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Re: Long term return forecast

What exactly is the FX return? I assume it's currency. For Russia, they estimate a 3.8% real FX return. Why would I expect a 3.8% real return for holding a foreign currency? I don't get it.
by Hallman
Sat Oct 18, 2014 10:44 am
 
Forum: Investing - Theory, News & General
Topic: Long term return forecast [Research Affil. Expected returns]
Replies: 27
Views: 1740

Re: Estimating Future Investment Returns — On a Napkin

Of the mentioned authors, I've only read Bernstein's work. From what I remember, he used 1.32% real dividend growth rate in the formula. You use 3% (5% nominal minus 2% inflation). Why the large difference? Referring to my copy of Bernstein's The Four Pillars of Investing , he wrote in 2002 (page 5...
by Hallman
Sat Oct 04, 2014 11:54 am
 
Forum: Investing - Theory, News & General
Topic: Estimating Future Investment Returns — On a Napkin
Replies: 75
Views: 4777

Re: Estimating Future Investment Returns — On a Napkin

STOCKS: FUTURE EARNINGS/DIVIDENDS PREDICT FUTURE RETURNS What are we buying when we buy shares in a stock or stock index fund? Essentially we are buying a stream of future money over the next, say, 30 or 40 years. That money is returned to us in the form of earnings (which increase the share price)...
by Hallman
Fri Oct 03, 2014 7:31 pm
 
Forum: Investing - Theory, News & General
Topic: Estimating Future Investment Returns — On a Napkin
Replies: 75
Views: 4777

Re: 100% Small and Value Tilting

Serious question, what cheaper funds are you referring to? VSS would be my pick. PDN's 0.15 value factor loading, or w/e it is, isn't worth the 0.3% extra ER. Well I just disagree, as I find the multifactor sort, and smaller company focus of PDN worth it over VSS. Neither are bad choices though. VS...
by Hallman
Fri Sep 12, 2014 10:24 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Small and Value Tilting
Replies: 72
Views: 4643

Re: 100% Small and Value Tilting

I would look at PXSV on the SV side, PDN on the ISV side and also consider having a emerging markets fund, DGS would fill the bill there. PDN doesn't seem valuey. Why wouldn't I just go with a cheaper fund here? Here is a recent thread on the ISV options: International Small Cap Value Serious quest...
by Hallman
Fri Sep 12, 2014 8:35 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Small and Value Tilting
Replies: 72
Views: 4643

Re: 100% Small and Value Tilting

I would look at PXSV on the SV side, PDN on the ISV side and also consider having a emerging markets fund, DGS would fill the bill there. DGS seems expensive. Trailed its index by about 1.1% per year + .45% lost to foreign withholding taxes, adding up to ~1.5% total cost in a tax deferred account. ...
by Hallman
Fri Sep 12, 2014 6:40 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Small and Value Tilting
Replies: 72
Views: 4643

Re: Is now a bad time to invest?

The stock market isn't expensive, i.e total world is neither cheap nor expensive in historical terms. I'd just buy that :)
by Hallman
Wed May 21, 2014 6:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is now a bad time to invest?
Replies: 100
Views: 10066

Re: How much of the value premium do vanguard ETFs pick up?

I thought the Fama-French indexes were supposed to be very stronly loaded on value? If the Fama-French small value index only bested Fama-French small blend by 0.6% per year for the 80 years between 1927-2007, and the value premium in this period was pretty high, 5.11%, why are so many people willin...
by Hallman
Thu May 15, 2014 10:59 am
 
Forum: Investing - Theory, News & General
Topic: How much of the value premium do vanguard ETFs pick up?
Replies: 17
Views: 1022

Re: How much of the value premium do vanguard ETFs pick up?

http://books.google.no/books?id=rNY1rZE_sl8C&pg=PA150&lpg=PA150&dq=estimated+average+expected+return+over+market+return+for+ifa+index+portfolio&source=bl&ots=IWSZpgpx5j&sig=WMyBVvZgwwfdY4TTVan6bfLaY_c&hl=no&sa=X&ei=dKh0U9SxFqOayAPG2YFo&ved=0CEMQ6AEwAw#v=onepa...
by Hallman
Thu May 15, 2014 8:39 am
 
Forum: Investing - Theory, News & General
Topic: How much of the value premium do vanguard ETFs pick up?
Replies: 17
Views: 1022

Re: How much of the value premium do vanguard ETFs pick up?

I use http://fundfactors.com to compare factor loadings of different ETFs I don't know anything about the theory here. I searched for VBR on the site you linked to and see that it has had a HML of 0.42 since 2004. Let's say the Fama-French US Small Value Index continues to outperform the Fama-Frenc...
by Hallman
Wed May 14, 2014 12:04 pm
 
Forum: Investing - Theory, News & General
Topic: How much of the value premium do vanguard ETFs pick up?
Replies: 17
Views: 1022

How much of the value premium do vanguard ETFs pick up?

I don't have a tilt and don't plan to - value funds aren't available here even if I wanted to. Simply asking because I'm curious. Annualized returns from 1927-2012: Fama-French US Small Value Index (ex-utilities): 13.6% Fama-French US Small Cap Index: 11.8% Fama-French US Large Value Index (ex-utili...
by Hallman
Wed May 14, 2014 8:50 am
 
Forum: Investing - Theory, News & General
Topic: How much of the value premium do vanguard ETFs pick up?
Replies: 17
Views: 1022

Re: International funds - withholding taxes causing shortfal

If you hold international funds in a taxable account, you get the withholding tax back as a foreign tax credit, so the loss to withholding is zero. (There is still a tax cost, because Tax-Managed International is Vanguard's only foreign fund with 100% qualified dividends, while most US stock indexe...
by Hallman
Wed May 07, 2014 9:26 am
 
Forum: Investing - Theory, News & General
Topic: International funds - withholding taxes causing shortfall
Replies: 3
Views: 1057

Re: Bogle's view on international investing?

30% international. Though patriotism drives me to have 40% US stocks I think we're all being foolish to waive off the possibility that the US economy could suffer a cataclysmic drop in the next several decades. I hope not, but hey, it could happen. Nothing lasts forever and one day we will inevitab...
by Hallman
Sun May 04, 2014 8:17 am
 
Forum: Investing - Theory, News & General
Topic: Bogle's view on international investing?
Replies: 56
Views: 5236

Non-US investors having fixed allocation to US equities.Why?

Looking at the model portfolios for Canadians in the bogleheads wiki, they all have a fixed allocation to US equities. For example, the Global Couch Potato has an equity allocation of 1/3 Canadian, 1/3 US and 1/3 International. I have also seen many european posters allocate a fixed percentage to th...
by Hallman
Sun May 04, 2014 7:32 am
 
Forum: Investing - Theory, News & General
Topic: Non-US investors having fixed allocation to US equities.Why?
Replies: 6
Views: 537

Re: Cost of tilting - what are you willing to pay?

steve_14 wrote:See poll a few weeks back: viewtopic.php?f=10&t=135569&p=2002502 . The most common answer among tilters was .1%-.2%.


Nice. Thank you.
by Hallman
Sun May 04, 2014 7:13 am
 
Forum: Investing - Theory, News & General
Topic: Cost of tilting - what are you willing to pay?
Replies: 7
Views: 746

Cost of tilting - what are you willing to pay?

I have a few total market funds available to me for 0.8%/year. I also have a range of other funds available to me, that I would most certainly invest in if the costs were equal to total market funds, especially small & value, but the extra cost is making me unsure. If you tilt, How many basis po...
by Hallman
Sat May 03, 2014 5:06 pm
 
Forum: Investing - Theory, News & General
Topic: Cost of tilting - what are you willing to pay?
Replies: 7
Views: 746

Re: Europe Developed REIT valuation?

What if you just set a portfolio allocation to REIT or any other asset class and ignore valuation? If you want the portfolio to be 10% REIT and find that you have 6% REIT in the portfolio, buy more REIT. If you find that the portfolio has 16% REIT after a run up, sell some REIT to get back to targe...
by Hallman
Fri Apr 25, 2014 12:02 pm
 
Forum: Investing - Theory, News & General
Topic: Europe Developed REIT valuation?
Replies: 7
Views: 589

Europe Developed REIT valuation?

An index fund following the FTSE EPRA/NAREIT Developed Europe Index was added to my retirement portfolio today (here in Norway most plans only let you choose your ratio of bonds to equities, with a minimum % of both, not which funds to invest in - luckily most plans have mostly index funds). Anyway,...
by Hallman
Fri Apr 25, 2014 10:41 am
 
Forum: Investing - Theory, News & General
Topic: Europe Developed REIT valuation?
Replies: 7
Views: 589

Question about the gordon equation

The Gordon equation estimates future stock returns by using dividend yield + dividend growth + speculative return. From what I've read so far, historical dividend growth is used to estimate future dividend growth. Why is this? Considering dividend payout ratios have steadily declined and are about h...
by Hallman
Thu Apr 17, 2014 10:43 am
 
Forum: Investing - Theory, News & General
Topic: Question about the gordon equation
Replies: 2
Views: 237

Sustainable wage increases over the long term?

Here in Norway the annual "wage discussion" or "wage settlement", not sure what to call it, for the norwegian industry, between the employers' organization and the workers' organization is now taking place. One of the leaders of the employers' organization was in the paper today ...
by Hallman
Wed Mar 26, 2014 7:44 am
 
Forum: Personal Finance (Not Investing)
Topic: Sustainable wage increases over the long term?
Replies: 20
Views: 1898

Rick Ferri's estimated future returns

Looking at Rick's numbers for estimated future returns for large cap stocks, for both developed international and the US, he estimates they'll increase with 5-5.5% real annually (numbers vary a little from year to year). This year's numbers are her: http://www.rickferri.com/blog/investments/portfoli...
by Hallman
Fri Mar 14, 2014 6:44 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's estimated future returns
Replies: 8
Views: 2289

Re: Question about hedged bond funds

bumpidy bump bump
by Hallman
Fri Sep 20, 2013 9:11 am
 
Forum: Investing - Theory, News & General
Topic: Question about hedged bond funds
Replies: 3
Views: 426

Re: The market is on fire

Not for us! USD has dropped about 2.5% relative to NOK since yesterday.
by Hallman
Thu Sep 19, 2013 7:51 am
 
Forum: Investing - Help with Personal Investments
Topic: The market is on fire
Replies: 127
Views: 12576

Question about hedged bond funds

Let's say you live in country A and invest in bonds in country B through a currency hedged fund. Country A has an inflation target of 3% and country B has an inflation target of 2%. Let's say the countries are able to meet their inflation target over time and the risk premium for the bonds is 1%. Is...
by Hallman
Tue Sep 17, 2013 10:36 am
 
Forum: Investing - Theory, News & General
Topic: Question about hedged bond funds
Replies: 3
Views: 426

Portfolio help. High ER index funds.

My daughter has three index funds available to her: MSCI world: 1.18% ER MSCI Emerging Markets: 1.42% ER OSEBX Index (norwegian stock market): 0.27% ER We're norwegian, and she'll have all her equities in these three funds. I'm not asking for a specific asset allocation recommendation, but does the ...
by Hallman
Sun Aug 04, 2013 6:40 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio help. High ER index funds.
Replies: 1
Views: 248

Re: Simple question about how market weightings work

I think I understand the concept, I just don't see why it's logical for me as an investor. "Think of it this way. Assume A and B are the total market. You, a billionaire decide to buy the entire market outright, assuming total ownership of A and B. Before the dividend the portfolio value of A a...
by Hallman
Mon Jun 17, 2013 1:51 pm
 
Forum: Investing - Theory, News & General
Topic: Simple question about how market weightings work
Replies: 5
Views: 344

Simple question about how market weightings work

Say you have an index consisting of two almost identical stocks, A and B .Both start the year with a share price of 10 and at the end of the year they're at 11, and you invest $20 at the beginning of the year. The only difference between them is that A pays out a $1 dividend and B doesn't pay a divi...
by Hallman
Mon Jun 17, 2013 11:17 am
 
Forum: Investing - Theory, News & General
Topic: Simple question about how market weightings work
Replies: 5
Views: 344

International funds - withholding taxes causing shortfall

Considering most of you invest in tax sheltered accounts (no foreign tax credit), why isn't the cost of withholding taxes ever discussed when international investing is the topic? 50 basis points is 3-4-5 times the expense ratio of the funds.. "We find that the U.S.-listed Vanguard Index fund a...
by Hallman
Sat Jun 01, 2013 9:08 am
 
Forum: Investing - Theory, News & General
Topic: International funds - withholding taxes causing shortfall
Replies: 3
Views: 1057

Re: Vanguard and Norway

Is there no way to buy Vanguard ETFs? It is possible to buy them, I know several who have done so, but it's been mentioned on here in another thread that it might not be a good idea due to estate taxes (I don't know what this is). I sent Vanguard an email regarding it yesterday but haven't received...
by Hallman
Tue May 28, 2013 3:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard and Norway
Replies: 15
Views: 1836

Re: Vanguard and Norway

Thank you. Good thing I am customer at both companies then. I buy my private investments though Skandiabanken (funds) and my business investments though Nordnet (individual dividend stocks). Fees seems not to be a very much discussed topic, they are not easily accessible and I miss ability to sort ...
by Hallman
Tue May 28, 2013 2:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard and Norway
Replies: 15
Views: 1836

Re: Vanguard and Norway

Another thing, many of the funds mentioned have a purchasing fee (usually pretty low - 0.2-0.3%) if you buy them from the companies that run the funds, but you can omit this by buying them at Nordnet or Skandiabanken (these are the only 2 places I know that don't charge purchasing fees for any funds).
by Hallman
Tue May 28, 2013 12:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard and Norway
Replies: 15
Views: 1836

Re: Bond returns prior to 1980 [non-US]

I ordered the books Hope you like at least one. I don’t know how to evaluate the pension, but good that it’s from two sources. Was thinking about possible reasons for expanding into fixed income or cash. My planning includes counting on dividends, even if reduced, but never being forced to sell equ...
by Hallman
Tue May 28, 2013 7:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Bond returns prior to 1980 [non-US]
Replies: 15
Views: 1491

Re: Vanguard and Norway

Landkreditt actually has a fund that invests in Vanguard Global Stock Index Fund. ER is 1.25% and front fee (or whatever it's called in english..what you pay to purchase the fund) is 3% and fee to sell is 1.25%.

I wouldn't touch it. Too expensive.
by Hallman
Tue May 28, 2013 6:46 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard and Norway
Replies: 15
Views: 1836

Re: Norway expects 2.7% real return from global bonds

Well, they explain their thoughts pretty clearly it seem: The expectations are intended to apply over very long investment horizons. They represent estimates for average annual real return and volatility over a period of many decades, or over a period that is long enough to encompass many economic ...
by Hallman
Mon May 27, 2013 4:59 pm
 
Forum: Investing - Theory, News & General
Topic: Norway expects 2.7% real return from global bonds
Replies: 6
Views: 835

Re: Vanguard and Norway

We have more stock index funds than you might think. We definitely aren't the worst country out there. Bonds on the other hand are sparse (KLP has some, which has been mentioned above). KLP AksjeVerden Indeks (14% MSCI Emerging markets, 86% MSCI World, 0.3% ER). DNB Global Indeks (0.3% ER, MSCI Worl...
by Hallman
Mon May 27, 2013 4:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard and Norway
Replies: 15
Views: 1836

Norway expects 2.7% real return from global bonds

I don't know what to make of this. Anyone care to comment? "Global bonds include credit bonds with a share about the same as in the GPFG"s fixed-income portfolio. Expected real return on government bonds is 2.5 per cent, while the real return on credit bonds is about 0.5 percentage points ...
by Hallman
Mon May 27, 2013 3:38 pm
 
Forum: Investing - Theory, News & General
Topic: Norway expects 2.7% real return from global bonds
Replies: 6
Views: 835

Re: Bond returns prior to 1980 [non-US]

I'll have a pension that will afford me a nice lifestyle, my investments will be gravy on top. How secure is your pension? Is it insured by your government? If it is insured, do you trust the insurance? If there is a big financial crisis, could the insurance (or pension) only cover a modest payment...
by Hallman
Mon May 27, 2013 3:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bond returns prior to 1980 [non-US]
Replies: 15
Views: 1491

Re: Do other countries have very low cost index funds?

Here in Norway we have 3 financial institutions offering good index funds. All offer funds that track MSCI World and the norwegian market, and two offer MSCI emerging markets index funds. ER between 0.2-0.4. The funds were introduced after a law was passed that stated that employers must pay all cos...
by Hallman
Sat May 18, 2013 6:55 pm
 
Forum: Investing - Theory, News & General
Topic: Do other countries have very low cost index funds?
Replies: 33
Views: 3640

Bond returns prior to 1980 [non-US]

I'm writing this on my phone, making it hard to organize my post. If it looks scrambled, I'll fix it on my computer later. I'm a 48 years old non US investor with a 7 figure portfolio (usd) in 100% equities (almost all invested in an index fund tracking MSCI World) My plan is to keep it this way, bu...
by Hallman
Fri May 17, 2013 6:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bond returns prior to 1980 [non-US]
Replies: 15
Views: 1491

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