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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...

Nice post gw. Well reasoned and well balanced (between equities and either cash or bonds).

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...

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...

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...

Swensen recommends a 50/50 split between nominal treasuries and TIPS. You might want to read what he has to say.

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...

Is HACKER an acceptable password?

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...

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 -...

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...

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...

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...

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...

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...

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...

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 ...

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% ...

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...

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...

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...

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 ...

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...

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...

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...

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...

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...

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 ...

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!

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...

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...

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.

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...

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.

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...

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

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...

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?

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...

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 ...

You gotta take a ticket to get in line with all the experts who hate bonds. That makes them a screaming buy, IMO.

We followed easy Al off the cliff once, and once is enough.

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...

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.

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...

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...

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...

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?

If you had the choice between dying with regret, or having the regret squeezed out of you from suffering, which would you choose?

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 ...