Thanks very much for sharing that WSJ article! William Bernstein, Jonathan Clements, Rick Ferri and other leading investment experts recommend only holding Treasuries, while Professor Edward McQuarrie ("McQ" on the Bogleheads forums) did an exhaustive study recently comparing intermediate-term treasuries (VGIT) to Vanguard's Total Bond Market fund (BND) that showed conclusively that ITT's are superior to funds like BND that not only dilute Treasuries with lower-quality corporate issues but also have nudged their duration out to ~7 years, thereby exposing investors to considerably more interest rate risk than a true intermediate-term (5 year) fund. Bottom line from Dr. Bernstein: a TIPS ladder is the only place for long-duration bonds; otherwise use short-term Treasuries only and take your risk on the equity side. Personally I keep of couple of years of residual living expenses in GOV and split the rest of my bond holdings equally between VTIP (short-term TIPS) and VGIT. Like you I see the silly pop-ups from Vanguard urging me to consider dollar-hedged international bonds but their own track-record after using them in their target retirement date and LifeStrategy funds just shows that they add complexity for no additional return. Too bad they didn't choose to include TIPS in any of those funds beside Target Retirement Income instead, as VTIP has out-performed all of their other bond funds since inception and short-term TIPS actually do offer meaningful diversification - especially for retirees.
I'm both a minimalist and a cheapskate so here's where I've ended up: Fidelity as our primary brokerage AND bank, Schwab as a back-up. Why? Fidelity is the only one of the three major brokerages that has a lockdown feature to prevent fraudulent ACATS transfers, plus (unlike Schwab) they pay competitive (with high-yield savings accounts) interest on sweep funds in money market accounts. They also offer a Visa credit card whose cash-back feature nets us several hundred dollars a year since we charge everything we can on it and pay it off monthly, along with a debit card that reimburses transaction fees worldwide. Good luck finding a bank that offers these benefits. Given the omnipresent threat of cyber attacks temporarily impeding account access I think it's prudent to have at least one backup brokerage. Schwab fulfills that role for us nicely. By intention and design their yields on both bank savings and checking accounts and sweep money market accounts on the brokerage side are pitiful, so we keep a bare minimum in savings and checking there (which gives us a second debit card to use which like Fido's reimburses us for ATM fees worldwide) and remaining cash in SGOV. Finally, on the investing side, we hold almost exclusively Vanguard ETFs at both brokerages, thereby taking advantage of the one thing Vanguard does well (running low-cost funds) while sidestepping their lousy customer service, primitive website and tools and so-so security. IMHO two great brokerages make regular banks and credit unions superfluous.
Thanks for this! The link to the NYT article appears to be broken in your post so here it is as a gift article in hopes at least a few non-subscribers can read it. https://www.nytimes.com/2025/11/07/opinion/donald-trump-great-gatsby-roating-20s-sec.html?unlocked_article_code=1.zk8.PHMi.y57GHvU02KcT&smid=url-share
Responding to R Quinn's numerous uninformed comments, here's an up-to-date ranking of world health care systems. The U.S. doesn't fare all that badly (except for being in a league of its own for inefficiency and high costs) but it should be obvious that it is in no way an appropriate thing to be crowing about. What it comes down to is that civilized countries view health care as a right - just as they do transportation infrastructure, clean air and water and so on. What we have instead is what the French call "capitalisme sauvage" - unbridled prioritization of money making hand over fist by a few at the expense of the common good. https://www.usnews.com/news/best-countries/rankings/well-developed-public-health-system
Thanks for the timely reminder! One useful rule of thumb I learned from an advisor many years ago is to imagine that your equity allocation suddenly loses 50% of its value and doesn't recover for a decade. If you could still live well under that quite realistic worst-case scenario then your stock percentage is reasonable. Also of note is that both Vanguard and Morningstar are currently recommending 30-40% in equities and the rest in bonds along with a slice of cash for short-term needs as the risk:reward "sweet spot" starting point - essentially turning the classic 60:40 on its head. This is because bonds are (finally) offering a decent real (above inflation) return, while, as you point out, stocks are very richly valued. In that regard though, it's only the U.S. market, in which the Magnificent 7 have a total market share of 40%, that's overvalued. Jonathan Clements' advice to own the TOTAL market - including international equities at global market cap (currently around 35%) has never seemed wiser. Thanks as always Mr. Grossman for your excellent writing.
Great article that I hope will be widely-read. Thank you for writing it! Berkshire Hathaway's legendary Charlie Munger's take on Bitcoin sums things up nicely - and memorably: "I think it's rat poison," he famously said in 2013, when Bitcoin was worth $150. When asked to revisit his comments five years later, when the world's largest cryptocurrency was trading at $9,000, he said, "So it's more expensive rat poison." When pressed on the returns some Bitcoin investors were able to make, he called them "idiot booms" that harm the U.S. "In my life, I try and avoid things that are stupid, and evil, and maybe look bad in comparison with somebody else," he said in 2018. "Bitcoin does all three." "It's stupid because it's very likely to go to zero; it's evil because it undermines the Federal Reserve system... and third, it makes us look foolish compared to the communist leader in China," he explained. "[Xi Jinping] was smart enough to ban Bitcoin in China... we are a lot dumber."
Forgot to post this great new article by Campbell Harvey on gold. It's easily the most balanced and informative piece yet and makes it clear both why gold can be a valuable diversifier in small doses AND why most of us are better off not owning any apart from in jewelry. https://www.researchaffiliates.com/content/dam/ra/publications/pdf/1079-gold-5000.pdf
While you've written this with the best of intentions you don't really understand how gold works when deployed in a portfolio, while trotting out the familiar (and incorrect) clichés about it not being an inflation hedge, having no intrinsic value, etc. Meanwhile portfolios that contain a judicious (5-20%) slice of gold deployed strategically in combination with other assets continue to offer risk-adjusted returns that trounce plain vanilla stock:bond allocations as they have for decades. I should also say right upfront that I personally HATE owning gold not only because it's a PITA to deal with and is wildly volatile and unpredictable< but also because of the crowd it often draws (I don't own a bunker filled with ammo and MRE's, for example). But as a diversifier to protect against sequence-of-returns-risk and guard against the deep, long-lasting drawdowns that are a retiree's worst enemy it has no rivals. Case in point: my Golden Butterfly portfolio is up almost 4% YTD and its worst drawdown has been 0.4% - in keeping with its record of having the highest risk-adjusted returns and lowest and shallowest drawdowns of any lazy portfolio for over 50 years. This article explains the basics and serves as a necessary corrective to your post: https://portfoliocharts.com/2020/08/21/metal-money-and-the-measurable-value-of-gold/ /
Speaking of Warren Buffett, his famous quote "only when the tide goes out do you see who's been swimming naked" certainly applies to these times. Which is to say, for individual investors, this is when you find out what your actual, rather than hypothetical, risk tolerance actually is. At times like these (or better yet, before experiencing times like these), especially for retirees, It can be instructive to look at which kinds of portfolios have performed well during the very worst markets. There are lessons about diversification to be learned that go well beyond holding buckets of stock index funds, U.S. bonds and cash. https://portfoliocharts.com/2025/04/09/how-to-succeed-in-the-worst-stock-markets/
What we're actually doing in response to this is thanking our lucky stars that we're invested in an extremely resilient portfolio that is only down 1.81% YTD (see the Golden Butterfly on this real-time list of lazy portfolio returns: https://portfolioslab.com/lazy-portfolios). Other than that, not much we can do except to remind our elected representatives that they can stop and reverse this madness at any time. Tariffs are the purview of Congress unless they cede their authority to someone else - which is what has happened Fantastic post today by Cullen Roche on how we got here. Can't recommend it highly enough: https://disciplinefunds.com/2025/04/04/weekend-reading-how-did-we-get-here/
Comments
Thanks very much for sharing that WSJ article! William Bernstein, Jonathan Clements, Rick Ferri and other leading investment experts recommend only holding Treasuries, while Professor Edward McQuarrie ("McQ" on the Bogleheads forums) did an exhaustive study recently comparing intermediate-term treasuries (VGIT) to Vanguard's Total Bond Market fund (BND) that showed conclusively that ITT's are superior to funds like BND that not only dilute Treasuries with lower-quality corporate issues but also have nudged their duration out to ~7 years, thereby exposing investors to considerably more interest rate risk than a true intermediate-term (5 year) fund. Bottom line from Dr. Bernstein: a TIPS ladder is the only place for long-duration bonds; otherwise use short-term Treasuries only and take your risk on the equity side. Personally I keep of couple of years of residual living expenses in GOV and split the rest of my bond holdings equally between VTIP (short-term TIPS) and VGIT. Like you I see the silly pop-ups from Vanguard urging me to consider dollar-hedged international bonds but their own track-record after using them in their target retirement date and LifeStrategy funds just shows that they add complexity for no additional return. Too bad they didn't choose to include TIPS in any of those funds beside Target Retirement Income instead, as VTIP has out-performed all of their other bond funds since inception and short-term TIPS actually do offer meaningful diversification - especially for retirees.
Post: Which bond fund?
Link to comment from December 6, 2025
I'm both a minimalist and a cheapskate so here's where I've ended up: Fidelity as our primary brokerage AND bank, Schwab as a back-up. Why? Fidelity is the only one of the three major brokerages that has a lockdown feature to prevent fraudulent ACATS transfers, plus (unlike Schwab) they pay competitive (with high-yield savings accounts) interest on sweep funds in money market accounts. They also offer a Visa credit card whose cash-back feature nets us several hundred dollars a year since we charge everything we can on it and pay it off monthly, along with a debit card that reimburses transaction fees worldwide. Good luck finding a bank that offers these benefits. Given the omnipresent threat of cyber attacks temporarily impeding account access I think it's prudent to have at least one backup brokerage. Schwab fulfills that role for us nicely. By intention and design their yields on both bank savings and checking accounts and sweep money market accounts on the brokerage side are pitiful, so we keep a bare minimum in savings and checking there (which gives us a second debit card to use which like Fido's reimburses us for ATM fees worldwide) and remaining cash in SGOV. Finally, on the investing side, we hold almost exclusively Vanguard ETFs at both brokerages, thereby taking advantage of the one thing Vanguard does well (running low-cost funds) while sidestepping their lousy customer service, primitive website and tools and so-so security. IMHO two great brokerages make regular banks and credit unions superfluous.
Post: Where to Keep Cash
Link to comment from December 6, 2025
Thanks for this! The link to the NYT article appears to be broken in your post so here it is as a gift article in hopes at least a few non-subscribers can read it. https://www.nytimes.com/2025/11/07/opinion/donald-trump-great-gatsby-roating-20s-sec.html?unlocked_article_code=1.zk8.PHMi.y57GHvU02KcT&smid=url-share
Post: AI Rally Market Risks
Link to comment from November 8, 2025
Responding to R Quinn's numerous uninformed comments, here's an up-to-date ranking of world health care systems. The U.S. doesn't fare all that badly (except for being in a league of its own for inefficiency and high costs) but it should be obvious that it is in no way an appropriate thing to be crowing about. What it comes down to is that civilized countries view health care as a right - just as they do transportation infrastructure, clean air and water and so on. What we have instead is what the French call "capitalisme sauvage" - unbridled prioritization of money making hand over fist by a few at the expense of the common good. https://www.usnews.com/news/best-countries/rankings/well-developed-public-health-system
Post: About those US medical costs….
Link to comment from November 1, 2025
Thanks for the timely reminder! One useful rule of thumb I learned from an advisor many years ago is to imagine that your equity allocation suddenly loses 50% of its value and doesn't recover for a decade. If you could still live well under that quite realistic worst-case scenario then your stock percentage is reasonable. Also of note is that both Vanguard and Morningstar are currently recommending 30-40% in equities and the rest in bonds along with a slice of cash for short-term needs as the risk:reward "sweet spot" starting point - essentially turning the classic 60:40 on its head. This is because bonds are (finally) offering a decent real (above inflation) return, while, as you point out, stocks are very richly valued. In that regard though, it's only the U.S. market, in which the Magnificent 7 have a total market share of 40%, that's overvalued. Jonathan Clements' advice to own the TOTAL market - including international equities at global market cap (currently around 35%) has never seemed wiser. Thanks as always Mr. Grossman for your excellent writing.
Post: Is The Stock Market Overvalued?
Link to comment from October 18, 2025
Great article that I hope will be widely-read. Thank you for writing it! Berkshire Hathaway's legendary Charlie Munger's take on Bitcoin sums things up nicely - and memorably: "I think it's rat poison," he famously said in 2013, when Bitcoin was worth $150. When asked to revisit his comments five years later, when the world's largest cryptocurrency was trading at $9,000, he said, "So it's more expensive rat poison." When pressed on the returns some Bitcoin investors were able to make, he called them "idiot booms" that harm the U.S. "In my life, I try and avoid things that are stupid, and evil, and maybe look bad in comparison with somebody else," he said in 2018. "Bitcoin does all three." "It's stupid because it's very likely to go to zero; it's evil because it undermines the Federal Reserve system... and third, it makes us look foolish compared to the communist leader in China," he explained. "[Xi Jinping] was smart enough to ban Bitcoin in China... we are a lot dumber."
Post: Up Because It’s Up
Link to comment from May 31, 2025
Forgot to post this great new article by Campbell Harvey on gold. It's easily the most balanced and informative piece yet and makes it clear both why gold can be a valuable diversifier in small doses AND why most of us are better off not owning any apart from in jewelry. https://www.researchaffiliates.com/content/dam/ra/publications/pdf/1079-gold-5000.pdf
Post: Go for the Gold?
Link to comment from May 11, 2025
While you've written this with the best of intentions you don't really understand how gold works when deployed in a portfolio, while trotting out the familiar (and incorrect) clichés about it not being an inflation hedge, having no intrinsic value, etc. Meanwhile portfolios that contain a judicious (5-20%) slice of gold deployed strategically in combination with other assets continue to offer risk-adjusted returns that trounce plain vanilla stock:bond allocations as they have for decades. I should also say right upfront that I personally HATE owning gold not only because it's a PITA to deal with and is wildly volatile and unpredictable< but also because of the crowd it often draws (I don't own a bunker filled with ammo and MRE's, for example). But as a diversifier to protect against sequence-of-returns-risk and guard against the deep, long-lasting drawdowns that are a retiree's worst enemy it has no rivals. Case in point: my Golden Butterfly portfolio is up almost 4% YTD and its worst drawdown has been 0.4% - in keeping with its record of having the highest risk-adjusted returns and lowest and shallowest drawdowns of any lazy portfolio for over 50 years. This article explains the basics and serves as a necessary corrective to your post: https://portfoliocharts.com/2020/08/21/metal-money-and-the-measurable-value-of-gold/ /
Post: Go for the Gold?
Link to comment from May 10, 2025
Speaking of Warren Buffett, his famous quote "only when the tide goes out do you see who's been swimming naked" certainly applies to these times. Which is to say, for individual investors, this is when you find out what your actual, rather than hypothetical, risk tolerance actually is. At times like these (or better yet, before experiencing times like these), especially for retirees, It can be instructive to look at which kinds of portfolios have performed well during the very worst markets. There are lessons about diversification to be learned that go well beyond holding buckets of stock index funds, U.S. bonds and cash. https://portfoliocharts.com/2025/04/09/how-to-succeed-in-the-worst-stock-markets/
Post: Spreading Your Bets
Link to comment from April 12, 2025
What we're actually doing in response to this is thanking our lucky stars that we're invested in an extremely resilient portfolio that is only down 1.81% YTD (see the Golden Butterfly on this real-time list of lazy portfolio returns: https://portfolioslab.com/lazy-portfolios). Other than that, not much we can do except to remind our elected representatives that they can stop and reverse this madness at any time. Tariffs are the purview of Congress unless they cede their authority to someone else - which is what has happened Fantastic post today by Cullen Roche on how we got here. Can't recommend it highly enough: https://disciplinefunds.com/2025/04/04/weekend-reading-how-did-we-get-here/
Post: Tariffs and our retirement assets
Link to comment from April 5, 2025