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

A splash of long term treasuries will go a long way in diversifying a stock-dominated portfolio and is worth the expected drag on returns. If you are very young you do not know how you will react to a bear market. Are you sure this money is in a lockbox set aside for retirement and you won't be draw...
by Day9
Wed Oct 29, 2014 4:49 pm
 
Forum: Investing - Theory, News & General
Topic: If I am a LT investor, should I forgo a bond allocation?
Replies: 28
Views: 2089

Re: QE Ending, how does it affect Total Bond Fund?

Duration of TBM is low enough that there won't be a wild swing in either direction.
by Day9
Wed Oct 29, 2014 4:13 pm
 
Forum: Investing - Theory, News & General
Topic: QE Ending, how does it affect Total Bond Fund?
Replies: 8
Views: 1396

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

Your point on SPX is well taken. But it's still the S&P500, and at present valuations, I don't want to lever the S&P500. ... Well, what do you want to lever? Famous poster "market timer" has the following allocation as of Oct 10 in this thread 45% Long term Treasuries (25+ year ma...
by Day9
Fri Oct 24, 2014 9:25 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 437
Views: 38665

Re: IRS Announces new 401(k) contribution max for 2015 ($18,

My 401k offers index funds with expense ratios even lower than Vanguard's Admiral Shares, AND it offers some DFA funds. I don't make a ton of money, but I max it out because the fund choices are so good. I'm very happy for any increase in contributions limits. :D
by Day9
Fri Oct 24, 2014 2:06 pm
 
Forum: Investing - Theory, News & General
Topic: IRS Announces new 401(k) contribution max for 2015 ($18,000)
Replies: 50
Views: 7217

Re: Recent statistics of college majors

Does this belong in the Investing - Theory,News & General board? I think it might be more appropriate for the Personal Finance board.
by Day9
Wed Oct 15, 2014 1:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Recent statistics of college majors
Replies: 35
Views: 2668

Re: Gold: Is now the time?

I have no idea why someone would buy just gold instead of a diversified basket of commodities. Holding a small allocation to Collaterallized Commodity Futures (about 5%-10% of your equity allocation) can add diversification to a stock/bond portfolio, and will allow you to take on more duration risk...
by Day9
Mon Oct 13, 2014 3:47 pm
 
Forum: Investing - Theory, News & General
Topic: Gold: Is now the time?
Replies: 36
Views: 2306

Re: Gold: Is now the time?

The thing that's the same with gold and CCF is that they are both dead weight as long-term investments. CCFs hold positive expected real return investments as Collateral. That's what the first C stands for. Furthermore like I said in my post it allows you to take on more duration risk which increas...
by Day9
Mon Oct 13, 2014 3:44 pm
 
Forum: Investing - Theory, News & General
Topic: Gold: Is now the time?
Replies: 36
Views: 2306

Re: Gold: Is now the time?

I have no idea why someone would buy just gold instead of a diversified basket of commodities. Holding a small allocation to Collaterallized Commodity Futures (about 5%-10% of your equity allocation) can add diversification to a stock/bond portfolio, and will allow you to take on more duration risk ...
by Day9
Mon Oct 13, 2014 12:36 pm
 
Forum: Investing - Theory, News & General
Topic: Gold: Is now the time?
Replies: 36
Views: 2306

Re: Why choose a LifeStrategy Fund?

For an all-in-one fund that is for a goal other than retirement
by Day9
Sat Oct 11, 2014 12:55 am
 
Forum: Investing - Theory, News & General
Topic: Why choose a LifeStrategy Fund?
Replies: 41
Views: 3570

Re: is anything 'cheap' out there?

Commodities are cheap. A small allocation to Collateralized Commodity Futures (5%-10% of your equity allocation) may have a place in your portfolio. But according to this recent popular thread the people on this forum appear to sell out of asset classes after they go down instead of rebalancing back...
by Day9
Fri Oct 10, 2014 1:18 pm
 
Forum: Investing - Theory, News & General
Topic: is anything 'cheap' out there?
Replies: 54
Views: 5580

Re: Recommended book for teaching kids about saving/investin

I would suggest reading The Richest Man In Babylon to them
by Day9
Thu Oct 09, 2014 11:10 pm
 
Forum: Investing - Theory, News & General
Topic: Recommended book for teaching kids about saving/investing
Replies: 3
Views: 319

Re: Gambling versus Investing

"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." -Benjamin Graham
by Day9
Thu Oct 09, 2014 2:27 am
 
Forum: Investing - Theory, News & General
Topic: Gambling versus Investing
Replies: 20
Views: 2472

Re: Why Wouldn't You Tilt To Small Value?

Here is one person's opinion about various domestic small-value funds: http://www.altruistfa.com/USsmallcapvaluefunds.htm

Note how Vanguard's fund is quite low on the list. Other posters have already said how it is not small nor valuey enough. It also holds a lot of REITs.
by Day9
Wed Oct 08, 2014 2:06 pm
 
Forum: Investing - Theory, News & General
Topic: Why Wouldn't You Tilt To Small Value?
Replies: 52
Views: 2945

Re: Why Hold Cash in Retirement Account

When investors talk about "cash" they usually mean cash equivalents like T-bills or Moneymarket funds. Something that is extremely liquid and safe (no duration or credit risk). Cash-equivalents act as a ballast to your portfolio and dilute large drops in asset prices. Bonds are supposed to...
by Day9
Wed Oct 08, 2014 2:03 pm
 
Forum: Investing - Theory, News & General
Topic: Why Hold Cash in Retirement Account
Replies: 21
Views: 1660

Re: Correlation Data for Total Bond, TIPS, & Total INTL Bond

SOMEONE TELL ME WHERE I CAN GET MY HANDS ON 30 YEAR NEW ZEALAND GILTS!
by Day9
Wed Oct 08, 2014 2:28 am
 
Forum: Investing - Theory, News & General
Topic: Correlation Data for Total Bond, TIPS, & Total INTL Bond ?
Replies: 13
Views: 987

Re: How much is your fixed income investment earning?

Long term treasuries up something like 20% YTD. I have an extremely high stock allocation and a splash of CCF so I want to avoid credit/default risk and take on more duration risk. They yield something like 3% only though but I'm not sweeping coupons to my spending accounts anytime soon. That gets r...
by Day9
Tue Oct 07, 2014 6:29 pm
 
Forum: Investing - Theory, News & General
Topic: How much is your fixed income investment earning?
Replies: 27
Views: 1844

Re: Optimum # of Funds in a Portfolio ?

12 is the maximum? Child's play.

Large Momentum
Large Value
Small Momentum
Small Value
Intl Large Momentum
Intl Large Value
Intl Small Momentum
Intl Small Value
Emerging Markets Momentum
Emerging Markets Value
REIT
Intl REIT
Long Term Treasury
Short Term Bond
TIPS
Commodities
by Day9
Sat Oct 04, 2014 2:11 am
 
Forum: Investing - Theory, News & General
Topic: Optimum # of Funds in a Portfolio ?
Replies: 17
Views: 1517

Re: Why not a portfolio of equity index funds and CD's?

Yes CDs offer higher yields than treasuries and are FDIC insured. The only thing you sacrifice is the upside potential if rates go down. Don't tell me "rates have nowhere to go but up". 10 year treasury is about 2.5%, but similar German Bund is 1.5% and Japanese govt bond is 0.5%. Sometime...
by Day9
Fri Oct 03, 2014 5:45 pm
 
Forum: Investing - Theory, News & General
Topic: Why not a portfolio of equity index funds and CD's?
Replies: 27
Views: 2654

Re: does anybody out there own a two fund portfolio?

Total World stock does not yet have admiral shares. It has higher fees and owns fewer stocks than TSM and Total International.
by Day9
Fri Oct 03, 2014 12:09 am
 
Forum: Investing - Theory, News & General
Topic: does anybody out there own a two fund portfolio?
Replies: 14
Views: 2115

Re: Is there an "upper limit" on Boglehead theory?

$10 m is a lot for an individual but not a lot compared to hedge funds and institutions. The upper limit is when you have billions. People like Warren Buffet cannot simply buy as much stock as they want for the current asking price because there are not enough buyers.
by Day9
Thu Oct 02, 2014 5:21 pm
 
Forum: Investing - Theory, News & General
Topic: Is there an "upper limit" on Boglehead theory?
Replies: 58
Views: 4179

Re: Cramer's sane moment on Gross' exit

I have heard him recommend stock index funds (for a young person's first $5,000 he invests).

I can't believe that people still believe his thesis that you can beat the market by doing "one hour of homework per week for every stock in your diversified 5-10 stock portfolio".
by Day9
Thu Oct 02, 2014 2:47 pm
 
Forum: Investing - Theory, News & General
Topic: Cramer's sane moment on Gross' exit
Replies: 24
Views: 3182

Re: Why not 100% Stocks?

I think the moderators locked the last thread that compiled all the "100% stocks?" posts recently. Too bad. It was pretty entertaining and interesting to see when these kinds of threads crop up.
by Day9
Wed Oct 01, 2014 10:35 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 20921

Re: should we all own a small cap fund?

The small premium only shows up in the very smallest stocks, like in microcap funds. Vanguard's small funds are basically midcap funds.
by Day9
Wed Oct 01, 2014 9:21 pm
 
Forum: Investing - Theory, News & General
Topic: should we all own a small cap fund?
Replies: 11
Views: 495

Re: When should someone "not stay the course"?

Mr Bogle shifted his asset allocation before the 2000 crash. He noticed stock earnings were above 40 while the bond yields were about 7%. He was having health issues with his heart and wanted to protect his legacy and loved ones. He says you should "almost never and perhaps never" make a l...
by Day9
Tue Sep 30, 2014 3:18 pm
 
Forum: Investing - Theory, News & General
Topic: When should someone "not stay the course"?
Replies: 43
Views: 2570

Re: CNN: 5 investing secrets of the wealthy.

Nah this article seems to imply that stock picking is not a complete waste of time. For this to be 100% Boglehead it would also say "Choose a fund that is low cost, low turnover, and broadly diversified. An index fund meets these requirements perfectly."
by Day9
Tue Sep 30, 2014 1:50 pm
 
Forum: Investing - Theory, News & General
Topic: CNN: 5 investing secrets of the wealthy.
Replies: 20
Views: 3673

Re: 'Play Money' - why 5%?

The real answer is because the human has 5 fingers on each hand. That is the reason we use the base-10 number system instead of binary, hexadecimal, base-12, roman numerals, or some other alternative. The property of adding a "0" when you multiply by 10, etc are just properties of this par...
by Day9
Sun Sep 28, 2014 4:55 pm
 
Forum: Investing - Theory, News & General
Topic: 'Play Money' - why 5%?
Replies: 42
Views: 1658

Re: What's Your Takeaway from 2014 High Valuation

Bogle is a market timer and a yield chaser.:) And both of those can be legit strategies. There is no point in giving those strategies fancy names unless you need them to feel better about the actions you take. People worry too much about ideological purity. Stocks too high to let you sleep at night...
by Day9
Sun Sep 28, 2014 12:19 am
 
Forum: Investing - Theory, News & General
Topic: What's Your Takeaway from 2014 High Valuation
Replies: 52
Views: 4257

Re: Will Investment Returns Ever Revert to "Normal"?

I would cite Bill Gross' book "The New Normal" but...
by Day9
Sat Sep 27, 2014 10:20 pm
 
Forum: Investing - Theory, News & General
Topic: Will Investment Returns Ever Revert to "Normal"?
Replies: 56
Views: 4497

Re: Paul Merriman: DFA Better Than Vanguard

Here is one comparison between DFA and Vanguard

http://www.altruistfa.com/dfavanguard.htm
by Day9
Sat Sep 27, 2014 3:11 pm
 
Forum: Investing - Theory, News & General
Topic: Paul Merriman: DFA Better Than Vanguard
Replies: 13
Views: 2050

Re: What is your best estimate of the SWR (Safe Withdrawal R

I've seen someone post here that a 4% WR succeeded in 95% of historical scenarios and a 3.74% WR succeeded in 100% of historical scenarios.
by Day9
Fri Sep 26, 2014 3:18 pm
 
Forum: Investing - Theory, News & General
Topic: What is your best estimate of the SWR (Safe Withdrawal Rate)
Replies: 77
Views: 4026

Re: Pimco Total Return - Keep or Sell

I would like to take this moment to encourage the people out there with very high stock allocations and tilts overweighing SmVal and Emerging Markets to make all of their fixed income default-free instruments like CDs, I-bonds and especially long term Treasuries. Default/Credit Risk is affected by t...
by Day9
Fri Sep 26, 2014 1:32 pm
 
Forum: Investing - Theory, News & General
Topic: Pimco Total Return - Keep or Sell
Replies: 28
Views: 2392

Re: Buy PCRIX today?

Larry has said that if you invest in CCF you may want to take on more duration risk because these two risk factors complement each other well. While PCRIX has gone down, Long Term Bonds have done well so if you took his advice you would be in decent shape.
by Day9
Tue Sep 23, 2014 6:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: Buy PCRIX today?
Replies: 31
Views: 2697

Re: Lack of liquidity in corporate bonds hits index funds

It doesn't matter to me because the only fixed income I hold is default-free securities like Treasuries and CDs. The fixed income portion of my portfolio has a 0% expense ratio.

Most of the premium of corporate bonds is explained by same factors that influence equity returns
by Day9
Tue Sep 23, 2014 6:19 pm
 
Forum: Investing - Theory, News & General
Topic: Lack of liquidity in corporate bonds hits index funds
Replies: 12
Views: 1979

Re: Could one theoretically be 100% stocks your whole life?

Buffet is going to put his wife on 90% S&P index fund, perhaps the one at Vanguard, and 10% short-term government bond fund. Search this subreddit for 100% stocks it has been discussed before. Adding just a 10% allocation to bonds reduces a good amount of risk without affecting expected return t...
by Day9
Tue Sep 23, 2014 2:09 am
 
Forum: Investing - Theory, News & General
Topic: Could one theoretically be 100% stocks your whole life?
Replies: 43
Views: 2811

Re: The only risk of leverage is selling at the bottom

Margin rates are floating rates . Sure Interactive Brokers offers 1.58% now but they will likely raise the rates during a time when you want to ride out an unrealized loss. You have virtually 0% chance of being completely wiped out if you follow Boglehead principals. If you leverage by buying on mar...
by Day9
Tue Sep 23, 2014 1:58 am
 
Forum: Investing - Theory, News & General
Topic: The only risk of leverage is selling at the bottom
Replies: 46
Views: 1576

Re: Why I sold my gold, and would sell commodities too

OP isn't a genius for discovering that stocks have better long term returns than gold or CCFs. You should not look at an investment on its own, you should look at it in the context of a whole portfolio. This should be the Boglehead's first stop on this issue: The Great Commodity Debate - Larry Swedr...
by Day9
Mon Sep 22, 2014 8:28 pm
 
Forum: Investing - Theory, News & General
Topic: Why I sold my gold, and would sell commodities too
Replies: 71
Views: 5378

Re: Does Equity Risk Decrease over Time?

Here is a paper from UC Irvine that shows how the idea of "time diversification" in equity markets is flawed.

The Long-Term Risks of Global Stock Markets

http://merage.uci.edu/~jorion/papers/risk.pdf
by Day9
Mon Sep 22, 2014 5:03 pm
 
Forum: Investing - Theory, News & General
Topic: Does Equity Risk Decrease over Time?
Replies: 51
Views: 2718

Re: Leeraar's Three-Holding Portfolio

If you're going to go through the trouble of using some kind of Life Strategy Tax Efficiency Barbell you may as well use the 3-fund portfolio so you can stick TBM in the tax advantaged accounts, making for more optimal tax efficiency, and making you eligible for admiral shares. In today's low intere...
by Day9
Sun Sep 21, 2014 6:41 am
 
Forum: Investing - Theory, News & General
Topic: Leeraar's Three-Holding Portfolio
Replies: 27
Views: 2264

Re: Vanguard web site now showing daily change as %

Just keep in mind that if something goes up 1% then goes down 1% it is 99.99% what it used to be. And if it goes up 5% then down 5% it is 99.75% what it used to be. When it showed dollars you didn't have this property.

Anyone remember when stock information used to be in fractions like 3/8, 1/4, etc?
by Day9
Sun Sep 21, 2014 5:20 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard web site now showing daily change as %
Replies: 2
Views: 661

Re: What evidence would prove the Boglehead mentality wrong?

The basic laws of mathematics would have to be proven incorrect? There is a non-zero possibility of this occurring though. It's not that 1+1 would cease to equal 2. But that we may discover that the mathematical construct of "1 + 1" simply doesn't reflect anything in reality as nothing is...
by Day9
Fri Sep 19, 2014 2:51 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 15628

Vanguard Reaches $3 Trillion In Assets, matching Hedge Funds

Vanguard Reaches $3 Trillion In Assets, Matching Entire Hedge-Fund Industry

Courtesy Kirsten Grind & Wall Street Journal

http://blogs.wsj.com/moneybeat/2014/09/18/vanguard-reaches-3-trillion-in-assets-matching-entire-hedge-fund-industry/
by Day9
Fri Sep 19, 2014 1:41 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard Reaches $3 Trillion In Assets, matching Hedge Funds
Replies: 12
Views: 1482

Re: Left tail portfolio - 70% bonds. Good idea?

Please, explain it to me again how individual bonds don't appreciate in price when rates lower but bond funds do. Case in point. Let's take Vanguard intermediate term treasury fund VFITX and look at 2008. The fund returned 4.2% for the year from dividends. It also returned an additional 9.13% becau...
by Day9
Thu Sep 18, 2014 11:57 pm
 
Forum: Investing - Theory, News & General
Topic: Left tail portfolio - 70% bonds. Good idea?
Replies: 38
Views: 3229

Re: Left tail portfolio - 70% bonds. Good idea?

Of course you can sell individual bonds. You are not forced to hold them to maturity. What are you trying to say with "You don't get the capital appreciation"? You do. The treasury market is extremely liquid. The hassle amounts to a few mouse clicks every year or so. There are no commissi...
by Day9
Wed Sep 17, 2014 11:14 pm
 
Forum: Investing - Theory, News & General
Topic: Left tail portfolio - 70% bonds. Good idea?
Replies: 38
Views: 3229

Re: Left tail portfolio - 70% bonds. Good idea?

I don't think the hassle of individual bonds is worth it. Plus you don't get the capital appreciation of a bond that you'll get in a financial crisis which will effectively allow you to buy more shares of depressed stocks thru rebalancing. Bond fund gives better liquidity right when liquidity is ki...
by Day9
Wed Sep 17, 2014 10:08 pm
 
Forum: Investing - Theory, News & General
Topic: Left tail portfolio - 70% bonds. Good idea?
Replies: 38
Views: 3229

Re: How often do YOU rebalance and when?

I rebalance with new contributions.


I never trigger a taxable event just to rebalance. I don't think it is ever worth it.
by Day9
Wed Sep 17, 2014 7:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: How often do YOU rebalance and when?
Replies: 39
Views: 2070

Re: Left tail portfolio - 70% bonds. Good idea?

I believe Larry addresses this idea thoroughly in his recent book Reducing the Risk of Black Swans: Using the Science of Investing to Capture Returns With Less Volatility
by Day9
Wed Sep 17, 2014 6:31 pm
 
Forum: Investing - Theory, News & General
Topic: Left tail portfolio - 70% bonds. Good idea?
Replies: 38
Views: 3229

Re: Proposed: 35% Maximum Bond Allocation, For Life

65/35 is not a radical allocation and is fine if the investor can stay the course. It is basically the same as the ubiquitous 60/40 portfolio. However you are suggesting locking in this 65/35 allocation instead of the traditional approach of gliding from say 60/40 to 40/60 as one enters his twilight...
by Day9
Tue Sep 16, 2014 6:50 pm
 
Forum: Investing - Theory, News & General
Topic: Proposed: 35% Maximum Bond Allocation, For Life
Replies: 37
Views: 3799
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