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Re: Which is King: Income Stream or $ Invested

Income stream up to my minimal acceptable lifestyle then dollars invested after that.
by Clearly_Irrational
Tue Jul 29, 2014 3:40 pm
 
Forum: Investing - Theory, News & General
Topic: Which is King: Income Stream or $ Invested
Replies: 8
Views: 383

Re: Landlording for long-term wealth? Who's doing it?

Great responses so far - glad to hear that others are doing it successfully. Something else I'm curious about: are you all purchasing these properties under an LLC? I've read that it's advised to do so, but acquiring financing is practically impossible, which leads me to wonder if I should go about...
by Clearly_Irrational
Tue Jul 29, 2014 3:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: Landlording for long-term wealth? Who's doing it?
Replies: 14
Views: 1004

Re: Landlording for long-term wealth? Who's doing it?

steve_14 wrote:Depends on how you define break even of course. A property that breaks even for five years, then requires a new $50,000 roof isn't breaking even.


Quite true. It's important to consider long term maintenance costs when doing your calculations.
by Clearly_Irrational
Tue Jul 29, 2014 2:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: Landlording for long-term wealth? Who's doing it?
Replies: 14
Views: 1004

Re: Landlording for long-term wealth? Who's doing it?

I've got two duplexes now and I'm planning to buy eight more prior to retirement. They can definitely be a pain at times but with a decent property management company (I've fired one out of three) the annoyance is kept to a minimum. The way I look at it any property I can buy that breaks even after ...
by Clearly_Irrational
Tue Jul 29, 2014 1:06 pm
 
Forum: Personal Finance (Not Investing)
Topic: Landlording for long-term wealth? Who's doing it?
Replies: 14
Views: 1004

Re: If FF3 model is a true risk model, does it follow to buy

acegolfer wrote:If SMB and HML are true risk factors, why does it follow that one should buy SV?


It doesn't follow. You could fully accept the multi-factor model and yet choose a portfolio that has very low exposure to SMB & HML. It depends on your risk preference.
by Clearly_Irrational
Fri Jul 25, 2014 1:14 pm
 
Forum: Investing - Theory, News & General
Topic: If FF3 model is a true risk model, does it follow to buy SV?
Replies: 17
Views: 861

Re: Gold, Silver, Copper

HardKnocker wrote:Great stuff! I am looking forward to reading your book series!


Heh, thanks. I had fun writing it.
by Clearly_Irrational
Thu Jul 24, 2014 11:07 am
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 87
Views: 4979

Re: Should market valuations be completely disregarded?

Gas prices are already $8-$10 in much of the world. Very bad things don't happen specifically in those places because of gas prices. Actually, many countries with those gas prices build more public transportation infrastructure and smaller vehicles to use less gasoline. Which really isn't all that ...
by Clearly_Irrational
Thu Jul 24, 2014 12:57 am
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3755

Re: Gold, Silver, Copper

You need to brush up on comparative advantage. Comparative advantage relies on a number of assumptions about labor and technology that may not apply to interactions with a society that has technology much more advanced than ours. For example, if automated manufacturing equipment can be purchased an...
by Clearly_Irrational
Wed Jul 23, 2014 3:34 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 87
Views: 4979

Re: Gold, Silver, Copper

So we'll be able to see a market change coming before the market does. That's good to know. :D That's not what I was saying. What I was trying to get across is if the world economy changes in such a way that the US economy could crash without taking down everything else it would be pretty obvious. ...
by Clearly_Irrational
Wed Jul 23, 2014 2:47 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 87
Views: 4979

Re: Should market valuations be completely disregarded?

Small-cap value ETF's such as VBR have P/E ratios in the 20's. Yahoo Finance says 17, where are you getting your data? The Vanguard website says the P/E of its SV fund is 24, vs 21 for the market as a whole. Those are some pretty expensive "cheap" stocks. Interesting, apparently they're u...
by Clearly_Irrational
Wed Jul 23, 2014 1:48 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3755

Re: Gold, Silver, Copper

And as far as confiscating hard assets, how do they know you have gold? They don't have to, they'll just make private ownership illegal and require everyone to turn theirs in. Not at all hypothetical since its already happened before in the US. There are plenty of fine reasons to own gold, hyperinf...
by Clearly_Irrational
Wed Jul 23, 2014 1:42 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 87
Views: 4979

Re: Gold, Silver, Copper

If the USD/treasuries are the riskless asset, end of discussion. As best I can tell there is no such thing as a riskless asset. Short Duration US Treasuries are merely the best approximation we currently have. Virtually any scenario that includes collapse of the US Financial system would also crash...
by Clearly_Irrational
Wed Jul 23, 2014 1:32 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 87
Views: 4979

Re: Gold, Silver, Copper

Hyper inflation in one country is a silly argument for gold. I have to agree. In any scenario where hyper inflation is likely to occur, one of the early steps will be government confiscation of hard assets like gold. Additionally hyper inflation can occur only in a very narrow range of unusual scen...
by Clearly_Irrational
Wed Jul 23, 2014 1:27 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 87
Views: 4979

Re: Some charts of asset classes during downturn or key even

For major downturns the assets that seem to do the best are Long Term US Treasuries and Gold. Essentially it's a flight to safety reaction.
by Clearly_Irrational
Wed Jul 23, 2014 1:20 pm
 
Forum: Investing - Theory, News & General
Topic: Some charts of asset classes during downturn or key events
Replies: 3
Views: 346

Re: Reaching Severe Burnout - Can I Scale Back Career?

I felt stressed out just reading your summary. I understand the desire to work hard to get ahead, I'm currently working full time and going to school, but you have to have some sort of lower stress end game in mind if you don't want to go nuts. With your work history it should be pretty easy to down...
by Clearly_Irrational
Wed Jul 23, 2014 1:05 pm
 
Forum: Personal Finance (Not Investing)
Topic: Reaching Severe Burnout - Can I Scale Back Career?
Replies: 48
Views: 5008

Re: Should market valuations be completely disregarded?

at wrote:Small-cap value ETF's such as VBR have P/E ratios in the 20's.


Yahoo Finance says 17, where are you getting your data?
by Clearly_Irrational
Wed Jul 23, 2014 11:26 am
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3755

Re: Gold, Silver, Copper

I expected these kind of replies which is an indicator of negative sentiment in general. The general asset classes are very over extended but the precious metals are cheap yet most do not see this. Time will tell of course. I own gold but I wouldn't describe it as "cheap" currently. Just ...
by Clearly_Irrational
Wed Jul 23, 2014 11:22 am
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 87
Views: 4979

Re: I'm a genius!

I was short the market until late Feb 2009. I got out when Cramer threw in the towel. It seemed to me that if the perma-bull was giving up then we were pretty darn close to the bottom.
by Clearly_Irrational
Tue Jul 22, 2014 7:16 pm
 
Forum: Investing - Theory, News & General
Topic: I'm a genius!
Replies: 19
Views: 5149

Re: P/E Ratio: How do YOU interpret/use it?

Mostly I ignore it, with three caveats: 1) I keep an eye on the relative valuation of the total market (PE10, Tobin's Q, Price to PeakPE) to see if things are getting irrational 2) PE10 is part of my composite crash indicator. Based on those items and a few others, my IPS allows me to suspend the no...
by Clearly_Irrational
Tue Jul 22, 2014 6:59 pm
 
Forum: Investing - Theory, News & General
Topic: P/E Ratio: How do YOU interpret/use it?
Replies: 26
Views: 1349

Re: Gold, Silver, Copper

Don`t look now but the gold, silver and copper train is leaving the station. It`s a shame that most Bogleheads aren`t diversified into at least a small percentage of these asset classes. The sentiment has been very negative and isn`t that the way it`s supposed to be at low price levels? I happen to...
by Clearly_Irrational
Tue Jul 22, 2014 6:40 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 87
Views: 4979

Re: How to track expenses to the penny?

Originally I used quicken and saved all of my receipts. That was a lot of work though, nowadays I just try to use my debit card for everything and Mint tracks it all for me. Unless you're seriously broke penny accuracy probably isn't necessary. At my current income $5 accuracy is good enough.
by Clearly_Irrational
Tue Jul 22, 2014 6:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: How to track expenses to the penny?
Replies: 40
Views: 2647

Re: Should market valuations be completely disregarded?

You may think that but in the last 15 years gas has gone in my area from $0.85/gal to nearly $4/gal, and everyone still gets up and drives to work every day just as they always have. Right, but we're talking about real increases not just inflation based ones. When I got my first car gas prices in m...
by Clearly_Irrational
Tue Jul 22, 2014 5:37 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3755

Re: Should market valuations be completely disregarded?

Valuations matter, but there's nothing I can do about them. I consider it much like the price of gasoline...the price of gasoline matters to me, but I still have to fill my tank so I can drive to work regardless of the price. Well, sort of. It depends on how much the price of gas goes up: 2x Time t...
by Clearly_Irrational
Tue Jul 22, 2014 5:06 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3755

Re: Value Overvalued

Suppose for a moment that you're right. Do you have a timing system that switches between the two that you've successfully backtested and checked against out of sample data? If not then this information isn't even theoretically actionable.
by Clearly_Irrational
Tue Jul 22, 2014 3:59 pm
 
Forum: Investing - Theory, News & General
Topic: Value Overvalued
Replies: 23
Views: 2258

Re: Do any bogleheads hold the "Larry Portfolio?"

No but I use a similar concept. 30% Small Cap Value 20% Emerging Market 30% Long Treasuries 20% Gold (Rotated with cash based on real interest rates) Additionally I have an IPS rule that allows me to violate normal buy and hold rules at extreme market valuations, though currently it hasn't triggered...
by Clearly_Irrational
Fri Jul 18, 2014 2:24 pm
 
Forum: Investing - Theory, News & General
Topic: Do any bogleheads hold the "Larry Portfolio?"
Replies: 18
Views: 2401

Re: Tobins Q as market valuation metric

Heyolshan wrote:Let me ask one of you stat-savvy investors this: what do you get from Tobin's Q that you don't get from Shiller PE?


A different way of measuring the same thing.
by Clearly_Irrational
Thu Jul 17, 2014 7:05 pm
 
Forum: Investing - Theory, News & General
Topic: Tobins Q as market valuation metric
Replies: 42
Views: 2094

Re: Tobins Q as market valuation metric

I think everyone expects returns to be lower than average for forseeable future, but I don't think too many people expect loosing money after 30 years in the market and the Tobin's Q seems to suggest that this is exactly what happened last 5 times the value was at the level that it is right now, wh...
by Clearly_Irrational
Thu Jul 17, 2014 12:38 pm
 
Forum: Investing - Theory, News & General
Topic: Tobins Q as market valuation metric
Replies: 42
Views: 2094

Re: Tobins Q as market valuation metric

Whether you use Tobin's Q, Price to PeakPE or PE10 they're all saying that valuations are pretty high right now. At the very least I think it's reasonable to say that returns going forward for stocks purchased now will be lower than the historical average.
by Clearly_Irrational
Thu Jul 17, 2014 12:18 pm
 
Forum: Investing - Theory, News & General
Topic: Tobins Q as market valuation metric
Replies: 42
Views: 2094

Re: POLL: Do you have a dedicated REIT allocation?

I don't hold any REITs because I prefer direct investment for my real estate allocation.
by Clearly_Irrational
Wed Jul 16, 2014 5:21 pm
 
Forum: Investing - Theory, News & General
Topic: POLL: Do you have a dedicated REIT allocation?
Replies: 123
Views: 6970

Re: Neighbor's ugly overgrown bushes and fence

Plant a hedge. In my area fences are restricted to 6' in height but there is no limit on hedges.
by Clearly_Irrational
Wed Jul 16, 2014 3:17 pm
 
Forum: Personal Consumer Issues
Topic: Neighbor's ugly overgrown bushes and fence
Replies: 41
Views: 3213

Re: How much do you spend on your hobby annually?

Confession time. My wife and I love horses we spend a lot on this hobby. Wife pays all horse related expenses so I will not know exactly what we spend but my estimate is 18- 20k I know there is no logical way to justify this amount but we worked hard during the accumulation phase and it our money. ...
by Clearly_Irrational
Mon Jul 14, 2014 1:40 pm
 
Forum: Personal Consumer Issues
Topic: How much do you spend on your hobby annually?
Replies: 77
Views: 7013

Re: Anyone here flip houses?

Lastly, I would never rent a flip. Any value you create by installing shiny, new finishes will be destroyed by renters the first week they move in. If you're rehabbing a rental you do a lot less, basically just resolve any health & safety issues plus the few cosmetic items that bring in decent ...
by Clearly_Irrational
Mon Jul 14, 2014 12:58 pm
 
Forum: Personal Finance (Not Investing)
Topic: Anyone here flip houses?
Replies: 40
Views: 4608

Re: Does a Precious Metals & Mining Fund Improve a Portfolio

It doesn't, unless you enjoy uncompensated sector risk.
by Clearly_Irrational
Fri Jul 11, 2014 5:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Does a Precious Metals & Mining Fund Improve a Portfolio?
Replies: 29
Views: 3152

Re: Why not include gold?

i think his recommended portfolio for his wife, 90 equities / 10 tbills is very boglehead..... That's an incredibly risk heavy portfolio and I personally don't think it really matches the Boglehead philosophy especially given her age. A more Bogleheadish setup would be 40-60% intermediate term bond...
by Clearly_Irrational
Thu Jul 10, 2014 11:20 am
 
Forum: Investing - Help with Personal Investments
Topic: Why not include gold?
Replies: 48
Views: 3794

Re: Why not include gold?

Maybe so, but he did say investors should have cash to reduce volatility. http://www.usatoday.com/story/money/business/2013/05/06/warren-buffett-federal-reserve-stocks-bonds-heinz/2138403/ My take on it is that he doesn't like bonds as an investment. However I think he'd be ok with short or interme...
by Clearly_Irrational
Wed Jul 09, 2014 6:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why not include gold?
Replies: 48
Views: 3794

Re: Why not include gold?

Eh, cash is indistinguishable from a zero-duration bond. Semantics; it's all fixed income. If you want to be that way about it then sure, he's fine with zero-duration bonds for your emergency fund but he advocates against holding any longer duration notes purposes of investing. Which is pretty much...
by Clearly_Irrational
Wed Jul 09, 2014 4:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why not include gold?
Replies: 48
Views: 3794

Re: Why not include gold?

This is incredibly misleading. Buffett keeps 10's of billions in TBills. This is a more extreme version of Bernstien's advocated position to keep your "bonds" of the highest quality and lowest risk. http://www.usatoday.com/story/money/business/2013/05/06/warren-buffett-federal-reserve-sto...
by Clearly_Irrational
Wed Jul 09, 2014 4:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why not include gold?
Replies: 48
Views: 3794

Re: Why not include gold?



Be careful quoting Warren, he doesn't like bonds either.
by Clearly_Irrational
Wed Jul 09, 2014 3:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why not include gold?
Replies: 48
Views: 3794

Re: Why not include gold?

I'm mildly pro-gold, but before you decide to add some you have to ask "What am I trying to accomplish by adding gold to my portfolio?" If you can't answer that question in detail then you can't make a rational decision as to whether it makes sense to hold some or not.
by Clearly_Irrational
Wed Jul 09, 2014 2:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why not include gold?
Replies: 48
Views: 3794

Re: Windows 7 going the way of XP?

Don't worry, hang out for a while longer and they'll release Windows 9 which will be the Windows 8 fix just the way 7 was the fix for Vista. Or of course, you could take a more Bogleheads type stance and move to a free operating system like Linux. As Tom Peterson used to say "Free is a very goo...
by Clearly_Irrational
Wed Jul 09, 2014 2:35 pm
 
Forum: Personal Consumer Issues
Topic: Windows 7 free support will be ending in 2015
Replies: 27
Views: 2244

Re: Risk Adjusted Return in a Multi-Factor Model

If we agree that the risk adjusted return = return explained by factor model, then to answer OP's question, In addition to factor loadings he provided, he needs risk premiums such as MKT, SMB, HML, MOM expected returns. If one doesn't know this, then using past average returns is one method. Ok, so...
by Clearly_Irrational
Wed Jul 09, 2014 10:54 am
 
Forum: Investing - Theory, News & General
Topic: Risk Adjusted Return in a Multi-Factor Model
Replies: 28
Views: 910

Re: stocks about to plunge

I agree with Nisi. Although this type of post isn't usually looked upon with great favor in this forum, I think it is interesting and I like the way you use it to double-check a buy & hold mentality rather than just outright time the market in and out. Please keep us posted when things get a bi...
by Clearly_Irrational
Tue Jul 08, 2014 6:54 pm
 
Forum: Investing - Theory, News & General
Topic: stocks about to plunge
Replies: 39
Views: 7686

Re: stocks about to plunge

Very nice stuff, clearly_irrational, and I learned a new term from you today: "Lévy flight." http://en.wikipedia.org/wiki/Lévy_flight Thanks! I actually owe you credit for the composite crash indicator. I was tracking a list of indicators previously but you kept asking a lot of tough ques...
by Clearly_Irrational
Tue Jul 08, 2014 4:58 pm
 
Forum: Investing - Theory, News & General
Topic: stocks about to plunge
Replies: 39
Views: 7686

Re: stocks about to plunge

mptfan wrote:Do you have a newsletter? How much does it cost to subscribe?


No, but I could probably make a go of it if I really wanted to. The problem is that the incentives in running a newsletter are opposed to the message I'd want to send.
by Clearly_Irrational
Tue Jul 08, 2014 4:26 pm
 
Forum: Investing - Theory, News & General
Topic: stocks about to plunge
Replies: 39
Views: 7686

Re: stocks about to plunge

There was some weakness in 2013 but by September my indicators were suggesting it was still too early to call, which looks to have been correct. My current data suggests we're still in a period of market order that started July 2011. Latest crash indicator reading is only 14.29/100 (over 30 is usua...
by Clearly_Irrational
Tue Jul 08, 2014 4:22 pm
 
Forum: Investing - Theory, News & General
Topic: stocks about to plunge
Replies: 39
Views: 7686

Re: stocks about to plunge

denovo wrote:I am 99 percent this was a joke, but the sad thing is how many people in the general public would act on this.


I wasn't joking, I'm pretty sure Bertilak was, though if someone took the offered advice "continue with a buy and hold strategy" then they'd hardly be doing badly thereby.
by Clearly_Irrational
Tue Jul 08, 2014 2:47 pm
 
Forum: Investing - Theory, News & General
Topic: stocks about to plunge
Replies: 39
Views: 7686

Re: When do you "limit" saving and start to spend more?

For me, I would prioritize financial independence. Even if I didn't plan to stop working, I would want the knowledge that I could leave at any time. Personally I would find that incredibly empowering and it would likely change my attitude towards work and what sorts of jobs I would accept. Now, once...
by Clearly_Irrational
Tue Jul 08, 2014 1:20 pm
 
Forum: Personal Finance (Not Investing)
Topic: When do you "limit" saving and start to spend more?
Replies: 39
Views: 3877

Re: stocks about to plunge

There was some weakness in 2013 but by September my indicators were suggesting it was still too early to call, which looks to have been correct. My current data suggests we're still in a period of market order that started July 2011. Latest crash indicator reading is only 14.29/100 (over 30 is usual...
by Clearly_Irrational
Tue Jul 08, 2014 1:10 pm
 
Forum: Investing - Theory, News & General
Topic: stocks about to plunge
Replies: 39
Views: 7686

Re: Risk Adjusted Return in a Multi-Factor Model

I thought you were asking how to measure the risk-adjusted return in a 4-factor model. alpha is clearly one method. Do you disagree that alpha is not a risk-adjusted return? Yes, I would disagree, alpha is not a risk adjusted return. Alpha is a measure of the return not explained by other factors. ...
by Clearly_Irrational
Mon Jul 07, 2014 6:38 pm
 
Forum: Investing - Theory, News & General
Topic: Risk Adjusted Return in a Multi-Factor Model
Replies: 28
Views: 910

Re: Risk Adjusted Return in a Multi-Factor Model

CI, have you heard of abnormal return? Alpha is a risk-adjusted measure of the so-called active return on an investment. It is the return in excess of the compensation for the risk borne, and thus commonly used to assess active managers' performances. http://en.wikipedia.org/wiki/Alpha_(investment)...
by Clearly_Irrational
Mon Jul 07, 2014 6:05 pm
 
Forum: Investing - Theory, News & General
Topic: Risk Adjusted Return in a Multi-Factor Model
Replies: 28
Views: 910
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