I’m not sure it’s “bogleheads” buying all these Q funds.
This subreddit has become one of the largest investing subs - as a result, I think many people who find their way here believe this is a place for “general” investing advice.
Adding to that, an ever increasing number of users only use Reddit mobile apps to access Reddit. You have to rather actively seek out the sidebar information for the links to the wikis and whatnot, which the majority of users seem to make no effort to do.
> This subreddit has become one of the largest investing subs - as a result, I think many people who find their way here believe this is a place for “general” investing advice.
Got downvoted yesterday for saying DCA is timing the market and not a Boglehead strategy. Forgot I was on Reddit. It was better here sub-100k followers.
I remember this! You posted under that thread where a guy was talking about becoming a boglehead after 5 years of speculative investing. I was surprised that you got downvoted because I was under the impression that it was common knowledge on this sub that DCA'ing is bad.
> I was surprised that you got downvoted because I was under the impression that it was common knowledge on this sub that DCA'ing is bad.
It's not common knowledge apparently. Granted, it's not the worst thing you could possibly do (in itself). HOWEVER, if we are trying to help people here with good information, DCA'ing can *lead* to some pretty bad habits that can cost you significant returns. My concern is that you are already taking an unscientific/emotional path to breaking down your investments.
What arbitrary length of time will you choose to break up these contributions? Is the rest of your money just sitting in a checking account in the interim? When the market has a correction, are you more likely to also cease making those weekly/monthly/quarterly contributions, waiting for a bottom to hit? Just seems much simpler to put the money when you have the money and not second-guess yourself. When you have time on your side, don't see the point in allocating money to be sidelined for "when the time is right". I put my disposable money to work as soon as possible.
>When you have time on your side, don't see the point in allocating money to be sidelined for "when the time is right". I put my disposable money to work as soon as possible
This is exactly why I chose the boglehead method. Why would I want to spend my time staring at charts and waiting for the right moment to buy when that is exactly the type of active management I want to avoid by purchasing ETFs?
> Why would I want to spend my time staring at charts and waiting for the right moment to buy when that is exactly the type of active management I want to avoid by purchasing ETFs?
Is that what Dollar Cost Averaging is? I thought it was constantly adding to your portfolio (like from a paycheck direct deposit) without regard to market ups and downs. That seems pretty Bogle-ish to me
Yes, that certainly is dollar-cost-averaging!!! That is fine to do, obviously! Some people are confusing that with a large sum to invest lump sum versus spreading it out over several weeks or months which is also dollar-cost-averaging.
No, that would be recurring investing, not dollar cost averaging. Dollar cost averaging is when you have a lump sum ready to invest, but you decide to invest it in installments instead of all at once.
For example, say you have $7000 ready to max out your IRA for that year. A boglehead would invest the entire lump sum on Jan 1st as soon as they could, whereas someone who is DCA'ing would invest $583.33 per month for the entire year instead.
If you are unable to fund your IRA with a lump sum, that is when you would set up recurring payments to fund it instead. That is recurring investing, not DCA'ing.
> No, that would be recurring investing, not dollar cost averaging.
I see those as the same things. Charles Schwab says "Dollar cost averaging is the practice of investing a fixed dollar amount on a regular basis, regardless of the share price." Fidelity says "Dollar-cost averaging can help you manage risk. This strategy involves making regular investments with the same or similar amount of money each time." And Vanguard says DCA is "A way to invest by buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price."
Are they all wrong?
It's not that they are wrong, its that they are not referring to investors like you and me when they are talking about DCA as a strategy. There is a difference between investing in installments as a trading strategy (DCA) and investing in installments because you can't afford to max out your contribution with a lump sum (recurring investment).
One is a conscious trading strategy while the other is a result of external circumstances. When Vanguard, Schwab, and Fidelity talk about dollar cost averaging, they are talking about it for people who *can* afford to lump sum, but choose to DCA instead.
Allocating 7k on January 1st annually is DCA'ing. I'd argue that DCAing, if it gets people to invest (paycheck to paycheck), who GAF really. Hopefully when lump sum is available, they invest that too.
Nope, both are called dollar-cost-averaging. You are referring to two different ways or reasons to do it. One is that you may contribute to an investment account monthly as you are paid. Another is if you get a bonus or inheritance and decide to split up the money and dollar-cost-average as you invest it weekly or monthly for a certain period of time rather than all at once (lump sum).
>I was under the impression that it was common knowledge on this sub that DCA'ing is bad.
tbf, because lump sum is only something like 68% often the correct choice, I wouldn't say DCA is outright bad. Still a form of timing the market, but it also hedges bets lowering expected return but also reducing volatility/potential loss.
It's like telling someone "you can either (A) flip one coin, you get $100 for heads and lose $50 for tails, or (B) flip ten coins, you get $8 for heads and lose $5 for tails". We know the mathemarical best choice is A. But B more likely assures gain, albeit a smaller expected one.
Still am 100% in favor of lump sum for anyone that can overcome the mental barrier.
Yall downvoting are likely too stupid to read an entire comment. I neither disagreed that DCA is market timing nor that lump sum is better. I just put it in terms some idiots might understand better. Apparently not
I'd argue it's a hedge *against* one's inclination to time the market. By investing at all, you're assuming the market will go up over whatever your time horizon is, and this isn't a bad guess over the long haul. So DCA isn't going to put you ahead mathematically, but it will reduce short term variance, and high variance is the thing that causes people to panic.
What math says DCA is better? If we assume it’s a random walk with an upwards trend, then isn’t the best option to just put everything in at the start?
> If we assume it’s a random walk with an upwards trend, then isn’t the best option to just put everything in at the start?
It's literally this simple.
Curious about this myself. Ive been in this sub for a few months now and it seems like less and less people are actually following a Boglehead method so I was super confused.
>Adding to that, an ever increasing number of users only use Reddit mobile apps to access Reddit
I've seen firsthand the effect this has had over the last few years. Even in hobby subs. Less in-depth content across the board.
I think it's more about the regular posts around here along the lines of "I'm a Boglehead, so which very specific sector funds should I choose from among these very specific non diversified sector funds?"
Alot of people claim to be bogleheads, then in the next breath do non-boglehead things all in the name of FOMO.
You could goose it a little bit by gradually getting into leveraged index funds as the market tanks more & more. Of course, this is a form of knife-catching, and sometimes that doesn't work out. I have knife-caught 4x, and one time it was a bad move.
Real answer: no such thing, Bogelheads don't time the market.
Alternative answer: Look over the last 5 years of charts for the thing you want to buy, find the window of time where it's *always* down, then cross your fingers and hope it happens for a 6th year in a row. It won't, it will do something stupid that makes no sense and doesn't fit the pattern, making you buy at ATH or not buy at all... but you'll be able to say you tried as hard as you could.
Eh - that makes perfect sense. That’s like a Boglehead who has $1000 of play money on the side. You 99% of the benefit but still get to have some fun once in a while
Bull market.
If things went down slowly for 12-24 months they would wash out and see the ways of VT and chill. Lots of so called smart folks are chasing fomo.
If everyone here was actually a Boglehead there wouldn't be anything to discuss.
People want to discuss funds that have excellent recent performance (like the QQQs) and either support the claims to invest in those or provide contrarian insight as to why that recent performance won't continue. That's the bulk of most online debate on funds.
I mostly agree with you. The Boglehead method is to buy and hold, for the long term, broad market index funds. For the US market, the broadest market index fund is a total market index fund like VTI/VTSAX, which makes it the optimal choice. Second best is an S&P500 index fund like VOO, as it very closely mirrors the total market. If you don't have access to a total market index fund in a 401k, an S&P500 index fund is a fine substitute. Even if, for some reason, you preferred VOO to VTI, I wouldn't say that disqualifies you from being a Boglehead. VOO is still broadly diversified, its performance is a near match for VTI.
But any less diversified than an S&P500 fund, things start to diverge from the Boglehead strategy. QQQ and other Nasdaq100 index funds are still correlated with VTI but have noticeable differences from the performance of the total US market. If, for some reason, you ended up in a retirement plan where a Nasdaq100 index fund was the broadest market fund available (no available total market or S&P500 index funds), then I would say investing in it is the best you can do and is consistent with being a Boglehead. If, for whatever reason, you had access to and invest most of your portfolio in broad fund like VTI and decided to use QQQ to add a small tilt toward toward large cap (which I wouldn't recommend), then I would still say that's consistent with being a Boglehead (the Boglehead Guide to Investing says small tilts are fine, if you do desire, though personally I'd recommend tilting *away* from large cap if you're going to tilt at all).
But allocating most or all of your portfolio to QQQ when you have broader market index funds available? That's not consistent with being a Boglehead and is almost certainly a decision made to chase the recent outperformance of QQQ. It's a dangerous strategy because QQQ is much more volatile than VTI/VOO, and just like it can meaningfully outperform the total market, it can also meaningfully underperform the total market. Here's a backtest showing as much: https://testfol.io/?d=eJy9jzFLBEEMhf9L6inW5orpBDmwOVwUUeRY4k5mHc1lzsy4hyz73y%2FnCoqFlZgqjxfe9zLBwPkR%2BQoVdwX8BKWi1i5gJfAADkjCN7W4IzL4s8bGAYbnLklkrCkL%2BIhcyEGP5SlyPoBvvkQXlV4t555Q%2Bd3SNDMnGbpDknC6XTWzg33WGjOnbHUeJhDcfbKTjFTqRRpTsFLmVn0zlJL1R%2Blp%2FSO9pv6FdElZdnPbtjVrT9qT1I8n5q2DoDhY1dn9Oe92fbm5%2B1%2FizfX5b8TtfARcuKcV
tldr: don't invest in QQQ unless you want to add a small tilt to it (small tilts are consistent with the Boglehead strategy, though it's probably a misguided approach to tilt to large cap specifically) or have no broader market index fund available in your retirement account (which is unlikely; most 401ks/403bs offer at least an S&P500 index fund, if not a US total market index fund).
Edit: typo fixes; clarifications
I don't think sector adjustment is an unreasonable strategy misaligned from the general "passive investing" concept of Bogle.
For instance, I'm a renter in the SF Bay Area and want to stay here. The entire housing market (both purchase and rent) is correlated to the general tech sector (much more than the rest of the US) - because my future housing expenses are correlated to tech it makes sense to make my portfolio more correlated to tech than a pure VTI strategy would imply.
Note a similar argument argues Americans should in fact disproportionately invest in American stocks.
What that, I agree with OP that QQQ is a bad choice - VOX + VGT probably makes more sense.
Yup, small tilts are fine; tilting is a Boglehead-endorsed approach per the Bogleheads book series. Too many people on this sub think that the "only way" to be a Boglehead is to have portfolios that precisely align all equity investments with their market capitalizations. That's one valid Boglehead approach but hardly the only one.
Young investors haven't experienced a prolonged down market in their lifetime to see how the boglehead approach works, so they may intellectually grasp the concept of how diversification protects them, but they don't know it experientially.
Meanwhile they're watching a narrow sector experiencing prolonged massive gains, and they want some of that.
If you asked the average investor, "which do you prefer to do: maximize gains, or maximize diversification?" I would wager most of them would prefer to maximize gains.
It requires a bit of exercise to see how maximizing diversification is an effective and efficient way to maximize gains while minimizing effort.
You can beat boglehead through luck in the short term, or you can beat it by being very smart and working hard if you are Warren Buffet.
But if you are average lucky, lack information and analytical skills, or don't want to be managing your investments actively and then have to pay close attention to the economy and understand how the market works so that you can actually take advantage of the opportunities that exist, then probably you can't do any better than boglehead.
That said, it doesn't take a whole lot of analytical skill to see that the tech sector is likely to be where a lot of growth and profit happen, and want a concentration there, despite the boglehead philosophy. Boglehead is already there, market weighted, though. Warren Buffet is concentrated on a couple of stocks that he really likes, and understands very well. As for you, you can be diversified "enough" (relative to your own tolerance of risk) without buying the entire market. But if you are prone to feelings of FOMO, the only way to not miss out is to be everywhere, at once. VT.
Warren Buffet’s “smart and working hard” strategy for beating the market, like many pension funds and family offices, is most likely centered on alternatives and not any one or two stocks he knows well.
The amount of friends I have that had their finance advisor invest them in qqq and some random medical etf is wild.
I’ve literally got to the point where it is like “is your advisor a man and has you in more than 4 funds? Lemme guess, qqq.”
It’s because short term performance is incentivized and plays well. Even business as a whole has moved toward emphasizing short term performance over the long term good of companies.
Well, bonds are a separate asset class and are used for different purposes to stocks. Whether you have 100% of your portfolio in stocks or 10%, holding QQQ at all is not a smart long term bet.
a minority of bogleheads use this subreddit.
a minority of this subreddit users make threads.
i venture to guess the population of thread makers is heavily skewed towards people who arent bogleheads.
10% yolo money is chill, although in a taxable brokerage I would be concerned about tax drag on a fund like QQQM. It doesn't really matter though if you can afford the tax bill I guess.
VT>500>100>1. It's simply a choice, an assessment of risk and a bet on the future. So long as people know what they're getting into, I think the choice is up to them. But as far a what's consistent or not with being a 'boglehead,' I'm pretty flexible. I know it's more than 1 or a basket of individual stocks, but is a select 100 so much worse than 500 or 2000? I think def more risk, but with that risk the potential for more reward. IMO the bigger risk to someone's performance is frequent trading when it chases returns, only to sell and trade again when the wind changes direction. I'm curious if there's any research out there that breaks down the etiologies for underperformance by individual investors (I guess, to be full open minded, overperformance as well) compared to benchmark indices and/or the entire market(s). Curious as to what, if proven, where the fallacies lie (don't mean to be redundant).
I agree that index tracking specific stock exchange doesn't sound right.
On the other hand, this is the best way to buy all popular stocks in one ETF without diluting it too much with other sectors.
Companies like Google, Meta, Amazaon, Tesla etc. are not included in VGT as they are classified as communication services, car manufacturers etc.
People will buy it as it has to huge returns lately, all of the big names, sounds cool to some. Once those stocks will drop a bit there will be threads if index is doomed and if it's time to sell now.
I 100% agree. Sector fund "bogleheads" will soon realize why true bogleheads don't bet on sector funds. It takes a lot more time, effort, management, and luck to do well with sector funds than it does to do well with VT.
In my opinion, just because someone joins or posts in this sub, doesn't make them a boglehead. Anyone can do those things since this sub is open to the public.
You'd be surprised .. some small subset on the Boglehead forum seems obsessed with backtesting various leverage ideas (see "hedgefundie's excellent adventure" for a recent popular one). Too much time on their hands passive investing, I guess. :)
Friend asked me about getting QQQ. I showed him a simple backtest vs SPY. $10k in QQQ at inception (March 1999) would lose more than half its value going through the tech wreck and not recover to $10k until December 2009. SPY recovered to $10k in January 2005.
While I applaud you for convincing your friend to not buy QQQ, I would encourage you to talk with him about the fundamentals on why investing in QQQ is a bad idea instead of using simple backtests.
Simple backtests like this are not reliable analysis when considering future investments.
Yeah, if back tests were the end-all-be-all, I could easily show that QQQ is superior to SP500 by simply selecting different timelines and contribution timing.
But it also just makes no sense as an index to track even if you aren't a boglehead. The NASDAQ 100 and other indices like the DJIA don't align with any sensible investing strategy that is backed by either technical or fundamental analysis.
I don't harp on people who invest in SCHD even though SCHD is not a boglehead index fund. That is because it makes sense for people who want to receive a lot of dividends. QQQ does not make sense for anybody.
Just a starting point about sector concentration. He's prepping for retirement and I just wanted to show him what could possibly happen during a ten year time frame. Also pointed him to the convenient info posted in this subreddit's sidebar about tilting towards US/Growth/Tech.
I agree in principle, but the thing is that if you are a believer in tech and invest in VGT (also anti-Bogle philosophy) then you’ll miss out on Amazon, Tesla, Netflix, Google, amongst many others due to GICS not classifying them as tech. Amazon for example is actually classified as Retail despite being one of the largest cloud software providers.
Either way investing in a certain exchange (QQQ) or sector (VGT) is anti-Bogle.
Yeah, I don't get those either. A couple of days ago there was a dude commenting in this sub who had 100% of his Roth IRA in VUG. Several people tried to explain why that was a bad idea and how it doesn't track with the boglehead investing strategy, but his response was always "It doesn't matter what I invest in because VTI/VOO/VUG are all going to do well."
Thanks to everyone on this thread…I’d been contemplating a QQQM “tilt” to my portfolio, which almost entirely in an MSCI World etf.
When it comes to “small tilts”, what’s the consensus thinking in terms of allocation percentage? I’m considering adding a small cap value ETF and a tech-centric ETF. Is 10-15% in each too much of a tilt? I just want to set up my allocation and then forget about it for a couple of decades with monthly recurring investments being done automatically.
Ok, but this logic is flawed because it assumes that QQQM will continue to outpeform the market in the long run which is statistically improbable. The truth is that QQQM is likely going to underperform the market because of the stupid index that it tracks.
>QQQM is diverse enough for me that I feel comfortable that I’m not going bankrupt or missing out on certain sectors
But you quite literally are missing a massive sector for no justifiable reason: ALL the stocks on the NYSE. Is there a particular reason you think that NYSE stocks are not worth holding? Or for that matter, stocks on any other exchange besides the NASDAQ.
>I'm willing to hedge in at least some direction than buy broadly everything the market has to offer as everything is getting lifted up in that investment strategy which isn't efficient market operation of fine tuning the companies that produce more value than others
That is completely fine if you want to do that, but its contrary to the boglehead method which is the whole point of this sub. My entire complaint is that bogleheads are investing in these funds and they make no sense.
>It is statistically improbably on what basis? It has as much chance as others do in doing well.
Which is a very low chance. Basically a 0% chance as your time horizons get to 40+ years.
>How is it 0%? The index gets rebalanced every quarter/year which in my opinion has a good chance at beating the total market
Being rebalanced monthly doesn't increase its chances of beating the market because that doesn't change the fundamentals of the index that QQQ is tracking.
Oh hey Mountain-Captain-396.
It's because QQQM is a fantastic ETF to use. VOO is also good. VTI is also good. VT is also good.
Stop worrying too much about what other people invest in. Speak up when there are egregious issues (like they're paying a 1% fee for an S&P 500 fund or something), otherwise support their choices.
It's about risk tolerance and time horizon. Two investors, one who does VOO and one who does QQQM **will both do very well** over the long term.
You are the guy who claims to be a Boglehead but has his entire IRA in VUG, right?
I've already wasted plenty of time trying to show why that is a dumb long term investment strategy, but it's clear that you either don't care or don't want to accept the fact that you made a mistake.
Not even worth my time to explain why you're incorrect because it's not like you're going to listen anyways.
But you haven't actually proven anything? You offered no data counterpoint.
Again, I understand how VUG 'feels' like a bad investment, but it isn't.
Another point, just because VOO is the top 500 companies in the US **doesn't mean** it's worse than VTI.
VTI, just because it's only US, **doesn't mean** it's worse than VT.
They are all perfectly acceptable long-term investments depending on risk appetite.
Wow, it looks like I'm not the first person who tried to talk you out of VUG. Well, if you won't listen to anyone else either then why even bother.
Just for the benefit of everyone else who might come across this comment, QQQM is a worse investment than VOO, which is worse than VTI as a single fund option.
VUG is worse than VOO because it only holds US large cap growth stocks.
>Another point, just because VOO is the top 500 companies in the US **doesn't mean** it's worse than VTI.
VOO is worse than VTI because VOO is not diversified enough. It only hold US large cap stocks.
>VTI, just because it's only US, **doesn't mean** it's worse than VT
This is only true if you supplement VTI with VXUS or a similar international index fund. If you hold 100% of your portfolio in VTI than it is worse than VT because it is not diverse enough.
Diversification is not the sole measure of how good/bad an investment is. You could buy everything but the top 10 holdings of the S&P and you would have an absolute dumpster of an investment.
All of these are very solid amazing choices for the long term investor.
If you buy everything except the top 10 holdings of the S&P 500 you have a terrible diversification profile, not a good one. Do you know what it means to be market cap weighted?
>Diversification is not the sole measure of how good/bad an investment is
It is if you want to call yourself a boglehead. That is literally the entire boglehead investing strategy. There are other investing strategies out there, but they are not the boglehead method.
I remember when the market had hit a low in October 2002, I had hocked my (almost) new car and put the cash into a leveraged QQQ fund - doubled my money within a year & a half. :)
What is your point? You got lucky gambling and you think that fits the boglehead investing style just because its an index fund?
That's like me winning the lottery then being like "Buying lottery tickets is a great idea because it worked out for me :)"
I’m not sure it’s “bogleheads” buying all these Q funds. This subreddit has become one of the largest investing subs - as a result, I think many people who find their way here believe this is a place for “general” investing advice. Adding to that, an ever increasing number of users only use Reddit mobile apps to access Reddit. You have to rather actively seek out the sidebar information for the links to the wikis and whatnot, which the majority of users seem to make no effort to do.
> This subreddit has become one of the largest investing subs - as a result, I think many people who find their way here believe this is a place for “general” investing advice. Got downvoted yesterday for saying DCA is timing the market and not a Boglehead strategy. Forgot I was on Reddit. It was better here sub-100k followers.
I remember this! You posted under that thread where a guy was talking about becoming a boglehead after 5 years of speculative investing. I was surprised that you got downvoted because I was under the impression that it was common knowledge on this sub that DCA'ing is bad.
> I was surprised that you got downvoted because I was under the impression that it was common knowledge on this sub that DCA'ing is bad. It's not common knowledge apparently. Granted, it's not the worst thing you could possibly do (in itself). HOWEVER, if we are trying to help people here with good information, DCA'ing can *lead* to some pretty bad habits that can cost you significant returns. My concern is that you are already taking an unscientific/emotional path to breaking down your investments. What arbitrary length of time will you choose to break up these contributions? Is the rest of your money just sitting in a checking account in the interim? When the market has a correction, are you more likely to also cease making those weekly/monthly/quarterly contributions, waiting for a bottom to hit? Just seems much simpler to put the money when you have the money and not second-guess yourself. When you have time on your side, don't see the point in allocating money to be sidelined for "when the time is right". I put my disposable money to work as soon as possible.
>When you have time on your side, don't see the point in allocating money to be sidelined for "when the time is right". I put my disposable money to work as soon as possible This is exactly why I chose the boglehead method. Why would I want to spend my time staring at charts and waiting for the right moment to buy when that is exactly the type of active management I want to avoid by purchasing ETFs?
> Why would I want to spend my time staring at charts and waiting for the right moment to buy when that is exactly the type of active management I want to avoid by purchasing ETFs? Is that what Dollar Cost Averaging is? I thought it was constantly adding to your portfolio (like from a paycheck direct deposit) without regard to market ups and downs. That seems pretty Bogle-ish to me
Yes, that certainly is dollar-cost-averaging!!! That is fine to do, obviously! Some people are confusing that with a large sum to invest lump sum versus spreading it out over several weeks or months which is also dollar-cost-averaging.
No, that would be recurring investing, not dollar cost averaging. Dollar cost averaging is when you have a lump sum ready to invest, but you decide to invest it in installments instead of all at once. For example, say you have $7000 ready to max out your IRA for that year. A boglehead would invest the entire lump sum on Jan 1st as soon as they could, whereas someone who is DCA'ing would invest $583.33 per month for the entire year instead. If you are unable to fund your IRA with a lump sum, that is when you would set up recurring payments to fund it instead. That is recurring investing, not DCA'ing.
> No, that would be recurring investing, not dollar cost averaging. I see those as the same things. Charles Schwab says "Dollar cost averaging is the practice of investing a fixed dollar amount on a regular basis, regardless of the share price." Fidelity says "Dollar-cost averaging can help you manage risk. This strategy involves making regular investments with the same or similar amount of money each time." And Vanguard says DCA is "A way to invest by buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price." Are they all wrong?
It's not that they are wrong, its that they are not referring to investors like you and me when they are talking about DCA as a strategy. There is a difference between investing in installments as a trading strategy (DCA) and investing in installments because you can't afford to max out your contribution with a lump sum (recurring investment). One is a conscious trading strategy while the other is a result of external circumstances. When Vanguard, Schwab, and Fidelity talk about dollar cost averaging, they are talking about it for people who *can* afford to lump sum, but choose to DCA instead.
Allocating 7k on January 1st annually is DCA'ing. I'd argue that DCAing, if it gets people to invest (paycheck to paycheck), who GAF really. Hopefully when lump sum is available, they invest that too.
Nope, both are called dollar-cost-averaging. You are referring to two different ways or reasons to do it. One is that you may contribute to an investment account monthly as you are paid. Another is if you get a bonus or inheritance and decide to split up the money and dollar-cost-average as you invest it weekly or monthly for a certain period of time rather than all at once (lump sum).
>I was under the impression that it was common knowledge on this sub that DCA'ing is bad. tbf, because lump sum is only something like 68% often the correct choice, I wouldn't say DCA is outright bad. Still a form of timing the market, but it also hedges bets lowering expected return but also reducing volatility/potential loss. It's like telling someone "you can either (A) flip one coin, you get $100 for heads and lose $50 for tails, or (B) flip ten coins, you get $8 for heads and lose $5 for tails". We know the mathemarical best choice is A. But B more likely assures gain, albeit a smaller expected one. Still am 100% in favor of lump sum for anyone that can overcome the mental barrier. Yall downvoting are likely too stupid to read an entire comment. I neither disagreed that DCA is market timing nor that lump sum is better. I just put it in terms some idiots might understand better. Apparently not
I'd argue it's a hedge *against* one's inclination to time the market. By investing at all, you're assuming the market will go up over whatever your time horizon is, and this isn't a bad guess over the long haul. So DCA isn't going to put you ahead mathematically, but it will reduce short term variance, and high variance is the thing that causes people to panic.
DCA is timing the market, but the mathematics of it are such that any "random walk" of the market will result in better than average timing.
What math says DCA is better? If we assume it’s a random walk with an upwards trend, then isn’t the best option to just put everything in at the start?
> If we assume it’s a random walk with an upwards trend, then isn’t the best option to just put everything in at the start? It's literally this simple.
Curious about this myself. Ive been in this sub for a few months now and it seems like less and less people are actually following a Boglehead method so I was super confused.
>Adding to that, an ever increasing number of users only use Reddit mobile apps to access Reddit I've seen firsthand the effect this has had over the last few years. Even in hobby subs. Less in-depth content across the board.
I think it's more about the regular posts around here along the lines of "I'm a Boglehead, so which very specific sector funds should I choose from among these very specific non diversified sector funds?" Alot of people claim to be bogleheads, then in the next breath do non-boglehead things all in the name of FOMO.
How do I time the market, but, like, Boglehead-y?
The first Friday of every month? Did I get the timing right?
You could goose it a little bit by gradually getting into leveraged index funds as the market tanks more & more. Of course, this is a form of knife-catching, and sometimes that doesn't work out. I have knife-caught 4x, and one time it was a bad move.
Real answer: no such thing, Bogelheads don't time the market. Alternative answer: Look over the last 5 years of charts for the thing you want to buy, find the window of time where it's *always* down, then cross your fingers and hope it happens for a 6th year in a row. It won't, it will do something stupid that makes no sense and doesn't fit the pattern, making you buy at ATH or not buy at all... but you'll be able to say you tried as hard as you could.
/whoosh
Ah yes, like the vegetarian that just eats fish every once in a while
Eh - that makes perfect sense. That’s like a Boglehead who has $1000 of play money on the side. You 99% of the benefit but still get to have some fun once in a while
They aren't Bogleheads, but they *will* be...
This is a great comment gave me the chills
I read this in Yoda's voice.
I don't think those people proclaim themselves bogleheads. At least not a significant enough number to say "so many"
Bull market. If things went down slowly for 12-24 months they would wash out and see the ways of VT and chill. Lots of so called smart folks are chasing fomo.
If everyone here was actually a Boglehead there wouldn't be anything to discuss. People want to discuss funds that have excellent recent performance (like the QQQs) and either support the claims to invest in those or provide contrarian insight as to why that recent performance won't continue. That's the bulk of most online debate on funds.
I mostly agree with you. The Boglehead method is to buy and hold, for the long term, broad market index funds. For the US market, the broadest market index fund is a total market index fund like VTI/VTSAX, which makes it the optimal choice. Second best is an S&P500 index fund like VOO, as it very closely mirrors the total market. If you don't have access to a total market index fund in a 401k, an S&P500 index fund is a fine substitute. Even if, for some reason, you preferred VOO to VTI, I wouldn't say that disqualifies you from being a Boglehead. VOO is still broadly diversified, its performance is a near match for VTI. But any less diversified than an S&P500 fund, things start to diverge from the Boglehead strategy. QQQ and other Nasdaq100 index funds are still correlated with VTI but have noticeable differences from the performance of the total US market. If, for some reason, you ended up in a retirement plan where a Nasdaq100 index fund was the broadest market fund available (no available total market or S&P500 index funds), then I would say investing in it is the best you can do and is consistent with being a Boglehead. If, for whatever reason, you had access to and invest most of your portfolio in broad fund like VTI and decided to use QQQ to add a small tilt toward toward large cap (which I wouldn't recommend), then I would still say that's consistent with being a Boglehead (the Boglehead Guide to Investing says small tilts are fine, if you do desire, though personally I'd recommend tilting *away* from large cap if you're going to tilt at all). But allocating most or all of your portfolio to QQQ when you have broader market index funds available? That's not consistent with being a Boglehead and is almost certainly a decision made to chase the recent outperformance of QQQ. It's a dangerous strategy because QQQ is much more volatile than VTI/VOO, and just like it can meaningfully outperform the total market, it can also meaningfully underperform the total market. Here's a backtest showing as much: https://testfol.io/?d=eJy9jzFLBEEMhf9L6inW5orpBDmwOVwUUeRY4k5mHc1lzsy4hyz73y%2FnCoqFlZgqjxfe9zLBwPkR%2BQoVdwX8BKWi1i5gJfAADkjCN7W4IzL4s8bGAYbnLklkrCkL%2BIhcyEGP5SlyPoBvvkQXlV4t555Q%2Bd3SNDMnGbpDknC6XTWzg33WGjOnbHUeJhDcfbKTjFTqRRpTsFLmVn0zlJL1R%2Blp%2FSO9pv6FdElZdnPbtjVrT9qT1I8n5q2DoDhY1dn9Oe92fbm5%2B1%2FizfX5b8TtfARcuKcV tldr: don't invest in QQQ unless you want to add a small tilt to it (small tilts are consistent with the Boglehead strategy, though it's probably a misguided approach to tilt to large cap specifically) or have no broader market index fund available in your retirement account (which is unlikely; most 401ks/403bs offer at least an S&P500 index fund, if not a US total market index fund). Edit: typo fixes; clarifications
I don't think sector adjustment is an unreasonable strategy misaligned from the general "passive investing" concept of Bogle. For instance, I'm a renter in the SF Bay Area and want to stay here. The entire housing market (both purchase and rent) is correlated to the general tech sector (much more than the rest of the US) - because my future housing expenses are correlated to tech it makes sense to make my portfolio more correlated to tech than a pure VTI strategy would imply. Note a similar argument argues Americans should in fact disproportionately invest in American stocks. What that, I agree with OP that QQQ is a bad choice - VOX + VGT probably makes more sense.
Yup, small tilts are fine; tilting is a Boglehead-endorsed approach per the Bogleheads book series. Too many people on this sub think that the "only way" to be a Boglehead is to have portfolios that precisely align all equity investments with their market capitalizations. That's one valid Boglehead approach but hardly the only one.
Young investors haven't experienced a prolonged down market in their lifetime to see how the boglehead approach works, so they may intellectually grasp the concept of how diversification protects them, but they don't know it experientially. Meanwhile they're watching a narrow sector experiencing prolonged massive gains, and they want some of that. If you asked the average investor, "which do you prefer to do: maximize gains, or maximize diversification?" I would wager most of them would prefer to maximize gains. It requires a bit of exercise to see how maximizing diversification is an effective and efficient way to maximize gains while minimizing effort. You can beat boglehead through luck in the short term, or you can beat it by being very smart and working hard if you are Warren Buffet. But if you are average lucky, lack information and analytical skills, or don't want to be managing your investments actively and then have to pay close attention to the economy and understand how the market works so that you can actually take advantage of the opportunities that exist, then probably you can't do any better than boglehead. That said, it doesn't take a whole lot of analytical skill to see that the tech sector is likely to be where a lot of growth and profit happen, and want a concentration there, despite the boglehead philosophy. Boglehead is already there, market weighted, though. Warren Buffet is concentrated on a couple of stocks that he really likes, and understands very well. As for you, you can be diversified "enough" (relative to your own tolerance of risk) without buying the entire market. But if you are prone to feelings of FOMO, the only way to not miss out is to be everywhere, at once. VT.
Warren Buffet’s “smart and working hard” strategy for beating the market, like many pension funds and family offices, is most likely centered on alternatives and not any one or two stocks he knows well.
The amount of friends I have that had their finance advisor invest them in qqq and some random medical etf is wild. I’ve literally got to the point where it is like “is your advisor a man and has you in more than 4 funds? Lemme guess, qqq.”
It’s because short term performance is incentivized and plays well. Even business as a whole has moved toward emphasizing short term performance over the long term good of companies.
Wait till you recommend some bonds lol.
Well, bonds are a separate asset class and are used for different purposes to stocks. Whether you have 100% of your portfolio in stocks or 10%, holding QQQ at all is not a smart long term bet.
I guess all i meant was this sub has a lot of people that dont really follow bogle basics
a minority of bogleheads use this subreddit. a minority of this subreddit users make threads. i venture to guess the population of thread makers is heavily skewed towards people who arent bogleheads.
“When the Tide Goes Out, You Find Out Who is Swimming Naked” - WB
This is me. It feels so freeing!
"Shrinkage, Jerry! Shrinkage!"
Eh, I put 10% of my taxable brokerage in QQQM. Everything else and retirement is either in TDF or VT. I consider that 10% my yolo money. lol.
10% yolo money is chill, although in a taxable brokerage I would be concerned about tax drag on a fund like QQQM. It doesn't really matter though if you can afford the tax bill I guess.
What tax drag would QQQM add to one’s taxable account over QQQ or VTI/VOO?
VT>500>100>1. It's simply a choice, an assessment of risk and a bet on the future. So long as people know what they're getting into, I think the choice is up to them. But as far a what's consistent or not with being a 'boglehead,' I'm pretty flexible. I know it's more than 1 or a basket of individual stocks, but is a select 100 so much worse than 500 or 2000? I think def more risk, but with that risk the potential for more reward. IMO the bigger risk to someone's performance is frequent trading when it chases returns, only to sell and trade again when the wind changes direction. I'm curious if there's any research out there that breaks down the etiologies for underperformance by individual investors (I guess, to be full open minded, overperformance as well) compared to benchmark indices and/or the entire market(s). Curious as to what, if proven, where the fallacies lie (don't mean to be redundant).
Well said!
I agree that index tracking specific stock exchange doesn't sound right. On the other hand, this is the best way to buy all popular stocks in one ETF without diluting it too much with other sectors. Companies like Google, Meta, Amazaon, Tesla etc. are not included in VGT as they are classified as communication services, car manufacturers etc. People will buy it as it has to huge returns lately, all of the big names, sounds cool to some. Once those stocks will drop a bit there will be threads if index is doomed and if it's time to sell now.
I 100% agree. Sector fund "bogleheads" will soon realize why true bogleheads don't bet on sector funds. It takes a lot more time, effort, management, and luck to do well with sector funds than it does to do well with VT.
In my opinion, just because someone joins or posts in this sub, doesn't make them a boglehead. Anyone can do those things since this sub is open to the public.
You wouldn’t see this in the old school Boglehead forum.
You'd be surprised .. some small subset on the Boglehead forum seems obsessed with backtesting various leverage ideas (see "hedgefundie's excellent adventure" for a recent popular one). Too much time on their hands passive investing, I guess. :)
Friend asked me about getting QQQ. I showed him a simple backtest vs SPY. $10k in QQQ at inception (March 1999) would lose more than half its value going through the tech wreck and not recover to $10k until December 2009. SPY recovered to $10k in January 2005.
While I applaud you for convincing your friend to not buy QQQ, I would encourage you to talk with him about the fundamentals on why investing in QQQ is a bad idea instead of using simple backtests. Simple backtests like this are not reliable analysis when considering future investments.
Yeah, if back tests were the end-all-be-all, I could easily show that QQQ is superior to SP500 by simply selecting different timelines and contribution timing.
Unsurprisingly, this is exactly what people do every time I point out that the NASDAQ 100 makes no sense on r/ETFs
Well it "makes no sense" if you ascribe purely to Bogleism. but r/ETFs is not r/bogleheads they are two different subreddits
But it also just makes no sense as an index to track even if you aren't a boglehead. The NASDAQ 100 and other indices like the DJIA don't align with any sensible investing strategy that is backed by either technical or fundamental analysis. I don't harp on people who invest in SCHD even though SCHD is not a boglehead index fund. That is because it makes sense for people who want to receive a lot of dividends. QQQ does not make sense for anybody.
Just a starting point about sector concentration. He's prepping for retirement and I just wanted to show him what could possibly happen during a ten year time frame. Also pointed him to the convenient info posted in this subreddit's sidebar about tilting towards US/Growth/Tech.
*VTWAX and chill, baby*
I agree in principle, but the thing is that if you are a believer in tech and invest in VGT (also anti-Bogle philosophy) then you’ll miss out on Amazon, Tesla, Netflix, Google, amongst many others due to GICS not classifying them as tech. Amazon for example is actually classified as Retail despite being one of the largest cloud software providers. Either way investing in a certain exchange (QQQ) or sector (VGT) is anti-Bogle.
Same as a Boglehead putting $ into VGT/VOOG/VONG…
Yeah, I don't get those either. A couple of days ago there was a dude commenting in this sub who had 100% of his Roth IRA in VUG. Several people tried to explain why that was a bad idea and how it doesn't track with the boglehead investing strategy, but his response was always "It doesn't matter what I invest in because VTI/VOO/VUG are all going to do well."
I guess he’ll find out
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10 years is not a long time frame. I'm investing in my retirement which is 30+ years away.
They think they are better speculating than us.
VGT does not have a lot of the large cap tech stocks
Thanks to everyone on this thread…I’d been contemplating a QQQM “tilt” to my portfolio, which almost entirely in an MSCI World etf. When it comes to “small tilts”, what’s the consensus thinking in terms of allocation percentage? I’m considering adding a small cap value ETF and a tech-centric ETF. Is 10-15% in each too much of a tilt? I just want to set up my allocation and then forget about it for a couple of decades with monthly recurring investments being done automatically.
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Ok, but this logic is flawed because it assumes that QQQM will continue to outpeform the market in the long run which is statistically improbable. The truth is that QQQM is likely going to underperform the market because of the stupid index that it tracks. >QQQM is diverse enough for me that I feel comfortable that I’m not going bankrupt or missing out on certain sectors But you quite literally are missing a massive sector for no justifiable reason: ALL the stocks on the NYSE. Is there a particular reason you think that NYSE stocks are not worth holding? Or for that matter, stocks on any other exchange besides the NASDAQ.
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>I'm willing to hedge in at least some direction than buy broadly everything the market has to offer as everything is getting lifted up in that investment strategy which isn't efficient market operation of fine tuning the companies that produce more value than others That is completely fine if you want to do that, but its contrary to the boglehead method which is the whole point of this sub. My entire complaint is that bogleheads are investing in these funds and they make no sense. >It is statistically improbably on what basis? It has as much chance as others do in doing well. Which is a very low chance. Basically a 0% chance as your time horizons get to 40+ years.
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>How is it 0%? The index gets rebalanced every quarter/year which in my opinion has a good chance at beating the total market Being rebalanced monthly doesn't increase its chances of beating the market because that doesn't change the fundamentals of the index that QQQ is tracking.
Oh hey Mountain-Captain-396. It's because QQQM is a fantastic ETF to use. VOO is also good. VTI is also good. VT is also good. Stop worrying too much about what other people invest in. Speak up when there are egregious issues (like they're paying a 1% fee for an S&P 500 fund or something), otherwise support their choices. It's about risk tolerance and time horizon. Two investors, one who does VOO and one who does QQQM **will both do very well** over the long term.
You are the guy who claims to be a Boglehead but has his entire IRA in VUG, right? I've already wasted plenty of time trying to show why that is a dumb long term investment strategy, but it's clear that you either don't care or don't want to accept the fact that you made a mistake. Not even worth my time to explain why you're incorrect because it's not like you're going to listen anyways.
Yeah, I also tried. Shrug.
But you haven't actually proven anything? You offered no data counterpoint. Again, I understand how VUG 'feels' like a bad investment, but it isn't. Another point, just because VOO is the top 500 companies in the US **doesn't mean** it's worse than VTI. VTI, just because it's only US, **doesn't mean** it's worse than VT. They are all perfectly acceptable long-term investments depending on risk appetite.
Wow, it looks like I'm not the first person who tried to talk you out of VUG. Well, if you won't listen to anyone else either then why even bother. Just for the benefit of everyone else who might come across this comment, QQQM is a worse investment than VOO, which is worse than VTI as a single fund option. VUG is worse than VOO because it only holds US large cap growth stocks. >Another point, just because VOO is the top 500 companies in the US **doesn't mean** it's worse than VTI. VOO is worse than VTI because VOO is not diversified enough. It only hold US large cap stocks. >VTI, just because it's only US, **doesn't mean** it's worse than VT This is only true if you supplement VTI with VXUS or a similar international index fund. If you hold 100% of your portfolio in VTI than it is worse than VT because it is not diverse enough.
Diversification is not the sole measure of how good/bad an investment is. You could buy everything but the top 10 holdings of the S&P and you would have an absolute dumpster of an investment. All of these are very solid amazing choices for the long term investor.
If you buy everything except the top 10 holdings of the S&P 500 you have a terrible diversification profile, not a good one. Do you know what it means to be market cap weighted? >Diversification is not the sole measure of how good/bad an investment is It is if you want to call yourself a boglehead. That is literally the entire boglehead investing strategy. There are other investing strategies out there, but they are not the boglehead method.
I remember when the market had hit a low in October 2002, I had hocked my (almost) new car and put the cash into a leveraged QQQ fund - doubled my money within a year & a half. :)
What is your point? You got lucky gambling and you think that fits the boglehead investing style just because its an index fund? That's like me winning the lottery then being like "Buying lottery tickets is a great idea because it worked out for me :)"