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Vanguard founder John Bogle

Portfolio > Portfolio Construction > Investment Strategies

How Bogleheads Are Keeping Calm, Carrying On Amid Market Turmoil

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What You Need to Know

  • Speakers emphasized investing discipline and asset allocation appropriate for the investor's life stage.
  • Also discussed: ways to protect against inflation with TIPS, I bonds and stocks.

The Bogleheads, an investor community devoted to the principles of the Vanguard Group’s late founder, John C. Bogle, apparently have maintained calm by sticking with those ideas through this year’s market turbulence — while also seeking new opportunities.

Group members, who gathered in Chicago last week for their first in-person conference since the pandemic started, appeared steady, according to conference coordinator Christine Benz, Morningstar director of personal finance.

“Everything is down this year but the Bogleheads seem quite at peace. They’re not worrying about which sectors to be in or where to turn for protection against recession,” she told ThinkAdvisor via email on Monday.

“Multiple speakers reinforced the key Bogleheads messages of investing on a disciplined schedule and establishing an asset allocation plan that makes sense given your life stage. And once you’ve done that, you can go about your business!” she added.

The Bogleheads’ investing philosophies include these core ideas, among others, according to their website:

  • Invest early and often
  • Stay the course
  • Live below your means
  • Don’t take on too much or too little risk
  • Diversify your portfolio
  • Use index funds
  • Keep costs and taxes low
  • Don’t try to time the market

“Even as most Bogleheads are in ‘stay the course’ mode, one area of opportunity came up in multiple sessions: higher yields and the positive implications for the safe component of investors’ portfolios,” said Benz.

Allan Roth (Wealth Logic founder) made the comment that investors in search of safety and preservation of purchasing power could build a ladder of TIPS bonds; he noted that real TIPS yields are the most attractive they’ve been in years,” she said, referring to Treasury inflation-protected securities.

Inflation came up in several sessions, which wasn’t surprising given the inflationary pressures people are feeling in their daily lives, Benz noted. “For Bogleheads, the main tools in the toolkit are I bonds, TIPS and stocks,” she said, adding that economist Burton Malkiel “made the point that stocks are a wonderful way to preserve purchasing power in your investment assets.”

While Bogleheads may consider TIPS an important tool, speakers also discussed their shortcomings as an inflation hedge this year, according to Benz. 

“Jim Dahle (a physician who runs The White Coat Investor blog) said that he has long held a position in TIPS in expectation of the kind of higher inflation we’ve seen this year. But lo and behold, intermediate-term TIPS are down by double digits so far this year. His conclusion: TIPS bonds’ interest-rate sensitivity has overwhelmed their ability to protect against inflation,” she explained.

“Many speakers stressed the virtue of thrift and knowing your personal version of  ‘enough.’ That came through loud and clear in Michelle Singletary’s wonderful presentation, where she discussed her own approach to extending help to family members and her efforts at financial education in her own community,” said Benz, referring to The Washington Post personal finance columnist.

Meanwhile, conference attendees have been discussing their thoughts on the event on a Bogleheads forum

“Here’s a couple of nuggets that resonated with me,” someone with the user name RetiredDBA wrote. 

  • “Paraphrasing (investment advisor) Rick Ferri, ‘All the Bogleheads at the conference believe in the same philosophy BUT no two people are probably using the exact same strategy.’
  • Burton Malkiel comments on REITS (yes), international (yes), China (no), emerging markets (yes) and I bonds (yes). I can’t wait for the updated edition of his book next year.

“My significant other (SO), who had zero interest in anything related to finance and portfolios, came away impressed (as) well as informed. The Wednesday Bogleheads University session was right on the money to get her motivated to expand her financial knowledge and seek personal advisor advice for her portfolio. She wished she heard this session 30 years ago!

“Here’s some key points my SO remembers:

  • “Avoid analysis paralysis.
  • Index vs managed funds explained clearly.
  • Invest with simplicity.
  • Discussion of I bonds, TIPS and TIPS ladders.
  • Be conservative the five years before and after retirement.
  • Annuities and (single premium immediate annuity) discussion well done.
  • Delaying Social Security to 70 is the BEST annuity.”

Pictured: Vanguard founder John Bogle


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