Meeting the Diehards: Profiting from Shared Wisdom

A GRS reader dropped a line last weekend. “I want to invite you to the Diehard Organizational Meeting on Wednesday,” he said. “I'm new to the group but obviously we're all believers of value of index funds and John Bogle's investment philosophy.”

“Hope to see you there,” I replied.

I'm still new to investing, but my reading continues to point in the direction of index funds. (An index fund is a mutual fund designed to track a particular stock market index. FSMKX, for example, attempts to mimic the performance of the S&P 500 index.) Index funds were popularized by John Bogle, the founder and retired CEO of The Vanguard Group. Followers of Bogle's investment philosophy call themselves Bogleheads or Diehards.

I'm not a Diehard (yet), but a chance to meet and learn from them was an offer I could not refuse.

The Diehards
Seven of us gathered last night at a Portland coffeehouse. We're all at different places in life, and we each have different investment goals and strategies:

  • Ron is retired. He derives his income from dividends and social security. His investments follow a conventional split: 60% equities (50% stock index funds, 10% real-estate investment trusts, a.k.a. REITs) and 40% fixed income (30% bonds and 10% cash).
  • J.D. is a middle-aged blogger. He recently eliminated his consumer debt, and is only now beginning to learn about investing. All of his retirement money is in stock index funds (though one of them is FFNOX, which includes a small portion in bonds).
  • Tony is learning about investing. He reads Get Rich Slowly (and is the one who invited me to the meeting). His portfolio is 80% equities (50% total stock market index, 15% international, 15% small-caps) and 20% other (10% REITs and 10% bonds).
  • Greg is also new to investing — Tony has been showing him the ropes. Greg is a lifelong saver and is not a risk-taker. He tries to max out his Roth IRA every year, putting his money in Vanguard's STAR fund. Greg lives frugally in order to get the money to invest: he doesn't have cable, and he doesn't have internet.
  • Tim is a fee-based Certified Financial Planner. He believes that everyone's situation and circumstances are different. He likes to see the different approaches each person takes to financial planning. His own investments are 50% in stocks, 40% in fixed income (including 20% in TIPS, Treasury inflation-protected securities), and 10% in what he calls “alternative investments”, such as REITs and commodities.
  • Tom just moved to Vanguard index funds this year. He wants to do a lot of intense research over the next couple of years, find a plan that works, and then put it on auto-pilot. Like Ron, he has 60% invested in equities and 40% in fixed income.
  • Bruce teaches Certified Financial Planner courses at a nearby university. His personal investments are interesting. He's an income investor. He doesn't care how the share price moves. He cares about the income, because that's how he pays his bills. His portfolio contains 60% “income securities” (REITs, preferred stock, utilities) and 40% conventional equities (in other words, normal stocks). “This is not what I teach,” he said as he explained his methods.

Profiting from shared wisdom
As we introduced ourselves, others asked questions about our backgrounds, and we had tangential conversations about a variety of topics. We talked about health insurance. We talked about preferred stock. We talked about financial planning.

It seemed to me, though, that we were mostly discussing facts and figures. “What role do you think behavior plays in financial planning?” I asked.

“It's starting to play a bigger role,” said Bruce. “Financial planning is a huge topic. If you want to be a competent advisor, you have to know it all. The coursework is structured as if there are right answers and there are wrong answers, but then you get out into the real world and you realize that's not true.”

“There's no one right answer,” said Tim. “It's a broad subject.”

I also mentioned that the Doom-and-Gloomers (like Peter Schiff) are starting to get to me. “Those folks come out every time the economy goes bad,” Bruce said. “They bubble to the top. You just have to ignore them.”

I left the meeting with two pages of notes and tons of information, not just for the blog, but for myself. I learned about George Kinder and his concept of life planning (see video below). I learned about Sheryl Garrett, and her goal of making financial advice accessible to all people. I learned a little more about income investing (a subject that interests me).

I'm grateful to Tony for inviting me to join this group, and I look forward to additional meetings in the future.

Strength in numbers
It's certainly possible to learn about investing from books and blogs and magazines. But I think meeting and exchanging ideas with other people adds a new dimension to the subject.

If you're interested in sharing and learning about index fund investing, check the list of Diehards local chapters to find a meeting in your area. If you can't find a group nearby, you can still chat with hundreds of other like-minded folks at the Bogleheads investment forum.

You might also consider joining the American Association of Individual Investors, a non-profit founded in 1978 to provide individual investors — people like you and me — with tools and knowledge to better approach the stock market. This organization also has local meetings. (Here's info about the next meeting of the Portland chapter [PDF], which I hope to attend.) The downside to the AAII is that everything costs money.

There may be other similar groups in your city. One of the men at tonight's meeting mentioned that he's involved in a couple of other organizations that meet regularly to discuss saving and investing. These kinds of gatherings are excellent ways to meet other people, and to learn from their successes and failures. They allow you to profit from shared wisdom.

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