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Re: 2 million dollar mistake meeting with MIL's financial gu

The SEC and Finra have teamed up to protect seniors from financial predators. The policy is outlined in a program called, " NATIONAL SENIOR INVESTOR INITIATIVE ", and is a coordinated series of examinations by the SEC’s Office of Compliance Inspections and Examinations and FINRA to stop th...
by Rick Ferri
Fri Apr 24, 2015 3:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: 2 million dollar mistake meeting with MIL's financial guy
Replies: 23
Views: 4901

Re: Rick Ferri looking to internationalize his portfolio

I have not, but that doesn't mean anything in the big picture.

Rick Ferri
by Rick Ferri
Thu Apr 23, 2015 3:44 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 353
Views: 47095

Re: Rick Ferri looking to internationalize his portfolio

jay22 wrote:
abuss368 wrote:Total International is outperforming Total Stock this year!

That would explain Rick's strategy above. ;-)


Ha! I published my thoughts on January 1, 2015. So there! :D

Rick Ferri
by Rick Ferri
Thu Apr 23, 2015 2:51 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 353
Views: 47095

Interpreting Active Fund vs. Passive Fund Data

I’ve been a long-time SPIVA® fan. The first report was published about 13 years ago by S&P Dow Jones and it quickly became my go-to active management scorecard. No firm was comparing active manager performance to index benchmarks regularly. Advisers had to crunch data themselves to see the trend...
by Rick Ferri
Thu Apr 23, 2015 1:58 pm
 
Forum: Investing - Theory, News & General
Topic: Interpreting Active Fund vs. Passive Fund Data
Replies: 2
Views: 232

Re: Rick Ferri looking to internationalize his portfolio

My current allocation to international equity is 30% of the equity portion and I am planning to increase it to 40% of the equity portion.

Rick Ferri
by Rick Ferri
Wed Apr 22, 2015 5:02 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 353
Views: 47095

Expert Tips on Building Wealth for Forty Somethings

From Pathways.com: It’s not easy being 40-something. Hovering somewhere between the Baby Boomers and the Millennials, we defy tidy categorization. (Who wants to be pigeonholed into some lame label, anyway?) We’re also walking a tightrope with our wealth, deciding how to maximize earnings, minimize d...
by Rick Ferri
Tue Apr 21, 2015 8:41 am
 
Forum: Investing - Theory, News & General
Topic: Expert Tips on Building Wealth for Forty Somethings
Replies: 11
Views: 2865

To ETF or Not to ETF? That is the question.

As the ETF market expands, some people have been promoting that all-ETF portfolios are somehow a better approach to investing than all mutual funds or a combination of both ETFs and mutual funds. This message even spawned an entire industry devoted to the all-ETF portfolio. The rise of Internet-base...
by Rick Ferri
Mon Apr 20, 2015 1:11 pm
 
Forum: Investing - Theory, News & General
Topic: To ETF or Not to ETF? That is the question.
Replies: 17
Views: 1668

Re: Fact, Fiction, and Value Investing - Asness/AQR

If the value premium is a behavioral phenomenon, then value investing should at times become overly popular and underperform as a result of the same behavior biases. Given all the hype surrounding "smart beta", maybe this is one of those times.

Rick Ferri
by Rick Ferri
Fri Apr 17, 2015 6:09 pm
 
Forum: Investing - Theory, News & General
Topic: Fact, Fiction, and Value Investing - Asness/AQR
Replies: 9
Views: 1079

Cash is King with the Profitability Factor

WARNING! Factor geeks only... Under the category of newly discovered factors: a University of Chicago Booth Research Paper entitled “ Accruals, Cash Flows, and Operating Profitability in the Cross Section of Stock Returns ”, by Ray Ball, Joseph Gerakos, Juhani Linnainmaa and Valeri Nikolaev investig...
by Rick Ferri
Fri Apr 17, 2015 5:19 pm
 
Forum: Investing - Theory, News & General
Topic: Cash is King with the Profitability Factor
Replies: 2
Views: 1150

Re: New Vanguard White Paper: "Factor-based investing" (Apr

I've not seen the paper. There's no free lunch. So-call smart-beta is always more expensive to impliment, there are decades when it doesn't work, and today it has become so popular the odds of it not working in the near future may have increased. Only do this if you know what you're getting into and...
by Rick Ferri
Thu Apr 16, 2015 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: New Vanguard White Paper: "Factor-based investing" (Apr '15)
Replies: 21
Views: 3142

Re: What to add to my "Core 3"

retiredjg wrote:I don't see any holes.


I agree.

Rick Ferri
by Rick Ferri
Thu Apr 16, 2015 8:25 am
 
Forum: Investing - Help with Personal Investments
Topic: What to add to my "Core 3"
Replies: 40
Views: 4918

Collecting: A Hobby First, Investment Second

I'm frequently asked questions about how collectibles fit into one’s investing. My blog in the WSJ describes collecting as above all an act of love. Collecting for investment alone is a lot of work and it rarely pays well. It should be viewed as a hobby first and an investment second. Only when a po...
by Rick Ferri
Thu Apr 16, 2015 8:13 am
 
Forum: Investing - Theory, News & General
Topic: Collecting: A Hobby First, Investment Second
Replies: 33
Views: 2868

Re: Future income on 100,000 bond fund

hoops777 wrote:I am coming to the conclusion that it is a waste of time to worry about a high quality intermediate bond fund if you are going to hold it forever.


:D Exactly!

Rick Ferri
by Rick Ferri
Tue Apr 14, 2015 11:37 am
 
Forum: Investing - Theory, News & General
Topic: Future income on 100,000 bond fund
Replies: 16
Views: 2593

Re: My expanded interview w/ Barry Ritholtz of Bloomberg Rad

I listened to Barry's interview with Charlie Ellis that's on the same website. It's very interesting and highly recommended.

Rick Ferri
by Rick Ferri
Tue Apr 14, 2015 10:40 am
 
Forum: Investing - Theory, News & General
Topic: My expanded interview w/ Barry Ritholtz of Bloomberg Radio
Replies: 7
Views: 1245

Re: Future income on 100,000 bond fund

If you're afraid of intermediate-term bond funds in a rising interest rate environment, read this article by David Blitzer and you shouldn't be afraid anymore:

Bonds in a Rising Interest Rate Environment

Rick Ferri
by Rick Ferri
Mon Apr 13, 2015 5:58 pm
 
Forum: Investing - Theory, News & General
Topic: Future income on 100,000 bond fund
Replies: 16
Views: 2593

My expanded interview w/ Barry Ritholtz of Bloomberg Radio

My expanded interview w/ Barry Ritholtz of Bloomberg Radio is now available as a podcast. The first part of the podcast aired Saturday, April 11, and the expanded version was posted today.

Here is the link:

Masters in Business with Barry Ritholtz: Special guest Rick Ferri

Enjoy!
Rick
by Rick Ferri
Sun Apr 12, 2015 7:27 pm
 
Forum: Investing - Theory, News & General
Topic: My expanded interview w/ Barry Ritholtz of Bloomberg Radio
Replies: 7
Views: 1245

Re: Is there Smart Beta in Corporate Bonds?

I did a bit of backtesting with various amounts of high-yield bonds out of the equity portion, the Treasuries portion, and out of both, and the numbers were better without the high-yield corporate bonds What high yield bond index did you use? If it was index that included all high yield bonds down ...
by Rick Ferri
Fri Apr 10, 2015 8:20 pm
 
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3212

Re: Is there Smart Beta in Corporate Bonds?

I agree there is significant equity-type risk in HY bonds, and if you hold them, you should reduce your equity exposure accordingly. I disagree. An allocation to HY is nowhere close to the the risk of equity. A 10% allocation to the Vanguard HY fund is about 2% equity equivalent - hardly worth cons...
by Rick Ferri
Fri Apr 10, 2015 8:24 am
 
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3212

Re: Is there Smart Beta in Corporate Bonds?

Corporate bonds have two stages of credit risk. There's credit downgrade risk and credit default risk...I capture a credit downgrade risk premium by using the Vanguard High Yield Corporate Bond fund. Couple of things. Not sure I am a fan of the distinction between downgrade and default risk. It's a...
by Rick Ferri
Thu Apr 09, 2015 1:33 pm
 
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3212

Re: Is there Smart Beta in Corporate Bonds?

For an equity oriented investor there has been little benefit from adding Vanguard High Yield Corporate - at least historically. IMO the most relevant way to look at bonds is not in isolation, but in the context of a portfolio. In isolation HY may look okay relative to treasuries - higher return bu...
by Rick Ferri
Wed Apr 08, 2015 7:50 pm
 
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3212

Making Sense of Variable Spending Strategies for Retirees

Wade Pfau is a professor of Retirement Income at The American College and a Boglehead. His professional goal can best be summarized as attempting to reduce the risk of retirees running out of money by providing sensible withdrawal strategies. In a comprehensive new paper, Wade looks as many differen...
by Rick Ferri
Wed Apr 08, 2015 8:59 am
 
Forum: Investing - Theory, News & General
Topic: Making Sense of Variable Spending Strategies for Retirees
Replies: 4
Views: 543

Bogle: Investors are Now Drving Ethics

Jack Bogle speaks out on ETF.com. Topics include how money flows are driving changes in the fund industry, Jacks perceived cost of active management (he's quite high on his estimate IMO because active funds do not underperform by that much), and other musings. Bogle:: Investors are now driving ethic...
by Rick Ferri
Wed Apr 08, 2015 7:51 am
 
Forum: Investing - Theory, News & General
Topic: Bogle: Investors are Now Drving Ethics
Replies: 6
Views: 1202

Re: Rick Ferri looking to internationalize his portfolio

And what will I do if this unknown event doesn't happen? I'll move toward more international equity anyway. It just won't happen all at once.

Rick Ferri
by Rick Ferri
Tue Apr 07, 2015 9:32 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 353
Views: 47095

Re: Is there Smart Beta in Corporate Bonds?

Corporate bonds have two stages of credit risk. There's credit downgrade risk and credit default risk. The former is the risk that a bond will fall from investment grade and the latter is the risk of a non-investment grade bond going into default. There is surprisingly little research available on t...
by Rick Ferri
Tue Apr 07, 2015 6:56 am
 
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3212

Is there Smart Beta in Corporate Bonds?

Some investors mistakenly view credit risk as an extension of equity risk. In fact, prices of corporate bonds are not a simple mirror image of equity risk, thus an analysis of corporate bond returns requires more than a simple extension from equity returns. Smart beta is a growing buzz phrase being ...
by Rick Ferri
Mon Apr 06, 2015 9:46 pm
 
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3212

Re: Rick Ferri looking to internationalize his portfolio

tadamsmar

I'm sorry I can't tell you the exact day I'm going to start shifting more into international equity or when the yet unknown events will happen if they happen that would cause me to do so. I'm just not that insightful. :?

Rick Ferri
by Rick Ferri
Mon Apr 06, 2015 9:12 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 353
Views: 47095

Re: Rick Ferri looking to internationalize his portfolio

If they just keep outperforming, you are missing the train.


They might! But I believe this is a very long train.

Rick :happy
by Rick Ferri
Mon Apr 06, 2015 4:04 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 353
Views: 47095

Re: Rick Ferri looking to internationalize his portfolio

he predicts all this amazing stuff about international equities in the blog (none of which has come true so far), It hasn't? International is not outperforming this year? I must have missed something. Please fill me in. FWIW, as I stated in the blog, I plan to increase my allocation to internationa...
by Rick Ferri
Mon Apr 06, 2015 2:49 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 353
Views: 47095

Re: Bored -- wondering about day trading for fun

I play cards on line when I'm board. It's fun, competitive and doesn't cost anything.

Rick Ferri
by Rick Ferri
Sun Apr 05, 2015 9:37 am
 
Forum: Investing - Theory, News & General
Topic: Bored -- wondering about day trading for fun
Replies: 61
Views: 5609

Re: Opinions on Tilting/Slice and Dice

Do you think my proposed AA sounds appropriate? Don't get bogged down on developing the ideal asset allocation because that can only be known in retrospect. Portfolio construction is not a one-size-fits-all process. The idea is to create at portfolio to suit your needs and desires so you'll stick w...
by Rick Ferri
Sun Apr 05, 2015 9:10 am
 
Forum: Investing - Help with Personal Investments
Topic: Opinions on Tilting/Slice and Dice
Replies: 27
Views: 1859

Bogle on Brokers and Fiduciary Duty

How did the advice industry get so messed up?

ETF.com asks John Bogle his thoughts: John Bogle: Broker Behavior Costs Investors.

Rick Ferri
by Rick Ferri
Wed Apr 01, 2015 11:35 am
 
Forum: Investing - Theory, News & General
Topic: Bogle on Brokers and Fiduciary Duty
Replies: 1
Views: 483

Re: Rick Ferri's 30 year market forecast 2015

Yes, it does seem like a futile exercise. Yet people so willingly acceptvoo-doo simulations about retirement that rely on long-term market forecast. I am speaking of Monti Carlo simulation and how it's used and abused to show people that a certain asset allocation or investment strategy has a low pr...
by Rick Ferri
Tue Mar 31, 2015 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13897

Re: Rick Ferri's 30 year market forecast 2015

Don't get hung-up on what inflation and interest rates are today. These forecasts are my best guess about what the long-run inflation rate and total bond return will be over the next 30 years.

Rick Ferri
by Rick Ferri
Mon Mar 30, 2015 8:56 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13897

Re: Rick Ferri's 30 year market forecast 2015

I'm not looking for the absolute return of one single 30-year Treasury bond purchased today. That would be easy: it's the return of a long-term zero coupon bond (as I wrote in the article). I'm interested in estimating the total return on a portfolio of Treasury bonds over the next 30 years. It's a ...
by Rick Ferri
Mon Mar 30, 2015 4:18 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13897

Re: Rick Ferri's 30 year market forecast 2015

What matters is the real rate of return. Inflation is 0% today and the 30-year Treasury is yielding 2.55%. My target for a real return on 30-year TIPS is 2.60%. So, there's not illusion here. Nominal is what people look at because it's easy to understand. However, it confuses people more than anythi...
by Rick Ferri
Mon Mar 30, 2015 12:39 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13897

Re: The new blogger

"What matters most for the economy is the real, or inflation-adjusted, interest rate (the market, or nominal, interest rate minus the inflation rate). The real interest rate is most relevant for capital investment decisions, for example. The Fed’s ability to affect real rates of return, especi...
by Rick Ferri
Mon Mar 30, 2015 12:28 pm
 
Forum: Investing - Theory, News & General
Topic: Bernanke's Blog: why are interest rates so low?
Replies: 52
Views: 6851

Re: Rick Ferri's 30 year market forecast 2015

There seems to be confusion about what Rick is actually claiming with respect to the long-term government bond forecast. To me it was obvious. But then I may be wrong, so let me state it as clearly as I can and then see if I can be corrected. My understanding is totally different than what the crit...
by Rick Ferri
Mon Mar 30, 2015 10:56 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13897

Re: Rick Ferri's 30 year market forecast 2015

As I wrote in the article, the bond return forecasts assume the US will return to "normalized yields".

Rick
by Rick Ferri
Mon Mar 30, 2015 10:53 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13897

Re: Strategy for avoiding tax hit on rebalancing?

If your parents want to reduce risk in their portfolio, they will have to sell equity. One way to reduce taxes is to select specific higher-cost tax-lots and retain the low-cost basis shares. This assumes there were no shares sales in the past under the average cost method, which would negate the ab...
by Rick Ferri
Fri Mar 27, 2015 4:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Strategy for avoiding tax hit on rebalancing?
Replies: 4
Views: 623

Re: Tips on answering the question - What Should I Do?

I have been scratching my head as to why VT's ER (0.17%) is higher than holding a 50/50 combination of VTI (0.05% ER) and VXUS (0.14% ER). VTI/VXUS blended would be at a 0.095% ER. Each fund at Vanguard has it's own entity and has it's own P&L. New funds "borrow" from the main company...
by Rick Ferri
Fri Mar 27, 2015 4:41 pm
 
Forum: Investing - Theory, News & General
Topic: Tips on answering the question - What Should I Do?
Replies: 155
Views: 186570

Re: Rick Ferri's 30 year market forecast 2015

IlliniDave wrote:I'd be quite happy if those forecasts turn out to be on the mark.


I would be quite happy also as long as 2% inflation is also "on the mark." That's what the Fed is shooting for...

Rick Ferri
by Rick Ferri
Fri Mar 27, 2015 4:35 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13897

Re: Rick Ferri's 30 year market forecast 2015

That [2014] column heading was "Real Return" which presumably is what this year's "BEFORE INFLATION RETURNS" is now supposed to mean, but yes, it's an odd way to word it. I changed the first column to "Before Inflation Returns" from "Real Returns" because mos...
by Rick Ferri
Fri Mar 27, 2015 2:54 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 13897

Re: [New Member Observations- Covered Calls, Financial Advis

There a many roads to Dublin. Every road has potholes, some of which aren't easily seen, and every road has a toll, some of which are higher than others. Further, it's impossible to come to a consensus on which is the right road because what's the right road for one investor may not be the right roa...
by Rick Ferri
Fri Mar 20, 2015 11:12 am
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 17201

Re: Looking for dirt cheap commissions on DFA funds

Rick --Why do you have to buy DFA mutual funds? and that to be by paying advisor fees plus trading comissions? --if you dig into ETF world, it is entirely possible to 'replicate' performance of DFA mutual funds with equivalent ETFs(compare holdings of each). --and those comission free ETFs are avai...
by Rick Ferri
Fri Mar 20, 2015 11:04 am
 
Forum: Investing - Theory, News & General
Topic: Looking for dirt cheap commissions on DFA funds
Replies: 24
Views: 2794

Re: Looking for dirt cheap commissions on DFA funds

royroidx3 wrote: I contacted TDA to see if they can do something more reasonable... I will let you know what I find out.

Roy


We're on the same track.

Rick
by Rick Ferri
Fri Mar 20, 2015 11:03 am
 
Forum: Investing - Theory, News & General
Topic: Looking for dirt cheap commissions on DFA funds
Replies: 24
Views: 2794

Re: Observations from a first time poster, long time reader.

There's no free lunch. You sell covered calls and collect a premium most of the time, but when there is a significant downturn, like in 2008, you get hammered with huge downside losses. In geek speak, you're paid a premium from selling calls that expose your portfolio to left-side tail risk while cu...
by Rick Ferri
Thu Mar 19, 2015 5:23 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 17201

Re: Observations from a first time poster, long time reader.

Selling covered calls is like trying to pick up pennies on the New Jersey Turnpike. You think you've found free money until getting flattened by a Mack truck.

Rick Ferri
by Rick Ferri
Thu Mar 19, 2015 7:17 am
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 17201

Re: Is this Investing or Speculating?

What everyone knows isn't worth knowing.

I believe this is the hardest lesson for active investors to learn.

Rick Ferri
by Rick Ferri
Thu Mar 19, 2015 7:07 am
 
Forum: Investing - Theory, News & General
Topic: Is this Investing or Speculating?
Replies: 24
Views: 2103

Re: Is this Investing or Speculating?

frankly I am rather puzzled as to how an individual retail investor could possibly "value" a portfolio of five hundred stocks from seventeen different countries and make a judgement of them as being a better or worse investment than five hundred stocks from the United States. I recall in ...
by Rick Ferri
Thu Mar 19, 2015 7:01 am
 
Forum: Investing - Theory, News & General
Topic: Is this Investing or Speculating?
Replies: 24
Views: 2103

Re: Personal experience of Wealthfront, Betterment....?

Happy Wealthfront customer here...Silicon Valley viewpoint on investing (and NOT a Wall Street one.) So, you're saying there's something extra special about the Vanguard ETFs that Wealthfront buys because the company is in Silicon Valley? Wow. Have they got you hooked. :D Seriously, the most import...
by Rick Ferri
Thu Mar 19, 2015 6:37 am
 
Forum: Investing - Theory, News & General
Topic: Personal experience of Wealthfront, Betterment....?
Replies: 38
Views: 8984
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