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Re: Schwab's poor security

I'm not surprised. When I was a Schwab customer ( I am not now), my linked Schwab bank account had all the registered debit cards and credit card hacked all at the same time. Schwab refused to explain it and denied that the breach was through them, even though they were the common denominator. I ne...
by Doc
Mon Dec 22, 2014 3:07 pm
 
Forum: Investing - Theory, News & General
Topic: Schwab's poor security
Replies: 7
Views: 441

Re: Bond Fund vs CDs - which to use?

Another reason making them difficult to compare is that bond fund principal value fluctuates and CD principal remains static. If your goal is to compare returns between the two you have to make the assumption that you hold until maturity and therefore interim pricing doesn't matter. If you want to ...
by Doc
Mon Dec 22, 2014 3:04 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 58
Views: 4139

Re: Bond Fund vs CDs - which to use?

We often see people compare the YTM (or SEC yield) of a bond fun to CD rates. I think that this is grossly inexact, as it completely ignores the yield curve. 1) Maybe you see that but it is wrong for other reasons than not knowing the future. The CG should be compared to the YTM of a single bond. A...
by Doc
Mon Dec 22, 2014 1:05 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 58
Views: 4139

Re: Schwab's poor security

Thank you.
by Doc
Mon Dec 22, 2014 12:21 pm
 
Forum: Investing - Theory, News & General
Topic: Schwab's poor security
Replies: 7
Views: 441

Re: Bond Fund vs CDs - which to use?

But I also know that if I can earn a 1% premium without taking any additional risk, that's a pretty good deal. But there is additional risk. Maybe for the small investor the credit risk is small. (FDIC is not the same as "full faith and credit" of principle and future interest.) There is ...
by Doc
Mon Dec 22, 2014 10:57 am
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 58
Views: 4139

Re: Treasuries don't always go up when stocks go down

A quick look verifies that T Bonds did the job in the big stock downturns in the relatively recent years of 2002 and 2008. However, note that in the biggest stock drop in 1931 that T. Bonds also had a negative return, while T. Bills had a positive return, so cash did a better job here. I don't thin...
by Doc
Sun Dec 21, 2014 4:52 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 58
Views: 4139

Re: MM expense Ratio [Money Market]

Electron wrote:The 0.0% expense figure was very likely a mistake of some sort.

Yep. That may be why it was removed so fast. They were getting a lot of "huh's".
by Doc
Sat Dec 20, 2014 2:41 pm
 
Forum: Investing - Theory, News & General
Topic: MM expense Ratio [Money Market]
Replies: 15
Views: 1597

Re: [Why did my fund suddenly drop in value?]

For Vanguard bond funds on a monthly distribution schedule, the process is slightly different: the record date and reinvest date are on the same day, the last day of the month that the market is open . Those dividends are credited to my bank account two banking days later. (So, typically on the 2nd...
by Doc
Sat Dec 20, 2014 12:40 pm
 
Forum: Investing - Theory, News & General
Topic: [Why did my fund suddenly drop in value?]
Replies: 138
Views: 12266

Re: [Why did my fund suddenly drop in value?]

I'd be interested too. It is my understanding that securities transactions are only required to be settled two days after the next market close. In practice, this is after the third next market close. I verified this with my money-market accounts a year or two ago: Presuming no intervening holiday,...
by Doc
Sat Dec 20, 2014 11:22 am
 
Forum: Investing - Theory, News & General
Topic: [Why did my fund suddenly drop in value?]
Replies: 138
Views: 12266

Re: MM expense Ratio [Money Market]

For those challenging the arithmetic. I know that the SEC yield is after expenses. If the SEC yield was 0.01% with an expense ratio of 0.00% then the yield before management expense was also 0.01%. Now increase the expenses by 0.16% and the after expense return goes negative. The annual report was d...
by Doc
Sat Dec 20, 2014 10:54 am
 
Forum: Investing - Theory, News & General
Topic: MM expense Ratio [Money Market]
Replies: 15
Views: 1597

Re: MM expense Ratio

Help me out guys. I must be missing something. The expense ratio was 0.00 and is now 0.16% according to the prospectus dated 12/19/2014. Based on the Vanguard Fund profile the SEC yield is 0.01% as of yesterday with an e/r at 0.0%. So going forward we have a yield of

0.01 - 0.16 = minus 0.15%

:?:
by Doc
Fri Dec 19, 2014 6:04 pm
 
Forum: Investing - Theory, News & General
Topic: MM expense Ratio [Money Market]
Replies: 15
Views: 1597

Re: Vanguard is simplifying it's account structure ??

1210sda wrote: A relative of mine received an email from Vanguard requesting that he "upgrade" to a VBS account?


Yes, I got my email in November 2013 and they finally got all the "but you are not eligibles" fixed after 13 months.
by Doc
Fri Dec 19, 2014 5:26 pm
 
Forum: Investing - Theory, News & General
Topic: "Vanguard converting mutual fund accounts to brokerage?
Replies: 252
Views: 16858

Re: MM expense Ratio

Up date. On the Prime Money Market profile page:

Vanguard wrote:Expense ratio as of 12/19/2014 0.16%
by Doc
Fri Dec 19, 2014 8:57 am
 
Forum: Investing - Theory, News & General
Topic: MM expense Ratio [Money Market]
Replies: 15
Views: 1597

MM expense Ratio [Money Market]

At approximately 06:00 E this morning 12/19/14 all three of our accounts (new VBS platform) had a yellow highlighted banner saying that our MM market fund expense ratio had one from 0.00% to something like 0.19%. There was a link that went to ~ "Why expense ratios go up" but it was generic...
by Doc
Fri Dec 19, 2014 8:51 am
 
Forum: Investing - Theory, News & General
Topic: MM expense Ratio [Money Market]
Replies: 15
Views: 1597

Re: My Fund is Down?! It's Distribution Time!!

I'm confused? A cash credit no reason or what? They posted the cash credit before start of business but won't post the dividend itself until after the close of business. That's the kind of thing that sometimes happens when you try to merge a mutual fund company into a brokerage firm. :D Hey I was a...
by Doc
Thu Dec 18, 2014 6:18 pm
 
Forum: Investing - Theory, News & General
Topic: [Why did my fund suddenly drop in value?]
Replies: 138
Views: 12266

Re: My Fund is Down?! IT'S DISTRIBUTION TIME!!!

livesoft wrote:Bumpity-do-dah!


I've got a new twist for 2014 :D

My fund did NOT go down but I received a cash credit in my new Vanguard Brokerage account. I love freebies!

"Zip-A-Dee-Doo-Dah
Zip-A-Dee-A
My oh my, what a wonderful day
Plenty of sunshine heading my way"
by Doc
Thu Dec 18, 2014 4:24 pm
 
Forum: Investing - Theory, News & General
Topic: [Why did my fund suddenly drop in value?]
Replies: 138
Views: 12266

Re: Credit Risk vs. Term Risk

Interesting, the tradeoff between term risk and credit risk. I wonder if there is another factor involved in this situation now. Many analysts believe that the Fed will start raising interest rates in mid-2015. As the fed can only increase short term rates, those rates rise typically more precipito...
by Doc
Thu Dec 18, 2014 1:40 pm
 
Forum: Investing - Theory, News & General
Topic: Credit Risk vs. Term Risk
Replies: 11
Views: 930

Re: Total Market fund for Developed countries only

FTSE Developed ex-US has ~4% Korea and ~8% Canada. http://www.ftse.com/analytics/factsheets/Home/Search I'm using Schwab International Equity ETF SCHF (FTSE) to cover this part. & to include more small cap I use SPDR S&P International Small Cap ETF GWX (S&P) which also includes Korea and...
by Doc
Thu Dec 18, 2014 10:59 am
 
Forum: Investing - Theory, News & General
Topic: Total Market fund for Developed countries only
Replies: 17
Views: 1410

Re: Credit Risk vs. Term Risk

It's hard to make correct pronouncements of this nature and one is far better off concentrating on their own situation (i.e. advantages vs the market), like state tax. Let me try to clarify. Intermediate Treasuries and short corporates have similar expected future returns over a time period on the ...
by Doc
Thu Dec 18, 2014 10:28 am
 
Forum: Investing - Theory, News & General
Topic: Credit Risk vs. Term Risk
Replies: 11
Views: 930

Re: Total Market fund for Developed countries only

:D
pradador wrote:The plan was to overweight emerging markets ...


I read your initial statement as overweighting small cap developed international. Much of what I had to say may probably be irrelevant to your question. :(
by Doc
Wed Dec 17, 2014 8:02 pm
 
Forum: Investing - Theory, News & General
Topic: Total Market fund for Developed countries only
Replies: 17
Views: 1410

Re: Credit Risk vs. Term Risk

Well in the last three months the total return difference between the two is 2.14% in favor of the Treasury fund. The SEC yield is based on what a fund has in its portfolio today and if the fund didn't change that is the yield you would receive over the "duration". Of course funds do chan...
by Doc
Wed Dec 17, 2014 7:52 pm
 
Forum: Investing - Theory, News & General
Topic: Credit Risk vs. Term Risk
Replies: 11
Views: 930

Credit Risk vs. Term Risk

In these times of low interest rates many people are straying from a TBM type portfolio to other areas like CD's or High Yield. This made me wonder what kind of trade off there is between going to lower quality or longer duration. Using Vanguard index funds as a model we find Vanguard Short-Term Cor...
by Doc
Wed Dec 17, 2014 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: Credit Risk vs. Term Risk
Replies: 11
Views: 930

Re: Vanguard's International Small Cap Fund -ETF vs Mutual F

If you hold a Vanguard mutual fund at Vanguard and there is a corresponding ETF, Vanguard can/will convert shares of the mutual fund to the ETF without a taxable event: http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds#Vanguard_funds From Vanguard itself: Can I convert my conventional Vanguard mu...
by Doc
Tue Dec 16, 2014 6:28 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard's International Small Cap Fund -ETF vs Mutual Fund
Replies: 17
Views: 1943

Re: Are VG Indexes Weighted by their market capitalization?

Efficient when talking about a mutual fund usually refers to the trading costs incurred in order to track the index. Market weighted indexes are efficient because if a particular stock or sector outperforms the rest, the fund does not have to buy more in order to track the index. The tracking is &qu...
by Doc
Tue Dec 16, 2014 9:09 am
 
Forum: Investing - Theory, News & General
Topic: Are VG Indexes Weighted by their market capitalization?
Replies: 2
Views: 366

Re: Is it speculation to use the Callan Periodic table?

My thought is: the public and individual investor are often wrong. If that's true, going against the public would be right. Since the public often buys as prices rise and sell as prices fall, buy doing the opposite (buying asset classes that are most recently underperforming/falling), and holding t...
by Doc
Mon Dec 15, 2014 7:57 pm
 
Forum: Investing - Theory, News & General
Topic: Is it speculation to use the Callan Periodic table?
Replies: 26
Views: 1787

Re: Is it speculation to use the Callan Periodic table?

What if there was no rebalancing, only the annual purchase of the lowest producing asset class? That's just rebalancing by other means. It may not be as precise as buying and selling to return to target but it still has the same effect provided your annual contributions are large enough. If you onl...
by Doc
Mon Dec 15, 2014 5:23 pm
 
Forum: Investing - Theory, News & General
Topic: Is it speculation to use the Callan Periodic table?
Replies: 26
Views: 1787

Re: TIPS Mutual Funds

One asset class that is rarely mentioned on this forum with respect to an inflationary hedge is money market funds. With essentially a zero duration they are immune to interest rate risk and principal loss. Better is 4 wk Treasury bills. They are not quite giving them way yet but last week's went o...
by Doc
Mon Dec 15, 2014 12:46 pm
 
Forum: Investing - Theory, News & General
Topic: TIPS Mutual Funds
Replies: 42
Views: 2887

Re: Roth versus Traditional Debate

Your basically complaining that your getting more money when you are retired than when you were working:) It should be pointed out how much better it is to do ROTH conversions compared to ROTH contributions from a tax point of view. Getting to shift risk onto someone else is a very nice benefit. I ...
by Doc
Mon Dec 15, 2014 11:28 am
 
Forum: Investing - Theory, News & General
Topic: Roth versus Traditional Debate
Replies: 50
Views: 3926

Re: Roth versus Traditional Debate

In standard economic speak "marginal" means a derivative. Operationally this means the change in tax when you make a small change in income. How small is a problem. Too small and the tax tables turn marginal tax rate into a shah function. Too large and linear approximations are not reason...
by Doc
Mon Dec 15, 2014 10:45 am
 
Forum: Investing - Theory, News & General
Topic: Roth versus Traditional Debate
Replies: 50
Views: 3926

Re: TIPS Mutual Funds

#Cruncher wrote: archbish99 wrote: TIPS and nominals both price in the expectations of inflation. It's only the yields of nominal bonds that incorporate the expected rise in the Consumer Price Index. Since TIPS yields are in terms of constant dollars, the expected rise in the CPI is irrelevant to t...
by Doc
Mon Dec 15, 2014 10:35 am
 
Forum: Investing - Theory, News & General
Topic: TIPS Mutual Funds
Replies: 42
Views: 2887

Re: Are TIPs good in inflation & deflation?

Yes, it is true. And the reason is simply that TIPS guarantee, on a pretax basis, a known real return whether the Consumer Price Index goes up, down, or stays the same. Isn't this only true if you purchase at auction. If I buy a bond with an inflation factor of 1.1 and we have deflation of 10% over...
by Doc
Sun Dec 14, 2014 7:23 pm
 
Forum: Investing - Theory, News & General
Topic: Are TIPs good in inflation & deflation?
Replies: 6
Views: 864

Re: Turnover Expense impact on Expense Ratio

Regarding bond funds: I think derivatives also can add to the reported high turnover in bond funds. A 30 day interest rate swap gives you a turn over of x12. And an overnight investment of cash of 1% of your portfolio is what 360% turnover for 1% of your portfolio which alone adds 3.6% to the total ...
by Doc
Sun Dec 14, 2014 7:12 pm
 
Forum: Investing - Theory, News & General
Topic: Turnover Expense impact on Expense Ratio
Replies: 22
Views: 746

Re: Turnover Expense impact on Expense Ratio

One nice thing about an index fund is that you can pretty well bypass all such questions simply by looking at whether the fund is tracking its index, and how well. Yeh, that's what it says in the book but: SPDR S&P International Small Cap ETF GWX had a turnover of some 50% for the year 2014 fis...
by Doc
Sun Dec 14, 2014 7:05 pm
 
Forum: Investing - Theory, News & General
Topic: Turnover Expense impact on Expense Ratio
Replies: 22
Views: 746

Re: Roth versus Traditional Debate

In standard economic speak "marginal" means a derivative. Operationally this means the change in tax when you make a small change in income. How small is a problem. Too small and the tax tables turn marginal tax rate into a shah function. Too large and linear approximations are not reason...
by Doc
Sun Dec 14, 2014 6:51 pm
 
Forum: Investing - Theory, News & General
Topic: Roth versus Traditional Debate
Replies: 50
Views: 3926

Re: TIPS Mutual Funds

My impression is that a fair number of TIPS holders engage in market timing. I think you could come to that conclusion based on some of Larry Swedroe's posts. If I recall he has a formula for when TIPs are a good buy and when not so good. His "formula" was for trading 10 yr TIPS vs. short...
by Doc
Sun Dec 14, 2014 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: TIPS Mutual Funds
Replies: 42
Views: 2887

Re: Roth versus Traditional Debate

I guess we are lost in semantics. To me "marginal rate" is what you pay in tax on the next dollar earned. I'm not really sure what your definition means, but I don't think it is the same. Unfortunately, I will have to take some time to digest the rest of what you said. Some of it makes se...
by Doc
Sun Dec 14, 2014 12:55 pm
 
Forum: Investing - Theory, News & General
Topic: Roth versus Traditional Debate
Replies: 50
Views: 3926

Re: Total Market fund for Developed countries only

Adding in a 1.5% allocation to Canada won't make a difference in one's retirement outcome (although it might make investing more "fun" for people who thrive on complexity/perfection). No but 15% emerging market might. Even if the EM and Canada have a similar weight in the overall portfoli...
by Doc
Sun Dec 14, 2014 12:51 pm
 
Forum: Investing - Theory, News & General
Topic: Total Market fund for Developed countries only
Replies: 17
Views: 1410

Re: Roth versus Traditional Debate

Forgive me for picking this nit, but I don't think this is quite right either. If most or all of a person's taxable income is coming from a retirement account (IRA, 401k, etc.) then it will be taxed at different levels before reaching the highest level. Less we get lost in semantics: Marginal rate ...
by Doc
Sun Dec 14, 2014 12:17 pm
 
Forum: Investing - Theory, News & General
Topic: Roth versus Traditional Debate
Replies: 50
Views: 3926

Re: Total Market fund for Developed countries only

I looked at the allocation of Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) Besides Europe and Pacific developed markets, Vanguard lists the following: Emerging Markets 18.8% Middle East 0.5% North America 7.4% If you group Middle East with Emerging, Vanguard's allocation, wh...
by Doc
Sun Dec 14, 2014 12:03 pm
 
Forum: Investing - Theory, News & General
Topic: Total Market fund for Developed countries only
Replies: 17
Views: 1410

Re: Total Market fund for Developed countries only

SPDR® S&P® World ex-US ETF (GWL) - 0.34% ER. - Covers market but carries a high cost. Schwab International Equity ETF (SCHF) and Schwab International Small-Cap Equity ETF (SCHC) - 0.09% and 0.19% ER - Lower fees but need two funds. iShares Core MSCI EAFE (IEMG) - 0.14% ER - No Canada but includ...
by Doc
Sun Dec 14, 2014 9:39 am
 
Forum: Investing - Theory, News & General
Topic: Total Market fund for Developed countries only
Replies: 17
Views: 1410

Re: Question for bond experts about Treasury STRIPS

But I do still think that chasing the last 15 basis points in efficiency with strip ladders is a load of complexity that the average investor can afford to avoid....especially the retiree who is well advised to keep things simple, if not for their own benefit, for their spouse or trustee's benefit....
by Doc
Thu Dec 11, 2014 7:49 pm
 
Forum: Investing - Theory, News & General
Topic: Question for bond experts about Treasury STRIPS
Replies: 14
Views: 1607

Re: Vanguard Wish List

I'd love Vanguard to provide checking and credit card services comparable to Fidelity Cash Management Account and Fidelity 2% cash back cards. Currently VanguardAdvantage cash management services are available for free only to the 3 comma club, and there are no credit card offerings. Banks do a goo...
by Doc
Wed Dec 10, 2014 7:39 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard Wish List
Replies: 44
Views: 2992

Re: Poll: Your Portfolio Tax Diversification

Well so far the old farts fogies like me are in the minority with only 9% having a 75% taxable portfolio. I am beginning to understand why there is so little interest in my rants about the complexities of the tax code w/r/t SS. :D
by Doc
Wed Dec 10, 2014 7:31 pm
 
Forum: Investing - Theory, News & General
Topic: Poll: Your Portfolio Tax Diversification
Replies: 45
Views: 2458

Re: TIPs, Total Bond Market, or Both?

abuss368 wrote:My concern is how the Intermediate Term TIPS fund will react, considering the long duration (i.e. 8+-), with a change in real interest rates.


"the" :?:

Use another index product like TIPX - SPDR Barclays 1-10 Year TIPS ETF
by Doc
Wed Dec 10, 2014 4:43 pm
 
Forum: Investing - Theory, News & General
Topic: TIPs, Total Bond Market, or Both?
Replies: 35
Views: 3496

Re: Question for bond experts about Treasury STRIPS

To an investor, there is no practical difference between a coupon strip and a principal strip. Both are zero-coupon Treasury securities. But there is a technical difference. Each issue of Treasury securities is identified with a unique CUSIP number. When a note or bond is stripped, each new securit...
by Doc
Mon Dec 08, 2014 10:48 am
 
Forum: Investing - Theory, News & General
Topic: Question for bond experts about Treasury STRIPS
Replies: 14
Views: 1607

Re: TIPs, Total Bond Market, or Both?

If all of one's fixed income is inside tax-advantaged accounts tax efficiency is the same and can be ignored. Some posters will claim it makes a difference between tax-deferred and tax-free, but only because they misunderstand the math, having been misled by strictly political words coined by the l...
by Doc
Mon Dec 08, 2014 10:36 am
 
Forum: Investing - Theory, News & General
Topic: TIPs, Total Bond Market, or Both?
Replies: 35
Views: 3496

Re: VBS upgrade roll out has started

This workaround is only useful if we are talking non-retirement accounts. If you want to move money from traditional to Roth as a conversion, it's not ideal. Still, it'll be coming back next year allegedly There are a heck of a lot of these little "gotcha's" in this new system. I didn't e...
by Doc
Sat Dec 06, 2014 2:28 pm
 
Forum: Investing - Theory, News & General
Topic: "Vanguard converting mutual fund accounts to brokerage?
Replies: 252
Views: 16858

Re: TIPs, Total Bond Market, or Both?

There are plenty of reasons not too like one of the subsets, but each seems to have a reasonable role to play. If you want to slice and dice or more style purity, go right ahead. As far as I'm concerned one of the most important reasons to slice & dice fixed income is tax efficiency. Short term...
by Doc
Sat Dec 06, 2014 1:03 pm
 
Forum: Investing - Theory, News & General
Topic: TIPs, Total Bond Market, or Both?
Replies: 35
Views: 3496

Re: VBS upgrade roll out has started

Except that automatic exchange offers the options of "dollars," "percent," "shares," and "declining balance" whereas automatic withdrawal only offers the option of "dollar amount." I'm not sure that matters--so far I've never used anything but "...
by Doc
Sat Dec 06, 2014 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: "Vanguard converting mutual fund accounts to brokerage?
Replies: 252
Views: 16858

Re: 1099-B and Vanguard's Cost Basis Amount

I've always kept track of cost basis in an excel spreadsheet and continue to do so, though I suppose it's less important if all you have are covered shares. However, I don't completely trust them, and have already experienced problems with cost basis calculations which they eventually corrected. Th...
by Doc
Sat Dec 06, 2014 12:00 pm
 
Forum: Investing - Theory, News & General
Topic: 1099-B and Vanguard's Cost Basis Amount
Replies: 27
Views: 2330
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