Wall Street's Wisest Man: Charles Ellis on Navigating the Changing Investing World

Charles Ellis, also known as "Charley," is a highly influential thinker in the investing world. He has been a frequent guest on WEALTHTRACK for 17 years and is considered "Wall Street's Wisest Man" by Money magazine. He has authored 20 books, with the most famous being "Winning the Loser's Game," which is now in its 8th edition. In 2022, he published "Figuring it Out: Sixty Years of Answering Investors' Most Important Questions," a collection of his most thoughtful and thought-provoking articles and essays. In Part One of our interview, Ellis discussed how much the investing world has changed over the years and his recommendation for individuals to take a total financial portfolio approach to financial planning.
In part two of his exclusive WEALTHTRACK interview he discusses how individuals can create the best financial plan for their specific situation.
#financial_strategies #financialplanning #investingstrategy #investingtips #investingforbeginners #investingtips101
00:00 Hello
00:38 Introduction
01:46 Interview with Charles Ellis
26:19 One Investment
24:08 Action Point
WEALTHTRACK episode 1929 broadcast on January 13, 2023
More info: wealthtrack.com/building-a-fi...
Bookshelf:
Inside Vanguard: Leadership Secrets From the Company That Continues to Rewrite the Rules of the Investing Business: amzn.to/3keDdn7
Winning the Loser's Game: Timeless Strategies for Successful Investing (8th edition):
amzn.to/3AbA9Nt
Figuring It Out: Sixty Years of Answering Investors’ Most Important Questions:
amzn.to/3UsNnxC

[@jpsmith9452]

Ms. Mack has consistently delivered excellent content for nearly two decades. And she’s hardly aged. I don’t know how she does it.

[@petez4608]

Really appreciate this kind of wisdom.

[@WinningFinancially]

The first 5 minutes were so great!!

[@kahvac]

Thanks Charles at this Gold Nugget of wisdom @2:03 about asset mix.... worth the price of admission right here !

[@MILGEO]

I'm glad to see that Jack Bogle is mentioned in that small snippet at the end which also points out that Vanguard has made a transformation since Jacks departure.It really wasn't too bad at first but in the last 2-3 years it has doubled twice in assets under management that Jack always claimed was not good for individual funds which were often closed to new investors at least for a while! With Vanguard allowing such large Institutional firms to buy in, they have lowered their commitment and quality of service to most individual investors which I think Jack would not approve of!

[@krumw2]

Thanks!

[@vanguardvaluist2614]

Nothing but great advice from Mr. Ellis. I’ve benefited greatly from JL Collins book “The Simple Path to Wealth” with similar ideas presented. Also grateful for Jack Bogle and Vanguard giving the working class stiff a means to do the work and improve their lot significantly in life. Thanks Uncle Jack!

[@davidwilks4123]

That book is terrible, he is a hack. I was a finance blogger before he was, he ripped off his ideas from a ton of us, outright plagiarism in some cases I would imagine.

[@WinningFinancially]

@@davidwilks4123 I guess no one here is really reinventing the wheel from scratch, but just building on the shoulders of giants. I don't know your content, but if you are one of these giants, thanks for your service. Wondering though: did he copy paste your texts or he just picked up the common sense ideas from the community? If it is the later, how can you call it plagiarism? And if it is the later, he still did the world a favor to spread the word?

[@y.r.9401]

​@@davidwilks4123Can you please write a better book!?

[@barryabrams4661]

Great advice!!!

[@ralphparker]

How much bonds should you have? Take your planned expense rate minus your income. Take the sum of the first two years, have this much in cash. The sum of the next 5-7 years. This is how much you need in bonds and bond type investments. The rest of your retirement portfolio should be in ETF index funds. Your income includes annuities, pensions, social security and anything else that provides a reliable stream. I wouldn't put a house in the same bag as bonds. I've counted the present value of my income streams For 11 years now. It has always puzzled me that the guru's don't want to include PV of such in your net worth statement. Wade Pfau did some work that justifies annuities to a degree. My take is that guaranteed income streams should cover your basic, non-negotiable expenses. If they don't, buy an annuity to get it up to that level. If you retired early and have gaps to cover, use bonds and CD ladders. I like to buy a new car and keep it till its too problematic to trust. Finally, I think a house is a great inflation hedge for housing. Except for planned downsizing, I'd not count it in my retirement portfolio.

[@XA200]

Thanks for your honest advice

[@jw8578]

If you have enough and are looking for downside protection there's nothing wrong with being heavy on fixed income and cash.

[@aaron159r2]

At 2:37 "You own a home, don't you?...Of course..." Not the case for 35% of Americans, many of whom are Millennials approaching middle age and who may not have access to reliable Social Security income in the future and almost certainly don't have a company pension. Do you still go heavy into stock allocation? What if future income potential is facing uncertainty due to shifting labor patterns? How will the Work From Home movement affect high-income, white collar American jobs now that businesses can increasingly outsource these offsite jobs to the highly educated, English speaking populace of India?

[@edwardhayes6111]

The best !!

[@y.r.9401]

Global index funds! Vanguard ETFs (Global Fund)! - Recommended! ;)

[@chessdad182]

A mountain of experience.

[@WinningFinancially]

"A 1% fee cost you around 15% of returns."

[@Bullseye120]

Ditto to the comments below.

[@louisdelillo4256]

When it comes to all of the investing books written... you and me, both, Charlie. I may be suffering from confirmation bias because I do exactly what he suggests, so I agree with the "one long-term investment". Now I just have to read Ellis's latest book.

[@davidwilks4123]

Don't waste your money, just go build a broad spectrum dividend/growth fund. Use Fidelity's FidFolio program. Index funds are for brain dead chumps and low iq RepubliQan Nazi Trumpers.

[@jimmarka3983]

No annuities

[@py8130]

@@SeekingAlfalfa That is why Consuelo should ask for tougher and more in-depth questions like William Green did in his interviews.

[@aaron159r2]

Not sure if I agree with counting the value of a house as a bond. Fundamentally, real estate is an equity asset. It's a highly risk concentrated company that provides shelter for you. It has maintenance, cost of capital and taxes on the expense side of the income sheet and rents (or lack thereof) on the revenue side of the income sheet. As far as balance sheets go, the theoretical market price is the asset and the outstanding mortgage is the liability. Everything about your home is a personal, highly illiquid leveraged business whose product is a place to live. I would disagree with this guest and consider the equity value of your primary residence as part of the equity portion of your total portfolio, not the fixed income portion. Who am I to disagree with this professional though? Can anybody provide support for why a house is more like a bond?

[@johnbankston72]

One’s primary home is neither “high risk” nor is it a “company”. It has the least risk vs. stocks and bonds, as a home has insurance; stocks and bonds don’t. You’re overthinking it. He’s just saying to factor in all your assets to get a true total portfolio picture and that one’s home is less volatile, as is bonds, versus stocks and when you take that into account, you can justify a higher allocation to stocks.

[@tomgee2719]

Agree a house is not an asset to count in your portfolio and neither is SS. SS is income but you have no abaility to take more or less each month or shift those dollars into something else.

[@py8130]

@@johnbankston72 Good point. Just another important fact for you to think about - over the long term, the stock is the least risky asset among all asset class.

[@JSteve321]

More like a long term bond. Volatile, but only returns at about inflation if held for about 15+ years. It doesn't have a growth above inflation like equities. I do see the idea that it is illiquid in the short term. Another reason it's like a long bond that needs to be expected to be held longer term.

[@jamesmorris913]

A house isn't a risky investment? Try telling that to someone who bought one in 2007-2008, with little or no money down! Oh, how short people's memories can be.

[@harshareddy2129]

Unless the whole world goes up inflames!

[@jozzef40]

So bored 😴