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Re: Quickie to clarify confusion re: 0% long-term capital ga

By the way I had absolutely no idea that the lousey one dollar from a fund distribution would make so much difference. That is interesting indeed. Physicists call that the butterfly effect. :) "In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a s...
by Doc
Sat Apr 25, 2015 3:54 pm
 
Forum: Investing - Theory, News & General
Topic: Quickie to clarify confusion re: 0% long-term capital gains
Replies: 22
Views: 1343

Re: International Stock Poll: Emerging vs Developed Ratio

AA 60/40 Domestic/International 80/20 Developed/EM 80/20 EM benefit +10% (Ten percent - yeh really? Would you like to buy a bridge over the East River?) .60*.20*.20*10%=24 bps Does it make any difference at all? If you have enough EM to make a difference in your total portfolio return you probably w...
by Doc
Sat Apr 25, 2015 3:38 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Poll: Emerging vs Developed Ratio
Replies: 54
Views: 2191

Re: Quickie to clarify confusion re: 0% long-term capital ga

I was only answering the OP's question on whether there is a cap on the 0% rate for LTCG. My answer is still correct, I believe. Schedule D worksheet would not apply. I believe that is only for gains on collectibles and trusts Or maybe if you had "Unrecaptured Section 1250 Gains" of which...
by Doc
Sat Apr 25, 2015 2:38 pm
 
Forum: Investing - Theory, News & General
Topic: Quickie to clarify confusion re: 0% long-term capital gains
Replies: 22
Views: 1343

Re: Quickie to clarify confusion re: 0% long-term capital ga

If you have no capital gains, then you are correct. But if you have capital gains, you have to use the Qualified Dividends and Capital Gains Worksheet to compute your taxes. It has you compute an "Adjusted Taxable Income", which is line 43, less your capital gains and less your QDI, in ot...
by Doc
Sat Apr 25, 2015 9:51 am
 
Forum: Investing - Theory, News & General
Topic: Quickie to clarify confusion re: 0% long-term capital gains
Replies: 22
Views: 1343

Re: 5 year tips auction: TBA 4/16/2015 Neg 0.480 Yield?

Would welcome correction if I'm mistaken, but hasn't the Fed's asset-buying program also included TIPS, so that their low yields, like the historically low yields of other Treasury-quality securities, are not just an outcome of the behavior of individual and bank/brokerage actors, but have also bee...
by Doc
Thu Apr 23, 2015 8:41 am
 
Forum: Investing - Theory, News & General
Topic: 5 year tips auction: TBA 4/16/2015 Neg 0.480 Yield?
Replies: 7
Views: 773

Re: Vanguard Ultra-Short-Term Bond Fund now available

I don't understand the advantage of FDIC in this case: isn't FDIC insurance and Treasury bonds exposed to essentially the same default risk *? They're both backed the US government. ... Based on the information that is on Vanguard's web page (no criticism, they can hardly be expected to report the ...
by Doc
Wed Apr 22, 2015 8:55 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard Ultra-Short-Term Bond Fund now available
Replies: 41
Views: 5569

Re: VTIAX or VTMGX and VEMAX

Vanguard has the numbers for every year. https://personal.vanguard.com/us/insigh ... ncome-2014 Replace 2014 with another year to compare the data for multiple years . Also, Vanguard reports its own after-tax returns, which are more accurate than Morningstar's because Vanguard does know how much of...
by Doc
Tue Apr 21, 2015 9:14 am
 
Forum: Investing - Theory, News & General
Topic: VTIAX or VTMGX and VEMAX
Replies: 30
Views: 2748

Re: VTIAX or VTMGX and VEMAX

I wanted to make the comment that any numbers reported by M* for "tax-cost" are suspect until proven otherwise. I would not use them myself. Don't use Morningstar's tax data; use the data from the fund provider. Morningstar doesn't always know about qualified dividends, and there are a fe...
by Doc
Mon Apr 20, 2015 7:53 am
 
Forum: Investing - Theory, News & General
Topic: VTIAX or VTMGX and VEMAX
Replies: 30
Views: 2748

Re: a consensus? (Bonds in different accounts)

So midareff's post above speaks to the possibility of having bonds/stocks in each type of account makes it (potentially) easier in terms of later rebalancing? Is that right? Because, he says, splitting them up between 'only stocks' in one and 'only bonds' in another will trigger a challenge in reba...
by Doc
Sun Apr 19, 2015 12:05 pm
 
Forum: Investing - Theory, News & General
Topic: a consensus? (Bonds in different accounts)
Replies: 20
Views: 1384

Re: a consensus? (Bonds in different accounts)

dbr wrote:...

Agreed.
by Doc
Sat Apr 18, 2015 9:07 am
 
Forum: Investing - Theory, News & General
Topic: a consensus? (Bonds in different accounts)
Replies: 20
Views: 1384

Re: a consensus? (Bonds in different accounts)

... advocate placing bonds in a tax deferred but not in a taxable (unless they are muni's) ...and I do think this is what the wiki information also says .... That is not what the WIKI says. If you have both tax-advantaged (retirement) and taxable accounts, you generally want to hold less tax-effici...
by Doc
Sat Apr 18, 2015 8:54 am
 
Forum: Investing - Theory, News & General
Topic: a consensus? (Bonds in different accounts)
Replies: 20
Views: 1384

Re: How to (diplomatically) challenge wife's active mgmt fun

$10,000 earning 8% a year for 20 years is $46,609.

$10,000 earning 1% less because of fees for the same 20 years is $38,366.

Say to Darling Wife, "is another $400 a year worth your effort?"

(Use her own numbers before you ask so you don't look foolish if the savings is only $10 a year.)
by Doc
Thu Apr 16, 2015 10:59 am
 
Forum: Investing - Theory, News & General
Topic: How to (diplomatically) challenge wife's active mgmt funds
Replies: 90
Views: 5240

5 year tips auction: TBA 4/16/2015 Neg 0.480 Yield?

On Feb 5, 1015 Grok wrote So the next 30 year tips auction will be announced on February 12th. At that time you should be able to place orders with Vanguard, etc. The current real yield on the 29 year TIP is about 0.60%. The new 30 year tips will be a year longer, plus there is usually some extra yi...
by Doc
Thu Apr 16, 2015 10:38 am
 
Forum: Investing - Theory, News & General
Topic: 5 year tips auction: TBA 4/16/2015 Neg 0.480 Yield?
Replies: 7
Views: 773

Re: PIMCO Total Return - half cash?

Well I don't think of it as "bonds" myself - I think "alternatives" is a useful concept for asset allocation .. The fund may invest in derivatives only if the expected risks and rewards of the derivatives are consistent with the investment objective, policies, strategies, and ri...
by Doc
Wed Apr 15, 2015 3:29 pm
 
Forum: Investing - Theory, News & General
Topic: PIMCO Total Return - half cash?
Replies: 10
Views: 1386

Re: Need help understanding market cap in total market

Since different fund companies and/or different index providers use their own definitions I always use Morningstar. While theirs may not any "better" at least it's consistent and puts all the funds on the same basis.
by Doc
Wed Apr 15, 2015 9:21 am
 
Forum: Investing - Theory, News & General
Topic: Need help understanding market cap in total market
Replies: 12
Views: 1000

Re: PIMCO Total Return - half cash?

On MorningStar it says it's 75% long and 30% shorting cash - so it probably means it's trading/hedging currencies ... Right it is derivatives. Anything with a maturity of less than one year is treated as "cash" like in your MM fund. Net Other Short Duration Instruments includes securities...
by Doc
Wed Apr 15, 2015 6:56 am
 
Forum: Investing - Theory, News & General
Topic: PIMCO Total Return - half cash?
Replies: 10
Views: 1386

Re: Continual Changes to Cost Basis

Is there any reason the cost basis should ever be changed from the stepped up basis? Bonds purchased at a premium over par are subject to amortize bond premium ABP. This means that a portion of the premium gets subtracted from your coupon payment when you do your taxes and your cost basis is reduce...
by Doc
Tue Apr 14, 2015 10:19 am
 
Forum: Investing - Theory, News & General
Topic: Continual Changes to Cost Basis
Replies: 5
Views: 558

Re: Quicken 2015 entering cost basis

I never had to face this problem because I never used DRIPS but ... You can export an Excel file in CSV format and you can import prices into quicken in CSV format so there may be some hope. There are other file types that you can import also. Try going to the Quicken community site and search for i...
by Doc
Mon Apr 13, 2015 11:12 am
 
Forum: Investing - Theory, News & General
Topic: Quicken 2015 entering cost basis
Replies: 3
Views: 399

Re: Record keeping with Excel

jcheyman wrote:Does anyone have any templates or basic ideas for the types of information one should keep track of and how to go about doing it?

Bite the bullet and buy Quicken or some equivalent every three years. The extra cost is far less than the cost of the time you will use up messing with Excel.
by Doc
Mon Apr 13, 2015 6:57 am
 
Forum: Investing - Theory, News & General
Topic: Record keeping with Excel
Replies: 19
Views: 1556

Re: How to use Vanguard Portfolio Watch for rebalancing

Yes, definitely one has to be aware that not everything can be taken at face value with these tools. That's a reason to use more than one or two such tools and apply caution. A big problem I see for a firm like Vanguard for asset allocation is what is the data source. A Fidelity or a Schwab is not ...
by Doc
Mon Apr 13, 2015 6:54 am
 
Forum: Investing - Theory, News & General
Topic: How to use Vanguard Portfolio Watch for rebalancing
Replies: 42
Views: 12100

Re: GE stock up 11% on Friday.

Nicolas wrote:Doc, you mean March 9, 2009 don't you? That was the low of the market, not 2008.


Fixed it, thanks. :oops:
by Doc
Sat Apr 11, 2015 1:28 pm
 
Forum: Investing - Theory, News & General
Topic: GE stock up 11% on Friday.
Replies: 19
Views: 2147

Re: Cost basis update

I recently had to do some selling in our taxable accounts in order to rebalance, something I hadn't done in a long time. A couple of questions, regarding ETF's (from non-Vanguard providers) and Vanguard mutual funds. 1) In the old days, if one used specific share ID, one placed the order and then s...
by Doc
Sat Apr 11, 2015 10:35 am
 
Forum: Investing - Theory, News & General
Topic: Cost basis update
Replies: 3
Views: 514

Re: GE stock up 11% on Friday.

GE stock soared 11% Friday to close at the highest level since Sept. 8, 2008. http://www.marketwatch.com/story/ges-stock-snaps-out-of-its-15-year-slump-2015-04-10 I bought General Electric in 2008 and made the mistake of purchasing it within an IRA and thereby lost the advantage of TLH. Currently G...
by Doc
Sat Apr 11, 2015 9:13 am
 
Forum: Investing - Theory, News & General
Topic: GE stock up 11% on Friday.
Replies: 19
Views: 2147

Re: Hypothetical End Game Scenario w/ 5M retirement account

Don't take 4% a year. Figure out some withdrawal plan that lets you take more the next ten years now - maybe 8% - and then take a reduced amount for the rest of your life. That may still be 4% of what's left because you have gotten past the first ten without over depleting your portfolio in a market...
by Doc
Fri Apr 10, 2015 4:16 pm
 
Forum: Investing - Theory, News & General
Topic: Hypothetical End Game Scenario w/ 5M retirement account
Replies: 74
Views: 7330

Re: SC international: Swap GWX for VSS?

I'm thinking about this exchange for several reasons: VSS has a lower ER and a more geographically diversified portfolio, including EMs. (Neither fund is very small cap, however, and VSS's median market cap is actually higher -- $1.6B vs. $1.2B.) There's also some tax harvesting here since I'll rea...
by Doc
Thu Apr 09, 2015 4:02 pm
 
Forum: Investing - Theory, News & General
Topic: SC international: Swap GWX for VSS?
Replies: 5
Views: 757

Re: Optimal taxable distribution using specific identificati

Step 3) Sell shares with the greatest losses (and only losses), followed by shares with smaller and smaller losses until income need is met I think the opposite is better. Selling high cost (low loss shares) maximizes the probability for advantageous tax gain harvesting in future years. And it also...
by Doc
Thu Apr 09, 2015 10:45 am
 
Forum: Investing - Theory, News & General
Topic: Optimal taxable distribution using specific identification
Replies: 26
Views: 1941

Re: Optimal taxable distribution using specific identificati

If you have a long-term capital-gains tax rate of 15%, you want to postpone gains as much as possible, so you should sell the shares with the greatest loss first, and then the smallest gain (provided that the gain is long-term or will be offset by capital losses). There is almost no advantage in pa...
by Doc
Wed Apr 08, 2015 1:13 pm
 
Forum: Investing - Theory, News & General
Topic: Optimal taxable distribution using specific identification
Replies: 26
Views: 1941

Re: First ever change of AA constitutes 'frequent trading'??

I think automatic exchange is no longer available if you have moved over to the new Vanguard Brokerage platform. Nor can you direct dividends to another fund except your settlement fund. :(
by Doc
Wed Apr 08, 2015 10:19 am
 
Forum: Investing - Theory, News & General
Topic: First ever change of AA constitutes 'frequent trading'???
Replies: 13
Views: 1157

Re: Mohamed El-Erian Has Most of His Money in Cash

He also chairs President Obama’s Global Development Council ... Someone in a high government position has the potential of having conflicts of interest if he was to invest in equities or even government bonds for that matter. One way to avoid this would be to put one's assets in a blind trust but t...
by Doc
Mon Apr 06, 2015 1:25 pm
 
Forum: Investing - Theory, News & General
Topic: Mohamed El-Erian Has Most of His Money in Cash
Replies: 69
Views: 7630

Re: Bonds and interest rates: 2003 - 2007

...or is 50% < 5 years typical? As long as I've followed the fund it's duration has always been in the 5 to 5.5 range. Is that 10 days or 10 years? :) Interesting: Vanguard Interm-Tm Govt Bd Idx Admiral VSIGX uses the 3-10 version of the Govt Float adjusted index and both the Treasury and Governmen...
by Doc
Sun Apr 05, 2015 4:30 pm
 
Forum: Investing - Theory, News & General
Topic: Bonds and interest rates: 2003 - 2007
Replies: 36
Views: 3444

Re: Bonds and interest rates: 2003 - 2007

... VFITX holds bonds in the 3-year to 10-year range. Strange: The benchmark for the fund is the Barclays US 5-10 Yr Treasury Index but the fund currently has about 50% of it maturities in the 3-5 year range. Is this active management at work or is 50% < 5 years typical? The fund is expected to mai...
by Doc
Sun Apr 05, 2015 3:46 pm
 
Forum: Investing - Theory, News & General
Topic: Bonds and interest rates: 2003 - 2007
Replies: 36
Views: 3444

Re: Vanguard brokerage tax forms changed to late Feb. questi

I got a revised 1099 in the mail last week dated March 27. From what I can figure out, the only difference is the addition of a "D" code in box 1f of a 1099-B. You received a Form 1099-B showing accrued market discount in box 1g . http://www.irs.gov/pub/irs-pdf/i8949.pdf page 6 What is re...
by Doc
Sun Apr 05, 2015 9:17 am
 
Forum: Personal Finance (Not Investing)
Topic: Vanguard brokerage tax forms changed to late Feb. question
Replies: 95
Views: 8133

Re: Asset Allocation Calculation Question: Cash & Other

If your equity funds are broad index funds, they should not have significant cash holdings. Whatever cash they have is the cost of doing business, not part of an investment strategy. So even though my Vanguard Total Stock fund has 1% of its assets tied up in cash, I consider my holdings of that fun...
by Doc
Sat Apr 04, 2015 9:57 am
 
Forum: Investing - Theory, News & General
Topic: Asset Allocation Calculation Question: Cash & Other
Replies: 9
Views: 737

Re: Asset Allocation Calculation Question: Cash & Other

Cash is something that you have in your wallet or keep under the mattress. Things like money market funds and treasury bills are just short term fixed income and should be treated as such. (If you buy a ten year bond does it really magically turn into cash after 9 years?) Money in your checking or s...
by Doc
Fri Apr 03, 2015 4:13 pm
 
Forum: Investing - Theory, News & General
Topic: Asset Allocation Calculation Question: Cash & Other
Replies: 9
Views: 737

Re: Rick Ferri's 30 year market forecast 2015

Doc, that's an interesting hypothesis (i.e. that the arbitrage concept is weaker in the FI market). That seems implausible to me, regardless of the objectives of one group of investors in that market ... Try this idea, if you need a nine passenger van for all your offspring and I need a pickup truc...
by Doc
Thu Apr 02, 2015 11:17 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13896

Re: Rick Ferri's 30 year market forecast 2015

I understand the motivations of insurance companies and other liability-matching investors (like many Bogleheads), but that doesn't imply mis-pricing ... CAPM is based on the market participants making tradeoffs between price and market risk - variance in the one factor model. But the insurance com...
by Doc
Thu Apr 02, 2015 10:22 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13896

Re: Rick Ferri's 30 year market forecast 2015

if that is what you mean by roll yield than that is, to put it simply, hopelessly optimistic...it flies in the face of the concept of market efficiency...there is no way the market can possibly provide such a wonderful opportunity that would not be abritraged away. Roll yield exists in theory as lo...
by Doc
Thu Apr 02, 2015 7:15 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13896

Re: Is it time to give-up on TIPS?

#Cruncher wrote:I assume that Doc was referring to the SPDR® Barclays 1-10 Year TIPS ETF, symbol TIPX

Actually I was getting my info from the thread #Cruncher referenced. I actually didn't know which ETF it was. :D
by Doc
Wed Apr 01, 2015 7:28 am
 
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 113
Views: 14600

Re: Negative Yields Hit US Treasury Markets

Vanguard's website is showing a negative indicative yield for tomorrows 4 wk T-Bill. That's strange since the Treasury doesn't accept negative yield bids for a T-Bill auction. From the Uniform Offering Circular PDF file §356.12: (c) Competitive bids—(1) Bid format —(i) Treasury bills. A competitive...
by Doc
Wed Apr 01, 2015 7:25 am
 
Forum: Investing - Theory, News & General
Topic: Negative Yields Hit US Treasury Markets
Replies: 17
Views: 2782

Re: Negative Yields Hit US Treasury Markets

I buy same day using ACH pull straight from bank account, whether mutual funds or ETFs (latter via Prime MM). No need to wire, no need to hold Treasuries. A same day ACH transfer is an exception to the norm. Further I would not consider it prudent to have very large amount of money sitting in my ch...
by Doc
Wed Apr 01, 2015 7:22 am
 
Forum: Investing - Theory, News & General
Topic: Negative Yields Hit US Treasury Markets
Replies: 17
Views: 2782

Re: Negative Yields Hit US Treasury Markets

I don't understand -- how is a bank account less available? The Federal Reserve Banks provide the Fedwire Funds Service, a real-time gross settlement system that enables participants to initiate funds transfer that are immediate, final, and irrevocable once processed. Depository institutions and ce...
by Doc
Tue Mar 31, 2015 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: Negative Yields Hit US Treasury Markets
Replies: 17
Views: 2782

Re: Negative Yields Hit US Treasury Markets

There were negative yields on treasuries back in September 2014 http://www.wsj.com/articles/treasury-bill-yield-tips-into-negative-territory-1411516748 The rate for the 9/16/2014 and the 9/22/2014 auction was 0.000% so it never actually went negative at the auction. I got to the WSJ article. The ac...
by Doc
Tue Mar 31, 2015 8:58 am
 
Forum: Investing - Theory, News & General
Topic: Negative Yields Hit US Treasury Markets
Replies: 17
Views: 2782

Re: Rick Ferri's 30 year market forecast 2015

However, we also notice that there can be quite large discrepancies (prediction errors). This is why we have to take high correlation values with a very large grain of salt. I find that the prediction error is shown much better in the following type of graph, which plots the subsequent 20-year retu...
by Doc
Tue Mar 31, 2015 8:27 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13896

Re: Negative Yields Hit US Treasury Markets

My original intent was to point out the IT considerations of the negative rates themselves. As ogd points out there are reasons for the need to have a safe place to temporary store very safe and immediately available funds. It is because of cash flow needs not investment return considerations. In my...
by Doc
Tue Mar 31, 2015 8:20 am
 
Forum: Investing - Theory, News & General
Topic: Negative Yields Hit US Treasury Markets
Replies: 17
Views: 2782

Negative Yields Hit US Treasury Markets

Vanguard's website is showing a negative indicative yield for tomorrows 4 wk T-Bill. Two other brokers are not able to handle the negative yield apparently and don't have any way to buy at the auction currently. DW asked "if the Treasury can't sell T-bills because of a computer glitch, how will...
by Doc
Mon Mar 30, 2015 12:13 pm
 
Forum: Investing - Theory, News & General
Topic: Negative Yields Hit US Treasury Markets
Replies: 17
Views: 2782

Re: Rick Ferri's 30 year market forecast 2015

The most relevant considerations for most would fall under the categories of helping answer "am I saving enough?" and "am I taking too much risk?" I think that is the major point of a forecast of this type. I would add that if you can't save any more and you can't tolerate takin...
by Doc
Sun Mar 29, 2015 1:45 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13896

Re: Questioning the conventional logic on dividend reinvestm

Steven in NC wrote:My question: Are dividends from Total Bond, Total Stock, Total Int'l in my Taxable account "taxable" at year end, even if I have reinvestment selected?

Yes.

They actually accrue the tax when they are paid but you don't need to pay the tax until the next April 15th.
by Doc
Sat Mar 28, 2015 11:48 am
 
Forum: Investing - Theory, News & General
Topic: Questioning the conventional logic on dividend reinvestment
Replies: 28
Views: 2741

Re: Rick Ferri's 30 year market forecast 2015

...that is inconsistent with the (I thought) consensus opinion on the forum that current long-term 'rates' are the best indicator of future 'returns' on bonds. you left out the qualifying phrase "just not a very good one". And IIRC it's not "current long term rates" but "cu...
by Doc
Sat Mar 28, 2015 11:45 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13896

Re: Wash Sale (w/ a slight spin)

IMO, for the issue we're talking about... MF isn't arguing for or against bundling IRA + 401k. That's more of a broad statement that you can't TLH in tax-advantaged accounts. I think you are missing the point. When you have a wash sale the cost basis of the replacement shares is adjusted for the di...
by Doc
Fri Mar 27, 2015 3:18 pm
 
Forum: Investing - Theory, News & General
Topic: Wash Sale (w/ a slight spin)
Replies: 23
Views: 1654

Re: "TIPS. Love them or leave them?"

The usual Boglehead rule for bonds was/is: 50% Total Bond and 50% TIPS. (not getting into tax exempt bonds for high tax bracket). Has that changed??? Usual Boglehead rule? Jack Bogle has suggested lately that that the BarCap Agg Index holds to many Treasuries (or not enough corporates) because of c...
by Doc
Fri Mar 27, 2015 8:42 am
 
Forum: Investing - Theory, News & General
Topic: "TIPS. Love them or leave them?"
Replies: 16
Views: 2007
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