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Re: Putting Active Management to the Test

It's fun to see a true believer in active management. I didn't know there were any left. I figured all those active fund investors were just ignorant. ...either you believe the many books and studies that have already been done, or you want to try it out for yourself I am unaware of work relevant t...
by FinancialDave
Tue Oct 21, 2014 6:18 pm
 
Forum: Investing - Theory, News & General
Topic: Putting Active Management to the Test
Replies: 106
Views: 11489

Re: Putting Active Management to the Test

It's fun to see a true believer in active management. I didn't know there were any left. I figured all those active fund investors were just ignorant. My question is how will the results of this change anyone's investing strategy . If 3/4s of his funds beat their benchmark, will someone go after ac...
by FinancialDave
Mon Oct 20, 2014 12:14 pm
 
Forum: Investing - Theory, News & General
Topic: Putting Active Management to the Test
Replies: 106
Views: 11489

Re: Past Performance

Hundreds of millions of investors have already answered this question in the most meaningful way possible - by their dollar votes on the world's stock and bond markets. Just pick broad index mutual funds. It appears as you say investors have already voted with their wallets as the largest held stoc...
by FinancialDave
Sat Oct 18, 2014 6:59 pm
 
Forum: Investing - Theory, News & General
Topic: [how should new investors select funds w/o] Past Performance
Replies: 6
Views: 551

Re: 30 yr TIPs auction announced 16 oct: yield=1.10%?

FWIW - One can buy 5-yr TIPS bonds and 10-yr TIPS bonds each year for 5 years and end up with a 10-yr TIPs ladder at the end of 5 years. I began building mine at age 65 and will complete it just before I turn 70 at which time I will begin to receive Social Security. The two combined will served as ...
by FinancialDave
Sat Oct 18, 2014 1:53 pm
 
Forum: Investing - Theory, News & General
Topic: 30 yr TIPs auction announced 16 oct: yield=1.10%?
Replies: 89
Views: 6069

Re: "The best response to market volatility"

Thanks for the reminders, Taylor. As a new investor, this has been my first market downturn, and came right after putting in a lump sum to max out my IRA and deferring 90% of my paycheck to my 401k to get as much in as possible in by January. Realizing I had already lost 6% of what I invested in su...
by FinancialDave
Sat Oct 18, 2014 1:43 pm
 
Forum: Investing - Theory, News & General
Topic: "The best response to market volatility"
Replies: 27
Views: 3322

Re: Wealthfront updates tax loss harvesting software

Is the gain as much as those white papers suggest? Probably not. Let's be real, there is absolutely no way to predict whether there will be ANY gain at all. By the very nature of this "harvesting" you are selling your investments at a loss! That is the one true fact of this discussion. fd
by FinancialDave
Fri Oct 17, 2014 5:49 pm
 
Forum: Investing - Theory, News & General
Topic: Wealthfront updates tax loss harvesting software
Replies: 11
Views: 989

Re: "The best response to market volatility"

This volatility has had exactly zero affect (at least so far) on my retirement income account, which is driven solely from dividends. This type of volatility (which seems to be currently all news driven - as opposed to some systemic or fundamental problem like we had in 2008) affects dividends very...
by FinancialDave
Fri Oct 17, 2014 4:10 pm
 
Forum: Investing - Theory, News & General
Topic: "The best response to market volatility"
Replies: 27
Views: 3322

Re: Wealthfront updates tax loss harvesting software

I suspect their software is really "churning" this week!

fd
by FinancialDave
Thu Oct 16, 2014 7:35 pm
 
Forum: Investing - Theory, News & General
Topic: Wealthfront updates tax loss harvesting software
Replies: 11
Views: 989

Re: 30 yr TIPs auction announced 16 oct: yield=1.10%?

Just placed my order. Here is a guide to help decide how much each bond will likely cost at auction: 1) Bloomberg shows the current price on the secondary at 113 + 8/32 = 113.25 2) The inflation factor is 1.02062 3) The accrued interest per bond is 2.936 per $1,000 of face or 0.2936 per $100 of fac...
by FinancialDave
Thu Oct 16, 2014 7:31 pm
 
Forum: Investing - Theory, News & General
Topic: 30 yr TIPs auction announced 16 oct: yield=1.10%?
Replies: 89
Views: 6069

Re: Dealing with Volatility

Here is some good Boglehead advice: Dealing with Volatility If you think you shouldn't be nervous about market downturns, don't kid yourself. Everyone becomes concerned (except short-sellers). The question is what you do about it - or don't do. Rick Ferri Wow Rick, I would think short-sellers shoul...
by FinancialDave
Thu Oct 16, 2014 7:19 pm
 
Forum: Investing - Theory, News & General
Topic: Dealing with Volatility
Replies: 14
Views: 1110

Re: "The best response to market volatility"

This volatility has had exactly zero affect (at least so far) on my retirement income account, which is driven solely from dividends. This type of volatility (which seems to be currently all news driven - as opposed to some systemic or fundamental problem like we had in 2008) affects dividends very ...
by FinancialDave
Thu Oct 16, 2014 7:14 pm
 
Forum: Investing - Theory, News & General
Topic: "The best response to market volatility"
Replies: 27
Views: 3322

Re: Putting Active Management to the Test

Your uncertainties #2 & #3 just above the chart are of a major concern for me in any test like this.

fd
by FinancialDave
Wed Oct 15, 2014 6:15 pm
 
Forum: Investing - Theory, News & General
Topic: Putting Active Management to the Test
Replies: 106
Views: 11489

Re: starting 401(k) and need advice on taxable savings

Also, let's say I wanted to hold stocks and bonds separately in a taxable account instead of in a balanced fund. Is there any good option for a bond fund in a taxable account for someone in the 28% bracket? Would i-Bonds over time and TSM in the taxable be a better option? I am not sure I-bonds wou...
by FinancialDave
Wed Oct 15, 2014 4:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: starting 401(k) and need advice on taxable savings
Replies: 8
Views: 391

Re: TSP Withdrawal and RMD Question

You do want to make sure that he has no other IRA accounts, that will require RMD's as well.

fd
by FinancialDave
Wed Oct 15, 2014 3:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: TSP Withdrawal and RMD Question
Replies: 12
Views: 575

Re: TSP Withdrawal and RMD Question

I agree you should not need to worry about the word "approximate" if the account has the correct birthdate of your father. The tax notice says that the TSP will take care of it: If you make a partial withdrawal, withdraw your entire account in a single payment, begin withdrawing it through...
by FinancialDave
Wed Oct 15, 2014 3:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: TSP Withdrawal and RMD Question
Replies: 12
Views: 575

Re: starting 401(k) and need advice on taxable savings

I haven't received any responses, so I thought I might simplify my questions: - If I wanted to build a three-fund portfolio for my 401k from the above list, I would choose VTSSX, but don't know which bond fund to choose and don't see a viable international index. Because of this, should I choose a ...
by FinancialDave
Wed Oct 15, 2014 2:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: starting 401(k) and need advice on taxable savings
Replies: 8
Views: 391

Re: Crazy asset-based fees in my 401K!

Dear BH friends I need your help. New physician here who just started my first job. Next month I'm eligible for my employers 401k plan which is through The Standard. After careful study of the plan I'm seeing what seems to me as some crazy high fees! For example, one of the index funds we have acce...
by FinancialDave
Wed Oct 15, 2014 2:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: Crazy asset-based fees in my 401K!
Replies: 49
Views: 2472

Re: TSP Withdrawal and RMD Question

This has been discussed a few times - here is one such thread:

viewtopic.php?f=2&t=115275&p=1677078

There are others - just use the search box upper right.

fd
by FinancialDave
Wed Oct 15, 2014 12:31 am
 
Forum: Investing - Help with Personal Investments
Topic: TSP Withdrawal and RMD Question
Replies: 12
Views: 575

Re: Question re: RMD

Unless you can predict the future of the market I can't see how you could prove that Dec. is any better than Nov. or better than June or January. We all predict the future of the market -- it will go up. If we didn't believe this we wouldn't invest. (Well, except for dividends) To the extent we bel...
by FinancialDave
Tue Oct 14, 2014 1:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question re: RMD
Replies: 19
Views: 1217

Re: Question re: RMD

When you DCA during accumulation, you buy more shares when prices are low and fewer when prices are high. Buy low = Good. When you DCA during drawdown, you sell more when prices are low and fewer when prices are high. Sell low = Bad. In the first place DCA during drawdown is called Reverse Dollar C...
by FinancialDave
Tue Oct 14, 2014 1:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question re: RMD
Replies: 19
Views: 1217

Re: Question re: RMD

Maybe your answer is in http://www.irs.com Pub 590. I don't know as I take mine in Dec to get the advantage of compounding. Good luck. I was thinking about this over the weekend and was going to post it as a new question, but it seems to fit in here: If we consider dollar cost averaging to be a rea...
by FinancialDave
Mon Oct 13, 2014 9:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question re: RMD
Replies: 19
Views: 1217

Re: Question re: RMD

Maybe your answer is in http://www.irs.com Pub 590. I don't know as I take mine in Dec to get the advantage of compounding. Good luck. How much of an advantage do you get from compounding? Because I'm in the same boat with having to take RMDs and am still trying to find the ''best'' way to take the...
by FinancialDave
Mon Oct 13, 2014 6:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question re: RMD
Replies: 19
Views: 1217

Re: Asset allocation - early retirement

I am going to piggyback on what has already been said: If all of your money is at Fidelity, don't they have some easy portfolio analysis to tell you stock/bond/international? Our Fidelity account does. And our Vanguard account allowed us to link my accounts and my husbands accounts so we can do the ...
by FinancialDave
Mon Oct 13, 2014 5:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Asset allocation - early retirement
Replies: 10
Views: 1332

Re: TIPS or VIPSX and why?

I am not sure with thirty years to retirement that I would be buying TIPS at all, however. +1 I agree - over the next 30 years I'll invest in VTSAX (TSM) and you invest in TIPS -- is there anyone here who thinks TIPS will give a better "real" return above inflation. Sure TIPS can diversif...
by FinancialDave
Sat Oct 11, 2014 12:30 am
 
Forum: Investing - Help with Personal Investments
Topic: TIPS or VIPSX and why?
Replies: 9
Views: 1229

Re: I'm Chuck and I work at Vanguard and Invest in Active Fu

I would guess four of his funds to be: VGHCX Healthcare VHCOX Capital Opportunity VWEHX High Yield Corp VFSTX ST Investment Grade (ST Corp) investor We should have a contest to guess which are his five active funds. Chuck could send winner a Vanguard coffee cup. :happy I guess just about any 5 acti...
by FinancialDave
Thu Oct 09, 2014 1:56 pm
 
Forum: Investing - Theory, News & General
Topic: I'm Chuck and I work at Vanguard and Invest in Active Funds
Replies: 44
Views: 7258

Re: Retiring early, but where dump 401k for yearly withdrawa

I haven't seen much talk about currency risk in this thread. I see this as a major unknown if most of your retirement money is in US currency and you are living in Thailand. If it was me - I would instantly stop investing in the 401k and go to Roth and taxable accounts from here until retirement, un...
by FinancialDave
Thu Oct 09, 2014 1:33 am
 
Forum: Investing - Help with Personal Investments
Topic: Retiring early, but where dump 401k for yearly withdrawal?
Replies: 32
Views: 3153

Re: Retirees only, what was your average investment return?

Around 8% annualized total return, which was not all that great for 100% equity.

Despite, using the word average in the title of this thread my calcs are based on annualized total return.

fd
by FinancialDave
Thu Oct 09, 2014 1:12 am
 
Forum: Investing - Theory, News & General
Topic: Retirees only, what was you average investment return?
Replies: 49
Views: 3333

Re: Stock Dividend Yields & Share Buybacks — A Surprise

Companies in the US *do* from time to time offer a tender to *all* shareholders, from memory-- you get a letter in the mail (I vaguely recall having heard of such). Note a takeover (M&A) or a take private (LBO) transaction has the same effect-- giving cash to existing shareholders in proportion...
by FinancialDave
Mon Oct 06, 2014 12:28 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Stock Dividend Yields & Share Buybacks — A Surprise

I am not sure -- when a company such as GE buys back a bunch of stock at $30 a share and then resells it for $20 a few short years later, how is that helpful. If they had just kept the cash they would not have had to cut the dividend by 2/3rds and have everyone suffer. The issue is you and others k...
by FinancialDave
Mon Oct 06, 2014 12:16 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Stock Dividend Yields & Share Buybacks — A Surprise

PS I just found this and it looks like an interesting summary of theoretical and practical perspectives on corporate dividend policy http://faculty.london.edu/hservaes/Corporate%20Dividend%20Policy%20-%20Full%20Paper.pdf page 8 starts out that discussion (buybacks v. dividends and irrelevance theor...
by FinancialDave
Sat Oct 04, 2014 10:13 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Stock Dividend Yields & Share Buybacks — A Surprise

http://www.valueinvestingworld.com/2012/09/warren-buffett-on-share-repurchases.html Buffett on buybacks. I suspect maybe you did not read the article, or maybe it was just a lack of understanding - here is a quote: There is only one combination of facts that makes it advisable for a company to repu...
by FinancialDave
Sat Oct 04, 2014 1:39 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Stock Dividend Yields & Share Buybacks — A Surprise

Let's look at a more simple analogy. A dividend is at the instant it occurs a cash transfer of some of a corporation's net worth into YOUR pocket. A buyback is at the instant it occurs NO transfer of net worth to anyone. What happens afterward is the fortune tellers folly. fd P.S. No disrespect mea...
by FinancialDave
Sat Oct 04, 2014 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Stock Dividend Yields & Share Buybacks — A Surprise

... I am not sure -- when a company such as GE buys back a bunch of stock at $30 a share and then resells it for $20 a few short years later, how is that helpful. If they had just kept the cash they would not have had to cut the dividend by 2/3rds and have everyone suffer. Buybacks are the fortune ...
by FinancialDave
Sat Oct 04, 2014 1:13 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

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

With the prime interest rate at 3.25% and the potential for the fed to raise interest rates, hence negatively affecting bonds and bond funds, wouldn't it be prudent to shift asset allocation from bonds to CD's? When interest rates rise, bonds will get whacked. The longer the term of the bond, the w...
by FinancialDave
Fri Oct 03, 2014 6:12 pm
 
Forum: Investing - Theory, News & General
Topic: Why not a portfolio of equity index funds and CD's?
Replies: 27
Views: 2636

Re: Stock Dividend Yields & Share Buybacks — A Surprise

Let's look at a more simple analogy. A dividend is at the instant it occurs a cash transfer of some of a corporation's net worth into YOUR pocket. A buyback is at the instant it occurs NO transfer of net worth to anyone. What happens afterward is the fortune tellers folly. fd P.S. No disrespect mean...
by FinancialDave
Fri Oct 03, 2014 5:48 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Stock Dividend Yields & Share Buybacks — A Surprise

... That's just crazy logic, because I would hope you know if the company also issues 4% new shares to it's company executives, like most large companies do, the buyback has gained you nothing! fd Regardless of new share issuance, you've gained more from the buyback than if there was no buyback. An...
by FinancialDave
Fri Oct 03, 2014 5:42 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Stock Dividend Yields & Share Buybacks — A Surprise

^Yes. Share buybacks aren't really cash payments to shareholders who continue owning the stock. Suppose you, nisiprius, and I each own equal shares in a company worth $200. The company then makes $100 in cash and is worth $300. We each now own shares worth $100. Next, the company buys all of nisipr...
by FinancialDave
Fri Oct 03, 2014 4:48 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Estimating Future Investment Returns — On a Napkin

Thanks! So if I have the time horizon and emotional discipline, it is fairly clear that most of my assets should be in stocks at the present time. 5 > .5 Or is that just a little too simplistic? That's what Buffett thinks, but that answer is a little too simplistic, because many things can derail y...
by FinancialDave
Fri Oct 03, 2014 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: Estimating Future Investment Returns — On a Napkin
Replies: 75
Views: 4770

Re: Why not 100% Stocks?

Well, -70% is still pretty bad! [...] I checked Otar's aftcast numbers and his runs show essentially a 60% loss between 1929-1933. This is just yearly data, so does not pick up the highs and lows. [...] Thanks FD! Yes, the Shiller data is monthly, so that almost certainly explains the difference. I...
by FinancialDave
Fri Oct 03, 2014 3:59 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 20255

Re: Stock Dividend Yields & Share Buybacks — A Surprise

For every mathematical model of some phenomena, we can ask 1) Does the model accurately predict the behavior of a subset of the entire system? 2) Can the model predict the behavior of a collection of subsystems? #1 does not necessarily imply #2. Take the classic 3 body problem in physics. Even if y...
by FinancialDave
Fri Oct 03, 2014 3:52 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Stock Dividend Yields & Share Buybacks — A Surprise

^Yes. Share buybacks aren't really cash payments to shareholders who continue owning the stock. Suppose you, nisiprius, and I each own equal shares in a company worth $200. The company then makes $100 in cash and is worth $300. We each now own shares worth $100. Next, the company buys all of nisipr...
by FinancialDave
Fri Oct 03, 2014 3:45 pm
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 70
Views: 4351

Re: Dave Ramsey says asset allocation does not work

How about maybe just pick apart something more recent: http://view.e.daveramsey.com/?j=fe91177472600d7e75&m=fe9a15707460027475&ls=fe1d127771670c78721579&l=fef3107971660d&s=fe5e1672766d017b7116&jb=ff66157875&ju=fe2e15727763037e731772&et_cid=3474930&et_rid=0&linkid=...
by FinancialDave
Fri Oct 03, 2014 3:25 pm
 
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says asset allocation does not work
Replies: 87
Views: 7147

Re: Buffett vs. Bogleheads

I like Buffett and the "choices available" link above should be required reading for anyone who thinks they understand investing. He touches on some things in there that are extremely topical for the nation and individuals. It's all of three pages or so, and tells you all you need to unde...
by FinancialDave
Fri Oct 03, 2014 1:33 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett vs. Bogleheads
Replies: 46
Views: 3812

Re: Why not 100% Stocks?

You can massage it some, give it a nice ramp before then (anything but guaranteed), give it continued contributions (unlikely) and make it entirely about deflated spending (about half of mine) but this is taking it ENTIRELY to far. You must have liked the point about not ignoring double-digit divid...
by FinancialDave
Fri Oct 03, 2014 1:09 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 20255

Re: Why not 100% Stocks?

I just worked this out. The investor who makes equal monthly investments in the S&P starting in 1920 never lost money during the depression (she never had a portfolio worth less than her initial capital adjusting for inflation). Had she been forced to sell at the bottom in 1932, she would have ...
by FinancialDave
Fri Oct 03, 2014 12:40 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 20255

Re: Why not 100% Stocks?

I have a 30-40 year time horizon and, not only am I 100% stocks, but, I'm VERY heavily tilted towards small cap and value. My portfolio looks something like this: 50% SCV 15% MTUM 15% International Developed 10% International Emerging 10% US Reits I can already hear the words of warning being whisp...
by FinancialDave
Thu Oct 02, 2014 7:41 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 20255

Re: Dave Ramsey says asset allocation does not work

avalpert wrote:
Trader Joe wrote:I always enjoy reading treads here when the topic is Dave Ramsey, Suze Orman or Mr. Money Mustache. The jealousy is hilarious!


I don't think those three are jealous of us, ...


That's hilarious!

:D
:D
by FinancialDave
Thu Oct 02, 2014 7:34 pm
 
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says asset allocation does not work
Replies: 87
Views: 7147

Re: Why not 100% Stocks?

Probably the happiest case is regretting not having any liquid money to buy the ridiculous opportunities on sale, stocks or mansions. That's an important point... If the OP is sure he's tough enough to "stay the course" even if there's a 50% drop.... He's probably tough enough to actually...
by FinancialDave
Thu Oct 02, 2014 6:11 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 20255

Re: Buffett vs. Bogleheads

What I found quite interesting this morning was his comment that he does not own any bonds in all the pension funds that he manages for Berkshire. Seems like they would have to be quite over-funded.

fd
by FinancialDave
Thu Oct 02, 2014 3:48 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett vs. Bogleheads
Replies: 46
Views: 3812

Re: Why not 100% Stocks?

This has come up a lot lately on bogleheads, worryingly so. It might be an informal sign of a market top. ogd, I liked all your other points too, I just thought this might be a new "Boglehead Market Indicator" -- maybe I should tweet it to Jim Cramer! We could call it - % threads asking w...
by FinancialDave
Thu Oct 02, 2014 12:28 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 20255
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