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Re: Shiller CAPE 10 — Why So High These Days?

It is not difficult at all. Crimean war, terrorism, ebola, domestic financial wealth imbalance, India/Pakistan nuclear war, global climate change, oil price spikes, oil price plummets, hackers controlling a fleet of self-driving cars, the Cubs constructing a juggernaut, etc. Hard to believe I'm say...
by Clearly_Irrational
Wed Nov 26, 2014 4:30 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller CAPE 10 — Why So High These Days?
Replies: 38
Views: 2377

Re: Shiller CAPE 10 — Why So High These Days?

Simplegift wrote:In short, the historical average CAPE value of 16 is not a constant of nature, but rather an artifact of history that includes two world wars, a global depression and a decade of high, uncontrolled inflation.


So you're forecasting 50 years of peace, prosperity and brotherly love then?
by Clearly_Irrational
Wed Nov 26, 2014 3:25 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller CAPE 10 — Why So High These Days?
Replies: 38
Views: 2377

Re: Rental Real Estate vs. Stocks and Bonds

Lower middle class I know the people that used to own it. They bought it 30 years ago (not sure for how much) and sold it 10 years ago for 48. The person that bought it made some improvements (remodeled kitchen, redid floors, etc), and with that taken into consideration, it didn't appreciate much. ...
by Clearly_Irrational
Wed Nov 26, 2014 1:07 pm
 
Forum: Personal Finance (Not Investing)
Topic: Rental Real Estate vs. Stocks and Bonds
Replies: 17
Views: 1906

Turkeys predict crashes

A good piece that demonstrates how correlation is not necessarily causation even when the relationship looks very solid:

http://www.politicalcalculations.blogsp ... arket.html
by Clearly_Irrational
Wed Nov 26, 2014 12:54 pm
 
Forum: Investing - Theory, News & General
Topic: Turkeys predict crashes
Replies: 1
Views: 406

Re: Dog food - how cheap is too cheap?

Epsilon Delta wrote:* for example tuna in cat food, tuna may or may not be good for cats, but it is not a natural part of their diet.


Fair enough, though I doubt wheat middlings were either.
by Clearly_Irrational
Wed Nov 26, 2014 12:01 pm
 
Forum: Personal Consumer Issues
Topic: Dog food - how cheap is too cheap?
Replies: 63
Views: 3964

Re: Shiller CAPE 10 — Why So High These Days?

However, it has to be asked, "What evidence is there today that PE10 is destined to revert toward its long-term average?" Are we expecting a world war? Is high inflation a concern? Are there stresses or imbalances in the global financial system that might precipitate another deep recessio...
by Clearly_Irrational
Wed Nov 26, 2014 11:19 am
 
Forum: Investing - Theory, News & General
Topic: Shiller CAPE 10 — Why So High These Days?
Replies: 38
Views: 2377

Re: Shiller CAPE 10 — Why So High These Days?

We've already been at above average PE/10 levels since 1991. Either we've entered a new regime or there is one he** of a regression to the mean coming up one day. In my opinion it's mostly strongly correlated with the change in Fed policy that occurred when Alan Greenspan took over the Fed from Pau...
by Clearly_Irrational
Tue Nov 25, 2014 4:58 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller CAPE 10 — Why So High These Days?
Replies: 38
Views: 2377

Re: What would be the investing strategy for a coming crash?

tadamsmar wrote:How is it that market timing would not be prediction? Without a prediction, what would be the point in acting to change your AA?


That would depend on whether you believe in reversion to the mean or not I suppose.
by Clearly_Irrational
Tue Nov 25, 2014 12:40 pm
 
Forum: Investing - Theory, News & General
Topic: What would be the investing strategy for a coming crash?
Replies: 81
Views: 6648

Re: Dog food - how cheap is too cheap?

After looking at reviews and checking prices I just ordered a bag of Diamond Naturals from Amazon. It's rated 4 stars and only $0.97 a lb which is basically a free quality upgrade compared to the stuff I've been buying. (It's more expensive than Atta Boy! or Pedigree but less than Purina or Beneful ...
by Clearly_Irrational
Mon Nov 24, 2014 5:54 pm
 
Forum: Personal Consumer Issues
Topic: Dog food - how cheap is too cheap?
Replies: 63
Views: 3964

Re: Dog food - how cheap is too cheap?

texasdiver wrote:Your go-to source for all dog food information is

http://www.dogfoodadvisor.com


Hey that's awesome thanks! I just found something I didn't even know I was looking for.
by Clearly_Irrational
Mon Nov 24, 2014 3:59 pm
 
Forum: Personal Consumer Issues
Topic: Dog food - how cheap is too cheap?
Replies: 63
Views: 3964

Re: Dog food - how cheap is too cheap?

We bought a brand called "Mountain Chunks", the dogs ate it, but gave us a look like "seriously, this is the best you could do?". I advise staying away from dog foods that are excessively cheap. Atta Boy! seems fine though recently we've upgraded to Beneful. Of course, if you hav...
by Clearly_Irrational
Mon Nov 24, 2014 3:53 pm
 
Forum: Personal Consumer Issues
Topic: Dog food - how cheap is too cheap?
Replies: 63
Views: 3964

Re: What percent "Boglehead" are you?

I agree with most of the main philosophical points but I don't get religious about it. Skeptical analysis lead me here in the first place and I'll stay until it starts telling me to do something different. Given that I use a different asset allocation than many (Tilted, Large EM Holding, Gold, Long ...
by Clearly_Irrational
Mon Nov 24, 2014 3:48 pm
 
Forum: Investing - Theory, News & General
Topic: What percent "Boglehead" are you?
Replies: 119
Views: 6257

Re: What would be the investing strategy for a coming crash?

Supposing that an investor did believe a major crash was coming within the next 2 years My IPS requires me to keep an eye on these sorts of things though I'm mostly not allowed to act on that information. NBER recession data suggests that the current expansion has a 95% chance of of ending prior to...
by Clearly_Irrational
Mon Nov 24, 2014 3:35 pm
 
Forum: Investing - Theory, News & General
Topic: What would be the investing strategy for a coming crash?
Replies: 81
Views: 6648

Re: What would be the investing strategy for a coming crash?

greg24 wrote:Employ a huge amount of leverage and short everything.


Well if you're willing to take on that sort of risk you really need to look into using options instead.
by Clearly_Irrational
Mon Nov 24, 2014 3:22 pm
 
Forum: Investing - Theory, News & General
Topic: What would be the investing strategy for a coming crash?
Replies: 81
Views: 6648

Re: What would be the investing strategy for a coming crash?

It's a good idea to ALWAYS have an Asset Allocation that you could live with if a 50% crash happens tomorrow. This is the assumption I use as well. If I wake up tomorrow and the stock market is down 50%, I'm not going to be happy but as long as my portfolio is safe enough that I won't sell in a pan...
by Clearly_Irrational
Mon Nov 24, 2014 3:19 pm
 
Forum: Investing - Theory, News & General
Topic: What would be the investing strategy for a coming crash?
Replies: 81
Views: 6648

Re: Update on the ascent of CAPE

grap0013 wrote:Yes what about PE1 though?


PE1 tends to be the least predictive when you need it most due to overestimation of future earnings during a bull run. If any sort of valuation measure is useful at all, PE1 wouldn't be my first choice of a measure to use.
by Clearly_Irrational
Mon Nov 24, 2014 3:14 pm
 
Forum: Investing - Theory, News & General
Topic: Update on the ascent of CAPE
Replies: 19
Views: 1464

Re: Update on the ascent of CAPE

The PE 10 May not be as high as it seems. I think Larry has commented on this before. I haven't yet found a consistent way to adjust for the two main changes (FAS 142 goodwill impairment vs. amortization & buybacks vs. dividends). I agree it's probably slightly overstated but I'm not sure exact...
by Clearly_Irrational
Mon Nov 24, 2014 3:12 pm
 
Forum: Investing - Theory, News & General
Topic: Update on the ascent of CAPE
Replies: 19
Views: 1464

Re: Update on the ascent of CAPE

am wrote:Not to mention that it is not actionable and has low correlation with future returns.


I don't know that I'd call 0.42 low correlation but certainly by itself it's not a perfect predictor.
by Clearly_Irrational
Mon Nov 24, 2014 3:10 pm
 
Forum: Investing - Theory, News & General
Topic: Update on the ascent of CAPE
Replies: 19
Views: 1464

Re: Apple Stock - Seems great, right?

Of course. Apparently you missed the point: It is possible to select individual stocks with better fundamentals and valuation than the broad market. I'm not saying everyone should do so. I'm simply pointing out that it is something fairly easy to do. Making that comparison on a risk adjusted basis ...
by Clearly_Irrational
Fri Nov 21, 2014 5:48 pm
 
Forum: Investing - Theory, News & General
Topic: Apple Stock - Seems great, right?
Replies: 116
Views: 10922

Re: Thinking about retiring next year

How much does it cost to live the lifestyle you want?
by Clearly_Irrational
Fri Nov 21, 2014 4:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Thinking about retiring next year
Replies: 16
Views: 2016

Re: Apple Stock - Seems great, right?

Just for fun, I sketched out a potential investment on the back of a napkin. It came down to these two options: Company A ROE: 21.22 ROA: 8.19 Price to Forward Earnings: 17.6 Company B ROE: 32.60 ROA: 18:08 Price to Foward Earnings: 14.8 Which would you rather own? Completely insufficient amount of...
by Clearly_Irrational
Fri Nov 21, 2014 11:26 am
 
Forum: Investing - Theory, News & General
Topic: Apple Stock - Seems great, right?
Replies: 116
Views: 10922

Re: Purchasing power parity

Then 300 pounds times .23 ounces of gold times 690 current dollars/ounce gives us $47,610 today's dollars. Whereas $1320 dollars (1800's) divided by $20/ounce times 690 current dollars/ounce gives us $45540 today's dollars. Pretty close. Just a minor detail, but the current spot price of gold is $1...
by Clearly_Irrational
Thu Nov 20, 2014 3:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Jane Austen's Economics
Replies: 59
Views: 16270

Re: Apple Stock - Seems great, right?

Short term Apple is looking a bit overbought and ripe for a small pullback amidst an overall uptrend. Medium term Apple looks fairly strong with solid fundamentals. Long term I'm worried about their rapidly slowing earnings growth and trouble developing new products now that Steve Jobs is no longer ...
by Clearly_Irrational
Thu Nov 20, 2014 2:49 pm
 
Forum: Investing - Theory, News & General
Topic: Apple Stock - Seems great, right?
Replies: 116
Views: 10922

Re: Apple Stock - Seems great, right?

I appreciate all the insight above. I think I am going to take some advice and divide up my 10k stock gambling money vs dumping all into one stock. Perhaps pick 3. Hey, I'm diversifying and before you know it I will just buy more TSM and forget the idea completely :-) Well, if you're going to play ...
by Clearly_Irrational
Thu Nov 20, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: Apple Stock - Seems great, right?
Replies: 116
Views: 10922

Re: Apple Stock - Seems great, right?

rkhusky wrote:I would guess that all the top (5000? more?) stocks are analyzed by 1000's of analysts.


You would be wrong. Top 500 sure, but start getting down the list and analysis gets pretty thin.
by Clearly_Irrational
Thu Nov 20, 2014 2:34 pm
 
Forum: Investing - Theory, News & General
Topic: Apple Stock - Seems great, right?
Replies: 116
Views: 10922

Re: Jack Bogle: expect 7% annualized for the foreseeable fut

No. 1 I save as much as I can that I don't need to spend on stuff so predicting expected return won't help me there I understand that, but if you assume that you have zero knowledge of the return then you have no way to know if that will eventually lead to retirement or not. With zero knowledge of ...
by Clearly_Irrational
Wed Nov 19, 2014 2:33 pm
 
Forum: Investing - Theory, News & General
Topic: Jack Bogle: expect 7% annualized for the foreseeable future
Replies: 42
Views: 6069

Re: Jack Bogle: expect 7% annualized for the foreseeable fut

Right or wrong I don't see any actionable use of trying to predict future returns. There are two important ones: 1) Determining your necessary savings rate 2) Deciding if a financial portfolio (stocks and bonds) is the best place for your investment funds While no one's retirement should hinge on g...
by Clearly_Irrational
Wed Nov 19, 2014 11:57 am
 
Forum: Investing - Theory, News & General
Topic: Jack Bogle: expect 7% annualized for the foreseeable future
Replies: 42
Views: 6069

Re: Affording a 1.3 million home?

I think you can, but I'm not sure you should. You're stretching quite a bit to get in this place. I think the correct course of action in this case would be a comparison of alternatives, besides buying this house what are your other choices and how do they stack up?
by Clearly_Irrational
Tue Nov 18, 2014 3:54 pm
 
Forum: Personal Finance (Not Investing)
Topic: Affording a 1.3 million home?
Replies: 119
Views: 15863

Re: Jack Bogle: expect 7% annualized for the foreseeable fut

1/PE10 + implied Inflation (10yr Treasuries - 10yr TIPS) suggests a 5.58% rate, of course that prediction only has about 42% accuracy. There are some possible adjustments to PE10 that could increase that number, FAS 142 and buybacks for example. I'd call 7% possible but optimistic.
by Clearly_Irrational
Tue Nov 18, 2014 3:11 pm
 
Forum: Investing - Theory, News & General
Topic: Jack Bogle: expect 7% annualized for the foreseeable future
Replies: 42
Views: 6069

Re: a look at gold and its hedging value

Question: Why does gold (or other reserves) need to back GDP? I would imagine it needs to back currency obligations, and then perhaps only foreign obligations. It doesn't directly. Money is essentially tokens we use to represent wealth. Leaving aside for a moment the weaknesses of the GDP measure, ...
by Clearly_Irrational
Mon Nov 17, 2014 4:45 pm
 
Forum: Investing - Theory, News & General
Topic: a look at gold and its hedging value
Replies: 48
Views: 3307

Re: a look at gold and its hedging value

Amazing! If gold is a stable store of value and the ultimate root source of value in currency how is it possible that Venezuela is in the middle of a currency crisis so complicated that I can't quite grasp it... Venzuela currently has 367.6 tons of gold which works out to 11763200 ounces, current s...
by Clearly_Irrational
Mon Nov 17, 2014 4:22 pm
 
Forum: Investing - Theory, News & General
Topic: a look at gold and its hedging value
Replies: 48
Views: 3307

Re: a look at gold and its hedging value

My take is that gold is an insurance/hedging asset that has the most value during times of crisis. The problem is that during good times it's fairly expensive to hold. There are basically three ways to deal with that 1) Throw up your hands, say it's too expensive and don't hold it at all (convention...
by Clearly_Irrational
Fri Nov 14, 2014 7:31 pm
 
Forum: Investing - Theory, News & General
Topic: a look at gold and its hedging value
Replies: 48
Views: 3307

Re: What NW amount makes this person financially free?

It all depends on what exactly you mean by "financially free" and what sort of lifestyle you want to live. You specified $2000 per month in spending so $24k per year is the net number we need. With that income level you'll only be in the 15% bracket which I believe means you wouldn't have ...
by Clearly_Irrational
Fri Nov 14, 2014 7:13 pm
 
Forum: Investing - Theory, News & General
Topic: What NW amount makes this person financially free?
Replies: 19
Views: 2443

Re: Why Not 100% Treasuries if your Risk is on the Equity Si

There's no argument that U.S. Treasuries have historically provided the best portfolio protection during market corrections and periods of market stress, or that they will most likely continue to so. But the point is that other high-quality bonds (corporates, munis, international, etc.) have done a...
by Clearly_Irrational
Fri Nov 14, 2014 5:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why Not 100% Treasuries if your Risk is on the Equity Side?
Replies: 40
Views: 3728

Re: Does anyone here make "fun" purchases.

EmergDoc wrote:You mean the day I wreck it or it dies? Because I don't sell cars. :) J/K


Personally I try to avoid getting to the "rebuild the engine or scrap the car" decision so I usually try to sell prior to that.
by Clearly_Irrational
Fri Nov 14, 2014 4:00 pm
 
Forum: Personal Consumer Issues
Topic: Does anyone here make "fun" purchases.
Replies: 111
Views: 6714

Re: Real estate as my "million dollar idea"

This is a significant point regarding the value of leverage to this particular OP. I agree, if we're talking about homes that cost $25k, the closing costs would outweigh the advantage of leverage. I have a hard time wrapping my head around that idea given that prices in my area are at least an orde...
by Clearly_Irrational
Fri Nov 14, 2014 2:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: Real estate as my "million dollar idea"
Replies: 78
Views: 6716

Re: Does anyone here make "fun" purchases.

I will be the first to say $5K for curtains is not necessarily a bad purchase, if they are a classic color and design that will not go out of style. Does that include all the hardware also? Is it for every window in your home? I admit I was assuming this was for a single window. It's somewhat less ...
by Clearly_Irrational
Fri Nov 14, 2014 2:24 pm
 
Forum: Personal Consumer Issues
Topic: Does anyone here make "fun" purchases.
Replies: 111
Views: 6714

Re: Does anyone here make "fun" purchases.

Apparently you make a lot more than we do, if my wife suggested we buy $5k curtains I'd laugh myself sick I am assuming that OP would pay for the curtains out of her assets rather than income. Victoria Once you're past living paycheck to paycheck there isn't really much difference. Lifestyle expens...
by Clearly_Irrational
Fri Nov 14, 2014 12:57 pm
 
Forum: Personal Consumer Issues
Topic: Does anyone here make "fun" purchases.
Replies: 111
Views: 6714

Re: Does anyone here make "fun" purchases.

Apparently you make a lot more than we do, if my wife suggested we buy $5k curtains I'd laugh myself sick. That said, as long as your bills are paid, retirement is on track, etc. why shouldn't you spend your money on things that make you happy? Isn't that the whole point?
by Clearly_Irrational
Fri Nov 14, 2014 12:15 pm
 
Forum: Personal Consumer Issues
Topic: Does anyone here make "fun" purchases.
Replies: 111
Views: 6714

Re: Why Not 100% Treasuries if your Risk is on the Equity Si

Hard to conceive of a black swan for Treasuries that isn't a lot worse for all other types of bonds. That's my thinking. If at some point the US loses the reserve currency status or if the default risk were ever to rise considerably I'd look into changing my strategy. For now, I'm happy with 100% U...
by Clearly_Irrational
Fri Nov 14, 2014 11:21 am
 
Forum: Investing - Help with Personal Investments
Topic: Why Not 100% Treasuries if your Risk is on the Equity Side?
Replies: 40
Views: 3728

Re: Dealing with pressure for "social donations" at work

It sucks, but you're probably stuck paying. Failing to participate will probably torpedo your reputation with management. I'd ask for a receipt, that way you can file for either a charity deduction or unreimbursed business expense depending on your accountant's interpretation of the event.
by Clearly_Irrational
Thu Nov 13, 2014 3:44 pm
 
Forum: Personal Consumer Issues
Topic: Dealing with pressure for "social donations" at work
Replies: 167
Views: 9284

Re: Why Not 100% Treasuries if your Risk is on the Equity Si

The default or credit risk premium is only 0.31% with a Std Dev of 4.26%. It's the least valuable premium being 3-5 times less valuable than the other premiums on a risk adjusted basis. Frankly I don't think it's worth the effort. Data pulled from the nice chart at http://www.ifa.com/12steps/step8/i...
by Clearly_Irrational
Thu Nov 13, 2014 1:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why Not 100% Treasuries if your Risk is on the Equity Side?
Replies: 40
Views: 3728

Re: Real estate as my "million dollar idea"

I would be curious to have someone explain the leverage thing to me, and how it makes such a huge difference. I'm not sure I will ever get over the risk factor involved, but can someone explain the numbers to me in depth?? Here's the quick explanation, you'll have to dig deeper for the full story. ...
by Clearly_Irrational
Thu Nov 13, 2014 11:35 am
 
Forum: Personal Finance (Not Investing)
Topic: Real estate as my "million dollar idea"
Replies: 78
Views: 6716

Re: Real estate as my "million dollar idea"

hiddensee wrote:You will not exceed stock market returns by investing in property (absent luck, political corruption, other market friction)


If it's leveraged you most certainly will. Stocks come pre-leveraged, real estate you have to do it yourself.
by Clearly_Irrational
Wed Nov 12, 2014 11:20 pm
 
Forum: Personal Finance (Not Investing)
Topic: Real estate as my "million dollar idea"
Replies: 78
Views: 6716

Re: Real estate as my "million dollar idea"

I'd have to really think about using leverage to do this. It would be going against everything me and my wife have been taught and how we have agreed to live our lives. I just don't see it being worth the risk even if that approach does financially come out on top Without leverage real estate won't...
by Clearly_Irrational
Wed Nov 12, 2014 4:19 pm
 
Forum: Personal Finance (Not Investing)
Topic: Real estate as my "million dollar idea"
Replies: 78
Views: 6716

Re: Real estate as my "million dollar idea"

buddy17 wrote:I just looked at the Assessor's property card for one of his favorite properties...he paid $27,500 back in 2011 for a nice large home converted into a triplex.


I'm so jealous, in our area $27k isn't even a good downpayment.
by Clearly_Irrational
Wed Nov 12, 2014 4:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: Real estate as my "million dollar idea"
Replies: 78
Views: 6716

Re: Real estate as my "million dollar idea"

You can certainly accumulate $1m over time as a professional landlord. You can also accumulate $1m over time as an engineer, accountant, or truck driver. Finding great deals and managing them for low costs and high occupancy is possible but is employment in my opinion rather than investing. If you'...
by Clearly_Irrational
Wed Nov 12, 2014 4:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Real estate as my "million dollar idea"
Replies: 78
Views: 6716

Re: Real estate as my "million dollar idea"

bluejello wrote:The only caveat I would add is not to put ALL your money in real estate.


That's good advice.
by Clearly_Irrational
Wed Nov 12, 2014 4:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Real estate as my "million dollar idea"
Replies: 78
Views: 6716

Re: Real estate as my "million dollar idea"

We no longer manage the properties ourselves, for the most part. We did for many years, but we clear enough even with management fees that we are happy to pay the young guys to take care of the problems. If people talk about getting into rentals I tell them to do the management themselves for a whi...
by Clearly_Irrational
Wed Nov 12, 2014 3:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: Real estate as my "million dollar idea"
Replies: 78
Views: 6716

Re: Gathering thoughts vs. Market Timing

If you were going to market time you would want to write down your timing system and post a backtest. You need to prove it worked in the past or it's very unlikely to work going forward. If you can't manage at least that much rigor then you have no business gambling with your retirement money. Timin...
by Clearly_Irrational
Tue Nov 11, 2014 5:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: Gathering thoughts vs. Market Timing
Replies: 56
Views: 3133
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