Stocks — Part XXXIII: Optimism

Cartoon illustrated by Monica H. “avid reader of this blog and fellow index investor”

Ya gotta be optimistic if yer gonna be an English Major

Several years ago, as an English Major myself and because I can’t draw, I put a description of the cartoon above in my “About” page and in a post or two I can’t remember just now. In it I invited “one of my talented readers” to step up and illustrate it. Then I waited. And waited. 

Finally, in early 2017, my patience and optimism were rewarded. Monica’s husband sent the above drawing to me and she agreed to let me reproduce it. Thanks, Monica! 

Patience and optimism are also keys to investing success. Patience because it takes time for the power of compounding to unfold. Optimism because we have to trust the future will allow it the opportunity. 

At some past Chautauquas, my talk has been called “The Tenets of jlcollinsnhism,” a title that rolls trippingly off the tongue. 

The last of these tenets, because in many ways it is the foundation, is…

You Must be Optimistic.

The Good 

For the investing approach I suggest here in my blog and in The Simple Path to Wealth to make sense for you, you must first have an optimistic view of the future of civilization in general and the United States in particular for the next 100 years or so. 

Optimistic in the sense that the country will continue to be a major economic power on the world stage and stable politically.* Much as it has for the last 150 years or so. Note that this doesn’t mean or require that the next 100 years be a golden age of smooth sailing. 

The last century was filled with trauma:  a couple of world wars, a great depression, stagflation, countless smaller wars and economic panics. Through it all, the market (as measured by the Dow Jones Industrial Average) rose from ~66 to ~11,500. I expect the next hundred to be equally traumatic and I expect, as before, long term investors in the US economy (thru a broad-based, low-cost index fund like VTSAX) will prosper. 

In fact, the last century was so filled with turmoil, it is easy to imagine the next being better. Indeed, it already has been. By this time last century, we were already wrapping up the first of the two world wars.

If you share this optimism, then my approach is sound. For what it is worth, Jack Bogle and Warren Buffett both do.

The Ugly  

Of course not everyone does, and some see a far gloomier picture of civilization ending events. 

Nuclear war. AI, nanotechnology, bio-tech or other advances run amok. Global environmental disasters that makes the Earth uninhabitable. Space aliens plundering our planet and raising us for food. 

Even for those folks I suggest my approach still works, along with stocking your shelter with guns, ammo, food and water. My approach in case you’re wrong, the other stuff not because it will actually help, but because what else can you do? 

The Bad 

Between the Good and the Ugly lie those things that might derail the United States but leave civilization intact. Although, make no mistake. Any of these would have a devastating impact world wide. 

**For example: 

—-If a major war were to be fought on US soil, destroying our economy and cities. Perhaps, as some fear, Trump does turns out to be the next Hitler and seizes dictatorial power and leads us into fascism and aggression such that the world bands together and overruns us leaving the US a smoking ruin. Just as it did with Nazi Germany and Imperial Japan. 

—-Or maybe the divisiveness we see continues to grow, erupting into another civil war. 

—Maybe we just slowly become a nation of slothful dependents and our creative work ethic spark goes out. This, BTW, is one of the reasons I am so very pro-immigration. New blood, new sparks. 

—Maybe we just, and this is the one I fear most, suffocate ourselves under the massive debt we are accumulating. We are at 21 trillion and climbing and no politician even gives the problem lip service. It is hard to see how this ends well. 

For what it is worth, I don’t think any of these things will happen and, while I’m not entirely sure how, I think we will muddle thru whatever does. But for those who don’t, you are faced with a dilemma: In what then do you invest? 

Were some of these to happen, economies world wide would be trashed. Gold didn’t help the Jews or Germans under Hitler. It was just confiscated. As was their real estate before it was bombed to dust. The only thing that helped people survive these kinds of extreme events was extreme perseverance and flexibility. 

A second passport would be good, too. 

So there you go. 

In the unlikely event the pessimists are right, the options become very limited. Were I one, I’d still follow my Simple Path with most of my assets, playing the odds. With 20% or so I’d invest in whatever I thought would help in whatever calamity I thought most likely. 

In recent years, the concept of Black Swans has become all the rage. But it is important to keep in mind that, by definition, you can’t predict what any given Black Swan will look like or when it will happen. So you can’t actually prepare an investment strategy to deal with one. What you can do, is focus on developing your flexibility. Become, as it is now called these days, Anti-fragile. As I’ve written many times before, this is the only true security. 

“For myself I am an optimist — it does not seem to be much use being anything else.”

Winston Churchill



*Nothing lasts forever. From the Babylonians to the British, great empires have risen and faded. So too will the United States. This is something I discuss with my 26-year-old daughter. My guess is that the US will continue to dominate the world economy for at least the rest of my life, and very possibly hers. As long as that is true, I see no need for international funds

But taking the very long view, at some point VTSAX might no longer be enough. If/when that time comes, I tell her (and tell her to tell her children) to continue to keep things as simple as possible. I’d look at VTWSX:  Total World Stock Index Fund (current expense ratio .19).  This fund invests all over the world, including ~50% in the USA.  With it you no longer even need to hold VTSAX.

**I realize in these examples I have touched on political subjects about which many people have very strong feelings. These are included not to express a political opinion, but only to serve as a few random examples of things that might possibly derail the US and my investment approach.

If you choose to comment on this post, and I hope you do, please do not make your comment political. This is not the place and I will be forced to delete it.


In case you start thinking about timing the market, here’s a chart from my pal Bill…


Time Machine and the future returns for stocks


And in case you start fixating only on what can go wrong in the future:

Interview with George Church on BioEngineering, an amazing discussion of human genomics, bringing back Wooly Mammoths (and why that would be great for the environment) and aging reversal (and why it is better than life extension).

More reasons why the future might be incredibly good

(Unless the grey goo gets us)

50 Ways the World is getting Better

David and Elena


Being FI doesn’t mean you have to quit your job. It means you have options. Just in case. On occasion I hear/read people saying “I don’t care about financial independence, I love my job.” Andy Rooney had a great quote:

“Don’t expect too much from the company you work for, even if it’s a good company.”

You don’t have to Hate Your Job to Want Financial Independance


On a different note, another great post:

Here’s to all the girls who’d rather catch flights than feelings

And from the always entertaining and insightful Go Curry Cracker:

Fewer Dividends, please


Recent Interviews & Projects

Playing with FIRE documentary

Talk at Google

Bigger Pockets Money Show: JL Collins Edition




Both weeks for Greece sold out have long been sold out. However, please feel free to put yourself on the:

Millennial RevolutionChautauqua: Come Join the Family   (This is a brilliant post with all the details!)

1500 Days to FreedomMeet some awesome people… (Another brilliant post, this one with dinosaurs!)

ChooseFI — Oh, the Places we will go   Chautauqua in the words of the speakers who will be in Greece. There is nothing quite like hearing the voices behind the words.

Also, be sure to listen to this incredible episode with Travis Shakespeare.  Travis is a master story teller and, among other things, he shares three:

  • How the FI movement fits into the cultural fabric of America and its traditions of rugged individuals charting their own course.
  • The coming Playing with FIRE documentary
  • How he decided to come to Chautauqua and what it has meant to him. One of the best insights I’ve heard or read yet.

Mad FientistMoney Talks panel discussion at Chautauqua UK  Attendees discussing FI and also a great inside look at the Chautauqua experience.

JL CollinsGreece 2018 Mount Olympus 


Old Post

Every now and again I get a comment on an old post. It is always nice to see those getting some attention and it is fun, for me anyway, to re-read them. Maybe you too. Here’s one:

Where in the World are You



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    Like you I think the US economy will continue to dominate through my lifetime. Even when crazy things that you never would predict a decade ago, Donald Trump running and winning the presidency, tends to show how bad we are at predicting the future. I’m like you in the sense that I’ll continue to be an optimist until there is significant documentation showing me otherwise 🙂

  2. Dads Dollars Debts says

    Optimism is key to any long term plan, otherwise what’s the point. I expect our economy and country to continue on the up and up despite tarriffs, etc. Still we will see and I do have a small portion of assets in international markets.

  3. Accidental FIRE says

    Ha, great stuff Jim and I love the illustrations. The last one is so true and I saw that play out with some of my friends who sold in the 2008 crash. I warned them not to but they didn’t listen.

    I have unwavering optimism in the USA, and I’m unapologetic about it. Despite the doom-gloomers and the haters, I know that America still has the best talent on Earth and our innovators and shakers will continue to invent, make breakthroughs, and make the world a better place. And the best part is we can profit from their brilliance simply by clicking a few buttons on a website and buying some shares.

    What a great time to be alive:)

  4. Andy says

    Hi Jim,
    I love your book and I respect your crystal ball predictions about the USA, but I am VTWSX for life. Anything outside of that is speculation. I know nothing so I buy the haystack. VTWSX is the most bogleheadish fund in existence.

    • Noah says

      VTWSX has 8,099 holdings and an expense ratio of 0.19%

      VSTAX has 3,229 holdings and an expense ratio of 0.04%
      VTIAX has 6,327 holdings and an expense ratio of 0.11%

      You get a bit more diversification at a cheaper price by using these two funds together to get total world. Or, cheaper still, get the ETF versions. You also get to choose the ratio of US/Ex-US.

    • jlcollinsnh says

      Hi Andy…

      You make an interesting point, and it exposes a bit of my own hypocrisy.

      While I preach that it is fruitless to try to pick individual stocks, fund managers or sectors for outperformance, I then turn around and shamelessly pick a specific country for outperformance.

      While I hold there are excellent reasons to believe the US will continue to lead the world economies, that is very much the same sort of thing others would say about their stock, fund manager or sectors.

      Still, I plan to continue to hold VTSAX and thru it the US economy. I’m sure this reflects a location bias in that I was born and raised in the US, along with the history and momentum in place.

      But this is why I do not argue with those of you who chose to embrace the world with VTWSX or the alternative Noah suggests.

      • Eduardo says

        Brings back good memories of a good chat! Good to see we’ve both done well with our respective strategies, as I believe we’ll continue to do over time.

        Hope all is well!

        • jlcollinsnh says

          Hi Eduardo…

          Great to see you here!

          I, too, very much enjoyed our conversation in the UK and it was very helpful in sorting thru my thinking on this.

          Hope our paths cross again soon.

  5. TheHardenedInvestor says

    I’m optimistic about our economies future over the long-term. In the short-term, I’m sure hardships will befall us, but I’m inclined to follow Bogle’s advice…”Don’t do something, just stand there.”

  6. Carl says

    I used to be a pessimist. “What ifs?” would fill my mind. What if I lose my job? What if I run out of money? What if I this or that doesn’t turn out? After decades of living the what if? life, I realized something: the what if? scenarios never happen. Instead, the opposite happens.

    My life has exceeded my expectations. I stumbled into a great career that paid me a lot of money. On a whim, I started a blog and it became successful. I found a good mate and have a fine, healthy family. The only way things could get better is if Mr. Collins sent me a fat check so I could live in Tahiti during the winters.


    I digress…

    We live in stellar times. Of course, there are problems, but overall, the world is as safe and good as it has ever been. And I’ll bet it’s really great in Tahiti.


  7. Jason@WinningPersonalFinance says

    My trick to optimism is to avoid watching the news. When the really big stuff happens, somebody will tell me about it. Otherwise, I don’t need the media to scare me about the next market crash or unlikely safety hazard.

    Once I’m living on my assets, I will add some risk protection in the portfolio. For now, it’s a race to a goal while still living an amazing life.

    As the dinosaur guy above me said, life is good!

    I’m optimistic that it will stay that way.

  8. sanjay ratna says

    I am new and joined only a few days ago. I just cannot believe that I agree with a lot that I have read and also what I have read from the links on this site. I found a place where I am not alone!!! Thank you from a UK investing…

  9. Targeting FI says


    Love these posts but wonder why bloggers continue not to spell out the actual name of index funds but, instead, just use ticker symbols. I’m ALL about index funds and recognize ticker symbols, but this wasn’t the case when I first started getting into the FIRE world. In fact, it came off as if FIRE bloggers, and those that read their blogs, spoke a different language–almost as if they were part of a secret society.

    Although not the case with me, this practice can potentially turn away newbies looking to learn about the FI lifestyle. A simple practice would be to spell out the index fund name up front while also indicating the ticker symbol. After that, you can “ticker” away. 🙂

  10. steve poling says

    i recently read the book “Antifragile” and he sees risk as an inescapable reality and the steps central planners take to mitigate it will ultimately fail causing a bigger, deferred reversal. he suggests one keep the bulk of his wealth in boring investments and dedicate a fraction to crazy speculative instruments with astronomical up-side potential if the black swan flies in. there seems to be money in well-placed pessimism.

    your opinion on this?

  11. Grayson from Decade to Freedom says

    Very timely post, Jim. I was at dinner with my father-in-law last night and we started discussing what they should do with an inheritance they recently received. I recommended broad-based index funds (50/50 VTSAX and VBTLX) of course, and he started listing what if, black swan scenarios. My response could have been taken direct from this article if it had posted last night! Namely, our approach relies on faith in the US as a major power, and if that stops being the case, then it doesn’t really matter where you have your money, does it?

    Great article, thank you for reminding us that investing in anything is really an optimistic person’s game.

  12. TJ says

    Thank you for a great article.

    Glad you stated to not include politics. Like Jason above, I had to stop watching the news as it was making me crazy.

    Maybe next year you could post about Chautauqua, before it’s sold out?

    Love your stock series, and have signed up to be notified whenever there is a new post. Like you, I like to reread things, because I learn more each time I reread your articles and the comments below. Thank you for hosting this site and all the great information shared here.

    • jlcollinsnh says

      Hi TJ…

      To be fair to the readers of each Chautauqua speaker, we try to publish our Chautauqua posts within a week of each other.

      That said, we do provide advance notice to those who elect to sign up on the mailing list. See the link in the post.

  13. Jason says

    I love using the anecdote that you have put up where you talk to a person, discuss the events of the past 40 years and ask if they would invest in that context. Then when you reveal how much the market has grown even amidst this turmoil. It is a great way to turn the tables on people who have these negative thinking.

  14. Mr. Up says

    I like to pepper in any skepticism I have about the market with optimism of my ability to live off of less. For example, The world is going south and the markets crashed. I know I can life off of less money than most people because I do it on a regular basis! In this way, money becomes less and less important to me.

    I would love to have more money and I will save and invest in a way that seems to be in my favor, but I won’t worry about what happens if somehow I lost it all. I know I can spring back because FI gives me options, saving strategies, and frugal habits!

  15. Frogdancer says

    I have American cousins. One of them applied for (and received) his Australian passport, because his Mum is Australian. (My Aunt.)
    His attitude was, he probably won’t ever need to use it, but it’ll be nice to have if he ever does…

  16. Ashley says

    There’s not much sense in approaching the world with a less than optimistic viewpoint. Or at least my investments. I definitely prefer to just set my investing plan and ignore it so I can improve the parts of my life that I can control. (Realistically I have nearly 0% sway on the US stock market.) Thanks for the affirmation.

  17. Techwiz says

    Thanks for this post, and being optimistic and writing about it.

    As mentioned in a comment above, the media focuses on the negative too much and one way to stay optimistic is to limit your exposure to it!

    I wonder why doom and gloom and fear sells so well?

  18. MrWow says

    Life is a long hard slog if you’re constantly worried about the next huge bad thing that’s gonna happen.

    The universe has a way of working itself out, plus confidence in you’re ability to overcome hardship is core to a happy life.

    That being said, the world and economy was supposed to end as we know it no less than 5 times in my lifetime. Yet, here we are. No need to put on the Black Nikes yet.

    • jlcollinsnh says

      Well said, Mr. Wow…

      …and even if some huge bad thing happens, it very likely won’t be the huge bad thing you were worrying about. 🙂

  19. Madeline says

    Thank you so much for your informative, positive, and entertaining column. Here is my situation: I am highly risk-adverse, and my husband is not. I have been reading since Oct. that objective economists believe the market is about 25% overvalued. After the market set so many records in Jan. 2018, I became certain the market could not sustain this level of manic exuberance, so my husband agreed to put 1/3rd of our money into an annuity and take all the rest out so I could sleep at night. (The correction happened the next day, so I earned some creds for fortune telling.) I was sure we would have seen a very large correction by now, given that so many experts are saying it is 25% overvalued and also in a context when our government is making increasingly unpredictable decisions that can have huge political and economic consequences. This seems like a very stupid time for us to jump back into the market, given its growing volatility and the fact that the stock market is still pretty close to its all-time record high. It seems likely that we would be buying at a high point at a time when a large correction seems inevitable, and that would mean we’ d have to wait 1-2 years for it to come back to its current value. Do you have any thoughts for people like us who are sitting and watching from the sidelines? Do you agree that it may not be wise to for us and others who are sitting on the sidelines to put all our investment money back into the market at this particular point in time?

    • jlcollinsnh says

      You have found your experts, agree with their thinking and now you are asking me to dispute their ideas?

      I simply don’t have the time or inclination to do this. I’m not the least bit interested in trying to persuade anybody of anything.

      If you read my blog you’ll soon have a very clear idea of my views. You can then read other sources, compare and decide for yourself what resonates.

    • Old Jim says

      Dear Madeline

      I once saw a fortune cookie which said, “To guess is cheap, to guess wrong is expensive”. You should read about investing and market history, a much better way to spend your time. [Hint: Avoid any books that have titles that promise easy riches.]
      I am sure that you are a smart and wise person, but successful investing is not about timing. Please do not think that you were smart for taking such a big move and doing so on a fortuitous date. This is perhaps the most dangerous thing that an inexperienced investor can do. Making ONE such lucky move will lead you into over confidence [“all drivers rate themselves above average”]. To be a successful market timer you have to be correct not only on direction but also have perfect timing down to the minute – and you would have to repeat this feat every time you make a big change. To fail spectacularly you only have to make one [unlucky] bad decision on direction or date. Bogle and Buffett would tell you this can not be done, even by the thousands of professionals trying.

      Best wishes [and congratulations this is a good website for you to be reading/posting, many are not.]

      Old Jim

      • Madeline says

        Thanks for your well-reasoned reply, Jim. I AM getting dizzy reading this and that and pretending I can predict the market when no one else can. I will just have to steel my nerves and get back in the game.

        • Old Jim says

          Here are some quotations that I hope will help! When I find good ones I add them to our Investment Policy Statement.

          “Over a short time increment, one observes the variability of the portfolio, not the returns”, Nassim Nicholas Taleb, Fooled By Randomness.

          “Your long-term investments shouldn’t be allocated in a way that pressures you to review them constantly. That’s not investing. It’s a slow-motion form of panic.” Mitchell Tuchman, Marketwatch.

          “Become more humble as the market goes your way.” – Bernard Baruch.

          Getting out of the market is easier than getting back in – Rekenthaler Report.

  20. Dorf says

    Loved reading something on optimism today, Jim! I was just telling myself I have to stop reading the news… I don’t even live in the US, and the negative things happening there obsess me, and not in a good way… At the moment, the sun is shining, and my laundry has dried out on a rack in the sunlight. I will fo gather it up.

  21. Mr. Tako says

    You said it perfectly Jim — the world will muddle through. There’s always going to be bad things happening on both a macro and a micro scale, but I choose optimism.

    The world will figure it out. Humans will learn from past mistakes. New technologies will be invented to solve old problems. New medicines will help us keep living healthier lives. We’ll slowly get more efficient and impact our environment less. People (and a growing number of them) will still have wants and needs that can be met by businesses. Businesses we can invest in.

    That’s plenty to be optimistic about in my book.

    • jlcollinsnh says

      Noted and edited.

      I have also taken the liberty of deleting the political line in your comment.

  22. Old Jim says

    Really Excellent post.

    I am retired, so I am also old enough to have seen multiple complete market cycles – and watch my stock funds lose half their value and then recover [so far]. I am basically an optimistic person, but I am careful/thoughtful enough to seek out alternate points of view like Moshe Milevsky, and Nassim Nicholas Taleb. The latter’s description of his family living in the same house for hundreds of years – until the civil war broke out in his native Lebanon – made a lasting impression on me. Whenever we have a long stretch where stocks seem to have repealed the law of gravity I remember Taleb, and re-read The Great Crash 1929 [John Kenneth Galbraith] or Devil Take the Hindmost: A History of Financial Speculation [Edward Chancellor]. Either one will help me stay the course and not think I am now so wise that I can start timing the market.

    For those who think they can ‘know’ [guess] where the current regime will lead us, well I was young [30] when Reagan cut taxes and ran up huge deficits, and I was demoralized and convinced that the US could never recover, but along came the PC revolution and then the Internet [and despite the excesses] our economy today does not look much like it did when I was in elementary school and Sputnik was launched.

    Take care all, and be well and happy.

  23. Markola says

    Hi Jim, Others above have mentioned above how news companies and politicians are biased toward alarmist stories to gain readers and votes. One of their common myths is that the United States is in decline as a manufacturing nation. The facts are utterly contrary. The U.S. is by far the #2 manufacturing nation, likely on the way to #1 by 2020:

    Though the fact is we are a growing manufacturer, I’m really not trying to be jingoistic because, obviously, America also faces it’s share of “issues”, shall we say and as you note? (see: news companies and politicians). But this particular empire was established from Day One for the purpose of making money (see: the Jamestown Colony) and, like it or not, our society been built since with the buck foremost in mind. If the specific question is “which country should a stock investor be most optimistic about?” well, no one can know but I conclude that I’d rather have our problems, so I own primarily VTSAX.

  24. Kamil says

    “But taking the very long view, at some point VTSAX might no longer be enough. If/when that time comes, I tell her (and tell her to tell her children) to continue to keep things as simple as possible. I’d look at VTWSX: Total World Stock Index Fund (current expense ratio .19). This fund invests all over the world, including ~50% in the USA. With it you no longer even need to hold VTSAX.”

    I think that everyone who is 20 or 30 years old should take this very long view (having 50+ years of investing ahead).

    • Markola says

      I’ve thought a lot about that Total World Stock Index Fund and understand your rationale about the very long term. To date, however, over whatever time period one chooses, it has underperformed significantly VTSAX, as has the Total International Index, which I don’t feel comfortable ignoring yet. Maybe there are still some built in advantages to the U.S. stock market?

      • Kamil says

        Maybe there are and still will be (at least for some time) advantages bonded to US stock market, but I wouldn’t bet my money on it. Not 50+ years forward. I sleep better knowing, that I’m globally diversified and not attached to only one country, even if it’s companies generate half of their revenue worldwide.

        Some very fine companies like Samsung or Toyota aren’t listed on US stock exchange and I can’t thing of any reason why I wouldn’t want to have them in my portfolio.

      • HeadedWest says

        This might be one area in which a little market timing is justified… wait for a crash in countries like China or India, and, if the US market is doing well at that time – in other words, American and Chinese markets aren’t correlated – maybe put some of your assets into a fund that tracks those markets?

        If China really is on its way to being the world’s foremost economic power, there are going to be some bumps along the way whether their government likes it or not.

  25. FIRECracker says

    “Gold didn’t help the Jews or Germans under Hitler. It was just confiscated. As was their real estate before it was bombed to dust. The only thing that helped people survive these kinds of extreme events was extreme perseverance and flexibility.”

    This is why I can pack a backpack in less than 15mins and be out of the country in a matter of hours.

    Who needs optimism when you have flexibility?

    How’s that 2nd passport coming along? Maybe in addition to the English degree, it’ll be prudent to add a Portuguese degree? Their students get to dress like Harry Potter so there’s that 🙂

    • steve poling says

      I like the idea of acquiring assets that cannot be stolen, either by individuals, or governments. Taxation may or may not be theft, but inflationary government policies certainly seem to be. Marketable skills seem immune to theft.

  26. HeadedWest says

    I think folks tend to focus too much on the past few years of market performace (great returns) , and miss the bigger picture.

    The annual return on the S&P 500 from March 2000- March 2016 was around 2%, not including dividends. This is 16 years of horrible performance. By way of comparison, the annualized return from 1967-1982, which we all know was “the worst year to retire” (thanks GCC), was 1.5% . Scarcely a difference between the two. Seems like we might be due for some better times up ahead.

    The US economy, and thus its stock market, is in the very beginning stages of experiencing a huge demographic tailwind. Its peak spending cohort, those 35-55 years of age, has for some time consisted mostly of Gen Xers, of which there are roughly 65 million. Now, they are being replaced by millennials, who just started turning 35 in the past year or two. Over the next 15 years, Gen X will be completely replaced in this cohort by the Millennials. All 80+ million of them. That’s very nearly a 25% increase in the number of spendy shoppers for our economy.

    If you’re wondering if this has ever happened before, it has, at least roughly speaking. It happened the year after 1967-1982 was over, in 1983, when the first Baby Boomers started taking over the 35-55 age cohort. There were a lot more of them than there were the previous generation (hence their name).

    Wonder what happened in the market in the 15 or 16 years after that???

    Happy indexing.

  27. Jon says

    Some portfolio approaches try to mitigate those tragedies, like the Permanent Portfolio. It won’t get you a very good return in the long run though. So, it might be better for people close to retirement or that are in retirement. Harry Brown did change it up quite a bit as time went by, so who knows if it is good for now days. If a person was using the permanent portfolio in Iceland during their last economic collapse they would have come out pretty good.

    I don’t actually use it myself but I could see using some of the ideas from it. On the author goes into the problems with an all or nothing approach to stock investing with just an index fund. For long term investing it can be very good. But if you get in at a peak and you are expecting to retire soon it can be problematic.

    As for gold. Harry Brown suggested that you don’t keep all your gold in the same country you live in precisely because the government could confiscate it. So, you need to buy some outside of your own country and store it outside of your country.

    That’s what makes Bitcoin et. al. enticing. Is that it would be harder for the government to confiscate it and hopefully it keeps its value. The problem with those currencies are that they are not very stable and they are new. For people that live in highly unstable countries like Venezuela and Argentina it might make sense to be an early adopter, as those that have been have been rewarded handsomely partly because they have been more stable than their own currencies, even with that huge drop in bitcoin. If gold were easier to use gold might have been a better store of value if you lived in one of those highly inflationary countries, but like we mentioned they have issues.

    So, depending on what country you live in, what your investment outlook is, what you are willing to lose in the short term all make a difference to how you invest, etc. I’m sure you’ve put that in your other posts. As I have not read your whole blog I wouldn’t know!

    Great post!

  28. Luis says

    Hi Jim,

    Great post as always and the story I’m going to share with you is tied to the FI thought process.
    I’m sure you surmised by my name that I’m of Latin descent – Cuban specifically. Oh, the term Hispanic is such a misnomer used by an unknowing State Dept. bureaucrat long ago.
    I’ll share some family history. On both, my father and mother’s side were of prominent families. On my father’s side, his dad, my beloved grandfather Ito, owned this sugar can mill:
    My father and grandfather described to me plantation such as it was over 5,000 hectares and most telling was the $12 million deal my grandfather penned with a German manufacturer that specialized in light industrial rail transport back in 1958.
    My dad graduated in the mid 50’s from LSU with a degree in agricultural engineering. And Ito had been a senator of the Matanzas province and Cuba’s ambassador to Switzerland – talk about a cush job.

    All was going swimmingly well until Fidel, Che and his merry band of communists showed up on the Island to liberate it. Well, the rest is history, the family fled Cuba, except my Aunt who thought such “uncouth men” could not seize power. She was promptly jailed by none other than Che himself. Luckily, she later escaped.

    My father participated in Bay of Pigs and after that military fiasco he thought the US would certainly invade. Of course he was wrong. After many years, my family resigned themselves that they would not be able to return to their beloved Cuba.

    I grew up in South Florida with all this “loss” but there was great gratitude towards the US – in spite of the failed promises relating to the Bay of Pigs. But, that’s another story.

    In the midst of all this loss, and here is were FI comes into the story, my grandmother would always remind me, when I got a bad grade or got in trouble a school, “the communist took everything we had but could not take our education!” The beginnings of the FI though process. And, this process is part of life long learning.

    I went a different course from most of my family by attending military college and then serving in the Marine Corps.

    Just as you mentioned the loss suffered by the Jews and Germans, ours was complete to include my grandmother’s brother who was a political prisoner for 25 years.

    Anyway, with all this loss and learning from it, I became FI without even knowing it and it’s that thought process that has allowed me tremendous freedom.

    Thanks for putting together that post as it brought back bittersweet memories. More importantly, I’ll be sure that our kiddos know the importance of FI and the corresponding thought process instead of a sugar cane plantation or cushy job in Switzerland.

    Semper FI!

    • jlcollinsnh says

      Hi Luis…

      Always a pleasure to hear from you. Glad you liked it.

      Thanks for sharing that amazing story. My wife and her family also arrived here in the US fleeing revolution, in Zanzibar. They, too, lost everything. Including her father’s cushy job with the British government and his Portuguese passport. She is trying to reestablish that for a duel citizenship for her and our daughter.

      Her best friend from childhood married a guy who was also born there. He ran his family’s hotel. Until the soldiers showed up one day and announced, “This is our hotel.”

  29. Jamie V says

    I’m going to keep investing because if we get to a point where the investing/money no longer matters..We’ve clearly got bigger issues going on and it just won’t be a problem anyway. 🙂

    Also, I was not aware there was a whole world index fund! I must go check it out – Thanks!

  30. livefree says

    Hi Jim,

    Been following your blog for a little over a year and half now. First off, I would like to thank you as you have helped and inspire me to continue my journey in reaching and joining the FI club. I have always been an extremely frugal person and this had led me be able to have a good savings rate during my younger years. Although I had a good amount in my savings, I did not know what to do with it. I was not sure if I wanted to purchase a home or invest it in stocks without the fear of potentially losing money. My only debt that I had was from college roughly 55k and I decided to pay off the entire loan in one lump sum as this was eating away from my savings rate. I only wish I came across your blog sooner as I feel, I have missed out on some great years in the recent market. Better late than never!

    So here’s a little bit about me. I’m currently a single male 32 years of age making roughly 88k a year as an IT professional with a net worth of 320k and I have zero debt besides my monthly credit card bill. I think the real reason why I still have so much liquid cash in my portfolio is because I’m still uncertain is I would like to purchase a home eventually. Currently my feelings and personal beliefs tell me no and that I would like to continue to rent instead of own. I would like your advice and your communities advice in respects to my investment strategies currently and if you think, I’m sitting on to much liquid cash and should be investing it instead in VTSAX.

    I have listed my portfolio below.

    58k – in an online savings account yielding a 1.25% interest rate.
    80k – in a 401k with my current employer
    154k – with Vanguard in a brokerage account invested 100% in VTSAX.
    28k – with Vanguard’s ROTH IRA account invested 100% in VTSAX.

    • jlcollinsnh says

      HI LF…

      You really have two questions here. One on allocation and the other on buying a house. But are highly personal calls only you can make, but here is some perspective.

      Since you don’t say what your 401k holds, it is hard to determine your actual allocation. But if it is in stocks, as with a low cost index fund, you are holding 88% stocks and 18% cash. By most people’s standards, that is fairly aggressive. You could stand pat with this and it should serve you well over time. As you know if you read the blog, I would be even more heavily tilted to stocks, but that’s me. Here’s more:

      Since you are ambivalent about buying a home, I would have also been more aggressive on the stock side. If the market went up, I would have had more money faster to put down. If it dropped, since my heart isn’t set on a house, I can easily wait.

      If you do decide to buy, remember that it is almost always going to cost you more than renting. Plus, typically owning sets off a wave of purchases from upgrades, to appliances, to tools, to furniture and decorations. So be sure to run the numbers:

      Good luck!

      • livefree says

        Hi Jim,

        Since i’m still young and in my wealth building phase and following the principles of this blog, I am heavily invested in stocks within my 401k, Roth IRA and Brokerage accounts. I have listed my current allocation for my 401k.

        71% with VITPX with Vanguard with an ER of 0.02%
        24% (NT ACWI EX-US IDX DC ) in foreign stocks with an ER of 0.05%
        5% in GROWTH ALLOC INDEX with an ER of 0.023% this is a Blended investment class which I believe contains some bonds.

        I noticed that there is another option that matches the S&P 500 index through Northern Trust with a lower ER then Vanguard at 0.01%. However the price per share is much higher at $154.35 versus $62.50 with Vanguard. I hold Vanguard since I can purchase more shares even at a slightly higher ER.

        I’m also thinking about upping my contributions, currently i’m contributing 16% I would like to up this to 20% in my 401k this year. Aside from keeping between 6-8 months of emergency funds. My gut feeling tells me to invest the rest of my liquid cash into VTSAX and let it ride. Which I am heavily considering and hoping you can persuade me with your wisdom! 🙂

        Do you think my current asset allocation is well positioned or would you suggest I re-balance and go 100% into VITPX?


          • livefree says

            Hello TJ,

            Are you recommending to go 100% in VITPX? I’m considering making this adjustment. Just needing some encouragement :). Thanks for the help!

        • TJ says

          Hi livefree,
          I no longer recommend anything. I am mostly in VTSAX and believe it’s the best for me, for now. Wish I had access to VITPX (same stocks, lower expense ratio), if I did, I would be there instead. Check out the stock series by That is where I learned where I want to invest given my current situation. Everyone is in a different situation. I recommend deciding what you want to do, then do it. That’s the only plan you will stick with-the one you decide is best for you, or at least that’s the way it worked for me.

          • livefree says

            Understood TJ, no worries I completely understand and I think I got enough information in your message :). Thank you!

      • livefree says

        Hi Jim,

        Not sure if you got a chance to see my previous post June 15, 2018 at 1:06 pm. Could you please offer some insight, I would appreciate your thoughts. Thank you very much!


        • jlcollinsnh says

          Hi LF…

          Since TJ already gave you excellent guidance, I didn’t feel the need to add more.

          Since you seem very unsure, I strongly suggest you carefully read thru the Stock Series. Doing so, you will know my thoughts and the reasons behind them.

          Good luck!

          • livefree says


            Will do and I think I got TJ’s underlying message. I’m going int 100% into VITPX for my 401k.

            I’m still unclear as to what I should do with my liquid amount. I understand this is a personal choice to me it would make more sense to have it work for in the market instead of sitting in a saving account yielding 1.65%.

            Keep up the great work. I love this community.

    • jlcollinsnh says

      My pleasure, HP…

      …it is a great post of yours.

      And the old car in the field is a cool illustration. 🙂

  31. Dennis Schuman says

    Hi Jim, I recently purchased your books and it has been a great help for me in explaining things in a language I can understand having no real investing experience other than my company 401K that I never really took fully advantage until now.

    I set up a Roth IRA and a brokerage account with Vanguard because that’s who my employer plan is with and also due to your recommendations so thanks for that.

    I am trying to simplify my accounts and was wanting to change my 401k accounts to VTSAX 90% /VBMFX 10%. Only problem is my Vanguard plan doesn’t offer VTSAX or any of its other versions you mentioned. Below is what it does offer. Can you tell me is there any way to replicate the VTSAX fund with a combination of any of these funds?

    Balanced Funds (Stocks and Bonds)
    Vanguard Target Retirement Income Fund VTINX / 0308
    Vanguard Target Retirement 2015 Fund VTXVX / 0303
    Vanguard Target Retirement 2020 Fund VTWNX / 0682
    Vanguard Target Retirement 2025 Fund VTTVX / 0304
    Vanguard Target Retirement 2030 Fund VTHRX / 0695
    Vanguard Target Retirement 2035 Fund VTTHX / 0305
    Vanguard Target Retirement 2040 Fund VFORX / 0696
    Vanguard Target Retirement 2045 Fund VTIVX / 0306
    Vanguard Target Retirement 2050 Fund VFIFX / 0699
    Vanguard Target Retirement 2055 Fund VFFVX / 1487
    Vanguard Target Retirement 2060 Fund VTTSX / 1691
    Vanguard Target Retirement 2065 Fund VLXVX / 1791
    Bond Funds
    Vanguard Total Bond Market Index Fund Investor Shares VBMFX / 0084
    Domestic Stock Funds
    Vanguard 500 Index Fund Investor Shares VFINX / 0040
    Vanguard Mid-Cap Index Fund Investor Shares VIMSX / 0859
    Vanguard Small-Cap Index Fund Investor Shares NAESX / 0048
    International Stock Funds
    Vanguard Total International Stock Index Fund Investor shares VGTSX

    I am currently in the following funds/percentages:
    VFINX(23%)/VTHRX-2030(36%)/VBFMX(20%/VGTSX funds (21%)

    Thanks for any help you can give… Dennis

  32. Christopher Anderson says

    Hi Jim (et al),

    I just discovered the Stock series this morning (via MMM, which I just tumbled to a week or so back) and have devoured the whole series today through a conveniently slow day at home/work. (Whether this makes me a glutton or extremely disciplined I will leave for others to decide).

    I wanted to share with you and other readers who might be interested a book recommendation that I believe supports your call for optimism. Recently Bill Gates announced he is offer a free copy of Factfulness by Hans Rosling, Ola Rosling, and Anna Rosling Ronnlund to all US college graduates this year. Intrigued, I bought a copy for myself. Hans (who sadly passed away prior to the books publication) may be known to some for his TED talks on why we tend to get so many basic facts about the world (and why there is real cause for optimism about the global condition) I think the book does an outstanding job of giving us all a lot to think about at we consider how to assess the present state of our world, and tools that can only be of great service in assisting us to think more clearly as we make economic, political, and personal choices.

    I look forward to reading more of your blog (and your book) soon (as soon as I finish getting caught up on MMM’s posts). Thank you for all the extremely helpful information you’ve already given so many.

  33. TJ says

    Beware. I was at a gathering tonight and heard someone mention “Chautauqua.” I lit up. Here was a live person who was interested in financial independence, I was so happy and excited to hold a in person conversation about the topic. Until I learned that it is used in other contexts, this time it was about a location in Colorado. Oh well. One day I will actually meet someone who is interested in FI, in person, hopefully.

    • jlcollinsnh says

      Yeah, Chautauqua is an “old time” word with Native American origins.

      It had kinda fallen out of favor by the time I chose it for our event back in 2012. Since then, I do seem to see it around more. 🙁

  34. Michael T. says

    Hi Jim:
    My name is Michael, 57, a Real estate investor. Holding rental properties. Started the process of selling 3 or 4 per year and invest it in stock market. I already have a broker account with TD Ameritrade and and holding Vangurad ETF’s of VTI(80%), VNQ(10%), vxus(10%)
    I Would like to open an Vangurad Broker account and as I sell my properties, purchase Mutual fund through them directly.
    Each house will net me around $200K. As I do not want to put $200,000.00 at once and would like to invest it on weekly or monthly basis, would you suggest, parking the money in money market and short term CD’s and invest it as time comes or do you have another idea.
    Anyone else’s suggestion is welcome.

    Thank you

  35. Chris B says

    I’m not investing for the next 100 years. I will be FI in 6 years if returns stay in normal ranges. All I need to do is not lose money in that time. Yet the high CAPE, housing bubble 2.0, rising interest rates, and let’s say “unusual political variables” like the trade wars make me want to play it safer rather than risk making those 6 years 12 years.

  36. Sharon N says

    Hi Jim, I have read your stock series and watched many youtube videos of you explaining the Simple Plan to Wealth. Thank you so much!!
    I am wondering what you would do in our situation.??
    We were really late to the investing party. We did however, raise 5 beautiful children and pay for 4 sets of braces and 4 weddings, so far!!
    I’m 55, my husband is 62 and just retired. He will be getting a part-time job of some sort, he can’t sit still, lol!
    We have no debt, and our house is paid off ($300K value) My husbands pension, and both our SS (I’m on SSDI for Multiple Sclerosis) covers all our monthly bills and we can continue to save $600/month too.
    We have 25K between a money market and checking account, but We only have 135K in retirement accounts, mainly VTSAX and a 500 index in his 457. We are planning on rolling over all the 457 money to his Vanguard IRA and then slowly converting to his Roth over the next 5 to 7 years.
    We will not need to pull money from these accounts for income, but may need some if an unexpected medical or other expense comes our way.
    Should we add the VTBLX (total bond market) at this time? if so, at 20% or 25%? If you were in our shoes, what would you do?
    My husband currently drives a $2500 old mini van, and would love a new-ish ($20K) pickup truck.
    Not sure if we should just save the part-time job money, or just take it out of the Roth?
    May God Bless You,

    • jlcollinsnh says

      Hi Sharon…

      Your story made me think of this song my pal Kevin just released:


      Ordinarily, I avoid specific allocation suggestions as it is such a personal choice. It depends so much on your own temperament and needs:

      Understanding that, in your case I’ll make an exception.

      Since you are debt free, mortgage free and have SS and pension income that covers your expenses plus a monthly savings… your position I would keep the invested money in your stock index funds.

      The potential wild card is the possible medical expenses you reference. If you expect those, I would keep the amount you anticipate needing handy in a CD, saving account or money market fund.

      The medical expenses also influence the decision on the 20k for the truck.

      Since you don’t need the money to live on, without those pending, I would have said pull the money and enjoy the truck. You’ll need to think it though and balance the wants and potential needs.

      Our Forester is now 11 years old and with 143,000 miles has begun using oil. I should replace it. But it is fun seeing how long it can go. 🙂

      Enjoy your retirement!

      • Sharon N says

        Thank you so much for answering me!!

        My husband doesn’t believe it is actually you that responds, but I do!!

        I loved the YouTube song your friend recorded, and the reference to you!!

        He wanted me to ask, if we wanted to take a trip, would we just take a few thousand from the Roth?

        I KNOW we have very little for our retirement years, but would we be considered FI?

        My husbands pension has a built in COLA, so I think we’ll be fine!

      • jlcollinsnh says


        No, it’s really me Sharon. 🙂

        By definition, if your passive income (pensions, Social Security, etc) plus your investments is enough to cover your expenses, you are FI.

        The COLA helps and SS has that too.

        From what you tell me, your passive income alone covers your expenses and provides an extra margin to further build your savings. Unless you let your spending get out of control, you should be golden.

        Again, those potential medical expenses are a concern. But other than that, if you want to dip into your investments for the occasional splurge, I’d say go for it.

        Have a pina colada for me!

  37. James L says

    Hi Jim,

    I just finished reading the entire ‘Stocks’ series. After reading through I felt this post on optimism was a particular apt entry to leave a comment. After combing through the each new entry in the series, followed by a little self research, I absolutely feel more optimistic. Oddly enough I feel more optimistic for both the traditional equities markets, as well as the emerging cryptocurrency market.

    Now I know, you (and I’m sure many of your faithful readers) are already prepping a tongue in cheek quip at my expense. But after some research (and being in the tech industry myself) I can immediately see the value in Blockchain technology and by extension cryptocurrencies. For all its current flaws, the fact remains, if you were to look at the past historical data regarding crypto. Investors that stayed the course through the rough seas and held fast, would have seen immense gains. Another interesting trend arises when you consider that for every major correction (or crash) over the past 10 years, the crypto market has rebounded even stronger.

    In saying that, I have invested and will continue to invest in Vanguards index fund products. A sincere thank you for all your wonderful work.


      • James L says

        Hi Jim,

        Thank you for your warm welcome!

        A very amusing blog post (and gif), which i would agree, paints many accurate points surrounding the crypto space. I know the crypto arena isn’t your forte, so I won’t attempt to debate the points. However, I will say that ignoring the technological intrigue, social change and regulatory hoopla. The crypto space, is in my view completely comparable and indistinguishable from the thing that entraps all, greed. In so far as, the crypto market represents an avenue for major players (institutions) to make an absolute fortune, with little capitol injected (relative to their entire portfolio holdings).

        The above reason alone is enough to convince me that over the coming decades, the crypto market cap will increase dramatically. After all, it isn’t every day a new asset class comes into existence (120 odd years or so ?)


  38. jh-australia says

    Mr JL Collins, thank you for your wonderful Stock Series which I read recently (some posts more than once & this one being my favourite). I have been a disciple of the likes of John Bogle and Charles Ellis for a while now. Your insights into human behaviour and psychology consolidated things nicely for me. I’ve sold precisely nothing in the last month when there’s been a big sell-off (by the less enlightened) and markets tumbled.

    I want to share with you a question from Utopia For Realists by Rutger Bregma: “Bizarrely, its’ precisely the jobs that shift money around – creating next to nothing of tangible value – that net the best salaries. It’s a fascinating, paradoxical state of affairs. How is it possible that all those agents of prosperity – the teachers, the police officers, the nurses – are paid so poorly, while the unimportant, superfluous, and even destructive shifters do so well?”

      • jh-australia says

        JL, I was also hoping you might take a few moments to imagine that employers are legally obligated to pay an additional 9.5% of their employees’ salary into a Superannuation account. This account is tax-advantaged (taxed very favorably) and the money can’t be withdrawn until 60. You can even choose to put more money into this account and then claim the amount as a deduction to reduce tax payable. Eventually both the earnings within & the withdrawals from the fund are 100% tax-free.

        Can you imagine the above happening in America? And what are your thoughts on this arrangement if it was reality?

        The above has been a reality in Australia since 1992. And oh, we also have a publicly funded universal health care system.


        • jlcollinsnh says

          Sounds a bit like our Social Security system.

          There are many variations, but basically this totals 15.3%

          If you are an employee, your employer pays half. If you are self employed you get to pay it all.

          You can begin drawing at age 62, but at a reduced rate.

          Whether this money is taxed depends on what other income you have at the time. Which means, for those responsible enough to have saved and invested other money, SS is taxed. 😉

          For more:

          As for health care, here in the US we manage to have the world’s most expensive system combined with mid-level results.

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