Christine Benz pondered contradictory feedback after a recent, successful Bogleheads conference.
She came to the conclusion that the conference is attempting to serve two completely different audiences —
portfolio maximizers (or optimizers) and "satisficers."
Maximizers conduct deep research on how to best create a financial plan and manage their portfolios.
They'll often enjoy debating the finer points regarding their financial analysis/decisions.
Satisficers, on the other hand, are seeking acceptable options rather than optimal ones.
They're less interested in the nitty-gritty details and gravitate towards big-picture topics
like finding
enough, retirement lifestyle considerations, and leaving a legacy, for example.
Throughout my investment career, I've tended to be a maximizer.
As I've entered the … umm, second half of my life, I'll strive to spend less time and energy managing my investments.
Are you seeking the optimal portfolio and very best investing solutions or will good enough do?https://www.morningstar.com/personal-finance/case-good-enough-portfolio
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Then, there are strategic-allocation (static income/conservative/moderate/aggressive allocations) and glide-path TDFs of index funds.
But as Bogleheads have grown, there are many financial advisors who claim to follow indexing and present at Bogleheads conferences or attend looking for business.
Christine Benz' dilemma is easy to understand from that angle.
If you don't mind sharing, are you a maximizer or satisficer?
When I retired, I already had enough — all I needed was a 6% annual return, indefinitely. I could have gone with a simple 50/50 portfolio, but why? That approach would have allowed my portfolio to drop 20–30% from peak to trough.
Instead, I set clear goals:
-Earn at least 6% annually.
-Make money every single year.
-Never lose more than 3% from any recent high.
-Outperform a traditional 50/50 portfolio.
-Achieve the best possible risk-adjusted returns.
I’ve met and exceeded all of those goals.
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During the accumulation phase from 1995 to retirement on 2018, my stock portion beat the SP500, and my bond portion did too...and with better risk/adjusted performance.
The following information may provide additional clarity.
"A maximiser is a perfectionist who constantly strives to achieve the optimal outcome.
When faced with options a maximiser will exhaustively research each choice before deciding.
In the investment world this approach manifests itself in a portfolio with precise asset allocation
and extensively researched investments within each asset class."
"Satisfiser is a term that combines satisfy and suffice which was coined by psychologist Herbert Simon.
A satisfiser looks for a solution that is good enough and then moves on to spend their time
doing something else. Investors with satisfiser tendencies will not exhaustively research
every option but instead pick an investment that meets the minimum high-level criteria."
"Most people are not at one extreme or the other.
And most people will exhibit different degrees of maximising and satisfising in different parts of their life."
— Mark LaMonica, Morningstar Australia
I also tend to be a "maximizer."
I am trying to lean more towards being a "satisficer" but this is not easy for me.
LOL!
Having been "smart enough" to inherit some money, I learn from mistakes, never bet the whole farm on one big play. I've been in PRWCX for 13 years, don't plan to get out unless it falls off a cliff. I think it's helpful to pay attention to the news, financial and otherwise, so that one can be tactical and make a move or two when it is advantageous. Avoiding mistakes makes me a Satisfiser, I suppose. But I do want to take a small portion of the money to exploit new developments--- the falling dollar this year, for instance. In Ritholtz' new book, "How Not To Invest," he very succinctly describes investing as the Art (not science) of intelligently investing the best way you can, into probabilities. This is always done with a backdrop which makes all information imperfect and subject to interpretation. Numbers don't lie, but how might they be manipulated, or inserted out of meaningful context? What does Person X have to gain by convincing you to do what they say they are doing? And on and on...
Just in tax planning alone, Roth early in life? Or tIRA early and Roth later, or not at all? Start pulling from 401k the day you retire or hold for age 73. TLH? Or no?
Then there is asset placement - traditional Boglehead wisdom is bonds in your tax deferred (beating SPX, of course) / VTI in your Roth / BRK, maybe, in taxable. But does that always hold?.
Finally, age in bonds or now, 120 - age in stock or stress test need, ability and willingness to take a 50% loss on your stock holdings.
Two more - One is REITS? Or no? Two is bond funds or a bond ladder? I used to be convinced that the 2 move in opposite directions, but I don’t know if I still believe that.
What truly matters are quantifiable performance metrics:
TR (total return), SD (standard deviation), Sharpe ratio, Sortino ratio, max drawdown, and others.
Then: set measurable goals, track them rigorously, evaluate honestly, identify improvements, and implement changes.
Repeat every several years.
Everything else is unmeasurable noise.
BTW, a true goal must be challenging.
Example 1: At age 30, aiming for 7% annualized returns over the next 30 years while the S&P 500 averages 10% isn’t a real goal; it’s underperforming by design.
Example 2: If your bond allocation was in BND over the past 15 years and returned just 2.2% annually, that’s dismal performance, not a success.
All my meaningful goals over the years were hard to beat. That’s how I improved. On the flip side, many missteps taught me exactly what to avoid.