Comments on: Now THIS is the kind of investment research you should be doing

By: The Buy and Hold Hall of Fame: 10 Legendary Long Term Investors | ETF Database

Wed, 06 May 2009 18:11:52 +0000

[...] through investing. Instead, he points out that you should concentrate on asset allocation, doing solid investment research, and creating a plan you can stick with. Choosing investments for the long haul, through reasoned [...]

By: Thisson

Thisson — Tue, 31 Mar 2009 19:35:08 +0000

For those saying that young people should skip bonds, you may want to look at this article:

http://www.ritholtz.com/blog/2009/03/why-bother-with-bonds/

At this point, due to the downturn in the stock market, it looks like bonds may have outperformed equities over almost all 20 year periods in the last 200 years.

Johnny H also makes a fair point about sell-discipline. Even Ben Graham’s “Intelligent Investor” suggests the idea of picking target P/E multiples to sell at and to rebalance between stocks/bonds, ranging from 25%/75% to 75%/25% mixes depending on valuations/multiples.

By: Smart Investing for 20 Somethings | kaapro.NET

Smart Investing for 20 Somethings | kaapro.NET — Fri, 20 Mar 2009 19:25:36 +0000

[...] Now THIS is the kind of investment research you should be doing Lots of people say they want to invest for themselves, but this is the bare minimum amount of research you should be doing. It’s kinda like when people say they want to write a book, or get 6-pack abs…yes, I want two twins in the back of a limo feeding me grapes (that’s all, Mom!!!) but I don’t necessarily want to do all the work to get them back there. [...]

By: E

Fri, 20 Mar 2009 06:26:07 +0000

Hey guys this is Ramit’s buddy, ‘E’. A big thanks to Ramit for sharing my story on his blog, and equally big thanks to all of you who have commented. As a follow up, I wanted to share with you guys what I ended up doing.

Most of the comments suggested that my bond allocation was too high for a guy my age (27)–I agree. I decided to cut my bond allocation in half. Eventually I may decide to cut down even further to 10% of my total allocation, but I want to do some more research first.

Here’s my current allocation:

30% – Vanguard 500 Index VFINX
20% – Vanguard Emerging Markets Index VEIEX
15% – Vanguard Total Stock Market Index VTSMX
10% – Vanguard Total Int’l Stock Index VGTSX
10% – Vanguard REIT Index VGSIX
7.5% – Vanguard Long-Term Treasury VUSTX
7.5% – Vanguard Inflation-Protected Securities VIPSX

Now I know there’s more I could be doing to optimize my allocation as well as my investment channels–but I think any improvement would be on the margins at this point.

I don’t plan to touch this money for 30-40 years. I’m just a lazy guy who wants to do a little upfront research on asset allocation, settle on something, then just keep dumping money into that allocation without thinking about it any more. I’d rather focus my attention and energy on my new business!

Thanks again everyone!

By: Ramit Sethi

Ramit Sethi — Fri, 20 Mar 2009 04:58:56 +0000

A pair of twins — 2 in total, plus me. This is an important question and I’m glad you asked it.

By: Dennis

Dennis — Fri, 20 Mar 2009 04:03:34 +0000

Ramit, regarding your comment above: “…two twins in the back of a limo feeding me grapes…”; is that simply a redundant statement or did you mean two sets of twins for a total of four people? Or perhaps two twins but not necessarily from the same set of twins?

I ask because it might make a difference to your mom!

Really enjoy your writing.

By: Ramit Sethi

Ramit Sethi — Thu, 19 Mar 2009 18:04:59 +0000

Simplesimon = best comment ever

By: simplesimon

simplesimon — Thu, 19 Mar 2009 17:44:38 +0000

Buy and hold doesn’t work if you don’t respect the “hold”.

For people that lost 50%, should they have been in a position to lose 50% in the first place? If they had the stomach for such a loss and set up their portfolio in such a way, sure. If not, their portfolios were too risky to begin with.

By: Johnny H

Johnny H — Thu, 19 Mar 2009 15:42:39 +0000

The sacred principle of “long term”, ah yes! Might be fine now, but what about the people that lost 50% last year with strategies similar to the OP’s?

Now their portfolios have to see 100% gains just to break even. It could take 15 years + under decent conditions. Could take longer if the decline is not over. Long term? I’d say so…

Buy and hold is risky, always have an exit strategy.

By: Ramit Sethi

Ramit Sethi — Thu, 19 Mar 2009 15:10:08 +0000

Yes…that is the point of asset allocation and diversification. And the focus is on the long term, not the next 2 years.