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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: 91
Views: 7927

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: 2656

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: 91
Views: 7927

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: 1396

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: 1944

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

No sure Doc. I would have to check but I did not remove them because of Lehman. Do you own the TIPS fund? I use a 0-10 ladder. It is designed as a liability matching portfolio for retirement in case the market tanks and stays tanked for a significant length of time. If the market is OK in a given y...
by Doc
Fri Mar 27, 2015 8:22 am
 
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 104
Views: 13181

Re: Wise move to move some $ to cash before bear market?

Yes, of course. You should ALWAYS sell the week before a bear market begins. And then, buy when it ends. :P That is really not that hard to do in fact. DEFINITION OF 'BEAR MARKET' A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentimen...
by Doc
Thu Mar 26, 2015 10:52 am
 
Forum: Investing - Theory, News & General
Topic: Wise move to move some $ to cash before bear market?
Replies: 66
Views: 5647

Re: Wash Sale (w/ a slight spin)

I TLH whenever I can, but am careful to isolate things. Having gone through numerous audits in my business career it makes a lot of sense not to throw up a red flag in front of the auditor. Even if you don't violate the rules the suspicion alone is enough to give the auditor incentive to dig deeper...
by Doc
Thu Mar 26, 2015 8:59 am
 
Forum: Investing - Theory, News & General
Topic: Wash Sale (w/ a slight spin)
Replies: 23
Views: 1396

Re: Why Bonds With 20 Year Horizon?

Of course I'm familiar with CAPM which is certainly a very helpful model I'm not talking about the model. In maybe the original CAPM book Sharpe goes through a "psychological" assessment of risk and reward. He uses illustrations like apartments and girl friends as examples. In applying th...
by Doc
Wed Mar 25, 2015 11:43 am
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5124

Re: Why Bonds With 20 Year Horizon?

The reality is that we don't know. We don't know the distribution of future returns, and we don't know whether stocks have a higher expected return or not. Of course we know that stocks have a higher expected return. We know that Treasury bonds are virtually risk free and that equities are riskier....
by Doc
Wed Mar 25, 2015 10:50 am
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5124

Re: Why Bonds With 20 Year Horizon?

hoops777 wrote:I am impressed that so many are so absoluetly certain of the return of bonds going forward.Nice to know nothing could happen to change that :D

If a thirty year Treasury bond does not return the promised cash flows we have a lot more to worry about than a Boglehead forum. :P
by Doc
Wed Mar 25, 2015 10:44 am
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5124

Re: Why Bonds With 20 Year Horizon?

The reality is that we don't know. We don't know the distribution of future returns, and we don't know whether stocks have a higher expected return or not. Of course we know that stocks have a higher expected return. We know that Treasury bonds are virtually risk free and that equities are riskier....
by Doc
Wed Mar 25, 2015 10:38 am
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5124

Re: Why Bonds With 20 Year Horizon?

understand that adding bonds reduces volatility. I was just responding to the "dry powder" rebalancing argument that I hear on this forum. As for volatility, I couldn't care less. Bring it on. Now I obviously don't want a stagnant economy with deflation and depressed economic growth and a...
by Doc
Wed Mar 25, 2015 9:34 am
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5124

Re: Why Bonds With 20 Year Horizon?

The rebalancing "bonus" doesn't make up for significant (time * money) out of equities unless you assume a certain relationship between stock and bond returns. The math just doesn't add up on rebalancing between two significantly differently performing asset classes in a generally upward ...
by Doc
Wed Mar 25, 2015 7:56 am
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5124

Re: Why Bonds With 20 Year Horizon?

jhfenton wrote:On the contrary, it means that things are on sale!

And if things are on sale it is nice to have some ready cash (ie bonds) to buy some more equities at that great sale price.
by Doc
Tue Mar 24, 2015 4:56 pm
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5124

Re: How mutual fund distribution affects performance?

Depends on the broker but 90% of the time they do not reduce the cost base on dividends paid, making it look like your investment instantly lost the amount of the distribution. Dividends are taxable distributions and do not reduce your cost basis. On the other hand if you reinvest your dividends yo...
by Doc
Tue Mar 24, 2015 11:12 am
 
Forum: Investing - Theory, News & General
Topic: How mutual fund distribution affects performance?
Replies: 6
Views: 735

Re: Vanguard Ex-US Small Cap Value Petition

Fryxell wrote:There are international small value indexes from MSCI.


Thanks. Google failed me this time.
by Doc
Tue Mar 24, 2015 7:56 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard Ex-US Small Cap Value Petition
Replies: 24
Views: 3028

Re: Vanguard Ex-US Small Cap Value Petition

Morningstar doesn't even have a Foreign Small Value Category. I don't think there is a Foreign Small Value Index either. So I don't think an International/Foreign Small Value fund from Vanguard is in the foreseeable future. There is at least one INTL. SMALL CAP VALUE fund - DFA International Small C...
by Doc
Mon Mar 23, 2015 10:41 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard Ex-US Small Cap Value Petition
Replies: 24
Views: 3028

Re: Removing currency when evaluating returns?

But ... Here's the part I don't get. Here's a point that I don't get. I just looked at two almost identical foreign funds - Tweedy, Browne Global Value II Ccy Unhdg TBCUX and Tweedy, Browne Global Value TBGVX. These are essentially identical funds in theory except that one is hedged and one is not....
by Doc
Mon Mar 23, 2015 10:08 am
 
Forum: Investing - Theory, News & General
Topic: Removing currency when evaluating returns?
Replies: 7
Views: 613

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

abuss368 wrote:I am still on the fence with TIPS. I removed them many years ago and simplified our bond holdings to Total Bond Index and Intermediate Tax Exempt and this has worked very well thus far.

Is "many years" before or after Lehman? :D
by Doc
Sat Mar 21, 2015 11:56 am
 
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 104
Views: 13181

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

If all prices in an economy can freely adjust, then nominal bonds have no place in a portfolio because TIPS are better for both borrower and lender. You are falling into the trap of thinking of your fixed income investments in isolation. You also need to consider how various FI choices interact wit...
by Doc
Fri Mar 20, 2015 9:22 am
 
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 104
Views: 13181

Re: Tax Loss Accounting & Calculating Returns Accurately

The usefulness? That could be as simple as understanding if ones efforts were worth anything at all; but hopefully I think in the end little more nuanced. Once upon a time I made a 3x3 table for the effective annualized tax rate to account for the tax deferral from LTCG. The independent variable we...
by Doc
Wed Mar 18, 2015 3:36 pm
 
Forum: Investing - Theory, News & General
Topic: Tax Loss Accounting & Calculating Returns Accurately
Replies: 20
Views: 567

Re: Tax Loss Accounting & Calculating Returns Accurately

The timing of the taxes paid can be done on an annual basis. A more frequent basis makes you think you have more precision than you actually have.
by Doc
Wed Mar 18, 2015 3:00 pm
 
Forum: Investing - Theory, News & General
Topic: Tax Loss Accounting & Calculating Returns Accurately
Replies: 20
Views: 567

Re: helping adult children with house downpayment

Are you married? Is your son? If so, you and your spouse could each gift $14k to him and his spouse. That's $56k per year, or $28k if only one of you is married. My dad and his wife gifted me 20k for our house down payment. The bank had us and maybe them sign some a paper stating it was a gift with...
by Doc
Wed Mar 18, 2015 2:57 pm
 
Forum: Investing - Theory, News & General
Topic: helping adult children with house downpayment
Replies: 30
Views: 2676

Re: Tax Loss Accounting & Calculating Returns Accurately

My return spreadsheet includes all contributions and withdrawals, showing ROI, XIRR, and Real RRI. XIRR is a discounted cash flow analysis. Just add a term each April 15th for the actual tax that you pay on your investments. Remember it's a cash flow analysis. It's what you pay not what you accrue....
by Doc
Wed Mar 18, 2015 2:43 pm
 
Forum: Investing - Theory, News & General
Topic: Tax Loss Accounting & Calculating Returns Accurately
Replies: 20
Views: 567

Re: PXSV has changed indexes

This is what is frustrating to an investor. If I remember right, Vanguard changed its small cap value index too. So much for staying the course. :D S&P SmallCap 600 Value Index (formerly known as the S&P SmallCap 600/Barra Value Index) through May 16, 2003; MSCI US Small Cap Value Index thr...
by Doc
Mon Mar 16, 2015 12:51 pm
 
Forum: Investing - Theory, News & General
Topic: PXSV has changed indexes
Replies: 88
Views: 6134

Re: M* Portfolio Manager problem

livesoft wrote: I clicked on the "print" button on the web page and not in the browser menu. The print button opened a new window and reformatted the X-ray.

That's how I did it too.
by Doc
Fri Mar 13, 2015 4:12 pm
 
Forum: Investing - Theory, News & General
Topic: M* Portfolio Manager problem
Replies: 10
Views: 958

Re: M* Portfolio Manager problem

New problem: I can't get the bottom part of the X-ray report to print (the style boxes and below). :? Prints ok with either Chrome or IE. Two page report with Chrome and choice of 1 or 2 page with IE. No gobbledygook. But all I have is the style boxes I am not using a "transaction" portfo...
by Doc
Fri Mar 13, 2015 10:33 am
 
Forum: Investing - Theory, News & General
Topic: M* Portfolio Manager problem
Replies: 10
Views: 958

Re: M* Portfolio Manager problem

I checked a couple of prices and sure enough, they are correct. But at the bottom right of the screen it says, "Data as of 3/10/2015 5:04:05 AM CST". At the bottom left of the screen I now show Data as of 03-13-15 09:12 AM CST | USD which is 2 minutes old. Could it be possible that you we...
by Doc
Fri Mar 13, 2015 9:14 am
 
Forum: Investing - Theory, News & General
Topic: M* Portfolio Manager problem
Replies: 10
Views: 958

Re: vfiix M and Vanguard different duration

Thanks for replies. M is Morningstar, if the difference is a result of not being entirely fixed duration, would this imply that in a rising rate environment vfiix duration would increase? This is pretty nerdy. If rates increase mortgagees are less likely to pay off their mortgage and buy a bigger h...
by Doc
Thu Mar 12, 2015 3:32 pm
 
Forum: Investing - Theory, News & General
Topic: vfiix M and Vanguard different duration
Replies: 4
Views: 252

Re: Turbotax prices going up March 27

Or you can buy it from Amazon and probably elsewhere for nearly the same or even better price than the broker's discounted price. Intuit is also giving a discount if you got caught in the version fiasco this year regardless of where you bought it. https://turbotax.intuit.com/25back?priorityCode=1902...
by Doc
Thu Mar 12, 2015 11:53 am
 
Forum: Investing - Theory, News & General
Topic: Turbotax prices going up March 27
Replies: 5
Views: 619

Re: vfiix M and Vanguard different duration

Merrill probably has old data. The fund itself is behaving like it has shorter duration than a total US bond market index fund. Morningstar has 8.0 & 5.46 maturity/duration. There is a one month difference in the as of date which is not enough to cause this kind of difference. Possible reasons:...
by Doc
Thu Mar 12, 2015 11:48 am
 
Forum: Investing - Theory, News & General
Topic: vfiix M and Vanguard different duration
Replies: 4
Views: 252

Re: Basic Vanguard Graph Question

Very quick, basic question. I called Vanguard and the rep said he " thinks " ... OMG Calculation method. Personal performance uses a formula called internal rate of return (IRR), which is a dollar-weighted return. IRR takes into account new money coming into your investment, as well as ho...
by Doc
Thu Mar 12, 2015 10:41 am
 
Forum: Investing - Theory, News & General
Topic: Basic Vanguard Graph Question
Replies: 3
Views: 375

Re: question on how passively managed bond funds work

Almost all bond funds don't hold to maturity. The index themselves are seldom 0-X but more likely 1-X, or 3-X etc. Maturity 􀂄 At least one year until final maturity , regardless of optionality. For securities with a coupon that converts from a fixed to a floating rate, at least one year until the co...
by Doc
Tue Mar 10, 2015 5:23 pm
 
Forum: Investing - Theory, News & General
Topic: question on how passively managed bond funds work
Replies: 2
Views: 223

Re: What is the smallest amount you would invest in taxable?

fourwedge wrote:Is converting from investor shares to admiral shares a "taxable" exchange?

No.
by Doc
Mon Mar 09, 2015 7:26 pm
 
Forum: Investing - Theory, News & General
Topic: What is the smallest amount you would invest in taxable?
Replies: 13
Views: 1329

Re: What is the smallest amount you would invest in taxable?

How are they pathetic? I have a mix of covered and uncovered shares in a suboptimal, but not terrible fund. I want to switch to specific id to clear out the part of that fund that is underwater or nearly so. How much pain will I be in for with my hundred or so uncovered lots? It has to do with wash...
by Doc
Mon Mar 09, 2015 7:04 pm
 
Forum: Investing - Theory, News & General
Topic: What is the smallest amount you would invest in taxable?
Replies: 13
Views: 1329

Re: What is the smallest amount you would invest in taxable?

I started doing the $100 deposit for years until I woke up to just how PATHETIC vanguard is with tax lots (non covered... the rules changed recently).... after I figured that out, I tried to limit to 1K at a time to reduce the sheer number of tax lots (I also don't reinvest dividends for taxable ho...
by Doc
Mon Mar 09, 2015 12:14 pm
 
Forum: Investing - Theory, News & General
Topic: What is the smallest amount you would invest in taxable?
Replies: 13
Views: 1329

Re: International value: worth the fees?

Yes, that's something that's puzzled/frustrated me about Vanguard for a while, an international value index fund can't be that hard to implement. The fund might not be that hard to implement but implementing a foreign small cap value index is another matter. I can't find one unless you want to incl...
by Doc
Mon Mar 09, 2015 10:38 am
 
Forum: Investing - Theory, News & General
Topic: International value: worth the fees?
Replies: 24
Views: 1947

Re: Negative bond yields

The party holding the collateral hands over that return, so they don't care what it is. But the party posting the collateral, the owner, gets that return and does care. That's the point I was inexpertly trying to make. There are other reasons for holding low yield bonds/notes/bills other than the r...
by Doc
Sun Mar 08, 2015 6:26 pm
 
Forum: Investing - Theory, News & General
Topic: Negative bond yields
Replies: 25
Views: 2337

Re: International value: worth the fees?

Look at Schwab International Small-Cap Eq ETF™ SCHC which is a little smaller than VBR but maybe not quite as valuey. (e/r 0.18%) http://etfdb.com/ lists 14 ETF's in the foreign mid/small category. You could look at them and find the ones that are smallish and more valuey. Looking for the term forei...
by Doc
Sun Mar 08, 2015 1:58 pm
 
Forum: Investing - Theory, News & General
Topic: International value: worth the fees?
Replies: 24
Views: 1947

Re: Negative bond yields

So if you're betting that bond prices will increase further, you'd be buying the bond for the capital appreciation (and not the coupon). Huh? The question was "What's the point of a negative nominal bond". The answer is collateral for some other financial instrument. The return on the col...
by Doc
Sun Mar 08, 2015 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: Negative bond yields
Replies: 25
Views: 2337

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

Re: No 1099-B online. We have 2 taxable brokerage accounts at Vanguard. The 1099-B's are part of the "1099 Consolidated" statement that I was able to see online and download as a PDF on Feb 25, 2015. I was not able to download the 1099-B Worksheets to Turbotax until the 27th or 28th. Did y...
by Doc
Sat Mar 07, 2015 7:20 pm
 
Forum: Personal Finance (Not Investing)
Topic: Vanguard brokerage tax forms changed to late Feb. question
Replies: 93
Views: 7512

Re: What's with VG Complaints???

... its waiters don't work on tips ... and the service reflects it. Best food, cheapest food and lousy service. Wouldn't it be nice to get all three in the same restaurant. But paying a waiter based on the quality of his service to his customer would be too capitalistic. Oh, were we talking about r...
by Doc
Sat Mar 07, 2015 2:54 pm
 
Forum: Investing - Theory, News & General
Topic: What's with VG Complaints???
Replies: 42
Views: 3218

Re: Managed bond funds?

For the question of active vs passive investing in bonds, it does not matter what index you follow. The comparison is always the value added, or, more likely, subtracted, by the managers' activity. As long as you control for the risk characteristics of the index portfolio, you can compare to active...
by Doc
Sat Mar 07, 2015 12:37 pm
 
Forum: Investing - Theory, News & General
Topic: Managed bond funds?
Replies: 23
Views: 1655

Re: Managed bond funds?

@Alex These comments really address my question to Nisi. Easier replication implies lower costs but illiquid implies giving up some yield hence lower return before costs. We will probably never know how this balances out. But we do know - it is about .15% for the case cited. I didn't get the same n...
by Doc
Fri Mar 06, 2015 2:58 pm
 
Forum: Investing - Theory, News & General
Topic: Managed bond funds?
Replies: 23
Views: 1655

Re: Managed bond funds?

Apart from The Principle of the Thing and Vanguard being fickle about what indexes it tracks, do you actually perceive a meaningful difference and, if so, which is the "right" index? Neither is "right". I mentioned that there were inefficiencies in the market and indexes earlier...
by Doc
Fri Mar 06, 2015 2:05 pm
 
Forum: Investing - Theory, News & General
Topic: Managed bond funds?
Replies: 23
Views: 1655

Re: Managed bond funds?

...All this being said costs do matter but perhaps do not have as much impact in bonds as they do in equities... :?: The orthodoxy is that the same expense ratio matters more in a bond fund because it is being subtracted from a smaller return. I guess I wasn't clear. I'm saying that the difference ...
by Doc
Fri Mar 06, 2015 11:06 am
 
Forum: Investing - Theory, News & General
Topic: Managed bond funds?
Replies: 23
Views: 1655

Re: Morningstar Article on Barclays U.S. Universal Bond Inde

This is an interesting article. For those of you who are reaching for a little more return on your bond funds without using PIMCO the iShares product might be useful. Here's a link showing the portfolio comparison. http://portfolios.morningstar.com/fund/summary?t=IUSB Click the pull down tab under &...
by Doc
Fri Mar 06, 2015 10:45 am
 
Forum: Investing - Theory, News & General
Topic: Morningstar Article on Barclays U.S. Universal Bond Index
Replies: 8
Views: 1372

Re: Managed bond funds?

In order for passive investing to work, you need a market that is efficient and a index that is accurate . Alex raises a good point about bond indices. Right off the top of the head I can think of five intermediate term core bond indices. The BarCap Agg Index is the best known but even Vanguard no ...
by Doc
Fri Mar 06, 2015 10:21 am
 
Forum: Investing - Theory, News & General
Topic: Managed bond funds?
Replies: 23
Views: 1655

Re: Negative bond yields

So if you're betting that bond prices will increase further, you'd be buying the bond for the capital appreciation (and not the coupon). Huh? The question was "What's the point of a negative nominal bond". The answer is collateral for some other financial instrument. The return on the col...
by Doc
Thu Mar 05, 2015 2:06 pm
 
Forum: Investing - Theory, News & General
Topic: Negative bond yields
Replies: 25
Views: 2337
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