Excellent video I retire at nine months ago I and those principles we discussed are the same ones that I have had but none of the financial planners. I consulted thought that way they just had the conventional thinking and that is why I handle my own nest egg in a similar fashion as you described. But you illustrated it very well and I’m very appreciative of that. Thank you.
Merchandising is packaging something for sale. A scam is deliberately misinforming someone so as to manipulate them into taking action that they would not have taken were they fully informed on the subject matter...
This vastly understates the correlation that value stocks have with the broader market. Most value ETFs have a beta of close to .90 or even higher (AVUV currently has a beta of 1.04). If the market dips by 10%, they're gonna dip by 9% or more... not the 4% or 5% that this video makes it seem like. The dividend of value stocks is only slightly more than SPY, and the volatility and Sharpe ratio are similar.
Thanks for watching the video and I appreciate the comment. The beta depends on what time period you test it over. Using directly held stocks rather than an ETF would be a much better way to manage a dividend portfolio - this would allow better management of volatility, increased dividend yield, as well as the opportunity to tax loss harvest. I have several other videos showing actual portfolio performance using Portfolio Visualizer of directly held single stock dividend portfolios against Index funds as well as other funds. I'm not making a case that this is fool proof or evergreen. Simply illustrating that conventional wisdom such as using an asset allocation, while useful, actually leaves significant gaps in investors understandings and expectations of how an asset allocation should inform a retirement investor. Asset allocation is not a panacea that can be used with out any other trackable metrics or supporting education. That is my opinion. Thanks for supporting the channel!
I used the word scam on purpose because: 1) I believe that institutional financial parties know EXACTLY what they are doing when they teach using asset allocation models to financial professionals and then expect those financial professionals to trickle that process down to the consumer. It is a way to reduce decisions making friction, bring more assets into custodians, and provide benefit to the institution at the expense of the consumer. 2) Just because someone is the unwitting vehicle of the scam (delivers it unknowingly) does not make the process not a scam. This is partly a product of the fact that barriers to providing financial advice as the media are non-existent - journalists can write whatever they want anywhere on the internet providing financial advice because they are not regulated.... Meanwhile, the barrier to entry for qualified financial advisors has dropped through the floor meaning we have more and more financial advisors who are less and less qualified because the educational requirements keep dropping. And this results in consumers getting bad advice even when they work with someone who is supposed to be a "qualified" professionals. As a fee only fiduciary financial planner I still do believe most consumers would benefit from a relationship with a qualified financial advisor. I just believe it becomes harder and harder to qualify the right advisor... It's a shame because it does not have to be this way - and again we have to ask - who benefits from this? Certainly the unqualified financial advisors who wash out of the industry at an almost 90% clip don't benefit. Neither do consumers just like you... So... Big head scratcher.. Who does benefit? Maybe... Vanguard? Wealthfront? Fidelity/Schwab/insert financial institution here....
Maybe emphaisize the higher interest rate sensitivity of zero coupon bonds vs coupon bonds. Also the fact that bond funds may not be a great way to own bonds.
It can be true - in many cases while bond funds do provide simplicity, professional management, etc - they do not provide you that "return of principal" that can help you stomach volatility on the longer end of the bond duration curve. To be more specific - Long duration bond FUNDS perform a lot more like high interest rate sensitivity stocks. If you own the bonds DIRECTLY, you can always hold the bond to maturity for return of principal which will help smooth out the volatility in the bond price. Unfortunately, most people use bond funds these days because "simple is always better" (insert sarcasm here)... I'll look forward to your thoughts on an upcoming video I did busting the myth that "simpler is always better" and that "investing is simple". It'll probably come out in 10 days or so!
I think it can be a useful option to generate income under the right circumstances. I do think options have more use in most retirees portfolio than is commonly discussed, but it is very case dependent and in most cases I wouldn't recommend the individual do it on their own without professional help or at least professional education.
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Excellent video
I retire at nine months ago
I and those principles we discussed are the same ones that I have had but none of the financial planners. I consulted thought that way they just had the conventional thinking and that is why I handle my own nest egg in a similar fashion as you described.
But you illustrated it very well and I’m very appreciative of that. Thank you.
I am glad you enjoyed the video. Best wishes to you!
Very good explanation of the ways certain classes of stock behave more like bonds and vice versa.
Thanks for the feedback. Glad you found this helpful.
Merchandising is a better word than scam in this case
Merchandising is packaging something for sale.
A scam is deliberately misinforming someone so as to manipulate them into taking action that they would not have taken were they fully informed on the subject matter...
This vastly understates the correlation that value stocks have with the broader market. Most value ETFs have a beta of close to .90 or even higher (AVUV currently has a beta of 1.04). If the market dips by 10%, they're gonna dip by 9% or more... not the 4% or 5% that this video makes it seem like. The dividend of value stocks is only slightly more than SPY, and the volatility and Sharpe ratio are similar.
Thanks for watching the video and I appreciate the comment.
The beta depends on what time period you test it over.
Using directly held stocks rather than an ETF would be a much better way to manage a dividend portfolio - this would allow better management of volatility, increased dividend yield, as well as the opportunity to tax loss harvest.
I have several other videos showing actual portfolio performance using Portfolio Visualizer of directly held single stock dividend portfolios against Index funds as well as other funds.
I'm not making a case that this is fool proof or evergreen.
Simply illustrating that conventional wisdom such as using an asset allocation, while useful, actually leaves significant gaps in investors understandings and expectations of how an asset allocation should inform a retirement investor.
Asset allocation is not a panacea that can be used with out any other trackable metrics or supporting education. That is my opinion.
Thanks for supporting the channel!
What a great video. You are operating at a level above other financial advisors that I have checked out.
Thank you sir. I appreciate the kind words and am glad you enjoyed the video.
scam implies that someone is trying to rip you off. It is different than giving someone bad advice or a not-very functiona "rule of thumb"
I used the word scam on purpose because:
1) I believe that institutional financial parties know EXACTLY what they are doing when they teach using asset allocation models to financial professionals and then expect those financial professionals to trickle that process down to the consumer. It is a way to reduce decisions making friction, bring more assets into custodians, and provide benefit to the institution at the expense of the consumer.
2) Just because someone is the unwitting vehicle of the scam (delivers it unknowingly) does not make the process not a scam. This is partly a product of the fact that barriers to providing financial advice as the media are non-existent - journalists can write whatever they want anywhere on the internet providing financial advice because they are not regulated.... Meanwhile, the barrier to entry for qualified financial advisors has dropped through the floor meaning we have more and more financial advisors who are less and less qualified because the educational requirements keep dropping. And this results in consumers getting bad advice even when they work with someone who is supposed to be a "qualified" professionals.
As a fee only fiduciary financial planner I still do believe most consumers would benefit from a relationship with a qualified financial advisor. I just believe it becomes harder and harder to qualify the right advisor... It's a shame because it does not have to be this way - and again we have to ask - who benefits from this? Certainly the unqualified financial advisors who wash out of the industry at an almost 90% clip don't benefit. Neither do consumers just like you... So... Big head scratcher.. Who does benefit?
Maybe...
Vanguard? Wealthfront? Fidelity/Schwab/insert financial institution here....
Maybe emphaisize the higher interest rate sensitivity of zero coupon bonds vs coupon bonds. Also the fact that bond funds may not be a great way to own bonds.
It can be true - in many cases while bond funds do provide simplicity, professional management, etc - they do not provide you that "return of principal" that can help you stomach volatility on the longer end of the bond duration curve. To be more specific - Long duration bond FUNDS perform a lot more like high interest rate sensitivity stocks. If you own the bonds DIRECTLY, you can always hold the bond to maturity for return of principal which will help smooth out the volatility in the bond price. Unfortunately, most people use bond funds these days because "simple is always better" (insert sarcasm here)...
I'll look forward to your thoughts on an upcoming video I did busting the myth that "simpler is always better" and that "investing is simple". It'll probably come out in 10 days or so!
i’m going to ask my 2 cfp who manage my accounts about this…. u r brilliant…
Well thank you! I certainly did not come up with this, I'm only conveying the information! Thanks for watching.
Any thoughts on use of covered calls ETV'S for retired person? Such as HIGH
I think it can be a useful option to generate income under the right circumstances. I do think options have more use in most retirees portfolio than is commonly discussed, but it is very case dependent and in most cases I wouldn't recommend the individual do it on their own without professional help or at least professional education.
Nice explanation, glad I listened.
Glad to hear it!
Thank you
You're welcome
Excellent
Thank you! Cheers!
Sound advice