Little Jack

Dennis Friedman

I SUBSCRIBE TO a number of financial magazines, as well as a daily newspaper. Lately, they’ve been piling up in my garage unread. I scan the front cover of the magazines and the headlines of the newspaper, but I’m not that interested. I don’t care about “Where to Invest Your Money in 2019” or “The Best Stocks for the Long Run.”

I guess it’s because I’m no longer in charge of my investment portfolio. I have a financial advisor, Carl, who has been overseeing my investments for the past six months. And I have been satisfied with the way things have been going.

Just between you and me, Carl—who is human—hasn’t been selecting my investments. Instead, it’s been a computer. I call the computer Little Jack, after the late Jack Bogle, because it picks nothing but index funds. Right now, Little Jack has me in a mix of six index funds that track the total U.S. stock market, total international stock market, total international bond market and three different segments of the U.S bond market—short, intermediate and long-term securities. Overall, my portfolio is 40% in stocks and 60% in bonds.

I know for a fact that Little Jack hasn’t read those periodicals that are piling up in my garage. If he isn’t bothering, why should I?

What I like about Little Jack is that he isn’t human. There is no emotion or prejudice in picking my investments. You can’t say the same thing about those magazines and newspapers in my garage, all of which are written by humans, who are quoting other humans, who are supposedly experts.

I bet that, over the long run, Little Jack will beat the performance of the picks from those magazines and newspapers. I guess that’s another reason those periodicals are piling up in my garage unread.

Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous articles include Cancel the Movers, Let’s Take a Ride and I Can’t Do That. Follow Dennis on Twitter @dmfrie.

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Carl Rasmussen
Carl Rasmussen
4 years ago

Hi! I’m Carl! Well, not the Carl you are referring to. BUT, to be frank all anyone has to do is:

1. Keep enough in Cash Equivalents that is necessary. Depends on age, etc. Also MRDs needed for two years (in case the market goes down, you don’t have to sell depressed ETFs/stocks). Could be CDs, who knows . . . .

2. With the rest, invest in the S&P 500 and do nothing—except invest more (dollar cost averaging; SPY, VOO, etc.). IMHO, fussing about with “asset diversification/allocation” is too time consuming for the small increment that it MIGHT return is not worth it.

3. Sit back and watch CNBC and FoxBusiness News for entertainment—but do not act on any advice!

4 years ago

As I’m sure you know, computers pick stocks based on algorithms that are created and periodically modified by humans.
I also wonder how a managed portfolio like this fares against a less expensive self-managed approach such as the Boglehead three fund portfolio.

Jonathan Clements
Jonathan Clements
4 years ago
Reply to  parkslope

I suspect the results would be very similar — potentially better for the do-it-yourselfer, because you avoid the additional 0.3% for Vanguard’s advisor service, though potentially worse if you fall prey to behavioral mistakes.

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