Sacramento Area Bogleheads Meeting Summary (October 8, 2016)

This article is composed by Bogleheads® forum member digarei

The meeting of October 2016, more than any other meeting before or since, was a forum for an unordered clutch of ideas and discussions, none overly dominant; many, just snippets of conversation; a few rose briefly into promising and lofty themes before dissipating. Like cirrus clouds over the desert, some topics would scatter and then re-form or simply evaporate on their own. The agenda was followed, up to a point, then abandoned time and again. Incongruence and free-association were the only themes of note. Nevertheless,

THIRTEEN (13) persons found their way to midtown Sacramento on October 8, 2016, at 10:30 AM, to meet for the nineteenth occasion since the chapter began in March 2015. Its purpose was to provide a way for Bogleheads investors to meet in person to discuss investing, personal finance and retirement (both early and late). The group usually meets on the Second Saturday of each month. The following summarizes what transpired during the two hours alotted on Oct 8.

Introductions, including two persons attending for the first time, preceded several announcements and agenda changes (notably, postponement of scheduled topic, ‘Measuring Investment Risk’ until next month).

Meeting Summary Saturday, October 8, 2016

  • Plan to Invest .. I V
  • What We Think, We Become”
  • Bogleheads XV Conference Report
  • ‘Signed Book ‘Auction


Two members discuss what they’re doing with their portfolios now since achieving (or anticipating shortly) 100K in investment assets. One decided to divest the 10 percent that had been purposed for ‘play money’ and plans to reinvest it per his asset allocation very soon. The other member elected to back off from a 100% equity allocation to 90/10, buying bonds for the first time. A third member’s milestone was incremental: he spoke of an increase in the number of students to his business, anticipating additional income.

digarei read portions of a paper inspired by a blog author who works with Barry Rotholtz, financial advisor and former educator Tony Isola. The paper is entitled, ‘What We Think, We Become’. Excerpts follow. ¹

digarei wrote:

    • What We Think, We Become
    • Finding an old maxim useful to explore how our attitudes affect our judgments, happiness and investing success, we claim:
    • No twenty-year period in our history where you’d lose money in U.S. stocks
    • What We Think… We Become.
    • We all know that this is true. We can see it happen in real time in those around us.
    • We All Change Who We Are… Every Day.
    • Psychological impediments to happiness and investing success can be significant.
    • If you’re negative or uncomfortable in your own skin, compartmentalize.
    • We start with who we are today. Expect things to work out in the end.

Conversations, Bon Mots, Asides and Miscellanea

An eight minute discussion commenced on the subject of Social Security. A number of different recommendations were made on resources, mostly books, and authors, that have been helpful to some in understanding the complex benefits and processes related to Social Security. One item that not everyone was aware of: File & Suspend is no longer available to those who will not be at least 62 years old by April 2017.

What did the 2008 crash feel like? Reactions to news reports. Chickens: belonging to one’s neighbor, oneself, to isolated land masses (Kauai, Key West); delimited by a political boundary: city or county; by sex: hens or roosters; by sound: do only roosters crow?; by predators: raccoons, for one.

Someone might rightly object that it was the facilitator’s duty to maintain order, to keep the conversations in check, to steer the conversation back toward the topic at hand or at least one that rested near the margin of investing or personal finance; however, such guidance was unnecessary, the group found its own way back.

Bogleheads XV Conference Report / Signed Book ‘Auction’

The coordinator had enjoyed an opportunity to attend the annual Bogleheads conference a week or so prior to the October meeting and was pressed upon to share any insights garnered from the trip and report on what to expect for the benefit of members who may consider attending in the future. Besides some interesting pictures, a list of expenses incurred and a recapitulation of various meet-ups that demonstrated a fawning obsession with financial celebrity, he had nothing much to say. Still, he gave a long and meandering account that touched on various aspects of the event and his initial impressions. So unsatisfying was this speech that he felt compelled to atone by distributing several books signed by Jack Bogle, and several unsigned, an umbrella (unopened, unsigned), several pamphlets discussing a well-received 2013 speech given by Jack, which mirrored and paid homage to a yet more famous speech given by an unconventional anti-corporatist who became the soft-spoken, bespectacled, stick-carrying Teddy Roosevelt. Hurrah!

Total auction receipts for merchandise (taken and not paid for) from the Bogleheads conference headquarters near Philadelphia and the Vanguard campus: $0.00

Ten Year Returns Forecast / Investment Risk

There was a discussion of expected returns triggered by Lucy’s recollection that Jack Bogle had stated in the previous year that his expectation was that over the next ten years a 60/40 portfolio would return 4% nominal. ²

[Nominal returns are returns ‘before tax’, pre-inflation, pre-expenses.] ³

A member said he believed that there was little or no risk for investors with index funds, that risk “was not germane.” Other disagreed, pointing out that there is always market risk, regardless of whether the fund is indexed or not.

The group found itself discussing a number of issues that concerned several members: the general economic health of the country, the federal debt, fear of inflation, the debate on whether economic turmoil impacts investment success or is merely noise, Jack Bogle’s alleged disdain for international investing. These are excellent topics that can be endlessly exploited when you need to kill time, since general agreement is unlikely to be achieved on any of these issues—except when there are fewer than two persons in the room.

Doubling Down

Additional discussions that filled the remaining time available: corporate and personal security (good), the use of pepper spray (good/bad), taxation (bad), the advantage of redirecting RMDs to a charity to reduce income tax liability (good), tax planning using TurboTax or equivalent as an exercise near the end of the year (very good).

More on the ‘very good’: By entering different values for deductions, charitable donations, etc, into an early version of TurboTax and before the end of the tax year (Jim suggested November), if an opportunity exists to reduce tax liability there is time to take action (make a donation of a certain amount, say). Others may have control over their own income or timing of payments (property tax, e,g.) and could take steps to increase or decrease their income or payments to target a lower margin/effective rate for the current tax year… or load up the current year to ensure a lower tax bill next year. This exercise should also be considered for anyone performing Roth conversions.


The meeting ended at 12:30pm. Five (5) members traveled to Kupros on 21st street to have lunch.





¹‘What We Think, We Become’

Content Copyright © Greg Dietrich 2016.

This paper in its entirety (7 pp) was printed as a handout for meeting attendees on October 8. It was uploaded to the chapter’s cloud account. The copyright is just to protect it from unauthorized publication; if anyone wants to read it online or download it, that’s fine. To receive the link to the original file on Google Drive, send a PM to digarei — or an email to

² Expected Returns 10 year forecast: 4% nominal (from 2015)

Not mentioned in the discussion was the reasoning and parameters he uses to reach this number nor the fact that when providing it Mr. Bogle normally couches such predictions with a statement to the effect that the margin of error is almost 8%—this is what Jack calls the ‘speculative return’ factor. The prediction then should be framed as a range of possible return values: from -4% to +12%. The question becomes, is such a prediction useful to the investor? The coordinator and several others in the group would say that for both accumulators and retirees practicing DIY investing in broad spectrum index funds (or a diversified basket of inexpensive managed funds) there is little takeaway.

The 10 year ‘forecast’ is a meme promulgated by Mr. Bogle to emphasize the importance of keeping investing costs low. It’s not an invitation to chase yield/performance, begin investing in exotic instruments or make radical changes to one’s asset allocation in the hope of beating the market return. Such action would be anathema to Mr. Bogle, who has been consistent in his advice over the years that the investor must accept what the market returns. Low expected earnings / returns is just an admonishment to prepare for adverse times: accumulators should save a little more than they think they’ll need, invest more, spend less. Retired investors may want to tighten expenses, reduce the annual draw against their investments in years when the market has done poorly or shift an aggressive allocation a little more into bond territory. Note that few investors should be more conservative than 30/70. A better long term allocation may be 50/50.

Finally, note that Jack Bogle’s estimate of 10 year returns applies to a 60/40 portfolio, US Stocks & Bonds only. The returns of foreign stocks (ex-US) are predicted to be slightly higher over the next 10 years. Including international bonds would also change the forecast, as would an allocation other than 60/40, or a portfolio that overweights specific market sectors or factors (such as having a tilt to small stocks and/or value.)

³ A nominal rate of return is the amount of money generated by an investment before factoring in expenses such as taxes, investment fees and inflation.  More information here:

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