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Re: bond markets defy experts

I rationalized my dive into Treasuries by purchasing STRIPS that will mature (as best I could figure) roundabout when I plan to start spending the money. The worst that can happen if rates go up, I reasoned, is that I missed the opportunity to purchase Treasuries with a higher yield down the road. I...
by Lbill
Tue May 08, 2012 7:08 pm
 
Forum: Investing - Theory, News & General
Topic: bond markets defy experts
Replies: 95
Views: 5193

Re: Buffett: "I would totally avoid buying [bonds]."

Nice post gw. Well reasoned and well balanced (between equities and either cash or bonds). :D
by Lbill
Tue May 08, 2012 4:57 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: "I would totally avoid buying [bonds]."
Replies: 40
Views: 4757

Re: bond markets defy experts

As I pointed out in this thread only 2% of the experts at the 2012 Bespoke Roundtable were bullish on bonds, while 81% were bearish. So, I promptly went out and bought me a buncha treasury bonds. Nothing like an expert consensus to inform you what to invest in (whatever they were bearish on). Of cou...
by Lbill
Tue May 08, 2012 4:53 pm
 
Forum: Investing - Theory, News & General
Topic: bond markets defy experts
Replies: 95
Views: 5193

Re: The Rise and Fall of Shiller PE/10

This is simple and widely understood, but also useless. Nobody knows for certain which outcome will happen. What is certain is that if the Fed had not intervened massively then PE10 < 10 would have been seen in 2009. And boy, I was there with open arms waiting for it. On the exact day in March, 200...
by Lbill
Tue May 08, 2012 4:00 pm
 
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 4142

Re: Buffett: "I would totally avoid buying [bonds]."

Buying bonds has never been a BRK thing. Buffett has always operated BRK like an endowment with an infinite time horizon. If that's your model, you are an equity investor or an investor in alternative asset classes like real estate, timber, private equity, hedge funds, anything but bonds. Unfortunat...
by Lbill
Tue May 08, 2012 3:55 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: "I would totally avoid buying [bonds]."
Replies: 40
Views: 4757

Re: Why not just make bond allocation 100% inflation-indexed

Swensen recommends a 50/50 split between nominal treasuries and TIPS. You might want to read what he has to say.
by Lbill
Tue May 08, 2012 1:31 pm
 
Forum: Investing - Theory, News & General
Topic: Why not just make bond allocation 100% inflation-indexed?
Replies: 12
Views: 2025

Re: Buffett: "I would totally avoid buying [bonds]."

Buffett is a nice guy and an investing legend. But, if you live long enough, just about everybody finally hits stall speed. Jim Cramer on BRK: I didn't want to write this piece. I think the world of Warren Buffett, and he has made money for hundreds of thousands of people, including many who are now...
by Lbill
Tue May 08, 2012 11:39 am
 
Forum: Investing - Theory, News & General
Topic: Buffett: "I would totally avoid buying [bonds]."
Replies: 40
Views: 4757

Re: bogleheads.org under attack - may cause login problems

Is HACKER an acceptable password? :happy
by Lbill
Tue May 08, 2012 11:19 am
 
Forum: Forum Issues and Administration
Topic: bogleheads.org attacked - some accounts hijacked
Replies: 107
Views: 13412

Re: Gold is ready to fall

Gold down about $37/oz. today to $1,600. A gift, so I picked up another 100 shares of IAU. If it goes down tomorrow, I'll pick up another 100. As long as there are central banks creating monopoly money out of thin air, gold is a winning investment, IMO. Even if it isn't, the competition isn't exactl...
by Lbill
Tue May 08, 2012 11:13 am
 
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 9953

Re: The Rise and Fall of Shiller PE/10

One of the primary problems with P/E10 timing as generally put forth is you cannot price an investment in isolation. The price of competing investments must be taken into account. Jumping from stocks to bonds at P/E10 = x when bonds are returning 2% real is different from when bonds are returning -...
by Lbill
Tue May 08, 2012 9:37 am
 
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 4142

Re: If rich people don't buy funds or ETFs why should you?

I'm a very rich man and I'm offered an opportunity to invest in something that might pay off, but it seems that every so often it might unpredictably lose 50% or more and there have been periods as long as 20 years when this investment lost money or didn't make any at all. I think I'd look for a bet...
by Lbill
Mon May 07, 2012 10:31 pm
 
Forum: Investing - Theory, News & General
Topic: If rich people don't buy funds or ETFs why should you?
Replies: 79
Views: 6293

Re: Gold is ready to fall

If you're investing in dollar-denominated investments, then you're investing in the dollar. You better hope it's worth something in 100 years; otherwise, your $10 million dollars in equity won't buy you a Starbucks. I'll take an ounce of gold and let you take $1650 in U.S. stocks and meet you in 100...
by Lbill
Mon May 07, 2012 9:49 pm
 
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 9953

Re: The Rise and Fall of Shiller PE/10

The apple sellers were emblematic of the Depression and got so much press coverage precisely because they were often white-collar workers who'd had good jobs. I saw some old news items that indicated that apple sellers made around $22/month, equivalent to $330/month today. I don't think they were b...
by Lbill
Mon May 07, 2012 9:38 pm
 
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 4142

Re: If rich people don't buy funds or ETFs why should you?

A related question: How many people ever actually became wealthy owning stocks, and were able to hold onto it (besides Warren Buffett)? Actually, I'd be willing to bet that a lot more became wealthy by owning and managing real assets such as land, real estate, or a business. Actually, Warren Buffett...
by Lbill
Mon May 07, 2012 12:13 pm
 
Forum: Investing - Theory, News & General
Topic: If rich people don't buy funds or ETFs why should you?
Replies: 79
Views: 6293

Re: Withdrawal Rates, Savings Rates, and Valuation-Based Ass

Here is a recent article in the Journal of Financial Planning pertaining to allocation according to PE 10 http://www.fpanet.org/journal/WithdrawalRatesSavingsRatesandValuation/ This article provides favorable evidence based on the historical record for clients to obtain improved retirement planning...
by Lbill
Mon May 07, 2012 11:20 am
 
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 4142

If rich people don't buy funds or ETFs why should you?

Most interesting, however, are the differences between the affluent, rich and superrich. More than two thirds of respondents worth between $500,000 and $1 million invest in exchange-traded funds. And more than half of them invest in mutual funds. Yet only 1% of respondents worth $5 million to $10 m...
by Lbill
Mon May 07, 2012 10:56 am
 
Forum: Investing - Theory, News & General
Topic: If rich people don't buy funds or ETFs why should you?
Replies: 79
Views: 6293

Re: Gold is ready to fall

Here's an interesting question posed by Richard Russell: If you had a chance to leave something for your descendants to be opened 100 years from now, would you leave them a wad of dollar bills or some gold coins? I might even include some shares of GM as another choice. There's a pretty good chance ...
by Lbill
Mon May 07, 2012 10:20 am
 
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 9953

Re: The Rise and Fall of Shiller PE/10

I realized I hadn't accounted for dividends in calculating the returns of the S&P over these periods of declining PE/10. If I did it right, here are the total returns (including dividends). Returns are real (inflation adjusted) over the entire period, not annual returns: 6/1901 - 12/1920: +2.4% ...
by Lbill
Mon May 07, 2012 10:04 am
 
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 4142

Re: The Rise and Fall of Shiller PE/10

I was interested in how money invested in the S&P500 fared over these periods from the peak of PE/10 until the single digit low was finally hit. These are real (inflation adjusted) returns. Suffice it to say you would have been a lot better off with the money under the mattress: 6/1901 - 12/1920...
by Lbill
Sun May 06, 2012 7:30 pm
 
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 4142

The Rise and Fall of Shiller PE/10

Looking at the chart of the monthly values for the Shiller PE/10 (CAPE) metric, one can see that every previous peak in PE/10 was eventually followed by a low in the single digits many years later, before the index started back up on a sustainable path. Here they are: 6/1901....25.24 12/1920....4.78...
by Lbill
Sun May 06, 2012 12:46 pm
 
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 4142

Re: Commodities: Positive Returns = Inconclusive

It's true that nobody can guarantee that an allocation to commodities or gold will deliver when it's supposed to. In addition to not investing in commodities, one could decide to not invest dead money into auto or home insurance and invest that money in stocks instead. After all, how often does your...
by Lbill
Sat May 05, 2012 4:29 pm
 
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 2583

Re: Commodities: Positive Returns = Inconclusive

When there was high inflation in the 1970s gold was a much better portfolio hedge than commodities. For example, the real compound annual return of gold from 1972-1980 was 22.5%, and for commodities it was 8.8%. An investment divided between the S&P500 and commodities or gold required twice the ...
by Lbill
Sat May 05, 2012 3:27 pm
 
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 2583

Re: Commodities: Positive Returns = Inconclusive

LBill, the volatility of CCF and gold are way too high to be good inflation hedge in short term like quarterly or annually. As I showed the correlation for CCF and inflation rises over time, as one would expect as commodities are component of inflation, an input in production. Gold is not, There re...
by Lbill
Sat May 05, 2012 2:07 pm
 
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 2583

Re: Commodities: Positive Returns = Inconclusive

There seem to be three time periods in which gold and commodities acted differently relative to stocks and bonds: 1972-1980 (inflationary), 1981-2000 (deflationary), and 2001-2011 (mixed). The first of these was one of rising inflation and interest rates. Stocks and bonds fared poorly, while gold an...
by Lbill
Sat May 05, 2012 10:24 am
 
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 2583

Re: Commodities: Positive Returns = Inconclusive

Gold fell about 70% in value while inflation was running at 4% a year for about 25 years, so IMO that rules out gold as inflation hedge. We don't see that with commodities. From 1981-2005 (25 years) gold did have a compound annual real return of -4%, so it did lag CPI on average by 4% per year. Int...
by Lbill
Fri May 04, 2012 6:24 pm
 
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 2583

Re: Commodities: Positive Returns = Inconclusive

Even though gold (and commodities) are not good short-term CPI inflation hedges, the price of gold is correlated 0.48 with CPI-U over the time period 1972-2011 (Simba), while commodity futures (DJ-AIG) is correlated 0.22, base on annual returns. So there's no basis for claiming that gold is not as g...
by Lbill
Fri May 04, 2012 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 2583

Re: Commodities: Positive Returns = Inconclusive

Lbill Not true at all. While I have no problem with people owning an allocation to gold, gold DOES NOT HEDGE inflation it is not a factor in inputs to inflation. Thus IMO broader based CCF is a better alternative, but to each his own. Best wishes Larry One tactic of skilled debaters is to shift the...
by Lbill
Fri May 04, 2012 10:54 am
 
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 2583

Re: Penfed Credit Card breached (again)!

Banks replace "compromised" cards everyday. It doesn't necessarily mean your information was even stolen. Basically, a merchant or card processor will notify Visa and MasterCard when they think their database of card numbers was breached. Visa and MasterCard then pass along those numbers ...
by Lbill
Fri May 04, 2012 9:54 am
 
Forum: Personal Finance (Not Investing)
Topic: Penfed Credit Card breached (again)!
Replies: 3
Views: 916

Re: Gold is ready to fall

Fat lady ain't singing yet.

I've noticed they aren't that fat these days. Looking pretty good - how about the one on "Dancing with the Stars"? Za-zoom!
by Lbill
Fri May 04, 2012 9:48 am
 
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 9953

IPad 3 top-rated and can fry eggs too

Consumer Reports labs rates IPad 3 tops, has the best screen they've ever seen, and heats up to 120-degrees for serious gamers. Entertainment and egg fryer all in one - very useful. http://money.msn.com/money-video?vid=d17a4104-6dcd-4188-bd4d-65bd23089be0%26tab=Consumer%20Reports&from=gallery_en...
by Lbill
Fri May 04, 2012 9:45 am
 
Forum: Personal Consumer Issues
Topic: IPad 3 top-rated and can fry eggs too
Replies: 3
Views: 870

Penfed Credit Card breached (again)!

I just received an email from PenFed alerting me that my rewards credit card has once again been breached. This happened just over a year ago and my card was replaced. I guess this is becoming an annual event. Dear Member: Visa Fraud Control has notified us that your Pentagon Federal Credit Union (P...
by Lbill
Fri May 04, 2012 9:17 am
 
Forum: Personal Finance (Not Investing)
Topic: Penfed Credit Card breached (again)!
Replies: 3
Views: 916

Re: Commodities: Positive Returns = Inconclusive

Unfortunately for CCFs, everything Larry says about commodities applies even better to owning gold (portfolio diversification benefit). And yet we are told that investing in gold is only for people who wear tin hats.
by Lbill
Fri May 04, 2012 9:07 am
 
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 2583

Re: Last of series on diversification, sector/country funds

Larry- In your article you say: Investors are rewarded with higher expected returns (risk premiums) for taking systematic risks, risks which can't be diversified away. With stocks, there are three types of risk: Beta (exposure to the overall stock market) Size (exposure to small-cap stocks) Value (e...
by Lbill
Fri May 04, 2012 9:00 am
 
Forum: Investing - Theory, News & General
Topic: Last of series on diversification, sector/country funds
Replies: 21
Views: 1225

Re: Gold is ready to fall

I firmly believe that gold will go up in price, unless it goes down. I would strongly advise to buy in the case of the former and sell in the case of the latter.
by Lbill
Thu May 03, 2012 9:05 pm
 
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 9953

I just found out I'm invested in Farmland!

Investments in farmland provide attractive total returns. Between 1970 and 2009, agricultural land values, as measured by the USDA’s ERS database, have outperformed both domestic stocks and bonds on an annualized basis, returning an annual average of 10.25% vs. 6.24% for the S&P 500 and 7.3% fo...
by Lbill
Wed May 02, 2012 6:48 pm
 
Forum: Investing - Theory, News & General
Topic: I just found out I'm invested in Farmland!
Replies: 2
Views: 619

Re: What safe return would you take to forego stocks?

Leif Eriksen wrote:LBill - Nominal or real? You don't say, so I don't know how to respond. Looks like a blown poll.

Nominal
by Lbill
Wed May 02, 2012 6:07 pm
 
Forum: Investing - Theory, News & General
Topic: What safe return would you take to forego stocks?
Replies: 29
Views: 1456

Re: What safe return would you take to forego stocks?

Looks like most respondents so far wouldn't be willing to give up their high-risk stocks for less than a minimum 5%-6%% low-risk return. Given that the expected return from stocks going forward from many experts is in the same neighborhood, I guess that proves the "lottery effect" is alive...
by Lbill
Wed May 02, 2012 3:57 pm
 
Forum: Investing - Theory, News & General
Topic: What safe return would you take to forego stocks?
Replies: 29
Views: 1456

What safe return would you take to forego stocks?

How much would you have to earn from low-risk investments (nominal), such as CDs, these days in order to invest in them rather than stocks?
by Lbill
Wed May 02, 2012 9:19 am
 
Forum: Investing - Theory, News & General
Topic: What safe return would you take to forego stocks?
Replies: 29
Views: 1456

Re: Alternatives to Long Term Care Insurance

I suspect that most who at end of life choose when to die are not classified suicides. I've limited data, but this is true of the handful of specifics I'm aware of. It has to be way more than 12 in 100,000. Trusted medical professionals and family members help out. Re LTCI - seems to me like dental...
by Lbill
Tue May 01, 2012 8:05 pm
 
Forum: Investing - Theory, News & General
Topic: Alternatives to Long Term Care Insurance
Replies: 21
Views: 1890

Re: Alternatives to Long Term Care Insurance

LTCI isn't all you need - you need to be sure there's someone who can activate it in the event you need LTC because your marbles fall out of your head. How ironic if you planned and paid and never got the benefits because there was no-one around to call the insurance company, eh? I'm sure they'd be ...
by Lbill
Tue May 01, 2012 6:34 pm
 
Forum: Investing - Theory, News & General
Topic: Alternatives to Long Term Care Insurance
Replies: 21
Views: 1890

Re: Burton Malkiel on CNBC

You gotta take a ticket to get in line with all the experts who hate bonds. That makes them a screaming buy, IMO.
by Lbill
Tue May 01, 2012 5:12 pm
 
Forum: Investing - Theory, News & General
Topic: Burton Malkiel on CNBC
Replies: 12
Views: 1700

Re: Greenspan "Stocks are Cheap"

We followed easy Al off the cliff once, and once is enough.
by Lbill
Tue May 01, 2012 5:08 pm
 
Forum: Investing - Theory, News & General
Topic: Greenspan "Stocks are Cheap"
Replies: 25
Views: 1799

Alternatives to Long Term Care Insurance

The costs of elderly healthcare (including assisted living and nursing home care) may be the greatest single challenge faced by retirees affecting their financial planning. One approach is to purchase long term care insurance, but many don't feel comfortable with this option because of high premiums...
by Lbill
Tue May 01, 2012 10:00 am
 
Forum: Investing - Theory, News & General
Topic: Alternatives to Long Term Care Insurance
Replies: 21
Views: 1890

Re: Retirees: How to add $340,000 to retirement savings

I think it's a good idea to own a home for retirement. After all, it's a well-known fact that real estate never loses value. :oops:
by Lbill
Mon Apr 30, 2012 10:05 am
 
Forum: Investing - Theory, News & General
Topic: Retirees: How to add $340,000 to retirement savings
Replies: 65
Views: 6811

Re: Retirees: How to add $340,000 to retirement savings

Since retirees aren't making a dime on their savings these days, Scott has been promoting ideas for retirees to effectively "add" to their portfolio net worth by looking for ways to find money, such as trading cars The Jumbo CD in your garage , reverse mortgages Reverse mortgages - their t...
by Lbill
Sun Apr 29, 2012 5:09 pm
 
Forum: Investing - Theory, News & General
Topic: Retirees: How to add $340,000 to retirement savings
Replies: 65
Views: 6811

Retirees: How to add $340,000 to retirement savings

Scott Burns reports a simple way for some retirees to add the equivalent of $340,000 to their retirement savings - become a renter: In my new book with economist Laurence J. Kotlikoff (“The Clash of Generations,” MIT Press) we show that a retiring middle income couple can have lifetime discretionary...
by Lbill
Sat Apr 28, 2012 8:37 pm
 
Forum: Investing - Theory, News & General
Topic: Retirees: How to add $340,000 to retirement savings
Replies: 65
Views: 6811

Re: Article that highest risk is not highest reward

Not exactly a new finding that risk (defined as market risk, or beta) is not related to returns. Fama & French found this in 1992: Our tests do not support the central production of the [CAPM], that average stock returns are positively related to beta. http://www.bengrahaminvesting.ca/Research/P...
by Lbill
Sat Apr 28, 2012 11:49 am
 
Forum: Investing - Theory, News & General
Topic: Article that highest risk is not highest reward
Replies: 45
Views: 2185

Re: Article that highest risk is not highest reward

larryswedroe wrote:FWIW
Spoke with a leading researcher on this issue other day, though in limited light. Was related to small value. Once you used multiple screens for value, not just BtM, screening for low beta added no value at all
Larry

What about the reverse?
by Lbill
Sat Apr 28, 2012 10:27 am
 
Forum: Investing - Theory, News & General
Topic: Article that highest risk is not highest reward
Replies: 45
Views: 2185

Re: Top five regrets of the dying

If you had the choice between dying with regret, or having the regret squeezed out of you from suffering, which would you choose?
by Lbill
Fri Apr 27, 2012 10:04 am
 
Forum: Personal Consumer Issues
Topic: Top five regrets of the dying
Replies: 83
Views: 8294

Re: [Poll] My philosophy on SPIAs

One concern not listed in the poll, and frankly the primary one that is causing me to delay annuitizing, is the naming of a joint annuitant. I'm presently single but may not remain so, and I'd want something to go to my spouse if I die. My understanding is that you're locked into the annuity option ...
by Lbill
Fri Apr 27, 2012 9:55 am
 
Forum: Investing - Theory, News & General
Topic: [Poll] My philosophy on SPIAs
Replies: 65
Views: 3367
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