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Re: Best Way to Visualize Compounding

What I'm trying to visualize is the comparison of 2 scenarios: 1. Invest and grow with compounding 2. keep cash... Compound is a mixture of elements. Cash is like non-worked land, you might later sell it for much the same as what you paid for it in purchase power terms (inflation pacing). Bonds and...
by Clive
Mon Mar 30, 2015 9:48 am
 
Forum: Investing - Theory, News & General
Topic: Best Way to Visualize Compounding
Replies: 39
Views: 2836

Re: Should a BH investor never use futures/options?

In the money call options can provide leveraged ownership of the asset (sort of). Often it is the cheapest "loan", so if you can convert your shares to the equivalent options and pull cash out to pay down a 4% mortgage, in theory you'll come out ahead with the same risk level. Synthetic l...
by Clive
Sat Mar 28, 2015 4:39 am
 
Forum: Investing - Theory, News & General
Topic: Should a BH investor never use futures/options?
Replies: 68
Views: 3822

Re: Illiquid Assets

Primary residence - This is a good example. Not exactly diversified, but it does give a good example of a way for someone young to capitalize on illiquidity. Really? Owning a home provides an illiquidity premium? It certainly is not a very liquid asset, but just because an asset is illiquid does no...
by Clive
Fri Mar 27, 2015 4:07 am
 
Forum: Investing - Theory, News & General
Topic: Illiquid Assets
Replies: 46
Views: 4020

Re: Phil Town: "Rule #1 Investing"

find great companies, know their worth and acquire them at 50 percent off. Now THAT is a tall order!!! :shock: Side-tracking this likely going nowhere thread ... perhaps 50% off discounts are not as tall-order/difficult as you might believe. Investment advice from the Bible : Ecclesiastes 11:1-5 1....
by Clive
Thu Mar 19, 2015 12:24 pm
 
Forum: Investing - Theory, News & General
Topic: Phil Town: "Rule #1 Investing"
Replies: 11
Views: 1209

Re: How much international is too much?

Does currency risk exist (to a meaningful extent) with regard to equity investments? Sure it does. The relationship between the dollar index and international outperformance or underperformance (relative to U.S. equity) is as plainly evident as almost anything in investing can be. Look at the chart...
by Clive
Thu Mar 19, 2015 4:11 am
 
Forum: Investing - Theory, News & General
Topic: How much international is too much?
Replies: 113
Views: 9134

Re: Why the popularity of dividends? What's the counterargum

Project a yearly ladder of basic living expenses and income streams for each year ... to expected life expectancy (or perhaps 30 years), accounting for state/private pensions as/when they come online and the sum provides a indicator of the amount that might be deposited/invested into inflation bonds...
by Clive
Mon Mar 16, 2015 11:24 am
 
Forum: Investing - Theory, News & General
Topic: Why the popularity of dividends? What's the counterargument?
Replies: 70
Views: 5014

Re: The Permanent Portfolio as an accumulation portfolio

look up Ray Dalio's All Weather portfolio. Or look less distant - at the Three-Fund - which in holding some foreign (FX) is yet another alternative to holding some gold. As a example during Iceland's 2008 crisis the price of gold in Euro's remained much the same, whilst the Icelandic currency colla...
by Clive
Sat Mar 14, 2015 7:33 am
 
Forum: Investing - Theory, News & General
Topic: The Permanent Portfolio as an accumulation portfolio
Replies: 16
Views: 2056

Re: The Permanent Portfolio as an accumulation portfolio

Gold was illegal to own until 1975 As it was after the 1933 executive order that purchased all investment grade gold at $20.67 .... after which the peg was raised to $35 in 1934 (70% higher). Gold also gained 48% in 1972, 71% in 1973, 72% in 1974. Such that in combination those 4 years alone accoun...
by Clive
Fri Mar 13, 2015 1:25 pm
 
Forum: Investing - Theory, News & General
Topic: The Permanent Portfolio as an accumulation portfolio
Replies: 16
Views: 2056

Re: Retiree Poll:What is your current AA?

33/67 early retirement stock/bonds, looking to increase stocks to 100/0 stock/bonds as age. i.e. two bucket approach. Third in stocks/accumulation, draw down bonds. 2.2%/year bond drawdown rate (inflation adjusted assuming bonds pace inflation) over 30 years. 33/67 initial, 100/0 final = 66% average...
by Clive
Sun Dec 28, 2014 2:23 pm
 
Forum: Investing - Theory, News & General
Topic: Retiree Poll:What is your current AA?
Replies: 85
Views: 7114

Re: Trading around dividend days

There's no US withholding tax on capital gains, but there may be domestic capital gains tax liabilities. There are lots of differences around the world for example China charges 10% withholding tax on both dividends and capital gains. From a UK perspective whilst selling induces a UK capital gain ev...
by Clive
Sun Dec 28, 2014 2:00 pm
 
Forum: Investing - Theory, News & General
Topic: Trading around dividend days
Replies: 6
Views: 1167

Re: A collection of "black swan" portfolios

I see this type of portfolio allocation as particularly useful for retirement portfolios. In this case, the "safe" assets have been referred to as "liability-matching" assets; i.e., designed to provide sufficient low-risk income to meet lifestyle spending needs in retirement. St...
by Clive
Wed Dec 24, 2014 6:16 pm
 
Forum: Investing - Theory, News & General
Topic: A collection of "black swan" portfolios
Replies: 25
Views: 2540

Re: Please debunk this CNN Money article on dividend investi

http://thereformedbroker.com/wp-content/uploads/2012/06/div-chart.jpg Obviously, this is purely backwards looking and is time-dependent French's equal weighted no dividend 1928 to 1956 i.e. year end before the above chart had no dividend vastly outperform others. Around 14% annualised compared to 1...
by Clive
Sun Dec 21, 2014 5:08 am
 
Forum: Investing - Theory, News & General
Topic: Please debunk this CNN Money article on dividend investing
Replies: 42
Views: 5090

Re: Please debunk this CNN Money article on dividend investi

Kenneth French, a professor of Finance at Dartmouth College, has a website which contains an abundance of historical information (going back to 1928) about the relationship between dividend levels and total stock returns. FWIW for the period 1928-2013 his data indicates that the annualized return o...
by Clive
Sat Dec 20, 2014 4:17 am
 
Forum: Investing - Theory, News & General
Topic: Please debunk this CNN Money article on dividend investing
Replies: 42
Views: 5090

Re: Please debunk this CNN Money article on dividend investi

Kenneth French, a professor of Finance at Dartmouth College, has a website which contains an abundance of historical information (going back to 1928) about the relationship between dividend levels and total stock returns. FWIW for the period 1928-2013 his data indicates that the annualized return o...
by Clive
Fri Dec 19, 2014 3:23 pm
 
Forum: Investing - Theory, News & General
Topic: Please debunk this CNN Money article on dividend investing
Replies: 42
Views: 5090

Re: Understanding why we market weight

HSI index is market cap weighted and has 60% in ten stocks, of which 35% = financial (14% HSBC alone), 16% = mobile telecoms. 25% combined in HSBC and Tencent. Is that a Speculation OR a Investment? If you weighted 25% to two other stocks, 75% to a index, many would suggest you're tilted, Yet that's...
by Clive
Wed Dec 03, 2014 12:31 pm
 
Forum: Investing - Theory, News & General
Topic: Understanding why we market weight
Replies: 18
Views: 1659

Re: Understanding why we market weight

I'm sure it (Equal Weighting) looks significantly different if taken back further (and someone's got to have done it somewhere) http://moneytalks.net/market-opinion/1050-john-mauldin-looks-at-the-original-dow-30-stocks-banks.html Equal initial weighting and buy and hold thereafter, let the individu...
by Clive
Tue Dec 02, 2014 2:49 am
 
Forum: Investing - Theory, News & General
Topic: Understanding why we market weight
Replies: 18
Views: 1659

Re: Why Alpha is getting more elusive

My first impression of the articles chart was that of the similarity of pattern to historic LIBOR. Could it be that alpha is higher in periods of relatively high interest rates, lower in periods of lower interest rates? If thought of in terms of factor of inflation (i), then when inflation/interest ...
by Clive
Mon Nov 24, 2014 6:13 pm
 
Forum: Investing - Theory, News & General
Topic: Why Alpha is getting more elusive
Replies: 28
Views: 3964

Re: Why I will fund retirement with TIPs ladder no matter wh

an overwhelming impact in my thinking making my decision to build a TIPs ladder to fund my retirement no matter what the real yield look like

Haven't read the article, but isn't that too much concentration (taxflation) risk? Potential taxation risk against inflationary uplift.
by Clive
Sat Nov 22, 2014 7:04 am
 
Forum: Investing - Theory, News & General
Topic: Why I will fund retirement with TIPs ladder no matter what
Replies: 55
Views: 5243

Re: Will stocks beat bonds over next 30 years?

To add to my previous posting, the decision I personally came to was to utilise bonds for drawdown/income, with a target of achieving a 0% real and hold stocks for growth/accumulation. Two buckets. For stocks I set a objective of 90% of the total original start date amount i.e. if after 30 years I h...
by Clive
Sat Nov 22, 2014 5:31 am
 
Forum: Investing - Theory, News & General
Topic: Will stocks beat bonds over next 30 years?
Replies: 65
Views: 6254

Re: Will stocks beat bonds over next 30 years?

Another way to do this analysis is to identify 30-year periods, as many as possible, and then check stocks-vs bonds: 1901 - 1930, 1902 - 1931,... Cost averaging in a lump sum over three years, and cost averaging out also over three years is a reasonable extension to that IMO. Or simply extending th...
by Clive
Sat Nov 22, 2014 4:59 am
 
Forum: Investing - Theory, News & General
Topic: Will stocks beat bonds over next 30 years?
Replies: 65
Views: 6254

Re: Small cap value premium

I am still having trouble wrapping my mind around why or how a particular sector or style box can outperform indefinitely. Because the others tend to under-perform. Large cap indexes can have a high weighting to single stocks/sectors, that even after a hit can still remain relatively large and in t...
by Clive
Tue Nov 18, 2014 4:31 pm
 
Forum: Investing - Theory, News & General
Topic: Small cap value premium
Replies: 150
Views: 20419

Re: Why I Like Index Funds

Here are some of Taylor's favorite index funds

<jest>
And his favoured 3 stock portfolio
TravelCenters of America,
Alleghany Corporation,
Lazard World Dividend & Income
TA,Y,LOR
</jest>
by Clive
Mon Nov 17, 2014 5:33 pm
 
Forum: Investing - Theory, News & General
Topic: Why I Like Index Funds
Replies: 26
Views: 6437

Re: Why I Like Index Funds

Using Morningstar's data for Vanguards S&P500 Admirial Shares (VFIAX) compared to the actual S&P500 index for the past 15 years, the fund has only really cost investors at a rate of 0.01% (CAGR) on a total return basis. Thanks Jo. Hadn't realised the gap had closed down that much. With time...
by Clive
Mon Nov 17, 2014 4:56 pm
 
Forum: Investing - Theory, News & General
Topic: Why I Like Index Funds
Replies: 26
Views: 6437

Re: Why I Like Index Funds

Could you now list the reasons to not be in an index fund? A more balanced approach to discussing index funds is necessary to see the whole picture. Basically, complete and impartial data is always appreciated. 1928 Dow holdings, initially equally weighted and just held thereafter, relatively outpe...
by Clive
Mon Nov 17, 2014 12:15 pm
 
Forum: Investing - Theory, News & General
Topic: Why I Like Index Funds
Replies: 26
Views: 6437

Re: Strategies to protect retirement from depressn or long b

Say you are retired and have a portfolio large enough to easily survive the typical market crash. The “great recession” was scary but no problem. You’re prepared for pretty bad inflation and deflation. But you’d like to be more prepared for either an extended bear market like Japan 1990- or an even...
by Clive
Wed Nov 12, 2014 3:08 am
 
Forum: Investing - Theory, News & General
Topic: Strategies to protect retirement from depressn or long bear?
Replies: 33
Views: 4349

Re: astonishing performance of US markets vs others

When I compared veu or vwo vs spy over the past 5 years I was surprised to see how much better US markets (eg spy) have done. From a UK investor perspective (i.e. priced in GB£), the S&P500 total return is near middle of the road relative to our FT100 (100 largest) and FT250 (next 250 largest, ...
by Clive
Tue Nov 11, 2014 6:44 pm
 
Forum: Investing - Theory, News & General
Topic: astonishing performance of US markets vs others
Replies: 50
Views: 5475

Re: Equal weight vs. capitalization weight between world reg

That currently around half the value of global equities is made up of US domiciled companies is simply a fact. In the past that value has moved in a band roughly of 40-60% of global stock market capitalization being in US domiciled companies, and in the future that percentage will move around some ...
by Clive
Mon Nov 03, 2014 3:02 am
 
Forum: Investing - Theory, News & General
Topic: Equal weight vs. capitalization weight between world regions
Replies: 18
Views: 1402

Re: Equal weight vs. capitalization weight between world reg

This article indicates that 20 major markets equal weighted had the safer 30 year historic worst case http://patrickoshag.tumblr.com/post/93207823244/the-dangers-of-portfolio-patriotism since 1900. However in more recent times/decades companies tend to be much more global. The S&P500 for instanc...
by Clive
Sun Nov 02, 2014 6:36 pm
 
Forum: Investing - Theory, News & General
Topic: Equal weight vs. capitalization weight between world regions
Replies: 18
Views: 1402

Re: Only 3 factors determine stock market returns

Thanks Browser

On reading this threads title I was expecting to see a posting about "up, down, sideways" on opening the thread, so pleasantly surprised :)
by Clive
Sun Nov 02, 2014 2:54 pm
 
Forum: Investing - Theory, News & General
Topic: Only 3 factors determine stock market returns
Replies: 9
Views: 1307

Re: It's easy to be a "Wealth Manager" (humor)

Vanguard isn't exempt from such opacity either. For example VUSA factsheet https://www.justetf.com/uk/etf-profile.html?isin=IE00B3XXRP09&tab=documents wording indicates that it seeks to track the performance of the 'index' ...etc and the expense ratio of 0.07% is prominent. You have to be observ...
by Clive
Sun Nov 02, 2014 12:47 pm
 
Forum: Investing - Theory, News & General
Topic: It's easy to be a "Wealth Manager" (humor)
Replies: 6
Views: 1754

Re: Blog: Harry Browne's Permanent Portfolio

Also these returns do not include the very high costs of trading and storing physical gold over most of that period. Those costs would easily have shaved at least 1% annually from the real world returns of the PP. Total bunk. Nor taxation. In the UK late 1970's basic rate (most common) tax rose to ...
by Clive
Sun Nov 02, 2014 11:38 am
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 79
Views: 17214

Re: Blog: Harry Browne's Permanent Portfolio

The Permanent Portfolio (PP) starts of with a relatively heavy 25% allocation to gold that can act as a drag factor for years/decades. And then when circumstances reflect its value - PP investors sell chunks off potentially early into subsequent strong gains. All else being equal, starting with 200 ...
by Clive
Sun Nov 02, 2014 4:31 am
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 79
Views: 17214

Re: Blog: Harry Browne's Permanent Portfolio

since the starting point is at the peak of stocks, that means you have specifically chosen the period that would show the worst results for stocks. +1 here's a recent set of return numbers that underline gold's value And here's another set of return numbers : September 12th 2011 to recent and holdi...
by Clive
Sun Nov 02, 2014 3:36 am
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 79
Views: 17214

Re: Should I use margin to buy a balanced fund?

Aside from tax on gains, there are the complications of currency differences, and also how to deal with foreign dividend cheques In the UK TD Ameritrade, TD Waterhouse, TD DirectInvesting (different names in different countries for the same group) cater for holding multiple currencies in the same a...
by Clive
Thu Oct 30, 2014 5:38 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Blog: Harry Browne's Permanent Portfolio

... Likewise, the less than 2% gap that separated stock, bonds, and gold for 1964-2011 does not manke any sense, and for much the same reason: The period, particularly its last half, saw a historic bull market in both bonds and gold, a pairing of events not likely to recur any time soon. Assume the...
by Clive
Thu Oct 30, 2014 11:48 am
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 79
Views: 17214

Re: Should I use margin to buy a balanced fund?

Hi Zb3 If you held NZ bonds as the two-thirds partner to a third in US 3x stock ETF then you are also playing the carry trade/interest rate/FX differential which will induce additional tracking error/drift. But broadly that might be expected to wash over the mid/longer term. Since 2010 for instance ...
by Clive
Thu Oct 30, 2014 8:23 am
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: If I am a LT investor, should I forgo a bond allocation?

Long term treasury may move counter direction to stocks when stocks dip, only to then see the reverse the next year, stocks up, LTT down. That's ok if you're worried about shorter term volatility and maybe rebalance, but longer term that shorter term volatility reduction over some periods becomes ju...
by Clive
Thu Oct 30, 2014 4:48 am
 
Forum: Investing - Theory, News & General
Topic: If I am a LT investor, should I forgo a bond allocation?
Replies: 28
Views: 2315

Re: End of QE2 or Where did it go?

Mostly in excess reserves. I believe the consensus thinking now is that interest paid to these excess reserves will become the key policy rate once rate hikes commence next year. So are you predicting a Quantitative Tightening going forward rather than a prolonged Japan negative real yield type sce...
by Clive
Thu Oct 30, 2014 4:35 am
 
Forum: Investing - Theory, News & General
Topic: End of QE2 or Where did it go?
Replies: 13
Views: 1541

Re: Should I use margin to buy a balanced fund?

... I was wondering why the majority of people use a x2 leveraged ETF as opposed to a x3? ... Or does the volatility decay in a x3 portfolio negate this idea, even when rebalancing often? Using LETF's to replicate 1x i.e. a third in 3x stock, two-thirds in bonds fundamentally distils down to being ...
by Clive
Thu Oct 30, 2014 3:26 am
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Should I use margin to buy a balanced fund?

For example, stocks have dropped by as much as 55% from 2007-2009, so one invested 2x in stocks would have lost everything. On the other hand, a 40/60 portfolio dropped by less than 20% SSO = 2x S&P500 SPY = S&P500 IEI = 4 - 5 year Treasury Bonds Down leg : May 2nd 2007 to March 2nd 2009 to...
by Clive
Wed Oct 29, 2014 12:39 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: How should we invest if interest rates never go up?

5 year ladder. Japan since 2000 has seen a average of marginally negative inflation - something close to -0.11%, 5 year Japan treasury bonds for the same years averaged +0.63%, nearly a +0.75% spread. Some UK high street banks are paying around 2.2% more on 5 year cash bonds http://moneyfacts.co.uk/...
by Clive
Wed Oct 29, 2014 9:18 am
 
Forum: Investing - Theory, News & General
Topic: How should we invest if interest rates never go up?
Replies: 17
Views: 1858

Re: Should I use margin to buy a balanced fund?

is/was my major complaint with leveraged ETFs. The constant leverage does the opposite of what we want to do -- they buy high and sell low. Rise relatively more in uptrends, decline relatively less in down-runs, relatively lose out during sideways zigzags. They're different. My largest criticism of...
by Clive
Wed Oct 29, 2014 12:49 am
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Should I use margin to buy a balanced fund?

In a previous post, several links were given to papers describing a rebalancing strategy when using leveraged ETFs. Leveraged ETFs sell when prices decline and buy when prices increase. The rebalancing strategy buys when prices decline and sell when prices increase. This counteracts the rebalancing...
by Clive
Tue Oct 28, 2014 6:10 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Should I use margin to buy a balanced fund?

Assume the value of company A shares go up 25% in the first day, and down 20% the next day. Risk adjust the comparison Investor A buys $100 of the 1x Investor B buys $50 of the 2x Both have the equivalent of $100 1x stock risk exposure First day share price rises 25%. A gains $25, B gains 50% x $50...
by Clive
Tue Oct 28, 2014 5:53 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Should I use margin to buy a balanced fund?

Broadly investors are rewarded for taking risks - but not always proportionately so. There are a range of risk factors and often volatility is considered as being one risk factor. Typically rewards can be derived from each of price appreciation, income (dividends, interest), FX (currency fluctuation...
by Clive
Tue Oct 28, 2014 8:07 am
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Should I use margin to buy a balanced fund?

Leveraged ETFs do seem to be a reasonable option for tax-advantaged accounts that cannot use margin directly despite my earlier objections. Most of the articles seem to suggest that managing a portfolio of LETFs needs to be rebalanced frequently to exploit the volatility -- rebalanced monthly if no...
by Clive
Tue Oct 28, 2014 7:30 am
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Should I use margin to buy a balanced fund?

Park PM'd me asking me to drop in a comment here ... so : Broadly stocks are similar to leveraged bonds. A typical/average stock has a debt/equity ratio of 1. Compare 50/50 stock/T-Bill to total bond and http://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&endYear=2013&init...
by Clive
Mon Oct 27, 2014 4:56 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Vanguard total international

Hong Kong have what they call Red Chip stocks - similar to what we know as Blue Chip i.e. large, but for large China based stocks/companies. https://www.hkex.com.hk/eng/stat/smstat/chidimen/cd_rcmb.htm That list indicates around 5T HK$ worth of market cap in such red chips, and as 1 HK$ is around 0....
by Clive
Sun Oct 26, 2014 2:31 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard total international
Replies: 6
Views: 1359

Re: Should I use margin to buy a balanced fund?

I'm not convinced that leveraged ETFs have a place in a buy-and-hold portfolio. The need to frequently rebalance makes them problematic in my opinion. Though, maybe it's more personal disappointment with how leveraged ETFs work. Rob, half in 2x S&P500 (SSO), half in a VFISX/TLT (shorter dated/l...
by Clive
Fri Oct 24, 2014 5:57 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 637
Views: 87437

Re: Three Possible Outcomes for Future Investment Returns

Equities should deliver 3-4% real. On average. For some - 20 years of 0%, for others - 20 years of 8%. The more recent decades have tended to be on the better side of that average. 1980 - 1999 TSM +12.5% real, combine that with 2000 - 2019 TSM -4.5% real and in combination 1980 - 2019 = +4% real av...
by Clive
Thu Oct 23, 2014 3:48 am
 
Forum: Investing - Theory, News & General
Topic: Three Possible Outcomes for Future Investment Returns
Replies: 32
Views: 2493
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