Search found 7897 matches

by Rick Ferri
Tue Jul 28, 2015 1:24 pm
Forum: Investing - Theory, News & General
Topic: Rick’s Top Ten List of When Not To Invest
Replies: 12
Views: 2453

Rick’s Top Ten List of When Not To Invest

This is a full reprint from my recent blog . Oh, how painful it has been to learn these lessons. I’ve been around the investment industry for a long time and have made plenty of mistakes. I’ve also seen a lot of variations on the theme of investing, some of which have made the industry better and o...
by Rick Ferri
Tue Jul 28, 2015 11:39 am
Forum: Investing - Theory, News & General
Topic: A bit of gold?
Replies: 45
Views: 2354

Re: A bit of gold?

There is a benefit if you catch gold at the right time. That happens about 5 years out of every 25. The rest of the time it's dead weight in a portfolio or worse. I don't recommend it.

Rick Ferri
by Rick Ferri
Wed Jul 22, 2015 5:06 pm
Forum: Investing - Theory, News & General
Topic: Is Harry Markowitz wrong? Why Optimal Portfolios Are So Difficult To Create
Replies: 33
Views: 2972

Re: Is Harry Markowitz wrong? Why Optimal Portfolios Are So Difficult To Create

From the Article: "The weighted average method to estimating a portfolio’s overall risk and return may be a throwback in time, but it is conservative and does eliminate errors from inaccurate asset class covariance or correlation forecasts. You can read more about this method in my book, All A...
by Rick Ferri
Wed Jul 22, 2015 5:04 pm
Forum: Personal Finance (Not Investing)
Topic: Military career or Top MBA
Replies: 37
Views: 3658

Re: Military career or Top MBA

I looked at my services IRR vacancies today and I didn't see any that required less than 48 Inactive duty training units (I'm assuming 4 points = a weekend) and 14 annual training days. All in all that just looked like traditional guard/reserve. Are there other options available that I'm not seeing...
by Rick Ferri
Tue Jul 21, 2015 11:35 am
Forum: Personal Finance (Not Investing)
Topic: Military career or Top MBA
Replies: 37
Views: 3658

Re: Military career or Top MBA

Any other advice regarding MBA opportunities, Guard/Reserve life or deciding whether to stay or leave Active Duty would be much appreciated! Thanks again. You need to look into the IRR. It's a great deal for those of us who do not have a lot of time, but want to stay in the military system. All you...
by Rick Ferri
Tue Jul 21, 2015 11:21 am
Forum: Investing - Theory, News & General
Topic: Is Harry Markowitz wrong? Why Optimal Portfolios Are So Difficult To Create
Replies: 33
Views: 2972

Is Harry Markowitz wrong? Why Optimal Portfolios Are So Difficult To Create

Summary of Why Optimal Portfolios Are So Difficult To Create. Harry Markowitz won a Nobel Prize in Economics in 1990 for his work on a theory of portfolio management for individual wealth holders. Since that time, Modern Portfolio Theory (MPT) has become the bedrock for creating best-practice portfo...
by Rick Ferri
Mon Jul 20, 2015 4:52 pm
Forum: Personal Finance (Not Investing)
Topic: Military career or Top MBA
Replies: 37
Views: 3658

Re: Military career or Top MBA

Is giving away the security of a military pension worth the risk of attending a top MBA school? No, but you can do both in the IRR (Individual Ready Reserve). Earn 50 points a year and you're one step closer to retirement benefits at age 60. Rick Ferri USMC Reserve Retired (awaiting age 60 for my r...
by Rick Ferri
Wed Jul 15, 2015 3:04 pm
Forum: Investing - Theory, News & General
Topic: "My Too-Long Journey To Becoming An Index Fund Investor"
Replies: 12
Views: 2406

Re: "My Too-Long Journey To Becoming An Index Fund Investor"

Thanks, Taylor! I'd have a lot more money today if I starting indexing at an earlier age.

Rick Ferri
by Rick Ferri
Tue Jul 14, 2015 9:09 am
Forum: Investing - Theory, News & General
Topic: So Few Generals, So Few Top Fund Managers
Replies: 5
Views: 779

So Few Generals, So Few Top Fund Managers

I see a lot of similarities between the military and the money management profession. Every new Second Lieutenant considers what it would be like to becoming a General. However, becoming General requires decades of service and commitment, impeccable personal stature and integrity, years spent away f...
by Rick Ferri
Mon Jul 13, 2015 3:15 pm
Forum: Investing - Theory, News & General
Topic: Rebalance how often? It's expensive
Replies: 34
Views: 2760

Re: Rebalance how often? It's expensive

Once every three years is adequate. The rest of the time, you can remain close by rebalancing using dividends, interest, deposits and withdrawals. Also, Schwab doesn't charge a commission to buy or sell their own ETFs.

Rick Ferri
by Rick Ferri
Mon Jul 13, 2015 3:10 pm
Forum: Investing - Theory, News & General
Topic: DFA to run ETFs for John Hancock
Replies: 29
Views: 3560

Re: DFA to run ETFs for John Hancock

I knew they couldn't stay away. There's just too much money going into ETFs. INVESTMENT OBJECTIVE (of the U.S Large Cap Multifactor fund) To seek to provide investment results that closely correspond, before fees and expenses, to the performance of the John Hancock Dimensional Large Cap Index (the I...
by Rick Ferri
Sat Jul 11, 2015 12:59 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 410
Views: 67522

Re: Rick Ferri looking to internationalize his portfolio

Being passive doesn't mean doing nothing. The world changes over time and your personal circumstances change as well. Being passive means making small adjustments as these changes become apparent. This is a very small shift in the big scheme of things.

Rick Ferri
by Rick Ferri
Fri Jul 10, 2015 5:05 pm
Forum: Investing - Theory, News & General
Topic: Does An All ETF Portfolio Make Sense?
Replies: 40
Views: 3266

Re: Does An All ETF Portfolio Make Sense?

Vanguard municipal bond funds and high yield bond fund are a better deal than any ETF. Vanguard's active funds are lower cost, have more diversification, and always trade at NAV. They're more an index fund than any index fund on the market (including ETFs that follow indexes). You've got to go asset...
by Rick Ferri
Fri Jul 10, 2015 5:03 pm
Forum: Investing - Theory, News & General
Topic: What CFOs expect for stock market returns
Replies: 18
Views: 2197

Re: What CFOs expect for stock market returns

Alchemist wrote:I thought I was being conservative with my own 7-8% assumption. Guess the future will tell.


IMO, your estimate is on the aggressive side. Assuming 2% inflation, I'm using 6.5% total return over the next 10 years and 7.0% over the next 30 years.

Rick Ferri
by Rick Ferri
Fri Jul 10, 2015 5:01 pm
Forum: Investing - Theory, News & General
Topic: Video Interview at NY Society of Security Analyst ETF Forum
Replies: 3
Views: 407

Re: Video Interview at NY Society of Security Analyst ETF Forum

. (i) if stock prices in value strategies were being bid up at a much faster and steeper rate than the overall market with recent inflows into value strategies you should observe an increase in portfolio turnover of value funds i.e. as the price of 'value' stocks in a given year are bid up more qui...
by Rick Ferri
Thu Jul 09, 2015 2:31 pm
Forum: Investing - Theory, News & General
Topic: Does An All ETF Portfolio Make Sense?
Replies: 40
Views: 3266

Re: Does An All ETF Portfolio Make Sense?

Whether you use an ETF or mutual fund is something to think about if you're buying municipal bond funds or high yield corporate bond funds. Just say'n :wink:

Rick Ferri
by Rick Ferri
Thu Jul 09, 2015 2:18 pm
Forum: Investing - Theory, News & General
Topic: Video Interview at NY Society of Security Analyst ETF Forum
Replies: 3
Views: 407

Video Interview at NY Society of Security Analyst ETF Forum

I was in NY in April to participate in the NY Society of Security Analyst (NYSSA) ETF Forum and was cornered for this video. The topic was on "smart beta", also know as "scientific beta" "strategic beta" and factor investing. The video is a little noisy, but you can und...
by Rick Ferri
Thu Jul 09, 2015 1:20 pm
Forum: Investing - Theory, News & General
Topic: Just how new are "robo" advisors? Give Vanguard some credit.
Replies: 2
Views: 530

Just how new are "robo" advisors? Give Vanguard some credit.

The new breed of stand-alone robo advisers are automated investment solutions that allow people to go online, complete a questionnaire, receive an investment recommendation, and implement the strategy, typically using portfolios of exchange-traded funds–without ever speaking to a human being. Comput...
by Rick Ferri
Thu Jul 09, 2015 10:26 am
Forum: Investing - Theory, News & General
Topic: What CFOs expect for stock market returns
Replies: 18
Views: 2197

Re: What CFOs expect for stock market returns

I apologize if I missed it but I couldn't find in the article whether or not that number includes re-invested dividends which I assume it doesn't, given the purpose of the forecast. As for the previous forecasts, while the 2000-2010 period was clearly off, the beginning and end points were both ext...
by Rick Ferri
Thu Jul 09, 2015 10:23 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 410
Views: 67522

Re: Rick Ferri looking to internationalize his portfolio

This half. The water is getting colder...and the colder the better. :happy Rick Rick, please let us know what date you'll be purchasing more international so we can front-run you. :happy Ha! Sure, but I don't think you'll earn any excess return by doing that given a $50 trillion global equity marke...
by Rick Ferri
Wed Jul 08, 2015 3:54 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 410
Views: 67522

Re: Rick Ferri looking to internationalize his portfolio

This half. The water is getting colder...and the colder the better. :happy

Rick
by Rick Ferri
Wed Jul 08, 2015 2:22 pm
Forum: Investing - Theory, News & General
Topic: What CFOs expect for stock market returns
Replies: 18
Views: 2197

Re: What CFOs expect for stock market returns

FYI, Campbell Harvey just sent me an update through June. The 10-year S&P 500 CFO ERP is now 6.45%, down slightly from 6.63% in March.

Rick Ferri
by Rick Ferri
Wed Jul 08, 2015 12:24 pm
Forum: Investing - Theory, News & General
Topic: What CFOs expect for stock market returns
Replies: 18
Views: 2197

What CFOs expect for stock market returns

Company boards make capital decisions based in part on their CFOs’ assessments of the cost of equity, and these decisions have an impact on future returns in the equity market. Company boards may issue new stock to take on new projects when they believe the cost of equity capital is low (stock price...
by Rick Ferri
Tue Jul 07, 2015 10:13 am
Forum: Investing - Theory, News & General
Topic: Does An All ETF Portfolio Make Sense?
Replies: 40
Views: 3266

Re: Does An All ETF Portfolio Make Sense?

.. people like Ric Edelman saying things like retail mutual funds are dinosaurs and will not exist in 10 years ... What's driving the seeming excitement, and :twisted: what do you think of Edelman's comment? It's an absurd quote. First off, ETFs are mutual funds. There are no ETF filings with the S...
by Rick Ferri
Tue Jul 07, 2015 9:19 am
Forum: Investing - Theory, News & General
Topic: Does An All ETF Portfolio Make Sense?
Replies: 40
Views: 3266

Does An All ETF Portfolio Make Sense?

One frequently asked question I hear is "Should I buy ETFs or mutual funds?" That's the wrong question to ask when building a portfolio, at least not at the beginning. In fact, the process of portfolio construction shouldn't reach the question of buying ETFs or mutual funds or both until t...
by Rick Ferri
Tue Jul 07, 2015 8:05 am
Forum: Investing - Theory, News & General
Topic: Bloomberg - "The Hugely Profitable, Wholly Legal Way to Game the Stock Market" (Front running index fund purchases)
Replies: 43
Views: 4456

Re: Bloomberg - "The Hugely Profitable, Wholly Legal Way to Game the Stock Market" (Front running index fund purchases)

Any fund or ETF that follows a transparent, rules based index is susceptible to erosion of return due to front-running. However, there must be enough money tracking the index to matter. I believe the most susceptible are S&P 500 funds and style index funds that have high turnover and sizable ass...
by Rick Ferri
Thu Jul 02, 2015 2:36 pm
Forum: Investing - Theory, News & General
Topic: Morningstar/Kitces -- Social Security as Part of Asset Allocation
Replies: 34
Views: 3926

Re: Morningstar/Kitces -- Social Security as Part of Asset Allocation

Social Security, pensions, and annuities can be considered "offsets" to your living expenses. After subtracting your living expenses from these income streams, the remaining annual total expenses are what you use to plan for the total amount to withdraw using your risk portfolio. This tot...
by Rick Ferri
Thu Jul 02, 2015 12:47 pm
Forum: Investing - Theory, News & General
Topic: Morningstar/Kitces -- Social Security as Part of Asset Allocation
Replies: 34
Views: 3926

Re: Morningstar/Kitces -- Social Security as Part of Asset Allocation

Rick wrote: " Social Security should be treated as you would a salary." I happen to agree and put that belief into practice. However, I don't agree with one half of the following sentence: " This income cannot be converted into a lump sum and it goes away when you pass away." Ye...
by Rick Ferri
Thu Jul 02, 2015 11:20 am
Forum: Investing - Theory, News & General
Topic: Tips on answering the question - What Should I Do?
Replies: 158
Views: 200405

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

Rick, if you could touch on why a 100% equity portfolio is better than an optimized portfolio which takes advantage of risk reduction through diversification while likely meeting or exceeding the total U.S. stock market return. Do these portfolios only exist in theory? They exist in history. They m...
by Rick Ferri
Thu Jul 02, 2015 11:14 am
Forum: Investing - Help with Personal Investments
Topic: Vanguard v.s. Betterment
Replies: 45
Views: 4957

Re: Vanguard v.s. Betterment

What are the pros and cons? Pro -- It's cheaper. Con -- You'll have to do the work. That might take an entire hour every year. There is no work if you use a Vanguard LifeStrategy fund. These balanced portfolios are automatically managed to a fixed asset allocation of low-cost index funds - with no ...
by Rick Ferri
Thu Jul 02, 2015 11:07 am
Forum: Investing - Theory, News & General
Topic: Morningstar/Kitces -- Social Security as Part of Asset Allocation
Replies: 34
Views: 3926

Re: Morningstar/Kitces -- Social Security as Part of Asset Allocation

Social Security should be treated as you would a salary, because that's essentially what it is. It's an extension of your human capital. This income cannot be converted into a lump sum and it goes away when you pass away. So it's not a bond in the least, and should not be included as part of a fixed...
by Rick Ferri
Wed Jul 01, 2015 7:59 am
Forum: Investing - Theory, News & General
Topic: Active Funds Win Battles But Lose Wars
Replies: 15
Views: 2252

Re: Active Funds Win Battles But Lose Wars

1. What happens when a low performing fund is merged with another fund? Is the performance of the low performing fund just ignored when computing the performance of the combined fund? Correct. The poor performing fund's past performance disappears. 2. When funds are merged, I assume this is not a t...
by Rick Ferri
Wed Jul 01, 2015 7:30 am
Forum: Investing - Theory, News & General
Topic: Let’s Celebrate the Independent Adviser
Replies: 10
Views: 1559

Re: Let’s Celebrate the Independent Adviser

Second generation robo technology is available today, but still not ready for Prime Time. Hopefully by the end of summer. All robo's today are still on robo 1.0 technology, which limits investment selection to only ETFs - no mutual funds.

Rick Ferri
by Rick Ferri
Tue Jun 30, 2015 4:51 pm
Forum: Investing - Theory, News & General
Topic: Active Funds Win Battles But Lose Wars
Replies: 15
Views: 2252

Re: Active Funds Win Battles But Lose Wars

Great article, thanks. To your point that it's difficult to predict who the winners will be: It seems that the evidence for that is largely based on the fact that, looking at active funds in aggregate, many of them underperform or don't perform well consistently over time. But do you also reject th...
by Rick Ferri
Tue Jun 30, 2015 4:28 pm
Forum: Investing - Theory, News & General
Topic: Let’s Celebrate the Independent Adviser
Replies: 10
Views: 1559

Re: Let’s Celebrate the Independent Adviser

I'm just trying to level the playing field. Many people are fast to adopt what's new and in fashion, especially when it has technology wrapped around it or it comes from a company like you-know-who. In fact, these offerings are restrictive and do not pass the fiduciary standard test, IMO. It's not t...
by Rick Ferri
Tue Jun 30, 2015 3:53 pm
Forum: Investing - Theory, News & General
Topic: Let’s Celebrate the Independent Adviser
Replies: 10
Views: 1559

Re: Let’s Celebrate the Independent Adviser

Robo advisors use only ETFs because their software can only handle exchange listed securities. They have difficulty incorporating mutual funds and ETF in the same portfolio because of differences in settlement. So, these firms exclude all mutual funds. Is this what a fiduciary would do? I'll let you...
by Rick Ferri
Tue Jun 30, 2015 10:48 am
Forum: Investing - Theory, News & General
Topic: U.S. stocks in freefall
Replies: 1397
Views: 276970

Re: U.S. stocks in freefall

Question: How many daily declines of 1.5% or more have occurred in the S&P 500 since January 1, 2014? Answer: 13 Question: How many daily declines of 2.0% or more have occurred in the S&P 500 since January 1, 2014? Answer: 6 Don't jump out a window. Rick Ferri In the interests of complete a...
by Rick Ferri
Tue Jun 30, 2015 10:06 am
Forum: Investing - Theory, News & General
Topic: U.S. stocks in freefall
Replies: 1397
Views: 276970

Re: U.S. stocks in freefall

Question: How many daily declines of 1.5% or more have occurred in the S&P 500 since January 1, 2014? Answer: 13 Question: How many daily declines of 2.0% or more have occurred in the S&P 500 since January 1, 2014? Answer: 6 Don't jump out a window. Rick Ferri In the interests of complete a...
by Rick Ferri
Tue Jun 30, 2015 9:48 am
Forum: Investing - Theory, News & General
Topic: Let’s Celebrate the Independent Adviser
Replies: 10
Views: 1559

Let’s Celebrate the Independent Adviser

Advisers come in many shapes and sizes. Some are linked to brokerage firms and fund companies and are structurally biased in their investment recommendations. Others advisers use ETFs only and no mutual funds because ETFs work on their platforms while funds do not, even though better investments may...
by Rick Ferri
Mon Jun 29, 2015 3:56 pm
Forum: Investing - Theory, News & General
Topic: U.S. stocks in freefall
Replies: 1397
Views: 276970

Re: U.S. stocks in freefall

Question: How many daily declines of 1.5% or more have occurred in the S&P 500 since January 1, 2014?

Answer: 13

Question: How many daily declines of 2.0% or more have occurred in the S&P 500 since January 1, 2014?

Answer: 6

Don't jump out a window.

Rick Ferri
by Rick Ferri
Mon Jun 29, 2015 12:17 pm
Forum: Investing - Help with Personal Investments
Topic: AA for 529s that will be used for college and grad school
Replies: 11
Views: 1057

Re: AA for 529s that will be used for college and grad school

Morningstar recently created the Morningstar 529 College Savings Index Family that might be helpful to you. The family of glidepath indexes are specifically for the 529 plan structure and are available in aggressive, moderate, and conservative tracks.

Rick Ferri
by Rick Ferri
Wed Jun 24, 2015 10:24 am
Forum: Investing - Theory, News & General
Topic: Active Funds Win Battles But Lose Wars
Replies: 15
Views: 2252

Active Funds Win Battles But Lose Wars

Active managers often defend their turf by stating the markets are not efficient and active strategies routinely outperform. I don't argue with either of these statements. Nor do I believe either statement is complete. An analysis of the data shows how little relevance these statements have in a dis...
by Rick Ferri
Tue Jun 23, 2015 8:50 am
Forum: Investing - Theory, News & General
Topic: What was the 2008 crash like in real time?
Replies: 218
Views: 23825

Re: What was the 2008 crash like in real time?

The S&P 500 bottomed out at 666.

That's what it was like.

Rick Ferri
by Rick Ferri
Sun Jun 14, 2015 9:54 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 410
Views: 67522

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 I don't think anybody has any objection to that. People object to the final pa...
by Rick Ferri
Sun Jun 14, 2015 9:44 am
Forum: Investing - Theory, News & General
Topic: Set It and Forget It Works!
Replies: 37
Views: 7940

Re: Set It and Forget It Works!

This intrigues me, for as far as I can establish Rick has always fallen into the camp of never looking at valuations when deciding on asset allocations? Unlike Graham, Larry, Shiller, Bernstein, who will at least to some degree under certain circumstances. Valuations do come into play when an inves...
by Rick Ferri
Fri Jun 12, 2015 3:01 pm
Forum: Investing - Theory, News & General
Topic: Set It and Forget It Works!
Replies: 37
Views: 7940

Re: Set It and Forget It Works!

There are many issues to consider when looking at an efficient way to implement set-it-and-forget-it. The best one is the one you're able to maintain in all market conditions. It might cost a little, but it's worth it in the long run.

Rick Ferri
by Rick Ferri
Thu Jun 11, 2015 10:48 am
Forum: Investing - Theory, News & General
Topic: "Jack Bogle's Great Insight"
Replies: 6
Views: 2227

Re: "Jack Bogle's Great Insight"

"Stocks are absolutely less predictable than bonds, which are absolutely less predictable than cash. That is how risk is described." Stock returns are less predictable than bond returns in the short-term (< 10-years), yet ironically stock returns are more predictable than bond returns in ...
by Rick Ferri
Thu Jun 11, 2015 10:42 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 410
Views: 67522

Re: Rick Ferri looking to internationalize his portfolio

The core 4 allocated 60% to US stock, 30% to international and 10% to REITs for the non-bonds portion. What's the recommended new split in light of internationalization? (e.g. 55/35/10, 50/40/10 or ?) Core 4 thread and wiki entry should be updated, yes? The new equity allocation would be: 50% US st...
by Rick Ferri
Thu Jun 11, 2015 9:33 am
Forum: Investing - Theory, News & General
Topic: Set It and Forget It Works!
Replies: 37
Views: 7940

Set It and Forget It Works!

During periods of market volatility, Jack Bogle says, "Don't just do something, stand there!" The less you mess with your portfolio, the better off you'll be. I'm a big believer in set-it-and-forget-it. This means decide your asset allocation, decide to use low-cost investments to represen...

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