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by Rick Ferri
Thu May 14, 2015 5:59 pm
Forum: Investing - Theory, News & General
Topic: Our Mistakes Benefit Future Generations
Replies: 18
Views: 2941

Re: Our Mistakes Benefit Future Generations

Rick, just curious how many additional workers will be behind the 'robo' label, or if this is something you can manage with your current staff. I imagine this type of undertaking requires significant IT expertise as well as marketing savvy, but will you have any actual advisors dedicated to it? We'...
by Rick Ferri
Thu May 14, 2015 9:55 am
Forum: Investing - Theory, News & General
Topic: Our Mistakes Benefit Future Generations
Replies: 18
Views: 2941

Our Mistakes Benefit Future Generations

Today’s young investors have a much greater chance to learn about index funds earlier in life. I hope this prevents many from making the dumb (and costly) mistakes I made when I was their age. With today’s on-line tools and greater information dissemination, young investors should be better position...
by Rick Ferri
Fri May 08, 2015 12:53 pm
Forum: Investing - Theory, News & General
Topic: Should You Time the Markets When Experts Can’t?
Replies: 21
Views: 2236

Re: Should You Time the Markets When Experts Can’t?

Browser wrote:But what about the Canadian timers? How come they're better at it:? -- might be because they're less impulsive and more even-tempered than their southern neighbors.


:D Or got lucky!

Rick Ferri
by Rick Ferri
Thu May 07, 2015 4:34 pm
Forum: Investing - Theory, News & General
Topic: Should You Time the Markets When Experts Can’t?
Replies: 21
Views: 2236

Should You Time the Markets When Experts Can’t?

I’m always interested in reading academic studies that measure how well professional mutual fund managers can time financial markets. Many fund companies routinely claim their experienced management and propriety research give them a leg up on knowing where the markets are headed next. But is it tru...
by Rick Ferri
Tue May 05, 2015 9:32 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Personal Advisor Services now live
Replies: 38
Views: 5391

Re: Vanguard Personal Advisor Sevices now live

Perhaps Vanguard should learn how to spell first... Should You Go to an Adviser or an Advisor? Both the Securities and Exchange Commission and the Financial Industry Regulatory Authority, which oversee how investments are sold to the public, call someone who gives financial advice an “adviser” – not...
by Rick Ferri
Mon May 04, 2015 4:51 pm
Forum: Investing - Theory, News & General
Topic: To ETF or Not to ETF? That is the question.
Replies: 52
Views: 5822

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

Hank Moody wrote:Thank you for this post. What's your recommendation for when in the day to trade?


Between 10:30 AM ET and 3 PM ET.

Rick Ferri
by Rick Ferri
Sun May 03, 2015 1:06 pm
Forum: Investing - Theory, News & General
Topic: Market timing using CAPE, dividends or P/E? Forgetaboutit!
Replies: 8
Views: 1289

Re: Market timing using CAPE, dividends or P/E? Forgetaboutit!

The price of bubblegum is the only reliable stock market indicator:

The Bubblegum Ratio And Future Stock Returns

:D

Rick Ferri
by Rick Ferri
Fri May 01, 2015 1:31 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 357
Views: 49776

Re: Rick Ferri looking to internationalize his portfolio

The global equity market is 50% US and 50% international. I've been 30% international for 15 years and moving to 40% international for the next 15 years or more. Market timing you claim ? I don't call it that.

Rick Ferri
by Rick Ferri
Fri May 01, 2015 1:27 pm
Forum: Investing - Theory, News & General
Topic: Market timing using CAPE, dividends or P/E? Forgetaboutit!
Replies: 8
Views: 1289

Market timing using CAPE, dividends or P/E? Forgetaboutit!

Do valuations matter? Not in the short-term. Here is new paper on the subject. Multiples, Forecasting, and Asset Allocation Multiples such as D/P, P/E, and CAPE are useful when forecasting long‐term returns, and largely useless when forecasting short‐term returns. Given this mixed forecasting abilit...
by Rick Ferri
Tue Apr 28, 2015 5:08 pm
Forum: Investing - Theory, News & General
Topic: Two Index Fund Studies: One Good Strategy
Replies: 6
Views: 1440

Two Index Fund Studies: One Good Strategy

The long-term data comparing active funds to index funds shows actively managed mutual funds underperform in all asset classes and all investment styles. There is no ambiguity in the results. The data has been saying the same thing for decades. But, we’re only human. We forget, and lies are constant...
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: 37
Views: 10180

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
Thu Apr 23, 2015 3:44 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 357
Views: 49776

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 2:51 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 357
Views: 49776

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 1:58 pm
Forum: Investing - Theory, News & General
Topic: Interpreting Active Fund vs. Passive Fund Data
Replies: 2
Views: 267

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
Wed Apr 22, 2015 5:02 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 357
Views: 49776

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
Tue Apr 21, 2015 8:41 am
Forum: Investing - Theory, News & General
Topic: Expert Tips on Building Wealth for Forty Somethings
Replies: 11
Views: 3146

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
Mon Apr 20, 2015 1:11 pm
Forum: Investing - Theory, News & General
Topic: To ETF or Not to ETF? That is the question.
Replies: 52
Views: 5822

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
Fri Apr 17, 2015 6:09 pm
Forum: Investing - Theory, News & General
Topic: Fact, Fiction, and Value Investing - Asness/AQR
Replies: 9
Views: 1179

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 5:19 pm
Forum: Investing - Theory, News & General
Topic: Cash is King with the Profitability Factor
Replies: 2
Views: 1220

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
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: 3282

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 8:25 am
Forum: Investing - Help with Personal Investments
Topic: What to add to my "Core 3"
Replies: 40
Views: 5096

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 8:13 am
Forum: Investing - Theory, News & General
Topic: Collecting: A Hobby First, Investment Second
Replies: 33
Views: 2969

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
Tue Apr 14, 2015 11:37 am
Forum: Investing - Theory, News & General
Topic: Future income on 100,000 bond fund
Replies: 16
Views: 2689

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 10:40 am
Forum: Investing - Theory, News & General
Topic: My expanded interview w/ Barry Ritholtz of Bloomberg Radio
Replies: 10
Views: 1854

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
Mon Apr 13, 2015 5:58 pm
Forum: Investing - Theory, News & General
Topic: Future income on 100,000 bond fund
Replies: 16
Views: 2689

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
Sun Apr 12, 2015 7:27 pm
Forum: Investing - Theory, News & General
Topic: My expanded interview w/ Barry Ritholtz of Bloomberg Radio
Replies: 10
Views: 1854

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
Fri Apr 10, 2015 8:20 pm
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3381

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 8:24 am
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3381

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
Thu Apr 09, 2015 1:33 pm
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3381

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
Wed Apr 08, 2015 7:50 pm
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3381

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 8:59 am
Forum: Investing - Theory, News & General
Topic: Making Sense of Variable Spending Strategies for Retirees
Replies: 4
Views: 570

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 7:51 am
Forum: Investing - Theory, News & General
Topic: Bogle: Investors are Now Drving Ethics
Replies: 6
Views: 1235

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
Tue Apr 07, 2015 9:32 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 357
Views: 49776

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 6:56 am
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3381

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
Mon Apr 06, 2015 9:46 pm
Forum: Investing - Theory, News & General
Topic: Is there Smart Beta in Corporate Bonds?
Replies: 35
Views: 3381

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 9:12 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 357
Views: 49776

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 4:04 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 357
Views: 49776

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 2:49 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 357
Views: 49776

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
Sun Apr 05, 2015 9:37 am
Forum: Investing - Theory, News & General
Topic: Bored -- wondering about day trading for fun
Replies: 61
Views: 5961

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 9:10 am
Forum: Investing - Help with Personal Investments
Topic: Opinions on Tilting/Slice and Dice
Replies: 27
Views: 1975

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
Wed Apr 01, 2015 11:35 am
Forum: Investing - Theory, News & General
Topic: Bogle on Brokers and Fiduciary Duty
Replies: 1
Views: 506

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
Tue Mar 31, 2015 11:32 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 14736

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
Mon Mar 30, 2015 8:56 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 14736

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 4:18 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 14736

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 12:39 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 14736

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 12:28 pm
Forum: Investing - Theory, News & General
Topic: Bernanke's Blog: why are interest rates so low?
Replies: 52
Views: 7177

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 10:56 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 14736

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 10:53 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 14736

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
Fri Mar 27, 2015 4:50 pm
Forum: Investing - Help with Personal Investments
Topic: Strategy for avoiding tax hit on rebalancing?
Replies: 4
Views: 658

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 4:41 pm
Forum: Investing - Theory, News & General
Topic: Tips on answering the question - What Should I Do?
Replies: 155
Views: 190311

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...

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