Did My Friend’s Investment Advisor Add Value? (Part 2)

Part II: The Advisor’s Rebuttal

Last week, I published what turned out to be a popular post: Did My Friend’s Investment Advisor Add Value?

My friends pay roughly 1.92 percent of their account value in fees each year, for the money to be actively managed. My belief is that a passively managed account of rebalanced stock and bond indexes costing roughly 0.15 percent annually would be a far more profitable option over my friends’ investment lifetime, after all fees and taxes are considered.

I outlined my friends’ investment returns, made comments, and asked my readers for feedback in my previous post.

The advisor has responded to my post (and our comments). I have heard that he’s a fine fellow. His philosophy is different to mine, but he deserves my respect. After all, this is his bread and butter.

Feel free to add your comments or suggestions.

Advisor: First, the decision to use an index approach to investing versus active management is a debate that is still being fought among investment professionals and is not an issue likely to be resolved any time soon.

Andrew: In terms of peer-reviewed academic research, the debate over passive investing (index investing) versus active investing (buying individual stocks and actively managed mutual funds) ended a long time ago. While some people will beat the returns of a diversified portfolio of index funds over a lifetime with active management, it’s not likely (not impossible, but not likely) after fees and taxes. Index funds are highly efficient, after taxes. In a taxable account, it’s very tough to beat a diversified basket of indexes, and as far as I know, there are no peer-reviewed academic studies to the contrary. Many professional investors will understandably debate the issue, because their incomes rely on it. But financial academics sing a different tune.

When asked about investors’ chances of beating indexed portfolios after taxes, over a lifetime with active management, Economic Nobel Prize Winner David Kahneman says: “They’re not going to do it. It’s just not going to happen.”

The same sentiment is echoed by Economic Nobel Prize Winners Paul Samuelson, Merton Miller, Robert Merton and William F. Sharpe.

Advisor: [Andrew’s] website does suggest other websites that claim to have systems/approaches that will beat the index such as the “Beating the Index” website.

Andrew: This is a very good point. A fellow blogger, Mich, runs the blog “Beating the Index” but he’s a very honest bloke. If you were to ask him what the odds were of him beating a diversified portfolio of indexes (over a lifetime) after taxes, while actively picking stocks, he would likely say, “It probably can’t be done. But it’s fun to try.” I keep Mich’s blog link on my site because it’s fun to watch other people’s money. And he’s also a very honest chap.

Advisor: An index investor would not have told you to avoid investing in a technology index [in the late 1990s] but to invest as much as you wanted so long as you were comfortable with the volatility it added to your portfolio. However, the fundamentals were clearly indicating that tech stocks and the market as a whole was in bubble territory and that things would end very badly [before the 2001-2002 stock market crash]. Yale economist Robert Shiller made this argument is his book, “Irrational Exuberance”, prior to the bubble actually bursting.

Andrew: Above, the advisor is suggesting correctly that the stock markets were ready to burst in the late 1990s. He’s suggesting that an indexed investor would have seen his account drop dramatically when the markets dropped…because a total stock market index has nothing but stocks within it. His implication is that an active manager would have saved you this pain.

This ignores the fact that someone with a balanced account of stock and bond indexes (even if they had just 20% or 30% in bonds) would have been moving more and more money into bonds as the stock markets rose, simply to maintain their desired allocation of stocks and bonds. As a result, their money would not have fallen nearly as much as the stock market index itself, during the stock market drop of 2001-2002.

But based on the results of actively managed mutual funds from 2001-2002, most professional investors did not anticipate the irrational exuberance…or at least they failed to act on it.

Actively managed mutual funds are run by brilliant people. They have the option to keep their money fully invested in the stocks they own, or they can put their money into cash if they think the markets are headed for a crash. Unfortunately, when the market bubble burst in 2001, professionally managed funds (as an aggregate) had less money in cash than at any time in history, according to Princeton Economics professor Burton Malkiel. Such low cash levels for professional fund managers prove that they didn’t see the crash coming…or they failed to react to it. The average U.S. equity fund dropped 39.4 percent from March 31, 2000 to September 31, 2002, proving that professional mutual fund managers were part of Shiller’s “Irrationally Exuberant.”

Advisor: The other thing to keep in mind is that your success as an investor is determined far more by your choice of asset allocation than it is a decision to index or not index. Even if you use only index funds, you still need to decide how much to invest in a stock index vs. a bond index vs. a real estate index vs. a natural resources index, etc. It is this asset allocation decision where most errors are made and where we believe we can provide the most value to our clients.

Andrew: The advisor is absolutely right. But evidence suggests that professionals who bounce money around are very poor at determining what asset classes are going to do well over a short period of time. And most of them underperform annually rebalanced accounts of stock and bond indexes. Pension fund managers are a great example.

For pension fund managers, the world is their oyster. They can bounce their money from asset class to asset class, moving money where they feel it makes the most strategic sense. Pension funds also hire the rocket scientists of the industry. In most cases, if a financial planner applied for a job to run a state pension fund, their application wouldn’t likely be taken seriously. What’s more, a pension fund is run at an extremely low cost—a fraction of what a managed account charging 1.92% on annual assets would charge. With most pensions allocated closely to 60% stocks and 40% bonds, it’s worth comparing U.S. pension funds with the results of a portfolio comprised of a 60% total U.S. stock index, 40% U.S. bond index.

Based on a Piscataqua research study of 243 large pension funds, 90% of pension fund managers underperformed a comparable index portfolio (with 60% stocks, 40% bonds) from 1987 to 1999 (Bernstein, The Four Pillars of Investing, pg. 86).

And from Larry Swedroe’s book, The Quest for Alpha, we can read of this comparative study:

“FutureMetrics is a consulting firm that maintains an extensive database on corporate defined benefit plans. They studied the performance of 192 major U.S. corporate pension plans for the 18 year period 1988-2005…Less than 30 percent of the pension plans outperformed the simple indexing strategy [of 60% U.S. stock index, 40% U.S. bond index]” (Swedroe, 134).

These pension funds don’t have the same taxable liability that the average retail investment advisor would incur for his or her clients, nor does the average pension fund charge anything close to 1.92 percent annually (the cost of the account in question). Can my friends’ advisor beat the vast majority of professional pension fund managers, after taxes, and after charging 1.92 percent annually? Perhaps he can, but the odds of that probability are very slim.

[The advisor compares his client’s annual and cumulative results to the S&P 500, but doesn’t include dividends in the comparison. When questioned about it, this was his response below]

Advisor: We began using the S&P 500 with-out dividends many years ago [to compare to our clients’ accounts] because we had difficulty getting reliable data that included dividends. This is something we will revisit as the portfolio software has improved quite a bit over the past several years.) …we clearly indicated on your [my friends’] statement that dividends were not included. I also appreciate the fact that he [Andrew] acknowledges that even with dividends included, you still significantly outperformed the S&P Index.

Andrew: If a comparison between the speed of two cars is being made, but one car has a flat tire, is it fair to race those two cars and show the difference between the two because you don’t know how to fix the flat? Most clients won’t know the impact of reinvested dividends. So when we suggest a comparison to an index (without dividends) most people won’t know that omitting dividends over an investment lifetime will only showcase half of the compounding gains. The impact is huge. But few investors will realize that. I hate to be cynical, but I have to be, in this case. Although I am sure that it exists somewhere, I don’t know of any portfolio tracking software that would track the returns of the S&P 500 without dividends.

Advisor: We have had a higher allocation to natural resources because we believe this asset class was and is still undervalued. We also believe that it is a good hedge against the inflation and a falling dollar which are both concerns of ours. And as Andrew acknowledges, this allocation has resulted in significant gains to your portfolio.

Andrew: The higher allocation to natural resources for my friends’ account served them well. But for anyone to suggest that they know whether natural resources are undervalued of overvalued is very difficult. Unlike businesses and real estate (which are hard enough to value) you cannot look at natural resources and determine that their price to earnings (as with stocks) or that their price to rental revenue (as with real estate) is either historically high or low. Guessing where prices in natural resources are going to go is highly speculative. And the rebalanced portfolio of index funds that I compared with my friends’ account probably outperformed my friends’ account, as you can see on my previous post on the subject.

Advisor: As you know the fees we charge for our investment management are fully disclosed and it is quite clear every quarter the actual dollar amount that is paid out of each account. The performance we report to you is also net of all fees which means that the performance on your investment report is after (not before) all fees have been paid. Even with those fees you have outperformed the S&P.

Andrew: The S&P 500 index is not a portfolio. It’s simply a representation of the aggregate price movement of 500 large United States businesses. No responsible portfolio would be fully comprised of a simple S&P 500 index. Considering the volatile markets we have had over the past decade, an investor with a S&P 500 index, coupled and annually rebalanced with virtually any other asset class (bonds, real estate income trusts, gold etc) would have easily outperformed the S&P 500 index.

Advisor: One of the things we do on a regular basis is to evaluate thousands of mutual funds and then select the few funds that we will use in our Fund Allocation Service program. One of the factors we look at is the expense ratio (fees) charged by each fund because all things equal, we’d prefer to use a fund with lower expenses. However, of greater importance is the net of all fees performance of the money manager(s). In other words, I won’t choose fund B over fund A because it has lower expenses if fund A earns an extra 2% return every year net of all fees. I am always skeptical of mutual fund families that focus on their low expenses and not their investment performance.

Andrew: It’s very difficult for anyone to know what mutual funds will perform well ahead of time. It’s tough to look forward and suggest that fund A will return 2 percent more than fund B, by looking at its past results and expecting the past to be a future prologue. The Wall Street Journal’s Jason Zweig puts it nicely when stating that “Your chances of selecting the top-performing funds of the future on the basis of their returns in the past are about as high as the odds that Bigfoot and the Abominable Snowman will both show up in pink ballet slippers at your next cocktail party. In other words, your chances are not zero—but they’re pretty close” (pg. 245, The Intelligent Investor, Revised Edition)

A multitude of academic studies reveal that the most reliable predictor of future mutual fund performance is low fees, not high historical returns.

If we sought funds that have historically done well, we would likely be enamoured by the funds given a 4 or 5 star rating by Morningstar…for strong historical performance. But that would be a poor strategy. One hundred dollars invested in a broad based U.S. stock market index from 1994 to 2004 turned into roughly $283. According to Hulbert’s Investment Digest, if one hundred dollars were invested and continually adjusted to only hold the highest-rated Morningstar funds, the invested $100 would have turned into just $194. Investing with an eye in the rear-view mirror is a poor strategy, especially when it comes to predicting future mutual fund returns.

Advisor: Andrew attributes the fact that your portfolio outperformed the S&P 500 with dividends to mere luck on the part of [our fund company]. If he does not consider investment outperformance as evidence of providing value, what evidence could we possibly give that would demonstrate we are truly providing value to our clients? How could we ever prove we weren’t just lucky?

Andrew: As mentioned previously, outperforming the S&P 500 over the past decade would have been easy. The markets were very volatile, and the S&P 500 index didn’t gain much. Although I’m sure that some investors lost to the S&P 500 over the past eight years, very few would have. Whether you had a portfolio with 10%, 20%, 30% or 40% in bonds over the past eight years, if you rebalanced it when your portfolio allocation got out of whack, you would have easily beaten the S&P 500 index during the past eight years. Very few investors underperformed the S&P 500 over the past eight years.

Advisor: Andrew then goes on to argue that you would have been better off with a portfolio divided fairly equally among 3 specific Vanguard index funds rather than the allocations we have been managing for you since August of 2002. How did he choose this particular three fund portfolio for comparison? Is this the portfolio that he had been recommending to his friends/clients since August of 2002? Or is this hypothetical portfolio that he chose sometime after August of 2002?

Andrew: This indexed portfolio is one that I suggested long before 2002. I can’t guess where markets are going to go, and I don’t think anyone else can (with consistency) either. A portfolio—such as the one I recommended– with a stock allocation split between a U.S. stock index and an international stock index would give the investor a representation of stocks, based on global market capitalization. For example, roughly half of the world’s stock value is comprised of U.S. stocks, with roughly the other half comprised of international stocks. The U.S. index and the International first world EAFE index have performed similarly during my lifetime: separated by less than 1 percent annually. Short term, they can perform differently, however. So by rebalancing them annually, the investor is essentially being “greedy when others are fearful and fearful when others are greedy” by selling off bits of the winning index, and adding to the lagging index.

The portfolio I suggested doesn’t take a global benchmark risk. In other words, choosing to invest broadly over the entire world markets doesn’t ensure that you’re trying to time the rise or fall of any given foreign market. The beauty is in its simplicity. As for the bond component chosen, there’s a general rule of thumb suggesting that (for people without pensions) a person’s bond allocation should roughly equate to their age. Rebalancing the bonds with stock indexes also allows the investor to be slightly greedy when others are fearful, and vice versa.

Advisor: He [Andrew] also suggests that an even better portfolio would have been AssetBuilder’s “Model Portfolio 10.” Is he aware that no such portfolio existed in August of 2002? The link he provides to the AssetBuilder web page makes it clear in the disclosure that the performance data provided was “based on transactions that were not made.” Rather, “the trades were simulated, based on knowledge that was available only after the fact and thus with the benefit of hindsight.” It is very difficult for actual portfolio performance to beat the performance of a hypothetical portfolio constructed after the fact.

Andrew: The advisor is absolutely right. I should not have used that comparison. But Assetbuilder’s “Model 10” portfolio has represented real money since 2006, and it has gained 49.7 percent since then. My friend’s account has probably underperformed it over the past five years.

Other Lazy Portfolios of rebalanced indexes also likely outperformed my friends’ account over the past five years. Comparing my friends’ account with these sample accounts of indexes (all with different weightings and asset class combinations) shows an interesting comparison, without using hindsight. These online couch potato samples of indexed portfolios have been around for years.

– The Couch Potato Portfolios

 

3 Mth
  Period

1 Yr
  Annual

3 Yrs
  Annual

5 Yrs
  Annual

Y-T-D
  Period

Since 06/2006

Annualized

STD Dev

Couch Potato

2.88

17.79

4.25

5.81

6.62

5.81

11.19

Margarita

2.48

22.27

2.02

5.24

6.14

5.24

14.81

Four
  Square

2.88

20.32

2.70

5.59

6.09

5.59

12.89

Five
  fold

3.46

22.27

3.70

5.96

7.76

5.96

15.93

Six
  Ways From Sunday

2.68

25.45

2.78

6.56

8.61

6.56

16.75

Seven
  Value

2.52

25.33

2.47

5.99

8.62

5.99

16.94

Seven
  Value 2

2.41

25.11

2.89

5.84

8.42

5.84

17.73

Nine
  Emerging

2.82

25.72

2.65

6.48

7.71

6.48

18.80

10
  Speed

2.48

25.91

1.97

6.08

7.33

6.08

19.16

Average 5 year returns of the respective index portfolios above: 5.95% or 33.5% cumulatively

Average 5 year return of my friends’ portfolio: 4.89% or 26.9% cumulatively

(Note—The gap could be much larger in favor of the indexed portfolios, as of July 2011, considering that many of my friends’ resource based investments have plummeted in value since their last March statement)

Having said all this, it’s important to note the potential inaccuracy involved when comparing portfolios. Unless we can evenly dollar weight investments, it’s tough to make comparisons. For example, if my friends added an unusually large chunk of money to their portfolio in 2009, it would have dramatically juiced their returns because of the 2009 market low. A fair comparison would involve adding the exact same sum to one of the couch potato portfolios above, on the same date.

For this reason, the comparisons above (in fact, the comparisons made throughout this post) are not fully accurate. Whether the advantage falls in favor of my friends’ account or a rebalanced indexed option, it’s tough to tell unless we could evenly dollar-weight all deposits, which isn’t very practical.

 Advisor: But even if the portfolios he suggested were real and not hypothetical, on what basis would he argue that his portfolio or AssetBuilder’s portfolio added any value? He seems to suggest that these portfolios are superior because they had better investment performance. Is it fair that outperformance on his part is evidence of a superior portfolio, but outperformance on our part is merely evidence of luck? How can we know that the two portfolios he mentioned weren’t just lucky?

Andrew: The portfolio I mentioned (a diversified blend of a total U.S. market index, a total International market index and a bond market index) represented a weighting of stocks based on global capitalization. As such, no value was added to my portfolio at all. The portfolio simply earned the returns of the world’s stocks, and was annually rebalanced with bonds to maintain the target allocation, allowing the investors to have a bond allocation that roughly equated their age.

When Warren Buffett says that, “In aggregate, professional money managers add no value,” he’s referring to long term returns beyond an indexed benchmark, academically referred to as “Alpha”. Adding “value” as he suggests, is adding further after-tax profits beyond what a diversified basket of indexes could deliver. Most advisors, based on this definition, fail to add “value”.

Advisor: Since asset allocation rather than security selection has the greatest effect on investment performance, I’d be curious to know how Andrew makes his allocation decisions. Is it based solely on how much volatility the investor is willing to tolerate? And once he has determined an allocation, will it ever change based on what is happening in the economy, the world or the markets? Or is it more of a set it and forget it methodology? From visiting a couple of the websites he recommends, I did not see a consistent method of choosing an allocation.

Andrew: If I don’t listen to the economy, and if I keep my costs low, I can annually rebalance an account of stock and bond indexes (shifting the bond allocation slightly upwards as I age) and I will beat the vast majority of professional investors after all fees and taxes.

That fact is academically irrefutable. But whether an advisor can dance around, following the economy, charge nearly 2 percent in fees, and beat the overwhelming majority of U.S. pension fund returns and endowment fund returns over an investor’s lifetime is going to be anyone’s guess.

Bill Miller, in 2006, was named by Fortune magazine’s Andy Serwer as “the greatest money manager of our time.” And Miller had this to say:

“A significant portion of one’s assets in equities should be comprised of index funds…..Unless you are extremely lucky, or extremely skilful in the selection of managers, you’re going to have a much better experience going with the index fund.”

Can an investor pay nearly 2 percent in annual fees, and beat a diversified, globally weighted basket of indexes over an investment lifetime? The odds aren’t good.

Is there anything that you find particularly interesting about the above exchange?

 





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

You may also like...

12 Responses

  1. Hi Andrew,

    I should probably add a line on my site about my RRSP funds being all passively invested. BTI is my investment journal where I compete with my RRSP returns investing in a sector I enjoy.

    In this regard I will reiterate what was said above: “It probably can’t be done. But it’s fun to try.” (consistently over the long term)

    I bagged 2010 and we will need to get through all the 2011 debt drama in order to bag 2011.

    Cheers and thanks for your kind words!

    Mich

    • Thanks for stopping by Mich. I knew that you weren't advocating "3 steps to beat the market over your lifetime" on your site.

      If my friend reads this, it will be great for him to see that your retirement money (your RSP money) is passively managed.

      And with the non RSP money, you can fight the good fight. I look forward to seeing how you do, and I will live vicariously through it.

      Thanks again Mich!

  2. DIY Investor says:

    The exchange is interesting to me in that it is so easy to make an argument that active management adds value, especially since it seems so intuitive.

    The firm I had previously worked for told clients they did well, on a relative basis, in 2008 being down 30% when the S&P500 was down 37%. Most were in a 70% stock/30% bonds model that with low cost ETFS would have been down 24%. They walked away thinking they had performed well on a relative basis. The president of the company enjoyed pointing to the framed ethics statement on the wall in the conference room.

    The whole S&P 500 dividends issue has been around for decades in various guises including tricks with graphs, backtesting, and cherry picking time periods.

    Finally, everybody saw the bubble and got out. I'm just not sure what drove p/es to the moon! -:)

    Interesting exchange.

  3. I know what you mean Robert. Intuitively, it appears to make perfect sense that people watching the economy and moving money around to take advantage of economic trends are going to beat the market over time–or beat a no-brainer diversified account of broad market indexes or ETFs that take 10 minutes a year to manage.

    But paradoxically, it doesn't work out that way. What people fail to see is that when we make a purchase of any asset, there's an institutional investor on the other end of that trade who sells it to us, thinking that it's worthy of a sale, while the purchaser thinks it's worthy of a "buy".

    It's like that with any trade. When a mutual fund manager purchases a stock, there's another institutional manager (or fund manager) who is selling the exact same stock (in a sense, to the institutional investor who's buying it).

    To beat the market (or a diversified basket of indexes) an active manager has to outwit the other active managers. To do that consistently, and then charge a client 2% of their portfolio each year–while hoping to beat a passive portfolio–is close to impossible over a lifetime, after fees and taxes.

    As for your old firm that bragged about beating the S&P 500 during a down year… do you think they knew that adding a single asset class to the stock mix (as with 2008) would have ensured that they would beat the market during that year or not? I mean, were they misleading people? Or did they simply not realize it themselves?

    I wonder the same thing if someone boasts of beating the S&P 500 over the past decade. As I mentioned in the post, if you add any asset class you want to a portfolio with the S&P 500 index, the portfolio will have beaten the S&P 500 over the past decade (because practically every asset class I can think of beat the U.S. market over the past ten years)

    This begs the same question I asked about your former firm. Do people who boast of beating the S&P 500 over the past 10 years really feel that they have done a good job, or are they innocently unaware? What do you think?

    And Robert, when your firm gave individual investors their investment returns, did they evenly dollar-weight their clients' returns with a benchmark index, or did they just compare apple to oranges, by comparing to a benchmark without dollar weighting the comparison: without comparing the results based on an even dollar amount going into each comparative investment vehicle at exactly the same moment? Without doing that, comparisons don't seem to make sense. Agree?

    That's why, although the indexed portfolio examples I gave all beat my friends' portfolio, I was reluctant to claim that for certain, without having access to information that would allow me to evenly dollar weight every comparison.

    The investment club I manage has software at http://www.bivio.com that let's us track dollar for dollar: every dollar we invest is compared to an even dollar amount invested in a variety of indexes. It's certainly going to keep us humble.

  4. DIY Investor says:

    The place I used to work at didn't even compare performance to the benchmark. It showed the returns for the separate indices: S&P 500, Barclay's Aggregate Index, Dow Jones Industrial Average, and 3-month Treasury bills. The client's performance was reported on a time-weighted-return basis which was fine. But no similar performance was reported for the benchmark.

    In this setup, a fast talker can pretty much present performance in the most favorable light by talking around the various indices. Clients, in turn, pretty much accepted what was said. And, these were pretty smart people in their respective fields. Of course there were some who asked the right questions and either didn't use our services or resigned the account when they saw what was going on.

    What was being done wasn't illegal per se because there are no real standards for reporting comparative performance results for investment advisors. And it was done partly because they really didn't understand benchmark performance comparisons.

    This of course was shocking to me because coming from the institutional side of the business I was used to very rigorous reporting standards.

  5. Those benchmark performing standards are interesting, because you could use whatever convenient benchmark serves the purpose. The S&P 500 was basically flat for a decade, so using that to compare to accounts over the past decade can make any account look good (doing it without dividends included for the S&P 500 can make the account look comparably spectacular)

    I think this would be the fairest benchmark an advisor could give a client. The advisor could say: "OK, considering that you are 30 years old, we will create three benchmarks for you. An indexed benchmark portfolio with 20% bonds, 25% bonds and 30% bonds. The rest of the benchmark account be comprised of a domestic, broad stock market index and the stock index and bond index will be rebalanced annually.

    Then the client could compare their results with three low cost options of various risk levels. What do you think? Shall we propose to set a legal standard based on this? I'm joking, of course. But what do you think?

    OK, if that was evenly dollar weighted, it would be amazing, as a benchmark. Wouldn't that be great industry standard?

  6. DIY Investor says:

    The idea that a set of standard benchmark returns should be widely available makes great sense but good luck on getting it done. The financial services industry would fight it tooth and nail!

    For my clients I use Schwab's investment performance table as described in the next to last paragraph in

    http://rwinvesting.blogspot.com/2011/07/investmen

    I also track the passive portfolio used in the BlackRock table:

    http://rwinvesting.blogspot.com/2011/07/2011-year

  7. That is definitely the way to do it Robert!

    I think that many people stumble into their financial advisors without knowing much about them—other than the fact that they're usually really nice people, with great interpersonal skills.

    But your clients are truly getting value for their money. You are fishing with them, then showing them how to fish, while teaching them how to properly count their fish.

    I am impressed!

    If you haven't checked out the links associated with how Robert tracks his clients' performance, see his comment above and click it.

    He used a diversified portfolio comprised of a variety of index funds (with a bond index) as a comparative benchmark. Beautifully honest and educational.

    Nice work Robert!

  8. Brian says:

    Dear Andrew,

    I wanted to thank you for all the advice you gave me, including this posting on your website that allowed all of your experienced and knowledgeable fellow bloggers to comment on my portfolio. I wanted to let you, and your friends, know that as of last week, I finally have all of my previous portfolio liquidated and it's been reinvested into Vanguard. I followed the advice in your book and invested in total stock, total bonds, and total international.

    It's been a liberating process and I feel like we're finally in control of our financial future. To be honset, despite receiving quarterly statements, when I liquidated my assists at Royal Alliance and saw the transfer into my bank, it was the first time in a long while that I really knew our net worth (The statements were confusing for me). Vanguard is so easy and simple to understand.

    I still have two ROTH IRA accounts I'm filling out paperwork to get transferred, but I'm excited about the future and the new empowerment I feel. Thanks for your patience and guidance. I feel like I was one of the last holdouts of your friends in Singapore to fall in line with your ideas. It was your post here and all of the responses that helped push me over the edge.

    Thanks!

    Brian

  9. Great to hear Brian! Thanks for letting me know!

    Cheers,

    Andrew

  10. Matt says:

    Hi Andrew,

    Just reading your book right now, and I noticed you quote "David Kahneman", (and also on this page and a few other pages on your site too).

    Actually I believe his name is Daniel, not David. 🙂

    Definitely a genius of our times.

    Kind regards,

    Matt

    • Yeah, that typo (and it was my fault) definitely bugs me. You are actually the first person to mention it. Good eye! I should have asked for your help as a proofreader!

      Cheers,

      Andrew

Leave a Reply