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Re: Financial Adviser usage? (vs. 3-fund)

I've been a Boglehead since about 2001. I've read all the books and really like investing. I've enjoyed all the time I devoted to it. I put together a solid do it yourself all Vanguard asset allocation and stuck to it. Even rebalanced into the 2008'crisis. But the more I read, the more I started to ...
by Random Walker
Sun Jul 20, 2014 11:27 am
 
Forum: Investing - Theory, News & General
Topic: Investment Advisor usage? (vs. 3-fund)
Replies: 9
Views: 1314

Re: Persistence of SV performance

Sdsailing, If you are really interested in the true costs and benefits of tilting through an advisor, there are many more factors to consider than the advisor AUM fee and the increased ER. The AUM and ER are easy to quantify and certain. But there are certainly other costs/benefits that are less obv...
by Random Walker
Tue Jul 15, 2014 4:50 pm
 
Forum: Investing - Theory, News & General
Topic: Persistence of SV performance
Replies: 71
Views: 3915

Re: "Being Done" Saving: White Coat Investor blog post

RunningRad wrote "but I often get the feeling that the goalposts are moving further back and at the same time, someone is taking the air out of the football". I couldn't agree more. I think Bill Bernstein once wrote that the goal of retirement planning was to avoid eating cat food in our l...
by Random Walker
Fri Jun 27, 2014 3:10 pm
 
Forum: Investing - Theory, News & General
Topic: "Being Done" Saving: White Coat Investor blog post
Replies: 47
Views: 7797

William Bernstein's New Book Now On Sale

Just spotted William Bernstein's new book : Rational Expectations: Asset Allocation for Investing Adults for sale on Amazon. I believe this is Dr Bernstein's 21st century version of Intelligent Asset Allocator, one of my favorite all time investing books. Eager to read it and eager to hear from othe...
by Random Walker
Mon Jun 02, 2014 10:52 pm
 
Forum: Investing - Theory, News & General
Topic: William Bernstein's New Book Now On Sale
Replies: 7
Views: 1608

Re: Social Security at 66 vs. 70: A Bird in the Hand?

Definitely read William Bernstein's The Ages of the Investor
by Random Walker
Mon Jun 02, 2014 4:35 pm
 
Forum: Investing - Theory, News & General
Topic: Social Security at 66 vs. 70: A Bird in the Hand?
Replies: 54
Views: 4122

Re: Vanguard or DFA? "Vanguard, in a landslide..."

I think it would reasonably make sense that the size of the size and value premiums should vary over time, but they should always be positive. Otherwise increased risk wouldn't yield increased expected return. More reason to create a plan and stick to it through thick and thin.

Dave
by Random Walker
Sun Jun 01, 2014 10:35 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard or DFA? "Vanguard, in a landslide..."
Replies: 54
Views: 4701

Re: Vanguard or DFA? "Vanguard, in a landslide..."

Calm man,
I agree that costs are certain and all the other benefits are only potential. But there are a lot of those potential benefits. Performance over any single relatively short time period is meaningless. You may be right, but you also may not.

Dave
by Random Walker
Sat May 31, 2014 11:17 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard or DFA? "Vanguard, in a landslide..."
Replies: 54
Views: 4701

Re: Vanguard or DFA? "Vanguard, in a landslide..."

I was a DIY all vanguard portfolio for about 10 years. Then I changed to an all DFA portfolio through an advisor. I read these DFA v. VG comparisons and felt they were all a bit lacking. I think this is especially true for the taxable investor. There are differences that are hard to measure I think....
by Random Walker
Sat May 31, 2014 9:09 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard or DFA? "Vanguard, in a landslide..."
Replies: 54
Views: 4701

Re: Does a small value tilt reduce porfolio volatility?

The correlations between the risk factors are about: Market to small: 0.41 Market to value: 0.14 Small to value: 0.14 So the addition of small value has the potential to smooth portfolio ride, but it is a more risky asset class. So it may dampen portfolio volatility at times and amplify it at times....
by Random Walker
Fri May 23, 2014 5:24 pm
 
Forum: Investing - Theory, News & General
Topic: Does a small value tilt reduce porfolio volatility?
Replies: 53
Views: 3568

Re: An Interview with Charles Ellis

I agree, the book is invaluable for someone who wants to be serious with their money. I would expect it to be on anyone's list of top investing books.

Dave
by Random Walker
Fri May 23, 2014 12:33 am
 
Forum: Investing - Theory, News & General
Topic: An Interview with Charles Ellis
Replies: 5
Views: 1063

Re: An Interview with Charles Ellis

Ellis turned that paper into a classic book, Winning The Loser's Game. A new edition has come out within the last year or so. His book is one of my most favorites. Each time I've read it, I come away appreciating that the true long term enemy is inflation and I want to increase my % stocks.

Dave
by Random Walker
Thu May 22, 2014 2:06 pm
 
Forum: Investing - Theory, News & General
Topic: An Interview with Charles Ellis
Replies: 5
Views: 1063

Re: Factoring TLH Into Decision Whether To Use An Advisor

Dale G,
But 30 years down the road, you sell that appreciated TSM and minimize tax by offsetting the first 5K in capital gains with the loss from long ago. Yes, eventually you will pay the tax on a lower cost basis, but you have deferred the tax to the future
by Random Walker
Mon May 19, 2014 10:37 pm
 
Forum: Investing - Theory, News & General
Topic: Factoring TLH Into Decision Whether To Use An Advisor
Replies: 34
Views: 1302

Re: Factoring TLH Into Decision Whether To Use An Advisor

I believe you can offset up to $3000 ordinary income with capital losses. But I don't think there is any limit to how much long term capital gains can be offset by long term capital losses. I believe the 3K income issue is relatively minor in the big picture. Please correct my thinking if I am wrong...
by Random Walker
Mon May 19, 2014 6:35 pm
 
Forum: Investing - Theory, News & General
Topic: Factoring TLH Into Decision Whether To Use An Advisor
Replies: 34
Views: 1302

Re: Factoring TLH Into Decision Whether To Use An Advisor

Steve-14, At the limits of my knowledge here, but when you take out that $100 in retirement, there will be taxes to pay on the capital gain. If instead you offset that gain with a previously accumulated loss, you don't pay a tax until sometime in the future when you start selling and realizing capit...
by Random Walker
Mon May 19, 2014 6:11 pm
 
Forum: Investing - Theory, News & General
Topic: Factoring TLH Into Decision Whether To Use An Advisor
Replies: 34
Views: 1302

Re: Factoring TLH Into Decision Whether To Use An Advisor

Steve 14,
Yes it is a wash in the sense that the cost basis is lowered. But the tax is delayed. The result is that more money stays with the investor and is invested until the delayed tax is paid. That is why TLH is referred to as an interest free loan from the government.

Dave
by Random Walker
Mon May 19, 2014 2:27 pm
 
Forum: Investing - Theory, News & General
Topic: Factoring TLH Into Decision Whether To Use An Advisor
Replies: 34
Views: 1302

Re: Factoring TLH Into Decision Whether To Use An Advisor

The TLH papers I've seen, heard mentioned on this board, and seen referenced in some books are by Arnott, Belkin, Ye of First Quadrant. Most recently saw these guys referenced in the book Successful Investing is a Process by Lussier. He also references another TLH study, possibly the TLH study from ...
by Random Walker
Mon May 19, 2014 1:52 pm
 
Forum: Investing - Theory, News & General
Topic: Factoring TLH Into Decision Whether To Use An Advisor
Replies: 34
Views: 1302

Factoring TLH Into Decision Whether To Use An Advisor

Of course this Bogleheads board is predominantly comprised of DIY investors. But the subject of using an advisor comes up periodically. I'm wondering if people consider tax loss harvesting in their decision to use or not use an advisor. It appears that aggressive TLH throughout the year on a specifi...
by Random Walker
Mon May 19, 2014 11:29 am
 
Forum: Investing - Theory, News & General
Topic: Factoring TLH Into Decision Whether To Use An Advisor
Replies: 34
Views: 1302

Re: commodities and multi-asset class portfolios

If someone is adding CCFs now, would you recommend starting to lengthen bond duration with new portfolio additions at this time? Also, does adding CCFs affect the ratio nominal bonds to TIPs one chooses? Thanks

Dave
by Random Walker
Sun May 18, 2014 7:17 pm
 
Forum: Investing - Theory, News & General
Topic: commodities and multi-asset class portfolios
Replies: 65
Views: 3595

Re: commodities and multi-asset class portfolios

Well the ER on the DFA fund is I think 0.34%, which is about the same as the average ER of the rest of portfolio. So cost did not increase. As to the second question, that's the point of CCFS. A small dose has a much bigger impact than one would expect because of the low/negative correlation and the...
by Random Walker
Sat May 17, 2014 9:26 pm
 
Forum: Investing - Theory, News & General
Topic: commodities and multi-asset class portfolios
Replies: 65
Views: 3595

Re: commodities and multi-asset class portfolios

Fwiw, I just added 4% CCFs to my heavily tilted 80/20 portfolio by taking 4% from the equities side. I'm really intrigued by the portfolio effects. I'm swayed by Gibson's book and Larry's writings. William Bernstein, from what I've read, is a CCF fan but has not recommended them because of costs and...
by Random Walker
Sat May 17, 2014 8:02 pm
 
Forum: Investing - Theory, News & General
Topic: commodities and multi-asset class portfolios
Replies: 65
Views: 3595

Re: Is equity diversification over-hyped?

Rkhusky,
I agree small caps make up 15-20% of TSM, but look at charts of S&P 500 versus TSM. They move in lockstep with correlation something like 0.98. TSM has no real exposure to the small risk factor.

Dave
by Random Walker
Thu May 08, 2014 3:20 pm
 
Forum: Investing - Theory, News & General
Topic: Is equity diversification over-hyped?
Replies: 45
Views: 3392

Re: Is equity diversification over-hyped?

I don't think diversification is over hyped. But there is diversifying within an asset class and there is diversifying across sources of return. Owning S&P 500 or TSM is basically owning a large growth fund. Because of cap weighting, the contribution of small stocks to the behavior of TSM is neg...
by Random Walker
Wed May 07, 2014 9:27 pm
 
Forum: Investing - Theory, News & General
Topic: Is equity diversification over-hyped?
Replies: 45
Views: 3392

Re: Software for Own Investing Plan/Rebalance

I like the idea of a spreadsheet a lot! It takes all the emotion out of rebalancing decisions. You can incorporate rebalancing bands into the spreadsheet as well. I think it's an excellent exercise for an individual to build their own with Excel, especially if they don't have a lot of Excel experien...
by Random Walker
Sun Apr 13, 2014 3:19 pm
 
Forum: Investing - Theory, News & General
Topic: Software for Own Investing Plan/Rebalance
Replies: 11
Views: 771

Re: How can "value beats growth" be a rule?

Kid fresh,
I once had the same dilemma/question as you, then Larry straightened me out. The market doesn't equilibrate returns by adjusting prices. The market prices risk.

Dave
by Random Walker
Sun Apr 13, 2014 2:15 pm
 
Forum: Investing - Theory, News & General
Topic: How can "value beats growth" be a rule?
Replies: 21
Views: 1428

Re: Can I get some alpha? (DFA / Wealthfront)

Berntson, I think you'll find this interesting. A finance professor at UC Berkely named Terrance Odean wanted to look at the effects of overconfidence on investor behavior. He chose a surrogate measure for overconfidence, SEX! He compared the average results of males and females. Males on the whole ...
by Random Walker
Sun Apr 13, 2014 2:06 pm
 
Forum: Investing - Theory, News & General
Topic: Can I get some alpha? (DFA / Wealthfront)
Replies: 58
Views: 3509

Re: If not dollar cost averaging...then what?

You are doing the right thing. You are in accumulation phase. So save and invest as much as possible and as early as possible. The expected return on equities, although bigger or smaller at various times, is always positive. So the earlier you invest money, the more opportunity to grow. By having a ...
by Random Walker
Sun Apr 13, 2014 12:22 pm
 
Forum: Investing - Theory, News & General
Topic: If not dollar cost averaging...then what?
Replies: 15
Views: 872

Re: Portfolio Volatility is a Big Drag on Returns

But one can add asset classes that have the same or close to the same expected returns and less than perfect correlation: emerging markets, international, international value, international small value, REITs, international REITs. And dare I mention CCFs? Most people will comfortably add a total int...
by Random Walker
Sun Apr 13, 2014 8:52 am
 
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 25
Views: 2032

Re: The market portfolio vs. value tilts

I don't think tilters look only at historical data. To stick with a plan in bad times, one needs to believe in a plausible risk or behavioral story to look forward and stay the course.

Dave
by Random Walker
Sat Apr 12, 2014 9:37 pm
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 4364

Re: Portfolio Volatility is a Big Drag on Returns

I agree with most all you said Stay the Course. So the way I see it, there is the camp of minimize cost at all costs TSM or 3Fund portfolio investors and the pay a bit more slice and dicers. How would you categorize yourself? When things go down the tubes all the correlations go to 1 and the only sa...
by Random Walker
Sat Apr 12, 2014 9:28 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 25
Views: 2032

Re: Portfolio Volatility is a Big Drag on Returns

I would think the more weakly correlated asset classes available in the portfolio to rebalance, the better. That is pretty much the point I'm making. A whole markets index fund approach composed of just a few funds may not be nearly as efficient as a more complex portfolio composed of say 5-10 funds...
by Random Walker
Sat Apr 12, 2014 7:44 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 25
Views: 2032

Portfolio Volatility is a Big Drag on Returns

I was just reading a shortened version of Ilmanen's Expected Returns and came across this statistic. The arithmetic average equity premium from 1802-2009 was 4.17% but the compounded equity premium over the same period was only 2.68%. The compounded return is a full 1.5% less than the average return...
by Random Walker
Sat Apr 12, 2014 7:26 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 25
Views: 2032

Re: Can I get some alpha? (DFA / Wealthfront)

I think DFA and advisor deserves a particularly serious consideration from the taxable investor interested in tilting. Tax managed value funds and core funds effectively decrease cost differences between VG and DFA for the taxable tilter. Unfortunately I don't have a clue what the quantitative impro...
by Random Walker
Sat Apr 12, 2014 3:12 pm
 
Forum: Investing - Theory, News & General
Topic: Can I get some alpha? (DFA / Wealthfront)
Replies: 58
Views: 3509

Re: Can I get some alpha? (DFA / Wealthfront)

Leonard, It's not quite that simple. There would be two ways to increase risk for potentially more reward. The first is to simply add more of the same risk: market. The other is to add different kinds of risk that are weakly or uncorrelated to the market: small and value. The diversification across ...
by Random Walker
Sat Apr 12, 2014 3:05 pm
 
Forum: Investing - Theory, News & General
Topic: Can I get some alpha? (DFA / Wealthfront)
Replies: 58
Views: 3509

Re: The market portfolio vs. value tilts

Quincy, Not sure I'm qualified to answer all your thoughts, sort of at the limits of my knowledge. ButI can address one or two. Look at charts of TSM v. S&P500 performance. They virtually overlap. And the correlation is like 0.98 or something. The point is that although TSM is highly diversified...
by Random Walker
Fri Apr 11, 2014 3:46 pm
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 4364

Re: The market portfolio vs. value tilts

Tilting does not necessarily mean more risk. The risk of an individual asset class in isolation isn't really very meaningful. What matters is how an asset class contributes to a portfolio / how it mixes with other portfolio components. What matters are expected returns, volatility, correlations to o...
by Random Walker
Fri Apr 11, 2014 1:17 am
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 4364

Re: Can I get some alpha? (DFA / Wealthfront)

I thought I would just note that there are other things to consider in the DIY VG v. Advisor DFA choice. A DFA portfolio comprised of core funds and asset class funds to fine tune the tilt to a person's taste would minimize rebalancing costs, be more tax efficient, yield a more efficient portfolio, ...
by Random Walker
Thu Apr 10, 2014 4:53 pm
 
Forum: Investing - Theory, News & General
Topic: Can I get some alpha? (DFA / Wealthfront)
Replies: 58
Views: 3509

Re: Favorite Investing Book?

And for those who want to really want to be convinced of the significance of multi asset class investing on bringing compounded return closer to average annual return, I'd recommend reading Ferri's All About Asset Allocation followed by Gibson's Asset Allocation: Balancing Financial Risk. And for th...
by Random Walker
Wed Apr 09, 2014 1:48 am
 
Forum: Investing - Theory, News & General
Topic: Favorite Investing Book?
Replies: 50
Views: 5003

Re: Favorite Investing Book?

I second the William Bernstein vote. But for me it was The Intelligent Asset Allocator. The material is basically the same as 4 Pillars, but IAA uses some math with graphs, charts, SD, correlation coefficients and 4 Pillars tries to avoid all that. For people who understand a little math and statist...
by Random Walker
Wed Apr 09, 2014 1:41 am
 
Forum: Investing - Theory, News & General
Topic: Favorite Investing Book?
Replies: 50
Views: 5003

Re: What next after you have enough sort of.

Check out William Bernstein's e-book The Ages of the Investor: A Critical Look at Lifecycle Investing. It's a really short and cheap read, and if I remember talks a lot about liability matching portfolios. I'm going to reread it myself.

Dave
by Random Walker
Tue Apr 08, 2014 12:42 am
 
Forum: Investing - Theory, News & General
Topic: What next after you have enough sort of.
Replies: 31
Views: 3542

Re: What next after you have enough sort of.

I'm struggling with this issue as well. I'm sure StarbuxInvestor appreciates this, but thought I'd point it out anyways because of the way his question is written. Short time to retirement doesn't mean short time horizon for the portfolio. The portfolio needs to exist and be maintained potentially f...
by Random Walker
Mon Apr 07, 2014 6:28 pm
 
Forum: Investing - Theory, News & General
Topic: What next after you have enough sort of.
Replies: 31
Views: 3542

Re: Buffett hasn't beaten the market regularly since '07

I too am bewildered by those who would consider buying BRKB instead of a diversified collection of mutual funds. Buffet and his company may be an amazing business. But the performance of a company's stock can be very different from the business. The man and his company have got to be one of the most...
by Random Walker
Sun Apr 06, 2014 2:57 am
 
Forum: Investing - Theory, News & General
Topic: Buffett hasn't beaten the market regularly since '07
Replies: 20
Views: 2666

Re: Three-fund portfolio returns and variance drain

I feel this is a topic that is not discussed here. I remember getting a feel for it first from Ferri's All About Asset Allocation. Portfolio volatility will always cause the compounded return of a portfolio to fall short of the average weighted return of the portfolio components. And one goal in por...
by Random Walker
Sun Apr 06, 2014 2:46 am
 
Forum: Investing - Theory, News & General
Topic: Three-fund portfolio returns and variance drain
Replies: 39
Views: 2839

Re: William Bernstein-When you've won the game, why keep pla

I saw the initial question "if you've won the game, why keep playing?" and had to add my thought because I want to hear other's opinions. I didn't read any of the intervening posts, so I'm sorry if I'm going over territory that was already discussed. I'm 51 and am close to the 25X number, ...
by Random Walker
Tue Mar 11, 2014 4:38 pm
 
Forum: Investing - Theory, News & General
Topic: William Bernstein-When you've won the game, why keep playing
Replies: 264
Views: 33144

Bond Ladder v Bond Fund:differences in portfolio management?

We use bonds to dampen the risk of our portfolios. Many people are worried that even high quality bonds will take a hit in the future. This would show up in the share price of a bond fund and the daily price of an individual bond. My question is whether owning a ladder individual bonds, same quality...
by Random Walker
Wed Jan 01, 2014 5:32 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Ladder v Bond Fund:differences in portfolio management?
Replies: 1
Views: 180

Re: DFA TA funds - distributed cap gains

I hold TA US Core too. I'm very interested in this thread. The size of the capital gain and the return relative to TSM are certainly relevant. Also, anyone who would own DFA TA US core 2 would probably also own other tax managed or tax advantaged value funds through DFA that are not accessible throu...
by Random Walker
Sun Dec 15, 2013 5:47 pm
 
Forum: Investing - Theory, News & General
Topic: DFA TA funds - distributed cap gains + non-qualified div
Replies: 11
Views: 678

Re: Good article on style premium investing & AQR new fund

Larry, One could also get more tilt beyond core funds by adding additional specific small and value oriented funds. Would this strategy add anything beyond that? Illmanens talks about asset classes, styles, sources of risk. Does this fund add any of the style or risk source diversification beyond th...
by Random Walker
Sun Dec 15, 2013 5:33 pm
 
Forum: Investing - Theory, News & General
Topic: Good article on style premium investing & AQR new fund
Replies: 62
Views: 6096

Re: What matters over long haul is factor exposure and expen

Robert,
Your point about alpha indirectly reflecting many of the hidden costs, and zero alpha reflecting the likely lowest costs makes very good sense to me. With costs being certain and excess gains always questionable, zero alpha is a strong prerequisite in a fund. Thanks for the input.

Dave
by Random Walker
Sun Dec 15, 2013 11:28 am
 
Forum: Investing - Theory, News & General
Topic: What matters over long haul is factor exposure and expense
Replies: 37
Views: 3976

Re: Good article on style premium investing & AQR new fund

If a person has a DFA portfolio already diversified nicely across geography, size, value, how would this new fund mix with the portfolio? Especially since the DFA funds screen for momentum and profitability. The long-short aspect is intriguing. Thanks,

Dave
by Random Walker
Sun Dec 15, 2013 11:20 am
 
Forum: Investing - Theory, News & General
Topic: Good article on style premium investing & AQR new fund
Replies: 62
Views: 6096

Re: What matters over long haul is factor exposure and expen

"What matters over the long run is factor exposure and expense". I agree. But the expense ratio is the easiest expense to quantify. How do we measure which funds yield factor exposure at the lowest total expense? Other expenses include taxes, bid-ask spreads, cash drag, and I'm sure other ...
by Random Walker
Sat Dec 14, 2013 10:23 am
 
Forum: Investing - Theory, News & General
Topic: What matters over long haul is factor exposure and expense
Replies: 37
Views: 3976

Re: Did gaining knowledge alter your risk tolerance?

Knowledge has definitely made me more aware of the issue of risk tolerance. As Taylor wrote, knowledge helps build the fortitude to stay the course. I strongly recommend every Boglehead read at least one book on financial history in addition to all the more common Boglehead books. Knowledge of histo...
by Random Walker
Thu Dec 05, 2013 5:07 pm
 
Forum: Investing - Theory, News & General
Topic: Did gaining knowledge alter your risk tolerance?
Replies: 79
Views: 3315
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