By Dr. Rikki Racela, WCI Columnist
I had the pleasure of viewing the 2022 conference online and experienced a who’s who in personal investing and financial literacy education. From Christine Benz (a WCICON23 keynote speaker!) to Allan Roth and from Rick Ferri to the esteemed owner of this website Dr. Jim Dahle, the three-day talks were first-rate, easily digestible, and completely comprehensive in teaching basic financial literacy principles and more current investing topics. I will review four essential takeaways from this conference in the hope that you will be enticed to actually watch and learn from the conference as I did. The conference is a basic overview of everything you need to know in personal finance with appropriate deep dives on nuanced topics. Best of all, you can watch the 2022 videos for free (FYI, this year's conference runs from October 13-15 in Rockville, Maryland, and yes, Jim Dahle will be there!).
Here are some of my takeaways from immersing myself in Bogleheads 2022.
#1 The Essentials of Personal Finance Are Dirt Easy
The first part of the conference was led by none other than WCI's founder. Jim had mentioned previously that he was hosting a pre-conference the day before the start of the formal conference, called Bogleheads University. This is an effective clinic on the basics of personal finance and is amazingly comprehensive with a star-studded panel of speakers. The lectures, which were quick 15-minute hitters on basic investing principles, included:
- Developing a Workable Plan by Dr. Jim Dahle
- Investing Early and Often by Christine Benz
- Never Bearing Too Much or Too Little Risk by Allan Roth
- Diversifying by Christine Benz
- Never Timing the Market by Rick Ferri
- Using Index Funds Whenever Possible by Rick Ferri
- Keeping Costs Low by Allan Roth
- Minimizing Taxes by Mike Piper
- Investing with Simplicity by Mike Piper
- Staying the Course by Dr. Jim Dahle
Bogleheads University was everything you needed to know about personal finance, and it all fit in one afternoon. Jim started off with his first lecture and indulged us with the reasons for and how to create a written financial plan. Starting with goals, choosing accounts, determining an asset allocation, picking investments, and setting rules for changing the plan were the main tenets of his talk. Next, Christine Benz pumped us up for investing as much as you can for as long as you can for retirement. This attitude can help you attain hundreds of thousands, if not millions of dollars, extra.
Allan Roth, quite humorously, went over trying to find your risk tolerance and how different assets can help mitigate risk, and he even dissed the use of risk tolerance questionnaires. Afterward, Benz took the stage again and really made the point that you want diversification, not DE-WORsification—the concept of adding too many asset classes which is not really increasing your diversification.
Rick Ferri emphasized that market timing is an impossible task and that index funds absolutely without a doubt dominate active management in terms of return. After Roth took the stage again to talk about why the fees of active management leads to its downfall, Mike Piper (a WCICON21 keynote speaker along with Roth!) had two talks: 1) about how to minimize taxes in just two ways (maxing out retirement accounts and using tax-efficient investments in taxable accounts) and 2) he emphasized how simplicity makes it easier to implement a financial plan (he only invests in one fund: the Vanguard LifeStrategy Growth Fund. Talk about simple!).
Finally, the fearless leader of Bogleheads University took the stage for the last talk on the merits yet difficulties of staying the course.
It was great getting the thoughts of such an accomplished panel, and I have to say this was the best part of the conference if you are early in your financial journey or just want to review the basics. It is literally all you need to know to be a Boglehead and great investor. And it was simple, all done in one afternoon, reemphasizing that the principles of personal finance are dirt easy.
More information here:
#2 The Behaviors of Personal Finance Are Clear as Mud
While the first part of the conference might seem simple, a theme that pervaded throughout was that the behavioral side is the hard part. The first official talk of the conference was an engaging dialogue between Bill Bernstein (a WCICON22 keynote speaker!) and Jason Zweig, two giants in the industry who have a vested interest in the behavioral side of personal finance.
Bernstein came from a career studying the brain before writing on finance, while Zweig came from a career reporting on finance which then was honed on focusing on the brain. For Zweig, an article in Scientific American regarding behavior triggered his specific interest, and he has since built a career writing about behavioral finance, exemplified by his book Your Money and Your Brain. Bernstein exemplifies how to use rationalization behavioral bias to become a better investor. He applies how doctors “read the peer-reviewed literature” when treating patients, and he uses this mantra when studying investing. He mentioned a few seminal papers including the Fama and French paper on market efficiency, the limits of arbitrage, Dreman’s work on the value effect, and a paper on the transience of growth companies’ outperformance.
He also utilizes salience when learning and teaching personal finance. For example, he discussed how a young accumulator is going to love bear markets and inherently has no risk in stocks. To an old decumulator, though, he said a bear market is “Three Mile Island toxic.” Using an analogy of nuclear disaster taps into the salience portion of how our brains work, searing the risk of stock for retirees into our memories.
In a later conference session, Dan Egan, the director of personal finance at Betterment, discussed how to put savings and investing on auto-pilot to minimize the limited mental bandwidth your brain has to waste. He also described his favorite behavioral economic hack: temptation bundling. For example, he and his wife bundle their financial date nights with drinks at a chic local bar. What a great way to make budgeting much more pleasant by rewarding your financial hard work with a cold one with the spouse you love at a stylish locale. He also discussed how success in finance is not predicting the next big stock, not timing Bitcoin, and not even being an oracle like Warren Buffett. It is utilizing knowledge of your brain’s heuristics to make finance more palatable and easier to save and invest for success.
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#3 Many Finance Debates Just Don’t Matter Much
Throughout the conference, plenty of topics were hotly debated, but the conclusion of all these discussions was this: it doesn’t matter!!! There was a panel discussing investing including Dahle, Ferri, Bernstein, and Zweig. They discussed their optimism for the market (even though this was in the middle of a bear market) and how you can only speculate whether the US market vs. the international market is overvalued. Dahle mentioned that international will eventually outperform US stocks and that every asset class will have its day in the sun. In the end, debating how much US vs. international just doesn’t matter!
The panel also discussed tilting, where Bernstein said sticking to your tilt was more important than tilting. Ferri mentioned that tilting is not as big a deal as the macro asset allocation which dictates 90% of your return. That, he said, is the cake whereas tilting is just the icing and sprinkles. Should you tilt to small/value/momentum/quality? Again, it does not matter. What matters is the stock/bond allocation and that you stick to it.
They then talked about bonds and how they are a diversifier and ballast to your equities. Even in 2022, when both stocks and bonds went down, bonds did not go down as much as stocks. You just don’t know which type of bond will act best as a ballast to stocks during the next bear market. You can debate this endlessly. But what if, as opposed to 2022, the Fed had dropped interest rates to stimulate the economy instead of increasing those rates? Then, instead of long-term Treasuries getting killed, they might have actually jumped highest in value at the same time equities were getting hammered. You just can’t predict these things.
The more important insight to realize is why you have certain bonds in your portfolio. It doesn’t matter what bonds will be best going forward. It matters what role they are playing in your asset allocation, how they can react in different situations, and that you understand what type of risk you are taking.
The panel then discussed REITs and dividend stocks. Again, does it matter? REITs are equity-like in their returns, and they have less of a correlation to stocks. But you can likely accomplish your financial goals with or without them. Ditto for dividend stocks, where you might delude yourself psychologically that you are not selling equities. But every time you receive that dividend, that is taken out of the intrinsic value of the companies it came from. The point is not whether you should have these asset classes in your portfolio, but are they acting in a way that helps you to stick with them through thick and thin?
#4 I Want to Be Michelle Singletary
The finale of the conference could not have been better as dynamic writer and speaker Michelle Singletary (a WCICON22 keynote speaker!) was interviewed by Christine Benz center stage. Michelle delivered a fantastic story regarding her upbringing of frugality modeled by her mother and how she passed on those traits to her children. This was exemplified by a story she told about her daughter paying $5 of her own money to buy a pretzel at the movies. Her daughter, after handing in that $5 and getting her pretzel and 10 cents in change, started crying. She was crying because she had lost that $5 she had worked so hard for—all for this simple pretzel—and wanted her money back.
Singletary’s response to the server at the movies was hilarious: “Well, give her her money back!”
She went on to mention her worst fear of enabling her children to be dependent on her financially—what Stanley and Danko described as Economic Outpatient Care —and she said that everyone at the Bogleheads conference, by virtue of their financial literacy and resulting success, are at highest risk for giving EOC and that we should all be mindful.
Now, I am going to say this in public, right here, right now, in this column: I want to be Michelle Singletary, because she exemplifies frugality and smart low cost index investing which she deftly teaches her kids and others. Her strength was built through a life of surviving poverty and family struggle. She doesn’t blame the stars/fates, but instead, she thanks them for making her the woman she is today. I am reminded of a quote by Cassius in Shakespeare’s “Julius Caesar”:
“The fault, dear Brutus, is not in our stars, but in ourselves.”
It's a must-watch interview and a great finale to the conference.
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The Bottom Line
The Bogleheads conference was so wide-ranging that I cannot think of a single thing that it didn't cover in terms of personal finance. The speakers: phenomenal. The talks: comprehensive. The content: evergreen. I say this is a must-see conference, especially given the price tag: free! If there was a conference to view online after WCICON, it would be the Bogleheads Conference.
What do you think? Have you ever been to or watched a Bogleheads conference? Do you agree with the Boglehead philosophy? Comment below!