4 ms·

Rule #1 (your career creates your wealth) is a gem. Rule #8 (make your own decisions) lacks self-awareness, especially after you read Rule #11 (bulletproof por

Rule #1 (your career creates your wealth) is a gem. Rule #8 (make your own decisions) lacks self-awareness, especially after you read Rule #11 (bulletproof portfolio). I have been on a quest for a truly bulletproof portfolio for years. It's not easy. TANSTAAFL. Rule #11 also contradicts Rules #6 (no trading system works forever) and #9 (only do things you understand). That criticism aside, the author did a service to us all by writing this. If I had followed all these rules consistently throughout my life, I would probably be a wealthier man today.

ghaff 3y ago
Where I've ended up is keeping some money aside to scratch whatever (mostly pretty conservative) investing itch I have and leaving the rest to a financial advisor. He's done stuff for my family for years and my feeling is that especially if I'm not going to actively manage my full portfolio, I'm better off with someone else doing it than just throwing the money into some index funds and calling it a day. (Though there have certainly been periods where that's probably been the right strategy.)
- c0pium 3y ago
  Have you back tested this hypothesis? It’s very unlikely to be true over a long period, say 15 years.
  - ghaff 3y ago
    Hard to say. Everything invested in the NASDAQ over the past 15 years would have been a great strategy. (Edit: high return strategy. Not necessarily a "good" one.) The 15 years before that probably not as good. Putting money in a small number of index funds and not even looking at them probably isn't a bad strategy and the costs are pretty low. But it's not bulletproof. I look at the financial advisor/firm as a form of diversification in part. I also keep my own portfolio small enough to have some (hopefully) intelligent opinion on whether the investments still make sense. (Including a decent weight on index funds.)
    - c0pium 3y ago
      It’s not hard to say though, back testing is trivial. There are very few market-beating advisors, and the longer you look the longer the odds get.
- sgerenser 3y ago
  People with “a guy” always think he’s doing something super clever. In reality, the best ones are just investing your money in index funds. The best they can do is help to save you from yourself, like avoiding selling stocks and moving to cash in 2008 or 2020.
  - deleted 3y ago
    [deleted]
DennisP 3y ago
Trading systems and asset allocations are not the same thing. Browne wrote a book explaining his portfolio in hopes that people would understand it. If you understand it and decide to use it, you're making your own decision.
- kaycebasques 3y ago
  > Trading systems and asset allocations are not the same thing. Asset allocation is just a trading system that changes much less frequently and has a different belief system underpinning it. They are both fundamentally decision frameworks about how to spend your money. The tragedy with this article is that a lot of the advice is sound. Once people get to Rule #11 they have a lot of reason to trust this author and adopt his bulletproof portfolio. And then they learn the hard way how it wasn't bulletproof. The author really should have known better. The prescriptive recommendations in Rule #11 contradict so much of the otherwise sound advice.
  - DennisP 3y ago
    Nothing is bulletproof, but you have to do something and Browne's portfolio has less risk than most. It sacrifices some returns to achieve that, but if you're retired or nearly so, it's a solid choice.
    - kaycebasques 3y ago
      Yes, exactly! Nothing is bulletproof and you have to do something. There Ain't No Such Thing As A Free Lunch. You can't depend on anyone to figure out a low-risk plan for you, not even Browne!
    - ghaff 3y ago
      >It sacrifices some returns to achieve that, but if you're retired or nearly so, it's a solid choice. In that scenario, especially given a healthy nest egg, it absolutely makes sense to optimize locking in an income stream at the expense of limiting the upside. Once you have "enough" money close to retirement, it's mostly about not taking risks for potential gains that won't really benefit you. For someone in a different situation, it will often make sense to go for higher average returns over time. (All of which is pretty much bog standard financial planning advice.)
angarg12 3y ago
Growing up poor-ish and coming to a high income later in life (nearing 40 now) I believe growing your income is almost a prerequisite to accumulate wealth. Sure, I wish I had known this advice earlier, but even if I did, now I would be only ever so slightly richer. When I spent the first half of my career in a low pay job living paycheck to paycheck, I simply didn't have the spare income to invest.
- movedx 3y ago
  > Growing up poor-ish and coming to a high income later in life (nearing 40 now) I believe growing your income is almost a prerequisite to accumulate wealth. Your income is your number one wealth building asset. Love him or hate him, but he has some solid advice at times: "Ramsey says that your income is your biggest wealth-building tool. I'd argue that it's actually the gap between what you earn and what you spend. That's the cash you can use to become more financially secure. If you're unsure of where to start, take a look at where your money goes each month." - https://www.fool.com/the-ascent/personal-finance/articles/dave-ramsey-says-this-is-your-most-important-wealth-building-tool/ https://www.fool.com/the-ascent/personal-finance/articles/da...

ghaff 3y ago

Where I've ended up is keeping some money aside to scratch whatever (mostly pretty conservative) investing itch I have and leaving the rest to a financial advisor. He's done stuff for my family for years and my feeling is that especially if I'm not going to actively manage my full portfolio, I'm better off with someone else doing it than just throwing the money into some index funds and calling it a day. (Though there have certainly been periods where that's probably been the right strategy.)

c0pium 3y ago
Have you back tested this hypothesis? It’s very unlikely to be true over a long period, say 15 years.
- ghaff 3y ago
  Hard to say. Everything invested in the NASDAQ over the past 15 years would have been a great strategy. (Edit: high return strategy. Not necessarily a "good" one.) The 15 years before that probably not as good. Putting money in a small number of index funds and not even looking at them probably isn't a bad strategy and the costs are pretty low. But it's not bulletproof. I look at the financial advisor/firm as a form of diversification in part. I also keep my own portfolio small enough to have some (hopefully) intelligent opinion on whether the investments still make sense. (Including a decent weight on index funds.)
  - c0pium 3y ago
    It’s not hard to say though, back testing is trivial. There are very few market-beating advisors, and the longer you look the longer the odds get.
sgerenser 3y ago
People with “a guy” always think he’s doing something super clever. In reality, the best ones are just investing your money in index funds. The best they can do is help to save you from yourself, like avoiding selling stocks and moving to cash in 2008 or 2020.
- deleted 3y ago
  [deleted]

DennisP 3y ago

Trading systems and asset allocations are not the same thing. Browne wrote a book explaining his portfolio in hopes that people would understand it. If you understand it and decide to use it, you're making your own decision.

kaycebasques 3y ago
> Trading systems and asset allocations are not the same thing. Asset allocation is just a trading system that changes much less frequently and has a different belief system underpinning it. They are both fundamentally decision frameworks about how to spend your money. The tragedy with this article is that a lot of the advice is sound. Once people get to Rule #11 they have a lot of reason to trust this author and adopt his bulletproof portfolio. And then they learn the hard way how it wasn't bulletproof. The author really should have known better. The prescriptive recommendations in Rule #11 contradict so much of the otherwise sound advice.
- DennisP 3y ago
  Nothing is bulletproof, but you have to do something and Browne's portfolio has less risk than most. It sacrifices some returns to achieve that, but if you're retired or nearly so, it's a solid choice.
  - kaycebasques 3y ago
    Yes, exactly! Nothing is bulletproof and you have to do something. There Ain't No Such Thing As A Free Lunch. You can't depend on anyone to figure out a low-risk plan for you, not even Browne!
  - ghaff 3y ago
    >It sacrifices some returns to achieve that, but if you're retired or nearly so, it's a solid choice. In that scenario, especially given a healthy nest egg, it absolutely makes sense to optimize locking in an income stream at the expense of limiting the upside. Once you have "enough" money close to retirement, it's mostly about not taking risks for potential gains that won't really benefit you. For someone in a different situation, it will often make sense to go for higher average returns over time. (All of which is pretty much bog standard financial planning advice.)

angarg12 3y ago

Growing up poor-ish and coming to a high income later in life (nearing 40 now) I believe growing your income is almost a prerequisite to accumulate wealth. Sure, I wish I had known this advice earlier, but even if I did, now I would be only ever so slightly richer. When I spent the first half of my career in a low pay job living paycheck to paycheck, I simply didn't have the spare income to invest.

movedx 3y ago
> Growing up poor-ish and coming to a high income later in life (nearing 40 now) I believe growing your income is almost a prerequisite to accumulate wealth. Your income is your number one wealth building asset. Love him or hate him, but he has some solid advice at times: "Ramsey says that your income is your biggest wealth-building tool. I'd argue that it's actually the gap between what you earn and what you spend. That's the cash you can use to become more financially secure. If you're unsure of where to start, take a look at where your money goes each month." - https://www.fool.com/the-ascent/personal-finance/articles/dave-ramsey-says-this-is-your-most-important-wealth-building-tool/ https://www.fool.com/the-ascent/personal-finance/articles/da...