Dr. William J. Bernstein on investing simplicity

Dr. William J. Bernstein talks about how the imperfect portfolio you can stick with is better than the perfect portfolio you can't stick with, answers audience questions about bonds for young investors, bond maturity, the risks of bond ETFs, Treasury inflation-protected securities (TIPS), and about how he's changed his approach to investing over time.

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[00:00:40] Jon Luskin: Thank you for joining us for the 8th Episode of Bogleheads® Live. My name is Jon Luskin, and I’m your host for today. My co-host for today is Dr. William Bernstein.

Dr. Bernstein is an investment advisor and author of The Intelligent Asset Allocator and The Four Pillars of Investing - among others. Today we’ll be discussing investing simplicity.

I’ll rotate between asking Dr. Bernstein questions that I got beforehand from the Bogleheads forum at www.bogleheads.org, Bogleheads® Reddit. And I’ll be taking live audience questions from the folks here today. 

Before that, let’s talk about the Bogleheads®, a community of investors who believe in keeping it simple by following a small number of tried and true investing principles. You can learn more at the John C. Bogle Center for Financial Literacy at boglecenter.net. 

We’ll be holding the annual Bogleheads® conference on October 12th through October 14th (2022) in the Chicago area. We’re pretty sure the agenda and speaker lineup will knock you out - in a good way.

Speakers include Eric Balchunas, author of The Bogle Effect, economist Burton Malkiel, Jason Zweig of the Wall Street Journal, CPA Mike Piper of Oblivious Investor, Rick Ferri, host of the Bogleheads On Investing Podcast, Christine Benz, director of personal finance at Morningstar, today’s guest - Dr. Burnstein, yours truly, and so much more. Registration is now open. Registration is now open. You can find the link to register pinned to the top of the Investing Theory News and General Forum at Bogleheads.org. 

Mark your calendars for future episodes of Bogleheads® Live.  Next week Mike Piper will be discussing his updated book on Social Security. The following week we’ll have Paul Merriman as our guest. On May 25th Cody Garrett  and Sean Mallaney will be discussing tax planning for early retirees. That’s for the “FIRE” crowd.

Before the podcast, a disclaimer: The following is for informational and entertainment purposes only, and should not be relied upon as a basis for investment tax or other financial planning decisions.

Dr. Bernstein, thank you so much for joining us for today’s Bogleheads® Live. I received a lot of great questions, so ‘thank you’ to everybody who submitted those questions ahead of time. We don’t have enough time to answer all those questions. We can start with a couple that are at the center of our topic today, which is “Investing Simplicity.”

“Randommusings” from the forums writes: “As all investors are different. How can one determine which ‘sub-optimal’ portfolio is right for them?” and Nowizard, also from the forums asks, “What is his opinion (Dr. Bernstein) of the effect of personal psychology on investing, as opposed to factual information and its interaction with seeking perfection?”

[00:02:53] Bill: I’m struck by a quote from Robert Kaplan. Who’s a historian who said that he likes to think that geography is extremely important to history, which of course, it is. And he says that all history is half geography and half Shakespeare. And in my impending senile decrepitude, I’ve come to realize that the same is true of investing. 

I used to think that it was 100% math, but I now realize that it’s about 50% math and 50% Shakespeare. And what I mean by that is that probably 95% of your long-term success derives from how you behave in the worst 2% or 3% of the time. 

So it’s not what you’re doing right now - even with today’s volatility - it’s how you behaved during a time like 1931 or 1932, or early 2009 when it looked like the world was going to end.

The way I think that the investor approaches that is to do the “James Tobin full-monty” of separation…to apply the separation theorem very aggressively, which is to, instead of thinking of your portfolio as one overall portfolio - which we still do, for formalistic purposes. What you, in fact, do is mentally go full “2 bucket” -  which is you say to yourself, “All right, this is my pile of risky assets, namely my stocks. And, hopefully, I don’t need that for 20 or 30 years.” That’s the period of time when they can, under really bad circumstances, have negative, real returns. You completely write that off in your mind.

And what do you think about during the worst of times? Your safe assets. 

And during the worst of times, those safe assets have to be perfectly safe. But, even the total bond market - as we recently found out - isn’t terribly safe. 

There’s only one thing that, in the very short term, is safe and allows you to sleep at night. And those are Treasury bills. 

There is a reason why 20% of Berkshire Hathaway’s assets, at any one time, is in Treasury bills. And that’s because I think that’s Warren Buffett’s little secret. It’s what allows him to sleep at night. That 20% of his assets, in Treasury bills, makes him completely agnostic about what the market is doing at any particular day or any particular year. And that’s the place that you want to be. 

I’ve heard it said occasionally, and I agree completely with this sentiment, that the Treasury bills, in fact, are the highest-yielding asset in your portfolio because those are the assets that allow you to sleep at night. They are in effect, the elixir of equanimity.

The question is “How much of them do you hold?” Well, it depends upon who you are. You don’t need very much of them if you are a young person who is saving and you have a lot of human capital. Your human capital, in that situation, dwarfs your investment capital. So, you need an emergency fund…

On the other hand, if you’re a new retiree who has no human capital left, then you had better have many, many years in Treasury bills to save you from a bad initial sequence.

That’s what I mean when I talk about, you know, investing simplicity and why, in holding a lot of T-bills may not be optimal, but it’s a sub-optimal strategy that you can execute rather than an optimal one, which you can’t execute.

[00:06:24] Jon:  So well said. You can spend as much time in a spreadsheet or doing backtests as much as you like, but if you can’t stick with your plan, it’s not going to matter. 

David can ask his question on investing simplicity to Dr. Bernstein…

[00:06:43] David: Dr. Bernstein, thank you for your time today. I wanted to just start off and say that your book The Four Pillars of Investing, when it was first published, I bought it and read it, and then I gave it to many of my family members and it made a big difference. So, thank you for that. 

Listening to you speak over the years, you always emphasized that when you were a practicing physician, go to the peer-reviewed research. And, that’s how you learned finance. And I truly appreciate that view. And I’m just wondering if you continue to look at that peer-reviewed research? And, since - let’s say - French/Fama, is there anything out there that’s really struck you that’s new and different? Or have we kind of reached a plateau in terms of discoveries and finance?

And, then, a related question: If that is the case, why do you think it’s taken so long for meaningful adoption? Why is there still so much noise and misinformation surrounding investments? Thank you very much.

[00:07:44] Bill: Thanks for the kind words, Dave. You’ve asked, if I can count right, two questions. The first one is: “Is there anything new in the finance literature?” 

I do spend a lot of time surveying the finance literature. It’s not as complete a survey as it should be. One of the nice things about having a bit of a public profile is people bring the most significant articles to my attention fairly quickly. So I don’t have to actively survey the whole literature…

I like to, half-jokingly, say that one of the nice things about finance - as opposed to law or medicine - is that in those last two fields, you have to keep track of literally thousands of pieces of peer-reviewed literature and case law, because it’s so very important - critical to day-to-day practice. 

The nice thing about finance is I could probably make a list of about 15 or 20 articles that someone who was interested in it as an academic field should read, and you can probably ignore all of the rest of it. 

So, the short answer to your question then is ‘there’s almost nothing that is new in the finance literature that I consider to be significant.’ There are a couple of factors, particularly profitability and maybe the investment factor of Fama and French, which may be worthwhile.

But, if you fell asleep for the past 20 years, you haven’t really missed much in the finance literature. 

So the question is “Why is the important peer-reviewed work - that data-driven work - ignored?” And the answer is because it’s not profitable to anybody.

If the correct way to invest is to invest passively and not trade, then, 99% of the people employed in the investment industry should be finding some other field. That’s the basic reason. And, 100% percent of the people, by the way, in the financial journalism…

[00:09:31] Jon: That is so well said, Dr. Bernstein. I echo that completely. 

There’s no money in simplicity. It’s pretty obvious to Bogleheads®: all you really need is a handful of low-cost index funds. Sometimes, you can even get away with a single, balanced fund. 

But, that’s not going to make a lot of money for folks charging on assets under management. It’s not gonna make a lot of money for CNBC -  who’s out there talking about all the noise, all the distractions from the tried-and-true, super boring, super cost-effective approach to investing. 

Let’s jump to another question that I got beforehand. This one is from Bogle heads, Reddit. This user, MisnamedMod asks:

“I’ve seen a number of Bogleheads recently bemoan the performance of bonds - which have been going down as rates go up. I’ve also noticed more and more young investors holding few, if any, bonds in their portfolios. So my question is: To what do you attribute this change in attitude? And, how important are bonds for one’s long-term investment plan? Also, are bonds mainly there for psychological balance? Or do you see them as mathematically important?”

[00:10:48] Bill: The only thing I would like to say is that I try to stay away from using the word “bond.” I prefer to use the words “fixed income” because you really have to define what you mean when you’re talking about fixed income. And the word “bond” - really - is not a very good word to use.

It doesn’t tell you very much. I mean, the strict definition of a bond is something that has a maturity of more than 10 years, or at least an initial maturity of more than 10 years. But, really when you talk about fixed income, you’re asking yourself “How much credit risk are you taking? How much duration risk are you taking?”

If you want your fixed income assets to be the safe “ballast” part of your portfolio, as I described, then both the credit risk and the duration risk should be relatively low. And the reason why Bogleheads® have been bemoaning bonds, so far this year, is for obvious reasons. And, that is that the duration part of the risk has really bit you in the keister. 

Now, I want to say one other thing, which is, just because you believe in the efficient market hypothesis, doesn’t mean that you blindly invest in the market. There are some very rare times when certain asset classes just don’t make any sense. 

And I would go back, for example, 1998 or 1999, when the S&P 500 was yielding 1.1%, and you could buy a 30-year TIPS, yielding more than 4%...

I can tell a little out-of-school story about Jack Bogel...After he had his second martini at dinner one night, I said, “So, Jack, have you cut back on stocks?” And, he sort of looked over his shoulder, and sort of grinned and said, “Well, yeah, I’ve cut back by about 5% or 10%.” 

So, even Jack Bogle, occasionally, made a call like that. Now, I make that point because you could’ve done the same thing and come to that same conclusion a year and a half ago., When you look at the Treasury yield curve…When you got exactly 13 or 14 basis points by going out from three months to five years. So, you were taking five years of duration risk to get 13 or 14 extra basis points of yield. 

Guess what? That’s not a smart thing to do. And the risk of doing that in fact showed up this year.

[00:12:56] Jon: Why are young investors holding few bonds? Well, first off they’re young, but the second thing is if you’re a young investor, you haven’t really lived through a prolonged bear market.

This is one thing that I’m seeing with not just young investors, but older investors, too. We’ve got a little bit of investor amnesia, if you will.  Folks are taking more risk than they should - especially some retirees at the edge of retirement. I do find myself trying to walk folks back a little bit from their very aggressive portfolios.

[00:13:30] Bill: I want to add one thing to that. You mentioned the word “amnesia,” which I think is the most powerful force in the financial universe. It has been 40 years since we’ve seen a real bear market in long bonds. And I think that the people I see who advocate the use of long bonds have forgotten that they provided the only real example of awful deep risk in the U S securities markets between 1941 and 1980. 

An investment in long-term Treasury lost you over two-thirds of your real portfolio value, even with a reinvested interest. So the risk-return of that particular asset class is just not there. 

Now, it performs a little better if you mix it in with a portfolio of stocks.  But, people need to realize what bond risk looks like.

[00:14:17] Jon: Wow. Two-thirds of a loss on bonds - that’s pretty mind-blowing...Thanks for sharing that.  

I’m going to go ahead and make Il a speaker, and you can ask your question on investing simplicity to Dr. Burnstein.

[00:14:33] Il: Thanks for that. Thank you, Bill. 

Just to stay on this topic for a minute, what are your views, given the current low interest rate environment, and the Fed’s plans going forward, for owning TIPS of an intermediate duration? 

[00:14:47] Bill: TIPS are becoming more interesting. They’re an excellent deep-easing asset for the retiree. Who is the prime candidate for owning TIPS?  Well, some people are, and some people aren’t. If you have a lot of taxable assets, they’re not a great thing to buy, above the $10,000 or $20,000 limit on buying I Bonds - which are always a great idea…

But the prime candidate for TIPS is a retiree with a large amount of sheltered assets with a burn rate of more than 3% or 4%. That’s the kind of person who has to be very careful about deep-easing and their future liabilities. So, TIPS are a fine idea. 

The next question you have to ask is, “What’s their expected return?” And until, a couple of months ago, their expected returns were pretty miserable, at the short end - strongly negative. 

Now you can go out - I don’t know exactly what it looks like today - but I’m guessing that today, you can get a seven-year TIPS that will at least keep you even with inflation. 

So they weren’t a good idea three or four months ago. Today, they may be a better idea. And as time goes on, they may get to be even better.

[00:15:48] Jon: Dr. Bernstein, what are your thoughts? We’re getting more questions about tips compared to a few months ago. Is there some performance chasing going on? And, what could that mean for investors deciding to move into TIPS now, from perhaps other types of bonds - or even socks?

[00:16:07] Bill: Well, if there’s performance chasing, I’m not seeing it in the yields. The yields are rising. So if there were performance chasing, you’d see yields falling.

So I just don’t see it. There may be some performance chasing going on, but it is overwhelmed by people who are scared to death that the Fed is going to tighten more. 

[00:16:26] Jon: Got it. Thank you for that. 

Dr. Bernstein, on the Efficient Frontier website, in one article, you wrote, “Attempting to evaluate the risk-return characteristics of a single isolated asset from the portfolio is a wasted effort. Unless you are at the very end of the risk tolerance, the long bond is a terrible idea. It’s not an investment. It’s a wager on interest rates. Likewise, unless you are at the very low end of risk tolerance, T-Bills are bad idea, too.  One and five-year Treasuries seem to work best over the vast middle range of stock-bond mixes that make up most of our portfolios.”

Dr. Bernstein, you wrote this quite some time ago, comparing the ideal maturity of a Treasury bond, to just how much stocks you have in that portfolio. So, given the goal of simplicity, that being our topic today - do you still believe that bond maturity should be matched with the percentage of the portfolio investing in stocks?

[00:17:28] Bill: You know, I went and looked that article up, it was published exactly a quarter century ago. And, as you can tell from my previous remarks, I’ve changed my thinking a little bit about that.

I still think that you should be keeping maturity short. I still think that Treasuries are the way to do it. But, I think that the environment of the past 10 years has been extraordinary with, at times, zero reward going out on the yield curve. 

As long as you are getting rewarded for going out the yield curve, I think you should do it to a certain extent. Larry Swedroe suggests that you should be looking for at least 20 basis points of yield per year of maturity. 

Well, that gets you right now to around two or three years. Beyond two years, three years, you’re getting hardly any jump in yield. And, before that, you’re getting rewarded tolerably well.

And when I wrote that, I had no idea at all that we would be in an environment that we were 18 months ago…when you got, literally, just maybe one basis point for every year or two basis points for every year, you went out the yield curve. And that’s a situation where I think that the rational person wants to stay short.

The other part of that passage that I certainly have changed my thinking about is thinking about the overall portfolio. I realize it’s the mathematical way to do it. That’s the psychological “system two” advocated by Kahneman/Gursky/Stanovich/West. 

But we are not ruled by “system two.” We are ruled by “system one.” System two, to use Kahneman’s words, is our “rational facilities.” It’s really the “press agent” for system one. And if you’re going to invest successfully through the worst of times, you have to be able to control your reptilian brain. And the way you do that is by separating your safe assets and your risky assets.

I certainly have changed my thinking about that.

[00:19:17] Jon: Certainly as we learn more, changing our approaches is reasonable. 

This question is from username “Lyrollabis” - if I’m saying that correctly.  And, that user asks:

“If I’m not mistaken, you usually recommend against investing in bond ETFs.  However, some investors, for example, from Europe, have no access to low-cost bond mutual funds. And, investing directly in individual bonds requires more micromanagement than some investors are comfortable with. Should bond ETFs be strictly avoided? Or, can they be a sub-optimal, but acceptable compromise.”

[00:20:01] Bill: . If you’re a European investor and you don’t have access to US Treasuries, or you don’t have access to a plain-vanilla, open-end bond fund, then, sure, there’s nothing that wrong with an ETF. 

The problem with ETFs is you’ve got this liquidity mismatch. And so with a bond ETF, you are guaranteed getting the “end of day” estimated price. Now, what I find amusing is that when you do that, yes, you are taking advantage of people who are buying individual bonds - and perhaps even of the ETF holders - and that’s somehow immoral. 

I think that’s hilarious because, by the same logic, it’s also a moral to buy low in the stock market when everyone else is panicking…You’re taking unfair advantage of everybody else’s panic. 

So, yeah, go ahead and take advantage of other people and buy an open-ended bond fund. And when the excrement hits the ventilating system, you’ll get a decent price.

[00:20:56] Jon: Related to that, this issue with liquidity mismatch in that total bond market ETF will have some of those bonds that are rarely ever treated. And the problem there is finding a price for that given that those bonds are infrequently traded. Does the issue with bond ETFs still apply to a pure Treasury ETF? Should investors with a pure Treasury ETF still be concerned about that liquidity mismatch?

[00:21:22] Bill: No. I mean, where this really applies, of course, is with corporate and muni bond funds.

It probably doesn’t even apply that much to a total bond market type of fund. It probably applies a little bit, but not that much. And, of course, it doesn’t apply at all to a Treasury ETF. But why would you want to pay somebody even three or four or five or six basis points to own a Treasury ETF when you can buy the Treasuries yourself at auction for nothing in most places?

[00:21:47] Jon: Greg, you can ask your question on investing simplicity to Dr. Bill Bernstein.

[00:21:52] Greg: My question was on your earlier comments about T-bills being preferred for safety. Would you consider I-bonds to be pretty much equivalent? And, should someone who’s in the accumulation phase be maxing out the I-bond purchases per year, to try to get a decent amount in 10 years, rather than investing in total bond or another bond fund?

[00:22:13] Bill: For the most part, the answer to that is, “yes.” So the question is “Who shouldn’t buy I bonds?” There’s actually only one kind of person who really shouldn’t be buying I bonds, and that’s the person with a large amount of assets in the sheltered part of their portfolio. That’s where they can own all of their inflation-protected securities. If one-half to three-quarters of your assets are in an IRA or 401(k) plan, then that’s the place where you want to own inflation-protected securities. You don’t want them on the taxable side. 

Yes, the interest on the I bonds is deferred until you cash them in.  Eventually, you’ve got to pay taxes on them. But you’re already paying taxes on your IRA, either before it went in or after it comes out - depending upon which kind of account you’ve got.

So, for most people, I-bonds are a wonderful idea. I suppose the other kind of person who doesn’t really want to mess with our bonds is the person who’s got so much assets and whose time is so precious that it’s not worth the hassle of dealing with Treasury Direct. I-bonds, in general, are a fine asset to own on the taxable side for most people.

[00:23:16] Jon: To echo your point about sometimes it’s just not worth someone’s time... There was a gentleman who I worked with recently…He was an oral surgeon, making seven figures per year. For him, his time is better spent being an oral surgeon than getting a few hundred extra bucks with interest via I-bonds.

So, thinking about your particular circumstances, it’s going to help you figure out what investment is appropriate for you, as opposed to just doing what everyone else is doing.

[00:23:44] Jon: Riprap from the forums wrote:

“Do you ever look back at The Intelligent Asset Allocator, and think ‘Boy, was I wrong’? If you could have a redo of that book, what would you change?”

And, then a related question from Frayjay6, also from the forums, writes:

“What investing concepts have you changed your mind about since writing Rational Expectations?”

[00:24:07] Bill: First of all, you’re asking me, “What, have you changed your mind about in the past 25 years since I wrote the first edition of The Intelligent Asset Allocator?” And the answer is: a lot. I’ve become much more cognizant of the importance of designing portfolios that are not only mathematically optimal, but also psychologically optimal. And those can be two very different things. 

I was sort of cavalier in The Intelligent Asset Allocator about the credit risk in the Vanguard short-term investment grade bond funds. I should have known from my study of the Great Depression that taking any sort of credit risk - in the safe part of your portfolio - doesn’t work well during a financial crisis.

I certainly learned that in 2008-2009. And, then more in terms of “What do I know now that I didn’t know then?” is that I didn’t really fully internalize, in The Intelligent Asset Allocator, just how important it was to accumulate equities when you are young. And, that the risk that I really hadn’t fully realized and internalized is that when people ask “How risky are stocks?” The answer to that question is dependent on the question, “How old are you?”

If you are a young person, then stocks aren’t really all that risky. In fact, you should get down on your hands and knees and pray for a volatile, awful market. 

On the other hand, stocks are pretty risky for the buy-and-hold investor. And, they are “Three Mile Island” - nuclear toxic - for the retiree. 

So, I hadn’t really realized that.

Now, what have I realized since I wrote The Investor’s Manifesto - which was written just after the global financial crisis? 

I can’t really say that I’ve changed my mind about that much. I did some thinking a few years afterward about the nature of financial risk. I realized that there’s more to risk than just standard deviation and short-term volatility.

The real financial risk is that a given asset class, or a portfolio, will lose a substantial amount of its purchasing power over a period of a generation. That’s real risk. What’s happening today in the stock market, or even what happened in 2008 and 2009 in the stock market, is not real risk.

What real risk is, is what happened to bonds from 1940 to 1980.  Or, what happened in the Japanese stock market after 1990...

[00:26:27] Jon: I want to echo that it is certainly challenging to make a case for taking on credit risk. Especially to your point that we talked about earlier, looking at that total portfolio performance, looking at not just bonds in isolation, not just one asset in isolation, but stocks and bonds together.

And when you do that, it is certainly much more challenging to argue for credit risk. It might instead simply make more sense to just hold a little bit more stocks, if an investor is looking to take more risks. 

Hold your risk on that equity side of your portfolio and be more conservative in bonds.

[00:27:05] Bill: I want to add one thing to that, which is that one of the big features of the markets over the past decade or so, has been abnormally low interest rates. 

And what that does is it drives people to take more risk to get returns. The credit spread has dramatically fallen, and investors are certainly not being anywhere near compensated for taking credit risk now compared to 10 years ago. 

The junk bond/Treasury spread is around  3% or 4% per year.  So you’re getting 4% extra yield over Treasuries by investing in junk bonds. Well, that’s the failure rate. That’s the loss rate for these bonds. So, you’re not being compensated at all for taking the extra risk. It makes no sense.

[00:27:47] Jon: Absolutely…chasing yield…reaching for yield... we’re seeing that right now with low rates…

We have a user “Bendight Sailors” from Reddit asking:

“You’ve mentioned that you think most people should have financial advisors to prevent them from making bad decisions, such as panic selling. What traits, actions, or behaviors do you see in those who are able to successfully manage their retirement funds over several decades - besides reading the book list provided in If You Can?”

[00:28:19] Bill: In order to invest competently, you need to assemble four skill sets. Number one is you have to have an interest in finance. If you’re not interested in it, you’re not going to do well.

Secondly, you have to have acquired the basics of evidence-based finance. You have to know about market efficiency. You have to know about the relationship between risk and return. You have to fully understand the futility of trying to pick stocks or time the market. You have to understand that the market’s already at equilibrium. And that whenever you trade stocks, the person on the other side of the trade is anonymous to you. And, more likely, it’s somebody who’s far more capable and is working harder, and is far smarter than you are.

The analogy I like to use with trading stocks is that it’s like playing tennis against an invisible opponent. And what you don’t realize is that the person on the other side of the net is Serena Williams. 

The third thing that you need to have is the math horsepower. The average math horsepower of the average Boglehead® is probably two or three standard deviations above average. And it’s difficult to realize that for 90% of the population fractions are a stretch…That, right there, eliminates probably 90% of the population…

And then finally you have to have the emotional discipline. You can have all three of those other skill sets in spades, but if you don’t have the emotional discipline, you’re going to drop out at the most inopportune times. A wonderful article detailing what happened at the endowment board of the University of Chicago during the crisis…Here you had the most brilliant minds in finance, and it was obvious - reading the minutes of their meetings - that half of them had lost their nerve at that point.

Those are the four things you have to be able to assemble. What portion of the population has that? It’s a very small portion of the population. The thing about being a Boglehead® is that you live in an alternative universe of people who actually do have, for the most part, all of those skillsets. Bogleheads® are not the real world.

[00:30:21] Jon: As Bogleheads®, we are a little jaded in our view of the world. If you’re hanging out with folks all the time who are talking about the value of simplicity - of simple, low-cost index funds - that can be surreal to turn on CNBC. To rephrase what you said, perhaps a little bit differently, advice-only financial planner, Cody Garrett, likes to say that if you have the time, temperament, and the talent to manage your investments yourself, it can make sense to do so. 

Now, for those who don’t have those three T’s, if you will, it’s important if using a professional to consider the costs, and that’s going to be whether you do it yourself, or whether you use a professional. Successful investors are obsessed with keeping their costs low.

[00:31:03] Bill: The time and the temperament. And I figure the third one, talent. It’s a wonderful alliteration. But, I would spoil the alliteration and also say that you have to have the knowledge. So it’s “T-T-T-K.” 

[00:31:18] Jon: That’s perfect.  Thank you for adding that. 

Well, folks and that it’s all the time that we have for today. Thank you, Dr. Bill Bernstein, for joining us today. And thank you to everyone who joined us for today’s Bogleheads® Live. 

On our next Bogleheads® Live, Mike Piper will be discussing his updated book on Social Security. The following week we’ll have Paul Merriman as our guest.

You can access all things Bogleheads at the Bogleheads forum, Bogleheads  Wiki, Bogleheads Facebook, Bogleheads Twitter, Bogleheads YouTube, Bogleheads local chapters - a shout out to my San Diego group - Bogleheads virtual online chapters, The Bogleheads On Investing Podcast, Bogleheads Conferences, and Bogleheads books. 

The John C Bogle Center for financial literacy is a 501c3 non-profit organization. At boglecenter.net, your tax-deductible donations are greatly appreciated. 

Thank you again, everyone. I look forward to seeing you all again where we will have Mike Piper discussing his updated book on Social Security. Until then, have a great week.