[Enough John Bogle Epub Bud
Melvin Amey
To that end, I have recently read four excellent books that summarize where we are, where we have come from and where we likely may be going. (Note, this blog is an update of what I wrote in late November, but with two books added.)
Richardson is a history professor at Boston College. For Canadians in particular the book is a valuable primer on the founding of America, the Declaration of Independence, the civil war, the Constitution and its many amendments, the creation of the Democratic and Republican parties, and the politics of the last few centuries. I assume most well-read American readers are taught this in grade school (although maybe not, judging by the millions of deluded MAGA zealots.)
While most of us may think we know this history going back to high-school history classes, not to mention numerous histories, novels and films about World War II, Hitler: Ascent is nevertheless a bracing refresher course.
The book also makes clear his goals for creating a Greater Germany at the expense of most of his European neighbours (famously Poland and France), and his plans for impossibly grandiose architectural structures to be implemented by Albert Speer, with Berlin (to be renamed Germania) the centre of what he hoped would be a global dictatorship.
To that end, I have recently read two excellent books that summarize where we are, where we have come from and where we likely may be going. These books came to my attention from two relatively new social media sites I joined in the past year.
For those who care, I am still on Twitter (now X) but restrict most of my posts there to the financial matters on which this blog focuses. I post there as @JonChevreau, which is the same handle I have on Mastodon (since Nov 6, 2022) and Threads, which I joined a week after its early July launch this summer. Threads is now almost the polar opposite of X politically, a veritable Blue haven: just last week Joe & Jill Biden both signed on as @potus and @flotus respectively, as well as under their real names. So did vice president Kamala Harris (posting as @VP and @kamalaharris).
Maddow credits the reader with enough intelligence to extrapolate from that period into the current dangerous environment. One is left to infer how she feels about the parallels to the modern GOP and its fascist leader and would-be dictator: she never says their names although she is usually more explicit in her MSNBC and podcast commentaries.
A book discovery service called Shepherd.com has just published a multi-book review by me about my recommendations for some of the best all-time books on Financial Independence and Retirement. You can find the full review by clicking here. Shepherd.com is a year old; an alternative to older services like Goodreads, it helps readers and authors share and discover books in various genres.
For this exercise, however, I opted to go with straight non-fiction financial books. My thinking was what books influenced me in my own journey to Semi-Retirement and Financial Independence, or the so-called FIRE movement, for Financial Independence Retire Early.
Here are the 5 books I did pick: go to the original link to get my analysis and reasons for each pick. Below I offer just a line each but each explanation is closer to 400 words so be sure to click on the original Shepherd link to get the full take on each. The five titles below each include hypertext to the Shepherd book store where you can order directly.
Probably first for most other proponents of the FIRE (Financial Independence Retire Early) movement is this classic, subtitled Transforming Your Relationship with Money and Achieving Financial Independence.
Edmonton-based author Ernie Zelinski is probably best known for this self-published international bestseller and several others, all on the theme of escaping from full-time employment as soon as possible.
This book by the famed Finance professor and a certified financial planner caters to anxious would-be retirees who do not have the luxury of having an inflation-indexed, guaranteed-for-life Defined Benefit pension plan offered by an employer.
It is no secret that I think highly of William Bernstein, MD and his writings. At my first Bogleheads convention (2008) Jack Bogle was in the hospital but I was only slightly disappointed because I got to meet Bill there, who had far more direct impact on my financial life than Jack did. His now 13 year old tome, The 4 Pillars of Investing, was easily the best of the first 20 financial books I ever read. Bill was also gracious enough to write the first guest post on this site and the foreword in my own The White Coat Investor: A Doctor's Guide to Personal Finance and Investing. I'm embarrassed to say it took me far longer to get to his book than it took for him to get to mine.
The first quarter of the book is heavy on the theory and the math. I warn you now, there are equations printed in the book, not all of which I know how to derive. There is little you can directly take out of this section and apply to your investments, other than the idea that future returns of your investments are highly likely to be lower than the past returns. However, this section lays a necessary foundation for the much more practical remainder of the book.
My favorite chart in the book was Figure 1-3, where he plots the Percent Market Decline on the X axis and the Percent of Investors Who Abandon Their Strategy on the Y Axis. At a 50% drop, such as the 2008-2009 Global Financial Crisis, about 70% of investors abandoned their strategy. At a 90% drop, such as in the Great Depression, that number approaches 100%. While I don't think this chart is actually generated from any true empirical data, the concept behind it is not only accurate, but extremely important when determining your asset allocation.
This chapter introduces the concept of a Liability Matching Portfolio (LMP). This is basically a sum of money that can pay for all your necessary living expenses for the rest of your life while taking minimal risk. We're talking a SPIA or a TIPS ladder here. Bernstein is famous for his idea that when you've won the game, you should quit playing it. Your Risk Portfolio (RP), any amount above and beyond the LMP is for special treats, inheritances, and charitable contributions. One of the best quotes from the book comes out of this section:
If you learn nothing else from this book, remember this: the purpose of your investment plan is to accumulate an LMP tailored to your retirement needs. Your LMP, once achieved, should be sacred and should never, ever take a back seat to your desire for higher returns. The purpose of investing is not to simply optimize returns and make yourself rich. The purpose is to not die poor.
I enjoyed the discussion of how you have to have a lot of time and an incredible savings rate in order to invest in nothing but safe assets. I've written a similar post here. The best part of this section, however, was the discussion of how exactly to transition your portfolio from a standard accumulation portfolio to an LMP + RP. I loved his recommendation that while you invest the LMP very conservatively, you invest the RP as aggressively as you can tolerate.
My favorite section of the book includes a discussion of the Flash Crash of 2010, which ought to scare you at least a little. It also includes the best discussion of duration I've yet seen. Bernstein says this about human capital and investment risk:
This chapter also discusses how you shouldn't be too mad that interest rates have been so low these last few years. While it did cost 14% more to retire in 2013 than it did in 2008, the Fed's accommodative policy has swollen your investments by far more than 14%. The remainder of this section rehashes the discussion of deep and shallow risk from book 3 in this series. The new part is the discussion of when shallow risk becomes as important or even more important than deep risk.
This final section is the practical part. He discusses various asset allocations, recommends funds for each asset class (hint: they're almost all from DFA or Vanguard), and talks about the various ways to tilt a portfolio. He also discusses the various ways to rebalance. I found the discussion about why you shouldn't use bond ETFs and his oft-repeated stance about not using bond funds in general particularly interesting, enough that I'll be doing a future post about them.
The four pillars is a must read, along with random walk by malkiel and bogles books on mutual funds. These three will provide you all the knowledge to invest in stocks and bonds as well as the other asset classes better than 99% of the population
Terrific book. There were some sections, especially at the beginning, which were so fact, theory and mathematics dense that I had to take in small bites and reread a couple of times. Bernstein is my favorite author on the mechanics of investing.
Is there a formula for how much to small value tilt your portfolio? Should one go for small value growth or value or blend? (I know Swedroe writes a lot about it)
Most of my investments are just Vanguard total stock, total international and 20% Vanguard US bonds. So I am mainly invested in 70% large stock.
I keep grappling with this question, should I tilt or not. Help!
I think Bernstein is writing for a different market than us, so it is possible that he would feel similarly if asked, but he sure comes across as being pretty absolute about going into extremely safe allocation (SPIA, etc) with all that you need for retirement, and then only putting any additional money at risk.
Many of us see value in our work, and are happy to work past the time that we could retire. By staying invested for growth, we will most likely end up with enough money to make substantial differences in: our families lives, local philanthropy, areas of specific interest, etc.
The book summarizes the most important information on the blog and contains material not found on the site at all. Straighten out your financial life today! Also available on Audible!
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