You can't enjoy life with wildfires, high taxes, crippling regulation, unchecked rioting in the streets, and a pandemic working through your overcrowded city. Yet, that's the situation many Californians face every day. That's why so many Golden Staters are looking to escape the city, and instead, live the island life. Many are looking to Hawaii as a refuge from California. Trevor Boyer of the Daily Mail reports "From January to June 2020, Californians have bought $587.6 million worth of Hawaii real estate, or 41 percent of the total from U.S. buyers." He writes: Beset by fire and a … [Read more...]
Why Vanguard is too Big: Part VIII: You Can’t Know What You Don’t Know
Let’s clear something up real quick. If you’re invested with Vanguard and it’s a major undertaking to shift your portfolio to Fidelity Investments—there are worse places to be stuck. In an industry littered with terrible, high-cost products, you’re lucky to be at low cost, no front or back-end load Vanguard. But what you might own at Vanguard and seeing how its assets continue to expand is concerning. As an aside, Vanguard has had some great managers retire such as the GNMA fund’s Michael Garret, from sub-advisor Wellington Management. You never hear about his retirement party. It makes it … [Read more...]
How Low Rates Can Be a Killer
Investors have a short-term memory—they forget what losing money feels like. Do you remember how everyone was reaching for yield leading up to the real estate crash? I do. A lot of wealthy investors lost big time money trying to lock in a few measly points more than what the risk free treasury was (not) paying. Then the crash hit, and they not only didn’t get those extra points, they lost all of their principal. I’m talking big money. Then, like clockwork, came the Monday morning lawsuits. Investors cried that they should have been made more aware of the risks they were taking. Some … [Read more...]
Why Vanguard is too Big: Part VII: What Do You Have to Lose? A LOT
You wouldn’t believe the conversation I had yesterday with a prospective client. It’s as if he’s done everything we’ve recommended over the years and we were set to talk yesterday—after all of those years later—to see how it all turned out. I’m here to tell you, quite well, indeed. This gentleman is wealthy beyond his imagination and I bet, having not met him face to face yet, I wouldn’t be able to pick him out of a lineup. That’s the beauty of quiet wealth: You control how you move about the world with no pressure to live up to some silly image. Long ago, my new friend and his wife … [Read more...]
Why Vanguard is too Big: Part VI
Do you know what career risk means? Of course, you do. It means you could lose your job. Well, in the investment world of pensions, mutual funds, and ETFs, career risk means you might lose your job if you underperform an index. That’s why so many pensions, foundations, and the like are piling into the Jabba the Hutt funds, like Vanguard’s Total Stock Market Index. If they lose a pile of money, at least they can say, “Hey, so did everyone else. We performed just like the market did”. You’ve read here, here, here, here, and here about my concerns with Vanguard being too big. That goes for all … [Read more...]
Why Vanguard is too Big: Part V: How You’re Being Forgotten
I’m not trying to be unfair to Vanguard, or other companies with airplane-hangar-sized call centers, but nowadays you tend to feel like a number. You feel like what’s more important to the big guys is telling you how many assets they have under management. It’s in the trillions. How does that help you? It doesn’t. It also doesn’t help when the phone rep you’re speaking with is either fresh out of college or is worth a fraction of what you’ve been able to save over a lifetime of work. There tends to be some value in working with someone who has actually made some money, don’t you think? It … [Read more...]
Why Vanguard is too Big: Part IV: Meet the Jabba the Hutt of Funds
When you spend hours on vanguard.com like I do, you realize how hard it is to get the information you’re looking for. Take for example the bloated Vanguard Total Stock Market Index Fund. The thing is a behemoth, with so much money stuffed into it, it’s a wonder it can even move the needle. Jabba the Hutt comes to mind—you deserve better. Not to tool on Jabba, but take a look at what you’re really getting yourself into. Consider for a moment the title—Total Stock Market—where you think you’re buying a diversified fund. Not necessarily the case. How can it be when ten stocks account for over a … [Read more...]
Why Vanguard is too Big: Part III: BOND ALERT
In times like these, you can’t afford to fight other people’s social crusades. Vanguard has announced a new ESG bond fund. You need to know the pitfalls of ESG and avoid them. Vanguard has announced: We’re pleased to announce that Vanguard ESG U.S. Corporate Bond ETF (VCEB) is now available. This latest addition to our ESG (environmental, social, and governance) offerings was designed to complement our equity lineup of ETFs and mutual funds, satisfy evolving investor preferences, and enhance our low-cost approach. It’s time for Vanguard to get back to its roots. The venerable firm, … [Read more...]
Why Vanguard is too Big: Part II
Short-term noise is an investor’s worst enemy. As if it’s not hard enough to set an appropriate course, you have the constant barrage of information that can make you feel uneasy. Times are changing. That’s a fact. Take a look at the S&P 500 or Vanguard’s Index 500 or some other ETF. Today, seven stocks account for 26% of the index, while not one of them trades at less than 33x earnings. You have read here that the stock market has dropped by 33% three times already this century. Doesn’t it make sense that the chances of that happening again become more likely when only seven … [Read more...]
“They Stick a Q-Tip So Far Up Your Nose, You Can See it Through Your Eye”
“They stick a Q-tip up your nose so far, you can see it through your eye,” I thought, as a friend described what it was like to watch his daughter squirm in pain and holding her in place as the doctor performed a COVID-19 test. No thanks. But Rhode Island requires school children showing two signs of COVID-19, which we all have when we get a cold, must be sent home. They can return with either a doctor’s note saying in writing he doesn’t believe a test for COVID-19 is necessary, or take the traumatizing test and wait at home for the results. Both options stink, and are disruptive to say the … [Read more...]
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