Bogleheads® Live with Larry Swedroe: Episode 4

The John C. Bogle Center for Financial Literacy is pleased to sponsor the fourth Bogleheads® Live, a Twitter Spaces meeting project.

In this episode Larry Swedroe answers questions on sustainable investing, including alternatives to sustainable investing, investing in sin (brown) stocks, how ESG decisions are made, the risks of sustainable investing, and the historic investment performance of investing sustainably.

Transcript

Bogleheads Live with Larry Swedroe: Sustainable Investing

Jon Luskin: Thank you for joining us for the fourth of Bogleheads Live. My name is John Luskin, and I'm the host for Today. My co-host for Today is Larry Swedroe, who, for Bogleheads, needs little introduction. Larry is Chief Research Officer at Buckingham Wealth Partners, educating investors on the benefits of evidence-based investing. Larry has co-authored and authored 17 books on investing, including his latest book, Your Essential Guide to Sustainable Investing with his coauthor, Sam Adams.

Today we'll be discussing sustainable investing with Larry. I'll ask Larry questions that I got beforehand across the Bogleheads forum and Bogleheads Reddit. But before that, let's start by talking about the Bogleheads, a community of investors who believe in keeping it simple, following a small number of tried and true investing principles. You can learn more at boglecenter.net.

Also, an announcement: we'll be holding the annual Bogleheads Conference on October 12 through 14th in the Chicago area. We're pretty sure the agenda and speaker lineup will knock you out in a good way. And mark your calendars for future episodes of Bogleheads Live. All times are Eastern. For Thursday, April 14, that's next week, at 04:30 p.m. Christine Benz, Morningstar's Director of Personal Finance, will be answering your questions on asset correlation and sustainable distribution rates.

The week after, on Thursday, April 21, Avantis’ Dr. Sunil Wahal will be discussing mutual fund costs. On Thursday, April 28, at 04:00 PM. Eric Balchunas will be discussing his new book, The Bogle Effect: How John Bogle and Vanguard Turned Wall Street Inside Out and Saved Investors Trillions.

Before we get started on today's show, a disclaimer: this is for informational and entertainment purposes only and should not be relied upon as a basis for investment tax or other financial planning decisions.

Now let's start today's episode. Larry, thank you for joining us today on Bogleheads Live. Larry, I received a lot of great questions. Thank you to everyone who submitted questions on the forums ahead of time. We don't have time to answer all those questions, but we can start with a great one that really jumped out at me. Again, the topic is sustainable investing. 

My first question for you comes from username coffee owl nine on Bogleheads Reddit. And he asks, or rather he says, I'm interested in ESG investing. However, from what I've read so far, I'm not convinced that the passive filter approach most ESG index funds take have much of any meaningful effect. So it's been hard to reconcile my Boglehead philosophy of holding index funds with any sort of ESG approach and largely stayed away from EFG funds. How do I effectively invest according to my values?

Larry Swedroe: It's a really interesting question and unfortunately, there really is no good answer. And the reason is that there is no consistent standard to rate companies under the ESG banner, if you will. So there are seven different rating players, or at least seven major ones, and each one has their own system. And even if, for example, they agreed on what are the important things, the metrics to look at, under ESG, Morningstar might weigh each of those three, say 33%. Sustained analytics might weigh at 50%, and 25% for each of the others. And another could put 80% on the E and et cetera.

And then within the issues you get, how do people rate? So under E, for example, you could have the issue of carbon emissions. So now you have to look at whether they're measuring what are called scope one emissions, which are the direct inputs going into a product. Do you measure scope one and scope two emissions, which are the things not only that you make, but all your supply chain leading to it? And then the third is scope three. And then you consider, let's say, Amazon, which may make nothing, but they have lots of trucks driving around delivering a product to you.

And so that could be included in the scope three. And so one company can rate someone very high on the score and another very low, depending upon which scope. And just think about things like social issues and diversity. How do you judge that? For example, you might look at the number of women on the board and minorities on the boards of companies, or you may look at the number of directors. Or you could look at pay caps and you could look at multiple metrics and how you weigh them. There are all kinds of ways to come up with this, and there are no good standards. So you really have two choices, and even if you're doing your due diligence on each of these seven raters, it might not get you all the answers you want. If you have to accept somebody's ratings and say, okay, that makes sense to me what they're doing, or the alternative today, which has been enabled by relatively cheap direct indexing now at lots of places – my firm, for example, uses Aperio and Parametric which have very reasonable fees, and you can tell them very specifically screening out some industries, screening in others, and tailor your own portfolio.

So that's really the way to maybe address the issue for those with sufficient assets to do so. Let me add just one other point that I think is really important, one that I raise with people, because you have to look at how ratings are done. For example, are they done by, say, relative to the market? You take a total market approach and look at, say, emissions, or do you look at what could be called best in class or best in industry? So for example, if you decide you're going to screen out all of the oil companies, you're actually hurting yourself in the world, because the oil companies have the most green patents, and so you would be depriving them of capital, which would allow them to make investments to make the world a better place. So you have to think about how your actions are impacting your screening process. I think best in class is a much better way to go, which will encourage companies to act and behave better. And that's exactly what the fund families like Dimensional do. They don't entirely screen out industries and then you get a more diversified portfolio as well.

So hopefully that answers that question.

Jon Luskin: That was fantastic. Thank you so much for that answer, Larry. Gosh one take away from that is there's no simple answer. The ESG lampscape is quite complex and still evolving. But another thing I think about when looking at this question and having read your book is that he mentions “invest according to my values.” And one thing that's neat about the ESG is that it's pretty close, as you point out, to conventional investing on what you share in the book as a spectrum of sustainable investing. So on the most conventional plain vanilla, we've got conventional investing and then we have EFG, which is slightly more sustainable with that tilt. And then we have SRI and then impact investing and then philanthropy. So looking at just how much you want to tilt your portfolio away from the plain vanilla broad market approach, conventional investment approach, and towards investing towards your values can help you determine, hey, do I want just ESG or do I want something that's going to go even deeper into the space of investing according to my values?

Larry Swedroe: Let me add one other thing that's really – what one person's good behavior is another person's bad. I'll give you one example. In the ‘70s and ‘80s I lived in San Francisco and Levi Strauss was considered a leader in providing benefits to employees. For example if you had a gay spouse, they were able to get medical benefits. Now, many people would consider that a really good thing and want to screen them in and screen out other companies that don't do that. On the other hand, you may have, for religious reasons, want to screen them out and somebody could view that as a bad thing. So the real answer, I think, is: someone should determine how important this issue is. To determine is it really important to express your values very specifically? Like I drink alcohol and I gamble a little bit for fun, I wouldn't screen those industries out. Somebody else may want to screen them out as sin stocks. You really have to tailor it to your own situation, in my opinion. Or decide I'm just going to move directionally. I'll go with one of the major raters and trust their judgment. That would be my recommendation, one of those two choices.

Jon Luskin: Wonderful. Thank you for sharing that, and then adding that. I’ll jump to our next question. To username Azizi Cooper 123 on bogleheads.org forum asks, “Does it make sense to buy non ESG assets and give the gains to charities that I care about?”

Larry Swedroe: That is actually my favorite way to address the problem. But there's no right answer, it's all a matter of your own personal values. So I've always told people for the 20 years since people started talking about ESG and Sin stocks, etc--to me, focus your investing on generating the highest returns for the risk you're willing to take. 

So, for example, the literature shows that small and value stocks have higher expected returns and higher returns historically. So if you tilt your portfolio to those factors, including, for example, profitability, you should expect to get higher returns. Unless, for argument's sake, that portfolio would generate, say, 2% a year higher returns. Donate that money directly to the charities or issues that you think are the most important, and you can directly have an impact.

That's one way to do it, but it doesn't mean it's the right way. Others could say, I just don't want to support any company that goes against my E,S, or G values. Again, no right answer here.

Jon Luskin: Yeah, I also think it's a fascinating question. One thing I think about with this question is that one’s charitable goals can be a little bit distinct from any ESG funds. So while we do have the sustainable spectrum of investment options, again, we've got ESG, SRI, Impact, etc. There's also other funds out there that can help you invest according to their values. You mentioned DFA, they have a line of social core funds that invest somewhat along lines of a Catholic value system. So if that is your end goal, then maybe an ESG fund isn't the right thing for you anyway. You talk a lot about how portfolio construction is a deeply personal exercise in the book, when it comes to this approach, and that's absolutely spot on.

Let's jump to username sizewide on Bogleheads Reddit, who asks, “Why would I want a large corporation-- this is related to what we've already covered--why would I want a large corporation filtering the companies that I invest in based on their values and their arbitrary application of them, rather than just investing in the entire market? 

Larry Swedroe: Well, I think we already answered that. That's a personal choice. If you feel strongly about certain issues, you certainly shouldn't delegate that to anybody. On the other hand, you may just have a view that I want to move directionally in the right way and you can decide, for example, to invest in only a fund that has Morningstar’s four or five globes. That would be another perfectly acceptable option to use. There is no right answer here.

Jon Luskin: Yes, absolutely. That's something I tell folks all the time when it comes to investing – there’s no right answer, only trade offs. Username Jockdock from Bogleheads.org says, “given the current social undercurrent for EFG, can we expect the broad market indices, international and domestic, to become more compatible, thinking these companies will be more aware of environmental risk for their business, more aware of societal impacts with child labor, fair wages, better corporate behavior, regulations pushing towards more ESG favorable behavior?”

That's an interesting question. If we wait long enough, our company is just going to become more ESG anyway. Do I even need to invest in an ESG fund today? I guess that runs the risk of between now and then when that eventual utopian enlightenment does arrive, you would be, at least in the short term, not investing. 

As to ESG, what do you think of that – eventually companies are going to become more ESG compatible.

Larry Swedroe: The answer to that one is pretty simple. We have a whole chapter in the book dedicated to the research on answering that question. And the good news for ESG investors is that companies are already reacting very favorably, and sustainable investors can feel good that they are definitely changing corporate behavior. And the reason is pretty simple. Economic theory and the empirical evidence shows very clearly this: if a large enough group of investors screen out, say, entire stocks and groups of companies, sectors, industries, or just a particular company that's a bad performer--let's say they boycott those companies products, so that's going to have an impact. 

But if enough investors screen out stocks, then you don't change their earnings, but you lower their price earnings ratio. And if you don't buy your bonds, then you're going to raise the yield required to sell those bonds and clear the market. So you'll be at a competitive disadvantage because you'll have a higher cost of capital. And a great example of that, as we show in the book, the trinity of Sin industries, tobacco, alcohol and gambling, which lots of people screen out, have outperformed by two to 3% a year over about a century of data.

The other side of that to keep in mind is that if enough people favor certain stocks or industries, then the cash flows coming in will, of course don't affect earnings, but they drive up the valuations. And that means you get lower expected returns. And the research showed very clearly, right up to about 2017, that brown or sin stocks outperformed green stocks by, let's call it 2 to 3% here. Virtually every academic paper showed that. And that economic theory fits with the empirical evidence.

You can also say there should be a risk story here because companies that are bad and don't have good risk control-- so you have an Exxon Valdez accident--you could get boycott, right? Your products are boycotted, you have more risk of fraud problems and lawsuits of all kinds and bad publicity. So those companies have more tail risk and investors then are going to demand a risk premium and you'll have a lower cost of capital. As it turns out, these sin stocks tend to be value stocks, they tend to be lower price to book or earnings, and that turns into higher returns to investors. So that was the evidence right up to about 2017. 

Now, the ESG movement has been around really in major form, let's say for about 20 years. But cash flows were like a hockey stick. There was very little coming in right up till around 2016 - 17. And then the movement really gained speed and huge amounts of cash flow started coming in, tens of billions of dollars. And that had enough of an effect that it was driving up the valuations of the green companies, and relatively speaking, driving down the valuations of the brown stocks. So that there was enough of that impact that at least offset the brown premium, if you will, or the sin premium. And some studies showed even a small outperformance of the green stocks. Or what I call generating “Agreenium”.

But if that continues, and I think it's likely to happen, because I think we're in kind of the middle innings of this revolution towards ESG investing, you get enough cash flow coming in, you can overcome that sin premium. But at some point, of course, you reach a new equilibrium. And now everyone who's invested in ESG, is where they are, and the others are willing to accept the risk of investing in the sin stocks or brown stocks. And now you have much higher valuations for green companies, low evaluations for brown, and you get a bigger and bigger risk premium. So there's more reward for taking the risks of investing in those stocks. 

So you have these conflicting forces, which makes it very difficult unless you understand what's going on here, understand what the research is showing. And I think a lot of people are drawing the wrong conclusions, which is that green stocks should be expected to outperform. Neither theory nor the empirical evidence supports that idea. But you can get a temporary--and it may even last for years or a decade even--where that might happen, but eventually when we reach a new equilibrium, sin stocks investors should be expecting a premium for having to hold their nose and owning these companies.

Jon Luskin: Yeah, that is super fascinating, sin stocks outperform more risk, more returns, the value tilt, that's pretty fascinating thing. Thanks for sharing that. 

Let's jump to one that I am super interested in because I'm a little bit of a bond geek. Like yourself, I've seen the performance of Treasuries and how they compare to other bonds. So let's jump to a question about bonds. Username Jockdock on bogleheads.org asks, “are ESG bond funds less risky than the aggregate bond index, and would you expect them to return less for this reason?

Larry Swedroe: The research would argue that yes, and that was probably true up until recently. But all of the bond rating agencies, Moody, S&P, and Fitch began incorporating ESG into their ratings. So that is going to show up in the ratings, and therefore bond yields shouldn't be much different. So you should have the same risk for the same yield. 

However, if there are enough people investing, you may be able to pick up a little higher return for owning riskier ESG types of stocks, but there's no evidence of that, for example, in the municipal bond market, although there is some evidence when governments issue green bonds specifically, they tend to get a little lower yield. And obviously, if Germany is issuing a green bond and a non green bond, the risks are identical, but the green bond might have a few basis points lower yield. 

So there's a little nuance here, but in general, I would say because Moody's, S&P, and Fitch are incorporating the riskiness of the lower rated ESG companies now in their ratings, there shouldn't be an issue here.

Jon Luskin: Got it. One thing that I think about is that you can put an ESG label or sustainable label on anything. So I pulled up a couple of comparisons just to share today because it's just fascinating, the difference in what you'll get with a sustainable bond fund, with corporate bond funds.  

So I looked at a period of poor market performance, the Corona [Virus] crash, pulling data from Yahoo finance. I looked at February 19 to March 19 of 2020. At that time, global stocks lost over 30% using VT, Vanguard’s Total Stock Fund ETF [actually VTI] as a proxy, that lost 30%. How did the total bond market do during that same period? Well, it lost roughly 5%. So in that circumstance now you've got a total bond fund help managing the risk of stocks in your portfolio. And then my personal favorite, Treasuries, gained 4% during that period. Total bond market lost five, Treasuries gained four. What about the ESG funds? Well, here's one, the iShares ESG-aware USC corporate bond fund, ticker SUSC, lost 16%. So more than half of what stocks lost during that same period. But then alternatively, the Fidelity Sustainable Bond Index Fund lost only 2%. So this one did even better than a total bond fund during that same period. That latter fund, that Fidelity Sustainability fund, that's one fund that you mentioned in your book, Larry. And why is that? if you take a look at what these bonds are made of, the corporate bonds on the iShares fund is more than 50% triple B bonds. But then if you look at the Fidelity fund, it's more than 72% AA, right? So just because you've got ESG on the label of the bond fund doesn't mean your research is done at that point. Dig deep, see what these things are actually made of. Because if there's one takeaway I've gotten from your book, Larry, is that what is possible for ESG varies wildly.

Larry Swedroe: Yeah, well, I hope you got more than one takeaway. But let me add this, there's a lot of greenwashing going on and I've written about that now. So mutual funds know that there's a massive interest now in ESG investing. So they're just slapping ESG labels on their funds and without even changing, in effect, if you look at the scores of the companies that they're buying, their portfolios are not better scores just because they put the ESG label on them. So a lot of greenwashing is going on in mutual funds and you need to be very careful. This is where you really have to do due diligence, unfortunately.

Let me add one other point to your comment. I was actually going to mention that as well. ESG stocks outperformed during Covid and other evidence that they tend to be less risky, which of course should mean that you should have lower expected returns in the long term. But I'll also add during that period, as you would expect, growth stocks would tend to outperform value stocks, whose risks tend to show up in severe recessions and the green stocks tend to be more growthy. 

So you have that benefit in those periods. If you get value outperforming, then value tends to have more companies that may not be green. And then you would have seen a different answer. But the answer is really simple: green stocks are less risky for the reasons we discussed, and that risk can show up like it did in Covid. Probably showed up in 2008 as well.

Jon Luskin: Got it. Thank you for sharing that. And yes to your point I certainly got more than just that one takeaway. That's one thing that just really stuck with me is that the ESG landscape is so vast and it's just so inconsistent. So it's really an issue of you've really got to do the research if you're going to take that ESG approach ,to figure out what you're actually investing in is what you're actually trying to accomplish, given your goals. 

Let's jump to Random Musings username on bogleheads.org who asks, “how do you truly benchmark an ESG fund or ETF? Does the criteria that allow inclusion in a cap weighted fund due to the E factor make these funds become more tech heavy?

Larry Swedroe: Well, if technology tends to be greener based on the ratings, then yes, that's what will happen. As I mentioned, it will tend to make it more growthy as well because G stocks tend to be more growth oriented just based on the industries like high tech and medical. They're not big polluters in general, as an example. So yeah, your portfolio may not look like the market in general, and you've got to decide are you willing to allow your portfolio to look different and take different risks than the market. And if that's allowing you to achieve your values, that's perfectly acceptable. But yes, ESG investing could lead you to have different factor tilts, different industry tilts as well. 

Jon Luskin: In the book you list the iShares MSCI USA ESG Select ETF, ticker SUSA, as one thing that folks could consider in helping them invest in an ESG manner. Pulling up what that fund is composed of, comparing it to VTI--which folks here probably don't need me to tell them is a US broad market fund. So let's compare a US broad market fund to a sustainable, to an ESG US broad market fund and we'll see this exact slightly more tech heavy tilt. So VTI, we're roughly 25% technology. In SUSA we're roughly 28% technology. And some of that comes from energy. We've got a bigger exposure to energy with the broad market and then a small exposure to energy with SUSA.

So certainly that could be the case. But it will depend on the specific ESG fund, which again to Larry's point that he echoes in the book, which is do the research, dig deep, figure out if what you're investing in is going to help you accomplish your goals, your ESG goals, sustainable investing goals or otherwise. 

Let's jump to username groku on Bogleheads.org who asks,”is there any appetite for anti EFG investing other than just shorting these funds?” So you've talked a little bit about this already, the brown stocks, the sin stocks. If investors do want to take that approach, how would they do that? 

Larry Swedroe: Well, first of all, you could just go buy stocks of companies with poor ESG scores and they will have higher expected returns without question because they are riskier and investors are avoiding them--the ESG group of investors. Now as I mentioned before though, in the interim period until we reach a new equilibrium, if enough cash flow is coming in, you don't get those higher expected returns. That gets deferred until we get to that new equilibrium.

Also, I would add it depends upon the market environment. If we have good strong general economies and value stocks, their risk don't show up. You should expect them to outperform in that market. But if you get a Covid crisis or an ‘08, then growth stocks, which tend to be more green, tend to outperform. So you have to decide what risk you're willing to live with. And understand once you tilt away from the market, you're going to have tracking variance and you shouldn't care because you have a different goal than just owning the market. So if you're an ESG investor and you underperform, you actually should expect that to happen. But that's the price you pay for expressing your values.

Let me add one other thing that we discuss in great detail in the book. The academic research also shows, and the empirical evidence, that the outperformance historically of the Sin stocks is fully explained by their being value companies selling cheap, and they're much better at managing investments, they don't make bad investments. And just so people might be interested, I'd be willing to bet if you polled the Boglehead community and asked them which are the highest returning industries in the US and also in the UK for the last century, about we have data, they would say likely healthcare, technology. But it's alcohol and tobacco and gambling would be right up there. And that's because they tend to be cheap companies that tend to be very profitable. The kind of stocks that, if you will, Warren Buffett has bought, cheap profitable companies.

So the way you can sort of have your cake and eat it too is to invest with a sustainable strategy that tilts the portfolio holdings to these factors. And that's exactly what the funds that Dimensional Fund Advisors has done. They have a group of sustainability funds that have tilts towards the size and value and profitability factor.

Jon Luskin: I'm going to unmute, Rick.

Rick Ferri: Okay, well, thank you, Larry. My question was--and thank you, Jon, for letting me ask the question--was I had not yet read your book. I've been working on the ESG question and I was getting a podcast guest lined up who is an academic on this, and actually she has the exact same views that you have. So it's refreshing to hear that everybody who has learned, if you will, or educated is coming up with the same conclusion. So appreciate all of that. It's confirmation, if you will. But my question was on your brown stock risk, if you will, the idea that brown stocks have a value factor component and they also have a quality factor component, is that all it is? In other words, if you were going to do a correlation analysis between brown stocks, the value factor, the quality factor, is there anything unique about the brown stocks?

Larry Swedroe: Yeah, it's a really good question, Rick. And there are several papers that address this. And as you would guess, and based on our conversation so far, they're going to be these brown or sin stock value companies because people have avoided buying them for either religious, social or other value reasons. So you become value. As it turns out, as you noted, they tend to be quality stocks. Another way of thinking about that is they tend to be more profitable, and profitability is a quality factor. They also tend to be much better at managing their investments. So they have exposure to factors many people aren't familiar with, which is the investment factor. They tend not to waste money on investments. 

Jon Luskin: Okay, David, you should be live. 

David: Thanks. I would love to hear everyone's opinion on if you're a fiduciary. I would assume, based on what I've heard, that the base case is that ESG investing cannot be really recommended because it's a constrained universe, right? By definition and based on what I've heard--maybe I misunderstood--but the expected returns are – it's reasonable to expect that the returns will be low because these stocks have been bid up. So I'm just curious, like from a fiduciary responsibility, would you agree that the base case has to be that unless the client directs you, the base case has to be not to recommend ESG investing? I'm just wondering if that could be discussed or if anyone has an opinion on that. I appreciate that.

Rick Ferri: That's a great question, David. And you know what? I never recommend ESG to a client, ever. When they come to me, if they're asking me about ESG, I explain basically exactly what we've been talking about today. The expected returns are lower. I mean just looking at the industry groups, the expected returns are lower. Going forward, you're not adding money value. Maybe you're adding some other type of value, but it's not money value to the portfolio. I never bring it up with clients. But if they bring it up, then we have a discussion about it. And then if they say, well, that's fine, I accept that. I accept the fact that I will be probably expecting a lower return. OK, then I start talking about these are your options. 

Yeah, I completely agree. So it's not something we who are fiduciaries, meaning we're expected to achieve our clients’ financial objectives. We're starting with a total market approach and say, can we do better than the total stock market if by taking some extra risk, say, in value or other types of factors, some sort of an asset allocation shift, and that asset allocation shift wouldn't go this direction. If we're trying to get some sort of excess return over the market by adding factors. This is a negative returning asset. Like Larry said, this is not a new concept. It used to be SRI going back many years. It's been a lot of different funds and it's always been an underperformer. 

It's not new. People who say that somehow by doing this you're going to outperform. There's just no data to support. That never has been. So this is the conversation we have to have with our clients about that, if they bring up ESG. But if they don't bring it up, I'm not bringing it up. 

David: Yeah, thank you. It amazes me. If it's problematic to recommend ESG and investing from a fiduciary responsibility, I shouldn't say it surprises me, but it does, that there are so many ESG funds being introduced when it's really, it's hard to build a case that it’s beneficial from a kind of a portfolio construction, long term investing perspective, right? And you know, what amazes me too is also I remember reviewing some of Milton Friedman's essays. At one point--and to your point--this was discussed back in his day and he was emphatically against it, and says this is not what companies really should be doing. This is something that should be exogenous to the fundamental purpose of running a publicly run company. 

So anyway, I find it amazing that you just see this proliferation of the ESG funds, for what it's worth. Thank you again for taking my question and setting up these calls.

Rick Ferri: No, thanks. And I want to add one more thing from the people I talked to on the academic side, who have no bias here. They're consultants to very large endowments, who are basically saying ESG investing on the equity side does nothing. It does nothing. The companies don't care whether or not you own their stock or not. It doesn't do anything. Somebody else will buy it, that's fine. They don't care because it's out there in the marketplace anyway. It's not a primary offering where they're trying to sell the stock to the market and there's less buyers. This stock is already trading out there. The ESG funds are just buying stock from somebody else that's already trading out there. They're not primary offerings going on. 

But the person I'm talking with about interviewing on my podcast is talking about, on the debt side, the primary issue debt side, that if there are less buyers of the company's debt, that does have an impact. And I think Larry started going down that path when he was talking about it in his book, when he was talking about fixed income. Just come to the same conclusion that you hurt these companies, not on the equity side, but you hurt them by not buying their debt because a lot of them are financed with debt. So I thought that was interesting as well.

Jon Luskin: Thank you everyone who joined us today, and thank you Larry, for joining us. Our next Bogleheads Live will be on Thursday, April 14, at 04:30 pm Eastern time. That's 01:30 pm Pacific. We'll be discussing sustainable distribution rates and asset correlations with Christine Benz, Morningstar's Director of Personal Finance. The week after that, we'll be discussing mutual fund costs with Avanti's Sunil Wahil. Between now and then, you can submit your questions for Christine and questions for Sunil on the Bogleheads forum at bogleheads.org and on Bogleheads Reddit.

Until then, you can access the Bogleheads.org forum, Bogleheads wiki, Bogleheads Reddit, Bogleheads Facebook, Boglehead Twitter, Bogleheads YouTube channel. My personal favorite Bogleheads local chapters--shout out to my San Diego group. Bogleheads virtual chapters,. Bogleheads international chapters, Bogleheads conferences and Bogleheads.books. 

The John C. Bogle Center For Financial Literacy is a 501(c)(3) nonprofit organization at boglecenter.net. Your tax deductible donations are greatly appreciated. Thank you again, everyone, and thank you for bearing through our technical difficulties for today's episode. Look forward to seeing you all again next Thursday, April 14 at 5:30 p.m. Eastern time, where we will have Christine Benz. Until then, have a great week and let's have the trumpets take us out.