summary.

00:31:39.640 | What's the difference?

00:31:41.560 | I'm just going to read the slide and I'll let you guys read the slide.

00:31:44.880 | So an active portfolio management versus retired passive investor.

00:31:49.400 | I focused on a rigorous investment process.

00:31:52.800 | Bogle headway use a simplified process, which I find much easier.

00:31:56.880 | Quality back then meant finding high quality companies.

00:32:00.840 | I showed you all the things we did to evaluate.

00:32:03.160 | Now I use a highly diversified passive ETFs or funds.

00:32:06.600 | I think I'm leaning more towards ETFs just to minimize my cost valuation.

00:32:11.680 | I had to do a number of methods to determine fair value and price target.

00:32:14.560 | They included assumptions.

00:32:16.440 | Now I use proper asset allocation to minimize our taxes balance.

00:32:21.480 | I set up a portfolio with the right mix, including appropriate sectors.

00:32:25.400 | Here, balance includes.

00:32:27.880 | Guess what?

00:32:28.840 | Never time the market.

00:32:30.920 | Stay the course by rebalancing annually only if necessary.

00:32:34.320 | So with that, I will lead us to the question and answers,

00:32:40.000 | which is the next slide.

00:32:41.720 | And Alan, I think I'm going to let Chris go ahead with our canned questions first.

00:32:46.400 | If that. Yeah, that's great.

00:32:49.080 | Fantastic, Betsy.

00:32:51.040 | It's really interesting to see how the the Wall Street

00:32:54.720 | insider sausage is made behind the scenes.

00:32:57.680 | And there it is.

00:32:59.680 | That's that's a cookbook.

00:33:00.720 | That's a recipe right there for any of you.

00:33:02.720 | Absolutely fascinating.

00:33:04.920 | I wonder how many active managers, you know, any other active managers

00:33:09.120 | in retirement who have embraced passive.

00:33:11.240 | Investing over that file or similar.

00:33:14.440 | They're all telling me to go to hell.

00:33:20.040 | Now, I'm just that's that's basically the ones who are still working in the business.

00:33:23.240 | I have not.

00:33:24.080 | I actually tell you the truth.

00:33:25.360 | I'm I'm the my colleague does use a number of ETFs

00:33:30.400 | to use for his portfolio just because we find that

00:33:34.000 | it was a stressful position.

00:33:37.720 | And a lot of us are just done with it, you know, so well.

00:33:41.040 | Yeah. Right.

00:33:42.800 | Before we get on to the questions, I was going to point out.

00:33:44.720 | Interesting. Today, I was walking and listening to the current

00:33:48.720 | Morningstar Longview podcast, and they had on.

00:33:51.720 | You may be familiar with this individual from Wasatch Global Investors

00:33:54.920 | based in Salt Lake City.

00:33:56.880 | They had the CEO, J.B.

00:33:59.280 | Taylor, who is a small cap fund investor talking about his process,

00:34:03.360 | their process for stock picking.

00:34:05.520 | Quite interesting with Ben's interviewing him.

00:34:08.360 | That's cool. Yeah, I do know of James.

00:34:10.840 | Yes, I have met him.

00:34:12.400 | He's a growth guru.

00:34:13.360 | He's more growth. But yes, I have more growth focus.

00:34:16.480 | Yeah. Yeah. All right, Chris.

00:34:19.240 | OK, we'll start with the ones that she

00:34:22.360 | prepared for me, and then we'll get into some of the ones.

00:34:26.760 | Thanks, everybody, for hitting the chat.

00:34:29.000 | And we'll get to those for sure.

00:34:31.120 | So, Betsy, we've been in our household.

00:34:35.360 | Vanguard passes investing zones, always known as the evil empire.

00:34:39.800 | Yes. So how are you going to turn your back on active investing,

00:34:44.200 | especially in the small companies you've invested in for years?

00:34:47.800 | That's a great question.

00:34:49.680 | Thanks. I thought so.

00:34:52.360 | Yes, I Vanguard was always known as the evil empire and

00:34:56.600 | and they continue to gain assets and continue to gain assets

00:34:59.760 | as as active managers continue to watch.

00:35:02.000 | And that's why I think you see Fidelity and T.R.O.

00:35:04.280 | take a take a bit into that that foray.

00:35:07.480 | So for me, I'm not really turning my back on active investing,

00:35:12.400 | but I just know that.

00:35:14.800 | What it takes to pick good stocks, as far as my mentality goes,

00:35:19.160 | I don't have access to the people, to the tools, to it,

00:35:23.840 | to the to what I needed to do for a deep dive into small companies.

00:35:27.200 | Now, that being said that I still own a few names to this day.

00:35:31.480 | But just like the market constantly change, so do companies.

00:35:35.240 | And I know there's going to be a point where I can't follow it as closely

00:35:38.440 | and tell you the truth. I just don't want to.

00:35:42.080 | Good. OK, so what do you tell someone

00:35:47.080 | who wants to or desires to pick their own stocks

00:35:49.920 | instead of investing in an index?

00:35:51.880 | I'd say good luck.

00:35:53.480 | I'm just kidding. I'm just kidding.

00:35:56.200 | There there's definitely opportunities to find,

00:36:00.960 | especially in small companies, an advantage over the market.

00:36:04.200 | I do believe if you follow a company closely and maybe you have access

00:36:07.720 | to Yahoo Finance and Google Finance, that you could probably do a decent job.

00:36:11.160 | And sometimes it's just a hobby for people.

00:36:13.600 | So go go for it.

00:36:15.160 | But that being said, I truly believe, and especially as I've learned,

00:36:19.040 | that index investing, you're going to get a solid return over the long term.

00:36:25.640 | It's a buy and hold.

00:36:27.360 | And I believe in it. I believe in those returns.

00:36:29.960 | And you can't go wrong with a nine percent, nine, 10 percent return

00:36:34.200 | in an index investment.

00:36:37.400 | Well, like you said, you guys had a good year and you're six percent over the index.

00:36:41.200 | So that's but that's a lot of work to get to be six percent over.

00:36:45.520 | So and then we lost we lost the year before.

00:36:48.520 | So, yeah, so it's just it's just super hard.

00:36:51.360 | And you had you had access to the tools faster.

00:36:55.560 | Yes. Like Yahoo and others aren't as fast as Bloomberg.

00:37:00.240 | We had news.

00:37:02.600 | I'll tell you right now, anything you see on CNBC,

00:37:05.320 | we knew it three hours before you got told.

00:37:08.240 | So, yeah. Oh, especially in small, maybe not large.

00:37:12.600 | So we've got we've had 80 to 90 people on here.

00:37:17.760 | Can you give us a hot stock tip?

00:37:20.400 | A hot stock to follow the ball go ahead and win.

00:37:23.440 | All right. So it's only been a little over a year

00:37:30.480 | that you began following the bottle head method.

00:37:33.960 | So are you there's two parts of this.

00:37:36.520 | Are you truly there?

00:37:38.720 | Meaning do you say your portfolio totally looks like a like a bottle?

00:37:43.400 | Yeah, no. As Alan or any of you

00:37:47.960 | probably know, when you

00:37:51.160 | adopt a portfolio of one hundred and fifty stocks and you adopt

00:37:55.320 | one hundred bonds, there's no way I can change.

00:37:59.600 | Although I would love to change in a day

00:38:02.960 | to get everything moved over.

00:38:04.120 | I have been moving towards that way.

00:38:05.840 | I bet you don't take me at least three, if not five years,

00:38:09.080 | if not 10 years to become completely vulnerable.

00:38:11.280 | Well, that relates to a question that Steve had, you know,

00:38:14.360 | that we have a big tax bill.

00:38:16.040 | If you just converted everything over and sold everything off.

00:38:18.640 | You're exactly. Is there anything else to that?

00:38:20.640 | I mean, some of some of those sales weren't necessarily taxable.

00:38:23.880 | Is that true or?

00:38:26.280 | It is true. It is true.

00:38:27.800 | I thought it was a mix.

00:38:29.480 | It was a mixture because my financial advisor

00:38:32.360 | not only had taxable money, he had tax deferred money.

00:38:36.400 | And I believe I ran my small, very small Roth at the time.

00:38:41.760 | And and then, of course, my company had a lot of other products

00:38:46.040 | that they were managing for us.

00:38:47.960 | OK, so with the Bogle method, is there

00:38:51.560 | is there anything you see for improvement with this methodology?

00:38:54.760 | Well, I'm glad Lady Geek was on here earlier and I will bring her up

00:38:59.160 | because as I told her and she and she admitted that the Bogle

00:39:04.200 | head site was created as a billboard site many, many years ago.

00:39:08.720 | And right now I'm lost.

00:39:11.400 | I'm a little lost.

00:39:12.440 | So I find myself, as you all feel as an analyst.

00:39:17.080 | I find a link and then I go to the next link and then I go to the next link.

00:39:20.680 | And but the next thing you know, it's two hours later.

00:39:23.320 | And I didn't consolidate my brain.

00:39:25.400 | So I request that maybe we get a millennial.

00:39:29.520 | I Alan, you took the poll.

00:39:31.000 | There's hopefully one person who's early retired.

00:39:33.440 | Maybe they can help us develop a more simple.

00:39:36.480 | I mean, I actually even went with your suggestion out

00:39:39.720 | and looked at the tools provided, you know, the financial tools.

00:39:42.840 | And that's even that section is kind of tough to to figure out.

00:39:47.160 | If I can interject for a minute,

00:39:50.080 | I think a good starting point for the basics is the Bogle

00:39:52.800 | has university that has taken place the last two years at the conference.

00:39:56.560 | They're concise, short lectures covering specific topics,

00:40:00.880 | especially the Bogle has one on one for beginners.

00:40:03.560 | And then the Bogle has five on one that they did this past conference

00:40:07.360 | for more advanced topics.

00:40:08.560 | But yes, the the wiki and the and the Bogle has website

00:40:11.520 | can be certainly be overwhelming.

00:40:12.880 | You can really go down the rabbit hole.

00:40:14.320 | Well, there's a and if there's any other consolation,

00:40:18.600 | I was a civil engineer working for a consulting firm

00:40:22.600 | for thirty five years and and our website stunk.

00:40:27.600 | I mean, we couldn't find anything on it.

00:40:29.720 | We had mountains and piles of information and things.

00:40:34.600 | But so they they they need to be updated in general.

00:40:38.520 | All of them do. Periodic.

00:40:40.880 | You know, it's just another tool.

00:40:42.880 | It's like going going through your, you know, your desk

00:40:46.120 | and cleaning out the books you don't need anymore.

00:40:49.440 | You know, so one last question that I got.

00:40:53.560 | So retirement so far, what's your biggest eye opener, Betsy?

00:40:57.960 | Like all of you,

00:41:00.600 | let's Bogle heads were savers, right?

00:41:02.800 | We don't like to spend money.

00:41:04.640 | And it's been so, so tough for me to let those dollars go.

00:41:09.280 | So to go from accumulation all those years

00:41:12.360 | and not hope the young people hear it to distribution, it's scary.

00:41:16.440 | And you and for some reason you're not thinking you have 30 years.

00:41:20.840 | You you think that you still have another hundred years for some reason.

00:41:23.920 | I don't know my brain.

00:41:25.800 | And and you need to be allowed to spend money.

00:41:28.800 | And it's tough.

00:41:31.280 | Betsy, for what it's worth,

00:41:33.440 | I did a column about 10 years ago for Forbes on that exact topic,

00:41:39.480 | switching gears, going from saving to spending.

00:41:43.560 | And I interviewed a lot of people for it and Bogle heads.

00:41:47.720 | And I was not unique.

00:41:50.240 | I found out that a lot of people really have a problem.

00:41:54.480 | And I think the big problem is we don't know how long we're going to live.

00:41:58.600 | If we did, we could divide

00:42:01.560 | and we would know the answer, but we don't.

00:42:03.960 | And the fear of the fear of running out of money is after saving

00:42:09.080 | all your life to have a good retirement.

00:42:12.520 | And then you get there and you're afraid to spend it.

00:42:14.760 | So it's a it's a common problem.

00:42:18.000 | And I was guilty of it.

00:42:19.920 | My editor at Forbes was approaching retirement.

00:42:25.000 | She knew I was already retired.

00:42:26.800 | So she asked me what it was like.

00:42:29.080 | And I said, well, that's a good topic for an article.

00:42:31.880 | And so then I started interviewing the

00:42:34.680 | the members and found out that I was not the only one

00:42:39.640 | that was really worried about it.

00:42:41.000 | So, yeah, you're not alone, Betsy.

00:42:43.640 | Thank you. Thanks, Mel.

00:42:46.880 | We're trying to spend honestly.

00:42:50.480 | So you want me to

00:42:55.400 | read through some of the questions or you want to take some or

00:42:58.200 | why don't we alternate

00:43:01.320 | between people who want to raise their hand and ask a question?

00:43:04.280 | And then I haven't been following the chat that closely, but maybe

00:43:08.600 | some of my co-coordinator colleagues can can read them off as well.

00:43:12.160 | But let's start.

00:43:12.640 | If anybody has a question they want to ask live, raise your hand, please.

00:43:16.520 | Don't be shy.

00:43:20.320 | This will only be viewed by a few thousand people.

00:43:22.520 | Yes, Russ.

00:43:29.480 | Russ, you had your hand up.

00:43:34.480 | Yes. Oh, really?

00:43:37.440 | Welcome from Wharton, Colorado.

00:43:39.640 | Hey, first the snow tonight.

00:43:41.760 | That's what I hear anyway.

00:43:43.720 | And the wife and I were both 76.

00:43:47.480 | We've been retired.

00:43:48.600 | We're both retired military and used TSP and all that,

00:43:52.920 | which was in way index funds.

00:43:55.400 | And what I want to say is I use Quicken

00:44:02.560 | and they've got a planning function in there, it's really great.

00:44:06.960 | And, you know, I can say, you know, we're going to do this.

00:44:09.400 | We're going to do that.

00:44:10.240 | We want to go there, put money in it and say, OK, what's going to happen?

00:44:15.120 | And they take what we have, our assets, checking accounts, everything.

00:44:21.160 | And then they run it through

00:44:24.360 | and say, OK, here's a graph and this is.

00:44:26.440 | You're not going to go broke in your lifetime.

00:44:29.280 | That's that's what I want to hear, because I plan to live to 100.

00:44:33.000 | That's what I believe.

00:44:34.800 | I, you know, I can put anything in there.

00:44:36.840 | I can do all kinds of manipulations.

00:44:39.480 | The other thing is we are pretty much into Vanguard

00:44:45.080 | time dated funds, mostly somewhat

00:44:49.840 | 2065 for the money that I don't think we'll ever use.

00:44:54.080 | And then we've got Ross on the side of that.

00:44:57.320 | And then it's still I still have 20, 20 and 26.

00:45:02.400 | Well, I've got 20, 22, 20 also

00:45:05.440 | because, you know, it's sort of more safe because there's more bonds in it.

00:45:11.840 | And I like the 2065 because it gives me a little exposure

00:45:15.640 | to the international stocks, not so much of international bonds.

00:45:20.800 | So I wanted to ask

00:45:24.440 | with all this money in the 2065 and

00:45:29.840 | it's really hard to like move around things.

00:45:34.200 | So what's your position on moving some money from the 2065

00:45:40.520 | or any of the Vanguard funds?

00:45:42.040 | If you look at the makeup of it, they've got these

00:45:45.960 | bond funds and stock funds and moving into their ETFs.

00:45:52.240 | So, yeah, it's you're playing the market more.

00:45:58.120 | But it's it gives you ability to,

00:46:01.120 | you know, if it's down, whatever.

00:46:05.640 | And that's the other thing is we keep we're 76 years old.

00:46:09.880 | So we keep two years of mandatory

00:46:14.120 | required distributions in a money market fund.

00:46:17.240 | So it's safe. It's cash in the bank.

00:46:20.840 | It's cash.

00:46:22.680 | So if the market tanks, we got two years at least of

00:46:28.280 | we don't have to worry about us.

00:46:30.360 | So what we did in 20 was like 2020 and everything is like, yeah, OK, whatever.

00:46:35.560 | If I can interject for a moment, Ross, I think you're talking about target

00:46:39.800 | date funds, I presume, which all the major fund families offer

00:46:44.160 | and with varying types of asset allocation.

00:46:47.000 | So it's only this one that we're there managing the basically the overtime,

00:46:53.160 | how the allocation changes, typically, you know, increasing the bonds

00:46:56.840 | and becoming more conservative.

00:46:58.560 | You're talking about breaking it up into this individual components

00:47:01.320 | and and managing it yourself.

00:47:03.360 | Is that what you're referring to? Correct. Correct.

00:47:06.000 | Yes, absolutely.

00:47:07.800 | I have thoughts on that.

00:47:12.800 | We'll let people speak, but my thoughts would be as you get older.

00:47:15.960 | I'd love to hear if you if just my own personal thoughts

00:47:19.360 | is that the beauty of a target date fund is it's a sentence, forget it.

00:47:23.120 | If you agree with the asset allocation and the glide path,

00:47:26.080 | you go out and live your life, let the pros manage it.

00:47:29.840 | Now, if you get older, if you're concerned about cognitive decline

00:47:33.040 | or other issues, you want to start taking more responsibility

00:47:36.160 | where you're more agonizing and potentially losing sleep at night,

00:47:40.440 | trying to figure out what to do.

00:47:42.080 | My philosophy is to simplify things as I get older, not make them more complicated.

00:47:46.000 | That's my two cents worth.

00:47:47.760 | OK, thank you. I appreciate it.

00:47:53.080 | And so I was just going to say, I'm too new to the game.

00:47:56.160 | I've never I've never invested in target funds.

00:47:59.240 | I know that they offer them in my 401k.

00:48:01.760 | But I always felt that that was a I don't know, a weak way of investing

00:48:06.280 | just from my standpoint, because I was an active manager.

00:48:08.880 | So I felt like I always wanted my hands in the game.

00:48:12.200 | But again, just like Alan said, as I get older, I need to simplify.

00:48:17.400 | And I get so frustrated that the U.S.

00:48:20.320 | government has created this tax system that we have to pay attention to.

00:48:24.280 | Now, when I was making money, I didn't have to worry about it so much.

00:48:27.040 | But now we have to figure out this asset allocation

00:48:30.080 | and maybe the target date funds are perfect for you.

00:48:33.560 | But again, I don't feel like I have the experience

00:48:36.160 | to explain to you to jump in or out or market time.

00:48:39.960 | I've I've got a set number of ETFs that I feel very comfortable holding.

00:48:45.800 | And you would know.

00:48:47.280 | I mean, it's a lot of Vanguard ETFs.

00:48:49.240 | There's some Invesco ones I found.

00:48:51.640 | I actually sort now on net expense ratio and find a few.

00:48:55.880 | And then I go with the cheapest one.

00:48:57.920 | And if the holdings really don't, they don't differ quite that much.

00:49:02.560 | I don't I don't know how they get away with charging 20 basis points for one

00:49:06.040 | and ten, maybe they're a little bit more specialized.

00:49:07.840 | But right now, that's what I'm doing.

00:49:09.840 | Yeah, there are some S&P 500 index funds

00:49:13.200 | that still charge like upwards of 75 basis points and get away with it.

00:49:17.240 | I don't know. Well, we're pretty much Vanguard.

00:49:20.640 | Yeah, we're yeah, we're all Vanguard.

00:49:23.320 | Right. Oh, yeah.

00:49:25.160 | All right. We have I think to tend to you've had your hand up.

00:49:28.560 | And thank you, Russ, for that topic.

00:49:31.440 | Oh, yeah. Yeah. Thank you.

00:49:32.960 | And to tend to tend to your muted.

00:49:35.400 | How do I get in there?

00:49:37.200 | Can you hear me?

00:49:40.440 | Oh, yes. Yes. Yeah.

00:49:42.360 | OK. Thank you, Betsy.

00:49:44.960 | What a nice presentation.

00:49:47.120 | The point I thought I know I see most of the people like me.

00:49:52.960 | Bold headed is not bold headed.

00:49:55.640 | Bold headed is that X is the situation.

00:49:59.400 | Now, when you do what you were talking about.

00:50:03.480 | Active or ETF and all the game

00:50:09.720 | I like to play and I'm playing it with individual stocks.

00:50:14.960 | Which was the one subheading in your topic

00:50:17.920 | gives you control to maneuver this

00:50:21.800 | tech situation like last year when things were bad.

00:50:26.320 | I look at it.

00:50:27.800 | How much red I have or how much green I have.

00:50:30.280 | Then I just bing bing bing.

00:50:32.880 | My goal was to bring down

00:50:36.600 | my income, otherwise it goes Medicare goes up and all that.

00:50:42.080 | So to that end.

00:50:45.640 | I know you can do that with ETF some easily,

00:50:49.640 | but individual stocks takes the advantage because, you know, the date.

00:50:55.000 | Also, you know, I know it required a little active management

00:50:59.440 | because, you know, the date and you said, OK, I want to sell it

00:51:02.960 | after January or whatever. And.

00:51:05.560 | As you know, all of you guys know,

00:51:09.480 | tax is so low on a long term, it's like a rainfall for all of us.

00:51:14.080 | What do you think of that?

00:51:16.320 | Well, I don't know if I'm the right person to ask that question.

00:51:20.640 | I might have Alan interject.

00:51:24.520 | So your basic question is, it's better to stay with individual stocks

00:51:29.400 | when it comes to the tax situation versus our control over it.

00:51:33.400 | I actually probably agree with you.

00:51:39.000 | I haven't I haven't seen

00:51:41.400 | the tax situation with my ETFs right now.

00:51:45.040 | I keep all my individual stocks,

00:51:48.400 | my growth stocks in my taxable accounts.

00:51:51.480 | And you're right. I have more control. I decide when I sell them.

00:51:54.320 | Yeah, I don't have them telling me when they're selling.

00:51:57.040 | Yeah, but I am.

00:51:59.120 | I am going to get in trouble because I do use.

00:52:01.400 | I have to. I don't have my money's not.

00:52:04.480 | I mean, we're split 50/50.

00:52:07.200 | I think we did a good job with our tax deferred and our tax

00:52:09.600 | efficiency and our taxables.

00:52:11.480 | But I still have to have a certain percentage in each of the ones

00:52:15.560 | that I haven't quite figured out how to balance because I've got so many losses

00:52:20.240 | in these bond positions that it'd be silly for me to sell right now

00:52:25.040 | because I just like, well, first of all, I don't like selling at a loss

00:52:29.080 | on names that I know will gain because their thoughts.

00:52:32.000 | No, but I'm sure you know it more than me.

00:52:34.840 | You can buy in kind next day.

00:52:38.280 | Yes. Yes.

00:52:39.600 | Yeah. And you just see one turnpike.

00:52:41.440 | You buy California turnpike or something like that.

00:52:43.720 | You're sure it's true.

00:52:45.080 | But I, I, I just I don't know.

00:52:47.320 | I decide that it was.

00:52:50.600 | Active men and men who want to spend the time.

00:52:53.600 | So that's my second question, because I'm I'm all older than you guys.

00:52:59.320 | And as I hear the word from Alan, simplification.

00:53:03.960 | Yes. But I'm sure all of us gets a little.

00:53:08.400 | I don't want to use the word cake, but jolly out of doing our own thing.

00:53:13.520 | My broker said, that's your

00:53:16.960 | morphine, OK?

00:53:18.440 | Otherwise, I go crazy in the morning if I don't do a couple of trade or read.

00:53:21.920 | So and still make the money or at least most of the time, whatever.

00:53:27.160 | So point is, the next question is

00:53:33.320 | the simplification.

00:53:34.760 | Yes. You can buy four or five.

00:53:36.680 | Kipling are also right.

00:53:38.320 | Want the best growth and all lowest expense ratio and buy those.

00:53:42.800 | That's fine.

00:53:44.120 | But that doesn't get you anything.

00:53:46.360 | You you can do some tax advantage there.

00:53:49.560 | If you write the date that you bought it, it's on the screen and sell it.

00:53:53.840 | Maybe whatever the gain, you got it.

00:53:56.200 | Maybe it does.

00:53:57.320 | So any thoughts on.

00:54:01.360 | Stay 60 to 80 percent.

00:54:05.120 | Short of active and 20, 30.

00:54:11.200 | I have something fun, which is already on.

00:54:15.000 | I don't even touch.

00:54:16.440 | It came from old fidelity to swap, whatever.

00:54:18.680 | So that's my simplification.

00:54:21.160 | Any thoughts there?

00:54:23.120 | Let me interject, I guess if I can speak.

00:54:25.320 | I guess you're talking about the ability to tax loss harvest, obviously.

00:54:28.840 | When you have buildings that have declined

00:54:31.920 | and that that's a very well accepted bogal head philosophy.

00:54:35.320 | And if you exchange it for something similar,

00:54:38.640 | you know, but not exactly the same, you're not you're going to have an issue

00:54:41.920 | with the IRS. Yeah.

00:54:44.960 | So if if if people want to do that, there's actually there are firms now

00:54:49.240 | like I think maybe Wellfront, Betterment, others that actually do

00:54:52.720 | automated tax loss harvesting for you with a basket of stocks.

00:54:56.920 | That's active, very active.

00:54:58.240 | But relatively low expense ratio.

00:55:00.400 | But the problem is you're you're stuck.

00:55:03.040 | You're locked into that long term because ultimately you're going to have

00:55:06.000 | embedded capital gains.

00:55:07.480 | It's going to be harder and harder to get out of long term.

00:55:10.160 | You need to think about what happens to either you or those who inherit the assets.

00:55:14.920 | Obviously, upon your death, it gets a stepped up cost basis

00:55:18.320 | and that'll wipe out any embedded gains if that's what you want to aim for.

00:55:22.520 | But keeping a small portion, if you like to, you know, play around

00:55:27.720 | and it's a hobby for you to pick out and play with individual stocks.

00:55:31.760 | Limited, I say, five to 10 percent of your portfolio

00:55:36.400 | is your the fun part of your portfolio that'll scratch that itch

00:55:40.520 | and the rest leave it in index funds.

00:55:42.760 | That way you kind of get the best of both worlds.

00:55:44.920 | You can also tax loss harvest with with index funds.

00:55:48.400 | If you have sector funds or a large cap, switch S&P 500

00:55:52.400 | for the total stock market or vice versa.

00:55:54.880 | There's tons of stuff in the Bogleheads wiki about ways to accomplish that.

00:55:58.800 | Where do you get that?

00:56:01.840 | I'm sure Lady Geek can put something in the Bogleheads wiki

00:56:05.840 | has a lot of resources talking about tax loss harvesting,

00:56:10.400 | and that's all over the Internet.

00:56:11.480 | You can get that anywhere on the Internet.

00:56:12.920 | There's videos that talk about that as well.

00:56:15.440 | One thing I'm going to interject and then I'll get to you, Mel,

00:56:19.160 | is talking about, you know, stock picking and such.

00:56:23.320 | Even if you have small cap.

00:56:25.040 | So, you know, there's been a lot, Paul Merriman and others

00:56:27.600 | who've advocated small cap value is being long term,

00:56:30.880 | potentially outperforming the S&P 500.

00:56:33.880 | The beauty of having, say, a total stock market fund,

00:56:37.520 | you have to worry about the small caps who grow and mature

00:56:40.840 | that are very well run, evolve, become the mid cap, stay in the index.

00:56:44.520 | You don't have to worry about anything happening there.

00:56:46.920 | And later on, if they do extremely well, they may move up

00:56:49.680 | and become large cap stocks.

00:56:51.280 | So that's one thing I wish I had done.

00:56:53.240 | I have a very small percentage of my total portfolio.

00:56:55.720 | That's actually the total stock market index fund.

00:56:58.400 | Instead, I have a slice and dice portfolio.

00:57:01.200 | But I've added the in this case, the Vanguard

00:57:04.600 | completion index or the extended market index.

00:57:08.720 | There's everything but the S&P 500.

00:57:10.400 | So I've consolidated my small and mid a little bit that way.

00:57:13.400 | But the beauty of having large index funds

00:57:16.840 | such as a total stock market index for total international,

00:57:20.680 | you don't have to worry about the gyrations amongst the asset classes

00:57:24.000 | within that fund.

00:57:25.840 | They do what they do.

00:57:26.680 | The best ones will float.

00:57:27.880 | The cream will flow to the top.

00:57:29.640 | Others will drop off.

00:57:31.360 | And it's going to have minimal tax implications for you.

00:57:34.560 | And it's OK to pay taxes.

00:57:36.240 | If you're paying taxes, it means you've made money somehow.

00:57:38.560 | And we shouldn't regret that.

00:57:42.120 | It's just so much.

00:57:44.720 | And I will just interject that, yes, I still have 20 stocks

00:57:49.560 | that I am following, but I've whittled it down.

00:57:52.840 | So but it's still a lot of fun and I probably can't give it up, but I'm trying.

00:57:56.640 | And every year it'll get worse.

00:57:58.680 | It'll get I know it'll happen.

00:58:01.160 | You got to wean her off her habits.

00:58:02.960 | OK. OK, Mel, your hand is up.

00:58:05.880 | Yeah, I just wanted to thank.

00:58:09.360 | I have to run, so I want to thank Betsy for a very informative

00:58:13.040 | and interesting evening.

00:58:15.160 | And thank you for all you do.

00:58:18.080 | We'll see you all later. Take care.

00:58:20.720 | Thank you. Thanks, Mel.

00:58:22.720 | By the way, for those of you who may not know, Mel was a big advocate.

00:58:25.560 | They call it Mel's Unloved Midcaps.

00:58:27.880 | For many years on the Bogleheads Forum and elsewhere,

00:58:30.280 | he basically spouted about what a wonderful sector it was, just the midcaps.

00:58:35.000 | And I think they have long term done done quite well.

00:58:37.760 | I don't know if it's outperformed the S&P 500 or the total stock market long term,

00:58:43.080 | but it's certainly an under an underappreciated

00:58:46.680 | segment of the market that's worth looking at.

00:58:49.880 | Definitely, definitely.

00:58:53.400 | I call them midcaps and it's great place to be because they've outgrown

00:58:56.680 | the small cap status and they're not fully large

00:58:59.720 | and you could have a ton of growth potential through them.

00:59:02.000 | All righty, Pat, your hand is up.

00:59:06.840 | Yes. When I first started getting

00:59:11.160 | getting into investing, I didn't really know a lot about the index funds

00:59:15.720 | because it was quite a few decades ago.

00:59:18.480 | But I've definitely kept one of my actively managed funds

00:59:23.160 | because it has done extraordinarily well and continues to do so.

00:59:26.520 | And I also found that when the market tanked,

00:59:30.320 | what went down in that fund, you know, the percentage went down

00:59:35.280 | was a fraction of what the index funds did.

00:59:39.160 | So sometimes, like you said, with the small cap,

00:59:42.960 | sometimes, you know, the act of investing can can contribute.

00:59:48.160 | Well, I think the same thing kind of happens

00:59:50.240 | with protecting.

00:59:53.720 | I'm definitely a bogo head and that is, you know, what I'm doing now.

00:59:58.560 | But I'm going ahead and keeping this one fund.

01:00:02.080 | And just when I saw it, it only went down a fraction

01:00:05.760 | compared to the dive that all my other index funds took.

01:00:09.680 | You know, it makes me think.

01:00:12.760 | Over what period of time was that a short term comparison or long term

01:00:17.680 | that obviously different asset allocations and sectors

01:00:21.680 | will behave differently in the short term.

01:00:24.040 | But if you're going to hold on to something long term, you want to know

01:00:27.320 | how well correlated it is with the total market.

01:00:29.640 | And is it really providing you any benefit over the long haul?

01:00:33.760 | Yeah, this I purchased it in 1992 and I still own it.

01:00:38.160 | And I think it was during the last decade.

01:00:43.000 | I can't remember whether it was 2008 or what.

01:00:45.520 | But when I saw the dive that it took

01:00:48.920 | and it never, you know, when the market took a dive,

01:00:53.560 | this this actively managed fund never even came close

01:00:57.560 | to plummeting to the extent I was fortunate because I was working.

01:01:02.720 | And I just left everything alone.

01:01:05.680 | So I ended up when the market came back.

01:01:08.000 | I was way ahead of the game because I was buying bargains.

01:01:11.640 | But I just was really amazed, you know, how,

01:01:16.400 | you know, when when my other stuff was just tanking,

01:01:19.760 | you know, 50 percent and whatever, this was just like a fraction.

01:01:23.400 | Yeah, it went down, but it wasn't that.

01:01:27.040 | Horrible, dramatic thing that everything else was doing.

01:01:32.320 | All right. So he's asking what the fund is.

01:01:33.920 | Of course, you want to see if it has holdings that are comparable

01:01:36.920 | to what you're comparing it against, if it's a bond fund or something else.

01:01:40.320 | You know, I'll tell you, I'll tell you what the fund was.

01:01:43.720 | Fidelity Contra Fund. OK.

01:01:46.360 | Yeah, that's I think, well, long term.

01:01:50.560 | All that was actively manages relatively low

01:01:53.600 | expense ratio for an actively managed fund. Yes.

01:01:56.200 | Interesting. Yes.

01:02:00.280 | And of course, again, to remind everybody, we can't give specific custom

01:02:04.200 | advising investment advice for everybody here.

01:02:07.720 | It's just speaking in generalities. Miriam.

01:02:10.280 | Yes, I was just wondering what the.

01:02:15.280 | Equity bond ratio is Fidelity Contra Fund,

01:02:19.840 | because, for example, during the Great Recession.

01:02:23.000 | My Vanguard Wellington, which is an active fund, a 60 40 fund.

01:02:30.000 | Did not lose much at all either.

01:02:32.440 | But it was 60 percent stocks and 40 percent bonds.

01:02:36.280 | Fidelity Contra did not do the same as my stock funds,

01:02:40.640 | and it did not perform the same as bond funds

01:02:43.200 | because the asset allocation was different.

01:02:45.400 | And also some funds have, especially if they're T.R.O.

01:02:49.920 | price funds, which I owned at that time.

01:02:52.560 | They have what we call the kitchen sink put into them.

01:02:55.800 | T.R.O. price funds do well because they add puts and calls.

01:03:00.200 | Hedge funds, foreign stocks.

01:03:02.840 | They put a lot into even their target date funds.

01:03:06.040 | They put a lot of that stuff in there, specifically so that when the market

01:03:10.680 | changes, you will not lose your your principle.

01:03:14.280 | You will stay up ahead is what they say in their prospectus.

01:03:17.960 | The difficulty is that the expense ratio is so high.

01:03:22.160 | You will eventually lose what you gain in your expenses

01:03:26.840 | if you hold those funds.

01:03:29.320 | I might again interject.

01:03:32.360 | I'm sorry for a moment on this type of thing.

01:03:34.800 | I don't think we have time.

01:03:35.880 | I could pull up Fidelity Contra fund and share that with you on the screen.

01:03:39.360 | But, you know, who does a lot of that is Rob Berger.

01:03:40.880 | I know Betsy is a big fan of Rob Berger's YouTube channel, as am I.

01:03:44.160 | And he's really wonderful.

01:03:45.720 | He's he's been the last two Boglehead conferences.

01:03:48.160 | He pretty much embraces the Boglehead philosophy, plus or minus.

01:03:51.360 | And what he does now every other week is does a live YouTube

01:03:56.480 | and Facebook session for two hours, taking questions and comparing funds

01:04:00.840 | and talking about the pros, the cons, comparing their assets.

01:04:04.800 | And if you watch him, I think this is the sort of thing that he does.

01:04:08.920 | He also is currently compiling on his website, which I think Rob Berger dot com,

01:04:14.160 | a whole resource of tools,

01:04:17.040 | all the conceivable personal finance tools that are available,

01:04:22.720 | including links with screenshots of them, his comments on the pros and the cons.

01:04:28.240 | I actually mentioned that to Lady Geek, and she put a link to his website

01:04:33.040 | in our wiki because the Bogleheads wiki can't keep up to the extent

01:04:37.280 | that he's keeping up with this.

01:04:39.080 | And I encourage you all to check that out.

01:04:41.160 | It's Rob Berger dot com.

01:04:42.800 | And he's got a section there on tools that he's just now compiling,

01:04:46.600 | but includes new retirement, you know, empower formerly personal capital,

01:04:51.120 | a ton of others, and it's going to grow.

01:04:53.280 | And he says he's going to maintain that.

01:04:54.920 | So it should be a great resource. Yeah.

01:04:57.080 | I agree. Let me see if I can.

01:05:02.600 | My guys who are looking at the chat, we have any specific questions here

01:05:06.720 | that I have missed, per se.

01:05:08.960 | Somebody posted contra fund is pretty much almost 100 percent equity.

01:05:14.680 | Yeah, I think the thesis behind the contra fund was it was contrarian, right?

01:05:20.480 | It invested in things that were not momentum.

01:05:22.960 | So she was getting things very cheap, probably cheaper

01:05:26.240 | as the market continued to go down, probably did very well.

01:05:29.080 | Yeah, I don't know if they did any type of things

01:05:32.280 | like shorting the market or anything else, any other type of fancy type.

01:05:35.800 | Roaches, I do have access to someone who's a big wig at Fidelity,

01:05:40.400 | so I could ask that question.

01:05:42.520 | OK, Greg, your hand is up.

01:05:45.480 | I do. Yeah. Thank you.

01:05:47.720 | I'm really curious.

01:05:49.160 | I got several responses to this, including from Chris, which I appreciate.

01:05:53.880 | But I'm not sure I understand the allegory.

01:05:57.040 | And maybe I'm just dense.

01:05:58.320 | But earlier you had a slide, some data and you said, bend the knee.

01:06:03.520 | And I know I understand bending the knee may be smart when you're lifting weights.

01:06:09.000 | But were you talking about lifting weights?

01:06:11.400 | I was. I was. OK.

01:06:14.600 | Those are just all the quotes came from different parts of my life.

01:06:18.640 | So I remember when we were when I was going through my physical therapy program,

01:06:22.400 | the way to actually transfer patients.

01:06:25.160 | You had to bend the knees always to use your quads

01:06:28.240 | because the quads is the strongest muscle in the body and then turn.

01:06:32.600 | So you only transfer patients from, you know, beds to chairs.

01:06:37.040 | The way that it was to keep them close to your body.

01:06:40.000 | And people would sometimes the family member would just, you know,

01:06:42.640 | I'm trying to show you, but, you know, they never bend the knees.

01:06:45.600 | So I had to train them.

01:06:47.320 | So this does not apply to the financial.

01:06:49.760 | Oh, no. No.

01:06:51.680 | But every time I saw one of my colleagues go to pick up a bunch of papers or a box,

01:06:56.560 | I'd be like, hey, bend your knees.

01:06:59.640 | I have another question, if I could.

01:07:01.360 | I put it earlier in the chat.

01:07:03.040 | If I could move on to that. Sure.

01:07:05.480 | You mentioned that if a CEO moves from Medtronic to one of your companies,

01:07:10.920 | that that was a positive indicator for you

01:07:13.920 | because they might be able to grow the company. Right.

01:07:17.360 | But I'm thinking, wouldn't that be a red flag as well,

01:07:19.520 | or at least something you want to look into?

01:07:20.960 | Because there's a lot of CEOs that fail at certain levels.

01:07:24.640 | And the only place they can get a job is maybe at Company B, which is smaller.

01:07:29.440 | Well, what I would always do, Greg, is see

01:07:33.360 | where in Stryker or Medtronic or J&J that they led.

01:07:37.720 | And so if I had a company like

01:07:41.320 | the CEO from Phillips who ran the electromagnetic division

01:07:46.400 | and then my company, that's all my small company focused in on.

01:07:49.320 | I say, of course, I wanted them because they ran more money there

01:07:52.360 | at Phillips than they did with this company.

01:07:54.960 | So I had a ton of success every time.

01:07:58.480 | Yes, maybe some red flags on somebody just looking for a CEO position

01:08:03.160 | that didn't make sense in that area.

01:08:05.080 | But for me, it always turned out to be a huge positive.

01:08:07.960 | Ninety nine percent of the time.

01:08:10.400 | Thank you, sir, to me, it's great.

01:08:11.880 | It's not it's not the CEO of Johnson and Johnson.

01:08:14.720 | It's a division leader going from there to be a CEO of a smaller company.

01:08:19.600 | Yeah, that makes more sense, I think.

01:08:21.720 | Yeah, correct. Correct.

01:08:22.880 | Oh, yes. Oh, yes.

01:08:23.720 | Not to see if I saw the CEO of Johnson and Johnson, I'd be like,

01:08:26.960 | well, that would be a red flag.

01:08:29.200 | OK, well, that's that's one of the advantages, obviously, of having an index fund.

01:08:33.280 | There's no manager risk in terms of a manager leaving and management changing.

01:08:37.000 | It follows the index.

01:08:38.400 | Oh, yes. From time to time, the index might change.

01:08:41.280 | But that's just one less risk that you have to deal with and worry about.

01:08:45.960 | And there's a lot to be said.

01:08:47.360 | Again, as we get older, certainly for me.

01:08:50.200 | I like simplifying and anything that I don't have to worry about

01:08:53.240 | just makes my life easier.

01:08:55.360 | Well, Alan, I could chime in on that, too.

01:08:58.120 | I know Betsy went through a very tenuous, not tenuous, but

01:09:03.720 | long duration planning to retire for that exact reason,

01:09:09.680 | because she didn't want the whole thing to go in the tank when she left.

01:09:13.280 | So they hired a couple, they interviewed, they hired a couple of people.

01:09:17.080 | They let out the notification at the right time.

01:09:20.280 | And it was all about we're going to keep our process and we're not changing.

01:09:24.080 | Betsy's going to leave.

01:09:25.960 | And that's that's what people do.

01:09:28.000 | So don't freak out, everybody.

01:09:29.440 | But that that's a valid challenge.

01:09:32.800 | And she went through it correctly.

01:09:36.200 | Yeah, I think Morningstar actually tracks that.

01:09:38.200 | And one of the one of the measures they track is the team.

01:09:41.560 | Somebody posted a question here that I'll read about.

01:09:45.240 | What do folks think of Avantis ETFs?

01:09:47.520 | In general, they are actively managed, right, and lower cost

01:09:51.080 | and have somewhat different approach.

01:09:53.160 | So Avantis is kind of like, I guess,

01:09:57.040 | a kind of a spinoff from Dimensional Funds, the same concept

01:10:00.480 | where they're kind of indexy, but they have another process on top of that

01:10:06.760 | for their asset stock selection.

01:10:09.920 | What are your thoughts, Betsy, as how both of those operate in their approach?

01:10:15.560 | So I'll tell you right now, Alan, I'm not familiar with those ETFs.

01:10:20.200 | I'm focusing on

01:10:21.480 | the Vanguard's, the Invesco's, the

01:10:25.520 | that's another one.

01:10:27.280 | I found a couple.

01:10:29.680 | Franklin Templeton, I look for international,

01:10:32.640 | but I'm not familiar with Avantis.

01:10:35.320 | I'd have to look that up myself.

01:10:37.720 | And I don't and I don't know the Dimensional Funds.

01:10:40.240 | I think they were based on.

01:10:41.800 | Different types of strategies that I never paid attention to.

01:10:46.080 | Yeah, they were interesting.

01:10:48.320 | They start off mainly focusing on extreme small cap value,

01:10:51.680 | maybe somewhere between micro and small cap, focusing on value.

01:10:54.840 | And they're basically, I believe, following academic research

01:10:59.120 | coming out of University of Chicago and the Nobel laureates that

01:11:02.280 | that did that work that were consultants with them.

01:11:05.480 | I don't know how they perform long term,

01:11:08.160 | but I think they're pretty highly regarded in the industry

01:11:11.560 | as a way to kind of have a more or less an index approach.

01:11:15.360 | But with a little bit of an active tilt to it, that's still reasonably inexpensive.

01:11:19.320 | I personally don't own any of the funds, so I haven't followed them.

01:11:22.920 | Does anybody else own either

01:11:25.200 | dimensional or Avantis ETFs?

01:11:27.760 | Avantis, the guy who started Avantis broke away from dimensional.

01:11:31.280 | I think he was maybe even a co-CEO because he wanted to introduce ETFs,

01:11:36.160 | which initially Dimensional did not want to.

01:11:38.600 | Kind of like Bogle, just like Bogle didn't like ETFs.

01:11:41.760 | But eventually now Dimensional has had to come out with ETFs

01:11:44.720 | to try to maintain their business.

01:11:46.760 | But is anybody else using either of those funds?

01:11:48.960 | I don't even know how the active ETFs are doing.

01:11:54.520 | I mean, do you pay attention?

01:11:56.320 | I mean, except for the only one I know is Cathie Wood, right?

01:12:00.640 | We all know how that's done.

01:12:02.520 | By the way, Jay, your hand is still up.

01:12:04.040 | Did you have another comment, Jitendra?

01:12:06.360 | Did you have another comment, Jitendra, your hand is still up.

01:12:11.360 | Maybe not.

01:12:16.520 | Greg, your hand is up.

01:12:20.520 | OK, I'll persist here.

01:12:22.880 | There's a few really good questions back about 5.44 p.m.

01:12:27.040 | That's probably Pacific time.

01:12:30.480 | So you might want to go back.

01:12:31.320 | There's one from Steve that I was curious about, but I'll put in one of my own.

01:12:34.600 | And that's Steve Fenn for himself.

01:12:36.560 | Well, if you can read it for us.

01:12:39.560 | Just read it, Greg.

01:12:40.840 | All right. Well, I'll give you I'll give you a few here.

01:12:43.200 | Which small index do you follow and why in choosing your own funds?

01:12:49.200 | That's the part A. Part B is do you tilt a small value or other factors?

01:12:55.040 | So I know that's a very good question.

01:13:00.400 | I use the Vanguard. I use both.

01:13:02.720 | I use the Vanguard growth and I use the Vanguard value.

01:13:06.760 | I also have found this interesting ETF.

01:13:11.640 | The ticker is PSCT, tell you the truth.

01:13:15.760 | And the only reason why I use it is it's all small cap tech stocks

01:13:21.400 | and all of those tech stocks.

01:13:25.000 | We own half of those in the portfolio.

01:13:27.360 | So I called my tech analyst who still works for Eagle.

01:13:30.480 | And I said, do you recognize this?

01:13:33.280 | Are we still and he's like, oh, this is this is a great.

01:13:36.760 | He mentioned it as a great book.

01:13:38.200 | Now, the net expense ratio is a little bit higher.

01:13:40.560 | So I do do some specialized.

01:13:42.760 | I have and that's one of them tech.

01:13:44.880 | I do own a health care ETF and I'm not going to give you that one.

01:13:48.640 | I actually have to look it up in small cap.

01:13:51.760 | And then and what's the other small cap one that we've been using?

01:13:55.960 | I have to also look it up.

01:13:58.720 | But I'll make sure that.

01:14:02.120 | How much how much weight do you put into looking at the underlying index?

01:14:07.800 | I have. So in my equity, so in my equity portfolio right now,

01:14:13.400 | I just looked at this, I have 66 percent.

01:14:15.400 | I have. I believe I have 70 percent of that is towards large cap.

01:14:23.000 | But that's just because the mega caps have done so well.

01:14:26.480 | I am looking to readjust this.

01:14:28.400 | I have 25 percent in mid cap and then the rest goes in small cap.

01:14:32.120 | OK, I'll cut to the chase. Are you a factor believer?

01:14:35.160 | No, no. OK.

01:14:38.840 | So total market approach at this point. Correct.

01:14:42.320 | OK, I'd be glad to read a question from Steven who submitted this a while back.

01:14:47.440 | This one is due. OK, thanks, Alan.

01:14:50.520 | Knowing that you knowing what you know now about managing a portfolio

01:14:54.120 | in retirement, do you feel differently about the value of active investing

01:14:58.160 | during one's investing career?

01:15:00.640 | Are the potentially high gains in your active portfolio

01:15:05.040 | that would trigger taxes if you transition to a passive index

01:15:08.920 | portfolio worth it to most people?

01:15:11.040 | That's a good question.

01:15:16.280 | So I know that we would

01:15:18.760 | in small cap, Greg or Steve, I should say.

01:15:22.800 | Yeah, that's me. That's you.

01:15:25.720 | That's a great question.

01:15:27.680 | We did not have to worry about taxes as much as the large cap did.

01:15:32.720 | And the reason being and the reason being is that our turnover.

01:15:37.200 | Normally, we made sure that we matched some of our losses,

01:15:41.480 | our big losses with some of our big gains.

01:15:44.320 | So I know that tax at the end of the year for the mutual funds or whatever,

01:15:47.720 | or even even the SMAs could end up as a huge tax bill for some of the investors.

01:15:52.760 | I know for our actively managed, I'm sure there's many active managers

01:15:57.800 | who are now looking at this because that's one of the number one complaints

01:16:01.000 | is at the end of the year, they couldn't control their taxes.

01:16:03.760 | So either you owned us in a tax deferred product, which we would sell,

01:16:08.720 | or if you owned us in a taxable product that we would kind of monitor

01:16:13.360 | that tax situation. It was, again, much easier in small cap

01:16:16.960 | than it is in large cap. And would I recommend a.

01:16:20.200 | I don't think knowing what I know now.

01:16:24.320 | And because I have many friends in large cap,

01:16:28.200 | I would not recommend an actively managed large cap that just focuses on S&P 500.

01:16:33.560 | It's just too hard. It's it's I don't know.

01:16:36.280 | I just found the returns minimal in small cap.

01:16:39.720 | It's a different story and it would depend on the manager.

01:16:42.480 | And then I asked that question because I'm I'm early in my retirement

01:16:48.720 | and I I don't know, maybe 14 years ago or so

01:16:53.080 | is when I learned about Bogleheads and I was like, oh, index.

01:16:56.040 | OK. And from that time on.

01:16:58.840 | Yeah, I was all indexed.

01:17:00.640 | But I and I I managed to pare down some of my more active stuff.

01:17:07.160 | But still, I wish I had gotten it all.

01:17:09.560 | And and in retrospect, I'm like, gosh, you know, kind of wish maybe I hadn't.

01:17:13.760 | That wasn't optimal, but all right.

01:17:16.120 | I am where I am, you know, so I was like.

01:17:18.240 | That's that was that was the motivation and your your

01:17:21.960 | your presentation, which was wonderful, is talking about how do you evaluate active?

01:17:26.120 | Oh, this is good.

01:17:27.400 | We take it very seriously.

01:17:29.000 | We look at the management and we look at the numbers and,

01:17:31.200 | you know, all that kind of stuff was like, that's true.

01:17:34.640 | But you reach you then get to a point in your life

01:17:38.640 | where you're like, oh, I don't want to deal with this anymore.

01:17:41.640 | Yeah. Anyway, that was sort of the motivation of my question.

01:17:44.840 | Thank you for your response.

01:17:46.720 | It's a great question. Thank you, lady.

01:17:49.160 | I'll get to you in a moment.

01:17:50.200 | I want to put a question, Betsy, because you're talking about this.

01:17:52.960 | Did you guys know as managers what percentage of the holdings

01:17:57.720 | or the individuals or institutional versus the

01:18:01.400 | the individual investor that held your fund,

01:18:05.240 | what the breakdown was between the two?

01:18:08.280 | Oh, yes. Oh, yes.

01:18:10.200 | We had software that we could tell actually

01:18:13.680 | who was trading our stock by the end of the day.

01:18:15.760 | So, for instance, if Fidelity owned a big portion of one of our stocks,

01:18:20.440 | we knew it because of the movement in the stock or just where we

01:18:24.520 | or what we would see on earnings.

01:18:27.160 | And I'll tell you right now, I would say in our companies.

01:18:30.520 | We hardly saw movements from the individual investor.

01:18:34.200 | It was mostly the institutional.

01:18:36.880 | And I'll tell you right now, it was Artisan.

01:18:39.120 | It was Wasatch. It was.

01:18:41.160 | It was it was it was it was some of the big T-Rows.

01:18:47.680 | You know, just any of the big ones that you see out there.

01:18:50.880 | We could tell who was moving the stock.

01:18:53.760 | But you didn't change anything based upon whether it was predominantly

01:18:56.920 | institutionally owned versus the individual investor.

01:18:59.840 | I presume most of it was maybe institutional or separately managed

01:19:02.880 | account through, say, a Raymond James or other, you know, advisor.

01:19:07.000 | I'll tell you right now, I never paid attention to the individual investor.

01:19:10.720 | I always paid attention to the smart money.

01:19:13.280 | And but but the smart money gets it wrong, too.

01:19:15.800 | But I really paid attention if there was seven of my peers

01:19:19.800 | all in this one company that I never recognized before.

01:19:22.560 | That track kind of drove me to do analysis on that company.

01:19:26.680 | Interesting. Thank you.

01:19:30.120 | OK, Lady Geek. Yeah, yeah.

01:19:33.000 | This discussion reminds me of Gus Salter many years, several years ago

01:19:38.040 | when he was at the Philadelphia Bogle Heads Conference,

01:19:40.240 | when Gus was running the fund, you know, he was like Jack Bogle's right hand man.

01:19:45.800 | I remember speaking with him directly and he or at least with the audience,

01:19:50.720 | he gave a very interesting talk on how the fund managers

01:19:55.560 | keep track, keep on track with the indices like the S&P 500.

01:20:00.680 | He would say every day they would go and they have morning

01:20:03.120 | they would have all these meetings.

01:20:04.840 | And you had to have the sharpest people who did this on a daily basis.

01:20:09.200 | How the heck did they keep that fund tracking within like point zero

01:20:13.400 | zero one percent of the index?

01:20:15.520 | It is a very difficult job.

01:20:17.720 | It is almost like an art to doing that.

01:20:20.160 | So I just it just this discussion reminds me of speaking with Gus Salter.

01:20:24.800 | And he people who know him, at least from seeing him at the conference

01:20:28.960 | every year, the guy is like phenomenal in terms of theoretical and math and stuff.

01:20:33.640 | This is his this is his love, I believe.

01:20:36.400 | But he just kept saying how difficult they really, really had to manage

01:20:41.600 | the fund, the guys who did the trades, how they tracked every index.

01:20:46.000 | And it was it was really amazing how well they did that.

01:20:48.320 | So you keep talking about buying an active and passive.

01:20:51.640 | That completely masks the underlying details of how this stuff actually happens.

01:20:56.960 | It actually boils down to people and algorithms.

01:20:59.360 | So that's why I wanted to make that point.

01:21:01.200 | Well, Lady Geek, I'll tell you, we had an advantage

01:21:04.080 | being an active manager.

01:21:06.080 | We would actually watch and we would try to play games,

01:21:09.520 | play games on end of quarter.

01:21:12.520 | And this was early in my career because we weren't allowed to do it

01:21:15.200 | by SEC rules at the end.

01:21:17.240 | But we knew that Vanguard had to have so much percentage in certain names.

01:21:21.240 | So when they started their small cap,

01:21:23.560 | we would buy these companies that had very low liquidity.

01:21:27.720 | And we would know that we would push it up a certain percentage.

01:21:31.800 | And Vanguard on that Monday, we do it like on a Friday.

01:21:35.400 | On that Monday, we would see that stock rise by six to 10 percent.

01:21:39.680 | And we would sell immediately because we knew Vanguard

01:21:42.720 | had to have that closeness to the index.

01:21:45.720 | But you know what? Vanguard got smart about it, too.

01:21:48.080 | They would watch those positions and they would keep an eye on it.

01:21:50.760 | And now you know that they can kind of have a time frame

01:21:54.200 | before they actually actively push that passive position.

01:21:57.440 | So it is very interesting.

01:21:59.280 | But there is software that you that we could buy

01:22:02.600 | that could tell us what Vanguard was doing.

01:22:05.320 | Yeah. Isn't it called front running?

01:22:07.120 | Is that called front running?

01:22:08.840 | Well, you front run if you're a man, if you're personally doing it.

01:22:13.840 | But if you're doing it as a fund manager, I'm running your money.

01:22:17.800 | I'm doing I'm doing what's best for the client.

01:22:21.280 | So I could do it all day long and not get in trouble.

01:22:24.960 | Again, the SEC rules have changed since that time.

01:22:27.800 | But Vanguard has become this behemoth.

01:22:30.280 | So whenever they started becoming a passive manager

01:22:34.280 | for one of our one of our indexes, we loved it.

01:22:38.280 | And I think front.

01:22:42.200 | I think front running implies really illegal.

01:22:45.440 | You know, information with you definitely know information,

01:22:50.480 | before you're supposed to know it.

01:22:52.480 | Whereas what she was talking about is you kind of suspected

01:22:55.880 | that was going to happen, right?

01:22:57.440 | Because you'd seen it happen a lot of times.

01:23:00.000 | So you kind of anticipated it.

01:23:01.960 | But you didn't 100 percent know it was going to happen.

01:23:04.680 | Right now. Right.

01:23:06.320 | Well, that being said, right, we could never buy a company

01:23:09.360 | that was outside of our investment process.

01:23:12.360 | You wouldn't see me buy a biotech company that had no earnings.

01:23:15.240 | That just wasn't part of our.

01:23:17.000 | But there was ways of watching it.

01:23:19.440 | It is ways of watching to make sure that you could still get a good return

01:23:23.800 | off the stock, you know, even if Vanguard didn't participate.

01:23:26.520 | But it is interesting.

01:23:30.440 | Yeah. Yeah. The street has to make money somehow.

01:23:32.320 | Everybody's going to pass it.

01:23:34.360 | There's a book that was written that described front running

01:23:37.720 | called something like Flash Boys or something.

01:23:39.960 | It has the word flash in it.

01:23:42.200 | Fascinating book from a number of years back.

01:23:45.600 | I love those.

01:23:47.160 | It was about laying this fiber optic in the most optimal way

01:23:51.920 | so that they could get like a multi millisecond advantage to to what was going.

01:23:57.680 | Yeah, that was a high frequency, the high frequency traders that had the computers,

01:24:01.560 | the closer they were with their mainframe.

01:24:04.000 | Yes. Wall Street.

01:24:06.040 | Milliseconds. That's right.

01:24:07.480 | It was all. It was all speed of light.

01:24:09.800 | It was like, how much can we optimize this?

01:24:12.280 | Yes. They didn't want the fiber bent. It was.

01:24:15.600 | It was intriguing.

01:24:17.600 | And eventually, I mean, I think the book was made five,

01:24:21.320 | six, seven years ago, something like that.

01:24:23.120 | I think the SEC came up with some new regulations

01:24:26.680 | that they had to all route everything through a common source.

01:24:31.120 | I think a common computer or something.

01:24:33.080 | Yeah. Even out the playing field.

01:24:34.760 | They eliminated that from some regulation.

01:24:36.760 | It sort of slowed it down a little. Yeah. Yeah. Yeah. Yeah. Yeah.

01:24:40.600 | Well, I'll tell you, though, the last big event or cool.

01:24:43.720 | Well, not cool or neat.

01:24:45.240 | Neato kind of thing that happened with me was watching that GameStop

01:24:49.280 | because I actually did it.

01:24:51.280 | We actually our poor consumer analysts had dumb money.

01:24:55.800 | It's gone. Have you guys seen that movie?

01:24:58.120 | That's it's called some money. You better watch it.

01:25:00.800 | It's all on the GameStop.

01:25:02.680 | And it's fascinating to see what the little little investor could do

01:25:06.280 | to those who have heavily shorted a terrible company.

01:25:09.400 | It was a terrible. We were not invested.

01:25:11.360 | But we kept monitoring it every day. It was it was fascinating.

01:25:14.560 | Yeah. And very interesting.

01:25:18.440 | Yeah, I'm curious, I know you said you're I don't know if you're

01:25:20.600 | your children, adult children are on this zoom at all, Betsy,

01:25:24.080 | but I'm just curious without I'm not putting them on the spot.

01:25:26.200 | But when you have conversations with your children,

01:25:29.240 | as all of us that have children and now we're retired and they're in

01:25:32.320 | they're approaching hopefully their peak earning years.

01:25:34.840 | It's been interesting in trying to have financial discussions

01:25:38.680 | and having an opportunity to share our values and teach them,

01:25:42.160 | which for me personally has been slow going.

01:25:44.400 | I'm just curious how the two of you approach that with your kids.

01:25:48.920 | Well, we were we were one of our kids followed me into the business.

01:25:53.640 | So he actually he fought he he works for a hedge fund in New York City

01:25:58.160 | and he has a total different mandate.

01:26:00.680 | So it was funny, though.

01:26:02.520 | I worked I was work from home before work from home became popular.

01:26:06.640 | I've been doing it for 20 years since Chris and I were based in Florida

01:26:10.280 | and my company was my my team was based in Vermont.

01:26:12.880 | So he actually had access to all of the tools

01:26:17.720 | and he would come in and play a little bit, but he didn't get serious.

01:26:21.200 | And so he he went to went to college at Cornell

01:26:25.840 | and he learned all the ropes and he would now every day

01:26:29.560 | we talk about or there was a time where our careers overlapped.

01:26:33.240 | And so he's he's definitely fully involved

01:26:37.080 | and and believes in the passive investment, but he's an active.

01:26:39.960 | His mandate is totally different than what mine was.

01:26:43.200 | And his brain is so much smarter.

01:26:45.120 | Our daughter. Wait, wait, wait.

01:26:47.640 | So to answer your question a little bit to

01:26:50.800 | my perspective as a civil engineer,

01:26:54.480 | I've I tried to get him to get into engineering.

01:26:58.080 | And luckily, I think I think at the end of the day,

01:27:02.280 | he'll be glad that he did that.

01:27:04.800 | So he got a degree in engineering

01:27:08.000 | and he's he ended up on Wall Street with those guys.

01:27:11.160 | And then I don't our daughter, like like you just said, she's a tricky one.

01:27:15.400 | I try to send her those very few articles

01:27:20.040 | every week on what you should do with your money.

01:27:22.200 | I started a Roth with her way back when she first started earning money.

01:27:26.480 | But she's a she's a tough one

01:27:29.440 | because her whole passion is art.

01:27:33.000 | And she's not afraid to spend money, even at her age.

01:27:37.680 | So she'll have no problem.

01:27:39.800 | Like we all have trouble spending money, but for whatever reason, she does.

01:27:45.400 | Now, it's it's interesting that the two biggest challenges

01:27:52.040 | I've personally encountered in retirement is, as with you, spending the money,

01:27:56.360 | opening up the purse strings, very, very difficult after a life

01:27:59.560 | of more or less living way below my means.

01:28:01.760 | And then also trying to educate the next generation,

01:28:05.680 | our children and their friends and so forth and and observing what's going on.

01:28:11.440 | I'm glad to see there's an active there's also a vocal head subreddit

01:28:14.920 | that's active amongst the millennials and younger generation.

01:28:17.720 | And it's nice to see.

01:28:19.600 | But again, we're for the most part, the tip of the iceberg, I think.

01:28:22.560 | I think worldwide or certainly domestically,

01:28:25.960 | I think probably less than five percent of individual investors

01:28:30.800 | are pursuing a passive approach.

01:28:32.720 | Everybody's chasing the almighty dollar and the GameStops and the Bitcoin

01:28:37.280 | and whatnot. So it's interesting.

01:28:39.960 | Well, I mean, you see a stock like NVIDIA.

01:28:42.280 | I think it's, again, up like something's crazy, like 200 percent.

01:28:45.440 | There's one of those. That's all it takes.

01:28:48.720 | Yeah. Interesting.

01:28:52.120 | But just do we have but even going back to your other part

01:28:55.320 | and the simple stuff like matching out your 401k as soon as you can

01:28:59.480 | and, you know, getting, you know, getting in that mindset, you know,

01:29:03.400 | and and they're both picking up on it.

01:29:07.000 | But it's it's it's a process for sure.

01:29:09.520 | And education, you know.

01:29:13.080 | Yeah, I was very happy.

01:29:15.360 | This is a couple of years ago when the crypto craze first started.

01:29:18.840 | My daughter, who lives in New York, was telling me, you know,

01:29:21.640 | she asked me about crypto and I advised against it.

01:29:24.360 | But she said all her friends are buying it.

01:29:26.440 | And she did not.

01:29:28.480 | She she picked up a little bit of what I said over the years,

01:29:31.080 | but it really made my heart go pitter patter when she said, I know, dad,

01:29:34.600 | just buy and hold.

01:29:36.640 | It's time in the market, not timing the market.

01:29:40.000 | And that made my day.

01:29:41.720 | I said, my life is complete.

01:29:42.960 | I've been self-actualized.

01:29:45.840 | Wow. That's great.

01:29:47.440 | Yeah, but Bitcoin's at 76,000 now.

01:29:50.200 | So, yeah, it's well, the ETFs, all those ETFs now, everybody's piling into it.

01:29:55.960 | We'll see how long it lasts. That's right.

01:29:58.560 | Do we have more questions, folks,

01:30:02.960 | if anybody wants to raise their hand or submit it in the chat?

01:30:05.480 | I got one question about

01:30:10.800 | was Betsy and active managers in general aware of what Steve?

01:30:17.560 | We're at what the Steve report.

01:30:19.960 | I lost it. Oh, I think I just saw this.

01:30:23.480 | Yeah. How active managers lose to the index every every year.

01:30:28.920 | I'm aware of it. No, I don't read it.

01:30:32.840 | Yeah, that's that's interesting, because, yeah, those that do outperform

01:30:38.640 | for the first early years don't have persistence for the most part.

01:30:43.800 | Not saying that you didn't.

01:30:45.720 | But and certainly the small cap space has been easier to outperform the index.

01:30:51.320 | But as a general rule, I think now the speed of folks, which is the S&P

01:30:56.760 | people actually do an analysis as well called persistence.

01:31:02.360 | Those that do outperform, do they persist in their outperformance?

01:31:05.440 | And as expected, no, long term, they generally don't.

01:31:08.640 | And those that do, you have to be able to pick those managers in advance

01:31:14.160 | in order to do really well and continue to outperform.

01:31:16.800 | But we don't have any thing to guide us

01:31:19.280 | and being able to pick them in advance, other than pure luck,

01:31:21.760 | because they don't have a track record yet at that point.

01:31:26.000 | Yeah. Interesting.

01:31:29.000 | Yeah, it was funny to watch us go from two hundred million to three billion.

01:31:33.880 | And it's because we became the hot little thing on the market.

01:31:38.600 | And it was amazing how much money rolls in when it rolls in very quickly.

01:31:43.320 | Did you have to close your fund at all in order to limit?

01:31:46.520 | We did. And I'll tell you the truth.

01:31:48.880 | We closed it at two point two billion, I think.

01:31:53.120 | And the salespeople kept selling us.

01:31:55.640 | So we finally put a hard you end up doing a soft close at two point two.

01:31:59.720 | And then we did a hard close at three billion, because at that point

01:32:02.360 | we had kind of filled all the positions.

01:32:05.120 | We didn't we can take any more money.

01:32:07.880 | Mm hmm. Yeah, that's interesting.

01:32:09.920 | In fact, the podcast I mentioned, the the long view on morning

01:32:13.800 | with Morningstar with that small cap manager this week talks about that,

01:32:17.600 | how often they have to close their their actively managed funds

01:32:21.040 | because they just couldn't purchase anymore.

01:32:23.400 | They basically they had done everything they could and they had too much money

01:32:26.480 | coming in. Right, right.

01:32:28.480 | And then I guess and the tough space is the microcap.

01:32:31.600 | I think the microcap and that and that's why you don't see a lot of

01:32:35.000 | actively run microcaps by the brokerage houses,

01:32:39.640 | because they don't make any money off.

01:32:41.640 | You can't you can't charge because it's that much work

01:32:44.880 | to put into these microcaps before you can actually put a portfolio together.

01:32:48.120 | And then you have to immediately close it when it hits like a billion.

01:32:50.840 | Yeah, it's very interesting.

01:32:56.160 | I think you sold us on the viability.

01:33:02.120 | If you really want to work hard and perhaps outperforming

01:33:05.720 | and picking as being a stock picker.

01:33:07.960 | But I think for most of us, whether you're a true Vogelhead

01:33:10.680 | or more or less embracing the philosophy that

01:33:13.080 | the index approach is probably ideal for the majority of us.

01:33:17.640 | And I think most of us, certainly myself, got

01:33:22.000 | I got my start trying to individually pick stocks.

01:33:24.920 | And going way back, gosh, probably about 30 years ago,

01:33:30.280 | I had a girlfriend who was actually a day trader.

01:33:33.160 | And she I live in Tampa.

01:33:36.080 | She was in Orlando.

01:33:37.480 | And there was a small, very small, unknown company.

01:33:39.640 | She found a chip maker called Sawtech.

01:33:42.440 | They were relatively unknown.

01:33:44.160 | And we toured.

01:33:44.720 | We went in and met with the management and tour their setup there,

01:33:48.760 | which was incredible.

01:33:50.920 | And I invested in them.

01:33:52.640 | I was very impressed.

01:33:54.080 | And they were it went nowhere.

01:33:56.160 | And I ultimately lost some.

01:33:58.440 | I sold it at a loss, not a big loss.

01:34:00.760 | But I realized at that point and unfortunately, it took me a while

01:34:04.920 | beyond that to realize that just sticking to an index would be the approach.

01:34:08.280 | But I probably carried on with stock picking for another three, four years

01:34:11.600 | before I finally threw in the towel.

01:34:14.880 | Well, Alan, to that point, I mean, I don't know how many different ideas

01:34:20.520 | and, you know, ideas for companies that have come along

01:34:25.360 | now that we're older and we're seeing these things, you know,

01:34:28.760 | and you got kids making an app and, you know,

01:34:32.680 | what else sound like really great ideas, you know, but

01:34:36.200 | it takes a lot to make it actually go and make it work. Yeah.

01:34:40.600 | Well, as Jack Bogle was fond of saying is instead of trying to pick out

01:34:44.880 | the needle in the haystack, just buy the whole haystack.

01:34:47.640 | Exactly.

01:34:49.840 | Sounds good.

01:34:52.800 | That pretty much sums it up.

01:34:54.840 | Yeah. All right, folks.

01:34:55.840 | Any I'm sorry. Go ahead.

01:34:57.560 | No. Any further comments or questions?

01:35:02.840 | Anybody?

01:35:04.200 | OK, if not, I guess we'll we'll wrap it up again.

01:35:10.920 | I want to thank Betsy and Chris for a very unique

01:35:15.200 | shared perspective about how the sausage is made in active management.

01:35:20.000 | And you're a rare breed to have admitted and been honest

01:35:24.320 | about the utility of switching to a more passive approach.

01:35:28.080 | Look forward to hearing your further perspectives.

01:35:30.920 | Our local Tampa Bay chapter meetings.

01:35:33.000 | I encourage everybody to check the Boglehead calendar of events.

01:35:38.960 | Also, check out all the four life stage chapters that meet virtually on Zoom,

01:35:43.760 | as well as any Boglehead local chapters in your community or start one

01:35:48.440 | if you don't have one nearby and continue to come up with ideas.

01:35:53.680 | And and we'll keep the all these conversations and share perspectives going.

01:35:58.920 | I want to do a quick launch a poll real quick.

01:36:00.960 | The final poll, for those of you still here,

01:36:02.760 | just to get some feedback on what you thought of this meeting.

01:36:07.920 | So bear with me, folks.

01:36:08.920 | I'm just going to do one more quick poll here,

01:36:11.160 | if you don't mind answering this just for our feedback.

01:36:14.280 | Obviously, the people that I board already signed off,

01:36:27.360 | so we expect to have a good response here.

01:36:29.160 | That's right, wait till the bitter end, it's skewed.

01:36:35.120 | Yeah, you must be one of those active managers.

01:36:40.520 | Numbers.

01:36:42.920 | All righty, everybody, I'll go ahead and share this.

01:36:48.360 | Waiting for the end of the quarter to actually.

01:36:50.840 | All right.

01:36:53.800 | Yeah, so all the people who didn't care for it are are long gone.

01:36:58.560 | But again, that was wonderful.

01:37:00.280 | Betsy and Chris, everybody, thanks for sticking with us.

01:37:03.480 | If anybody wants to save the chat before I end this, if you go down to the chat,

01:37:08.440 | you'll see there's an ellipsis, the three dots, and you can go save chat.

01:37:12.920 | It'll save it to your local computer.

01:37:15.160 | Lady Geek typically saves the chat and anonymizes it

01:37:18.320 | and posts a link on the Bogleheads forum.

01:37:20.720 | So you can also get it from there.

01:37:23.520 | I didn't have a chance.

01:37:24.440 | It's very hard when you're hosting to look at all the all the comments

01:37:28.000 | in the chat going by, they go by too quick.

01:37:29.680 | But again, thanks, everybody, for attending.

01:37:32.960 | Hope this was useful.

01:37:35.000 | And maybe, Betsy, you can drag Chris along to our next in-person

01:37:38.960 | Tampa Bay chapter meeting.

01:37:41.120 | Yeah, I don't think so.

01:37:43.400 | Thanks again.

01:37:45.280 | [MUSIC]