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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: 115
Views: 9995

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: 115
Views: 9995

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: 115
Views: 9995

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: 115
Views: 9995

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: 18
Views: 1928

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: 115
Views: 9995

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: 115
Views: 9995

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: 595

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: 183738

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: 115
Views: 9995

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: 115
Views: 9995

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: 225
Views: 16095

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: 2678

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: 2678

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: 225
Views: 16095

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: 225
Views: 16095

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: 2015

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: 2015

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: 8754

Re: Is this Investing or Speculating?

There is no hard line between investing and speculating. The extremes are obvious, but you have to draw the line in the grey area. For me, it's how long you're going to hold the position. Less than 10 years and you're probably speculating.

Rick Ferri
by Rick Ferri
Thu Mar 19, 2015 6:32 am
 
Forum: Investing - Theory, News & General
Topic: Is this Investing or Speculating?
Replies: 24
Views: 2015

Re: Looking for dirt cheap commissions on DFA funds

This is mainly a question for other advisers who frequent this site. I'm looking for a custodian for advised assets that charges just a few dollars to trade open-end funds like DFA and Vanguard. Anyone know one?

Rick Ferri
by Rick Ferri
Wed Mar 18, 2015 6:49 pm
 
Forum: Investing - Theory, News & General
Topic: Looking for dirt cheap commissions on DFA funds
Replies: 24
Views: 2678

Re: Looking for dirt cheap commissions on DFA funds

In my employers 401(k) at Schwab I can buy DFA funds in my Personal Choice Retirement Account for $15 a trade. You certainly would not want to set up monthly $100 purchases for this trading cost, but for a one time purchase of $10,000 or $20,000, the cost of the trade is lost in the noise. Ralph $1...
by Rick Ferri
Wed Mar 18, 2015 4:59 pm
 
Forum: Investing - Theory, News & General
Topic: Looking for dirt cheap commissions on DFA funds
Replies: 24
Views: 2678

Re: Looking for dirt cheap commissions on DFA funds

Yep. Odd question from me. Don't think to much into it. I'm just trying to find a cheaper way to execute DFA fund trades. BTW, DFA does not keep tabs on such things.

FWIW, the barrier to managing smaller accounts using DFA funds is the per trade commission charged by the custodian.

Rick Ferri
by Rick Ferri
Tue Mar 17, 2015 6:41 pm
 
Forum: Investing - Theory, News & General
Topic: Looking for dirt cheap commissions on DFA funds
Replies: 24
Views: 2678

Looking for dirt cheap commissions on DFA funds

I'm in the hunt for dirt cheap execution. The cheapest commission I've found to trade a DFA fund is about $20. Does anyone know of a custodian that will execute DFA fund trades cheaper than $20?

Thanks
Rick Ferri
by Rick Ferri
Tue Mar 17, 2015 6:01 pm
 
Forum: Investing - Theory, News & General
Topic: Looking for dirt cheap commissions on DFA funds
Replies: 24
Views: 2678

Re: keep advisor or do it myself

I've never heard of a DFA advisor charging less than 1%, so you are getting a fair deal. Whether it's worth it to you is something only you can decide. Paul Paul, There is not such thing as a DFA advisor. There are advisers who have access to DFA funds and use them in client accounts, but there is ...
by Rick Ferri
Mon Mar 16, 2015 4:51 pm
 
Forum: Investing - Help with Personal Investments
Topic: keep advisor or do it myself
Replies: 28
Views: 2195

Re: keep advisor or do it myself

when I talked to him about reducing his fee and he said that it has been proven that an advisor using DFA funds can provide us, over time, net of fees, an additional 1 - 1.5% portfolio growth. This is complete and utter hogwash. It really burns me up with I hear these stories. There is no extra ret...
by Rick Ferri
Sun Mar 15, 2015 9:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: keep advisor or do it myself
Replies: 28
Views: 2195

Bond credit risk is unique from equity risk

A new study by Attakrit Asvanunt, AQR Capital Management, LLC, and Scott A. Richardson, London Business School; AQR Capital Management, LLC titled Credit Risk Premium: Its Existence and Implications for Asset Allocation put to bed the false notion that credit risk and equity risk are one in the same...
by Rick Ferri
Tue Mar 10, 2015 2:09 pm
 
Forum: Investing - Theory, News & General
Topic: Bond credit risk is unique from equity risk
Replies: 12
Views: 1239

Re: 3 Costs Investors Must Control

Rick, Has there been any research into whether people are less likely to make snap decisions based on emotion if they believe they'll have to explain or justify these moves to another person, be it a spouse or a financial advisor? I don't know about a spouse. I do know if they have an adviser who h...
by Rick Ferri
Sat Mar 07, 2015 9:47 am
 
Forum: Investing - Theory, News & General
Topic: 3 Costs Investors Must Control
Replies: 61
Views: 5266

Re: 3 Costs Investors Must Control

Can you offer any more insights as to the behavioral motivations for investors to actively fiddle around with their funds and ETF positions, out of some mistaken sense that they are reducing the risk of loss, instead of keeping things very simple and stable? This particular article was linking mutu...
by Rick Ferri
Sat Mar 07, 2015 7:17 am
 
Forum: Investing - Theory, News & General
Topic: 3 Costs Investors Must Control
Replies: 61
Views: 5266

Re: 3 Costs Investors Must Control

Yes. That's the value. We're paid to what most people can't or won't, and that's worth something.

Rick Ferri
by Rick Ferri
Fri Mar 06, 2015 8:42 pm
 
Forum: Investing - Theory, News & General
Topic: 3 Costs Investors Must Control
Replies: 61
Views: 5266

Re: 3 Costs Investors Must Control

The easiest way for a neophyte to painlessly invest for their future is through their 401(k) but too many of these plans impose steep costs. Obviously it's cheaper to only invest the minimum required to be eligible for an employer match, and invest the rest in an IRA with a 3-fund portfolio of ultr...
by Rick Ferri
Fri Mar 06, 2015 7:33 pm
 
Forum: Investing - Theory, News & General
Topic: 3 Costs Investors Must Control
Replies: 61
Views: 5266

Re: 3 Costs Investors Must Control

Apology accepted. We're all working very hard to educate investors on this forum.

Rick Ferri
by Rick Ferri
Fri Mar 06, 2015 12:58 pm
 
Forum: Investing - Theory, News & General
Topic: 3 Costs Investors Must Control
Replies: 61
Views: 5266

Re: 3 Costs Investors Must Control

That the individual investor is a self-defeating idiot is a message that fits the goals of the investor advisor industry. This is an absurd and demeaning quote and it is undeserved. It in no way reflects my view, the views of Vanguard adviser services, or the view of thousands of honest and ethical...
by Rick Ferri
Fri Mar 06, 2015 12:54 pm
 
Forum: Investing - Theory, News & General
Topic: 3 Costs Investors Must Control
Replies: 61
Views: 5266

3 Costs Investors Must Control

The cost to invest in mutual funds is often couched in terms of expense ratios and commissions. These are important structural costs and certainly worthy of your consideration. However, other costs are not so obvious that can eat deep into your investment return. It’s wise to know what those costs a...
by Rick Ferri
Thu Mar 05, 2015 11:37 am
 
Forum: Investing - Theory, News & General
Topic: 3 Costs Investors Must Control
Replies: 61
Views: 5266

Re: Rick Ferri looking to internationalize his portfolio

They copied my business model and now offer a low-cost Personal Advisor Service, so they might as well copy my investment decisions. :happy

Rick Ferri
by Rick Ferri
Fri Feb 27, 2015 1:14 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 296
Views: 37355

Re: When 60/40 just isn't appropriate

By a perception of greater loss during a bear market for a retiree, I meant there is a perception that a market downturn is worse than if the same person was working and adding money to their account.

Rick Ferri
by Rick Ferri
Sun Feb 22, 2015 10:38 am
 
Forum: Investing - Theory, News & General
Topic: When 60/40 just isn't appropriate
Replies: 127
Views: 13524

Re: When 60/40 just isn't appropriate

When the stock market falls, who suffers more? Is it a working person who is accumulating money for retirement, or a retiree who is withdrawing money? Although market risk is the same in both cases, I suggest there is a greater perception of loss to a retiree who is withdrawing money. This is becaus...
by Rick Ferri
Sat Feb 21, 2015 9:28 pm
 
Forum: Investing - Theory, News & General
Topic: When 60/40 just isn't appropriate
Replies: 127
Views: 13524

Re: Rick Ferri looking to internationalize his portfolio

Not that it matters, it was recently reported by Bloomberg that Soros Fund Management, the family office of billionaire hedge fund manager George Soros, is also cutting holdings of U.S. stocks and shifted assets globally.

Soros Shifts to Europe, Asia as Investors Cut U.S. Equities

Rick Ferri
by Rick Ferri
Sat Feb 21, 2015 9:13 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 296
Views: 37355

Re: When 60/40 just isn't appropriate

Mr. Ferri, thank you for sharing your current thinking on retirement allocation and for having the courage to evolve. At some point I think you should address how you have come to 30/70 as a more typical guideline with respect to your books on AA in which you suggest typical allocations of 50% stoc...
by Rick Ferri
Sun Feb 08, 2015 11:36 am
 
Forum: Investing - Theory, News & General
Topic: When 60/40 just isn't appropriate
Replies: 127
Views: 13524

When 60/40 just isn't appropriate

Peter Bernstein wrote The 60/40 Solution in 2002. His seminal article laid out arguments for why 60% stocks and 40% bonds is the “ideal asset allocation” for long-term investors. He considered this allocation the “center of gravity” on a risk and return spectrum. Bernstein’s observation is timeless ...
by Rick Ferri
Sat Feb 07, 2015 5:09 pm
 
Forum: Investing - Theory, News & General
Topic: When 60/40 just isn't appropriate
Replies: 127
Views: 13524

Re: "What My Daughter Learned From the Stock-Market Crash"

ftobin wrote:
Gropes & Ray wrote:So Rick supporting investing on margin during the stock crash? :P

It was really an expensive put he was offering to sell to his daughter.


If you can't take advantage of your kids, who can you take advantage of? :D

Rick Ferri
by Rick Ferri
Fri Feb 06, 2015 10:25 pm
 
Forum: Investing - Theory, News & General
Topic: "What My Daughter Learned From the Stock-Market Crash"
Replies: 13
Views: 3477

Re: Rick Ferri looking to internationalize his portfolio

The more people who hate this idea, the better I like it. :D

Rick Ferri
by Rick Ferri
Thu Jan 29, 2015 9:54 am
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 296
Views: 37355

Beware of Investing Based on Rising Rates

Many investors have been incorrectly predicting the rise in short-term interest rates for several years and have kept their fixed-income investments short term. They feared a rise in rates would harm the value of their portfolios if they held intermediate- and long-term bonds or bond funds. However,...
by Rick Ferri
Thu Jan 08, 2015 11:15 am
 
Forum: Investing - Theory, News & General
Topic: Beware of Investing Based on Rising Rates
Replies: 22
Views: 2187

Re: New Vanguard AMT-free National Municipal Bond Fund

Vanguard wanted a tax-exempt bond ETF and now they have it. That's the best I can say about this fund.
by Rick Ferri
Wed Jan 07, 2015 10:56 pm
 
Forum: Investing - Theory, News & General
Topic: New Vanguard AMT-free National Municipal Bond Fund
Replies: 79
Views: 7408

Re: DFA vs DIY

Hire an adviser because you want one or need one. Don't hire an adviser just to gain access to products that sound appealing.

Rick Ferri
by Rick Ferri
Mon Jan 05, 2015 10:07 am
 
Forum: Investing - Help with Personal Investments
Topic: DFA vs DIY
Replies: 10
Views: 1800

Re: Rick Ferri looking to internationalize his portfolio

Browser wrote:What about a little gold in case the other shoe drops? That ought to shake things up and be a tonic for the yellow dog.


No, i sqwashed that bug a long time ago.

The Fight of the Century: Bond Buyers Versus Gold Bugs

Gold Bugs Swatted Agian

Rick Ferri
by Rick Ferri
Sun Jan 04, 2015 9:07 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 296
Views: 37355

Re: Rick Ferri looking to internationalize his portfolio

Of course, seems he has not yet gone neutral. There is still time for Mr. Market to teach him a lesson. Are you suggesting that I should go neutral now? Is that the "lesson" Mr. Market is going to teach me? No, I think I'll wait as I explained in the article. There is time before the othe...
by Rick Ferri
Sun Jan 04, 2015 8:03 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 296
Views: 37355

Re: Rick Ferri looking to internationalize his portfolio

Question for Rick or any other VSPs: At what point does in make sense to hedge your currency exposure? Vanguard equity funds are unhedged. Both international bond funds are hedged although using different means. That works for me. [OT response to OT economic policy comment deleted by admin alex] Ri...
by Rick Ferri
Sun Jan 04, 2015 7:05 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 296
Views: 37355

Re: Rick Ferri looking to internationalize his portfolio

To believe that indexes don't adjust to global market changes mischaracterizes what indexing is and how the strategy is executed.There is not such thing as passive index or a passive index fund. Someone is always making decisions on methodology, reconstitution techniques, rebalancing, etc. Passive i...
by Rick Ferri
Sun Jan 04, 2015 2:58 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 296
Views: 37355

Re: Rick Ferri looking to internationalize his portfolio

A few observations. Rick Ferri is a Very Smart Person. The finance and economics industries employ a large number of VSPs, many of whom try to predict the directions of economies or financial markets. Perhaps several hundred thousand such people around the world. In spite of their unquestioned inte...
by Rick Ferri
Sun Jan 04, 2015 2:29 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 296
Views: 37355
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