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Re: Market not interested in inflation protection?

I don't think the market is not interested in inflation protection. Most people already have 3 forms of inflation indexed assets - Social Security, real estate and equities. So, what you are saying is that there doesn't seem to be much of a market for riskless inflation protection. I think there are...
by Chan_va
Tue Jul 29, 2014 3:18 pm
 
Forum: Investing - Theory, News & General
Topic: Market not interested in inflation protection?
Replies: 14
Views: 453

Re: How does car trade-in works?

Here is my strategy. Post the car on craigslist with lots and lots of pictures. Price it at above market value. Allow yourself to be haggled down. It's amazing the number of people out there who don't do the basic research regarding the market price of a used car. And everyone on Craigslist loves th...
by Chan_va
Tue Jul 29, 2014 1:55 pm
 
Forum: Personal Finance (Not Investing)
Topic: How does car trade-in works?
Replies: 19
Views: 821

Re: Was ready to pull plug on Janus..until

1. Are you calculating annualized returns correctly? The annualized return over 8 years is not the total return/8. 2. Make sure you are comparing to the right index. So, if your Janus fund is a small cap fund - compare to the small cap index etc. But to answer your questions - Yes you have been luck...
by Chan_va
Tue Jul 29, 2014 1:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Was ready to pull plug on Janus..until
Replies: 36
Views: 1084

Re: Why should stocks go up over the long term?

There are at least 3 ways to answer this question 1. They go up because of fundamentals - productivity increases, earnings reinvestment etc. 2. They go up because they are riskier, and investors demand higher returns for riskier assets 3. They don't - the data presented is just a statistical fluke I...
by Chan_va
Tue Jul 29, 2014 1:20 pm
 
Forum: Investing - Theory, News & General
Topic: Why should stocks go up over the long term?
Replies: 29
Views: 2071

Re: Ultra long term treasuries (50 yr)

The total term risk an investor takes on is what matters. So, for instance, an investor could a small allocation of 50 year treasuries together with a large allocation of cash and have the same risk and expected return as an intermediate bond fund. That's true in terms of interest rate risk, but I ...
by Chan_va
Tue Jul 29, 2014 12:42 pm
 
Forum: Investing - Theory, News & General
Topic: Ultra long term treasuries (50 yr)
Replies: 4
Views: 347

Ultra long term treasuries (50 yr)

The treasury is considering the possibility of issuing ultra long term treasuries - 50 year maturity or more. http://online.wsj.com/articles/u-s-considers-issuing-debt-with-maturities-of-more-than-30-years-1406145447 I can see how this may be interesting to insurers who want to match liabilities, bu...
by Chan_va
Tue Jul 29, 2014 12:19 pm
 
Forum: Investing - Theory, News & General
Topic: Ultra long term treasuries (50 yr)
Replies: 4
Views: 347

Re: Should retirement investors own small/value stocks at al

Do you mean - Should retirees not hold small/value in excess of the market portfolio, or do you mean - Should retirees cut small/value out of their portfolio altogether?
by Chan_va
Tue Jul 29, 2014 10:28 am
 
Forum: Investing - Theory, News & General
Topic: Should retirement investors own small/value stocks at all?
Replies: 13
Views: 668

Re: bond duration and interest rate risk

Here's at least on of the posts that discusses this issue and the difference between average duration which is impact by call provisions and the average stated maturity which is not. Also contains links to other posts and useful info. Before VG started providing both numbers I starting holding at l...
by Chan_va
Tue Jul 29, 2014 9:49 am
 
Forum: Investing - Theory, News & General
Topic: bond duration and interest rate risk
Replies: 20
Views: 1184

Re: POLL: Wills vs. Living Trusts

Revocable trusts make sense in some cases, and in some states. However, they're overhyped and oversold, and for most people in most states are unnecessary and tend to be a distraction. Like any tool in the toolbox, we'll use it where it's appropriate, which is some but not most of the time. Asking ...
by Chan_va
Tue Jul 29, 2014 9:11 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Wills vs. Living Trusts
Replies: 7
Views: 601

POLL: Wills vs. Living Trusts

Folks,

I know this topic has been discussed before, but I don't think we have had a poll on this topic. I am trying to decide between a will and a will+living trust, and wanted to see what's more common out here.
by Chan_va
Tue Jul 29, 2014 8:54 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Wills vs. Living Trusts
Replies: 7
Views: 601

Re: bond duration and interest rate risk

People much smarter than I seem to think that long bonds are good (as in, efficient volatility) for portfolios with very high stock percentages (above 80% or so), intermediate bonds for less. Couple that with the fact that we seldom recommend more than 80% stocks and you've got an explanation for t...
by Chan_va
Mon Jul 28, 2014 11:10 pm
 
Forum: Investing - Theory, News & General
Topic: bond duration and interest rate risk
Replies: 20
Views: 1184

Re: Old people and financial advisors - a family tale

OP, are your investable assets > 170K? (The value of your uncle's assets). If so, show him your statements. That hopefully will prove to him that you aren't interested in his money. After that, say your piece just once, and make it clear to your uncle that this is the last time you will bring this u...
by Chan_va
Mon Jul 28, 2014 11:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Old people and financial advisors - a family tale
Replies: 75
Views: 5436

Re: Do Bogleheads Feel Wealthier?

There is a rich body of knowledge out there on how to scientifically construct and word surveys. I am not the expert on the topic, but I am sure someone on this board is - he/she should write up a "best practices" post and that should be made a sticky. This poll uses the comparative form o...
by Chan_va
Mon Jul 28, 2014 11:09 am
 
Forum: Personal Finance (Not Investing)
Topic: Do Bogleheads Feel Wealthier?
Replies: 56
Views: 3874

Re: Make Income the Outcome

Imagine that, simple sports analogies can't replace a couple page article! Are there any simple analogies that don't break down? Can we cut out the snark please, and focus on the issues. If simple analogies break down - then don't use simple analogies. I detect more than a hint of noblesse oblige h...
by Chan_va
Fri Jul 25, 2014 1:13 pm
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 49
Views: 3801

Re: Make Income the Outcome

Here's a football analogy. With 6 minutes to go, possession of the ball, and a 9 point lead a team can maximize its expected pointed total by throwing lots of medium and long passes, but the goal of winning the game is not maximized by employing this strategy. BobK But doesn't a glide path to conse...
by Chan_va
Fri Jul 25, 2014 11:31 am
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 49
Views: 3801

Re: Bonds beat stocks over the last 15 years

Yes, for me, one of the big puzzles in investing is just how to approach the "long term" data. All of the impressive numbers involve an implicit assumption that a) the long-term future WILL resemble the long-term past, and that b) you, the individual investor hoping to tip your odds a bit...
by Chan_va
Thu Jul 24, 2014 10:53 am
 
Forum: Investing - Theory, News & General
Topic: Bonds beat stocks over the last 15 years
Replies: 93
Views: 7554

Making a will - recommendations in Wash DC area

The financial side of the house is in reasonable order, but we (wife and I) haven't got our act together on the legal side. Wills, POA etc. not sure where to start. I recall reading that this is not a DIY job, and I should work with an attorney. Any recommendations in the Washington DC metro area? W...
by Chan_va
Thu Jul 24, 2014 6:40 am
 
Forum: Personal Finance (Not Investing)
Topic: Making a will - recommendations in Wash DC area
Replies: 1
Views: 181

Re: Here's another "where should I retire" thread

Ithaca NY - has the lakes, the colleges, the beauty, the quirkiness. Big enough to have things and people, small enough to feel like you got away.
You will need somewhere else to spend the winters though
by Chan_va
Wed Jul 23, 2014 5:43 pm
 
Forum: Personal Consumer Issues
Topic: Here's another "where should I retire" thread
Replies: 104
Views: 6041

Re: Is there any downside to investing in bond futures?

Isn't this another variation on the "borrow short, lend long" strategy? You are comparing a 0 duration bond (FDIC savings acct) with a 5 year duration bond. All is well if the interest rates don't move, but what if they do? Ok, here's a first crack at the math behind the advantages of bond...
by Chan_va
Wed Jul 23, 2014 5:27 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1805

Re: Is there any downside to investing in bond futures?

Perhaps I was being a bit hasty there, but the risk of the interest rates shifting is always there for any bond investment, and that part is extremely well documented. But if we make the assumptions that none of us have a crystal ball with respect to interest rates, it makes sense to talk about two...
by Chan_va
Wed Jul 23, 2014 3:19 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1805

Re: Please help settle an argument

Any argument that contains the word ALWAYS is ALWAYS wrong. How's that for a logical paradox
by Chan_va
Wed Jul 23, 2014 2:38 pm
 
Forum: Personal Finance (Not Investing)
Topic: Please help settle an argument
Replies: 23
Views: 1946

Re: Anyone been to Charleston, SC?

Consider taking a day or 2 to visit Savannah. I personally like it much more. Charleston felt a bit too touristy for me.
by Chan_va
Wed Jul 23, 2014 11:22 am
 
Forum: Personal Consumer Issues
Topic: Anyone been to Charleston, SC?
Replies: 27
Views: 1438

Re: Computer Fried By Lightning - Security Question

Do you have a backup of the data? I would just junk the old system and buy a new one. Between the repair costs, and the security risks - it's not worth sending the hard drive over.
by Chan_va
Wed Jul 23, 2014 10:55 am
 
Forum: Personal Consumer Issues
Topic: Computer Fried By Lightning - Security Question
Replies: 15
Views: 1178

Re: Computer Fried By Lightning - Security Question

Do you have a backup of the data? I would just junk the old system and buy a new one. Between the repair costs, and the security risks - it's not worth sending the hard drive over.
by Chan_va
Wed Jul 23, 2014 10:55 am
 
Forum: Personal Consumer Issues
Topic: Computer Fried By Lightning - Security Question
Replies: 15
Views: 1178

Re: Vanguard Portfolio Watch issue

Are stock markets outside the US adjusted every day for new market values? Total International is, or should be. It holds stocks. They go up and down. The percentages change. You need a date for the outside the US data. Or does Vanguard recalculate it every day? Personally, I don't care and never l...
by Chan_va
Wed Jul 23, 2014 10:39 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Portfolio Watch issue
Replies: 8
Views: 776

Vanguard Portfolio Watch issue

Here is what I see in Vanguard's portfolio watch, in the "stock analysis" tab My ONLY international holding is the Vanguard Total International Stock Index. How can I be overweight in Pacific and underweight in Europe and Emerging? I think this has to do with Vanguard's switching of Korea ...
by Chan_va
Wed Jul 23, 2014 10:24 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Portfolio Watch issue
Replies: 8
Views: 776

Re: Is there any downside to investing in bond futures?

You can simulate a bond using a bond futures. However here are just a couple of things to think about in addition to what's been said- this gets very complex very quickly. 1. You are going to pay a basis spread over a bond - for the privilege of having a futures contract which has some options. The ...
by Chan_va
Wed Jul 23, 2014 9:46 am
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1805

Re: Is there any downside to investing in bond futures?

I don't get what you are trying to do. You don't want to pay bond fund fees but are willing to pay the higher commissions and spreads on a futures contract? If tax implications matter, why not individual munis? I suppose if you are an ultra high net worth investor and for some reason you had to hold...
by Chan_va
Tue Jul 22, 2014 11:14 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1805

Re: Thoughts on [not] rebalancing

You have pointed out a big advantage to never re balancing, which isn't appreciated enough. You don't have to do anything!

The fewer decisions I have to make, the less chance I have to do something stupid. I am not wired to be a coldly rational investor.
by Chan_va
Tue Jul 22, 2014 2:56 pm
 
Forum: Investing - Theory, News & General
Topic: Thoughts on [not] rebalancing
Replies: 12
Views: 667

Re: Stock market recovery time

Here is a chart I created a few years ago for a presentation. The data shows the worst 10 year loss (in real terms) for equities, plotted over time. I remember pulling this data from a peer reviewed paper, but for the life of me, cant remember what it was. I also don't remember what the size of the ...
by Chan_va
Tue Jul 22, 2014 12:08 am
 
Forum: Investing - Theory, News & General
Topic: Stock market recovery time
Replies: 25
Views: 2680

Re: Should I use margin to buy a balanced fund?

Rob, Forget about balanced funds vs. stocks and bonds. Here is an argument for why leverage is not a great idea in general. The issue is that you need to consider a sequence of probabilities across time, not one across the whole time period. Let's simplify the problem. Consider a theoretical asset, ...
by Chan_va
Fri Jul 18, 2014 5:54 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 181
Views: 8973

Re: Relatively safe investment for large sum

I am adding the Wellesley option, the Vanguard 2020 target fund and am reslisting the options in term of perceived risks. 1) CDs (any recommendation for a specific bank ?) 2) LT/IT muni (VWLUX/VWIUX) 3) 20% total stock market (VTSAX), 30% short-term treasuries( VFISX), 50% intermediate term treasur...
by Chan_va
Fri Jul 18, 2014 10:54 am
 
Forum: Investing - Help with Personal Investments
Topic: Relatively safe investment for large sum
Replies: 43
Views: 3221

Re: Very high interest rate in other countries? How come?

1. Inflation affects the currency exchange rate. So, if country A's inflation rate was x%, and Country B's inflation rate was y%, then after a year, you would expect that the currency of Country A would appreciate vs. the currency of country B at (x-y)%. So - you are exposed to inflation risk. 2. Ye...
by Chan_va
Fri Jul 18, 2014 10:18 am
 
Forum: Investing - Theory, News & General
Topic: Very high interest rate in other countries? How come?
Replies: 44
Views: 3203

Re: If interest rates would ever reach double digits again

Btw, it will be interesting to see how TIPS behave the next time high inflation rolls around. The first inflation protected security was issued by Great Britain in 1981 I believe, so we don't really have data points on how they will behave. I have a theory that their market behavior will be so diffe...
by Chan_va
Fri Jul 18, 2014 10:09 am
 
Forum: Investing - Theory, News & General
Topic: If interest rates would ever reach double digits again
Replies: 36
Views: 3015

Re: Apple TV

I watched the entire World Cup on the Apple TV via the WatchEspn App. Between that and broadcast channels, I don't need cable anymore.
by Chan_va
Fri Jul 18, 2014 10:02 am
 
Forum: Personal Consumer Issues
Topic: Apple TV
Replies: 43
Views: 3391

Re: Should I use margin to buy a balanced fund?

You should note that you are basing all your calculations assuming margin requirements don't change in a downturn. But the opposite is true. During a downturn, your broker can and will raise margin requirements to cover risk. And that will throw off your calculations.
by Chan_va
Thu Jul 17, 2014 4:27 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 181
Views: 8973

Re: Market Timing vs. Market Opportunity

Heyolshan wrote: This time around though, there's a twist.


The 4 most dangerous words in investing - This time it's different.
by Chan_va
Thu Jul 17, 2014 3:50 pm
 
Forum: Investing - Theory, News & General
Topic: Market Timing vs. Market Opportunity
Replies: 46
Views: 2948

Re: Relatively safe investment for large sum

When you say you are looking for a 3% yield in 5 years, and that cash will lose 3% to inflation, are you looking to break even after inflation, or are you looking for 3% on top of inflation? If the latter, then no easy answers with low risk. If the former, then your safest option is to buy a TIP (in...
by Chan_va
Thu Jul 17, 2014 3:45 pm
 
Forum: Investing - Help with Personal Investments
Topic: Relatively safe investment for large sum
Replies: 43
Views: 3221

Re: Relatively safe investment for large sump

I am looking for a relative safe place to park ~300K of cash which I don't really need access to for 5 years. My risk tolerance is fairly low. I guess I am hoping for ~3% or better yield. Please advise. Relative to what? How do you define fairly low risk? 5 year T notes are yielding about 1.7% now.
by Chan_va
Thu Jul 17, 2014 12:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Relatively safe investment for large sum
Replies: 43
Views: 3221

Re: New Edition of Random Walk in January 2015

Try this: Tell me one thing you can get from a book that you can't get on bogleheads. You can't. If you tell me, then it will be on bogleheads. Q.E.D. Not true. I could tell you that there are books that tell you why the question you are asking gets into thorny issues of set theory. http://en.wikip...
by Chan_va
Thu Jul 17, 2014 12:31 pm
 
Forum: Investing - Theory, News & General
Topic: New Edition of Random Walk in January 2015
Replies: 33
Views: 2338

Re: If interest rates would ever reach double digits again

Yes - you are overlooking inflation. If interest rates were to reach double digits, it's very likely that inflation will be up there too. So, your real return in bonds will be roughly the same as in a low interest rate environment.
by Chan_va
Thu Jul 17, 2014 12:21 pm
 
Forum: Investing - Theory, News & General
Topic: If interest rates would ever reach double digits again
Replies: 36
Views: 3015

Re: Should I use margin to buy a balanced fund?

Using leverage to buy bonds is different from using leverage to buy equities. In using leverage to buy equities, your nemesis is the margin call in a bear market. In using leverage to buy bonds, your nemesis is the margin rate and the yield curve, and the fact that you will need to borrow at short t...
by Chan_va
Thu Jul 17, 2014 12:12 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 181
Views: 8973

Re: What Book Are You Currently Reading? Part V

Just read the Code Book - http://www.amazon.com/Code-Book-Science-Secrecy-Cryptography/dp/0385495323/ref=sr_1_3?s=books&ie=UTF8&qid=1405610925&sr=1-3&keywords=simon+singh Great read - enough math to make it intellectually stimulating, but not so deep that you can't read it on the bea...
by Chan_va
Thu Jul 17, 2014 11:28 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part V
Replies: 3113
Views: 1009268

Re: New Edition of Random Walk in January 2015

I realize that there are legitimate concerns about the shifting AA in the book over the past few editions, but let's not forget what a bolt from the blue the original book was. Rewind the clock back to 1973 when the first edition came out. There was so little general knowledge about the mechanics of...
by Chan_va
Thu Jul 17, 2014 10:10 am
 
Forum: Investing - Theory, News & General
Topic: New Edition of Random Walk in January 2015
Replies: 33
Views: 2338

Re: Why I can't be a day trader.

Easy solution. Make a couple of bad trades. I am actually serious. It's hard to appreciate indexing till you have felt it in your gut.

Buy some penny stocks and try and make money. It cured me fast.
by Chan_va
Wed Jul 16, 2014 11:01 am
 
Forum: Personal Finance (Not Investing)
Topic: Why I can't be a day trader.
Replies: 38
Views: 2965

Re: Persistence of SV performance

Disclaimer - I am pretty much a 3 fund portfolio guy. I dont tilt because I need simplicity, and I can't tolerate tracking error. Having said that, I don't quite understand the arguments against SV. Argument 1. You cant use past data to predict the future: We all use past data to invest. We all inve...
by Chan_va
Tue Jul 15, 2014 12:58 pm
 
Forum: Investing - Theory, News & General
Topic: Persistence of SV performance
Replies: 71
Views: 3828

Re: Advice on investment direction using 3-fund

Welcome Florida917. Couple of things you should think about. 1. You can still contribute to a Roth IRA even if your AGI is over the limit. See here - http://www.bogleheads.org/wiki/Backdoor_Roth_IRA 2. You should think about your portfolio as a whole - including your 401k, Roth and taxable accounts....
by Chan_va
Tue Jul 15, 2014 12:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Advice on investment direction using 3-fund
Replies: 6
Views: 1005

Re: Company just offered a Roth 401K option. Should I use i

You cant predict future tax brackets. So follow a tax diversification strategy. You are in the 33% bracket today. It's likely that you will be in a lower bracket when you retire. So, by putting 17.5K in a traditional and 5.5K in a Roth every year, you are hedging your bets. By following this strate...
by Chan_va
Tue Jul 15, 2014 12:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Company just offered a Roth 401K option. Should I use it??
Replies: 20
Views: 1178

Re: Company just offered a Roth 401K option. Should I use i

You cant predict future tax brackets. So follow a tax diversification strategy. You are in the 33% bracket today. It's likely that you will be in a lower bracket when you retire. So, by putting 17.5K in a traditional and 5.5K in a Roth every year, you are hedging your bets. By following this strateg...
by Chan_va
Tue Jul 15, 2014 11:41 am
 
Forum: Investing - Help with Personal Investments
Topic: Company just offered a Roth 401K option. Should I use it??
Replies: 20
Views: 1178

Re: Paperwhite for Cloudy-Day Reading

Btw, I recommend spending a bit more and getting the paperwhite with the 3G option. I find that I make a lot of book purchases when I am at the airport, on the beach etc. Worth it to have the ability to instantly browse and download a book.
by Chan_va
Tue Jul 15, 2014 11:26 am
 
Forum: Personal Consumer Issues
Topic: Paperwhite for Cloudy-Day Reading
Replies: 21
Views: 1820
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