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Re: Individual Stocks

If you hold perhaps 4 stocks in each of 9 sectors (36 stocks) in equal proportion (2.8% weighting each) that might be no riskier/safer than buying the Dow 30. In the UK dividend income is taxed differently from price appreciation. For a basic rate taxpayer there will be no further tax on dividends a...
by Clive
Sat Sep 20, 2014 7:41 pm
 
Forum: Investing - Theory, News & General
Topic: Individual Stocks
Replies: 35
Views: 2554

Re: Why invest in bonds?

Not too be a broken record but as Financial Dave just proved again,it is easy to be 80 to 100 pct in equities when your expenses are covered by pensions and SS. Age 50 and have enough to live off 2%/year, so drop 60% into a 30 year inflation bond ladder, 40% into growth (stock/accumulation). 30 yea...
by Clive
Tue Sep 02, 2014 2:48 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 6243

Re: Why invest in bonds?

The advice I have heard most often is, invest your age in bonds. But bonds only just about keep up with inflation. By permanently keeping 30% to 40% or more of your money in bonds you are giving up a on lot of growth. Looking at more recent years real return government bond yields and picking out e...
by Clive
Tue Sep 02, 2014 2:24 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 6243

Re: Why invest in foreign funds?

Thanks Valuethinker Here's one for Shell but with the 'view' flipped (from the other direction) http://finance.yahoo.com/q/bc?t=1y&s=RDS-A&l=on&z=m&q=l&c=rdsa.l%2Cgbpusd%3Dx&ql=1 http://chart.finance.yahoo.com/z?s=RDS-A&t=1y&q=l&l=on&z=m&c=RDSA.L,GBPUSD=X&...
by Clive
Tue Sep 02, 2014 7:51 am
 
Forum: Investing - Theory, News & General
Topic: Why invest in foreign funds?
Replies: 35
Views: 2227

Re: Why invest in foreign funds?

The gap between an ADR and its home country price I'm UK so know little about ADR's but I thought they actually bought/held/traded the actual foreign stocks and I put any differences down to being due to FX (stock price change +/- FX change) In this chart BP.L is London (GP£) BP price, BP is US$ BP...
by Clive
Tue Sep 02, 2014 5:32 am
 
Forum: Investing - Theory, News & General
Topic: Why invest in foreign funds?
Replies: 35
Views: 2227

Re: Dollar Cost Averaging vs. Lump Sum

Comparing 30 year real gain factors since 1901 I'm seeing figures of a worst case 30 year real gain factor of 2.31 (131% gain) based on yearly granularity. Average in over three years (third each year) and that increases to 2.65 (165%). i.e. average in over three years had a better worst case (didn'...
by Clive
Tue Sep 02, 2014 5:12 am
 
Forum: Investing - Theory, News & General
Topic: Dollar Cost Averaging vs. Lump Sum
Replies: 31
Views: 3150

Re: Why invest in foreign funds?

iShares NYSE Composite ETF (NYC) - which is due to close in October, includes holding ADR's - which make up around 30% I believe of that index/fund. Compare the S&P500 with NYC and you don't see much of a difference. https://chart.finance.yahoo.com/z?s=NYC&t=my&q=l&l=on&z=m&c...
by Clive
Tue Sep 02, 2014 4:13 am
 
Forum: Investing - Theory, News & General
Topic: Why invest in foreign funds?
Replies: 35
Views: 2227

Re: When to invest in China?

Out of interest, what does the US/China tax treaty agree? The Chinese default is to apply 10% withholding tax to capital gains, dividends, interest, rent and royalties. From a quick skim of http://www.irs.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties---A-to-Z it looks lik...
by Clive
Sun Aug 31, 2014 3:03 pm
 
Forum: Investing - Theory, News & General
Topic: When to invest in China?
Replies: 51
Views: 2942

Re: Why invest in foreign funds?

Reduces the risk of having been heavily weighted into the worst Difficult to read the labels in this image, so for clarity in order of the most recent best down to the most recent worst (real gains in USD) Australia S. Africa US World France Italy Austria http://media.tumblr.com/eb247b66c5e4125e6346...
by Clive
Sun Aug 31, 2014 1:29 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in foreign funds?
Replies: 35
Views: 2227

Re: Berkshire Hathaway Inc. or a Vanguard Variable Annuity

I want something that has no dividends and something I can hold a long time. I would hold B shares in Berkshire if I picked that. It is a tricky question Berkshire is not as diversified as the total market but the tax man would hit you hard in the variable annuity. Equal weight a globally diverse r...
by Clive
Sat Aug 30, 2014 3:36 am
 
Forum: Investing - Theory, News & General
Topic: Berkshire Hathaway Inc. or a Vanguard Variable Annuity
Replies: 33
Views: 2464

Re: A Low-Return Future? Are We Prepared?

Just to offer a concrete example of what a "low-return" future looks like, the table below shows William Bernstein's estimates for expected annual real returns of major asset classes over the next 10 years (from his book, Rational Expectations , published May 2014). These estimates are mo...
by Clive
Fri Aug 29, 2014 2:13 pm
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12152

Re: Berkshire Hathaway Inc. or a Vanguard Variable Annuity

Berkshire Hathaway Inc. or a Vanguard Variable Annuity Ttl Stock Market Idx If you could only pick one to hold for 25 years which one would you choose? Berkshire Hathaway pays no dividends and pulls off some clever 'tricks' to do so. Tax deferred is seen by Buffett as yet more 'free cost cash' i.e....
by Clive
Thu Aug 28, 2014 12:35 pm
 
Forum: Investing - Theory, News & General
Topic: Berkshire Hathaway Inc. or a Vanguard Variable Annuity
Replies: 33
Views: 2464

Re: Can a Commodities Fund be a Long-Term Investment?

Can a Commodities Fund be a Long-Term Investment? Yes. Most people are familiar with the wealth of Gates and Buffett, but less so with the Koch brothers whose combined $72B wealth compares to Gates'. And that wealth is derived primarily from diversified base/core (Commodity) products such as asphalt...
by Clive
Thu Aug 28, 2014 11:47 am
 
Forum: Investing - Theory, News & General
Topic: Can a Commodities Fund be a Long-Term Investment?
Replies: 45
Views: 2804

Re: Warren Buffet and the S&P index fund

Buffett's pledged to give away 99% of his personal (around $58B recently) wealth, which leaves around $580M. 10% of that in short term treasury bonds = $58M. That's perhaps topped up by another $10M each year by the dividends from the remainder $522M that's invested in the S&P500.
by Clive
Thu Aug 28, 2014 11:23 am
 
Forum: Investing - Theory, News & General
Topic: Warren Buffett and the S&P index fund
Replies: 23
Views: 1755

Re: The Larry Portfolio - For Tilters and S&D'ers Only

Jaab. Value stocks imply some residual value. They might be priced at or below book value and in the event of failure might have some remaining cash or value. Growth will often be in debt and in the event of failure leave no residual value (and outstanding non-repaid loans). Assuming 5000 total stoc...
by Clive
Wed Aug 27, 2014 2:59 am
 
Forum: Investing - Theory, News & General
Topic: The Larry Portfolio - For Tilters and S&D'ers Only
Replies: 27
Views: 3216

Re: The Larry Portfolio - For Tilters and S&D'ers Only

Thanks Larry. Just a observation - last hour or so I've just ran a really simple/quick test of looking at Vanguard's Small Value funds top 10 largest holdings, arbitrarily selected 5 from those and downloaded Yahoo daily adjusted closing prices for the last 12 months for each of the stocks (SNA, AJG...
by Clive
Mon Aug 25, 2014 7:20 pm
 
Forum: Investing - Theory, News & General
Topic: The Larry Portfolio - For Tilters and S&D'ers Only
Replies: 27
Views: 3216

Re: The Larry Portfolio - For Tilters and S&D'ers Only

IIRC French's equal weighted data broadly indicates an even greater annualised (something like 18% if I'm remembering correctly). Just dug out the figures and for 1993 onwards French's S/H equal weighted = 18.8% annualised. The average number of fewer stocks each year (initial set selected at the s...
by Clive
Mon Aug 25, 2014 6:02 pm
 
Forum: Investing - Theory, News & General
Topic: The Larry Portfolio - For Tilters and S&D'ers Only
Replies: 27
Views: 3216

Re: The Larry Portfolio - For Tilters and S&D'ers Only

Clive While data not perfect in sense you don't have trading costs, DFA SV has come within 10bp AFTER all expenses of matching its index over its life, so the concern really isn't warranted. just need to have a fund manager that is a patient trader and not having to be a buyer of liquidity when mar...
by Clive
Mon Aug 25, 2014 3:04 pm
 
Forum: Investing - Theory, News & General
Topic: The Larry Portfolio - For Tilters and S&D'ers Only
Replies: 27
Views: 3216

Re: The Larry Portfolio - For Tilters and S&D'ers Only

French has the "US data on his site French's data is awkward as it forms yearly rewards based on monthly rewards and monthly rewards are based on a initial set selected in June of each year (once/year), and additional data shows the number of firms remaining each month. i.e. the totals are bas...
by Clive
Mon Aug 25, 2014 3:02 am
 
Forum: Investing - Theory, News & General
Topic: The Larry Portfolio - For Tilters and S&D'ers Only
Replies: 27
Views: 3216

Re: International allocation

Taken from Rick Ferri off of a google search for "efficiency frontier - US stock/Int Stock" http://i61.tinypic.com/bev8e1.png Be careful there...depends on what time period you're looking at doesn't it? http://i.imgur.com/oP9dy.jpg http://i.imgur.com/oP9dy.jpg Late 1960's to 1990 Japan's ...
by Clive
Sun Aug 24, 2014 5:43 pm
 
Forum: Investing - Theory, News & General
Topic: International allocation
Replies: 73
Views: 4249

Re: The Larry Portfolio - For Tilters and S&D'ers Only

Please vote yes if you have even something related to this philosophically In the sense that I hold a Talmud type asset allocation (i.e. consider my home(s) as investments and not just consumables), with a target third in each of land, business and reserves then yes - especially when home values ar...
by Clive
Sun Aug 24, 2014 2:36 am
 
Forum: Investing - Theory, News & General
Topic: The Larry Portfolio - For Tilters and S&D'ers Only
Replies: 27
Views: 3216

Re: The Larry Portfolio - For Tilters and S&D'ers Only

design new LP's supposing that the fixed asset will only return inflation rate - 1 percent. ... with say a more "normal" 5 year bond portfolio A 5 year treasury bond ladder initially weighted 70%, when not marked to market and each bond is held to maturity will generally provide a reward ...
by Clive
Sun Aug 24, 2014 2:05 am
 
Forum: Investing - Theory, News & General
Topic: The Larry Portfolio - For Tilters and S&D'ers Only
Replies: 27
Views: 3216

Re: Juice up your cash returns (!) [What do you consider cas

Can't vouch for the accuracy (UK investor) of this US data, but if you run with a 5 year treasury bond ladder holding each bond to maturity, then the yearly reward can be simplified to the (rolling) average of the five years 5 year yields. Each year you have one rung maturing (cash in hand) that rol...
by Clive
Fri Aug 22, 2014 7:38 am
 
Forum: Investing - Theory, News & General
Topic: Juice up your cash returns (!) [What do you consider cash?]
Replies: 11
Views: 2201

Re: Bogleheads and Dividend Paying Stocks

In the UK we have a $17K approx. yearly capital gains allowance - share price gains/profit that can be made in any one year before being liable for capital gains tax. Capital gains are counted against nominal gains (no inflationary offset). Dividends for basic rate taxpayers (up to $75K of income) h...
by Clive
Thu Aug 21, 2014 6:39 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads and Dividend Paying Stocks
Replies: 22
Views: 2097

Re: [live off dividends?] How the rich stay/get richer??

Broadly share price only values pace inflation over time - and pay a dividend. As the share price rises with inflation so also does the dividend value increase over time. Reinvest the dividend and your total gain outpaces inflation. If you spend the dividend whilst broadly you might see a dividend v...
by Clive
Wed Aug 20, 2014 2:28 am
 
Forum: Investing - Theory, News & General
Topic: [live off dividends?] How the rich stay/get richer??
Replies: 62
Views: 4990

Re: "Cost" of foreign tax on international investing

I'd ball park estimate around a average 15% withholding tax being applied to foreign dividends and a 4% average dividend yield. So broadly 0.6% (4 x 0.15) For a more accurate figure you'd have to look up the weighting and dividend yield to each country - and then consult tax treaties ...etc For inst...
by Clive
Mon Aug 11, 2014 4:31 am
 
Forum: Investing - Theory, News & General
Topic: "Cost" of foreign tax on international investing
Replies: 19
Views: 1418

Re: Historical question about recessions

3. What were the precipitating factors? Leeraar posted this image link in another thread. The first big up about a quarter of the way into the chart is the rise up to the 1929 peak during the "Roaring 20's". When anything doubles, doubles again and perhaps doubles yet again across a relat...
by Clive
Fri Aug 08, 2014 2:51 am
 
Forum: Investing - Theory, News & General
Topic: Historical question about recessions
Replies: 19
Views: 1112

Re: Volatility: Oh how I love thee.

Volatility: Oh how I love thee You might be interested in this weird observation then. Kenneth French's data since 1927 indicates that stocks that paid no dividends were less rewarding on a annualised basis than dividend paying stocks - when Value weighted. His equal weighted based values however f...
by Clive
Thu Aug 07, 2014 6:46 pm
 
Forum: Investing - Theory, News & General
Topic: Volatility: Oh how I love thee.
Replies: 44
Views: 3138

Re: International investing. A good call by our mentor.

...and expect your long-term return to be about the same either way, then it doesn't make any difference on the return side. All that's really left for the U.S. investor to decide is if they think adding international exposure reduces the risks in their portfolio, or if it introduces new risks that...
by Clive
Mon Aug 04, 2014 9:19 am
 
Forum: Investing - Theory, News & General
Topic: International investing. A good call by our mentor.
Replies: 145
Views: 12535

Re: global diversification works in long term

Exchange Rate Risk as noted earlier can influence the investor's decision on international weighting. This is touched on in the Vanguard paper, which is worth re -reading on the currency fluctuation issue and in similar vein, Siegel in 'Stocks for the Long Run', states :- 'It is very important to n...
by Clive
Sun Aug 03, 2014 8:28 pm
 
Forum: Investing - Theory, News & General
Topic: global diversification works in long term
Replies: 21
Views: 1947

Re: It seems Warren Buffett believes in DCA

"The Elements of Investing" by Burton Malkiel and Charles D. Ellis. "... You should diversify over time. Don't make all your investments at a single time. If you did, you might be unlucky enough to have put all of your money into the stock market during a market peak in early 2000......
by Clive
Sun Aug 03, 2014 3:12 pm
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

I don't think he advocates a 90/10 stock/bond mix for everyone. I believe he said he will instruct his trust to allocate investments in that way. An aspect of a 90/10 is that if stocks drop -50% and cash gains +5% then you're holding nearly 20% in cash at that time. For a dividend paying stock that...
by Clive
Fri Aug 01, 2014 3:17 pm
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

For a couple of examples : From Japan's 1990 peak, over the next five years their stocks lost (total return) -33% whilst a Japanese holder of US stocks (adjusted into Yen) gained +5% (near-as break-even). Over the ten years from 1990 Japanese stocks lost -58% in total whilst a Japanese holder of US ...
by Clive
Fri Aug 01, 2014 2:59 pm
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

You might well do better in the long term with diving in, but ultimately you're market timing with all your eggs in one basket. Statistical superiority of the total data are a poor recompense if you happen choose the wrong time to lump sum invest.Garland Whizzer The indications I'm seeing are that ...
by Clive
Fri Aug 01, 2014 2:34 pm
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

Using Shiller's data for US stocks since 1871 and One Year Interest Rates, and loading into stocks 10% each year for 10 years, with a 30 year total investment period (lifetime) and comparing to lump sum from day 1..... for all possible 30 year periods since 1871, and using inflation adjusted total ...
by Clive
Fri Aug 01, 2014 11:18 am
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

Fclevz wrote:There is no choice but to dollar-cost-average, since no career choice will give you your lifetime earnings up front.

Someone might be holding a lottery ticket that would suggest otherwise.
by Clive
Fri Aug 01, 2014 11:17 am
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

I seem to recall Buffett suggesting that investors should accumulate shares over a period of time (years) - i.e. not have bought all shares at a single point in time Here's one of his quotes : “…If you like spending 6-8 hours per week working on investments, do it. If you don’t, then dollar-cost av...
by Clive
Fri Aug 01, 2014 8:36 am
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

In this video, Warren says that they should not jump in at the wrong time I seem to recall Buffett suggesting that investors should accumulate shares over a period of time (years) - i.e. not have bought all shares at a single point in time. I've not however seen any of his advice as to how to do th...
by Clive
Fri Aug 01, 2014 7:30 am
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

Please explain by comparison to a stock that pays no dividend Generally with a dividend stock where dividends are reinvested you accumulate more shares of a stock whose share price appreciates less quickly than a growth stock. With a growth stock you hold a constant number of shares (maybe 100), wi...
by Clive
Fri Aug 01, 2014 7:09 am
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: It seems Warren Buffett believes in DCA

To some extent lump sum is also a DCA process when dividends are being reinvested. Share price yearly average 5.7% stdev 17.8 (4.2% implied CAGR) Dividend average 4.5% stdev 1.5 (4.5% implied CAGR) (implied CAGR are approximate values estimated using pythagorean approximation http://www.financialwis...
by Clive
Fri Aug 01, 2014 4:42 am
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 4014

Re: Stocks: losing money for 20-30 years not uncommon

Does the data include dividends? Seems to me that every time I've read about long periods of negative stock returns, dividends have been excluded and the situation looks much better once they are considered. The 1900 - 2012 US annualised real of 6.26% is indicative that the figures are total real r...
by Clive
Thu Jul 31, 2014 7:27 am
 
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 4315

Re: Do any boggleheads invest in individual companies?

If you have a 'portfolio' that provides a reasonably good chance of ending 30 years with a similar inflation adjusted amount as at the start, together with having paid a 3.3% average income (that also grew with inflation) then conceptually for those with no heirs or need to leave a inheritance that ...
by Clive
Thu Jul 31, 2014 6:52 am
 
Forum: Investing - Theory, News & General
Topic: Do any boggleheads invest in individual companies?
Replies: 95
Views: 5820

Re: Do any boggleheads invest in individual companies?

If an investor believes he/she has stock-picking skill and can select a portfolio containing stocks with higher returns, or lower variances or correlations, than the market averages, that investor can adjust the risk-adjusted returns derived from randomly-selected stock studies accordingly. The inv...
by Clive
Thu Jul 31, 2014 6:34 am
 
Forum: Investing - Theory, News & General
Topic: Do any boggleheads invest in individual companies?
Replies: 95
Views: 5820

Re: Do any boggleheads invest in individual companies?

Here in the UK, a TD Direct Investing (UK's branch of TD Waterhouse/Ameritrade) trading account permits you to hold/exchange multiple currencies all within the same single account. You can also trade in any one or more of 17 different stock markets around the world (15 online). For a home-brew globa...
by Clive
Thu Jul 31, 2014 6:11 am
 
Forum: Investing - Theory, News & General
Topic: Do any boggleheads invest in individual companies?
Replies: 95
Views: 5820

Re: Stocks: losing money for 20-30 years not uncommon

In fact, MOST countries had a 30 year period where you could have lost money- ouch! I'm guessing that 30-year period was 1916-1945; a period that included two World Wars and a worldwide Great Depression. I would call that period uncommon. US 1915 CPI = 10.1 1920 CPI = 19.3 UK 1914 Cost of Living In...
by Clive
Wed Jul 30, 2014 2:04 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 4315

Re: Stocks: losing money for 20-30 years not uncommon

Rodc wrote:And worse, US has had a simultaneous horrible 30-year period in stocks and bonds! They both stank at the same time.

Because periods of high inflation occurred at the same time.
by Clive
Wed Jul 30, 2014 1:28 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 4315

Re: Stocks: losing money for 20-30 years not uncommon

Inflation at times can be high. Being on the losing side of a war can be devastating. Inflation and wars can at times be more widespread/global - in which case more remote continents can be more protected from such global crises. Diversification reduces the risk/reward. More middle road rather than ...
by Clive
Wed Jul 30, 2014 1:15 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 4315

Re: Question about long treasuries and increased supply

What you are suggesting is that the Gov. Is mysteriously stealing money from us. They are out to get us. We are doomed. It's unfair. People don't even know about it! How can this be? We have to do something about it. Change the system. We must survive. Oh my gosh. It's Godzilla!!! (Blast of nuclear...
by Clive
Wed Jul 30, 2014 7:52 am
 
Forum: Investing - Theory, News & General
Topic: Question about long treasuries and increased supply
Replies: 17
Views: 1118

Re: Question about long treasuries and increased supply

Your analysis would suggest that anytime there is movement in a currency's value downward, that EVERY borrower who borrows in that currency is in DEFAULT because they are paying back less "value" than originally promised. By your analysis then, defaulting is an everyday, expected, and una...
by Clive
Wed Jul 30, 2014 4:03 am
 
Forum: Investing - Theory, News & General
Topic: Question about long treasuries and increased supply
Replies: 17
Views: 1118

Re: Question about long treasuries and increased supply

The original debt is paid off per contract. Because the US is not presently running a surplus, it needs to borrow again the original principal, which it does via auction to willing participants, who choose to bid on behalf of themselves and their customers. If all the original terms are fulfilled, ...
by Clive
Tue Jul 29, 2014 3:25 pm
 
Forum: Investing - Theory, News & General
Topic: Question about long treasuries and increased supply
Replies: 17
Views: 1118
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