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Re: Stock Dividend Yields & Share Buybacks — A Surprise

...2) share buybacks do not affect PE ratios, since the # shares appears in both numerator and denominator... This was something John Neff suggested in his stock screening (essentially PEG Ratio with dividends added to earnings growth). It should make no difference if "Company A" grows ea...
by JoMoney
Thu Oct 02, 2014 6:44 am
 
Forum: Investing - Theory, News & General
Topic: Stock Dividend Yields & Share Buybacks — A Surprise
Replies: 26
Views: 1557

Re: Dave Ramsey says asset allocation does not work

Hey, give Dave a break. He has an asset Allocation: 25% growth 25% Agressive growth 25% Growth and Income 25% International. So that means you have 90/10 stock bond AA, assuming the growth and income fund is a balanced fund with 60/40 stock bond allocation. I am sure that his listeners that retired...
by JoMoney
Thu Oct 02, 2014 5:57 am
 
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says asset allocation does not work
Replies: 44
Views: 4066

Re: does anybody out there own a two fund portfolio?

I'm close, but not exactly a two fund portfolio. Just about everything in S&P500 funds, and then a hefty savings/emergency fund in Vanguard's Short-Term bond-index, but I don't really consider the short-term bond index as part of the portfolio (i.e. I don't follow a rebalancing regimen with mone...
by JoMoney
Thu Oct 02, 2014 5:24 am
 
Forum: Investing - Theory, News & General
Topic: does anybody out there own a two fund portfolio?
Replies: 2
Views: 379

Re: Buffett vs. Bogleheads

Don't want to derail this into a risk-parity discussion, but aren't the risk-adjusted returns higher for a balanced portfolio rather than 100% equities? Yes, the majority of the time that's been the case... But one could cherry pick specific periods, and types of bonds (like long-term bonds from 19...
by JoMoney
Thu Oct 02, 2014 3:36 am
 
Forum: Investing - Theory, News & General
Topic: Buffett vs. Bogleheads
Replies: 20
Views: 1371

Re: Buffett vs. Bogleheads

I don't believe the Three Fund Portfolio gives any explicit guidance as to how much the investor has in bonds. It's up to the individual to decide on the right risk levels for themselves. The "Total Stock Market" fund in the three fund portfolio and the S&P500 index suggested by Warren...
by JoMoney
Wed Oct 01, 2014 4:58 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett vs. Bogleheads
Replies: 20
Views: 1371

Re: What SWR/expense multiple to use for early retirement pl

5%. If things don't work out, you have plenty of time to go back to work and rebuild the savings. You are not in the same boat as the 65 year old who has to live on that money forever. It all depends on how badly you want to be retired versus how much you fear having to lower your living standards....
by JoMoney
Wed Oct 01, 2014 8:32 am
 
Forum: Investing - Theory, News & General
Topic: What SWR/expense multiple to use for early retirement plan?
Replies: 35
Views: 1432

Re: What SWR/expense multiple to use for early retirement pl

I like the idea of a variable rate withdrawal tide to expected lifespan, similar to what's used for the IRS calculations for RMD's from an IRA.
Seems to work out to about 2% for someone in their mid-30's, working up to 3% in the 50's , and hits 4% at around age 60.
by JoMoney
Wed Oct 01, 2014 7:52 am
 
Forum: Investing - Theory, News & General
Topic: What SWR/expense multiple to use for early retirement plan?
Replies: 35
Views: 1432

Re: Bogleheads, help me be less afraid of international stoc

...there is less excitement about international funds. I haven't picked up on that here. My impression has been there's two or three of us who stand with a position that owning international isn't necessary, it seems to me the bulk of the posts are people raving that international is at a bargain a...
by JoMoney
Tue Sep 30, 2014 5:00 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads, help me be less afraid of international stocks
Replies: 39
Views: 2070

Re: Bogleheads, help me be less afraid of international stoc

I think your attempt to pick countries based on macro economic trends is misguided. Some of the best investors (i.e. Warren Buffett) generally ignore macro forecasts and focus on the aspects of individual businesses. Some of the largest holdings in those areas are large multi-nationals that do a gre...
by JoMoney
Tue Sep 30, 2014 4:44 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads, help me be less afraid of international stocks
Replies: 39
Views: 2070

Re: Assett allocation market timing strategy inspired by Joh

Mr. Bogle has suggested that allowing your allocation to drift (or to be tacticaly allocated) within a range of 15%, suggesting a starting target of 65/35 may look desirable to some investors. Benjamin Graham had suggested an allocation that could range 25% starting at a 50/50 balance. I think using...
by JoMoney
Tue Sep 30, 2014 4:26 pm
 
Forum: Investing - Theory, News & General
Topic: Asset allocation market timing strategy inspired by John B
Replies: 32
Views: 1643

Re: Oatmeal suggestions

I like to make it in the microwave with a scoop of frozen berries and stir in a spoon full of jelly/jam/preserves to sweeten it a bit.
by JoMoney
Tue Sep 30, 2014 5:20 am
 
Forum: Personal Consumer Issues
Topic: Oatmeal suggestions
Replies: 96
Views: 3279

Re: In theory, market timing = index investing

I think you just restated the premise that's often repeated, in aggregate everybody owns the market portfolio, there is no excess returns in aggregate. For every portfolio that outperforms there is some other that underperforms. Trading might increase returns, but the odds are stacked against tradin...
by JoMoney
Mon Sep 29, 2014 4:58 pm
 
Forum: Investing - Theory, News & General
Topic: In theory, market timing = index investing
Replies: 10
Views: 627

Re: Will Investment Returns Ever Revert to "Normal"?

We can't push and pull our stock and bond portfolios and expect to make them earn more or revert to some constant rate. The real returns from the economy is going to be what it's going to be. We put a lot of effort in trying to estimate what future outcomes will be, but if we put those efforts into ...
by JoMoney
Sat Sep 27, 2014 11:14 pm
 
Forum: Investing - Theory, News & General
Topic: Will Investment Returns Ever Revert to "Normal"?
Replies: 56
Views: 4265

Re: what is risk?

Volatility is a type of risk, but it gets way over used as a proxy assuming it measures all sorts of risk. It's handy because past volatility can be measured perfectly in hind-sight, and math geeks who like to pretend the market is some sort of casino game can use it to form sciencey looking charts ...
by JoMoney
Sat Sep 27, 2014 9:20 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4107

Re: Will Investment Returns Ever Revert to "Normal"?

I think the idea that there is a "normal" is misleading. The fact that people have gathered statistics and averaged them out to show what the average was in the past conceals more than it reveals. Mean reversion is inevitable at some point, but it may take longer than our lifetimes, and th...
by JoMoney
Sat Sep 27, 2014 8:11 pm
 
Forum: Investing - Theory, News & General
Topic: Will Investment Returns Ever Revert to "Normal"?
Replies: 56
Views: 4265

Re: Stamps cheaper at Staples than at USPS ?

I can't verify it, but I think it's quite possible. It might be a promotional thing to raise awareness of their new services. Costco used to sell the "forever stamps" at a small discount, I remember a few years ago when it was announced there was going to be a price increase in postage som...
by JoMoney
Sat Sep 27, 2014 5:25 pm
 
Forum: Personal Consumer Issues
Topic: Stamps cheaper at Staples than at USPS ?
Replies: 12
Views: 1225

Re: Vanguard ETF and fund

One of the features I like about my short-term bond index fund vs. an ETF is that mutual funds sometimes offer better liquidity. I can sell my fund and use the proceeds to make another purchase or transfer the money immediately, selling a stock or ETF will be subject to a 3 day settlement period. I...
by JoMoney
Sat Sep 27, 2014 8:18 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard ETF and fund
Replies: 19
Views: 1064

Re: rebalancing conundrum/paradox/irony

Aha! So now you see the wisdom of a glidepath! Yep. Setting up a glide path helps you to take more equity risk earlier in your investing lifetime and slowly taper it down as you get closer to retirement. That said, you might want to wait for a 5-10% correction in the stock market before readjusting...
by JoMoney
Sat Sep 27, 2014 8:12 am
 
Forum: Investing - Theory, News & General
Topic: rebalancing conundrum/paradox/irony
Replies: 83
Views: 4645

Re: What's wrong with leverage?

When people talk about prudent allocation to risky assets, they often bring up "need, ability, and willingness" to take on risk. I think leverage inherently fails the "ability" test. If you're borrowing money to buy the asset, whether it's synthetic leverage or more typical credi...
by JoMoney
Sat Sep 27, 2014 7:38 am
 
Forum: Investing - Theory, News & General
Topic: What's wrong with leverage?
Replies: 15
Views: 1093

Re: Vanguard ETF and fund

One of the features I like about my short-term bond index fund vs. an ETF is that mutual funds sometimes offer better liquidity. I can sell my fund and use the proceeds to make another purchase or transfer the money immediately, selling a stock or ETF will be subject to a 3 day settlement period. If...
by JoMoney
Fri Sep 26, 2014 9:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard ETF and fund
Replies: 19
Views: 1064

Re: AliBaba

So I guess this means that Ali will show up in the S&P 500 and the Russell 3000 i.e. VOO and Total Stock. Right? No. It doesn't match the criteria for inclusion in any of the common indexes. The thread over here has some discussion on that: http://www.bogleheads.org/forum/viewtopic.php?f=10&...
by JoMoney
Thu Sep 25, 2014 4:24 pm
 
Forum: Investing - Theory, News & General
Topic: AliBaba
Replies: 128
Views: 8180

Re: AliBaba

This is as good a time as any to remind everyone that IPOs underperform the market . Everyone knows this, but there are still hoards of retail investors willing to believe that this IPO is different . From the article: "Professor Jay Ritter of the University of Florida has done several studies...
by JoMoney
Thu Sep 25, 2014 3:51 pm
 
Forum: Investing - Theory, News & General
Topic: AliBaba
Replies: 128
Views: 8180

Re: The only risk of leverage is selling at the bottom

The Kelly Criterion and some of the premises behind Modern Portfolio Theory demonstrate that taking the riskiest position is usually not the optimal choice for maximizing returns. Consider the illustration from the below article This particular scenario is contrived, but does demonstrate potentially...
by JoMoney
Tue Sep 23, 2014 7:10 am
 
Forum: Investing - Theory, News & General
Topic: The only risk of leverage is selling at the bottom
Replies: 46
Views: 1530

Re: Could one theoretically be 100% stocks your whole life?

Taken to the extreme of "100%", It would be pretty difficult. You'd probably be more or less than 100% at some point, you could use credit and create a leveraged over 100% position, or keep some amount of money not in stocks to pay for your regular needs and expenses which would put you at...
by JoMoney
Tue Sep 23, 2014 6:05 am
 
Forum: Investing - Theory, News & General
Topic: Could one theoretically be 100% stocks your whole life?
Replies: 43
Views: 2752

Re: Are you using a Martingale strategy and don't know it?

I see most mean-reversion trading strategies as a form of a martingale (or similar) betting strategy. Momentum type strategies tend to be like a reverse-martingale (bet more when you win). The reverse-martingale isn't usually intuitive to people because people tend to underestimate how frequent long...
by JoMoney
Tue Sep 23, 2014 5:39 am
 
Forum: Investing - Theory, News & General
Topic: Are you using a Martingale strategy and don't know it?
Replies: 28
Views: 2160

Re: Two Fund real Lazy Portfolio?

That picture (and the related article) are interesting. http://seekingalpha.com/article/108867-the-capitalism-distribution-fat-tails-in-motion ...You may be wondering how the Russell 3000 index can have an overall positive rate of return if the average annualized return for all stocks is negative. T...
by JoMoney
Sun Sep 21, 2014 4:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Two Fund real Lazy Portfolio?
Replies: 36
Views: 4557

Re: Two Fund real Lazy Portfolio?

^ Right. It's good to see that even 30 stocks have relatively low standard deviation. I was also thinking about the skewness issue. I'm not sure if 30 stocks would be enough for that. But an investor probably doesn't need hundreds either. 50 is a nice round number. :) So the standards for building ...
by JoMoney
Sat Sep 20, 2014 8:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: Two Fund real Lazy Portfolio?
Replies: 36
Views: 4557

Re: Why is there no mutual fund that truly behaves like rent

The iShares Residential Real Estate Capped ETF focuses on residential real estate. The .48% ER seems high to me though for a fund that only has 36 stocks you could buy on your own. I don't know any names off hand, but there are lots of non-traded REITs sold as investments out there. Generally they'r...
by JoMoney
Sat Sep 20, 2014 3:23 am
 
Forum: Investing - Theory, News & General
Topic: Why is there no mutual fund that truly behaves like rental?
Replies: 36
Views: 2470

Re: Two Fund real Lazy Portfolio?

^ The benefits of diversification have been somewhat oversold IMO. Going from owning 30 companies across a range of industries to 100 companies makes a huge difference. Going from 100 companies to 500 companies a bit less but is still probably important. Once you own a diversified collection of 500...
by JoMoney
Sat Sep 20, 2014 12:32 am
 
Forum: Investing - Help with Personal Investments
Topic: Two Fund real Lazy Portfolio?
Replies: 36
Views: 4557

Re: AliBaba

... Waiting for analogies to the story of Ali Baba, whos greedy (but well-to-do) brother went to take all the riches he could grab from the secret cave but couldn't figure out how to get out and lost everything.
by JoMoney
Fri Sep 19, 2014 10:42 pm
 
Forum: Investing - Theory, News & General
Topic: AliBaba
Replies: 128
Views: 8180

Re: Alibaba is NOT coming to an index near you

Regardless of how the stock performs, as an investment it presents unique risks that someone might choose not to be exposed to for very good reasons. In my mind I'm hearing my mom's voice telling me "If everyone else jumped off a cliff would you?" ... "If everyone else is buying Aliba...
by JoMoney
Fri Sep 19, 2014 8:36 pm
 
Forum: Investing - Theory, News & General
Topic: Alibaba is NOT coming to an index near you
Replies: 33
Views: 3646

Re: Two Fund real Lazy Portfolio?

I don't see why investors need domestic stocks . You can build a perfectly good portfolio using only total international (VXUS) and total bond (BND). :beer I think there's a lot of worse choices you could make. :sharebeer There are probably finance pundits (e.g. Mebane Farber) that would agree with...
by JoMoney
Fri Sep 19, 2014 8:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Two Fund real Lazy Portfolio?
Replies: 36
Views: 4557

Re: Two Fund real Lazy Portfolio?

... So Apple yes, but Samsung no? GM yes, but Daimler no? Pfizer definitely, until it buys Astrazeneca and then no thanks? Equity in these companies all belongs to the same asset class. You don't necessarily need to hold them all, but limiting yourself to half the market seems like an oddly concent...
by JoMoney
Fri Sep 19, 2014 5:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Two Fund real Lazy Portfolio?
Replies: 36
Views: 4557

Re: Alibaba is NOT coming to an index near you

I found this blog post about the Alibaba IPO interesting, http://www.ethicssage.com/2014/09/beware-of-the-hidden-risks-in-owning-shares-in-alibabas-ipo.html Mostly it's just echoing the same sorts of cautions discussed in this thread. Regarding the regulators, it points out that in the U.S.: ...They...
by JoMoney
Fri Sep 19, 2014 9:03 am
 
Forum: Investing - Theory, News & General
Topic: Alibaba is NOT coming to an index near you
Replies: 33
Views: 3646

Re: Alibaba is NOT coming to an index near you

Well, that's all over my head, and I confess I had not even heard of Alibaba until I saw this thread, and have zero opinion on whether it is a good investment or not. But if it is a stock, and it trades on the world markets somewhere, why would it not appear in the world stock indices? I gather the...
by JoMoney
Fri Sep 19, 2014 7:12 am
 
Forum: Investing - Theory, News & General
Topic: Alibaba is NOT coming to an index near you
Replies: 33
Views: 3646

Re: Two Fund real Lazy Portfolio?

...I just read the Motley Fool interview with Mr. Bogle and also was struck by the simplicity of the VG Balanced Index. If you own it in Admiral, it's an er of 0.09%. Total Stock and Total Bond together come to an er of 0.13% in Admiral. One thought is how would it be to go with the Balanced Index ...
by JoMoney
Fri Sep 19, 2014 5:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Two Fund real Lazy Portfolio?
Replies: 36
Views: 4557

Re: Australia and New Zealand

I flew from Sydney to Ayers Rock and rented a car there. The car gave me time to explore the area on my own and at my own pace instead of booking tours at specific times. I've been to Australia now 3 times and I would go again and again. Sorry.. I misunderstood the statement "Book a roundtrip ...
by JoMoney
Fri Sep 19, 2014 4:59 am
 
Forum: Personal Consumer Issues
Topic: Australia and New Zealand
Replies: 34
Views: 2601

Re: What evidence would prove the Boglehead mentality wrong?

Doing nothing is not always cheaper than doing something. If you have a leaky roof, and don't fix it to save money, eventually you will have a rotted frame. Doing no research can lead one to invest in companies that lose money. In this case that is worse than doing research, realizing the company l...
by JoMoney
Thu Sep 18, 2014 5:18 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 109
Views: 7637

Re: Australia and New Zealand

Actually Uluru is surprisingly easy to see: Book a roundtrip flight from Sydney, book a hotel there for 3 nights, rent a car, go everywhere on your own with 2 full days of hiking. Then you will understand such posts about market dips like this one on the Uluru omen: http://www.bogleheads.org/forum/...
by JoMoney
Thu Sep 18, 2014 4:45 pm
 
Forum: Personal Consumer Issues
Topic: Australia and New Zealand
Replies: 34
Views: 2601

Re: M*'s Samuel Lee on Dividend ETF and Factor Investing

iShare's calls this fund a "CORE" fund, but the fund has an explicit concentration policy and it's "non diversified". Seems a bit odd to give it a name implying suitability as the "CORE" of a portfolio.
by JoMoney
Thu Sep 18, 2014 4:56 am
 
Forum: Investing - Theory, News & General
Topic: M*'s Samuel Lee on Dividend ETF and Factor Investing
Replies: 5
Views: 644

Re: The dangerous practice of rebalancing...

...John Bogle, doesn't think rebalancing is important, but then we could analyze why Bogle is wrong about this obvious fact, if it's really obvious (not to say he couldn't possibly be). Pending the outcome, I would still go with the intuitive answer that in some market dynamics rebalancing helps an...
by JoMoney
Wed Sep 17, 2014 5:06 pm
 
Forum: Investing - Theory, News & General
Topic: The dangerous practice of rebalancing...
Replies: 191
Views: 14032

Re: Bond Fund Duration ?

The answer is yes. Portfolio duration is a (dollar-weighted) linear combination of the fund durations (which are themselves a linear combination of constituent bond durations). If you want the duration to be 10 in year 1, 9 in year 2, 8 in year 3, etc. all you have to do is rebalance your bond fund...
by JoMoney
Wed Sep 17, 2014 5:44 am
 
Forum: Investing - Theory, News & General
Topic: Bond Fund Duration ?
Replies: 13
Views: 889

Re: Bond Fund Duration ?

Is there some way to use bond funds and an investor be able to manage it in such a way as to expect their duration to get to zero at some certain date and expect they'll have earned a fair amount of interest AND return of principal? Or would this only be possible with individual bonds? Although it ...
by JoMoney
Wed Sep 17, 2014 3:35 am
 
Forum: Investing - Theory, News & General
Topic: Bond Fund Duration ?
Replies: 13
Views: 889

Re: Premiums: Size, Value, Beta, Momentum

It should also be noted that the SmB (size) premium has not exited since FF published their 1993 research paper. Don't think this is quite true - if I understand what you are saying. This is what I get. 1993-2013 annualized return Vanguard 500 = 9.16% DFA US Microcap = 12.42% A 3.26% annualized ret...
by JoMoney
Wed Sep 17, 2014 3:23 am
 
Forum: Investing - Theory, News & General
Topic: Premiums: Size, Value, Beta, Momentum
Replies: 40
Views: 2834

Re: Bond Fund Duration ?

Given that a bond funds duration is perpetual, and there is no maturity date where one can expect to receive their principal back, if someone was relying/expecting to be able to spend their bond fund dividends and then sell their fund at a future date to receive their principal back, they may be unp...
by JoMoney
Tue Sep 16, 2014 5:12 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund Duration ?
Replies: 13
Views: 889

Re: Ack! Bought a Dividend!

Is this "tongue in cheek"? A dividend is an "expense" because it might have a taxable portion? Darn those pesky dividends. Stop giving me money! I would actually like this question answered. I see this mentioned occasionally and just don't understand what the issue is. Someone i...
by JoMoney
Tue Sep 16, 2014 4:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Ack! Bought a Dividend!
Replies: 26
Views: 2463

Re: Alibaba is NOT coming to an index near you

LazyNihilist wrote:Interesting. Would it be included in either CRSP US Total Market Index OR FTSE Global All Cap ex US Index?

Alibaba will be an ADR and will not be eligible for inclusion under CRSP's methodology for US Total Market.
by JoMoney
Tue Sep 16, 2014 7:45 am
 
Forum: Investing - Theory, News & General
Topic: Alibaba is NOT coming to an index near you
Replies: 33
Views: 3646

Re: Premiums: Size, Value, Beta, Momentum

Not really sure, just reading about what I think your talking about now... I think this "investment factor" is CMA "conservative minus aggressive" or "the accrual anomaly" http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2287202 http://papers.ssrn.com/sol3/papers.cfm?...
by JoMoney
Tue Sep 16, 2014 6:12 am
 
Forum: Investing - Theory, News & General
Topic: Premiums: Size, Value, Beta, Momentum
Replies: 40
Views: 2834

Re: Premiums: Size, Value, Beta, Momentum

There are several methods of looking at momentum investing. The Relative Strength indicator is one.
by JoMoney
Sun Sep 14, 2014 5:18 pm
 
Forum: Investing - Theory, News & General
Topic: Premiums: Size, Value, Beta, Momentum
Replies: 40
Views: 2834
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