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Re: The random stock portfolio bogey - beating the monkey

Back to beating the monkey, I understand that a monkey basket of stocks will, compared with a capitalization weighted index, tend to be overweight in mid and small cap stocks. Just based on the law of averages, that is inevitable. However, is there anything that requires the basket to be overweight...
by Browser
Mon Mar 30, 2015 8:48 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

Speaking of Malkiel's Monkey, I had a chance to browse the recent edition of "Random Walk" in the B&N reading room today. He doesn't think much of smart beta, aka alternative weighting. Two reasons: whenever you deviate from cap weight you are adding additional risks to your portfolio,...
by Browser
Sun Mar 29, 2015 9:38 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

One of the monkeys who didn't get hired:

Image
by Browser
Sun Mar 29, 2015 2:53 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

Of course, the catch with the monkey is that a randomly selected stock portfolio includes many more smallcap stocks than a cap-weighted portfolio. This increases the risk (volatility) of the monkey portfolio and the tracking error vs. cap-weighting. There is also the matter of the higher trading cos...
by Browser
Sun Mar 29, 2015 10:00 am
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

I think Arnott et.al. explain it: In summary, value and small cap exposures are naturally occurring portfolio characteristics, unless an investor constructs his portfolio to have positive relationship between price and portfolio weights. In other words, one can view cap-weighting as a nutritionally ...
by Browser
Sat Mar 28, 2015 11:05 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

Not sure why everybody's worried about some strategy other than cap-weighting becoming adopted by the "bozos" and not working anymore. First of all, if that were true then value and small would have stopped working a long time ago. Secondly, if it does act as a bozo-magnet and attract a gu...
by Browser
Sat Mar 28, 2015 7:03 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

But if the media didn't insist on reporting the stock "market" benchmarks as cap-weighted benchmarks, then you wouldn't have tracking error regret if you weren't keeping up with those benchmarks. Instead, you'd have a different kind of tracking error regret. It's all in your head, matey.
by Browser
Sat Mar 28, 2015 12:12 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

"Tilting" toward factors like small and value are like taking investment "vitamins." Nutritionists came up with the idea that you could ingest certain synthetic concoctions that represented nutritional substances that would improve your health, called vitamins. In investing we ha...
by Browser
Sat Mar 28, 2015 11:02 am
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

Actually, the first passive index fund was a monkey fund, begun in 1969 by Wells Fargo Bank. It was based on academic models which resulted in the construction of an index account for the pension fund of Samsonite Corporation, with a strategy based on an equal-weighted index of stocks listed on the ...
by Browser
Sat Mar 28, 2015 12:50 am
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

Cap weighting makes sense as far as a simple way to manage the portfolio that doesn't require additional turnover. It also makes sense if your goal is to capture the stock markets returns - owning the market as it is (weighted by market-cap) seems logical to me. If on the other hand your goal is to...
by Browser
Fri Mar 27, 2015 8:47 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: The random stock portfolio bogey - beating the monkey

I can understand the mechanics of an equal weight portfolio. Would that not "overweight" (based on market cap) micro, small, and midcap stocks? And wouldn't this mean an increase in volatility compared with the overall market based on market cap? I can't believe there is a "free lunc...
by Browser
Fri Mar 27, 2015 2:57 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: mobal.com phones

Thanks for the info. My Verizon phone can not do international as it is a flip phone. If I were going to be gone a short period of time (I will actually be gone an extra couple of days longer than they allow when you rent a phone from them) Verizon was not too bad although Mobal was less. Cell hire...
by Browser
Fri Mar 27, 2015 2:45 pm
 
Forum: Personal Consumer Issues
Topic: mobal.com phones
Replies: 5
Views: 392

Re: "TIPS. Love them or leave them?"

Yes, TIPs are your only choice inside your tax-deferred accounts which may be all most people have for their retirement. The nice thing about I-Bonds is that owning them is like having an after-tax retirement account. The earnings grow tax-deferred until they are withdrawn, for up to 30 years. Nice ...
by Browser
Fri Mar 27, 2015 10:37 am
 
Forum: Investing - Theory, News & General
Topic: "TIPS. Love them or leave them?"
Replies: 16
Views: 1958

Re: The random stock portfolio bogey - beating the monkey

Probably the only feasible way to do something similar to the "monkey" portfolio is to use an equal-weighted fund or ETF. Another way to approximate it would be to hold an equal allocation to smallcap, midcap, and largecap funds or ETFs. These are each cap weighted, but you can increase th...
by Browser
Fri Mar 27, 2015 10:29 am
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: "TIPS. Love them or leave them?"

I don't know how "paltry" the amount is. If you are doing what Zvi Bodie is suggesting, then you'd be able to save $10K per year in I-Bonds, which would accumulate to $200K over a 20-year saving horizon. For most people, $10K is probably at the upper limit of what they are saving anyway. I...
by Browser
Fri Mar 27, 2015 10:23 am
 
Forum: Investing - Theory, News & General
Topic: "TIPS. Love them or leave them?"
Replies: 16
Views: 1958

Confused article about IRA trusts and stretch IRAs

I just read an article advocating that people should put their IRAs into a trust. However, it seems to have been written by someone who doesn't understand how they actually work. Here's a quote: An IRA trust can specify that beneficiaries can only take out the minimum distributions and try to preser...
by Browser
Fri Mar 27, 2015 10:19 am
 
Forum: Personal Finance (Not Investing)
Topic: Confused article about IRA trusts and stretch IRAs
Replies: 3
Views: 345

Re: "TIPS. Love them or leave them?"

I wish articles about TIPS would also discuss I-Bonds. I-Bonds offer inflation protection and have no term risk, since they can be cashed any time after 12 months for their face value plus accrued interest. Zvi Bodie prefers them to TIPS. There are purchase limits - $10K annually, and you can't own ...
by Browser
Fri Mar 27, 2015 10:04 am
 
Forum: Investing - Theory, News & General
Topic: "TIPS. Love them or leave them?"
Replies: 16
Views: 1958

Re: mobal.com phones

Actually Mobal is in the UK. I ordered one from my sister to take on a trip to Ireland. Was shipped immediately to her home in U.S. from the UK and had a U.S. number. The phone worked fine for them on their trip. It was for emergency purposes only, since the per minute calling rate is quite high it'...
by Browser
Fri Mar 27, 2015 9:52 am
 
Forum: Personal Consumer Issues
Topic: mobal.com phones
Replies: 5
Views: 392

Re: Worst performing asset class since 2008

That would be commodities, followed by gold. Far worse than Emerging. If you are interested in equity funds only, Precious Metals.
by Browser
Thu Mar 26, 2015 5:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Worst performing asset class since 2008
Replies: 3
Views: 894

Re: Has Consumer Cellular Discontinued Roaming?

Wizard -
Thanks for the update. Did you have voice coverage in those areas?
by Browser
Wed Mar 25, 2015 10:48 am
 
Forum: Personal Consumer Issues
Topic: Has Consumer Cellular Discontinued Roaming?
Replies: 19
Views: 1919

Re: Bypass High Yield Checking/Savings Monthly Transactions

I have a 2.5% high yield credit union checking account that requires 12 debit card transactions per month as well as one ACH deposit. I do know that auto ACH bill paying doesn't count toward the 12 transactions with this account. But you got me thinking about this. I've never thought of doing someth...
by Browser
Tue Mar 24, 2015 12:54 pm
 
Forum: Personal Finance (Not Investing)
Topic: Bypass High Yield Checking/Savings Monthly Transactions
Replies: 5
Views: 675

Re: Foreign stocks/bonds may be less beneficial for retirees

Currency risk = currency diversification. International isn't beneficial if domestic does better. If domestic tanks a year before retirement, suddenly international may be helpful. If you are not disappointed by at least one investment at any given time, diversification is not working. I can't imag...
by Browser
Tue Mar 24, 2015 11:33 am
 
Forum: Investing - Theory, News & General
Topic: Foreign stocks/bonds may be less beneficial for retirees
Replies: 26
Views: 2326

Re: Google voice

I have no idea how to use Google Hangouts with GV to make calls with my Obi. My old setup uses Google Chat and I have to keep using that Google Account because I can't get Chat when I set up a new Google Account. So it would be nice to know how to use Hangouts, but I don't. I don't even understand h...
by Browser
Tue Mar 24, 2015 11:01 am
 
Forum: Personal Consumer Issues
Topic: Google voice
Replies: 57
Views: 4365

Re: Google voice

Callcentric has been quite good. I use it for my mother's VOIP phone service where I need the advanced configuration options it offers. Only drawback -- it's not free. One weird thing, they assigned a number to her when I signed up that we found, after several months and frequent wrong number calls,...
by Browser
Mon Mar 23, 2015 8:04 pm
 
Forum: Personal Consumer Issues
Topic: Google voice
Replies: 57
Views: 4365

Re: Google voice

Years ago when I quit Sprint, I ported the number to GV and it has been my only phone number. I've changed cellphone service providers a few times quite painlessly by forwarding my GV number to the number of whatever service provider I happen to have. I never have to port the number anymore. I could...
by Browser
Mon Mar 23, 2015 5:36 pm
 
Forum: Personal Consumer Issues
Topic: Google voice
Replies: 57
Views: 4365

Re: Michael Lewis puts his money into Vanguard index funds

Maybe "transparency" is an incomplete way to look at it. David Swensen plugs both TIAA-CREF and Vanguard because he believes there is congruence between investor/client interests and institutional interests at those organizations. Less motivation to "screw over" clients in other ...
by Browser
Mon Mar 23, 2015 1:51 pm
 
Forum: Investing - Theory, News & General
Topic: Michael Lewis puts his money into Vanguard index funds
Replies: 12
Views: 3128

Re: Foreign stocks/bonds may be less beneficial for retirees

Ask yourself this: if I knew I only had 5 years left, how much would I put into international investments? A lot of us would probably say zero. How about 10 years, or 15 years, or 20 years? As we know, it can take 20 years or longer for an investment strategy to pay off, and it can turn down before...
by Browser
Mon Mar 23, 2015 1:37 pm
 
Forum: Investing - Theory, News & General
Topic: Foreign stocks/bonds may be less beneficial for retirees
Replies: 26
Views: 2326

Re: Michael Lewis puts his money into Vanguard index funds

Interesting point about index ETFs. But if I buy-and-hold an index ETF instead of a fund (because it has a lower ER typically) why should I care about the "gaming" of frequent traders that Lewis talks about?
by Browser
Mon Mar 23, 2015 12:49 pm
 
Forum: Investing - Theory, News & General
Topic: Michael Lewis puts his money into Vanguard index funds
Replies: 12
Views: 3128

Re: "Small-Cap Indexing: Popularity Can Be a Pain"

Great post, Taylor. Brings up some good points. To tilt or not to tilt and, if so, by how much is a personal decision but having more information on these questions is helpful to all of us who consider it. I'm a valuation guy and I don't believe that SC today offer the same valuation advantage rela...
by Browser
Mon Mar 23, 2015 12:42 pm
 
Forum: Investing - Theory, News & General
Topic: "Small-Cap Indexing: Popularity Can Be a Pain"
Replies: 14
Views: 2126

Re: Foreign stocks/bonds may be less beneficial for retirees

Another consideration that has been running through my mind. We're familiar with the "age in bonds" guideline suggested by Bogle. The idea behind this is that as you get older, you have less and less time to recover financially from a bad turn of events; therefore, you should increase the ...
by Browser
Mon Mar 23, 2015 12:34 pm
 
Forum: Investing - Theory, News & General
Topic: Foreign stocks/bonds may be less beneficial for retirees
Replies: 26
Views: 2326

Re: Oneplus One phone- experience?

I have enough trouble when I squat or bend down with my 1st gen Moto-X in my front jeans pocket, which is much smaller. I've jammed it into my groin and have to remember to take the thing out of my pocket. I'm not getting a bigger phone until I take out more health insurance.
by Browser
Mon Mar 23, 2015 11:39 am
 
Forum: Personal Consumer Issues
Topic: Oneplus One phone- experience?
Replies: 19
Views: 1759

Re: Foreign stocks/bonds may be less beneficial for retirees

It's a tale of two cities when it comes to international diversification, marked by the rise and fall of Japan, Inc. There are two very different stories: 1972-1989 and 1990-2014. If you happened to retire in 1972 made 5% annual withdrawals (inflation adjusted) until 1989, if you had been invested 5...
by Browser
Mon Mar 23, 2015 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Foreign stocks/bonds may be less beneficial for retirees
Replies: 26
Views: 2326

Re: Oneplus One phone- experience?

If it weren't the size of a surfboard, I'd buy one immediately. I refuse to sustain a groin injury from carrying a smartphone in my pants pocket. :oops:
by Browser
Mon Mar 23, 2015 10:48 am
 
Forum: Personal Consumer Issues
Topic: Oneplus One phone- experience?
Replies: 19
Views: 1759

Michael Lewis puts his money into Vanguard index funds

Ha! Just saw an interview with Michael Lewis in CBS, who believes the stock market is rigged. When asked by Charlie Rose what he does with all the money he is making from his books and movie adaptations about Wall Street, he said he puts it into Vanguard index funds and Berkshire Hathaway, where he ...
by Browser
Mon Mar 23, 2015 10:44 am
 
Forum: Investing - Theory, News & General
Topic: Michael Lewis puts his money into Vanguard index funds
Replies: 12
Views: 3128

Re: "Small-Cap Indexing: Popularity Can Be a Pain"

And yet, there is a smallish difference when you add SCV to LCB over the last 10 years. Using Vanguard funds, the risk-adjusted return (Sharpe) is nearly identical for LCB, SCV, and a 50/50 allocation to LCB/SCV. The maximum drawdown is just about the same for all 3 as well (actually the 50/50 mix w...
by Browser
Sun Mar 22, 2015 10:47 pm
 
Forum: Investing - Theory, News & General
Topic: "Small-Cap Indexing: Popularity Can Be a Pain"
Replies: 14
Views: 2126

Foreign stocks/bonds may be less beneficial for retirees

Read a thought-provoking commentary recently which argues that international diversification may be detrimental for retirees who are taking income withdrawals from their investment portfolios. Diversifying internationally may be more beneficial for investors who are accumulating, for the same reason...
by Browser
Sun Mar 22, 2015 12:10 pm
 
Forum: Investing - Theory, News & General
Topic: Foreign stocks/bonds may be less beneficial for retirees
Replies: 26
Views: 2326

Re: Any reason not to divvy equity between LC, MC, and SC?

The best way to estimate overlap is to use the definitions of indexes. If you use mid-cap and small-cap funds from the same provider (such as Vanguard), there will be no overlap. Vanguard's large-cap and mid-cap funds do have overlap because the large-cap funds include the mid-cap class as well; if...
by Browser
Sun Mar 22, 2015 11:49 am
 
Forum: Investing - Theory, News & General
Topic: Any reason not to divvy equity between LC, MC, and SC?
Replies: 4
Views: 576

Any reason not to divvy equity between LC, MC, and SC?

In backtesting, I've found that an equal weight allocation to Large Cap, Midcap, and Smallcap has pretty good absolute and risk-adjusted returns, particularly if SCV is used instead of SCB. What do others think of this simple strategy? Ideally, it would seem to be ideal to avoid as much overlap as p...
by Browser
Sun Mar 22, 2015 11:15 am
 
Forum: Investing - Theory, News & General
Topic: Any reason not to divvy equity between LC, MC, and SC?
Replies: 4
Views: 576

Re: Odd issue with USPS change of address

I am still getting their mail and making a note for the mail career.

Are you considering a career with the postal service, Victoria?
by Browser
Sun Mar 22, 2015 11:06 am
 
Forum: Personal Consumer Issues
Topic: Odd issue with USPS change of address
Replies: 12
Views: 1351

Re: Is PagePlus Cellular Being Shut Down?

If you want a Verizon MVNO, how about the new Total Wireless -- available at Walmart. $25 for unlimited voice, $35 with 2.5 gig of data added. Seems easier than dealing with Page Plus. I'm an AT&T MVNO person myself. Verizon is just a pain.
by Browser
Sun Mar 22, 2015 11:02 am
 
Forum: Personal Consumer Issues
Topic: Is PagePlus Cellular Being Shut Down?
Replies: 14
Views: 2456

Re: The random stock portfolio bogey - beating the monkey

Research has demonstrated that randomly selected equally dollar-weighted stock portfolios produce slightly higher returns over time than the aggregate returns produced by mutual funds; this is the case even accounting for the expenses of both. In other words, if you have your monkey simply randomly...
by Browser
Sat Mar 21, 2015 7:18 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: 2015 Honda CR-V vibration problems

Repeated excessive vibrations are not a desired part of a design, they are from excessive imbalances, which will cause wear on the engine. During the design and testing process Honda probably did not look at all operating points. So these engines might not last 10 or 15 years, might require rebuild...
by Browser
Sat Mar 21, 2015 1:08 pm
 
Forum: Personal Consumer Issues
Topic: 2015 Honda CR-V vibration problems
Replies: 27
Views: 3392

The random stock portfolio bogey - beating the monkey

Research has demonstrated that randomly selected equally dollar-weighted stock portfolios produce slightly higher returns over time than the aggregate returns produced by mutual funds; this is the case even accounting for the expenses of both. In other words, if you have your monkey simply randomly ...
by Browser
Sat Mar 21, 2015 1:04 pm
 
Forum: Investing - Theory, News & General
Topic: The random stock portfolio bogey - beating the monkey
Replies: 108
Views: 5503

Re: Money Magazine on Low Volatility Funds

I'm pretty much in the camp that any strategy that reduces the weighting of large cap growth stocks with high P/E will tend to do better over time, which is what the low vol strategy does relative to large cap blend, such as the S&P or even TSM. Presumably that's what Arnott's Fundamental Indexi...
by Browser
Sat Mar 21, 2015 12:05 pm
 
Forum: Investing - Theory, News & General
Topic: Money Magazine on Low Volatility Funds
Replies: 18
Views: 2647

Re: Money Magazine on Low Volatility Funds

Let me see if I've got this right. The return from US minimum volatility funds, such as USMV, have beaten the returns from the total stock index, VTI, over the last 12 months, particularly during the last 6 months. As it turns out, this is because the price of min vol funds has risen more relatively...
by Browser
Fri Mar 20, 2015 11:27 pm
 
Forum: Investing - Theory, News & General
Topic: Money Magazine on Low Volatility Funds
Replies: 18
Views: 2647

Re: PXSV has changed indexes

One problem I've got with SCV funds is the REIT allocation, since I hold REIT as a separate allocation. JKL and IWN are both loaded with 13% and 16% respectively, so they're out. IJS has about 5% while RZV has less than 1%, so they're in. Anybody know with the Russell 2000 Pure Value has?
by Browser
Fri Mar 20, 2015 1:49 pm
 
Forum: Investing - Theory, News & General
Topic: PXSV has changed indexes
Replies: 88
Views: 6153

Re: Swedroe-type portfolio: downside risk vs tracking error

I'm not clear Robert T. Do you hold any foreign stocks or are you all domestic? If you hold foreign stocks, how do you calibrate the tilt of these in your portfolio?
by Browser
Fri Mar 20, 2015 12:30 pm
 
Forum: Investing - Theory, News & General
Topic: Swedroe-type portfolio: downside risk vs tracking error risk
Replies: 40
Views: 6196

Re: Swedroe-type portfolio: downside risk vs tracking error

For fans of the Harry Browne Permanent Portfolio, it is noteworthy that over the 1984-1999 time period you would have ended up with a portfolio value that was just 20% of the value of the S&P 500 compounded annually. Comparing to the more conventional allocation of 60% stocks / 40% bonds you end...
by Browser
Fri Mar 20, 2015 10:30 am
 
Forum: Investing - Theory, News & General
Topic: Swedroe-type portfolio: downside risk vs tracking error risk
Replies: 40
Views: 6196

Re: Larry on interest rates and bond term risk

I hold some CDs with about 3 years maturity. What is the "duration" of a CD? I also hold some bond ETFs and would like to figure what my "average duration" is across my fixed-income holdings.
by Browser
Thu Mar 19, 2015 3:04 pm
 
Forum: Investing - Theory, News & General
Topic: Larry on interest rates and bond term risk
Replies: 12
Views: 1675
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