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Re: What are you up YTD?

Small Cap Value 30%
Emerging Market 20%
Long US Treasuries 30%
Gold 20% (rotated with cash based on real interest rates)

Results YTD: +10.1%

Currently I'm beating my benchmark from portfolio inception to date but well within the expected range.
by Clearly_Irrational
Tue Aug 26, 2014 1:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: What are you up YTD?
Replies: 70
Views: 3714

Re: Can a Boglehead put down 10% on a house?

We currently pay around $900 in rent and $100 in utilities at the apartment. It's at the higher end of the 1BR rent values. Zillow's "estimated monthly payment" for homes at the upper end of our price range ($160,000) is around $990 including PMI, insurance, and taxes. Sounds like a no br...
by Clearly_Irrational
Tue Aug 26, 2014 11:11 am
 
Forum: Personal Finance (Not Investing)
Topic: Can a Boglehead put down 10% on a house?
Replies: 30
Views: 2342

Re: Can a Boglehead put down 10% on a house?

What's the payment on the rental compared to the estimated payment on the house?
by Clearly_Irrational
Mon Aug 25, 2014 4:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Can a Boglehead put down 10% on a house?
Replies: 30
Views: 2342

Re: Why don't utilities get any praise

Hmm.. interesting. Health Care covers hospitals, health insurance companies, medical supply and manufacturing companies from scanners to cancer treatments, pharmaceutical companies, medical delivery from medical durable to home health, biotech and so forth with an aging population and explosive EM ...
by Clearly_Irrational
Mon Aug 25, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: Why don't utilities get any praise
Replies: 39
Views: 3663

Re: Why don't utilities get any praise

It seems that common tilts are towards small cap, REIT, or health care. But rarely do you read, at least on these forums, about people tilting towards utilities. Small caps are legitimate if you buy into the multi-factor model. REITs are almost a separate asset class so it's not totally indefensibl...
by Clearly_Irrational
Fri Aug 22, 2014 7:34 pm
 
Forum: Investing - Theory, News & General
Topic: Why don't utilities get any praise
Replies: 39
Views: 3663

Re: A random walk...

nisiprius wrote:Which is another way of saying "it's not a random walk, it's much worse than that."


Heh, I think that's a valid point.
by Clearly_Irrational
Thu Aug 21, 2014 4:04 pm
 
Forum: Investing - Theory, News & General
Topic: A random walk...
Replies: 21
Views: 1667

Re: A random walk...

bertilak wrote:
baw703916 wrote:If the market follows a random walk, why don't returns follow a normal distribution?

What distribution do they follow?


One of the Student's t-distributions or a variant of Normal Inverse Gaussian seem to be among the most likely suspects in the current literature.
by Clearly_Irrational
Thu Aug 21, 2014 3:49 pm
 
Forum: Investing - Theory, News & General
Topic: A random walk...
Replies: 21
Views: 1667

Re: A random walk...

baw703916 wrote:If the market follows a random walk, why don't returns follow a normal distribution?


The market isn't actually a random walk, it's a levy flight.
by Clearly_Irrational
Thu Aug 21, 2014 3:32 pm
 
Forum: Investing - Theory, News & General
Topic: A random walk...
Replies: 21
Views: 1667

Re: A random walk...

I was much less impressed with it than the hype suggested I should be. Frankly I think he made a lot of unsupported statements and hand waved away entire portions of the debate. *shrug* There is some useful material in there, but it's buried in a mass of opinion.
by Clearly_Irrational
Thu Aug 21, 2014 1:22 pm
 
Forum: Investing - Theory, News & General
Topic: A random walk...
Replies: 21
Views: 1667

Re: Is a big war coming ???

I always wondered if 'The Big One' blew in Europe and we did *not* go nuclear (both low probability events) then what would the world look like by Christmas. Although things change over time, I gamed out this scenario several times back when it was the Soviet Union we were worried about. (I like ta...
by Clearly_Irrational
Tue Aug 19, 2014 1:18 pm
 
Forum: Investing - Theory, News & General
Topic: Is a big war coming ???
Replies: 37
Views: 3798

Re: Gold, Silver, Copper

Has anyone out there studied the Permanent Portfolio originally created by Harry Browne? 25% in each category --- Total World Stock Market, Total Bond Market, Cash and Gold. Look at the long term returns and learn from this. Yes. My portfolio is not the PP, but I have taken some key points and inco...
by Clearly_Irrational
Tue Aug 19, 2014 12:24 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 113
Views: 6941

Re: Shiller on Lofty Market Elevations

berntson wrote:This suggests that stocks are fairly priced.


That's one possible interpretation, the other is that bond yields are artificially suppressed.
by Clearly_Irrational
Mon Aug 18, 2014 5:25 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 4868

Re: Shiller on Lofty Market Elevations

In my view, this is a welcome corrective for those who have seen the long-term, mean PE10 of 16.55 as an immutable, unchanging constant, upon which their market valuation and market timing opinions can be anchored. Yes, PE10 may be helpful at the very extremes (say <10 and >30) — but I suspect it's...
by Clearly_Irrational
Mon Aug 18, 2014 5:22 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 4868

Re: Shiller on Lofty Market Elevations

Very nice article, thanks! One has to sympathize with Mr. Shiller, in that it's wholly unsatisfactory to believe that stocks have been consistently overpriced since the early 1990s (except at the bear market bottoms). I don't see why not, it matches perfectly with a period of heavy Fed involvement ...
by Clearly_Irrational
Mon Aug 18, 2014 5:20 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 4868

Re: Market valuation analysis

I'm not seeing the "roughly agree with PE10" part. PE10 Shows obvious over-valuations for the bubbles leading up to the great depression and the tech crash, additionally it shows that the market was never allowed to fully correct after the tech crash until the housing crash quite a bit la...
by Clearly_Irrational
Fri Aug 15, 2014 6:52 pm
 
Forum: Investing - Theory, News & General
Topic: Market valuation analysis
Replies: 36
Views: 1700

Re: Market valuation analysis

A difference of 0.05 is pretty meaningless IMO. Some posters go to great lengths to obtain PE10s of foreign countries in particular. Why?! Just go to Vanguard's website and you can look at all kinds of trailing PE1s or go to Morningstar.com if you prefer forward looking PEs. What if there is a big ...
by Clearly_Irrational
Fri Aug 15, 2014 5:46 pm
 
Forum: Investing - Theory, News & General
Topic: Market valuation analysis
Replies: 36
Views: 1700

Re: Market valuation analysis

Why? How many times has CAPE been over 25 in the past? How much higher is the stock market today than it was during those times? Anyone who bought stocks at the very top of 1987 or 2000 or 2007 when stocks were "ridiculously overpriced" has STILL made money today... So why worry about it?...
by Clearly_Irrational
Fri Aug 15, 2014 4:32 pm
 
Forum: Investing - Theory, News & General
Topic: Market valuation analysis
Replies: 36
Views: 1700

Re: Market valuation analysis

Assuming that's nominal return, it looks like using PE10 gets you a little over 3.6%, vs. my earnings yield of 5.2% and my expected yield at fair risk premium of 4.4%. It's generally estimated as 1/PE10 which right now would get you 3.87% real return, add in 20yr inflation expectations, Treasuries ...
by Clearly_Irrational
Fri Aug 15, 2014 3:53 pm
 
Forum: Investing - Theory, News & General
Topic: Market valuation analysis
Replies: 36
Views: 1700

Re: Market valuation analysis

IDimson, Marsh, and Staunton point out that much of the "success" of predictive tools like PE10 is in fact an illusion. The analysis isn't a very good one if they're looking at returns in the following 1-3 years. It's well known that PE10 works best at predicting returns in the following ...
by Clearly_Irrational
Fri Aug 15, 2014 2:43 pm
 
Forum: Investing - Theory, News & General
Topic: Market valuation analysis
Replies: 36
Views: 1700

Re: Market valuation analysis

The null hypothesis is that the market is right and I'm wrong, so what am I missing? Well, one thing is that this isn't a comparative analysis. It tells you that stocks are overvalued compared to historical trends, but not whether they're overvalued with respect to your other investment options, bo...
by Clearly_Irrational
Fri Aug 15, 2014 12:41 pm
 
Forum: Investing - Theory, News & General
Topic: Market valuation analysis
Replies: 36
Views: 1700

Re: Market valuation analysis

For approximating what is "low" or "high" with respect to PE10 levels I use the mean and standard deviation of PE10 1881 to present. (It's not completely accurate since the data is fatter tailed than the normal distribution, but for this purpose it's good enough) Mean 16.54 Std D...
by Clearly_Irrational
Fri Aug 15, 2014 12:23 pm
 
Forum: Investing - Theory, News & General
Topic: Market valuation analysis
Replies: 36
Views: 1700

Re: Do you hold cash/money market outside of your emergency

During periods of positive real returns I hold 20% cash since it lowers the average duration of my bonds. (The other portion being Long US Treasuries) Effective duration during negative real return periods: 16.84 Effective duration during positive real return periods: 10.868 Effective duration of in...
by Clearly_Irrational
Thu Aug 14, 2014 2:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Do you hold cash/money market outside of your emergency fund
Replies: 31
Views: 1973

Re: Beat The Street's Permanent Portfolio

During most periods of normal inflation real interest rates would be positive and I wouldn't be holding gold anyways. I wouldn't think that only buying gold when it is in high demand (such as when real rates are negative) is a particularly profitable strategy. Timing gold, like timing anything is n...
by Clearly_Irrational
Wed Aug 13, 2014 4:29 pm
 
Forum: Investing - Theory, News & General
Topic: Beat The Street's Permanent Portfolio
Replies: 36
Views: 3046

Re: Beat The Street's Permanent Portfolio

I am sure you are aware the correlations change with time and are unreliable. Sure, but in general during panics people run for "safe" assets. That tends to be long US Treasuries and Gold. While I keep an eye on possible paradigm shifts that seems a likely pattern to continue for at least...
by Clearly_Irrational
Wed Aug 13, 2014 1:53 pm
 
Forum: Investing - Theory, News & General
Topic: Beat The Street's Permanent Portfolio
Replies: 36
Views: 3046

Re: Beat The Street's Permanent Portfolio

Boy oh boy oh boy I do not understand the love that long-term bonds seem to have been getting lately. I can't understand committing for thirty years to a judgement about what inflation and interest rates are going to do. I don't see how anybody who lived through 1975-1985 could, and that wasn't by ...
by Clearly_Irrational
Wed Aug 13, 2014 1:36 pm
 
Forum: Investing - Theory, News & General
Topic: Beat The Street's Permanent Portfolio
Replies: 36
Views: 3046

Re: So where's that inflation many forecasted?

FOR THE CASUAL READER, the theory of inflation is far less important than the actual cost of living. We've got the CPI for that. Well, the CPI tells us what happened in the past. If we're talking about theory of inflation it's because we're trying to figure out what's going to happen in the future.
by Clearly_Irrational
Mon Aug 11, 2014 4:30 pm
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2649

Re: So where's that inflation many forecasted?

FOR THE CASUAL READER, the theory of inflation is far less important than the actual cost of living. It's important to know enough about it so that you know which experts to listen to. It's like fixing your car, you don't need to know as much as a professional auto mechanic, but you need to be able...
by Clearly_Irrational
Mon Aug 11, 2014 4:19 pm
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2649

Re: So where's that inflation many forecasted?

If I were in power, I could not just sit by and let the US Auto Industry just collapse. Though I don't like bailouts I probably would have done something very similar. Ditto for TARP. A million job hit at that time would have been bad, so would the domino effect on the banking system. I think the r...
by Clearly_Irrational
Mon Aug 11, 2014 3:28 pm
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2649

Re: So where's that inflation many forecasted?

So there are a few main schools of economic thought and each of them have made some predictions about the crisis, the response, the economy and inflation. The Orthodox school predicted that things would come roaring back with the massive amount of Fed intervention, they were wrong. The Austrians and...
by Clearly_Irrational
Mon Aug 11, 2014 2:46 pm
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2649

Re: Moving Average Backtest destroys Buy/Hold. Try for yours

pkcrafter wrote:Ok, how long would you wait (how much data would you need) until you decided to get in?


The minimum would probably be a full business cycle.
by Clearly_Irrational
Thu Aug 07, 2014 5:31 pm
 
Forum: Investing - Theory, News & General
Topic: Moving Average Backtest destroys Buy/Hold. Try for yourself.
Replies: 59
Views: 4378

Re: Moving Average Backtest destroys Buy/Hold. Try for yours

Just because a strategy was bad in the past doesn't mean it would be bad in the future though. It's not a 100% guarantee, but it's pretty likely. The whole point of trying to come up with a "system" is that you're looking for something that is an inherent feature of the market, not just s...
by Clearly_Irrational
Thu Aug 07, 2014 4:37 pm
 
Forum: Investing - Theory, News & General
Topic: Moving Average Backtest destroys Buy/Hold. Try for yourself.
Replies: 59
Views: 4378

Re: Moving Average Backtest destroys Buy/Hold. Try for yours

Before someone argues with that, historical data is not required to invest in broad market indexes. The only thing required is a belief that the economic system will continue to function. I disagree on two counts: 1) If the stock market had just been invented this year and we didn't have any histor...
by Clearly_Irrational
Thu Aug 07, 2014 4:22 pm
 
Forum: Investing - Theory, News & General
Topic: Moving Average Backtest destroys Buy/Hold. Try for yourself.
Replies: 59
Views: 4378

Re: Moving Average Backtest destroys Buy/Hold. Try for yours

KyleAAA wrote:Backtesting is never proof of anything. That's just data mining.


Not quite. You can prove which strategies are bad because they wouldn't have worked even in the past. Absence of badness is not proof of goodness though.
by Clearly_Irrational
Thu Aug 07, 2014 4:17 pm
 
Forum: Investing - Theory, News & General
Topic: Moving Average Backtest destroys Buy/Hold. Try for yourself.
Replies: 59
Views: 4378

Re: ? Best simple reference to dissuade a day trader

15 years is too short? LOL. Yes as a matter of fact it is. Many stock market patterns persist for extended periods yet aren't an integral part of the way the market functions. They work for a while and then just go away. Frankly, for any really good analysis even the entire 1871 to Present dataset ...
by Clearly_Irrational
Thu Aug 07, 2014 1:47 pm
 
Forum: Investing - Theory, News & General
Topic: ? Best simple reference to dissuade a day trader
Replies: 67
Views: 4256

Re: ? Best simple reference to dissuade a day trader

I use that site and didn't realize they had that feature, it must be fairly new, thanks for pointing it out. 15 Years is WAY too short a dataset to base any firm conclusions on, but it is interesting. The results tend to match my own research which suggests that there is a narrow exception to the bu...
by Clearly_Irrational
Thu Aug 07, 2014 12:30 pm
 
Forum: Investing - Theory, News & General
Topic: ? Best simple reference to dissuade a day trader
Replies: 67
Views: 4256

Re: ? Best simple reference to dissuade a day trader

Do you homework and learn that buy and hold gets crushed by even the most simple moving average trading systems. That wasn't my experience and I studied SMA systems quite a bit. In general the lag and whipsaws tend to cancel out the advantages. I'll admit to being curious though, if you think you'v...
by Clearly_Irrational
Thu Aug 07, 2014 2:07 am
 
Forum: Investing - Theory, News & General
Topic: ? Best simple reference to dissuade a day trader
Replies: 67
Views: 4256

Re: U.S. stocks in freefall

*shrug* All four of my funds are up YTD, doesn't seem like much to worry about at the moment. Latest crash indicator reading is only 7.14/100 (over 30 is bad) Leading indicator swirlogram says we're in an expansion phase Rail traffic is pretty strong The current expansion is at least half over but t...
by Clearly_Irrational
Tue Aug 05, 2014 7:57 pm
 
Forum: Investing - Theory, News & General
Topic: U.S. stocks in freefall
Replies: 802
Views: 135121

Re: ? Best simple reference to dissuade a day trader

jackpullo997 wrote:and trailing stop losses.


Heh, those stopped working quite some time ago. Nowadays the HFT algos will stop you out way more often than is tolerable.
by Clearly_Irrational
Tue Aug 05, 2014 1:28 pm
 
Forum: Investing - Theory, News & General
Topic: ? Best simple reference to dissuade a day trader
Replies: 67
Views: 4256

Re: ? Best simple reference to dissuade a day trader

But I know someone who is convinced he is smart enough to make a few hundred dollars- couple thousand dollars a day trading individual stocks. The idea is so clearly and inherently a terrible idea to me that I do not know where to begin to give him something to read to convince him he is wrong abou...
by Clearly_Irrational
Tue Aug 05, 2014 12:33 pm
 
Forum: Investing - Theory, News & General
Topic: ? Best simple reference to dissuade a day trader
Replies: 67
Views: 4256

Re: What actions to take in a stock market crash?

How are you supposed to live off of your now $250,000 in bonds, especially in today's low interest rates? Obviously you couldn't from the yield alone, so you'd be selling some of those bonds every year. If your retirement plan can't handle a 50% market crash then you're not ready to retire. I can g...
by Clearly_Irrational
Mon Aug 04, 2014 6:23 pm
 
Forum: Investing - Theory, News & General
Topic: What actions to take in a stock market crash?
Replies: 85
Views: 5426

Re: What actions to take in a stock market crash?

The two questions are related. You don't decide during the crash. Long before the crash you have chosen an asset allocation that you are willing to stick to even if "the knife keeps falling." And, in general, the worst time to make decisions is when you are in the grip of strong emotions-...
by Clearly_Irrational
Mon Aug 04, 2014 5:53 pm
 
Forum: Investing - Theory, News & General
Topic: What actions to take in a stock market crash?
Replies: 85
Views: 5426

Re: How Much Did You Lose Today?

pkcrafter wrote:The point is that posters answered in very different ways--it wasn't really a loss for instance.


Yeah, I don't really grok that answer. If you're following a total return strategy then a reduction in market value is indeed a loss, an unrealized one to be sure, but still a loss.
by Clearly_Irrational
Mon Aug 04, 2014 5:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: How Much Did You Lose Today?
Replies: 166
Views: 14163

Re: How Much Did You Lose Today?

sscritic wrote:You confused me with your 0.2%. That was my loss today's today, not yesterday's today.


My portfolio tends to do quite well on a relative basis during market downturns. The price I pay for that is tracking error, which can be quite significant at times.
by Clearly_Irrational
Fri Aug 01, 2014 6:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: How Much Did You Lose Today?
Replies: 166
Views: 14163

Re: How Much Did You Lose Today?

sscritic wrote:I am confused. Which today are we talking about today?


07/31/14
by Clearly_Irrational
Fri Aug 01, 2014 6:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: How Much Did You Lose Today?
Replies: 166
Views: 14163

Re: How Much Did You Lose Today?

I lost 0.2%, even with a strongly divergent portfolio sometimes everything goes down at once.
by Clearly_Irrational
Fri Aug 01, 2014 6:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: How Much Did You Lose Today?
Replies: 166
Views: 14163

Re: Which is King: Income Stream or $ Invested

Fidelity has a pretty cool feature on there website to create CD ladders. You can get your CDs through them and hold them all in your brokerage account. They will do all the work of splitting your money up into 16 banks ($4 Million in this case) so your money is all FDIC insured. Granted the intere...
by Clearly_Irrational
Thu Jul 31, 2014 10:16 pm
 
Forum: Investing - Theory, News & General
Topic: Which is King: Income Stream or $ Invested
Replies: 52
Views: 4581

Re: Which is King: Income Stream or $ Invested

More likely 16 separate credit unions. Probably eight of each of would be safer since they have separate insurance. FDIC vs. NCUSIF In the event of a major crisis where one or more institutions collapse ala Lehman Brothers it's likely that the insurance funds would be exhausted and many depositors ...
by Clearly_Irrational
Thu Jul 31, 2014 6:29 pm
 
Forum: Investing - Theory, News & General
Topic: Which is King: Income Stream or $ Invested
Replies: 52
Views: 4581

Re: Which is King: Income Stream or $ Invested

dolphinsaremammals wrote:You keep your money in non-FDIC insured banks?


We're talking about $4 Million, were you planning to use 16 separate banks?
by Clearly_Irrational
Thu Jul 31, 2014 11:05 am
 
Forum: Investing - Theory, News & General
Topic: Which is King: Income Stream or $ Invested
Replies: 52
Views: 4581

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

WhyNotUs wrote:I can't give away 8% on a single property to a manager but would do it on an apartment complex.


You should be accounting for that money either way, after all you don't work for free do you?
by Clearly_Irrational
Thu Jul 31, 2014 12:44 am
 
Forum: Personal Finance (Not Investing)
Topic: Landlording for long-term wealth? Who's doing it?
Replies: 68
Views: 7309

Re: Which is King: Income Stream or $ Invested

dolphinsaremammals wrote:$4mil in CDs. I don't trust income stream things - insurance companies go bellyup, pensions get reduced.


You realize that banks go out of business right?
by Clearly_Irrational
Wed Jul 30, 2014 1:49 pm
 
Forum: Investing - Theory, News & General
Topic: Which is King: Income Stream or $ Invested
Replies: 52
Views: 4581
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