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Re: I and EE Bonds - What will the new rate be?

Just want to chime in and say regardless of their interest rate EE bonds are guaranteed to double after 20 years. That works out to a 3.53% rate if held for 20 years. 20 year treasuries yield 2.31% today. Of course you can sell treasuries on the secondary market but EE bonds must be held for 20 year...
by Day9
Thu Apr 16, 2015 5:58 pm
 
Forum: Investing - Theory, News & General
Topic: I and EE Bonds - What will the new rate be?
Replies: 18
Views: 2059

Re: Less liquid counterpart to stocks?

High expected return entails high risk. But high risk does not entail high expected returns.

Maybe you can look toward micro-cap stocks which tend to be less liquid and sometimes have higher expected returns.
by Day9
Thu Apr 16, 2015 3:41 pm
 
Forum: Investing - Theory, News & General
Topic: Less liquid counterpart to stocks?
Replies: 7
Views: 620

Re: Will Saudi Arabia be added into Total International Stoc

Just want to chime in that valuation of state-owned, not publicly traded corporation Saudi Aramco is estimated from $781 billion to even $7 trillion. Apple's market cap at the end of last year was $647 billion. It has the highest revenue of any corporation in the world. FT Non-Public 150 - the full ...
by Day9
Thu Apr 16, 2015 12:16 pm
 
Forum: Investing - Theory, News & General
Topic: Will Saudi Arabia be added into Total International Stock?
Replies: 14
Views: 1522

Re: [retired guy said] terrible crash is coming

Jack Bogle said if the market seems to be very overvalued to you, then take your 65% allocation to stocks and bring it to 50%. But the idea of selling all your stocks is ridiculous.

https://www.youtube.com/watch?v=k6ra5POdsYg
by Day9
Wed Apr 15, 2015 12:22 pm
 
Forum: Investing - Theory, News & General
Topic: [retired guy said] terrible crash is coming
Replies: 67
Views: 7064

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

i've read in this thread the implied financing is 0.6%, a full percentage point below IB margin rates. why don't people just buy futures and hold collateral in 1% high yield fdic insured savings accounts? is this a free lunch? what is the best broker to buy futures? IB has low fees but has a require...
by Day9
Tue Apr 14, 2015 9:53 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 675
Views: 92899

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

aren't treasury futures just for speculation and not for long term investing? i say this because they don't yield coupon payments.
by Day9
Tue Apr 14, 2015 9:30 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 675
Views: 92899

Re: Roth IRA for Teeneagers

A friend of mine matched his teenage kid's earnings dollar-for-dollar if he contributed to his Roth IRA. I don't have kids but that sounds like good parenting to me.
by Day9
Tue Apr 14, 2015 2:59 pm
 
Forum: Investing - Theory, News & General
Topic: Roth IRA for Teeneagers
Replies: 24
Views: 1359

Re: The $1 Million Goal: Source of Motivation or Discouragem

A 22-year old today who saves $23,500 per year (current 401k+IRA maximum contributions) and averaging compound 7% returns will reach $1m nominal in 20 years, when he is 42. Factoring in a modest 2% inflation estimate will tack on 4 more years to reach $1 million 2015 dollars. $50k is about the media...
by Day9
Wed Apr 08, 2015 5:24 pm
 
Forum: Investing - Theory, News & General
Topic: The $1 Million Goal: Source of Motivation or Discouragement?
Replies: 172
Views: 15652

Re: Is there Smart Beta in Corporate Bonds?

This challenges the "Collective thoughts [investing mini-reference]" stickied thread in this forum by Robert T. Here are the relevant sections: Default Risk: NYU study: Most of the premium is explained by same factors that influence equity returns ""We show that expected default ...
by Day9
Tue Apr 07, 2015 12:06 am
 
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3147

Re: If long-term, why not just go really high risk?

There are long term risks to risky assets. You aren't absolved of all risk just because you have a long time horizon.

Here is a paper from UC Irvine http://merage.uci.edu/~jorion/papers/risk.pdf
by Day9
Thu Apr 02, 2015 1:21 am
 
Forum: Investing - Theory, News & General
Topic: If long-term, why not just go really high risk?
Replies: 49
Views: 4913

Re: Did you learn anything from 2008?

Mine was first university class to graduate after the 2008 crisis. I learned I am going to have to face different challenges than my parents' generation.
by Day9
Tue Mar 31, 2015 2:12 am
 
Forum: Investing - Theory, News & General
Topic: Did you learn anything from 2008?
Replies: 105
Views: 8395

Re: Bond Interest - No Where to Go But Up?

At some point I would think that hoarding of physical Federal Reserve Notes would become a significant problem if nominal interest rates went sufficiently negative. There is a little over $4000 in Federal reserve notes per capita outstanding, so if everyone just decided to keep more than a few hund...
by Day9
Mon Mar 30, 2015 7:03 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Interest - No Where to Go But Up?
Replies: 8
Views: 1135

Re: Medium bond vs short + long bonds & rebalance

The higher convexity of the barbell portfolio enhances portfolio performance only in the presence of higher interest rate volatility. In a situation of low interest rate volatility the bullet portfolio will outperform the barbell.
by Day9
Sun Mar 22, 2015 3:34 am
 
Forum: Investing - Theory, News & General
Topic: Medium bond vs short + long bonds & rebalance
Replies: 9
Views: 1251

Re: Collective thoughts [investing mini-reference]

This is such an amazing resource I cannot even articulate it. Thanks so much Robert T. I check this quite often and I would be grateful if you continue to update it with any new insights.
by Day9
Fri Mar 20, 2015 2:15 pm
 
Forum: Investing - Theory, News & General
Topic: Collective thoughts [investing mini-reference]
Replies: 37
Views: 104875

Re: An inspiring message for Bogleheads

I too am in my twenties and discovered the Boglehead philosophy three years ago. I have been been following the principles as best I can, living well below my means and investing in broadly diversified, low cost, low turnover funds in a tax efficient manner. My family is in a much more secure place ...
by Day9
Fri Mar 20, 2015 12:42 am
 
Forum: Investing - Theory, News & General
Topic: An inspiring message for Bogleheads
Replies: 56
Views: 4294

Re: Anyone concerned about their bond holdings?

We had a recent thread about this. The consensus was that most Bogleheads have crafted an allocation that they are comfortable enough with to stay the course.

http://www.bogleheads.org/forum/viewtopic.php?f=10&t=160412
by Day9
Thu Mar 19, 2015 4:38 pm
 
Forum: Investing - Theory, News & General
Topic: Anyone concerned about their bond holdings?
Replies: 58
Views: 5829

Re: Observations from a first time poster, long time reader.

I'd take the cute little saying of the Efficient Market Hypothesis over OP's only justification for the strategy - a cute little saying that the people on the other side of the trade are [irrational] gamblers. While there are far worse strategies I put them in the flawed category and don't like usin...
by Day9
Thu Mar 19, 2015 4:29 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16891

Re: Observations from a first time poster, long time reader.

The premium for writing a covered call 8% out of the money & 3 months away would be very small, pennies even. Gaining only 8% and incurring taxable events when the market rises 26.06% is a horrible result. The market has down days/months/years and reversion to the mean is a real phenomenon and m...
by Day9
Thu Mar 19, 2015 2:29 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16891

Dollar falls after Fed policy statement released

Tthe Fed dropped its promise to be "patient" as it weighs interest rate hikes. Yellen said "Just because we removed the word 'patient,' doesn't mean we will be impatient." This chart shows how UUP, a USD bullish ETF fell sharply while US stocks, foreign stocks, long term bonds, a...
by Day9
Wed Mar 18, 2015 1:56 pm
 
Forum: Investing - Theory, News & General
Topic: Dollar falls after Fed policy statement released
Replies: 10
Views: 1189

Re: Observations from a first time poster, long time reader.

Plugging that $1.3m into a plain old 3 Fund Portfolio, a la Bogle at the 50/50 AA returns about double that. I've never heard of "covered calls" so clearly I shouldn't get involved in them, but with the info I just posted, why is a CC better than the 3 Fund approach? You could have a 3-fu...
by Day9
Wed Mar 18, 2015 1:56 am
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16891

Re: Are long term bonds optimal for long investment horizons

This would make sense with long-term TIPS , but not with long-term nominal bonds. If you are 30 years from retirement and put $45K into 30-year zero-coupon Treasuries (which currently yield 2.71%), you would be guaranteed $100K in 30 years, but you would not have any guarantee how many years of liv...
by Day9
Tue Mar 17, 2015 10:08 pm
 
Forum: Investing - Theory, News & General
Topic: Are long term bonds optimal for long investment horizons?
Replies: 3
Views: 541

Re: Observations from a first time poster, long time reader.

Here's a chart of VFIAX (Vanguards S&P500 Fund) compared to BXM (CBOE Buy/Write index) and DIA (A DJIA ETF) compared to BXD (Another Buy/Write index based on the DJIA) http://i62.tinypic.com/30m26pj.png Adding Vanguard balanced fund http://i62.tinypic.com/2qd6913.png While there are far worse st...
by Day9
Tue Mar 17, 2015 9:46 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16891

Re: Article: The Death of The Millionaire Next Door Dream

Bogleheads don't overlap with the FIRE (Financial Independence, Retire Early) crowd that much (Many FIRE people are Bogleheads but most Bogleheads are not FIRE people). There is enough pressure in this society to be a consumer. Even if you are not aiming for early retirement it is good to be exposed...
by Day9
Mon Mar 16, 2015 11:53 pm
 
Forum: Investing - Theory, News & General
Topic: Article: The Death of The Millionaire Next Door Dream
Replies: 20
Views: 5417

Re: Is MicroCap on sale?

Micro cap funds can have very high tracking error due to the extreme illiquidity of the underlying stocks. On one hand, only big money can get exposure to microcaps by doing it themselves instead of using funds and avoid this tracking error. On the other hand, big money cannot invest too much into m...
by Day9
Mon Mar 16, 2015 11:01 pm
 
Forum: Investing - Theory, News & General
Topic: Is MicroCap on sale?
Replies: 11
Views: 1406

Re: Poll: When to pay down debt rather than invest

Having debt in addition to stock and bond investments is like the opposite of holding cash in addition to a stock and bond portfolio. It is risky while holding cash is conservative. On the other hand you can cash out investments in a pinch but you cannot get money back that you used to pay off a debt.
by Day9
Mon Mar 16, 2015 10:57 pm
 
Forum: Investing - Theory, News & General
Topic: Poll: When to pay down debt rather than invest
Replies: 49
Views: 4003

Re: Fed: US Household Wealth rises by 1.9% hitting $83 Trill

That puts Bill Gates at about 0.1% of all total wealth in the US. Or 1/1000 out of a population of 320 million. There are 117,538,000 households in the United States. Probably better to use this figure as 320 million includes children. I presume that US household wealth is much higher than any othe...
by Day9
Fri Mar 13, 2015 3:31 pm
 
Forum: Investing - Theory, News & General
Topic: Fed: US Household Wealth rises by 1.9% hitting $83 Trillion
Replies: 4
Views: 598

Re: How much international is too much?

Is there an agreed upon upper limit of international stock exposure? One way to think about an upper limit on international stocks is to look at revenue exposure This is a good point but one thing to keep in mind for people who tilt is that small and small value US stocks tend to get more of their ...
by Day9
Thu Mar 12, 2015 6:56 pm
 
Forum: Investing - Theory, News & General
Topic: How much international is too much?
Replies: 113
Views: 9268

Re: What cash interest rate to not invest in bonds?

Schwab makes its money from its roboadviser service from the cash allocation in their customers' portfolios. The try to make a profit for themselves with your cash. So it is important to realize this conflict of interest when reading their study praising the benefits of a hefty cash allocation in in...
by Day9
Thu Mar 12, 2015 2:09 am
 
Forum: Investing - Theory, News & General
Topic: What cash interest rate to not invest in bonds?
Replies: 14
Views: 2364

Re: Should Vanguard Offer A Low Minimum Fund?

What about ETFs? You can buy a single share of a Vanguard ETF commission free at Vanguard brokerage.
by Day9
Tue Mar 10, 2015 10:43 pm
 
Forum: Investing - Theory, News & General
Topic: Should Vanguard Offer A Low Minimum Fund?
Replies: 31
Views: 2400

Re: Bond credit risk is unique from equity risk

Robert T references this paper in the "Collective Thoughts" sticky: Default Risk - most of the premium is explained by same factors that influence equity returns "We show that expected default accounts for a surprisingly small fraction of the premium in corporate rates over treasuries...
by Day9
Tue Mar 10, 2015 3:42 pm
 
Forum: Investing - Theory, News & General
Topic: Bond credit risk is unique from equity risk
Replies: 12
Views: 1264

Re: Creating a Better Small Cap Value Fund

factor exposure and costs
by Day9
Mon Mar 09, 2015 10:15 pm
 
Forum: Investing - Theory, News & General
Topic: Creating a Better Small Cap Value Fund
Replies: 7
Views: 1021

Re: Schwab Intelligent Portfolios is live

I hear the high cash reserves is how they make their money. They take your cash allocation and lend it out themselves.
by Day9
Mon Mar 09, 2015 3:25 am
 
Forum: Investing - Theory, News & General
Topic: Schwab Intelligent Portfolios [now live]
Replies: 347
Views: 27374

Re: Please help me understand Bond ETFs...

Just to state the obvious: Read the prospectus. The whole thing, and all of its supplements.
by Day9
Fri Mar 06, 2015 5:42 pm
 
Forum: Investing - Theory, News & General
Topic: Please help me understand Bond ETFs...
Replies: 25
Views: 2594

Re: New DOW Component

This must have been the reason for the stock split. The Dow uses share price, which was easier to calculate 50 years ago but is inaccurate and obsolete today. But they couldn't have APPL with a 1000+ share price in the dow. It makes sense to replace AT&T since it is quite redundant with Verizon ...
by Day9
Fri Mar 06, 2015 5:24 pm
 
Forum: Investing - Theory, News & General
Topic: New DOW Component
Replies: 40
Views: 2716

Re: Taylor Larimore Honored

Here is the compilation of Taylor's Investment Gems -- an extremely valuable resource.

Thank you, Taylor.
by Day9
Mon Mar 02, 2015 9:12 pm
 
Forum: Investing - Theory, News & General
Topic: Taylor Larimore Honored
Replies: 59
Views: 5349

Re: ...it is madness to risk losing what you need in pursuin

According to firecalc.com a 3.7% withdrawal rate succeeded in 99% of historical scenarios with many of them leaving a a hefty legacy. Why would someone go for an annuity?
by Day9
Mon Mar 02, 2015 4:42 pm
 
Forum: Investing - Theory, News & General
Topic: ...it is madness to risk losing what you need in pursuing wh
Replies: 48
Views: 5247

Re: Yale Endowment Report 2014

Look at Page 13 of the report. Is this saying that the return of the yale portfolio returned less than the educational institution mean? Yale is more heavily invested in what we would deem risky (Real estate and PE) vs the other which has more us/foreign equity and bonds. Those are just asset alloc...
by Day9
Sun Mar 01, 2015 11:30 pm
 
Forum: Investing - Theory, News & General
Topic: Yale Endowment Report 2014
Replies: 45
Views: 4685

Re: Yale Endowment Report 2014

How can they get 36.1% annualized returns over a 20-year period on private equity!? Wow that is impressive! :greedy
by Day9
Sun Mar 01, 2015 9:59 pm
 
Forum: Investing - Theory, News & General
Topic: Yale Endowment Report 2014
Replies: 45
Views: 4685

Re: ERs cut on VT, VNQI and several others

I'm still waiting for Total World Stock to gain an Admiral Share class fund or for the ETF VT to drop expenses to VTI/VXUS levels. Furthermore I hear that Total World Stock holds far fewer securities than VTI+VXUS. I wish I could have a one-fund equity portfolio but until these two issues are addres...
by Day9
Sun Mar 01, 2015 9:57 pm
 
Forum: Investing - Theory, News & General
Topic: ERs cut on VT, VNQI and several others
Replies: 3
Views: 810

Re: Thought for the Day: Invest Logically

Live long and prosper, everybody.
by Day9
Fri Feb 27, 2015 11:03 pm
 
Forum: Investing - Theory, News & General
Topic: Thought for the Day: Invest Logically
Replies: 18
Views: 2068

Re: Not "Staying the Course"

If the PE ratios rose to extreme levels as during the tech bubble, I would probably add/transfer more to bonds. I am not sure if this is a break in "staying the course" or simple rebalancing. I cannot envision panicking because of a market drop. Did not happen in 1987, 2000, or 2008/9. IM...
by Day9
Fri Feb 27, 2015 5:11 pm
 
Forum: Investing - Theory, News & General
Topic: Not "Staying the Course"
Replies: 40
Views: 4934

Re: Roth and REITs

by Day9
Fri Feb 27, 2015 3:54 pm
 
Forum: Investing - Theory, News & General
Topic: Roth and REITs
Replies: 5
Views: 792

Re: Why Bonds With 20 Year Horizon?

Diversifying across asset classes may provide better risk-adjusted returns. RETURN IS RETURN IS RETURN................ YOU CAN'T SPEND THE "RISK-ADJUSTMENT". By holding riskless assets in addition to your volatile investments, or leveraging up the investments, you can have higher expected...
by Day9
Fri Feb 27, 2015 4:30 am
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5289

Re: Safe Withdrawal Rate as it relates to Size of Portfolio

Just to preempt any confusion: The 4% rule comes from a study that showed if one withdrew 4% of his portfolio in his first year of retirement, then continued to withdraw this dollar amount adjusted for inflation in subsequent years, he would not outlive his money in 95% of 30-year historical scenari...
by Day9
Thu Feb 26, 2015 2:34 pm
 
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate as it relates to Size of Portfolio
Replies: 25
Views: 2893

Re: Why Bonds With 20 Year Horizon?

Diversifying across asset classes may provide better risk-adjusted returns.
by Day9
Tue Feb 24, 2015 1:45 pm
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5289

Re: What is Risk?

I'm curious how all these different interpretations of risk relate to expected return. Everyone knows you can't have high expected returns without high risk but what interpretation of risk does this assume? To what extent is this common sense true when applied to different interpretations of risk?
by Day9
Fri Feb 20, 2015 6:54 pm
 
Forum: Investing - Theory, News & General
Topic: What is Risk?
Replies: 27
Views: 1430

Re: Bill Gross majority shareholder in his own fund?

If the manager doesn't own enough of his fund people will complain he doesn't eat his own cooking. Gross owns a lot of his own fund and you complain that it clouds his judgment. At what point would you be satisfied? Why do you think owning a large stake in his own fund would cloud his judgment? Isn'...
by Day9
Mon Feb 09, 2015 12:52 pm
 
Forum: Investing - Theory, News & General
Topic: Bill Gross majority shareholder in his own fund?
Replies: 20
Views: 1460

Re: Best Small Cap Value Funds

Here is one firm's evaluation of domestic Sm Val funds. It recommends RZV

http://www.altruistfa.com/USsmallcapvaluefunds.htm
by Day9
Fri Feb 06, 2015 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: Best Small Cap Value Funds
Replies: 43
Views: 4436
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