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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: 2947

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: 2947

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: 2947

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: 2947

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: 2947

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: 58
Views: 2861

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: 2947

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: 2947

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: 2136

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: 1993

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: 4880

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: 1406

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: 1091

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: 3072

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: 12351

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: 1916

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: 3973

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: 3973

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: 3973

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: 3973

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: 3973

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: 3973

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: 3973

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: 3973

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: 3973

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: 3973

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: 4298

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: 5758

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: 5758

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: 5758

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: 4298

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: 4298

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: 4298

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: 1093

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: 1093

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: 1093

Re: Question about long treasuries and increased supply

Think of it as refinancing (technically it's called refunding). Refunding/refinancing = default (partial) renegotiated terms with the lender(s) (buyers/holders of treasury bonds). Banks accept deposits and use that (your) money to 'speculate' on a heads we win, tails you (taxpayer) lose basis. 2008...
by Clive
Tue Jul 29, 2014 11:57 am
 
Forum: Investing - Theory, News & General
Topic: Question about long treasuries and increased supply
Replies: 17
Views: 1093

Re: Why should stocks go up over the long term?

Stocks of particular companies do not for the most part go up over the long-term. Stocks that are growing in value change over time because economies are dynamic. Many of the biggest US stocks today were tiny or non-existent in 1980. Many of the biggest stocks in 2050 are undoubtedly tiny or non-ex...
by Clive
Mon Jul 28, 2014 8:04 pm
 
Forum: Investing - Theory, News & General
Topic: Why should stocks go up over the long term?
Replies: 34
Views: 2884

Re: Why should stocks go up over the long term?

What's to say that this long term growth of stocks will continue going forward? Couldn't we have hit the "peak" and it no longer grow from here? If you buy some land and sell it 10, 20, whatever years later, you might reasonably expect to receive a similar amount in inflation adjusted ter...
by Clive
Mon Jul 28, 2014 7:39 pm
 
Forum: Investing - Theory, News & General
Topic: Why should stocks go up over the long term?
Replies: 34
Views: 2884

Re: Higher Returns at Lower Risk - please comment

It seems to me that in the link, Vanguard is not arguing the existence of a small cap value premium, rather it is exploring whether (and why) it may or may not exist I'd conjecture that its more a case of reducing the cost of failure/stress - not so much a premium but a reduction of the losses that...
by Clive
Mon Jul 28, 2014 6:21 am
 
Forum: Investing - Theory, News & General
Topic: Higher Returns at Lower Risk - please comment
Replies: 59
Views: 6614

Re: Predict: S&P Doubles or Halves First?

The obvious answer then was and still is that it will likely double before it will half because equities have an upward bias. The OP stipulated do not include dividends Robert Shillers real S&P share prices indicate 1906 236, 1982 251. With hindsight that's a relative high to a relative low how...
by Clive
Wed Jul 23, 2014 2:52 pm
 
Forum: Investing - Theory, News & General
Topic: Predict: S&P Doubles or Halves First?
Replies: 36
Views: 2720

Re: Gold, Silver, Copper

If you base your plan on history in the US, the point is entirely moot, there will be no such crisis, period. 1933 the US bought all investment grade gold at its then fixed market price of around $20 and a year later ramped the price fix up to around $35. In effect a confiscation/default. Periodica...
by Clive
Wed Jul 23, 2014 1:59 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 113
Views: 6941

Re: Gold, Silver, Copper

Hyper inflation in one country is a silly argument for gold. gold is only worth whatever it can buy. Gold can buy other currencies. During 2008 Icelandic financial crisis the price of gold stayed much the same in Euro's, but the Icelandic Krona currency dropped. i.e. the price of gold rose in Krona...
by Clive
Wed Jul 23, 2014 1:35 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 113
Views: 6941

Re: Predict: S&P Doubles or Halves First?

http://www.jfholdings.pwp.blueyonder.co.uk/images/7580FD1DBD45996DBEC05AF93174E161092B0C66.jpg By eye, and assuming US stocks broadly compared to UK stocks halved halved doubled doubled halved doubled halved halved doubled doubled doubled Recency, trend and mean reversion looks more to the next pha...
by Clive
Wed Jul 23, 2014 12:55 pm
 
Forum: Investing - Theory, News & General
Topic: Predict: S&P Doubles or Halves First?
Replies: 36
Views: 2720

Re: Gold, Silver, Copper

the UK is not in the Euro so it pulling out of the EU does not directly impact the Euro Agreed, but the euro zone include the UK's GDP as part of the EU Australia and Canada (nor New Zealand) The UK is 65% self sufficient in food (and on average the populous is 35% overweight!), the rest is made up...
by Clive
Wed Jul 23, 2014 12:14 pm
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 113
Views: 6941

Re: Gold, Silver, Copper

But at the moment, there is this shift (I don't know how big) towards settling in gold. gold Renminbisation BRIC (Brazil, Russia, India, China) is 35% of world trade (global GDP), 42% of the global population, yet have a relatively (disproportionately) small international (financial) voice (11% of ...
by Clive
Wed Jul 23, 2014 8:07 am
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 113
Views: 6941

Re: Gold, Silver, Copper

There's lack of faith in any one single primary reserve currency. The tendency is more towards a one-world fiat paper standard (a new currency unit) issued by a World Reserve Bank - "the bancor", "unita", "phoenix", rather than a return to the finite reserves gold stand...
by Clive
Wed Jul 23, 2014 6:26 am
 
Forum: Investing - Theory, News & General
Topic: Gold, Silver, Copper
Replies: 113
Views: 6941

Re: How indexing let these retirees live footloose and fancy

Rather than a model, let's take a real world case of Japan. From their 1990 peak when interest rates were up at 7% or 8% levels and following strong gains during the 1980's their market prices dived. -40% in 1990, 0% 1991, -23% in 1992 (nominal total gains (dividends reinvested)). Counting that peri...
by Clive
Wed Jul 23, 2014 5:38 am
 
Forum: Investing - Theory, News & General
Topic: How indexing let these retirees live footloose and fancyfree
Replies: 35
Views: 3913

Re: How indexing let these retirees live footloose and fancy

I bet they will receive close to $30K/year in combined SS payments at FRA. The current younger generation live in a 'are-we-there-yet' world. Bio-tech advances is and will continue to prolong life. In the UK we're seeing a trend towards deferring entering the work-place/benefit system until you're ...
by Clive
Wed Jul 23, 2014 4:27 am
 
Forum: Investing - Theory, News & General
Topic: How indexing let these retirees live footloose and fancyfree
Replies: 35
Views: 3913

Re: How indexing let these retirees live footloose and fancy

Whilst smaller markets (such as Greece) periodically openly default, the majors (US, UK etc.) tend to default more via stealth. UK around 1920 defaulted by a series of sequential years of high inflation. US 1933 removed investment gold from the equation by buying it all up for around $20/ounce to th...
by Clive
Wed Jul 23, 2014 4:09 am
 
Forum: Investing - Theory, News & General
Topic: How indexing let these retirees live footloose and fancyfree
Replies: 35
Views: 3913
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