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Re: Truly high earners (>$1M/year) how'd you do it?

Earned >1m from IT related businesses last year but don't really consider it 'per year' since the IT business changes too fast, really probable that 5 years from now it could be nothing. All my high earner friends are ibanking related (mostly in smaller / boutique shops) I do have a family friend wh...
by Dxbinvestor
Tue Jan 14, 2014 10:52 am
 
Forum: Investing - Help with Personal Investments
Topic: Truly high earners (>$1M/year) how'd you do it?
Replies: 64
Views: 7156

Re: buying index puts vs dollar cost averaging

Yeah, he was just nervous of jumping in all at once so we were brainstorming things he could do. I'm aware that all 'studies' say all in vs DCA over a year or so with a lump sum is better, but people are people, (nervous, timid, etc) and I thought maybe the puts would quell his fears. Worst case los...
by Dxbinvestor
Thu Dec 26, 2013 1:56 pm
 
Forum: Investing - Theory, News & General
Topic: buying index puts vs dollar cost averaging
Replies: 10
Views: 917

Re: buying index puts vs dollar cost averaging

Thx for the input! I was thinking the puts might not be a bad buy because market is at record high in real terms, it could keep running further obviously.. so 6% seems like you're getting a bit of a free shot. Worst case market stays flat and you are down 4% (the 6% minus your dividends), otherwise ...
by Dxbinvestor
Wed Dec 25, 2013 4:38 pm
 
Forum: Investing - Theory, News & General
Topic: buying index puts vs dollar cost averaging
Replies: 10
Views: 917

buying index puts vs dollar cost averaging

Friend was asking about this.

If one has a lump sum, what does the board think about going all in now and buying index puts as insurance vs dollar cost averaging?

I checked at the money Jan 2015 SPY puts and they cost a bit over 6% of the current share price.
by Dxbinvestor
Wed Dec 25, 2013 6:20 am
 
Forum: Investing - Theory, News & General
Topic: buying index puts vs dollar cost averaging
Replies: 10
Views: 917

Re: Another CAPE milestone breached - 26

Impose an interest rate chart on top this CAPE one and you see something pretty interesting.
by Dxbinvestor
Wed Dec 25, 2013 6:06 am
 
Forum: Investing - Theory, News & General
Topic: Another CAPE milestone breached - 26
Replies: 46
Views: 2491

Re: residential real estate as an investment,

"2-3% positive spread between net rent and mortgage interest, including management fee allowance and capital reserve allowance ." That's doable in some areas in the country with low price to rent ratios, but almost impossible in the vast majority of California. Best, Neil Yeah, I think yo...
by Dxbinvestor
Tue Dec 24, 2013 1:39 pm
 
Forum: Investing - Theory, News & General
Topic: residential real estate as an investment,
Replies: 78
Views: 7954

Re: Another CAPE milestone breached - 26

Shouldn't a 'reasonable' CAPE be somehow adjusted for interest rates, as from what I know about asset pricing theory, stocks earnings yield should be a certain spread % above the risk free rate, and over time this remains a pretty constant spread on a % basis.. stocks don't seem too bad with an ear...
by Dxbinvestor
Tue Dec 24, 2013 11:35 am
 
Forum: Investing - Theory, News & General
Topic: Another CAPE milestone breached - 26
Replies: 46
Views: 2491

Re: Is there any difference? [Real Estate vs. REIT]

direct ownership gets a small premium over REITs because of the work involved, but is only really worth it with a large amount of money to invest if you actually value your time on a per hour basis, I would say.
by Dxbinvestor
Tue Dec 24, 2013 11:04 am
 
Forum: Investing - Theory, News & General
Topic: Is there any difference? [Real Estate vs. REIT]
Replies: 22
Views: 1440

Re: Another CAPE milestone breached - 26

Shouldn't a 'reasonable' CAPE be somehow adjusted for interest rates, as from what I know about asset pricing theory, stocks earnings yield should be a certain spread % above the risk free rate, and over time this remains a pretty constant spread on a % basis.. stocks don't seem too bad with an earn...
by Dxbinvestor
Tue Dec 24, 2013 11:01 am
 
Forum: Investing - Theory, News & General
Topic: Another CAPE milestone breached - 26
Replies: 46
Views: 2491

Re: Leveraging bond funds

Yeah, I did both and the reasoning was more strategic than financial. I think they are probably about the same synthetically barring DWT. I bought foreign domiciled bond funds (good mix of brand names -- Pimco, Neuberger Berman, etc) using bank portfolio loans in order to give the bank some business...
by Dxbinvestor
Wed Dec 18, 2013 11:16 am
 
Forum: Investing - Theory, News & General
Topic: Leveraging bond funds
Replies: 20
Views: 1682

Re: Leveraging bond funds

Hi Dxbinvestor I'm wondering whether you have proceeded with employing leverage in your bond fund investments? I've begun employing a similar strategy (IB low margin rates, bond fund positions that I never need to sell). My plan is to add to my bond fund positions each month over the next 2 years u...
by Dxbinvestor
Tue Dec 17, 2013 9:33 am
 
Forum: Investing - Theory, News & General
Topic: Leveraging bond funds
Replies: 20
Views: 1682

Re: residential real estate as an investment,

100% sure residential real estate gets you better return than market under these conditions: * you buy 20% under market after all rehab costs * 20% leverage with fixed rate loan * 2-3% positive spread between net rent and mortgage interest, including management fee allowance and capital reserve all...
by Dxbinvestor
Tue Dec 17, 2013 9:14 am
 
Forum: Investing - Theory, News & General
Topic: residential real estate as an investment,
Replies: 78
Views: 7954

Re: Warren Buffett Market-Beating Skills Revealed

Poker is a good analogy. Some people say poker is all luck, when there are clearly consistent winners on the professional circuit, and it's possible for any fairly intelligent person to make a nice living playing poker. Same with market. There are plenty of people who beat the market gross of fees w...
by Dxbinvestor
Mon Dec 16, 2013 4:12 pm
 
Forum: Investing - Theory, News & General
Topic: Warren Buffett Market-Beating Skills Revealed
Replies: 49
Views: 6769

Re: Warren Buffett Market-Beating Skills Revealed

Saying people can't pick stocks is like saying poker is all luck Buffet: * He had some really good picks in the beginning when the market was much more inefficient * Smartly got into insurance so he could get leverage at zero cost and no risk of margin calls * Had temperance and patience to buy low ...
by Dxbinvestor
Mon Dec 16, 2013 12:03 pm
 
Forum: Investing - Theory, News & General
Topic: Warren Buffett Market-Beating Skills Revealed
Replies: 49
Views: 6769

Re: residential real estate as an investment,

call_me_op wrote by Call_Me_Op ┬╗ Thu Feb 02, 2012 8:27 pm Actually if you put 20% down on a property your leverage is 100/20 or 5 to I. If it appreciates at the inflation rate +!% your annual real return is 5% not 20% of your original investment as you claim. Simple math. The problem is that you bo...
by Dxbinvestor
Wed Dec 11, 2013 1:31 pm
 
Forum: Investing - Theory, News & General
Topic: residential real estate as an investment,
Replies: 78
Views: 7954

Re: Warren Buffett Market-Beating Skills Revealed

I haven't followed closely, but is Buffett even buying profitibality/quality lately? A railroad? Wouldn't surprise me if he's moved onto the next thing, then some pros and some of us will catch on in 10 years, then academics will catch up 25 years after that with a new risk factor. I think railroad...
by Dxbinvestor
Wed Dec 11, 2013 12:16 pm
 
Forum: Investing - Theory, News & General
Topic: Warren Buffett Market-Beating Skills Revealed
Replies: 49
Views: 6769

Re: residential real estate as an investment,

travellight wrote:But they make loans based on 80% of the purchase price, no? Aren't you usually in for 20% these days?


Nah, after 6 months you can get a new appraisal and do a cash out refinance. So you have to pay cash for 6 months and then you get your loan.
by Dxbinvestor
Wed Dec 11, 2013 12:13 pm
 
Forum: Investing - Theory, News & General
Topic: residential real estate as an investment,
Replies: 78
Views: 7954

Re: Writing bond etf puts vs owning

market timer wrote:Writing a put has a different exposure from owning the ETF. A synthetic long (long a call, short a put) has a risk profile much closer to owning the underlying ETF, though not exact due to potential for early exercise of the call.


so does your premium spread generally equal the expected dividend?
by Dxbinvestor
Wed Dec 11, 2013 7:46 am
 
Forum: Investing - Theory, News & General
Topic: Writing bond etf puts vs owning
Replies: 9
Views: 608

Re: residential real estate as an investment,

well, you are preaching to the choir. Real estate makes a lot of sense to me, and I feel that I am winning even with un-leveraged real estate. I just wonder if it can be proven to convince those who are so against real estate. You can do math yourself, but on an 'average' single family rental with ...
by Dxbinvestor
Wed Dec 11, 2013 7:34 am
 
Forum: Investing - Theory, News & General
Topic: residential real estate as an investment,
Replies: 78
Views: 7954

Re: Writing bond etf puts vs owning

The option exposure is short gamma and theta, both positions which have historically earned a premium over equivalent delta exposure in the underlying. You earn the premium b/c you are taking additional risk. But how are you actually taking additional risk? Only extra risk I can think of is opportu...
by Dxbinvestor
Wed Dec 11, 2013 7:09 am
 
Forum: Investing - Theory, News & General
Topic: Writing bond etf puts vs owning
Replies: 9
Views: 608

Re: Writing bond etf puts vs owning

I guess the question is .. Whats the actual money difference between writing an at the money put on a bond fund vs buying the fund mathematically?
by Dxbinvestor
Tue Dec 10, 2013 4:09 pm
 
Forum: Investing - Theory, News & General
Topic: Writing bond etf puts vs owning
Replies: 9
Views: 608

Re: A levered 50/50 portfolio is better than a 90/10 one?

I posted this in some other thread but using simple math seems the 50/50 is better, and you don't have much call risk.. People always give slippery slope sky is falling leverage examples but say you lever 1.5:1 on something like LQD, you never get a margin call even at lowest point of 2008, and your...
by Dxbinvestor
Tue Dec 10, 2013 3:19 pm
 
Forum: Investing - Theory, News & General
Topic: A levered 50/50 portfolio is better than a 90/10 one?
Replies: 43
Views: 4419

Re: Shiller P/E 10 hits 25

Didn't read while thread.. Has anyone done any research into PE10 adjusted for 10 year treasury yield? Seems this would probably be a more accurate metric of fair price.
by Dxbinvestor
Tue Dec 10, 2013 2:52 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller P/E 10 hits 25
Replies: 268
Views: 19328

Re: residential real estate as an investment,

100% sure residential real estate gets you better return than market under these conditions: * you buy 20% under market after all rehab costs * 20% leverage with fixed rate loan * 2-3% positive spread between net rent and mortgage interest, including management fee allowance and capital reserve allo...
by Dxbinvestor
Tue Dec 10, 2013 2:28 pm
 
Forum: Investing - Theory, News & General
Topic: residential real estate as an investment,
Replies: 78
Views: 7954

Re: Writing bond etf puts vs owning

Nah, not wrong forum. I think it's interesting to discuss writing bond puts vs owning the underlying in general.

I was curious why the put premium is 200-250bps higher than the underlyings yield.. Anyone know?
by Dxbinvestor
Tue Dec 10, 2013 2:04 pm
 
Forum: Investing - Theory, News & General
Topic: Writing bond etf puts vs owning
Replies: 9
Views: 608

Re: Warren Buffett Market-Beating Skills Revealed

I read that huge snowball biography.. He got into insurance because he could get very cheap non-callable financing. This allows him to leverage beta stocks and not worry about margin calls during the draw downs and is always paying less in interest than even the dividends of the stocks, so he's in a...
by Dxbinvestor
Tue Dec 10, 2013 2:01 pm
 
Forum: Investing - Theory, News & General
Topic: Warren Buffett Market-Beating Skills Revealed
Replies: 49
Views: 6769

Writing bond etf puts vs owning

I'm non US investor who doesn't have to pay tax on options premiums or capital gains but does have to pay 30% dividend withholding tax. I was thinking of writing ATM Jan '15 puts on HYG and JNK vs buying the ETFs since I would have to pay 30% tax on distributions but not on option premium. From what...
by Dxbinvestor
Tue Dec 10, 2013 1:41 pm
 
Forum: Investing - Theory, News & General
Topic: Writing bond etf puts vs owning
Replies: 9
Views: 608

Re: Bogleheads, why is this taboo? [Use Leverage in a Portfo

Imagine how few people would buy houses if on a 10% down mortgage, a 5% price decline from purchase price called the mortgage. Imagine how many people would have been wiped out in the last few years. Of course no one should leverage 10:1 on a callable loan. Same risk with commercial mortgage loans ...
by Dxbinvestor
Thu Dec 05, 2013 8:14 am
 
Forum: Investing - Theory, News & General
Topic: Bogleheads, why is this taboo? [Use Leverage in a Portfolio]
Replies: 189
Views: 15809

Re: Bogleheads, why is this taboo? [Use Leverage in a Portfo

I'm with Akiva here. Disclaimer that academic papers are purely theoretical in practice, but one paper (don't have link handy) analyzing risk parity portfolios theorizes that the reason a 30/70 stock/bond (leveraging the bonds) portfolio works is because retail investors are irrationally leverage-ad...
by Dxbinvestor
Wed Dec 04, 2013 6:43 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads, why is this taboo? [Use Leverage in a Portfolio]
Replies: 189
Views: 15809

Re: Lump sum or Dollar cost averaging right now

People ignored my post on this but just posting again because I checked the numbers. You can buy the SPY Sept 2014 puts with a 165 strike price for $10. This is 5.5% of your cost if you go all in now. The yield is 2% at the current price, so it only costs you 3.5% to jump in and you are fully protec...
by Dxbinvestor
Mon Sep 23, 2013 2:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Lump sum or Dollar cost averaging right now
Replies: 53
Views: 3691

Re: Lump sum or Dollar cost averaging right now

I didn't read the thread but why don't you look at the price of at the money puts.. I'm guessing a 12 month out spy leap costs about 5-7% of the underlying. That isn't such bad insurance cost if you want to jump in now.. Just a thought.
by Dxbinvestor
Sat Sep 21, 2013 10:30 am
 
Forum: Investing - Help with Personal Investments
Topic: Lump sum or Dollar cost averaging right now
Replies: 53
Views: 3691

Re: Leveraging bond funds

Patrick, good points and I understand it the same way. As an aside, what you say applies to residential real estate, but for commercial, loans can balloon at an unlucky time when valuations are low and you therefore risk a margin call. So what would you do in my situation? Would you sell the bonds t...
by Dxbinvestor
Sat Sep 21, 2013 4:41 am
 
Forum: Investing - Theory, News & General
Topic: Leveraging bond funds
Replies: 20
Views: 1682

Re: 1874-2004:S&P500 EPS grew anz'd 1.7% pts > than inflat.

I read an interesting paper once that illusttated Manhattan real estate since the 1700s has grown at exactly the inflation rate. Thus, the returns are only from rents and leverage (e.g. borrowing 50%, inflation is 3%, you make 6%, or 3% real) Makes sense that stocks would be the same really.. Compa...
by Dxbinvestor
Fri Sep 20, 2013 7:10 pm
 
Forum: Investing - Theory, News & General
Topic: 1874-2004:S&P500 EPS grew anz'd 1.7% pts > than inflat. Why?
Replies: 14
Views: 1210

Re: Leveraging bond funds

YDNAL wrote:What I think is this:
1. Spend time to increase earning power, thus increasing savings rate.
2. Rather than spend time in other endeavors - leveraged investments being one example.


Totally with you and I agree. Sound advice.
by Dxbinvestor
Fri Sep 20, 2013 6:58 pm
 
Forum: Investing - Theory, News & General
Topic: Leveraging bond funds
Replies: 20
Views: 1682

Re: Leveraging bond funds

Yeah there are lots of funds that do this. The Inker link doesn't seem so good. He says basically that treasuries have too low a yield and that if you lever up too much you are screwed. Bit of a captain obvious analysis imo. The reason I asked this question is that I have a mortgage on a house. It i...
by Dxbinvestor
Fri Sep 20, 2013 6:48 pm
 
Forum: Investing - Theory, News & General
Topic: Leveraging bond funds
Replies: 20
Views: 1682

Re: Leveraging bond funds

You didn't actually provide provide any reason as to why conservative bond leverage when you don't care about mark to market valuations is a bad idea. :-) The forum thread you posted was about maxed out equity leverage and is apples to oranges and linking to that seems an illustration of the irratio...
by Dxbinvestor
Fri Sep 20, 2013 6:18 am
 
Forum: Investing - Theory, News & General
Topic: Leveraging bond funds
Replies: 20
Views: 1682

Re: 1874-2004:S&P500 EPS grew anz'd 1.7% pts > than inflat.

I read an interesting paper once that illusttated Manhattan real estate since the 1700s has grown at exactly the inflation rate. Thus, the returns are only from rents and leverage (e.g. borrowing 50%, inflation is 3%, you make 6%, or 3% real) Makes sense that stocks would be the same really.. Compan...
by Dxbinvestor
Fri Sep 20, 2013 4:12 am
 
Forum: Investing - Theory, News & General
Topic: 1874-2004:S&P500 EPS grew anz'd 1.7% pts > than inflat. Why?
Replies: 14
Views: 1210

Leveraging bond funds

Hi all, I did some searches and there are a couple relevant threads but nothing specific to this topic. Assuming low borrowing rates (either IB portfolio margin rates of around 50bp) or a small LIBOR spread with a private bank, what do you think about buying credit quality bond funds or actual bonds...
by Dxbinvestor
Fri Sep 20, 2013 3:45 am
 
Forum: Investing - Theory, News & General
Topic: Leveraging bond funds
Replies: 20
Views: 1682

portfolio too complicated?

Hi, Great forum guys, fantastic resource and you guys are just tremendously helpful. So, my question: As a large, but passive ETF portfolio, is this too complicated? I tried to do something fairly broad and balanced but it seems easy to get carried away with maybe too much stuff.. One problem I have...
by Dxbinvestor
Tue Jul 16, 2013 5:50 am
 
Forum: Investing - Help with Personal Investments
Topic: portfolio too complicated?
Replies: 14
Views: 1750

Re: Investing in house flipping

Bumping old thread...

Generally, in real estate deals where one partner has the money and the other partner has the experience, at the end of the deal the roles are reversed.
by Dxbinvestor
Sun Jul 14, 2013 1:23 pm
 
Forum: Investing - Theory, News & General
Topic: Re: Investing in house flipping
Replies: 41
Views: 4564

Re: Investing from Singapore - Vanguard ETFs

Hi, I own a lot of the LSE VWRD. The ETF is Irish domiciled. There is no stamp duty and no dividend withholding. The dividends are withheld at source in the US at Irish treaty rates. It's simple math that this is much better than US traded equivalent assuming 30% withholding (not sure what Sg dwt is...
by Dxbinvestor
Sun Jul 14, 2013 11:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Investing from Singapore - Vanguard ETFs
Replies: 2
Views: 566

Re: Help AA. Business sale, liquid assets [United Arab Emira

Thanks for the replies all! Really appreciate the time! The tax situation in Dubai is great -- there isn't any!! No capital gains tax, no income tax, nothing.. all they have is some consumption taxes like tolls on the roads, permanent residency visa costs, and tax on hotel rooms. Then there are thin...
by Dxbinvestor
Tue Jan 15, 2013 1:57 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help AA. Business sale, liquid assets [United Arab Emirates]
Replies: 5
Views: 546

Help AA. Business sale, liquid assets [United Arab Emirates]

Hi all! This is a great forum and I really appreciate everyone taking time to write helpful posts to each other. Reading it is very informative. About: We live in Dubai, UAE. My wife recently sold her business and she doesn't really know what to do with the money. The sale was for low to mid 8 figur...
by Dxbinvestor
Mon Jan 14, 2013 6:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help AA. Business sale, liquid assets [United Arab Emirates]
Replies: 5
Views: 546

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