Search found 2992 matches

by Clearly_Irrational
Sat Jul 25, 2015 10:31 am
Forum: Investing - Theory, News & General
Topic: Are Stocks Overvalued? A Survey of Equity Valuation Models
Replies: 201
Views: 11275

Re: Are Stocks Overvalued? A Survey of Equity Valuation Models

In other words, you are defining "active" in such a way that there is no such thing as "passive". If making any decision at all about investing is "active", then there's zero need to even use the terms "active" and "passive", because we're all "...
by Clearly_Irrational
Fri Jul 24, 2015 6:44 pm
Forum: Investing - Theory, News & General
Topic: Are Stocks Overvalued? A Survey of Equity Valuation Models
Replies: 201
Views: 11275

Re: Are Stocks Overvalued? A Survey of Equity Valuation Models

Maynard F. Speer wrote: I also wonder whether a true global portfolio would need to include options and derivatives


To be truly accurate I think it would, there is a lot of money sloshing around there.
by Clearly_Irrational
Fri Jul 24, 2015 1:52 pm
Forum: Investing - Theory, News & General
Topic: Are Stocks Overvalued? A Survey of Equity Valuation Models
Replies: 201
Views: 11275

Re: Are Stocks Overvalued? A Survey of Equity Valuation Models

But if you hold 60:40, you're aiming to beat the market whatever way you slice it Changing the argument by making up definitions that no one else agrees with isn't going to get us very far. I agree with his definition, but I also agree with you that it's just a matter of semantics and pretty much a...
by Clearly_Irrational
Fri Jul 24, 2015 1:47 pm
Forum: Investing - Theory, News & General
Topic: Are Stocks Overvalued? A Survey of Equity Valuation Models
Replies: 201
Views: 11275

Re: Are Stocks Overvalued? A Survey of Equity Valuation Models

The irony is that (many) Bogleheads are the very people who understand this stuff and can't help themselves from keeping an eye on all these esoteric financial statistics and the minute-by-minute fluctuations of the markets. That depends on what you do with the knowledge. I have a fairly complex sy...
by Clearly_Irrational
Fri Jul 24, 2015 1:38 pm
Forum: Investing - Theory, News & General
Topic: Are Stocks Overvalued? A Survey of Equity Valuation Models
Replies: 201
Views: 11275

Re: Are Stocks Overvalued? A Survey of Equity Valuation Models

The big question is: let's say stocks are overvalued, what then? So what? The false syllogism is: a) Stocks are overvalued. b) Therefore, I must do something. Well, I think you could safely draw the following conclusions: 1) Equity performance will likely be below the historical average 2) I'll lik...
by Clearly_Irrational
Fri Jul 24, 2015 1:31 pm
Forum: Investing - Theory, News & General
Topic: Are Stocks Overvalued? A Survey of Equity Valuation Models
Replies: 201
Views: 11275

Re: Are Stocks Overvalued? A Survey of Equity Valuation Models

HomerJ wrote:So different metrics give conflicting conclusions. Does that make it easier or harder to use a "system" to beat the market?


Forward P/E is garbage, I didn't use that even when I was actively trading. It's all fantasy numbers from untrustworthy sources.
by Clearly_Irrational
Thu Jul 23, 2015 5:44 pm
Forum: Investing - Theory, News & General
Topic: [Original Research] The Failure of PE Market Timing Models
Replies: 43
Views: 3055

Re: [Original Research] The Failure of PE Market Timing Models

rca1824, I agree with nisiprius, there is a lot of value in playing with numbers on your own, instead of just believing what other say (TAA believers or naysayers). You will reach conclusions that you truly believe in, and this in itself has a lot of value ( :wink: ). Whatever plan you come up with...
by Clearly_Irrational
Wed Jul 22, 2015 5:54 pm
Forum: Investing - Theory, News & General
Topic: [Original Research] The Failure of PE Market Timing Models
Replies: 43
Views: 3055

Re: [Original Research] The Failure of PE Market Timing Models

I think for a strategy to be robust it should work across 100+ years of history and also work under more general allocation strategies not involve arbitrary cut-off points that can be too easily tweaked into succeeding on backtested data. I'm not sure I agree about the cut-off points, but if that's...
by Clearly_Irrational
Wed Jul 22, 2015 3:29 pm
Forum: Investing - Theory, News & General
Topic: [Original Research] The Failure of PE Market Timing Models
Replies: 43
Views: 3055

Re: [Original Research] The Failure of PE Market Timing Models

I may still tinker with this, but ultimately it looks like there is no free lunch in PE market timing models. I have seen evidence using short periods like 2000-2010 that show they work, but that's just data mining. Using the full 135 year data set does not support the hypothesis that PE market tim...
by Clearly_Irrational
Wed Jul 22, 2015 3:05 pm
Forum: Investing - Theory, News & General
Topic: Is Harry Markowitz wrong? Why Optimal Portfolios Are So Difficult To Create
Replies: 33
Views: 2967

Re: Is Harry Markowitz wrong? Why Optimal Portfolios Are So Difficult To Create

It's a useful model in that it informs us about the risk/return trade off and how adding various components can affect our portfolio outcome. The numbers can give you an idea of a reasonable range of outcomes but given all the flaws in the data available you'll never be able to actually "optimi...
by Clearly_Irrational
Thu Jul 16, 2015 3:55 pm
Forum: Investing - Theory, News & General
Topic: What 2008/09 has done to me
Replies: 158
Views: 18683

Re: What 2008/09 has done to me

The tech crash was actually more traumatic for me, after going through that mess I was determined to be ready when it happened again. The housing crash was still pretty traumatic though: 1) For a while I feared the collapse of the entire banking system, I got close to pulling all my cash out to avoi...
by Clearly_Irrational
Mon Jul 13, 2015 4:11 pm
Forum: Personal Finance (Not Investing)
Topic: What's lining up to be the next big bubble?
Replies: 34
Views: 2852

Re: What's lining up to be the next big bubble?

There is really a good point here. Before the 2008-09 financial crisis, many economists referred to the American Economy going through what they called the "Great Moderation". Economic growth in general wasn't as fast as it had been at some points in the past, but the crises weren't as bi...
by Clearly_Irrational
Mon Jul 13, 2015 3:25 pm
Forum: Personal Finance (Not Investing)
Topic: What's lining up to be the next big bubble?
Replies: 34
Views: 2852

Re: What's lining up to be the next big bubble?

I'm not sure what the bubble is exactly. There is a lot of money sloshing around with not enough places to go so many assets are becoming very richly valued. They slapped some bandaids on after the last crisis, so what usually happens is that the stress breaks out somewhere new. There is definitely ...
by Clearly_Irrational
Wed Jul 08, 2015 1:39 pm
Forum: Investing - Theory, News & General
Topic: Aren't we obsessing way too much about our portfolios?
Replies: 84
Views: 6616

Re: Aren't we obsessing way too much about our portfolios?

BahamaMan wrote:Yes, the good old Optimistic data from the early 1930s!


The data that only includes one major crash instead of three and some of the strongest growth years ever recorded, yes that data.
by Clearly_Irrational
Wed Jul 08, 2015 10:32 am
Forum: Investing - Theory, News & General
Topic: Aren't we obsessing way too much about our portfolios?
Replies: 84
Views: 6616

Re: Aren't we obsessing way too much about our portfolios?

BahamaMan wrote:That's the reality of financial planning.... the "4% SWR Rule" is based on Worst Case Historical Records.


With a 95% confidence level based on older more optimistic data yes.
by Clearly_Irrational
Wed Jul 08, 2015 10:17 am
Forum: Investing - Theory, News & General
Topic: Aren't we obsessing way too much about our portfolios?
Replies: 84
Views: 6616

Re: Aren't we obsessing way too much about our portfolios?

BahamaMan wrote:That's why you should always plan for the worst.


Apparently my idea of "worst" is a lot worse than yours, since if I was doing that I wouldn't be investing at all, instead I'd be filling my bunker with shelf stable food and ammo.
by Clearly_Irrational
Tue Jul 07, 2015 2:59 pm
Forum: Investing - Theory, News & General
Topic: Aren't we obsessing way too much about our portfolios?
Replies: 84
Views: 6616

Re: Aren't we obsessing way too much about our portfolios?

As you can see, within limits, it made very little difference over this period of time whether you held 40% in stocks or 60%, and whether you rebalanced your allocation annually or not. That's not the conclusion I drew from that information. Allocation difference 0.61% per year which adds up to a 2...
by Clearly_Irrational
Thu Jul 02, 2015 11:01 am
Forum: Investing - Theory, News & General
Topic: Warning Signs [Economic health indicators]
Replies: 246
Views: 31889

Re: Warning Signs

Well the new recession indicator reading is out today and not only is it lower, they revised the older readings lower as well. It's pretty common to have elevated noisy periods in the signals prior to an actual problem occurring, which is why multiple indicators are required. Looks like I raised my ...
by Clearly_Irrational
Wed Jul 01, 2015 4:56 pm
Forum: Investing - Help with Personal Investments
Topic: Too high Intra-Portfolio Correlation (IPC)?
Replies: 28
Views: 1396

Re: Too high Intra-Portfolio Correlation (IPC)?

Hadn't heard of this site before, but since my portfolio is based conceptually on having a low IPC I thought I'd check it out. My setup rated a 0.25 which I'm pretty satisfied with. A conventional three fund portfolio of roughly equal risk came in at 0.33
by Clearly_Irrational
Mon Jun 29, 2015 3:57 pm
Forum: Investing - Theory, News & General
Topic: dow futures down 200+ points
Replies: 84
Views: 9727

Re: dow futures down 200+ points

Personally I believe the markets are "weak-form" efficient, wherein someone with enough patience, know-how and resources can find small opportunities here and there to gain small advantages. But it's such a small effect that to figure out if a manager is "skilled" or just "...
by Clearly_Irrational
Mon Jun 29, 2015 3:45 pm
Forum: Personal Finance (Not Investing)
Topic: Tell Me I'm Stupid To Consider Quitting My Job and Moving
Replies: 157
Views: 38069

Re: Tell Me I'm Stupid To Consider Quitting My Job and Moving

Don't just keep doing the same thing and being miserable. I still advise having a plan before you leap, but if you're so miserable why haven't you taken any time to figure it out? Personally if I were that unhappy I'd be obsessing over it nearly every free minute, especially with the kind of flexibi...
by Clearly_Irrational
Mon Jun 29, 2015 2:59 pm
Forum: Investing - Theory, News & General
Topic: dow futures down 200+ points
Replies: 84
Views: 9727

Re: dow futures down 200+ points

My IPS still has me in buy and hold mode so I won't be taking any action on today's price move. For fun, here's some analysis if I were still trading: P&F Pattern is a triple bottom breakdown with a price target of 1991 on the S&P500. The market has been in a trading range since April but th...
by Clearly_Irrational
Mon Jun 29, 2015 2:44 pm
Forum: Personal Finance (Not Investing)
Topic: Pay student loan off at 2.875%? - otherwise, 14 years to go
Replies: 52
Views: 5530

Re: Pay student loan off at 2.875%? - otherwise, 14 years to go

The math says leave it, but personally I'd pay it off just to get the psychological reassurance. Either way it's not particularly impactful so it's a matter of choice.
by Clearly_Irrational
Fri Jun 26, 2015 9:56 am
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

Shiller today: “I’ve been very wary about advising people to pull out of the market even though my CAPE ratio is at one of the highest levels ever in history,” Shiller told Bloomberg in April. “Something funny is going on. History is always coming up with new puzzles.” I agree with Shiller on both ...
by Clearly_Irrational
Fri Jun 26, 2015 9:53 am
Forum: Personal Finance (Not Investing)
Topic: Tech jobs - is job-hopping the best way to get ahead?
Replies: 92
Views: 13520

Re: Tech jobs - is job-hopping the best way to get ahead?

This is true more generally. If you work for a company that specializes in X and you specialize in Y, even if they need Y, it is hard to be fully accepted in the in to the Club which will tend to be reserved for those who specialize in X. My experience is that the company doesn't have to specialize...
by Clearly_Irrational
Thu Jun 25, 2015 5:47 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Good point that multiple properties can mitigate the volatility, but unless you're living in the Midwest, you're going to need a pretty large sum in the seven figures to have several properties. Well it depends on what kind of properties you're talking about I suppose and whether or not you expect ...
by Clearly_Irrational
Thu Jun 25, 2015 5:29 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

I just don't think rental income is steady . With multiple properties it seems pretty steady to me, though steady is not the same as zero volatility. unless you have a eager member of your family willing to assist, there's sweat equity involved in being a landlord. How many people in their golden y...
by Clearly_Irrational
Thu Jun 25, 2015 5:25 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

joelly wrote:Without getting into real estate, I already have a passive income. It's hubby's paycheck. :beer


You must be a superhero if you consider marriage to be passive.
by Clearly_Irrational
Thu Jun 25, 2015 5:11 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Stock dividends can be kind of unpredictable, but bond interest payments are pretty steady, I am kind of baffled by this. If you can afford to support your entire retirement solely from bond payments then withdrawal strategies are moot as you have vastly more money than you need. If stocks are invo...
by Clearly_Irrational
Thu Jun 25, 2015 4:28 pm
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

Right. There could well be a bubble in junk bonds or in new IPOs or Chinese stocks or what have you. What I don't see is reason to think there's a bubble in stocks taken as a whole. Hence no reason to be worried about PE10 ratios. I can't say for sure if there is bubble in stocks right now, my mode...
by Clearly_Irrational
Thu Jun 25, 2015 3:47 pm
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

It's a nice story. But is it true? If investors really were piling into riskier assets at the expense of safe assets to maintain returns, the spread between the expected return of stocks and the expected return of safe assets (bonds or cash) would be smaller than usual. I'm not saying people are bu...
by Clearly_Irrational
Thu Jun 25, 2015 2:35 pm
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

Well, what do you mean by a market bubble? Investors have a real return preference that they tend to maintain over time, additionally they have an amount of risk they're comfortable with and last they tend to be very linear momentum based thinkers. As interest rates are artificially depressed they ...
by Clearly_Irrational
Thu Jun 25, 2015 1:58 pm
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

Low rates could cause asset bubbles. If they were causing a bubble, we would see them accompanies by a lower than normal equity risk premium. That could happen and isn't something I would rule out a priori. But it isn't happening. The ERP just tells you how much extra people are willing to pay for ...
by Clearly_Irrational
Thu Jun 25, 2015 1:44 pm
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

Here is a chart for the ERP as Damoraran calculates it. If you meant Damodaran then yeah he's a sharp cookie, and for anything valuation wise I'd definitely listen to what he had to say. I'm not so sure about crash prediction, the academics haven't even really admitted that crashes are possible sin...
by Clearly_Irrational
Thu Jun 25, 2015 11:36 am
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

PE10 flipped around is E10 (smoothed earnings yield). True but essentially meaningless, you're basically just stating the definition of E10. ERP10 says clear sailing. Both did equally well predicting past crashes. I haven't seen any evidence to support the idea that ERP10 is useful or reliable, it ...
by Clearly_Irrational
Thu Jun 25, 2015 10:48 am
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

To hold bonds or cash instead of stocks on the basis of high a PE10 is to implicitly assume that the low risk-free rate is irrelevant to whether or not stocks are fairly valued. I disagree with that premise. If I'm going to hold less stocks and more bonds due to high PE10 it's due to the fact that ...
by Clearly_Irrational
Wed Jun 24, 2015 10:33 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Noobvestor wrote:Bonds throw off steady flows of cash just fine, they're just less risky and require less work and thus the cash flows are lower.


In the current bond market environment I wouldn't describe yields as "just fine", more like "artificially depressed".
by Clearly_Irrational
Wed Jun 24, 2015 3:58 pm
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

I wonder how many people saw the drastic drop in oil or the strengthening of the dollar on the horizon? Even presuming people have this PE 10 figured out, there are a dozen other factors that are unknowable. One could have gone after lower PEs in Europe only to lose 15% in currency. Yeah, I looked ...
by Clearly_Irrational
Wed Jun 24, 2015 2:33 pm
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 331
Views: 26971

Re: Shiller P/E 10 hits 25

Well, I can't speak for the OP but my model has kept me invested during that whole period. Q1 this year was pretty wobbly and things aren't great now but so far my IPS requires me to keep my hands off the wheel. A more detailed analysis follows: 1) Federal reserve is still very accommodative 2) USSL...
by Clearly_Irrational
Wed Jun 24, 2015 10:01 am
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

One of the things I like best about rental properties is exactly what a stock/bond portfolio is worst at, throwing off a steady stream of cash flows. A portfolio is a magnificent vehicle for accumulation, but drawdown is fraught with all kinds of problems. Adding rental properties to your retirement...
by Clearly_Irrational
Tue Jun 23, 2015 10:46 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

robert88 wrote:To those who own real estate, why not just buy equity REITs instead?


The returns, risk and tax treatment just aren't the same. Additionally REITs tend to be much more correlated with the market which makes them much less useful as a diversifier.
by Clearly_Irrational
Tue Jun 23, 2015 4:17 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

Security trading and real estate (whether it's refurbishing and flipping houses or being a landlord) is not something everyone will be good at (or at least good enough to garner something extra for their efforts). Flipping is a whole different ball of wax. I'll be the first one to say that owning r...
by Clearly_Irrational
Tue Jun 23, 2015 3:41 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

In my lifetime, I have never heard of a person getting wiped out by #1 or #2. But I know plenty of cases where people have been completely wiped out by #3 or #4. #3 is just dumb, I think we can all agree on that. #1 fails to deliver enough returns to retire on and shouldn't be considered "inve...
by Clearly_Irrational
Tue Jun 23, 2015 1:59 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

denovo wrote:It's not a fair comparision for reasons mentioned above by normaldude.


It's a fair comparison for purposes of looking at returns. There are a whole host of differences in risk, liquidity, passivity, etc. between the two asset types.
by Clearly_Irrational
Tue Jun 23, 2015 11:45 am
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

denovo wrote:I've never been impressed in comparing unleveraged stock returns to leveraged real estate returns , not apples to apples.


So you only buy companies that don't issue debt?
by Clearly_Irrational
Tue Jun 23, 2015 11:43 am
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

cheese_breath wrote:
Clearly_Irrational wrote:There are only four ways to make money: Wages, Rent, Interest, Profit....

Theft, gift, inheritance, charity... Yes, I know. I'm being sarcastic. :P


Well, I was restricting myself to legal ways of earning money, which rules out both theft and receiving money from others for nothing.
by Clearly_Irrational
Mon Jun 22, 2015 5:21 pm
Forum: Investing - Theory, News & General
Topic: Why do Bogleheads/BiggerPocketers think there is only one way?
Replies: 123
Views: 14517

Re: Why do Bogleheads/BiggerPocketers think there is only one way?

There are only four ways to make money: Wages, Rent, Interest, Profit Wages and Profit are generally very active and so aren't really what I would call investing, really more in the category of "work". That leaves Rent or Interest for the investing portion and people tend to gravitate to t...
by Clearly_Irrational
Mon Jun 22, 2015 12:42 pm
Forum: Personal Finance (Not Investing)
Topic: Tech jobs - is job-hopping the best way to get ahead?
Replies: 92
Views: 13520

Re: Tech jobs - is job-hopping the best way to get ahead?

At some point, you will have to explain jumps on your resume as you interview for a new job. If I were on the other side of the table, I'd be asking you "so if you find a job that's 10% higher than we're paying you, do you plan to jump ship?". What I'd like to say: Of course, do you think...
by Clearly_Irrational
Sun Jun 21, 2015 8:40 am
Forum: Investing - Theory, News & General
Topic: Warning Signs [Economic health indicators]
Replies: 246
Views: 31889

Re: Warning Signs

You call this discussion "informed"? For a forum that: - discourages any type of active investing: factor betting I don't think that can be said to be true. But back to my question: - what ACTIONABLE advice can forum members take from this "informed" discussion? Care to explain?...
by Clearly_Irrational
Fri Jun 12, 2015 3:20 pm
Forum: Investing - Theory, News & General
Topic: Alternative theories
Replies: 53
Views: 5067

Re: Alternative theories

TwoByFour wrote:Hopefully nobody actually looks for a Ponzi scheme to invest in.


It could be a source of significant alpha if you could properly identify the right exit time.

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