This article is composed by Bogleheads® forum member digarei
KISS and Tell • Keeping it Simple
Last weekend, on the same day and in the hours leading up to and following the start of our meeting, Hurricane Irma was smashing through small towns, coral reefs and resorts in north-central Cuba’s Jardines del Rey archipelago. With sustained rotational winds that varied from 110-130 mph but a forward speed of only 4-12 mph it moved slowly toward the Florida Keys, hours later making landfall at Naples and Fort Myers.
It was an impressive storm by any measure. I understand the gravitational forces that affect the ocean tides and bodies of water, the earth’s elliptical orbit around the sun, solar contribution to atmospheric weather, the earth’s rotation along a skewed axis, electro-magnetic fields, etc., yet I was oddly struck by the contrast between the weather as experienced in the Caribbean, Atlantic and Gulf waters and that of the Pacific and our area, happening at the same moment.
No sign of autumn could be seen here, no gale or breeze, scattered cirrus clouds, no precipitation . It was just another warm and sunny day, barometric pressure high and rising. There, the ocean had emptied into the sky while houses disappeared, the air was violent. Some may have thought it more considerate to die quietly in the water and be found whole than to effect a futile resistance to an implacable foe and wear the marks of the struggle into death.
It’s tempting to overextend such personal observations, to make too much of them, to suggest a deeper meaning when the simplest and most honest answer is sometimes, “I don’t know.” Is there a better way of doing things, some form of wisdom, practical financial advice or an investment truth that can be had from mucking about with metaphor and allegory, drawing from such large events?
“I don’t know.”
If this were undeniably true, yet good advice was also obtainable in some measure from other sources, without verbal sophistry or grand theories, then I would suspect coincidence—possibly a correlation, probably not causation. Occam’s razor… and ‘as simple as possible but no simpler.’ ¹
‘The ocean is the market and the strong winds represent (choose one: the turbulence of market values/indecisiveness/changes in mood/risky or volatile investments/etc.)’
Psychologically, it might be useful to construct a world where everything has a special meaning or application to our endeavors or state of mind but since it’s not really the truth as we’ve come to understand the world and ourselves, there’s a chance that we’ll pull the plug somewhere down the line when reality snaps at our heels.
- Part of Keeping it Simple is Not Keeping it Complicated.
Sacramento Area Bogleheads Chapter Meeting
TWELVE (12) members of Sacramento Area Bogleheads Chapter met on Second Saturday, September 9, 2017 at our usual venue in midtown after a late start when closure of a freeway and subsequent traffic delays contributed to several members arriving late, including the chapter coordinator. The meeting was underway by 10:45 am.
What’s in a Name?
Following introductions, the agenda items were briefly discussed and a video was introduced.
Since Sacramento Area Bogleheads’s third scheduled meeting in June 2015, we’ve publicized each event with a unique name. This serves to identify the main topic for members & guests. In an unusually structured meeting last year (Dec 2016), the meeting announcement was purposefully devoid of subject matter but a topic name was provided anyway. ² ³
The discussion theme for September, ‘Keeping it Simple’, was posted on the forum but for the agenda it was abbreviated and incorporated into what the chair thought was a common and innocuous expression: KISS and Tell. 4
The idiom, as employed, was intended to invoke only this: KISS [Keep It Simple (Sweetheart/Stupid)] and Tell [Let’s share with each other what we know about it]
Video ~ ‘Smaller Investors Don’t Have to Skimp on Services’
Christine Benz (Morningstar, Inc.) was interviewed by Jeremy Glaser in August 2017. She had several good tips applicable to small investors. She recommended starting at Morningstar for free educational resources, mentioning that most of her own work is not behind a paywall. Her second suggestion: Bogleheads.org and the Bogleheads Wiki. For investors with 401(k) accounts, they may be able to receive free or low cost guidance via the managed account option. For investment advice and financial planning, Ms. Benz favors the ‘Hourly Financial Planning Model’. When you’re ‘on the clock’ with an advisor / planner, “it pays to do your homework” before meeting for the first time. She noted that even if you write a check to a planner for advice, that may be more economical than paying for your advice as a percentage of your assets [AUM] on an ongoing basis . 5
Keeping It Simple
Next we turned to examine a few of a surprisingly large number of excellent and on-point quotations compiled last year by Taylor Larimore (Bogleheads.org forum). Subject: ‘What Experts Say About “Simplicity'” 6
Maybe the word, simplicity, is an elixir, like the word, free! Maybe it sells books so everyone has learned to say something nice about it? But too many authors, editors, investors, executives and advisors have danced out on a limb with this meme, their shiny reputations bared for others to scrutinize, to believe that this concept is just a monkey-see, monkey-do embellishment for a jacket blurb a friend’s publisher asked for weeks ago. This is either the real McCoy or it’s a conspiracy involving thousands or it’s a mass self-delusion.
Self-delusional thinking is an ever-present danger but perhaps no more so than confirmation bias. We can accept assertions provisionally to guard against (mistaken) group think. I’m eager to rule out conspiracy. This leaves one choice: to accept simplicity. Acknowledging the idea that many smart people not all known to each other agree that simplicity, however they define it, is a paramount or important attribute to nurture, is strange but it does resonate with experience.
Keeping It Simple (or… not)
Introducing the quotes for discussion, Greg noted one reservation he had. Although all of the experts (in the scores of quotations cited by Taylor) agree entirely that simplicity is the answer, some have published books, white papers or columns that explore or promote complex portfolios and even seem to be placing clients into investments that are anything but simple. Notably: Ben Carlson (closed-end funds), Morgan Housel (derivatives/futures) and Larry Swedroe (extreme factor investing).
The following quotes were read aloud and then discussed by the group:
Peter Lynch, legendary fund manager: “If you spend more than fifteen minutes a year worrying about the market, you’ve wasted twelve minutes.”
J.L.Collins, author of The Simple Path to Wealth: “The more complex an investment is, the less likely it is to be profitable. At best they are costly. At worst they are a cesspool of swindlers.”
A finely turned alliterative phrase: “At worst, they are… a cesspool of swindlers.”
Warren Buffet: “To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these.”
Laura Dogu, Ambassador to Nicaragua and co-author of The Bogleheads Guide to Retirement Planning: “A simple portfolio is actually the ultimate in sophistication. It almost always lowers cost (including taxes), makes analysis easier, simplifies rebalancing, simplifies tax-preparation, reduces paper-work and record-keeping, and enables caregivers and heirs to easily take-over the portfolio when necessary. Best of all, a simple portfolio allows the investor to spend more time with family and friends.”
Clearly and confidently stated claims are a hallmark of integrity—or the mark of a pathological liar. What’s great about assertions is that they can be tested, shown to be true or not true. Add to this great list of benefits: Enables (or inspires) proper investor behavior, such as not selling in a down market.
Unfortunately, we did not have sufficient time remaining to read or discuss this intriguing quote:
Benjamin Graham, author, teacher, famed investor: “If you merely try to bring just a little extra knowledge and cleverness to bear upon your investment program, instead of realizing a little better than normal results, you may well find that you have done worse. — In the stock market, the more elaborate and abstruse the mathematics, the more uncertain and speculative are the conclusions we draw therefrom.”
When is Simplicity, not Simplicity?
Greg E. :”Some of these investors… financial gurus’ are doing things *other* than long term investments. They’re playing commodities, doing puts. It’s like [they’re saying],
‘Do as I say, not as I do.’ There’s a dichotomy there.”
Why does one need a Financial Advisor?
Susan (channeling FA): “If the market goes south, We’re here to hold your hand.”
Who needs Cash? (and When should I Want it?)
Art: “If you have enough cash for a year or two, [and the market declines] you don’t have to go sell a mutual fund or stock to buy groceries. Have it in a money market for a couple of years.
Exactly who are you trying to reach with this message about simple investing?
Greg D: “You see all of the 19 year olds in this room (ok, not really)? I’m not a social media guy but maybe I need to change that.”
What does Simplicity mean?
Chris G: “Personal freedom, financial freedom. Low cost, idiot-proof. Index investing with regular contributions every month—preferably automated. Buy & hold. Ignore the news, crazy sentiment, and the markets. Keep learning. Embrace learning.”
BJ: “Be Diversified but have as few holdings as possible to achieve that diversification”
Rom (citing Jack Bogle) : “Balance your portfolio. Recognize that markets will fluctuate. Invest for a long time. Stay the Course.” 7
Keeping It Real
It was déjà vu again..
It happened last month. Once again, the mere mention of “real estate” as a
subject of discussion elicited fifteen minutes of conversation on this topic.
Evidently, there is genuine interest here and some experience within the group.
Let’s take this up ‘for reals’ in October! Maybe we can all learn something new.
The 30th meeting of Sacramento Area Bogleheads was adjourned at 12:34 PM.
A thank you card was signed by members attending this meeting to acknowledge
the hard work and welcoming attitude shown by staff of our current meeting venue.
It was left at the front desk along with a box of pineapple cakes for the staff to enjoy.
Three members met at Selland’s Market – Cafe at 915 Broadway for lunch. We’ll be
brunching at a different restaurant next month..
Distributed to Meeting participants & Core Members (9/11/2017 and 9/15/20217):
- Taylor Larimore’s Collection of Quotes KISS w/agenda As Attachment
- Bruce’s Model Financial Planning Tool – Excel As Attachment
• • Model_Financial_Plan_Bruce_2016July.xlsx
- SABH July 2016 Meeting Notes URL Link
• • Re: Financial Planning Tool overview
- SABH Sept 2017 Meeting Notes URL Link
• • KISS and Tell Keeping it Simple
- Smaller Investors Don’t Have to Skimp on Services Video Link
• • Christine Benz
- SABH September 9, 2017 Meeting Recording Audio Link
• • 1 hrs 49 mins ~ 108 MB.
¹ ‘As simple as possible but no simpler’. Not Einstein but not not Einstein.
“It can scarcely be denied that the supreme goal of all theory is to make
the irreducible basic elements as simple and as few as possible without having
to surrender the adequate representation of a single datum of experience.”– Albert Einstein From “On the Method of Theoretical Physics,” the Herbert Spencer Lecture, Oxford, June 10, 1933.
This is the Oxford University Press version. The words “simple,” “simplest,” and “simplicity” recur throughout the lecture. This sentence may be the origin of the\much-quoted sentence that “everything should be as simple as possible, but not simpler,” and its variants.
Source: Discussion of the origin of the popularized version of the quote
² ‘Planning for the Future’
Sacramento Bogleheads @ Aioli Bodega 10:30 AM Sat June 13, 2015
³ ‘NO AGENDA’ AGENDA
Sacramento Bogleheads ~ Meeting 10:30 AM Sat December 10, 2016
4 The agenda name, once mentioned, generated some amusement when
several members indicated that an adult entertainment venue in the area
conducts business under the same name. This was found not to be true after
a bit of sleuthing. It is, however, very nearly the same.
The larger question: Was the concocted name inappropriate? It is the title of
a Shirley Temple film from the 1940s, and most conservative dictionaries define
this expression as merely a breach of confidence or gossip about others. Other
sources suggest that the most common usage is as a euphemism for a betrayal
of secrets during or after a non-platonic relationship. The dictionaries appear
to offer various definitions or multiple meanings for this expression. Since the
chair had none of this in mind in creating the agenda name, it has been left as is.
- “Kiss and Tell” (1945 film)
- “Telling details of private matters”
- “Revealing private or confidential information”,New Oxford American Dictionary © 2010 Oxford University Press
Other sources, with various interpretations;
- The Urban Dictionary
- American Heritage® Dictionary of Idioms
5 “Smaller Investors Don’t Have to Skimp on Services”
Christine Benz & Jeremy Glaser (8-16-2017) Video ~ 6:59
6 Quotations assembled by Taylor Larimore (2015)
Source: ‘What Experts Say About “Simplicity'”
7 Investing With Simplicity. Jack Bogle
1999 article authored by the founder of Vanguard