Search found 1296 matches

by Clive
Tue Jun 30, 2015 10:57 am
Forum: Investing - Theory, News & General
Topic: Emergency Portfolio with 30% Stocks
Replies: 33
Views: 1691

Re: Emergency Portfolio with 30% Stocks

In the land of TT (Topsy-turvy) people barter using shares of which there are many denominations. One day a clever individual devised a index against which the different denominations could be associated. Generally the population are content as more often stuff costs fewer shares to buy each year, s...
by Clive
Mon Jun 29, 2015 2:44 pm
Forum: Investing - Theory, News & General
Topic: Spending from separate retirement buckets
Replies: 21
Views: 1563

Re: Spending from separate retirement buckets

Three buckets 1. Own own home - so all 'rent' paid in advance 2. Drawdown, initially 20 years of income in safe (ideally inflation pacing/exceeding/liability matched) bonds. 3. Growth. Ideally doubles in real terms in 20 years or less I established a ladder for 2. taking into account future pensions...
by Clive
Mon Jun 29, 2015 2:26 pm
Forum: Investing - Theory, News & General
Topic: International stock "dividend variability" Why?
Replies: 49
Views: 4594

Re: International stock "dividend variability" Why?

Combination of Vodaphone/Verizon massive special dividend that was paid out some time around March 2014 ... and US$ strengthening by around 20% compared to a basket of other currencies https://chart.finance.yahoo.com/z?s=UUP&t=2y&q=l&l=off&z=m&a=v&p=s&lang=en-GB&regio...
by Clive
Mon Jun 29, 2015 5:35 am
Forum: Investing - Theory, News & General
Topic: The Other Side, part 3
Replies: 16
Views: 1986

Re: The Other Side, part 3

But the fundamental concepts still apply : initial equal weight - diversifying widely, and either simply buy and hold (leave as is) or better still periodically rebalance back towards equal weighting if cost/tax efficient to do so. The latter is technically the more rewarding, subject to costs/taxes...
by Clive
Sun Jun 28, 2015 6:11 am
Forum: Investing - Theory, News & General
Topic: The Other Side, part 3
Replies: 16
Views: 1986

Re: The Other Side, part 3

There's a common fractal pattern to stock gains. Take any time period from a few months up to 100+ years, sort and plot the individual gains and you'll see a deep left tail that rises quite steeply before levelling off into a more gentle upward slope, with a steep/tall right tail. Broadly a few do p...
by Clive
Sun Jun 28, 2015 5:06 am
Forum: Investing - Theory, News & General
Topic: The Other Side, part 3
Replies: 16
Views: 1986

Re: The Other Side, part 3

Format's not good, but this is the data I've formed from a Japanese investors perspective relative to total returns (dividends reinvested) for each of Australia (AORD), US, UK and TOPIX (Japan) all adjusted to Yen based % gains. A 5 year ladder of Japanese bonds is also included that is simply the r...
by Clive
Sat Jun 27, 2015 6:38 pm
Forum: Investing - Theory, News & General
Topic: The Other Side, part 3
Replies: 16
Views: 1986

Re: The Other Side, part 3

Ideally any potential lump sum investment should be assessed on current valuations. The Wall Street Crash years were preceded by the Roaring 20's, when stocks doubled, doubled again and doubled yet again within a decade or so. Similar in the case of Japan's 1990 peak. Lumping in after such prior fas...
by Clive
Sat Jun 27, 2015 6:18 pm
Forum: Investing - Theory, News & General
Topic: The Other Side, part 3
Replies: 16
Views: 1986

Re: The Other Side, part 3

I think that DCA is a psychological smoke screen that fools investors into adopting an inappropriate asset allocation. I really think that one should listen to one's rational fear of losing a significant amount of money in little time and chose an appropriate asset allocation. I've been thinking ab...
by Clive
Sat Jun 27, 2015 6:09 pm
Forum: Investing - Theory, News & General
Topic: The Other Side, part 3
Replies: 16
Views: 1986

Re: The Other Side, part 3

In your graph, why do you use US as a substitute for foreign stocks in general? Because the US$ is the primary world reserve currency, largest market share/global presence and most widely diversified. Australia for instance is primarily a commodity/mining and financials play The graph is interestin...
by Clive
Sat Jun 27, 2015 3:26 pm
Forum: Investing - Theory, News & General
Topic: The Other Side, part 3
Replies: 16
Views: 1986

Re: The Other Side, part 3

It is the beginning of 1990. Mayumi receives a present from her grandmother for 25000¥. Grandma advises young Mayumi to invest the money in the domestic stock market. For reasons I’ll explain later, my series of threads does not use international stocks After such strong Japanese stock performance ...
by Clive
Fri Jun 26, 2015 12:42 pm
Forum: Investing - Theory, News & General
Topic: Will stocks beat bonds over next 30 years?
Replies: 78
Views: 8640

Re: Will stocks beat bonds over next 30 years?

After WW1 the British Empire went into decline and the US more or less started taking over the helm of the global economy and in the process we started progressively breaking away from a gold standard until President Nixon more or less finalised that decoupling as a means to cover the costs of the V...
by Clive
Thu Jun 25, 2015 5:20 pm
Forum: Investing - Theory, News & General
Topic: AQR/Asness: Stocks, Bonds: Bleak Outlook
Replies: 90
Views: 6966

Re: AQR/Asness: Stocks, Bonds: Bleak Outlook

As you can see from this heat map, there are many periods in which US stocks have returned zip for over two decades. So, it wouldn't be extraordinary for that to happen over the next 2-3 decades. Plan accordingly. Two bucket, 50/50 initial stock/bonds, drawing down bonds 2.5%/year for 20 years, let...
by Clive
Thu Jun 25, 2015 4:30 pm
Forum: Investing - Theory, News & General
Topic: AQR/Asness: Stocks, Bonds: Bleak Outlook
Replies: 90
Views: 6966

Re: AQR/Asness: Stocks, Bonds: Bleak Outlook

Now for the depressing part. The real return of bonds is currently 0% while that of stocks is 3.7%. Do the math and that's ... 50% initially invested in 20 year inflation bond ladder, say 0% real overall reward, 2.5%/year drawdown. 50% in stocks/accumulation, grows at 3.7% real and over 20 years 50...
by Clive
Wed Jun 24, 2015 9:03 am
Forum: Investing - Theory, News & General
Topic: Investor Gap vs. Zero Sum Game
Replies: 15
Views: 1421

Re: Investor Gap vs. Zero Sum Game

Let me see if I can (somewhat) clearly explain my question. I'm new to these boards, but I'm a longtime Vanguard account holder. As I understand it the following items are true (at least that's what I've been told/read and believe): 1) The stock market is a zero sum game. If the market itself, let'...
by Clive
Sun Jun 21, 2015 4:19 pm
Forum: Investing - Theory, News & General
Topic: The "4% Rule" revisited
Replies: 102
Views: 13212

Re: The "4% Rule" revisited

Over the last 85 years, the worst possible years to retire were 1931, 1932, and 2000. Whilst retiring in those years were below average, stock gains in the lead up to those retirement years were above average http://jfholdings.pwp.blueyonder.co.uk/dow_29.gif https://chart.finance.yahoo.com/z?s=%5eG...
by Clive
Sun Jun 21, 2015 3:25 am
Forum: Investing - Theory, News & General
Topic: The "4% Rule" revisited
Replies: 102
Views: 13212

Re: Obvious Flaws in the 4% Rule

An individual has more risk of a miss-- pensions have members retire at different times, diversifying the initial conditions at start of each withdrawal. I opted for the 2 bucket approach, Drawdown (bonds that ideally inflation pace (or better); Growth to top up/replenish bonds via profit taking). ...
by Clive
Sun Jun 21, 2015 2:54 am
Forum: Investing - Theory, News & General
Topic: The "4% Rule" revisited
Replies: 102
Views: 13212

Re: The "4% Rule" revisited

There's a risk of running out of money, and there's a risk of running out of time... The 2.5% SWR people don't seem too interested in addressing the "running out of time" risk at all. As a (<) 2.5% WR myself who 'retired' in their early 40's I can see how that might apply to those still i...
by Clive
Sat Jun 20, 2015 4:53 pm
Forum: Investing - Theory, News & General
Topic: The "4% Rule" revisited
Replies: 102
Views: 13212

Re: The "4% Rule" revisited

Many experts say to expect diversified stocks and bonds to return something like 2%, 2.5% above inflation in the long run from now as the central tendency, with better and worse outcomes both likely. I opted for the 2.5% withdrawal rate choice myself, initial 50% in safe/inflation pacing (bonds) wi...
by Clive
Sat Jun 20, 2015 4:35 pm
Forum: Investing - Theory, News & General
Topic: The "4% Rule" revisited
Replies: 102
Views: 13212

Re: The "4% Rule" revisited

The real thing to understand is that 4% is already a very conservative number... 4% worked during the Great Depression... and 3.7% worked for the unfortunate people who retired in 1966-67... 1966-1982 was 16 years of basically zero stock market gains (DOW was around 1000 in 1966 and still around 10...
by Clive
Fri Jun 19, 2015 1:30 am
Forum: Investing - Theory, News & General
Topic: SPDR Gold Trust (GLD)
Replies: 14
Views: 1366

Re: SPDR Gold Trust (GLD)

patrick wrote:As total central bank assets are nowhere near half the global stock market value, I somehow doubt this.

More strictly, Central Banks, Sovereign Funds and Public Pension Funds collectively hold assets equivalent to 40% of world output.
by Clive
Thu Jun 18, 2015 2:34 pm
Forum: Investing - Theory, News & General
Topic: Retirees: Did you spend much time wringing your hands over Retirement Savings as Many on Forum Do Today?
Replies: 81
Views: 11411

Re: Retirees: Did you spend much time wringing your hands over Retirement Savings as Many on Forum Do Today?

Just like the subject heading states: Current retirees on this forum, during your working years, did you spend what seems to be an inordinate amount of time and effort planning your retirement strategy as many posters on this forum (myself included :P ) appear to be expending? Yes. Over-analysed in...
by Clive
Thu Jun 18, 2015 2:06 pm
Forum: Investing - Theory, News & General
Topic: The "4% Rule" revisited
Replies: 102
Views: 13212

Re: The "4% Rule" revisited

The real thing to understand is that 4% is already a very conservative number... 4% worked during the Great Depression... and 3.7% worked for the unfortunate people who retired in 1966-67... 1966-1982 was 16 years of basically zero stock market gains (DOW was around 1000 in 1966 and still around 10...
by Clive
Thu Jun 18, 2015 1:57 pm
Forum: Investing - Theory, News & General
Topic: SPDR Gold Trust (GLD)
Replies: 14
Views: 1366

Re: SPDR Gold Trust (GLD)

And if you're inclined to say gold "earns" inflation, try using that (debatable) view to come up with a price independent of any past price levels. I bought a load of junk bonds (convertibles) at what later transpired to be near the 2009 lows. 13% dividends, that were cut to 8%, but the p...
by Clive
Thu Jun 18, 2015 12:52 pm
Forum: Investing - Theory, News & General
Topic: SPDR Gold Trust (GLD)
Replies: 14
Views: 1366

Re: SPDR Gold Trust (GLD)

I gave my gold to someone else to hold in 2010 at around the same price as more recent. With stocks having risen 90% since then I could now buy back that gold at in effect a near 50% discount, or buy back 90% more gold. If I end up with 90% more gold at the end of 20 years than at the start of the 2...
by Clive
Thu Jun 18, 2015 12:37 pm
Forum: Investing - Theory, News & General
Topic: The "4% Rule" revisited
Replies: 102
Views: 13212

Re: The "4% Rule" revisited

Didn't the original "4% rule" assume some absurdly high portfolio cost also, something like 1% ER? Wasn't US stock returns something like 12% arithmetic nominal (since 1928), that due to volatility knocks down to around a 9% geometric. Which after inflation drops to around 4.5% real. I'm ...
by Clive
Thu Jun 18, 2015 12:04 pm
Forum: Investing - Theory, News & General
Topic: SPDR Gold Trust (GLD)
Replies: 14
Views: 1366

Re: SPDR Gold Trust (GLD)

Nice 200 year historic Dow/Gold chart provided by http://www.sharelynx.com/chartstemp/DowGoldRatio.php

Image

Not sure how that sits with the Dow Industrial not having been conceived until 1896 though.
by Clive
Thu Jun 18, 2015 11:50 am
Forum: Investing - Theory, News & General
Topic: SPDR Gold Trust (GLD)
Replies: 14
Views: 1366

Re: SPDR Gold Trust (GLD)

Currency used to be exchangeable for gold... ...starting about 1870 Subjective. Henry VII introduced the first Sovereign gold coins in 1489. In the UK Sovereign (and Britannia) gold coins are legal tender, face value of a Pound, but not that you'll ever get any in your change as the gold value make...
by Clive
Thu Jun 18, 2015 11:16 am
Forum: Investing - Theory, News & General
Topic: SPDR Gold Trust (GLD)
Replies: 14
Views: 1366

Re: SPDR Gold Trust (GLD)

Around 1250 years ago, a Anglo-Saxon king (Offa) of middle England (Mercia) introduced silver coins as currency. A Saxon Pound weight of silver being a pound of currency, with a pound being divided into 240 silver pennies (old pre-decimal currency, 12 pennies to a shilling, 20 shillings to a pound)....
by Clive
Tue Jun 09, 2015 12:18 am
Forum: Investing - Theory, News & General
Topic: There’s No Place to Hide as Bonds Move in Tandem With Equities?
Replies: 18
Views: 2793

Re: There’s No Place to Hide as Bonds Move in Tandem With Equities?

Maybe for Bonds. For Notes however (<10 years) and it looks to be business as usual. Looking at the yearly nominal stock purchase power of US short term treasury's since 1972 I'm seeing figures of Average -1.7% Stdev 20 Min -25% Max 69% Since 2000 the figures are Average +1.6% Stdev 26% Min -25% Max...
by Clive
Fri Jun 05, 2015 3:29 pm
Forum: Investing - Theory, News & General
Topic: Convertible Bonds and Preferred Stock. Why don't we invest in them?
Replies: 16
Views: 1303

Re: Convertible Bonds and Preferred Stock. Why don't we invest in them?

The convertible's I bought at near the 2009 lows up to that point had more or less mirrored stock performance, and much the same since also. At least in total return terms. Throw off a shed load of regular (monthly) cash. IIRC around 13%/yr at the time of purchase, but more recently around 8%/yr.
by Clive
Mon Jun 01, 2015 4:15 am
Forum: Investing - Theory, News & General
Topic: Stemikger "Volatility is far from synonymous with risk."
Replies: 152
Views: 10025

Re: Stemikger "Volatility is far from synonymous with risk."

We should NOT be using 1-year standard deviation as the risk axis when plotting return vs. risk. We should using the actual holding period standard deviation, e.g. 20-years or 30-years, which will be different. The investment industry has been getting it wrong all these years. For UK/US 50/50 initi...
by Clive
Sun May 31, 2015 5:05 pm
Forum: Investing - Theory, News & General
Topic: Value Outperformance ex-Dividends
Replies: 11
Views: 1043

Re: Value Outperformance ex-Dividends

Some dividends incur up to around 35% withholding taxes. When a dividend is paid typically the share price drops by the amount of dividend paid, so if you're reinvesting dividends they're a form of return of capital that's just reinvested. Pre-internet trading days some traded via post and brokers/m...
by Clive
Sun May 31, 2015 4:33 pm
Forum: Investing - Theory, News & General
Topic: Can this be possible? [Not lose money during 2008 crash]
Replies: 57
Views: 6321

Re: Can this be possible? [Not lose money during 2008 crash]

I guess if you're unclear how they did it Luck. Right choice/prediction somewhere close to when that prediction paid off. In other cases their predictions haven't come to fruition and they've paid the price of insuring against such prediction without benefiting from a claim payment (relatively lagg...
by Clive
Sun May 31, 2015 3:54 pm
Forum: Investing - Theory, News & General
Topic: Stemikger "Volatility is far from synonymous with risk."
Replies: 152
Views: 10025

Re: Stemikger "Volatility is far from synonymous with risk."

I look at risk and uncertainty as two different concepts. Risk to me is permanent loss of capital on a real basis. Volatility in my mind is closer to uncertainty. So I try to find low risk high uncertainty investments as those are the ones that are typically priced low due pricing based on volatili...
by Clive
Sun May 31, 2015 2:40 pm
Forum: Investing - Theory, News & General
Topic: Stemikger "Volatility is far from synonymous with risk."
Replies: 152
Views: 10025

Re: Stemikger "Volatility is far from synonymous with risk."

Just some observations The US 30 year real returns are one of the more successful cases. Since 1900, out of 20 major markets more than half have endured a worst case 30 year negative real total gain (dividends reinvested). Over 20 years the 'failures' (negative) cases are much higher with only US, C...
by Clive
Sun May 31, 2015 3:59 am
Forum: Investing - Theory, News & General
Topic: Can this be possible? [Not lose money during 2008 crash]
Replies: 57
Views: 6321

Re: Can this be possible? [Not lose money during 2008 crash]

I would say that it would be practically impossible to have had stocks and bonds and not lose money in the market crash From a UK investors perspective, domestic stock, foreign (US) stock, gold, third equal weightings broke even in both nominal and real terms over 2008 calendar year. Generally both...
by Clive
Sat May 30, 2015 6:31 am
Forum: Investing - Theory, News & General
Topic: Forget BND. Here's another idea...
Replies: 39
Views: 4860

Re: Forget BND. Here's another idea...

P.S. Emerging markets bonds may or may not have an acceptable risk/reward relationship, but they are not really like investment-grade bonds. If you are considering them I have one question for you: what happened to the value of emerging markets bonds and bond funds in 1997? If you don't know the an...
by Clive
Sat May 30, 2015 5:16 am
Forum: Investing - Theory, News & General
Topic: Help me simply understand why Bonds now?
Replies: 32
Views: 2980

Re: Help me simply understand why Bonds now?

Sidney wrote:The chances are probably significant that some time in the next few years the equity indexes will get a 30-40% haircut. Normally in these situations high quality bonds do fairly well.

Even if bonds = 0% when stocks are down -40% then the stock purchase power of bonds has risen 67%.
by Clive
Sat May 30, 2015 5:03 am
Forum: Investing - Theory, News & General
Topic: Can this be possible? [Not lose money during 2008 crash]
Replies: 57
Views: 6321

Re: Can this be possible?

ticker symbols MCD, SHY https://www.portfoliovisualizer.com/backtest-portfolio?s=y&allocation2_1=50&allocation1_1=50&annualOperation=0&initialAmount=10000&symbol1=MCD&endYear=2009&symbol3=SPY&symbol2=SHY&inflationAdjusted=true&annualAdjustment=0&showYield...
by Clive
Thu May 28, 2015 7:50 am
Forum: Investing - Theory, News & General
Topic: Market Capitalization Flaw in Index Funds
Replies: 11
Views: 1203

Re: Market Capitalization Flaw in Index Funds

If everyone equal weighted everything, then the entire business and assets of Apple with their billions of dollars stashed away would be priced as an enterprise with the same total value as some small deeply indebted operation with poor future prospects. A small indebted operation that received a m...
by Clive
Thu May 28, 2015 7:36 am
Forum: Investing - Theory, News & General
Topic: Stemikger "Volatility is far from synonymous with risk."
Replies: 152
Views: 10025

Re: Stemikger "Volatility is far from synonymous with risk."

What about the VIX (volatility index).

Very volatile, but mean reverts.

It also tends to spike when share prices shift rapidly. Gains when either stocks have dropped a lot quickly or risen a lot quickly.
by Clive
Thu May 28, 2015 7:19 am
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 51
Views: 4744

Re: Portfolio Volatility is a Big Drag on Returns

I can make volatility go to zero by putting cash under my bed. Since 1972 the average yearly stock purchase power of money under the bed was more volatile than money invested in T-Bills :) Typically buying -4.01% less stock than a year earlier on average with a 19.56% standard deviation (best year ...
by Clive
Thu May 28, 2015 5:53 am
Forum: Investing - Theory, News & General
Topic: Market Capitalization Flaw in Index Funds
Replies: 11
Views: 1203

Re: Market Capitalization Flaw in Index Funds

If the broad cap-weighted stock market portfolio is "distorted" then the entire market is distorted. Cap-weighting doesn't systematically over-weight or under-weight anything, it owns everything in proportion to how the market values it. Lemmings. Because more opted for one sector out of ...
by Clive
Thu May 28, 2015 5:27 am
Forum: Investing - Theory, News & General
Topic: Reducing the Black Swans
Replies: 69
Views: 7329

Re: Reducing the Black Swans

but I'd just point out that gold wasn't legally investible in the US until 1975, and the Nixon administration was playing games with the decoupling of the gold standard, devaluing of the dollar Gold has been legal tender in the UK since ... whenever. Around 1250 years ago the Anglo Saxon King of Me...
by Clive
Wed May 27, 2015 3:49 pm
Forum: Investing - Theory, News & General
Topic: Reducing the Black Swans
Replies: 69
Views: 7329

Re: Reducing the Black Swans

...The problem is he [Taleb] no longer believes that Treasuries are riskless assets and doesn't trust any bonds. I have the same thoughts about Zvi Bodie's choice of 90% inflation bonds - way too much single asset (taxflation) risk. Combine a 4x25 Permanent Portfolio with a 25/75 Larry Portfolio, 5...
by Clive
Wed May 27, 2015 12:44 pm
Forum: Investing - Theory, News & General
Topic: Reducing the Black Swans
Replies: 69
Views: 7329

Re: Reducing the Black Swans

I'm not sure about using small value in the Larry portfolio. For one, the LP seems to work even better with 2x levered ETFs. or even with 3x levered ETFs 30% 1x, 70% safe 15% 2x, 85% safe 10% 3x, 90% safe. half in 2x, half in bonds generally compares to 100% 1x if you rebalance once yearly or so. A...
by Clive
Wed May 27, 2015 8:32 am
Forum: Investing - Theory, News & General
Topic: Expense Ratio Comparison
Replies: 9
Views: 810

Re: Expense Ratio Comparison

Care has to be taken to drill down into where a fund is domiciled (and what taxes that may involve), what it holds and what if any withholding taxes that may involve. ETF holds a foreign stock that pays a 4% dividend, which is reduced by 30% withholding tax (1.2%). Fund management fee a impressively...
by Clive
Mon May 25, 2015 4:06 pm
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 51
Views: 4744

Re: Portfolio Volatility is a Big Drag on Returns

This is an improper example. we know gains and losses from stocks are proportional to the money invested. while in your example, the gain or lose is fixed at $50, doesn't matter how much you originally have. the whole following analysis is then flawed. I was just reading a shortened version of Ilma...
by Clive
Sun May 24, 2015 7:38 am
Forum: Investing - Theory, News & General
Topic: Market Cap and Value
Replies: 46
Views: 2413

Re: Market Cap and Value

...with the Fama and French value portfolio. That portfolio is usually called high-minus-low or HML. The problem is that HML has a built-in tilt towards small stocks. Fama and French start by building six portfolios . The HML portfolio then invests 50% in big value and 50% in small value. Big stock...
by Clive
Sun May 24, 2015 7:07 am
Forum: Investing - Theory, News & General
Topic: Why government bonds at all?
Replies: 55
Views: 4356

Re: Why government bonds at all?

So my thought is, I wouldn't buy equity in government. Why would I buy bonds in government? ... With a corporate stock or corporate bond, someone on the other end is trying to create value for me. The market forces ensure that if he/she fails, he/she will be replaced by someone who can. Government ...

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