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Re: What counts as "saving"?

Argument clarifies ideas. Have no idea why you view that as negative. Quite honestly, I don't see ideas being clarified. I see muddled thinking and hardened "argue to win, rather than patiently learn where one is mistaken" stances. If you like that, that's fine -- but to most rational peo...
by Harold
Thu Jan 22, 2015 7:37 pm
 
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 6861

Re: What counts as "saving"?

What benefit do you get from calling loan prepayment "savings"? You pose the question as if you are looking for an answer, but the tone of your responses suggest you may be merely interested in arguing. I'll respond in the spirit of the former, but have no interest in the latter. Using th...
by Harold
Thu Jan 22, 2015 6:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 6861

Re: Why are fruits not cheaper in California?

You obviously haven't tried shopping for produce in San Francisco's Chinatown.

It's a wide variety being sold under pure frenetic competition, and the prices reflect that.
by Harold
Tue Jan 20, 2015 8:09 pm
 
Forum: Personal Consumer Issues
Topic: Why are fruits not cheaper in California?
Replies: 28
Views: 1717

Re: Florida in the summer

isn't there also a cognitive bias that you think we are trying to defend our choices of suffering through a miserable summer, because we feel we have to defend where we live as being perfect? Perhaps. For whatever reason, whether on my end or theirs, I'm fascinated by the phenomenon. People everywh...
by Harold
Tue Jan 20, 2015 8:07 pm
 
Forum: Personal Consumer Issues
Topic: Florida in the summer
Replies: 81
Views: 5595

Re: Florida in the summer

cognitive biases Remarkable how biases shape how people think and view the world around them. The "Florida defense" is indeed a good illustration, and quite frankly the main reason I continue reading this forum is because I'm enthralled by the behavioral finance cognitive biases continual...
by Harold
Tue Jan 20, 2015 12:06 pm
 
Forum: Personal Consumer Issues
Topic: Florida in the summer
Replies: 81
Views: 5595

Re: Florida in the summer

If you want wonderful year-round weather, move to California. If you can tolerate miserable summers (and they are miserable) move to Florida. If you can tolerate brutal winters, stay where you are. Of course climate control helps with both the Florida summer and the northern winter. No doubt Florida...
by Harold
Tue Jan 20, 2015 10:42 am
 
Forum: Personal Consumer Issues
Topic: Florida in the summer
Replies: 81
Views: 5595

Re: What counts as "saving"?

From an Economics perspective, saving is very clearly defined as deferred consumption. One is either spending his income on consumption, or he is saving it for future consumption. Debt repayment is, from an Economics perspective, saving. That isn't merely semantics valid in an abstract academic worl...
by Harold
Tue Jan 20, 2015 10:32 am
 
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 6861

Re: Will young get social security?

I would expect anyone forced to pay into a system to demand their due share as an entitlement People would be far less angry if they used language displaying an understanding of the system. Rather than being "forced to pay into a system", they are being taxed -- and presumably they don't ...
by Harold
Tue Jan 13, 2015 8:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Will young get social security?
Replies: 13
Views: 1207

Re: 2015 BOGLEHEAD CONTEST REGISTRATION

2,620
by Harold
Sat Jan 10, 2015 10:52 pm
 
Forum: Investing - Theory, News & General
Topic: 2015 BOGLEHEAD CONTEST REGISTRATION
Replies: 556
Views: 19911

Re: Help clarify "expected future return"

Say a stock trading at $100 a share is expected to earn 10% annually. That is, at some point we expect 10% annual returns to be realized. To keep it simple, let's say we're expecting the share to be worth $110 a year from now. Now, let's say halfway through the year the share price has dropped 1.6% ...
by Harold
Fri Jan 09, 2015 8:55 pm
 
Forum: Investing - Theory, News & General
Topic: Help clarify "expected future return"
Replies: 12
Views: 738

Re: The Callan Periodic Table of Investment Returns 2014

Aptenodytes wrote:Here's a quickie I threw together

Thanks.
by Harold
Fri Jan 09, 2015 1:05 pm
 
Forum: Investing - Theory, News & General
Topic: The Callan Periodic Table of Investment Returns 2014
Replies: 26
Views: 3758

Re: The Callan Periodic Table of Investment Returns 2014

Harold: I did something similar to that in the past, but it's very cluttered and hard to decipher Ah I see, thanks. I was actually visualizing something with the same boxes and bars as the Callan Table, but shifted up and down. Not being a graphics guy, I had not idea whether that was reasonably po...
by Harold
Fri Jan 09, 2015 12:46 pm
 
Forum: Investing - Theory, News & General
Topic: The Callan Periodic Table of Investment Returns 2014
Replies: 26
Views: 3758

Re: The Callan Periodic Table of Investment Returns 2014

One thing I find when looking at the Callan Table (which is graphically beautiful) is that the great years and bad years blend together (e.g. the 66% emerging markets return of 1999 is on the same row as the 5% bond return of 2008). Would anyone (Tamales? since yours are pretty) be willing to do one...
by Harold
Fri Jan 09, 2015 11:25 am
 
Forum: Investing - Theory, News & General
Topic: The Callan Periodic Table of Investment Returns 2014
Replies: 26
Views: 3758

Re: I see rental properties as bonds. Am I completely off b

1) Stable cash flows, generally in line wiht the value of the asset (except during the bubble) 2) Asset values that rise when interest rates decline, fall when they rise (except 1 time) Rather than arriving at defining qualities of a single asset class, you've stumbled across the mathematics of how...
by Harold
Fri Jan 09, 2015 10:36 am
 
Forum: Investing - Theory, News & General
Topic: I see rental properties as bonds. Am I completely off base?
Replies: 28
Views: 2403

Re: What's Driving LT Treasuries This Year?

why have they piled into LT treasuries when the consensus is a rate hike is eminent People would be far less perplexed by bonds if they thought in terms of price rather than interest rates. (Prices set by supply and demand determine interest rates -- not the other way around.) There's demand for sa...
by Harold
Mon Dec 29, 2014 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: What's Driving LT Treasuries This Year?
Replies: 17
Views: 1902

Re: Square pegs won't go in round holes! Net Worth and Cash

Consider stocks ... Bonds ... Real estate The prices of all of these are present values of future income streams (stocks - earnings/dividends, bonds - dividends/return of principal, real estate - rents). These assets don't differ from other income streams as much as people tend to think. The distin...
by Harold
Thu Dec 25, 2014 7:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 7168

Re: Santa Cruz 1 day, Monterey 2 days with young kids

Seeing the monarch butterflies slowly "wake up" when the precise temperature is reached in the morning is something magical that the kids (and you) would likely remember all your lives. Somehow masses of them know to stop over on their migration at a sanctuary tucked in behind a motel in P...
by Harold
Wed Dec 24, 2014 10:52 am
 
Forum: Personal Consumer Issues
Topic: Santa Cruz 1 day, Monterey 2 days with young kids
Replies: 15
Views: 1237

Re: Poll: Include Pensions/SS/Annuities in NW Calculations?

TheTimeLord wrote:We are scared of you fancy multipliers that magically assigned value to income streams.

Thag not contemplate alchemy behind bond price -- Thag just buy VBMFX.
by Harold
Wed Dec 24, 2014 10:44 am
 
Forum: Personal Finance (Not Investing)
Topic: Poll: Include Pensions/SS/Annuities in NW Calculations?
Replies: 50
Views: 2884

Re: Thoughts on real estate allocation and owning your home

People can (and of course will) make their financial picture as complicated as they want, but the essence is pretty simple. Most people have investments in stocks, bonds, and real estate. Further, most use their real estate investment income to rent their home. (Most never see that rental income, si...
by Harold
Wed Dec 24, 2014 9:56 am
 
Forum: Investing - Theory, News & General
Topic: Thoughts on real estate allocation and owning your home
Replies: 34
Views: 3686

Re: How do you factor entitlements into your investing plan?

However, having paid the maximum to Social Security, I don't feel that the correct term is entitlement. I feel more like, these are my assets held by government, and if I don't get those, for whatever reason, then it is theft, and it should be punishable by the full extent of the criminal law. Oh m...
by Harold
Sun Dec 14, 2014 8:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: How do you factor entitlements into your investing plan?
Replies: 52
Views: 4953

Re: Why finance research is often wrong - the jelly bean pro

I believe there is a reasonably good explanation in financial economics of why there ought to be an equity risk premium With your writing skills, I know I'd appreciate a simply stated explanation. The commonly given ones are pretty easily refuted, but if it's true and understood, then it can be eas...
by Harold
Tue Dec 09, 2014 9:34 pm
 
Forum: Investing - Theory, News & General
Topic: Why finance research is often wrong - the jelly bean problem
Replies: 262
Views: 26978

Re: Bogle on the past and future of investing

Bogle doesn't sound like a believer in the future of small and value. But (and I hate to disagree with Bogle), I feel his logic is faulty. He seems to say that if small and value have potential to generate outsized returns, then the market will bid up their prices to equalize future returns with la...
by Harold
Mon Dec 08, 2014 6:11 pm
 
Forum: Investing - Theory, News & General
Topic: Bogle on the past and future of investing
Replies: 15
Views: 2212

Re: 1st Moving Violation Traffic Ticket: Lawyer Up or Pay Fi

As someone who every single day is endangered by red light runners who don't feel they are driving unsafely, may I offer a pedestrian perspective? If you were cruising (even coasting) through an amber/red light, you're probably not in the habit of stopping when the light turns yellow (as Michigan la...
by Harold
Wed Dec 03, 2014 12:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: 1st Moving Violation Traffic Ticket: Lawyer Up or Pay Fine?
Replies: 18
Views: 1413

Re: Why finance research is often wrong - the jelly bean pro

we don't know if the underlying distribution is stable Not only that, why would we even expect the underlying distribution to be stable? Under a stable distribution, with a known expected return, why would prices remain low enough to allow for the higher expected return? Because they're dealing wit...
by Harold
Wed Dec 03, 2014 11:22 am
 
Forum: Investing - Theory, News & General
Topic: Why finance research is often wrong - the jelly bean problem
Replies: 262
Views: 26978

Re: Is investing more risky today today than before the inte

There's an easy argument to be made that in the Information Age, market pricing more efficiently incorporates information. So more of the expected returns are captured in the current price (people are willing to pay more for returns they see as certain). This would effectively reduce future returns....
by Harold
Thu Nov 20, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: Is investing more risky today today than before the internet
Replies: 30
Views: 4609

Re: How much is saved by taking mass transit to work?

Thinking beyond yourself, you could also consider your impact on others. By driving less, you'd reduce pollution and related negative health effects, and you'd reduce limited resources you are consuming (and the impact of providing those resources to you). In addition, you'd directly be making the s...
by Harold
Thu Nov 20, 2014 10:40 am
 
Forum: Personal Consumer Issues
Topic: How much is saved by taking mass transit to work?
Replies: 51
Views: 5146

Re: "Life Ins Imputed Income Offset"?

If your employer has its payroll system set up to account for a charitable institution being designated -- your W-2 simply won't show that imputed income as taxable. If your employer doesn't have such a setup, you will have to interact with payroll to ensure your taxable income is correctly reported...
by Harold
Mon Nov 03, 2014 9:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: "Life Ins Imputed Income Offset"?
Replies: 7
Views: 1629

Re: 401k millionaire

Not quite right. Limits for 403(b), including employer contributions and both mandatory and optional employee contributions, are up around $53K per year, all tax sheltered. I came close to the limits my last few working years, when they were around $50,000 per year... 401(k) and 403(b) have the sam...
by Harold
Fri Oct 31, 2014 8:29 pm
 
Forum: Personal Finance (Not Investing)
Topic: 401k millionaire
Replies: 27
Views: 5257

Re: lump sum now vs pension later?

Look, I've given you all an easy to apply and accurate method for making this decision. Someone (e.g. #Cruncher) who loves spreadsheets could easily set up the calculation. You all can use this information or not., but I don't particularly care to argue about it. I will address statements made in th...
by Harold
Wed Oct 22, 2014 6:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: lump sum now vs pension later?
Replies: 45
Views: 4649

Re: lump sum now vs pension later?

I offered an accurate approach to calculating IRR only because it was the direction the thread took before my arrival. While it would work, it probably overly complicates the decision. There's no need to make the decision complicated, since there's a completely straightforward approach. Choose appro...
by Harold
Wed Oct 22, 2014 8:19 am
 
Forum: Personal Finance (Not Investing)
Topic: lump sum now vs pension later?
Replies: 45
Views: 4649

Re: lump sum now vs pension later?

By IRR, I'm referring to the interest component only. To come up with an interest/mortality IRR, you're back to using life expectancy rather than probabilities of survival -- which is fine, but less accurate. Yeah, Jensen's Inequality is certainly in that textbook. That concept (whether from Actuari...
by Harold
Mon Oct 20, 2014 8:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: lump sum now vs pension later?
Replies: 45
Views: 4649

Re: lump sum now vs pension later?

The way a pension actuary would quantify which choice was numerically better would be to compare the $101,040 to the actuarial present values of the three given annuity options. (This is somewhat equivalent to the oft-proferred advice to see what the cost of buying the annuity on the open market is....
by Harold
Mon Oct 20, 2014 6:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: lump sum now vs pension later?
Replies: 45
Views: 4649

Re: Why not 100% Stocks?

Thank you. Maybe a better way to phrase my question is as such. If you had capital that you did not need for 15-30 years, what would your allocation be on THAT capital? If corporations (particularly US) have demonstrated, historically, to be a superior investment over long stretches AND if you beli...
by Harold
Mon Oct 13, 2014 4:31 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 22635

Re: Why not 100% Stocks?

I didn't read much of the thread, so I don't know the level of belittling. It might have been due to your original statement being somewhat loaded with essentially false presumptions. One thing I don't quite understand is why not weight the portfolio almost exclusively in stocks. Their return over t...
by Harold
Mon Oct 13, 2014 4:14 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 22635

Re: Buffett Says ‘No-Brainer’ to Get a Mortgage to Short Rat

The price of a home implicitly includes an assumption of future rent increases (as with any investment, it’s worth the present value of future cash flows). So a homebuyer pays rent (net of ongoing expenses) with expected inflation up front. What a homebuyer is paying over time is ongoing expenses, w...
by Harold
Sat Oct 11, 2014 7:48 am
 
Forum: Personal Finance (Not Investing)
Topic: Buffett Says ‘No-Brainer’ to Get a Mortgage to Short Rates
Replies: 77
Views: 9969

Re: Why do so many think their home is a foolproof investmen

A home is similar to a tax free, inflation adjusted, perpetual annuity. Its "payout" is equal to equivalent rent minus the cost of ownership. A 0.2% real return would just be icing on the cake. Deflation is probably its greatest enemy. But once it's paid for, even that is a secondary conc...
by Harold
Sun Sep 14, 2014 3:01 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6763

Re: The Annuity Puzzlement

There's also the reality that people are very bad at assessing risk. Without their risk profile changing, they could go from a starry-eyed assessment of the returns from risky investments -- to a panicked assessment of how they could possibly live if something were to happen to those risky investmen...
by Harold
Sat Sep 13, 2014 3:20 pm
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 7470

Re: Why do so many think their home is a foolproof investmen

Johno wrote:An owner occupied home is obviously an investment.

I didn't say it wasn't. What I wrote holds whether one considers it an investment or not.
by Harold
Sat Sep 13, 2014 1:18 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6763

Re: Why do so many think their home is a foolproof investmen

It runs far deeper. Vast numbers of otherwise smart people view housing under an incorrect financial framework where they consider a mortgage payment as their rent -- hence since a mortgage payment “builds equity”, renters are “throwing money away”. That leads them to viscerally feel that buying a h...
by Harold
Sat Sep 13, 2014 11:23 am
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6763

Re: Interest rates - Bond effects?

If looked at in terms of prices, the mystery of interest rates falls away a bit. An issuer of a bond is promising future payments in exchange for current cash. The issuer of the bond would like as much cash as he can get, and the buyer of the bond would like to part with as little cash as possible. ...
by Harold
Fri Sep 12, 2014 2:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Interest rates - Bond effects?
Replies: 7
Views: 998

Re: Why invest in bonds?

I was imagining an investor who holds more in stocks but doesn't decrease her contributions. This results in a larger portfolio at retirement, which lets the investor's older self have a lower withdrawal rate and/or hold more bonds that if her younger self had been taken less risk. So then risk cle...
by Harold
Mon Sep 01, 2014 6:07 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 7109

Re: Why invest in bonds?

There's a misconception that high-equity allocations are only there to juice returns. They can also be used as a way of transferring risk from an investor's older self to her younger self. This often makes sense because young innovators have more options (working longer and saving more). Excessivel...
by Harold
Mon Sep 01, 2014 11:19 am
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 7109

Re: Neighbor's Fireworks

livesoft wrote:Actually, you want his kids on your lawn cleaning up the fireworks debris.

Nice, I missed that. "Clean up your dad's trash -- then get off my lawn!"
by Harold
Sat Jul 05, 2014 5:50 pm
 
Forum: Personal Consumer Issues
Topic: Neighbor's Fireworks
Replies: 50
Views: 4853

Re: Neighbor's Fireworks

XtremeSki2001 wrote:Our roof was replaced on July 3rd

Maybe replace it on July 5th next time :wink:

In the meantime, you could get back at him by sitting on your porch and yelling at his kids to get off your lawn.
by Harold
Sat Jul 05, 2014 5:25 pm
 
Forum: Personal Consumer Issues
Topic: Neighbor's Fireworks
Replies: 50
Views: 4853

Re: Urban garden bed--ideas to deter dog owners

livesoft wrote:^But pooping in the gutter should not preclude a dog owner from scooping it up and disposing of it properly. I suspect though that many owners would think that having it in the gutter is sufficient

Yes of course they should still pick it up, I didn't mean to imply otherwise.
by Harold
Fri Jul 04, 2014 10:59 pm
 
Forum: Personal Consumer Issues
Topic: Urban garden bed--ideas to deter dog owners
Replies: 44
Views: 4497

Re: Is deferring 75% of your paycheck Roth 401(k) even doabl

I've encountered this while frontloading contributions/stock purchase/etc. at the beginning of the year.

Although I tried to get it exact, I was a little off and my employer simply reduced the contribution to the extent needed to ensure enough was available for the required payroll deductions.
by Harold
Fri Jul 04, 2014 10:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is deferring 75% of your paycheck Roth 401(k) even doable?
Replies: 14
Views: 2069

Re: Urban garden bed--ideas to deter dog owners

I am not a city person and never understood what "curb" meant I am a city person and can speak to this. In its purest sense, it means that dog owners should train their dogs to use the curb (or gutter), which is the part of our shared space that has the least impact on everyone else (and ...
by Harold
Fri Jul 04, 2014 10:33 pm
 
Forum: Personal Consumer Issues
Topic: Urban garden bed--ideas to deter dog owners
Replies: 44
Views: 4497

Re: POLL: Mortgage as a negative bond

Oh, there are certainly risks involved with homeownership. My point was that mixing all this stuff into a single number is meaningless. I analyze my situation in a complete way. Knowing I'm 175% stocks vs 143% - that number - just doesn't have meaning. You may just be more sophisticated than the ty...
by Harold
Wed Jul 02, 2014 2:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Mortgage as a negative bond
Replies: 89
Views: 3229

Re: POLL: Mortgage as a negative bond

Not my reality. Say I have $100K in stocks. I buy a $300K house with a $200K mortgage. I pay the mortgage off, just like making rent payments, over 30 years. Where was the "massive risk shift"? ... When stocks crashed in 2009, my "one number" went from 125% stocks to 175% stocks...
by Harold
Wed Jul 02, 2014 10:21 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Mortgage as a negative bond
Replies: 89
Views: 3229

Re: POLL: Mortgage as a negative bond

There are two clear advantages to the negative bond concept: 1) It helps people have a better understanding of their actual risk. - People are indignantly resistant to the notion of their asset allocation being 120/-20 or whatever. But that's an accurate reflection of the massive risk shift that occ...
by Harold
Wed Jul 02, 2014 7:29 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Mortgage as a negative bond
Replies: 89
Views: 3229
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