Bogleheads® Conference 2024 "Don’t Be a Missing Billionaire or Millionaire!" w/ Victor Haghani

00:00:00.000 | (audience applauds)

00:00:03.000 | - Right now, I am so excited to welcome

00:00:08.320 | Victor Hagani to the stage.

00:00:11.460 | Victor is the co-author of a book

00:00:13.200 | called The Missing Billionaires,

00:00:14.840 | A Guide to Better Financial Decisions.

00:00:17.640 | We had Victor on our Morningstar podcast earlier this year

00:00:22.640 | and had such a great conversation with him.

00:00:25.440 | He founded Elm Wealth, which is a very low-fee

00:00:29.320 | investment advisory firm for high-net-worth individuals.

00:00:33.240 | He started his career at Salomon Brothers in 1984,

00:00:36.920 | where he became a managing director

00:00:38.800 | in the Bond Arbitrage Group.

00:00:40.480 | And in 1993, he was a co-founding partner

00:00:44.120 | of Long-Term Capital Management,

00:00:45.680 | and we'll talk a little bit about that.

00:00:48.200 | He graduated from the London School of Economics

00:00:50.760 | with a bachelor's degree in economics.

00:00:53.180 | Victor, if you can come on up here,

00:00:55.040 | and please welcome Victor.

00:00:56.800 | (audience applauds)

00:00:59.800 | So just pick up a mic of your choice.

00:01:05.600 | Maybe I'll sit here.

00:01:07.160 | - Great.

00:01:08.360 | Hello.

00:01:09.200 | Turn it on, right?

00:01:11.800 | Okay. - Yeah.

00:01:13.200 | Victor, thank you for being here.

00:01:15.040 | - Thank you so much, Christine.

00:01:17.080 | - So let's talk about your book, The Missing Billionaires.

00:01:20.120 | You did a calculation that there should be

00:01:22.080 | about 16,000 old-money billionaires alive today,

00:01:27.080 | but there are virtually none on the Forbes 2022 list

00:01:31.320 | of 700 US billionaires.

00:01:33.560 | So can you talk about what went wrong

00:01:36.400 | for these individuals so that they did not

00:01:39.840 | hang on to their fortunes?

00:01:41.480 | - Sure.

00:01:42.320 | So we start off the book by talking about this example

00:01:46.480 | of there were so many, quite a few wealthy families,

00:01:51.400 | 125 years ago in 1900,

00:01:54.280 | and if they had just invested and matched the return

00:01:57.400 | of this US stock market and paid taxes

00:02:00.040 | and spent some of their money in a reasonable way,

00:02:03.200 | and had children at a reasonable sort of normal pace,

00:02:06.220 | there would be all these billionaire families today

00:02:09.200 | from those early families, but they're not.

00:02:13.160 | And we don't know exactly what went wrong

00:02:16.800 | or what went right from a societal point of view

00:02:19.480 | to not have so many of these billionaires,

00:02:21.160 | but our feeling is that the mistakes that people made,

00:02:26.160 | the financial mistakes that people made

00:02:29.760 | were mostly around risk and spending,

00:02:34.760 | and that they took more risk in their investments

00:02:39.120 | and didn't match their family spending policies

00:02:43.360 | with the risk in their portfolio.

00:02:45.000 | So a lot of concentrated portfolios,

00:02:46.920 | a lot of these wealthy families made their money

00:02:49.400 | in some particular business,

00:02:50.760 | like the Vanderbilts in transportation.

00:02:53.300 | And by 1950, the Vanderbilts still were mostly invested

00:02:57.120 | in railroads and transportation,

00:02:59.600 | which didn't go too well for them.

00:03:01.760 | And we have this little toy example

00:03:04.820 | that we like to talk about that really illustrates

00:03:07.480 | how this mismatch between spending risk

00:03:11.200 | and investment risk can really go wrong

00:03:13.240 | and how risk eats into compound returns.

00:03:16.800 | In our example, it's very simplified,

00:03:19.300 | and it's only got two numbers in it.

00:03:21.240 | Imagine that you build an investment portfolio

00:03:24.880 | where you feel that the expected return of your portfolio

00:03:28.820 | is 5% above inflation per annum.

00:03:32.580 | That's the average annual return,

00:03:35.240 | not the compound return, but the average annual return.

00:03:38.200 | And then you decide, okay,

00:03:39.760 | let's say I have a million dollars.

00:03:43.360 | I'm gonna spend 4% of that for the rest of my life,

00:03:48.800 | but 4% adjusted for inflation from that starting point.

00:03:52.640 | And you're like, well, that doesn't sound too bad.

00:03:54.820 | I mean, my expected return is 5%,

00:03:57.260 | so I should be able to spend this 4% number

00:04:00.520 | to begin with, $40,000 for the rest of my life

00:04:03.360 | adjusted for inflation.

00:04:05.360 | But let's say that that portfolio is a really risky one

00:04:07.740 | because you picked a small set of stocks

00:04:12.200 | that you really like, but it's risky.

00:04:13.860 | Maybe it goes up and down by 30% a year,

00:04:16.420 | twice as risky as the stock market.

00:04:18.700 | Well, now the question is, after 25 years,

00:04:22.120 | what's the most likely amount of wealth that you will have?

00:04:26.340 | And the answer to that is zero.

00:04:28.760 | You're expected to go bankrupt.

00:04:30.460 | You will not make it 25 years on,

00:04:33.840 | you know, in more than 50% of the cases, you're bankrupt

00:04:38.080 | because the volatility, that 30% volatility

00:04:42.160 | is just killing your compound return.

00:04:44.820 | And you just keep on spending that $40,000 each year.

00:04:49.460 | So, you know, we think that that's a really big explanation

00:04:54.360 | for what happened over time to many of these wealthy,

00:04:58.040 | dynastically wealthy families.

00:05:00.460 | - So let's talk about the key lessons

00:05:03.280 | that Boglehead should take away from that history lesson.

00:05:08.280 | What lessons should we internalize as investors?

00:05:12.960 | And also, what are the key mistakes that we avoid,

00:05:16.260 | should avoid?

00:05:17.100 | You mentioned excessive risk-taking, profligate spending,

00:05:20.420 | I'm sure factored into many of these losses over time,

00:05:25.300 | but maybe talk about those things.

00:05:27.420 | - Yeah, well, I think that we, Bogleheads,

00:05:31.840 | I'm really glad to count myself in there,

00:05:34.600 | that we're avoiding, you know,

00:05:38.820 | as part of our central thinking,

00:05:40.580 | we're avoiding most of the big mistakes.

00:05:43.040 | So, you know, being really thoughtful about risk

00:05:48.040 | by being sort of maximally diversified,

00:05:51.440 | being really conscious of costs,

00:05:54.000 | the cost matters hypothesis, really important.

00:05:57.360 | So those are the, you know,

00:06:00.280 | those are the things that we all know about.

00:06:02.680 | I think some of the extra things that are really important

00:06:06.480 | are around thinking about spending,

00:06:09.320 | where I think that we need to have spending policies

00:06:12.900 | as individuals and families

00:06:14.460 | that are connected to our investment policies.

00:06:17.220 | So I don't think that we can have 70% of our money

00:06:20.540 | in equities and then have a spending policy

00:06:24.460 | where we're trying to spend a fixed amount of money

00:06:26.460 | adjusted for inflation each year,

00:06:27.860 | that our spending policy is inexorably linked

00:06:31.780 | to the risk that we're taking in our portfolios.

00:06:35.460 | And, you know, this isn't any kind of original thinking,

00:06:38.180 | you know, it's something that's been, you know,

00:06:40.260 | in the literature since the late 1960s.

00:06:43.860 | - Yeah, I wanna follow up on

00:06:45.500 | some of what you just talked about, Victor,

00:06:47.020 | but while we are still on these individuals

00:06:50.480 | and their families who lost their fortunes,

00:06:53.280 | I think a real life question that a lot of individuals

00:06:57.760 | in this room grapple with, they have children,

00:07:00.360 | they have grandchildren perhaps,

00:07:02.720 | and they want to try to pass wealth to them

00:07:08.500 | the question is how to do that without spoiling the kids,

00:07:12.860 | how do they inculcate their kids

00:07:14.980 | in being sensible about money?

00:07:18.380 | - Sure, so I think as is often the case,

00:07:21.880 | Warren Buffett, you know, has a really pithy statement

00:07:25.260 | about it where he says, you know,

00:07:26.900 | I wanna leave my kids or give my kids enough money

00:07:31.540 | so they can do anything, but not enough,

00:07:34.340 | but not so much that they can do nothing.

00:07:37.000 | I don't think he actually followed that advice, but okay.

00:07:39.880 | But I think that's a good way of thinking about it,

00:07:43.160 | and, you know, I mean, I'm a parent,

00:07:46.540 | I have three kids, 30, 28, 25,

00:07:50.320 | and, you know, my wife and I, you know,

00:07:53.340 | our number one priority in our lives

00:07:55.340 | has been devoting ourselves

00:07:57.900 | to the upbringing of these children,

00:07:59.740 | and I think that it's really kind of,

00:08:01.180 | would be weird if somehow we just decided

00:08:05.020 | to stop helping them or wanting to help them,

00:08:08.960 | you know, once they become 18 or 22 or whatever.

00:08:12.400 | So I think it's natural to wanna help your kids

00:08:15.240 | through life, but, you know, I think that, you know,

00:08:20.240 | definitely too much financial help, you know,

00:08:23.480 | can really be destructive.

00:08:25.240 | Now, luckily, you know, I think that,

00:08:29.280 | you know, if, you know, luckily in some ways

00:08:34.120 | that, you know, passing wealth to our kids

00:08:36.520 | is really expensive between, you know, taxes

00:08:40.040 | and, you know, the fact that the, you know,

00:08:42.620 | rate of return on safe and risky assets

00:08:45.300 | is not that high these days.

00:08:47.200 | So, you know, like if you wanna try to help your kids

00:08:50.560 | and maybe grandkids, you know, to the tune of,

00:08:53.120 | say $50,000 a year of help in some ways after tax,

00:08:57.040 | like that takes a tremendous amount of wealth

00:08:59.680 | to support that.

00:09:00.760 | So anyway, but I think that, you know, good question.

00:09:05.760 | I think that, yeah, I think, you know, as I say,

00:09:07.960 | I think that one statement by Mr. Buffett

00:09:10.760 | is pretty good in terms of how I and my wife

00:09:14.440 | like to think about it.

00:09:15.640 | - That's helpful.

00:09:16.560 | So I want to switch over to portfolios and planning

00:09:19.180 | because you were involved in that in your day job

00:09:21.440 | in managing people's portfolios.

00:09:24.740 | Most bogleheads, I would say, use a strategic buy,

00:09:28.200 | hold and rebalance approach to their portfolios.

00:09:31.200 | They keep things pretty simple.

00:09:33.080 | Yet at your firm, Elm Wealth,

00:09:34.720 | you do use a dynamic asset allocation strategy.

00:09:38.040 | Can you talk about that?

00:09:39.120 | How you decide whether to make changes

00:09:41.920 | in client portfolios?

00:09:43.720 | - Yeah, I think that's a, you know,

00:09:45.280 | it's a really interesting question.

00:09:47.840 | Actually, when we started Elm Wealth,

00:09:50.980 | we applied to the patent office

00:09:53.120 | for the term dynamic index investing

00:09:56.200 | to get a trademark for that.

00:09:57.600 | And we heard back from the patent office

00:10:00.440 | and they said, we're gonna give you that trademark

00:10:04.000 | because it just doesn't make sense.

00:10:05.480 | You know, index investing is passive.

00:10:08.360 | You know, it's sort of, it sounds like an oxymoron

00:10:11.400 | to us here at the U.S. Patent Office.

00:10:13.660 | Isn't index investing meant to be passive and not dynamic?

00:10:18.020 | So in order to make investment decisions,

00:10:23.560 | we need to know the expected return

00:10:26.480 | of the different things that we're investing in

00:10:28.400 | and the risk of them.

00:10:29.880 | And we also need to have an idea

00:10:31.800 | of our own personal degree of risk aversion.

00:10:34.040 | So that's really the only way that I can think of

00:10:37.280 | of making portfolio decisions.

00:10:39.480 | You know, what's the expected return

00:10:40.840 | of the different things we can invest in,

00:10:42.800 | their risk, and our personal risk aversion.

00:10:46.920 | So we need those things.

00:10:50.400 | Now, if the expected return and risk

00:10:53.680 | of the different things that we're investing in

00:10:55.480 | never change, then you would have a stat,

00:10:59.040 | you would decide what those numbers are

00:11:01.080 | and your risk aversion, I'm gonna assume, is stable.

00:11:04.380 | Then you would say, okay, the expected returns

00:11:08.120 | are constant, the risk is constant.

00:11:11.200 | I'm just gonna figure out the optimal

00:11:14.280 | portfolio allocations for me.

00:11:16.600 | I'm done, and that's it.

00:11:17.760 | And then they stay the same forever

00:11:19.960 | because the expected return is staying the same

00:11:22.560 | and the risk.

00:11:23.720 | But nobody believes that.

00:11:25.760 | I don't understand that nobody believes

00:11:29.040 | that the expected returns of all the different things

00:11:31.420 | are constant through time.

00:11:33.280 | For one thing, we see interest rates

00:11:35.120 | changing every single day.

00:11:37.520 | Real interest rates on tips go up and down, up and down.

00:11:40.360 | I mean, we know that the expected returns are changing.

00:11:44.280 | We also know that risk is changing.

00:11:46.040 | That the stock market in early 2020 was wildly risky.

00:11:52.920 | And at other times, like right now,

00:11:55.120 | it's not very risky at all.

00:11:56.440 | It's not bouncing around a lot.

00:11:58.200 | It's in a more sedate mode.

00:12:00.840 | So we know that the risk is changing.

00:12:02.520 | And we also have a view about the expected return

00:12:05.960 | of equities, and the expected return of equities

00:12:08.040 | is also changing over time.

00:12:10.640 | And it is possible to observe it and to estimate it.

00:12:13.840 | We'll talk about that, I think, in a moment.

00:12:15.800 | But you could go to Vanguard's website

00:12:17.560 | and they have a page called Capital Market Assumptions.

00:12:20.440 | And right there, you just go there

00:12:21.920 | and it says expected return US equities for the next 10

00:12:25.520 | or 30 years is whatever, 6%.

00:12:28.800 | Expected return of non-US equities for the next 10

00:12:31.560 | or 30 years you choose is whatever, 8%.

00:12:34.400 | Expected return of bonds, 4%.

00:12:37.040 | And those numbers are changing every six months.

00:12:39.920 | So why shouldn't they be part of our asset allocation decision?

00:12:43.360 | Now, it might be that people say,

00:12:46.080 | I just don't have time for that.

00:12:47.600 | And I think that's reasonable.

00:12:49.240 | That's a reasonable response to say,

00:12:50.840 | I don't have time for that.

00:12:51.720 | I'm just going to go with something static.

00:12:53.840 | Maybe I'll revisit it every five or 10 years.

00:12:57.040 | But I think that, from a logical point of view,

00:12:59.400 | that you have to-- that it makes sense

00:13:02.560 | that it should change if you're willing to spend

00:13:05.080 | the time chasing down these expected returns and risks.

00:13:08.640 | So just a quick follow up on that.

00:13:10.320 | If I don't want to spend a lot of time

00:13:13.360 | monkeying with my portfolio, would just

00:13:15.880 | a simple annual rebalancing address some of the things

00:13:19.360 | that you're talking about where I'm periodically stripping back

00:13:22.720 | what has performed really well and adding to the things that

00:13:26.120 | haven't performed as well?

00:13:27.880 | Yeah, absolutely.

00:13:28.920 | I think that there's a spectrum of things

00:13:31.120 | that we can do with our wealth.

00:13:32.880 | And what most people are-- not in this room,

00:13:37.040 | but what most people in the world are doing is over here.

00:13:39.440 | And it's not very good.

00:13:40.680 | And then over here would be a static asset allocation,

00:13:44.320 | maybe rethinking things over once a year,

00:13:47.200 | or even once every five year, that's over here.

00:13:49.560 | And then what I'm saying--

00:13:50.880 | I don't know if you remember where that hand was.

00:13:52.960 | And I'm saying that maybe over here

00:13:54.680 | is the best that you could do if you really feel like it.

00:13:57.120 | But it's so close.

00:13:58.920 | We're really close in here.

00:14:00.120 | I mean, the main thing is be diversified.

00:14:03.040 | Keep the costs down.

00:14:04.280 | Keep the taxes down.

00:14:06.280 | Spend appropriately.

00:14:08.140 | And then you're all the way over here.

00:14:09.760 | Now, whether you go here or not, I

00:14:12.640 | don't think that's where the juice is.

00:14:14.400 | It's getting from over here with all this crazy stuff

00:14:17.320 | and getting over here.

00:14:18.420 | OK, so stay away from over here.

00:14:20.160 | Yeah.

00:14:20.680 | Yeah, OK.

00:14:23.480 | So I wanted to ask, you alluded to the fact

00:14:26.400 | that you think about where the long-term real return of the US

00:14:31.280 | market is.

00:14:31.880 | And to arrive at that, you use cyclically adjusted earnings

00:14:36.040 | yield.

00:14:36.600 | I'm wondering if you can talk about, A, what that is,

00:14:39.000 | and B, where that puts us today in terms of the broad market.

00:14:44.160 | So cyclically adjusted earnings yield is--

00:14:47.160 | well, it's an idea that goes all the way back to Benjamin Graham's

00:14:51.240 | 1940s book.

00:14:52.280 | But it was really repopularized by Bob Schiller and John

00:14:56.520 | Campbell in the late '80s, just saying that, look,

00:15:01.400 | if you're buying equities, it's like buying an apartment

00:15:06.640 | building or a commercial building.

00:15:08.560 | You're looking at your income and dividing it

00:15:11.260 | by the price that you pay.

00:15:12.400 | That's your earnings yield or your rental yield.

00:15:15.320 | And that's as good of a long-term predictor

00:15:19.280 | of the real return on that investment

00:15:22.880 | that we can come up with, at least in terms

00:15:25.400 | of a simple and decent expected return estimator.

00:15:30.800 | It's like, OK, I'm putting money into the stock market.

00:15:34.800 | If companies paid out all their earnings as dividends each year,

00:15:37.760 | which they don't, but if they did,

00:15:39.600 | then the belief is that companies in aggregate

00:15:44.040 | would be able to keep the earnings constant in real terms.

00:15:47.480 | And that gives us this tie-in between earnings yield

00:15:51.340 | and the long-term expected real return of the stock market.

00:15:55.160 | Today, the cyclically adjusted earnings yield,

00:15:59.640 | which is basically just looking at the last 10 years of earnings

00:16:02.520 | adjusted for inflation.

00:16:04.200 | We could also adjust it for payout ratios

00:16:06.280 | to get a slightly better estimate,

00:16:07.740 | but not a big difference.

00:16:10.440 | So right now, for US equities, broad US equities,

00:16:15.880 | the cyclically adjusted earnings yield is around 3 and 1/2%.

00:16:20.780 | And of course, tips are around--

00:16:24.680 | tips are just under 2%.

00:16:26.840 | So the expected excess return of US equities

00:16:29.840 | relative to the safe asset of tips is about 1 and 1/2%.

00:16:34.080 | Not very high, not very exciting.

00:16:36.640 | For non-US equities, that spread between tips

00:16:40.720 | and the earnings yield is closer to 5%.

00:16:43.800 | And actually, Vanguard, on Vanguard's website--

00:16:46.840 | and everybody, all the big investment firms

00:16:49.360 | have a capital markets assumption page.

00:16:51.120 | You could go to BlackRock's, Goldman Sachs, whatever.

00:16:55.280 | But we love Vanguard.

00:16:56.720 | And Vanguard's numbers are pretty similar to what

00:17:01.040 | you would get from earnings yield.

00:17:02.460 | They do a much more complicated analysis, much more opaque,

00:17:08.720 | maybe better.

00:17:09.600 | But the numbers come out almost the same

00:17:11.520 | as just using cyclically adjusted earnings yield.

00:17:14.400 | OK, thank you.

00:17:16.000 | You alluded to this gulf between US, non-US.

00:17:19.800 | It's been kind of persistent where

00:17:21.900 | most firms do believe that the return

00:17:24.160 | expectations for non-US look better over the next decade

00:17:28.600 | than US.

00:17:30.520 | So what kind of international allocation

00:17:32.800 | do you think makes sense for the average investor?

00:17:36.000 | And I'm wondering, is the global market capitalization

00:17:39.080 | like using a Vanguard total world stock index?

00:17:42.460 | Is that a good way to think about it?

00:17:44.440 | Or if not using the fund, at least using it

00:17:47.140 | to set my US, non-US allocation?

00:17:50.400 | Or how should people approach it?

00:17:52.240 | I think that's a really good starting point.

00:17:54.880 | I think using these--

00:17:57.200 | they're adjusted market caps, actually,

00:17:58.880 | because FTSE and MSCI really haircut the market

00:18:02.800 | cap of a lot of non-US markets for investability and values

00:18:09.000 | and so on.

00:18:09.920 | So yeah, I think market cap weight isn't too bad.

00:18:12.400 | That's around 60-40 right now, 60% US, 40% non-US.

00:18:18.160 | There's lots of arguments out there.

00:18:20.280 | I heard Rick yesterday talking about US versus non-US.

00:18:24.760 | There's all kinds of arguments you can make about what's

00:18:27.640 | better or not.

00:18:28.280 | Some of the arguments, one in particular

00:18:31.480 | of the many different ones that I think is interesting

00:18:33.720 | is probably like 20 or 30 years ago,

00:18:37.480 | both Mr. Bogle and Warren Buffett said to US investors,

00:18:43.520 | don't worry about the rest of the world.

00:18:45.140 | Who cares?

00:18:45.640 | Just invest in US stocks.

00:18:47.640 | After all, the S&P 500 gets 30%, 40% of its revenue and profits

00:18:52.920 | from outside of the US.

00:18:54.280 | It's international.

00:18:55.620 | And that was a good point.

00:18:56.960 | But things are so different today in the sense

00:18:59.080 | that now if you own the S&P 500, that 40% of earnings

00:19:03.920 | that's coming from the rest of the world,

00:19:05.880 | you're paying a US multiple for that.

00:19:08.240 | And for non-US companies, they're

00:19:10.680 | making 30% of their money in the US.

00:19:13.160 | And you get to buy that earnings stream at the non-US multiple,

00:19:17.560 | which is much lower.

00:19:18.640 | So the arguments of Buffett and Bogle from 20, 30 years ago

00:19:24.040 | are actually now arguments against investing in the S&P

00:19:27.800 | 500 to get your international exposure.

00:19:31.480 | You referenced TIPS, Treasury Inflation Protected Securities,

00:19:35.040 | earlier.

00:19:36.160 | And you think that they should be investors' minimum risk

00:19:40.120 | asset in lieu of cash and other cash-like investments.

00:19:44.320 | Can you discuss the thesis there and also

00:19:48.080 | kind of the practical implications

00:19:50.040 | if I were to do that?

00:19:51.680 | What we've seen in periods of equity market volatility

00:19:56.400 | is that TIPS have been more volatile, certainly.

00:19:59.520 | I mean, they have risk, and cash does not.

00:20:03.920 | So maybe just follow up on that.

00:20:06.240 | So I think we should measure our wealth not

00:20:09.320 | as the present value of our wealth,

00:20:11.080 | but as the long-term real consumption

00:20:13.960 | that our wealth can support.

00:20:15.360 | And going back 150 years or so, that's

00:20:20.160 | how people used to talk about how wealthy somebody was.

00:20:23.200 | Like in Jane Eyre or whatever, they

00:20:24.800 | would say, oh, that Mr. Darcy, he's worth $10,000 a year.

00:20:29.040 | They didn't say he's worth whatever, $200,000

00:20:32.600 | of present value in his brokerage account.

00:20:34.880 | He was worth $10,000 a year or whatever.

00:20:37.440 | And I think that's the sensible way.

00:20:39.600 | I mean, counting our wealth in our brokerage account

00:20:43.200 | is not a valid use of our wealth.

00:20:45.200 | It's just spending it or giving it away over time.

00:20:48.560 | So if the real measure of our wealth

00:20:52.120 | is the long-term spending power that it can generate,

00:20:55.800 | then it's kind of clear why something like TIPS

00:20:58.600 | is going to be the minimum risk asset.

00:21:00.840 | Now, just because it's the minimum risk asset

00:21:02.760 | doesn't mean that you need to own any of it.

00:21:04.840 | So when TIPS were trading at minus 1 and 1/2% real yield,

00:21:10.200 | where you were locking in a minus 1 and 1/2%

00:21:12.960 | or you were locking in a loss of purchasing power of 1

00:21:15.680 | and 1/2% per year, you might have said, OK,

00:21:18.960 | it's my minimum risk asset.

00:21:20.880 | But I don't want to own any of it because it stinks.

00:21:23.640 | And so I think that it still is reasonable to say,

00:21:28.280 | that's my minimum risk asset.

00:21:29.680 | But I'm going to take some more risk and own treasury bills.

00:21:33.680 | So now treasury bills are riskier than TIPS because TIPS

00:21:37.080 | is the minimum risk asset.

00:21:38.160 | But it's like, OK, you know what?

00:21:39.580 | I'm going to own treasury bills because I

00:21:41.360 | think that treasury bills are going to do a lot better

00:21:43.440 | than TIPS, for instance.

00:21:44.600 | So just because it's our minimum risk asset

00:21:46.960 | doesn't mean that we have to own them when they're

00:21:48.960 | trading at minus 1 or 2%.

00:21:52.240 | I want to just remind everyone, if you have a question,

00:21:55.240 | please do put it on a card.

00:21:56.800 | And we will have people coming around to pick up your questions

00:22:00.920 | and curate them for us.

00:22:03.720 | So Victor, I want to follow up on TIPS

00:22:06.280 | as a component of retiree portfolios

00:22:09.680 | because you have said that for people who don't--

00:22:15.680 | if ideally you're spending in retirement, you write,

00:22:20.320 | it should change proportionately as your portfolio grows

00:22:23.920 | or shrinks.

00:22:24.440 | So you should take less when it's down.

00:22:26.280 | You can take more when it's up.

00:22:27.680 | But if you don't want to do that,

00:22:29.600 | then you should go to TIPS as your main bulwark

00:22:32.680 | for retirement spending.

00:22:34.080 | Can you discuss that point?

00:22:35.840 | Sure, so that's what we were talking about earlier on,

00:22:38.360 | is this connection between spending policy and investment

00:22:42.760 | policy.

00:22:43.800 | And so if you are just dead set that for the rest of your life

00:22:49.200 | you're going to just spend a certain amount adjusted

00:22:51.480 | for inflation or cost of living, and you're

00:22:54.680 | planning on exhausting your wealth

00:22:57.320 | by the end of your life-ish, then it

00:23:01.080 | doesn't make sense to own equities at all.

00:23:03.240 | That now you're disconnecting your retirement savings

00:23:09.160 | with your spending plan.

00:23:11.280 | And that's how you can go bankrupt.

00:23:15.280 | That's how you run out of money, is

00:23:16.680 | by having risk in your portfolio and then a fixed spending

00:23:21.760 | policy.

00:23:23.040 | So you just have to adjust your spending.

00:23:26.760 | And you don't want to wait until you're almost out of money.

00:23:29.260 | You have to adjust your spending.

00:23:31.160 | So if your portfolio value goes down,

00:23:33.040 | you're going to reduce your spending.

00:23:34.600 | But if you're not willing to increase your spending

00:23:36.960 | if your portfolio goes up, then what

00:23:39.480 | was the point of taking that risk to begin with?

00:23:41.920 | If it's like, well, I'm just going to die with that money.

00:23:45.320 | It's not going to any use whatsoever, then--

00:23:48.840 | now, if you have intergenerational transfers

00:23:54.500 | in mind, well, then things are different.

00:23:59.160 | And now your kids or so on are taking that residual risk.

00:24:05.720 | And it may not be a fixed spending policy anymore.

00:24:09.280 | But in that really simple case, a fixed spending policy--

00:24:13.120 | you shouldn't be taking any risk away from that, I think.

00:24:17.440 | Some of the academic researchers in retirement planning

00:24:20.240 | would say an annuity would be a fit in that context

00:24:23.760 | for the person who wants--

00:24:25.800 | granted, you can't get a CPI-linked annuity.

00:24:28.440 | But for someone who wants that stream of cash flow,

00:24:32.200 | what do you think about a very simple annuity

00:24:35.080 | in that context?

00:24:36.640 | I think that annuities make so much sense for so many people

00:24:40.880 | that one of the great puzzles in finance

00:24:43.280 | is why there's not so much more take-up of annuities.

00:24:47.760 | You're getting rid of a really big risk, longevity risk,

00:24:52.720 | kind of for free or close to for free.

00:24:55.760 | I mean, there's not a risk premium on this risk.

00:24:57.960 | You're getting rid of longevity risk through risk sharing.

00:25:01.520 | There's not necessarily a risk premium involved there.

00:25:04.120 | Now, annuities, just straight annuities or deferred annuities

00:25:11.360 | that don't involve any equity risk,

00:25:13.960 | the market prices them pretty reasonably altogether.

00:25:16.880 | And if you're feeling pretty robust and healthy,

00:25:20.840 | they can even be cheap, because the insurance companies don't

00:25:23.800 | even ask, so how are you doing?

00:25:27.800 | They don't even ask if you're a smoker or whatever.

00:25:29.840 | They just figure that, well, anybody that wants an annuity

00:25:32.280 | is in OK health.

00:25:32.840 | And so they're reasonably priced.

00:25:42.120 | There's more tax-efficient opportunities

00:25:43.880 | now to put them into our retirement accounts.

00:25:46.400 | And there just seems like a tremendous undertake-up

00:25:49.200 | of annuities for many, many people.

00:25:51.320 | If you're very, very wealthy, an annuity may not make sense.

00:25:54.360 | But if you're sort of thinking about, jeez,

00:25:57.440 | I need to really preserve a lot of my wealth

00:25:59.760 | because I might make it into my 90s,

00:26:02.040 | well, then an annuity could be really good.

00:26:04.040 | Now, it's weird.

00:26:06.000 | Variable annuities, these annuities

00:26:08.000 | with caps and floors and equity, these things seem terrible.

00:26:12.120 | And it's kind of interesting that you've

00:26:13.840 | got these terrible things sitting side

00:26:15.960 | by side with products, simple products that are really

00:26:19.160 | pretty useful and well-priced.

00:26:22.720 | While we are queuing up to take some audience questions,

00:26:25.600 | I wanted to ask about direct indexing,

00:26:29.040 | building these custom baskets of individual stocks

00:26:34.760 | as a matter of taking tax losses regularly.

00:26:39.200 | They seem to be getting sold to a lot of people.

00:26:42.680 | I'd like your take on them, whether you think

00:26:44.840 | they're worth the complexity.

00:26:46.680 | Sure.

00:26:47.280 | So yeah, I mean, the direct indexing, tax-loss harvesting

00:26:50.840 | programs have really mushroomed recently.

00:26:54.080 | Maybe there's $300 billion or more.

00:26:56.000 | I think Morningstar said there was almost $300 billion

00:26:58.560 | of this a year or two ago already.

00:27:00.280 | So maybe we're a lot bigger than that.

00:27:01.860 | You know, it's Goldman, Morgan Stanley that

00:27:05.280 | bought Parametric, JPMorgan.

00:27:07.680 | And the basic, the impetus for all of it

00:27:11.480 | is like, oh, I'm going to get all this tax-loss harvesting,

00:27:13.900 | because tax-loss harvesting, the amount of tax-loss harvesting

00:27:17.160 | you can get is proportional to how volatile the things are

00:27:20.120 | that you own.

00:27:21.200 | So let's own individual equities,

00:27:22.780 | because individual equities, on average,

00:27:24.480 | are twice as volatile as the indexes.

00:27:27.200 | Now, that's true.

00:27:29.640 | However, the tax-loss harvesting is subject to the wash/sale

00:27:34.240 | rule, so whatever you sell, you can't buy it back for 31 days.

00:27:38.080 | And so as a result, if you do one of these direct index

00:27:40.560 | programs with one of these providers,

00:27:42.500 | there's going to be a certain amount of tracking risk,

00:27:44.760 | because you sell Apple, because maybe Apple goes down.

00:27:48.200 | I don't know if it ever has gone down.

00:27:49.760 | But if it went down, you could sell it.

00:27:52.060 | But when you sell it, now you don't have Apple,

00:27:54.400 | and you're going to buy something else.

00:27:56.020 | So you have this tracking risk, and they're

00:27:58.480 | going to tell you, the provider of direct indexing

00:28:01.200 | is going to say, we're going to limit your tracking risk

00:28:02.920 | somewhat, because we don't want to have too much tracking risk.

00:28:05.640 | Well, then you're not getting as much tax-loss harvesting

00:28:08.120 | as you could from those volatile equities.

00:28:11.160 | And it turns out, from some analysis that we've done,

00:28:13.960 | that you could get just about as much tax-loss harvesting

00:28:17.020 | from having a portfolio of ETFs, managing those,

00:28:20.720 | or having them manage for tax-loss harvesting, which

00:28:24.120 | is a freebie for anybody that manages ETF portfolios.

00:28:28.040 | They just throw in tax-loss harvesting for free,

00:28:31.080 | rather than paying 50 basis points to Goldman or whatever.

00:28:34.360 | And it's simpler.

00:28:35.560 | And then three or four years down the road,

00:28:38.400 | your portfolio is all appreciated.

00:28:40.000 | And now you've got this weird portfolio of 400 stocks,

00:28:43.240 | not exactly matching the index.

00:28:44.960 | You're still paying fees.

00:28:46.520 | Your brokerage statement is like 20 pages long,

00:28:49.960 | and you're going to pull your hair out.

00:28:51.560 | And it's like, what am I going to do now?

00:28:53.600 | Now I'm just locked into this thing forever.

00:28:55.480 | So I think it's really being massively oversold and not

00:29:02.120 | a fan of the direct indexing at all.

00:29:03.680 | And then now they say, oh, here's

00:29:06.280 | this other benefit of direct indexing.

00:29:08.000 | We can customize for you.

00:29:09.360 | And it's like, oh, you customize.

00:29:11.240 | Well, we're index investors.

00:29:13.040 | We don't want customization.

00:29:14.280 | We want the market cap portfolio.

00:29:16.360 | We don't want to just be like a long-sum portfolio, where

00:29:19.840 | a company-- where it doesn't have any companies from Texas

00:29:22.480 | in it or something like that.

00:29:23.920 | So I think, yeah.

00:29:27.560 | Here's a good question from the audience.

00:29:29.480 | For simplicity, can someone allocate, say,

00:29:31.800 | 15% of portfolio to a short-term tips fund at, say, Vanguard?

00:29:37.320 | And Vanguard has a good fund like that.

00:29:39.420 | And call it a day versus buying individual tips and laddering,

00:29:44.160 | like your take on that.

00:29:46.320 | Yeah, I mean, I love using index funds and ETFs

00:29:49.680 | for everything and not buying any individual things.

00:29:52.520 | I mean, there's a lot of discussion about, well,

00:29:54.560 | is a tips ETF not as good as buying a ladder of tips?

00:29:59.000 | And overall, I think they're--

00:30:01.680 | I don't feel there's such a big distinction there.

00:30:04.040 | Like, if you're really trying to match out

00:30:05.800 | your spending for the rest of your life,

00:30:07.680 | maybe you want to buy or construct a ladder.

00:30:09.780 | But I think just owning these ETFs

00:30:11.760 | is such an unbelievably convenient way

00:30:16.200 | of owning fixed income.

00:30:19.040 | I like using fixed income ETFs in general.

00:30:22.120 | OK.

00:30:23.440 | Here's a question about retirement decumulation.

00:30:26.680 | When paying yourself once a year, what should I sell?

00:30:30.280 | Stocks and funds that are up or just equally across the board?

00:30:34.520 | So if I'm pulling from my portfolio, where should I go?

00:30:38.020 | I think the starting point is equally across the board.

00:30:43.880 | And then kind of just thinking about taxes.

00:30:46.320 | Well, if you're going to be doing

00:30:47.800 | some kind of reallocation, you're

00:30:49.520 | going to use that as a way of changing your allocation.

00:30:52.920 | But assuming that you have these target weights that you're

00:30:56.840 | shooting for, and you're there, and you're doing your

00:31:00.800 | rebalancing separately, then basically just using that--

00:31:06.240 | just taking a slice out of the portfolio

00:31:08.400 | is the simplest thing.

00:31:10.440 | Maybe thinking about taxes a little bit might skew you.

00:31:13.960 | But in general, I think just go for the portfolio

00:31:16.600 | that you want to have and do your stuff like that.

00:31:19.760 | So is it an elegant idea, though,

00:31:22.720 | to link my rebalancing with my retirement spending?

00:31:26.920 | I kind of like that idea of, if I've

00:31:29.380 | got to sell something to get my asset allocation back in line,

00:31:33.480 | that's my cash flows?

00:31:34.640 | Yes.

00:31:35.760 | I agree, very elegant.

00:31:37.080 | Sort of separating the two, but putting them together

00:31:39.320 | is the way to do it.

00:31:40.520 | OK.

00:31:42.240 | So what tools exist for passing wealth

00:31:45.160 | to a child that is not, and probably

00:31:49.080 | will not become, financially literate or savvy?

00:31:52.720 | So children who you want to take care of where you feel

00:31:56.360 | like they don't have the ability to manage

00:32:00.640 | their funds going forward.

00:32:02.360 | I mean, I would sort of challenge the premise there

00:32:09.640 | a little bit.

00:32:10.240 | I mean, I think investing is something is easy.

00:32:16.240 | I think that-- so I don't know exactly what

00:32:21.520 | the scenario is for this child.

00:32:23.200 | But I think that most people can learn really well

00:32:28.640 | about investing.

00:32:29.800 | If that's just not possible with a particular person,

00:32:34.760 | then trying to really think about a trusted advisor

00:32:40.520 | and thinking about the incentives of the advisor,

00:32:42.880 | the fees, maybe getting an advisor that's

00:32:46.560 | a fee-only advisor that charges a relatively low fee,

00:32:50.680 | to get that kind of advice.

00:32:51.960 | I mean, I think finding a trusted advisor that's young

00:32:55.640 | and that the person can work with for a long time

00:32:58.440 | is the way to go.

00:33:01.400 | How do you personally invest your money?

00:33:05.600 | You know, I have all of my family's liquid assets

00:33:09.760 | away from houses, whatever, are managed by Elm.

00:33:12.880 | It's all in low-cost ETFs.

00:33:16.800 | I don't own any individual stocks at all.

00:33:19.400 | I just have been doing a lecture series

00:33:23.000 | on why I don't pick stocks.

00:33:25.760 | And yeah, and that's really where my business of Elm Wealth

00:33:31.640 | really came out of doing it for myself and then

00:33:36.320 | some friends saying, well, if you do it as a business,

00:33:40.360 | we'd like to invest in that way, too.

00:33:42.080 | So sort of drawing more people into investing in low-cost ETFs.

00:33:46.640 | Yeah, I want to follow up on that, Victor, actually.

00:33:49.520 | You have a minimum account size of $1 million

00:33:52.320 | for potential clients.

00:33:53.280 | And I'm guessing a lot of people in this room

00:33:55.120 | would meet that threshold.

00:33:57.200 | What made you decide to target that segment

00:34:00.040 | of the market versus the more rarefied people

00:34:04.240 | with a lot more in assets?

00:34:06.880 | Well, we would like to help people with as little money

00:34:12.880 | as possible, as many people with a lower limit.

00:34:16.640 | But we needed to start somewhere.

00:34:18.400 | And we really wanted to keep our fees really low.

00:34:21.120 | So we charged 12 basis points.

00:34:24.000 | And we felt that, well, actually even--

00:34:26.720 | and when we started the business,

00:34:28.960 | trading was not commission-free yet.

00:34:30.800 | So we needed certain account sizes back then

00:34:34.080 | to take care of the $5 per trade at Fidelity and Schwab

00:34:38.640 | and so on.

00:34:39.400 | But actually, we'd like to be able to help smaller accounts.

00:34:45.080 | And it's really sort of a technology race,

00:34:50.160 | how we can manage lots and lots of accounts

00:34:52.480 | individually at a low cost.

00:34:55.560 | I think that-- oh, more directly to your question,

00:34:59.440 | really, really wealthy people are just

00:35:01.680 | totally unsensible, in my experience, with their money.

00:35:05.040 | Like, you're just not going to find any--

00:35:06.960 | I mean, you're going to find almost no super wealthy person

00:35:09.920 | that's invested sensibly in a diversified portfolio of index

00:35:13.840 | funds.

00:35:14.340 | It's like, I'm wealthy.

00:35:16.480 | I'm entitled to extra returns by doing

00:35:19.200 | all of this weird, complex, crazy stuff.

00:35:22.440 | So we don't want to spend a lot of time in that space.

00:35:29.720 | So 12 basis points versus a 1% industry average

00:35:36.920 | for $1 million accounts.

00:35:39.320 | So I'm curious why you think it is

00:35:42.320 | that we have not seen more downward pressure on investment

00:35:47.480 | advisory fees.

00:35:49.560 | So Vanguard, I think, charges around 30 basis points.

00:35:53.320 | I mean, maybe it scales down.

00:35:55.200 | And we know that Vanguard is doing it at break-even.

00:35:58.880 | So normal financial advisory is expensive.

00:36:05.800 | There's not super high margins in the space.

00:36:10.060 | And it really is just a function of what

00:36:11.800 | is that advisory looking like.

00:36:13.640 | So I think when somebody is charging 50 basis points,

00:36:16.800 | they're probably doing a lot of touch.

00:36:18.920 | There's probably a lot of touch involved in that.

00:36:21.680 | And again, Vanguard, they're charging 30

00:36:25.600 | because they're like, OK, this is what it looks like.

00:36:27.960 | This is what our costs are.

00:36:29.160 | Now, for us, we've tried to build our business

00:36:31.240 | in a way that's lower touch.

00:36:33.300 | I mean, we're there, and we're there to talk to people.

00:36:35.560 | But we're lower touch.

00:36:37.080 | And the clientele requires less touch, our clientele.

00:36:42.240 | We don't market, for instance.

00:36:43.720 | So we're not selling our stuff.

00:36:45.520 | People are coming to us, and there's an easier fit.

00:36:48.960 | And so we're able to charge lower fees because we're

00:36:52.680 | doing less for people.

00:36:53.880 | And then people know that.

00:36:55.040 | They're like, well, if I'm paying you 12 basis points,

00:36:57.320 | I don't expect that much from you.

00:36:59.800 | And it's a really good signal.

00:37:02.520 | And so I think there is a place for this really low-fee,

00:37:07.800 | low-touch model.

00:37:10.440 | So by low-touch, you mean if I were to call up Elm Wealth

00:37:15.520 | and say, I want some guidance on whether to pay off my house

00:37:19.040 | versus invest in the market, you can't put a CFP--

00:37:21.960 | or you wouldn't put a CFP on the line

00:37:23.760 | to help answer that question?

00:37:25.320 | Yeah, we would try to have a brief conversation about it.

00:37:28.920 | But it wouldn't be as deep as a real financial planner.

00:37:33.880 | A real financial planner would go deeper, deeper, deeper.

00:37:37.120 | We can have a couple of conversations

00:37:38.800 | with each of our clients each year.

00:37:40.840 | We probably don't have that many.

00:37:42.920 | But that's right.

00:37:43.720 | I mean, it's just a higher level, shallower take on things.

00:37:50.200 | So I wanted to ask about long-term capital management,

00:37:54.120 | which was fairly early in your career.

00:37:56.840 | I think most people will be aware of what happened there.

00:38:01.480 | But you have written that that was a life-changing event

00:38:04.200 | for you, having worked on long-term capital.

00:38:07.840 | And it really influenced the way that you

00:38:10.440 | think about the world, that you think about markets,

00:38:12.800 | and your career, and everything else.

00:38:15.600 | Can you summarize your key takeaways from that?

00:38:19.520 | We could do this whole session on that,

00:38:21.200 | but from that experience?

00:38:24.760 | So in terms of my takeaways about how markets work,

00:38:30.640 | and investing works, and so on, I

00:38:32.680 | think the most salient thing that I could say about--

00:38:38.480 | the most salient thing that comes to my mind

00:38:40.320 | is just, what a great reminder or illustration of how

00:38:46.400 | incredibly efficient markets are.

00:38:48.640 | So we were finding all of these things--

00:38:51.600 | asset A versus asset B. They were almost the same,

00:38:54.320 | but they were trading at a different price.

00:38:56.440 | And we would buy the cheap one and sell the expensive one.

00:38:59.840 | And you could see that those prices were not

00:39:02.720 | the right prices-- same cash flows, different prices.

00:39:05.840 | This was like-- we didn't call it arbitrage,

00:39:09.080 | but this is kind of the idea of arbitrage.

00:39:11.440 | But the markets are so efficient that the amount

00:39:15.800 | of that disparity is so small--

00:39:18.400 | I mean, it's identifiable, but it's so small--

00:39:21.280 | that it doesn't really pay people to do it

00:39:24.600 | unless you use leverage.

00:39:25.720 | Well, now as soon as you use leverage,

00:39:28.240 | you're subject to the spreads widening out and needing

00:39:32.640 | to reduce and becoming riskier and more volatile.

00:39:35.840 | And so what seems like a kind of a free lunch being offered

00:39:41.080 | by the market, in reality, is not a free lunch.

00:39:51.280 | There's risk involved.

00:39:52.240 | You're getting compensated for risk.

00:39:54.280 | And then it turns out that a lot of these things

00:39:57.280 | that kind of look like alpha have this tendency

00:40:01.800 | to lose a lot of money when the stock market is down huge.

00:40:05.440 | And so you're doing these things that kind of look like they're

00:40:07.980 | alpha because in normal times, you're making money.

00:40:11.040 | It's not correlated with the ups and downs of the stock market.

00:40:14.080 | But you go into a really big financial crisis like 2008.

00:40:17.520 | Now, our thing was in 1998.

00:40:19.720 | Thankfully, it was in '98.

00:40:21.000 | It saved me 10 years.

00:40:22.040 | Otherwise, I would've been working for another 10 years

00:40:24.340 | and hit 2008, and it would have been a disaster.

00:40:29.740 | But in 2008, the financial crisis

00:40:33.580 | caused all of the banks and lending institutions

00:40:36.080 | to pull back balance sheet.

00:40:37.700 | All of these relative value opportunities blew out,

00:40:40.180 | became riskier.

00:40:41.020 | People had to reduce.

00:40:42.160 | It was a disaster.

00:40:43.820 | And so my LTCM experience, lots and lots

00:40:46.900 | of life-changing lessons.

00:40:49.140 | But I think that it's just such a great reminder for me

00:40:52.740 | or illustration of how efficient markets are.

00:40:55.540 | Last question.

00:40:56.580 | I'm hoping you can answer really quickly, Victor,

00:40:58.820 | before we take a break.

00:41:00.740 | You end your book with a quote from Milton Berle, which

00:41:03.220 | is that money can't buy you happiness,

00:41:05.020 | but it helps you look for it in a lot more places.

00:41:07.220 | Can you talk about how your perspective

00:41:12.260 | on money and happiness has changed

00:41:15.100 | since you started your career?

00:41:16.700 | Sure.

00:41:17.180 | So when I started, I don't know, I

00:41:20.620 | was just so happy to have a job.

00:41:23.300 | I was so grateful to have a job.

00:41:25.020 | And I loved my job in Wall Street.

00:41:27.740 | I started off in research in 1984 at Salomon Brothers.

00:41:32.100 | It was amazing.

00:41:33.020 | And every day, I just couldn't believe

00:41:34.560 | that this was meant to be work.

00:41:35.980 | It was so much fun.

00:41:37.260 | And I just wasn't thinking about money.

00:41:38.900 | But wow, the money was just out of control.

00:41:41.260 | I mean, it was-- I don't know.

00:41:42.580 | Every year, they were just paying me so much more

00:41:45.700 | than they should have or I thought I was worth or whatever.

00:41:48.900 | And it went up and up and up.

00:41:50.620 | And then I left Salomon and went and joined my partners

00:41:57.060 | to found this hedge fund, LTCM.

00:41:58.860 | And then the money just kept going on up.

00:42:00.900 | And it felt really good, but I wasn't really spending it

00:42:03.820 | on anything because I was really busy.

00:42:05.460 | So it was like it was this counting thing.

00:42:08.900 | So it was like, wow, it's nice to have a lot of money.

00:42:11.180 | I wonder what I'll-- I just was so busy,

00:42:13.700 | I just wasn't thinking about it.

00:42:15.700 | I don't know what I was thinking about.

00:42:17.980 | I was just so strung out between kids and work and family

00:42:22.620 | and everything.

00:42:23.620 | And then LTCM came, and boom.

00:42:26.220 | I took a huge-- I don't know.

00:42:30.980 | My family, we lost 80% of our wealth at that time.

00:42:34.540 | And then I really paid attention.

00:42:35.980 | [LAUGHTER]

00:42:38.460 | And then I really thought about-- I

00:42:40.060 | started to really think about wealth and so on.

00:42:42.020 | And that's when I started to really think

00:42:46.420 | about this idea that's just very basic in economics,

00:42:49.940 | that there is a decreasing marginal utility to more

00:42:53.500 | and more wealth.

00:42:54.180 | The more wealth we have, each extra dollar

00:42:57.260 | is just worth less for us.

00:42:58.820 | It's like how many-- with almost everything in life,

00:43:05.260 | there's a marginal decrease in the joy

00:43:08.900 | that we get from things as we get more and more of it.

00:43:11.580 | And when I started to realize that,

00:43:13.940 | I realized that wealth has to be a means to an end.

00:43:19.620 | It can't be an end in itself.

00:43:21.660 | And it had me-- at that time, I really re-evaluated my life.

00:43:25.180 | I took a 10-year sabbatical to reboot, re-educate,

00:43:29.460 | where I wasn't working.

00:43:30.620 | My kids were young.

00:43:32.620 | I was an at-home dad for 10 years

00:43:34.540 | before I started Elm Wealth.

00:43:35.860 | And so LTCM was like a shock therapy for me

00:43:40.140 | that got me, hopefully, to look at things

00:43:42.820 | in a more holistic manner.

00:43:45.540 | Well, Victor, we are so grateful to you for being here today.

00:43:48.620 | Thank you so much for joining us.

00:43:50.020 | Thank you, Christine.

00:43:50.860 | Yeah, it's a pleasure.

00:43:52.780 | [BLANK_AUDIO]

Bogleheads® Conference 2024 "Don’t Be a Missing Billionaire or Millionaire!" w/ Victor Haghani

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