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Re: Univ of Chicago [Active Manager Luck vs. Skill] Lubos Pa

Thanks for posting. Their comment about chasing performance with fund managers not necessarily being all bad was interesting. Still might be difficult though to separate a skilled manager from a lucky manager or even having a un-lucky but skillful manager. Despite the fact that skill does exist in v...
by JoMoney
Tue Sep 02, 2014 8:35 am
 
Forum: Investing - Theory, News & General
Topic: Univ of Chicago [Active Manager Luck vs. Skill] Lubos Pastor
Replies: 6
Views: 519

Re: No advantage of Slice and Dice vs 3Fund?

Does anyone know what data is used for computing The Coffee House portfolio's returns / CAGR? It mentions the Vanguard funds, but it also shows a 20-year CAGR of 7.52% , which is a great return over that period, but a lot of the Vanguard funds that make up that portfolio (e.g. Vanguard REIT - VGSIX)...
by JoMoney
Tue Sep 02, 2014 6:58 am
 
Forum: Investing - Theory, News & General
Topic: No advantage of Slice and Dice vs 3Fund?
Replies: 41
Views: 2546

Re: No advantage of Slice and Dice vs 3Fund?

...Good P/B and P/E data only goes back to the 1950s. How many independent 40 year time periods do we have data for? 1 And in that period, we don't have a lot of actual data from funds following these theoretical portfolios that make up something less than a 5% portion of the market. The actual mar...
by JoMoney
Tue Sep 02, 2014 6:41 am
 
Forum: Investing - Theory, News & General
Topic: No advantage of Slice and Dice vs 3Fund?
Replies: 41
Views: 2546

Re: An inefficient market creating drag on index returns

Vanguard's index funds track their indexes, the small-cap indexes are within a range of their expense ratio, the Total Market seems to do better than the expense ratio would imply. The information is in the annual report, just look at the returns next to the indexes returns. http://i61.tinypic.com/2...
by JoMoney
Mon Sep 01, 2014 5:15 pm
 
Forum: Investing - Theory, News & General
Topic: An inefficient market creating drag on index returns
Replies: 30
Views: 1563

Re: No advantage of Slice and Dice vs 3Fund?

From a volatility perspective, none of these "slices" are any scarier than holding individual stocks would be. Except with individual stocks you pretty much know what you're getting. If you're holding a non-index fund and it starts doing poorly relative to an appropriate benchmark, there's...
by JoMoney
Mon Sep 01, 2014 4:14 pm
 
Forum: Investing - Theory, News & General
Topic: No advantage of Slice and Dice vs 3Fund?
Replies: 41
Views: 2546

Re: 100% Stock Thread Collection

Here's one that was very close to the bottom of the market in 2009
viewtopic.php?t=35984
by JoMoney
Sun Aug 31, 2014 10:08 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 40
Views: 2443

Re: No advantage of Slice and Dice vs 3Fund?

If you're persuaded by the "stories" and back tests of people who want to show some way to beat the market, there's a lot of different roads you can take with that. But you have to ignore all the real-world studies of actual funds that have tried various strategies, most of them failing to...
by JoMoney
Sun Aug 31, 2014 9:25 pm
 
Forum: Investing - Theory, News & General
Topic: No advantage of Slice and Dice vs 3Fund?
Replies: 41
Views: 2546

Re: No advantage of Slice and Dice vs 3Fund?

Nobody knows what the future will look like. Each period of past performance is unique, it doesn't predict the future. I'm inclined to agree with with the KISS approach. FWIW, the Bogle suggested Portfolio, Vanguards Balanced fund (VBIAX) which is a 60/40 stock/bond split like "The Coffeehouse ...
by JoMoney
Sun Aug 31, 2014 5:13 pm
 
Forum: Investing - Theory, News & General
Topic: No advantage of Slice and Dice vs 3Fund?
Replies: 41
Views: 2546

Re: Value in Diversifying Across Investment Companies?

Regardless if something happened to Vanguard, they have no recourse to the assets of the individual mutual funds. The managers of the individual funds don't have direct access to the assets as they're held by independent custodians. The assets held by the custodians and statements/accounting of the ...
by JoMoney
Sun Aug 31, 2014 12:20 am
 
Forum: Investing - Help with Personal Investments
Topic: Value in Diversifying Across Investment Companies?
Replies: 9
Views: 713

Re: Value in Diversifying Across Investment Companies?

There's a great write up by Mel Lindauer on "Vanguard safety" here: http://www.bogleheads.org/wiki/Vanguard_safety
by JoMoney
Sat Aug 30, 2014 11:37 pm
 
Forum: Investing - Help with Personal Investments
Topic: Value in Diversifying Across Investment Companies?
Replies: 9
Views: 713

Re: I'd buy an S&P 500 index fund in a pinch

I wonder: Why did the S&P beat the total market given that small stocks historically beat large stocks? One answer is that somebody's data is wrong. Either Bogle has the wrong data or Fama and French have the wrong data or both. Another explanation is that the S&P quality sorts in fact did ...
by JoMoney
Sat Aug 30, 2014 7:39 pm
 
Forum: Investing - Theory, News & General
Topic: I'd buy an S&P 500 index fund in a pinch
Replies: 45
Views: 5475

Re: I'd buy an S&P 500 index fund in a pinch

...That's a bad example. To get the whole 2.6% additional return someone would have to have say $100k in only EM index compared to $100k in the 500 index. How much additional return does $80k in the 500 index and $20k in the EM index get? I don't feel like doing the math, but not a big difference b...
by JoMoney
Sat Aug 30, 2014 5:34 pm
 
Forum: Investing - Theory, News & General
Topic: I'd buy an S&P 500 index fund in a pinch
Replies: 45
Views: 5475

Re: I'd buy an S&P 500 index fund in a pinch

...All things being equal unpredictable, it's hard to justify a further .17 in expenses. Well, even if returns may be unpredictable, there may still be choices to think about in the realm of what risks you expose yourself to. I'm not the person to talk to if you believe small-caps or international ...
by JoMoney
Sat Aug 30, 2014 8:50 am
 
Forum: Investing - Theory, News & General
Topic: I'd buy an S&P 500 index fund in a pinch
Replies: 45
Views: 5475

Re: Does it make any sense to switch from VFIAX to VTSAX?

...It really may make no difference though. It certainly hasn't in the past. Even in the 1983-2013 results it completely changes if you move +/- 5 years. If you move the start date back five years to 1978-2013 the Wilshire 5000 grew $10k to $525,919.08 vs $522,236.74 for the S&P But if you move...
by JoMoney
Sat Aug 30, 2014 7:23 am
 
Forum: Investing - Help with Personal Investments
Topic: Does it make any sense to switch from VFIAX to VTSAX?
Replies: 20
Views: 2576

Re: Does it make any sense to switch from VFIAX to VTSAX?

...Over the last thirty years, we can see VTSAX (green) do better when small stocks (blue) do and do worse when small stocks (blue) do worse. Of course. Your chart is 20 years... VTSAX/VTSMX hasn't been around 30 years. If you're a small-cap fan, you really don't want look at a 30 year chart of the...
by JoMoney
Sat Aug 30, 2014 4:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Does it make any sense to switch from VFIAX to VTSAX?
Replies: 20
Views: 2576

Re: Selling Covered Calls, Am I Missing Something??

What's the hoped for advantage over just selling as planned? It seems to me, that you're taking on the downside risks of a stock that you've already decided you want to sell, and you have a cap limiting your upside potential. I don't think the people on the opposite side of the contract are giving a...
by JoMoney
Sat Aug 30, 2014 3:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Selling Covered Calls, Am I Missing Something??
Replies: 7
Views: 894

Re: How low can Vanguard Fees Go?

...For VTSAX I can't pull up the Willshire in a total return chart, but if I compare against Morningstar's "U.S. Market TR" I get 0.0032% . I'm not as confident in this number because of the index choice... It's unfortunate that CRSP's index data is so closely held, but I suppose it allow...
by JoMoney
Fri Aug 29, 2014 10:06 pm
 
Forum: Investing - Theory, News & General
Topic: How low can Vanguard Fees Go?
Replies: 32
Views: 2179

Re: I'd buy an S&P 500 index fund in a pinch

I own an S&P 500 fund (TRSPX) through TIAA-CREF and it's my only equity holding in that account. I chose that over Cref Stock, because of the difference in expense ratio: .32 vs .49. I do wonder if that was the correct choice, as I maintain a 70/30 US/international in my IRA. I've only been in ...
by JoMoney
Fri Aug 29, 2014 9:22 pm
 
Forum: Investing - Theory, News & General
Topic: I'd buy an S&P 500 index fund in a pinch
Replies: 45
Views: 5475

Re: I'd buy an S&P 500 index fund in a pinch

...It looks like a rather small difference, though, as evidenced by your graph. And expenses on a TSM fund will be higher than for an S&P500 fund, due to the larger number of securities involved in TSM. In my 401k, I don't have access to a TSM fund. There is an S&P500 fund, Vanguard institu...
by JoMoney
Fri Aug 29, 2014 9:00 pm
 
Forum: Investing - Theory, News & General
Topic: I'd buy an S&P 500 index fund in a pinch
Replies: 45
Views: 5475

Re: Does anyone have 'Lazy Portfolios'?

...Do any of you have a lazy fund that has more than the core three or four ? What's your split? Do any of you have your portfolio very similar to these lazy portfolios?... What about lazy portfolio that's less than the core three/four? I use a Buffett Bequest lazy portfolio. I use Vanguard's short...
by JoMoney
Fri Aug 29, 2014 8:01 pm
 
Forum: Investing - Theory, News & General
Topic: Does anyone have 'Lazy Portfolios'?
Replies: 71
Views: 4123

Re: I'd buy an S&P 500 index fund in a pinch

...An S&P 500 index fund is fine in a pinch, but I’m a total market index guy at heart. I'm a " large leading industries " guy at heart. :D I have a feeling Warren Buffett is too, which is likely why he picked the S&P500 for the passive index portfolio he's leaving his wife's trus...
by JoMoney
Fri Aug 29, 2014 7:43 am
 
Forum: Investing - Theory, News & General
Topic: I'd buy an S&P 500 index fund in a pinch
Replies: 45
Views: 5475

Re: International allocation

... And with "inversions" anymore, there is a stronger argument for diversification. Maybe, but unless they change what exchanges their stock trades on, the country they're tax domiciled in may not make a difference for inclusion in index funds. http://www.washingtonpost.com/business/stop...
by JoMoney
Thu Aug 28, 2014 5:05 pm
 
Forum: Investing - Theory, News & General
Topic: International allocation
Replies: 73
Views: 4128

Re: Motif Investing - own the S&P500 for less

...Her strategy is to buy companies with the largest market cap first. She starts by saving for two months and then buys $10,000 in Apple stock. In the fourth month, Exxon's market cap is 74% of Apple's market cap, so Alice buys $7,400 worth of Exxon stock, enough for it to be worth 74% as much as ...
by JoMoney
Thu Aug 28, 2014 4:40 pm
 
Forum: Investing - Theory, News & General
Topic: Motif Investing - own the S&P500 for less
Replies: 75
Views: 3536

Re: Only need $315k non-retirement $ to retire at Age 43?

I marvel that so many relatively young people are so desperate to stop working. Isn't there a job that you're qualified for that you'd enjoy doing? That aside, I don't care what the simulations say, you're not close to having enough to retire. Enough to fund some re-training? Yes, probably. " ...
by JoMoney
Thu Aug 28, 2014 4:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: Only need $315k non-retirement $ to retire at Age 43?
Replies: 36
Views: 5190

Re: Warren Buffet and the S&P index fund

There wasn't any kind of timeline or "bet" like Buffett's against the hedge funds, but I'll be interested in seeing what the 10 year chart looks from 6/27/2006 out to 2016 comparing the popular small-value funds (e.g. 10 years out from Bogle's Turn on a Paradigm? WSJ editorial)
by JoMoney
Thu Aug 28, 2014 8:59 am
 
Forum: Investing - Theory, News & General
Topic: Warren Buffet and the S&P index fund
Replies: 23
Views: 1727

Re: Motif Investing - own the S&P500 for less

...I was wondering what the outcome could be if you randomly selected 30 stocks in the sp500 (sampling; either market weighed or equal weight) and invested in them for 10 years or longer (1 motif). Expense wise, it could be lower than an index fund. Performance wise, I think things will average out...
by JoMoney
Wed Aug 27, 2014 5:04 pm
 
Forum: Investing - Theory, News & General
Topic: Motif Investing - own the S&P500 for less
Replies: 75
Views: 3536

Re: Motif Investing - own the S&P500 for less

...With VOO, there is a rhyme and reason, despite a slight dependency on start/end and not just the period. I don't have a good explanation for this, but it does seem to have mostly gone away in the past few years. Were the expenses different in the past?... When the VOO ETF was introduced it had a...
by JoMoney
Wed Aug 27, 2014 4:39 pm
 
Forum: Investing - Theory, News & General
Topic: Motif Investing - own the S&P500 for less
Replies: 75
Views: 3536

Re: Motif Investing - own the S&P500 for less

If you really dig in and look at the costs and how well managed the index funds at Vanguard are, it's pretty hard to beat. I agree they are well managed and do a good job of execution. That said, execution and trading are not free, and why should I be paying for other people's trading when all I wa...
by JoMoney
Wed Aug 27, 2014 9:15 am
 
Forum: Investing - Theory, News & General
Topic: Motif Investing - own the S&P500 for less
Replies: 75
Views: 3536

Re: Motif Investing - own the S&P500 for less

JoMoney - commissions are a small part of the turnover cost. Most of it is the spread and market impact of the trades. Observe that my estimate of 3.4bp for the funds total turnover costs are only slightly higher than the 3.2bp average spread for these large cap stocks. VOO should have lower turnov...
by JoMoney
Wed Aug 27, 2014 8:57 am
 
Forum: Investing - Theory, News & General
Topic: Motif Investing - own the S&P500 for less
Replies: 75
Views: 3536

Re: Motif Investing - own the S&P500 for less

...I would be inclined to attribute the positive tracking error of the fund vs the index to luck rather than some systematic Vanguard skill aside from the factors I cited in OP. For the ETF, returns seem to differ by the ER as expected, and I think the ETF should have lower turnover and other hidde...
by JoMoney
Wed Aug 27, 2014 8:29 am
 
Forum: Investing - Theory, News & General
Topic: Motif Investing - own the S&P500 for less
Replies: 75
Views: 3536

Re: Motif Investing - own the S&P500 for less

I used to hold a lot of individual stocks, partly under the premise of it being cheaper than the cheapest of index funds. Managing the stock portfolio was a bit of pain and led to quite a few behavioral problems (for me). It's nice knowing that there's no ongoing "expense ratio" holding a ...
by JoMoney
Wed Aug 27, 2014 3:35 am
 
Forum: Investing - Theory, News & General
Topic: Motif Investing - own the S&P500 for less
Replies: 75
Views: 3536

Re: S&P500 over 2000

Gloat while it lasts...
Boglehead Contest 2014
Image
Image
by JoMoney
Tue Aug 26, 2014 5:16 pm
 
Forum: Investing - Theory, News & General
Topic: S&P500 over 2000
Replies: 68
Views: 5334

Re: invest only in vtsmx and total bond market index.

I don't hold international, but there's a lot of people here who advocate overweighting it... The recommendations I've seen in this board for international range from 0% to market cap weight...personally I don't see how you could call anything within that range "overweighting" when really...
by JoMoney
Tue Aug 26, 2014 4:37 pm
 
Forum: Investing - Theory, News & General
Topic: invest only in vtsmx and total bond market index.
Replies: 8
Views: 1364

Re: invest only in vtsmx and total bond market index.

Yes, he's been very consistent on his view that U.S. investors don't need to add an international allocation. He's written and spoken about that for 20+ years. He's also said that you should look at it for yourself and make your own decision. Right now, U.S. has had a pretty good run relative to mos...
by JoMoney
Tue Aug 26, 2014 4:25 pm
 
Forum: Investing - Theory, News & General
Topic: invest only in vtsmx and total bond market index.
Replies: 8
Views: 1364

Re: If my 70/30 Stock/Bond portfolio matched the S&P500 gain

Why short term bonds vs VBMFX ? Just to emphasize the point, that there hasn't been any difficult trick to beating "the market" over the past 15 years, especially if you're selective with the dates. Just about anything else did better. I would have used the Vanguard Prime Money Market fun...
by JoMoney
Tue Aug 26, 2014 4:06 pm
 
Forum: Investing - Theory, News & General
Topic: If my 70/30 Stock/Bond portfolio matched the S&P500 gains
Replies: 7
Views: 1699

Re: S&P 500 Equal Weight Index

Maybe "small" just means "small-er". All of those companies are in Vanguard's Mid-Cap index fund. The stocks you're buying more of in an equal weighted S&P500 are the same/similar stocks you'd be buying more of "tilting" to a cap weighted mid-cap fund. The big diffe...
by JoMoney
Tue Aug 26, 2014 7:37 am
 
Forum: Investing - Theory, News & General
Topic: S&P 500 Equal Weight Index
Replies: 10
Views: 923

Re: What 5 stocks can I own forever?

Given that the OP stated ...I already own a basket of great Vanguard index funds and have a good allocation to bonds as well... I'm assuming this 5 stock thing is a lark, and not as a serious "investment". When I've heard people (like Jim Cramer) advocate for a 5 stock portfolio, it's not ...
by JoMoney
Tue Aug 26, 2014 7:21 am
 
Forum: Investing - Help with Personal Investments
Topic: What 5 stocks can I own forever?
Replies: 58
Views: 4436

Re: The Extreme Outliers of the Investment Universe

... I would skeptical that a momentum tilt or market timing will get you very much as I have not seen a practitioner consistently beat the market over... The key question there comes into how you measure "consistently" and how long that constitutes. Over the past 15 years, with the experi...
by JoMoney
Tue Aug 26, 2014 7:10 am
 
Forum: Investing - Theory, News & General
Topic: The Extreme Outliers of the Investment Universe
Replies: 31
Views: 3154

Re: The Extreme Outliers of the Investment Universe

What use is any of this? I don't know how to pick stocks, and I especially don't know how to pick stock pickers. Watching the PGA on TV does not make me a better golfer. L. Very few golfers ever make it to a PGA Championship. How do we know those guys aren't just lucky enough to get the ball in the...
by JoMoney
Tue Aug 26, 2014 6:16 am
 
Forum: Investing - Theory, News & General
Topic: The Extreme Outliers of the Investment Universe
Replies: 31
Views: 3154

Re: Question on dividends

That's kind of a crazy scenario above, isn't it, Gill? How about this one- you buy Pepsi stock and hold it for decades. Your friend buys a tech stock and holds it for around the same time. During the same two-year period after all these decades, Pepsi crashes and so does your friend's stock. You bo...
by JoMoney
Tue Aug 26, 2014 5:05 am
 
Forum: Investing - Theory, News & General
Topic: Question on dividends
Replies: 15
Views: 1327

Re: S&P 500 Equal Weight Index

...I like the aspect of EW that in order to remain the proper allocation, they must utilize a Buy Low/Sell High strategy during quarterly rebalancing... Keep in mind that there are always stocks heading down a path they won't recover from as well, so it's also following a strategy of increasing the...
by JoMoney
Mon Aug 25, 2014 4:32 pm
 
Forum: Investing - Theory, News & General
Topic: S&P 500 Equal Weight Index
Replies: 10
Views: 923

Re: How Does Vanguard Re-Balance VBIAX

An interesting blog post that asks this regarding a target date fund: http://theinquiringinvestor.com/2012/06/03/how-often-do-vanguard-target-date-funds-rebalance/ They spoke to a Vanguard rep that explained they generally rebalance daily using normal cash flows in/out of the fund. What was particul...
by JoMoney
Mon Aug 25, 2014 4:15 pm
 
Forum: Investing - Theory, News & General
Topic: How Does Vanguard Re-Balance VBIAX
Replies: 4
Views: 546

Re: What 5 stocks can I own forever?

For the fun of the exercise, I decided to pick 5 stocks from DJIA that are from different sectors/industries and seem to have the oldest history: JPMorgan Chase & Co. (JPM) The company was founded in 1799 E. I. du Pont de Nemours and Company (DD) The company was founded in 1802 The Procter &...
by JoMoney
Mon Aug 25, 2014 6:08 am
 
Forum: Investing - Help with Personal Investments
Topic: What 5 stocks can I own forever?
Replies: 58
Views: 4436

Re: If my 70/30 Stock/Bond portfolio matched the S&P500 gain

...I don't see that result. From a quick check at Morningstar, it looks like the S&P 500 (using Vanguard 500 Index Investor shares, VFINX) is up 91% in the past 15 years. However, using Vanguard Short-Term Bond Index Investor shares (VBISX), I see only an 83% gain for short-term bonds. Of cours...
by JoMoney
Mon Aug 25, 2014 3:24 am
 
Forum: Investing - Theory, News & General
Topic: If my 70/30 Stock/Bond portfolio matched the S&P500 gains
Replies: 7
Views: 1699

Re: Good interview with John Bogle

The dot-com era in the late '90s/early 2000, was a bit unique. Things got way out there in the valuations, in particular with large-cap stocks - the difference in P/E and other valuations between the top 50 stocks and the rest of the market was pretty steep. Most of the time, the market is within so...
by JoMoney
Mon Aug 25, 2014 3:12 am
 
Forum: Investing - Theory, News & General
Topic: Good interview with John Bogle
Replies: 34
Views: 3690

Re: If my 70/30 Stock/Bond portfolio matched the S&P500 gain

does that mean I'm getting less risk for free? It did what it did, but the future may be different. Over the past 15 year period, 100% in a short-term bond fund had the same return as 100% in S&P500... but that's a period dependent event, and very sensitive to how you choose your start/end times.
by JoMoney
Sun Aug 24, 2014 5:17 pm
 
Forum: Investing - Theory, News & General
Topic: If my 70/30 Stock/Bond portfolio matched the S&P500 gains
Replies: 7
Views: 1699

Re: Good interview with John Bogle

It is interesting how big of a change he made. In other places he said if you're going to try your hand at tactical allocation to limit it to a range of 15% or so. Benjamin Graham had suggested a 25% range. Going from 80% to 25% is an even bigger range. ...Maybe he was following a Graham idea, but 8...
by JoMoney
Sun Aug 24, 2014 4:33 pm
 
Forum: Investing - Theory, News & General
Topic: Good interview with John Bogle
Replies: 34
Views: 3690

Re: International allocation

We're at 30%, although I'm steadily becoming convinced, largely by all the discussions about international on this forum, that it should be higher, reflecting true market share. World market share and personal risk tolerance are two different issues. Some folks may not like the greater volatility o...
by JoMoney
Sun Aug 24, 2014 4:20 pm
 
Forum: Investing - Theory, News & General
Topic: International allocation
Replies: 73
Views: 4128

Re: Fidelity front page: Is that value stock cheap or troubl

What a bizarre world. Today they're advocating buying "value" stocks based on technical indicators and momentum... A couple months ago they were advocating buying "growth" stocks based on fundamentals: https://www.fidelity.com/viewpoints/investing-ideas/growth-cheap Seems like ev...
by JoMoney
Sun Aug 24, 2014 1:55 am
 
Forum: Investing - Theory, News & General
Topic: Fidelity front page: Is that value stock cheap or troubled?
Replies: 9
Views: 1041
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