Search found 11194 matches

by Rodc
Wed Sep 02, 2015 7:47 pm
Forum: Investing - Theory, News & General
Topic: Is there a greater probability of buying low with ETFs than mutual funds?
Replies: 21
Views: 1293

Re: Is there a greater probability of buying low with ETFs than mutual funds?

...So it seems like you agree with the logic that instead of buying VTSAX and being locked into the market on example day Tuesday, one could potentially get a better price by holding off and applying the following rules to the ETF: 1) Look at price of VTI on Tuesday and buy if the price has dropped...
by Rodc
Wed Sep 02, 2015 7:42 pm
Forum: Investing - Theory, News & General
Topic: A “Crazy Like a Fox” Idea for Managing Market Uncertainty
Replies: 7
Views: 1424

Re: A “Crazy Like a Fox” Idea for Managing Market Uncertainty

Our emotions drive a craving for more certainty in our lives, even if it’s sometimes based on a false sense of security. Ain't that the truth. Surely some guru using 8th grade math can tell us to three significant figures what the future will hold! And maybe provide us with a fountain of youth or a...
by Rodc
Wed Sep 02, 2015 7:31 pm
Forum: Personal Finance (Not Investing)
Topic: Budgeting infrequent expenses (refrigerator, new tires, paint house, etc)
Replies: 27
Views: 2282

Re: Budgeting infrequent expenses (refrigerator, new tires, paint house, etc)

Personally I think having over $100k sitting and waiting for all of those things to fail at the same time is inefficient, since many of them you do have some choice over when precisely you replace them (or how much you spend on the replacement). On the other hand, I haven't needed a roof replacemen...
by Rodc
Wed Sep 02, 2015 7:17 pm
Forum: Investing - Theory, News & General
Topic: Selling all equities, discuss why I'm wrong. :)
Replies: 102
Views: 5473

Re: Selling all equities, discuss why I'm wrong. :)

Hey I didn't invent the Boglehead philosophy but this is it: The Bogleheads® Philosophy Develop a workable plan Invest early and often Never bear too much or too little risk Never try to time the market Use index funds when possible Keep costs low Diversify Minimize taxes Keep it simple Stay the co...
by Rodc
Wed Sep 02, 2015 4:19 pm
Forum: Investing - Theory, News & General
Topic: Why did the markets recover from the 10% loss last October?
Replies: 25
Views: 2315

Re: Why did the markets recover from the 10% loss last October?

I wasn't too concerned about why the drop occurred last October, but I couldn't think of why it recovered. Anyways, this speaks to the current situation in that there does not have to be anything memorable to make the market go higher. It does not seem that my portfolio needs to live in the moment ...
by Rodc
Wed Sep 02, 2015 3:52 pm
Forum: Investing - Theory, News & General
Topic: Why did the markets recover from the 10% loss last October?
Replies: 25
Views: 2315

Re: Why did the markets recover from the 10% loss last October?

livesoft wrote:Weren't there also protests in Hong Kong going on and possible crackdown by Chinese authorities?
Invasion of Ukraine?
Drop in oil prices?
Greeks doing something?
You know, all the usual things.


Probably. Those types of things have a habit of popping up on a regular basis.
by Rodc
Wed Sep 02, 2015 3:51 pm
Forum: Investing - Theory, News & General
Topic: Why did the markets recover from the 10% loss last October?
Replies: 25
Views: 2315

Re: Why did the markets recover from the 10% loss last October?

livesoft, I don't know if your post is Socratic, but I have to say that I had completely forgotten that there had been a 10% drop last October. The last one I actually remember was 2011--that's when this "U.S. stocks in freefall" thread started--but I don't remember what was being said ab...
by Rodc
Wed Sep 02, 2015 3:49 pm
Forum: Investing - Theory, News & General
Topic: Nothing is something worth doing
Replies: 15
Views: 1181

Re: Nothing is something worth doing

@RodC, I am happy to report the following: I made about $350 or enough for 35 sushi lunches. Last week I sold the all shares in my Vanguard taxable account that had losses. The only fund I had in that account was VLCAX. The sale amount was about $24,000 and I exchanged into a money market fund. The...
by Rodc
Wed Sep 02, 2015 10:53 am
Forum: Investing - Theory, News & General
Topic: Investing without past performance data
Replies: 27
Views: 1324

Re: Investing without past performance data

Investing with zero knowledge of the past would be extremely difficult. I would have no clue how much to save each month for example. It is important to know that it is very likely my lifetime returns will be greater than zero and less than 10%. Now it could be worse or better than that, but not lik...
by Rodc
Wed Sep 02, 2015 10:45 am
Forum: Investing - Theory, News & General
Topic: Nothing is something worth doing
Replies: 15
Views: 1181

Re: Nothing is something worth doing

Actually, no. I followed Larry Swedroe's advice and did something: https://www.bogleheads.org/forum/viewtopic.php?p=2610316#p2610316 Yesterday's RBD required me to rebalance by buying. This morning's big gain required me to rebalance by selling. How much did you buy and sell and how much did you ma...
by Rodc
Wed Sep 02, 2015 9:25 am
Forum: Investing - Theory, News & General
Topic: "Fair value" estimate for S & P 500: 9-1-15
Replies: 13
Views: 1144

Re: "Fair value" estimate for S & P 500: 9-1-15

I just tried to download the shiller data and the file was corrupt, but I did find the Jan 1 values back to 1881. http://www.multpl.com/shiller-pe/table A "reasonable" measure over time would have an average that was converging on some underlying average value. For example if I toss a coin...
by Rodc
Wed Sep 02, 2015 9:10 am
Forum: Investing - Theory, News & General
Topic: "Fair value" estimate for S & P 500: 9-1-15
Replies: 13
Views: 1144

Re: "Fair value" estimate for S & P 500: 9-1-15

If you'd prefer not to have some notion of reasonable valuation What I prefer and what I can have are not always the same thing. I want the fountain of youth. Do you have one? It is very dangerous to believe things merely because you want them to be true. You need to deal with what is actually know...
by Rodc
Wed Sep 02, 2015 8:46 am
Forum: Investing - Theory, News & General
Topic: How does one calculate the Shiller CAPE?
Replies: 4
Views: 175

Re: How does one calculate the Shiller CAPE?

GreatOdinsRaven wrote:Thanks. The last time I checked that spread sheet it hadn't been updated for August. It now reflects the CAPE as of August 28.

Thanks.


FWIW: You can estimate CAPE pretty well at any time by using the most recent E10 (which only changes slowly) and the current S&P500 index.
by Rodc
Wed Sep 02, 2015 7:38 am
Forum: Investing - Theory, News & General
Topic: "Fair value" estimate for S & P 500: 9-1-15
Replies: 13
Views: 1144

Re: "Fair value" estimate for S & P 500: 9-1-15

Given the noise and uncertainly back 95 years means the error bars are very large. Given the noise in the data in general means the error bars are very large. As I noted in a related context: Also known as garbage in --> garbage out. Look, how well do we know the mean return for US stocks in the pas...
by Rodc
Wed Sep 02, 2015 7:31 am
Forum: Investing - Theory, News & General
Topic: How does one calculate the Shiller CAPE?
Replies: 4
Views: 175

Re: How does one calculate the Shiller CAPE?

Do a google search.

Shiller's data and excel spreadsheet with the data and all the formulas will be one of the top hits
by Rodc
Wed Sep 02, 2015 6:48 am
Forum: Investing - Theory, News & General
Topic: Can you get better returns by overweighting low-PE assets?
Replies: 44
Views: 1705

Re: Can you get better returns by overweighting low-PE assets?

You should not compare 60/40 to stocks via correlation if you want to look at diversification. You would look at stocks vs bonds. Consider a portfolio of 99% cash in your mattress and 1% stocks. It's returns are completely correlated to 100% stocks. Why would I care? Their returns are extremely dif...
by Rodc
Wed Sep 02, 2015 6:21 am
Forum: Investing - Theory, News & General
Topic: Can you get better returns by overweighting low-PE assets?
Replies: 44
Views: 1705

Re: Can you get better returns by overweighting low-PE assets?

But people forget there is only *one* average portfolio - and it's the only truly passive way of investing - and that's the Global Market Portfolio .. which looks something like this: You might as well add beanie babies to your list. - Tim True - and this was addressed by Richard Roll in his 1977 c...
by Rodc
Wed Sep 02, 2015 6:13 am
Forum: Investing - Theory, News & General
Topic: Can you get better returns by overweighting low-PE assets?
Replies: 44
Views: 1705

Re: Can you get better returns by overweighting low-PE assets?

There is a difference between it really matters in a material way and it matters to me on an emotional level, which was the point of the old timer. Sure folks get very invested in their point of view, so it matters on that level. It just does not matter very much on a rational "is there any so...
by Rodc
Wed Sep 02, 2015 6:06 am
Forum: Investing - Theory, News & General
Topic: Can you get better returns by overweighting low-PE assets?
Replies: 44
Views: 1705

Re: Can you get better returns by overweighting low-PE assets?

Dear Maynard, Does cap weight theory apply across stocks and bonds? The market cap of bonds seems somewhat arbitrary. Why should the private decision to finance business operations with debt vs. equity affect an individual investor's optimal exposure to bonds? Plus if you leverage a bond portfolio,...
by Rodc
Wed Sep 02, 2015 5:54 am
Forum: Personal Finance (Not Investing)
Topic: Dear In-Laws: Less toys, more 529
Replies: 70
Views: 6390

Re: Dear In-Laws: Less toys, more 529

Most grandparents want to be in the traditional role of being able to spoil the grandchildren, play with them when they want and return them to the parents when tired, help with baby sitting either regularly or when really needed (If they live close by), etc. A key factor is the age of the grandchi...
by Rodc
Tue Sep 01, 2015 4:02 pm
Forum: Investing - Theory, News & General
Topic: Can you get better returns by overweighting low-PE assets?
Replies: 44
Views: 1705

Re: Can you get better returns by overweighting low-PE assets?

"You can only get long heated debates because the differences are too small to matter very much. If one were clearly better there would be no debate, we'd all just agree and move on." I think it matters a very great deal to the people who regularly engage in these debates. It seems to pro...
by Rodc
Tue Sep 01, 2015 3:20 pm
Forum: Investing - Theory, News & General
Topic: Can you get better returns by overweighting low-PE assets?
Replies: 44
Views: 1705

Re: Can you get better returns by overweighting low-PE assets?

Finding some very contradictory information on this community. Some people are saying you should hold small, value, emerging, etc. for higher returns others say you should hold cap weight because cap weight is efficient. Which side is right? What should I do? Bogleheads is a big forum, with many th...
by Rodc
Tue Sep 01, 2015 2:37 pm
Forum: Investing - Theory, News & General
Topic: Can you get better returns by overweighting low-PE assets?
Replies: 44
Views: 1705

Re: Can you get better returns by overweighting low-PE assets?

You should not compare 60/40 to stocks via correlation if you want to look at diversification. You would look at stocks vs bonds. Consider a portfolio of 99% cash in your mattress and 1% stocks. It's returns are completely correlated to 100% stocks. Why would I care? Their returns are extremely dif...
by Rodc
Tue Sep 01, 2015 2:04 pm
Forum: Investing - Theory, News & General
Topic: Can you get better returns by overweighting low-PE assets?
Replies: 44
Views: 1705

Re: Can you get better returns by overweighting low-PE assets?

The problem with the total stock market and total bonds is it doesn't diversify you much .. The 60:40 portfolio has had a 0.98 (I believe?) correlation with the stock market so far this century .. Not much of a free lunch You should not compare 60/40 to stocks via correlation if you want to look at...
by Rodc
Tue Sep 01, 2015 1:52 pm
Forum: Personal Finance (Not Investing)
Topic: Blue collar worker and millionaire dream
Replies: 32
Views: 4363

Re: Blue collar worker and millionaire dream

Not to be a downer, but remember inflation matters. One might need* $2.4M in 30 years to have the purchasing power of $1M today. It helps some that income will tend to go up with inflation (though may not) * assumes 3% inflation. FWIW: near as I can tell the best way to get ahead as a blue collar wo...
by Rodc
Tue Sep 01, 2015 1:45 pm
Forum: Personal Finance (Not Investing)
Topic: About to close on a home we have overbid on - have cold feet
Replies: 56
Views: 6622

Re: About to close on a home we have overbid on - have cold feet

Getting cold feet is very common before buying a first house. A house is a big commitment and a lot of money. It carries a certain amount of risk. I got cold feet when I bought my house, in part because a competing real estate agent spun me up when I told them I was going to buy house A and not B wh...
by Rodc
Mon Aug 31, 2015 12:00 pm
Forum: Personal Finance (Not Investing)
Topic: First Post - seeking wisdom on job (long, sorry)
Replies: 36
Views: 4530

Re: First Post - seeking wisdom on job (long, sorry)

Glad it worked out so well. Thanks for the update.
by Rodc
Sun Aug 30, 2015 6:35 pm
Forum: Investing - Theory, News & General
Topic: Reblancing
Replies: 17
Views: 1111

Re: Reblancing

I do both. That is to say, I add to "underfunded" assets with new inflows and rebalance when I hit a band/threshold. That is what I do as well. To answer the OP, it really just does not matter how you rebalance. Do whatever is easiest for you. http://home.comcast.net/~rodec/finance/papers...
by Rodc
Sun Aug 30, 2015 6:19 pm
Forum: Investing - Theory, News & General
Topic: REITs: The one Tilt that Makes Sense?
Replies: 47
Views: 3148

Re: REITs: The one Tilt that Makes Sense?

Bicycling is a big business, yet I think there is only one publicly traded US company in the bicycle industry--the rest are all private. Does this mean I need a 5% allocation to this one company? The Market Portfolio is the set of all risky assets, not just all assets that small time investors have...
by Rodc
Sun Aug 30, 2015 6:00 pm
Forum: Investing - Theory, News & General
Topic: REITs: The one Tilt that Makes Sense?
Replies: 47
Views: 3148

Re: REITs: The one Tilt that Makes Sense?

I own them but after 2008 I am pretty well agnostic. I buy that real estate is a separate asset class, but REITS are not really quite real estate so you have to decide if (1) you think owning real estate is something you want and (2) are REITS a good enough proxy for real estate. One issue you real...
by Rodc
Sun Aug 30, 2015 5:58 pm
Forum: Investing - Theory, News & General
Topic: REITs: The one Tilt that Makes Sense?
Replies: 47
Views: 3148

Re: REITs: The one Tilt that Makes Sense?

While REITs may not be perfect substitute for real estate, aren't they still better than no substitute? That is, if the returns of REITs are 60% correlated with stocks and 40% correlated with real estate, you still get that 40% correlation with real estate which is better than 0%. So would you cons...
by Rodc
Sun Aug 30, 2015 5:54 pm
Forum: Investing - Theory, News & General
Topic: REITs: The one Tilt that Makes Sense?
Replies: 47
Views: 3148

Re: REITs: The one Tilt that Makes Sense?

I own them but after 2008 I am pretty well agnostic. I buy that real estate is a separate asset class, but REITS are not really quite real estate so you have to decide if (1) you think owning real estate is something you want and (2) are REITS a good enough proxy for real estate. One issue you real...
by Rodc
Sat Aug 29, 2015 5:16 pm
Forum: Investing - Theory, News & General
Topic: REITs: The one Tilt that Makes Sense?
Replies: 47
Views: 3148

Re: REITs: The one Tilt that Makes Sense?

I own them but after 2008 I am pretty well agnostic. I buy that real estate is a separate asset class, but REITS are not really quite real estate so you have to decide if (1) you think owning real estate is something you want and (2) are REITS a good enough proxy for real estate. One issue you reall...
by Rodc
Sat Aug 29, 2015 5:10 pm
Forum: Investing - Theory, News & General
Topic: Why doesn't the 3 fund portfolio have TIPS?
Replies: 38
Views: 2718

Re: Why doesn't the 3 fund portfolio have TIPS?

Leave statistics out of it. What people mean qualitatively by expected inflation certainly can be made precise using the notion from probability theory of expected value of a random variable. Sort of. But remember there is an important difference between precise and accurate. Sure one can make a pr...
by Rodc
Sat Aug 29, 2015 8:33 am
Forum: Investing - Theory, News & General
Topic: Why doesn't the 3 fund portfolio have TIPS?
Replies: 38
Views: 2718

Re: Why doesn't the 3 fund portfolio have TIPS?

Leave statistics out of it. What people mean qualitatively by expected inflation certainly can be made precise using the notion from probability theory of expected value of a random variable. Sort of. But remember there is an important difference between precise and accurate. Sure one can make a pr...
by Rodc
Sat Aug 29, 2015 8:21 am
Forum: Personal Finance (Not Investing)
Topic: Dear In-Laws: Less toys, more 529
Replies: 70
Views: 6390

Re: Dear In-Laws: Less toys, more 529

Reading through this I agree that decoupling (1) the kids have more toys and "stuff" than they need or even can handle (I remember one Christmas when my little kids were so overwhelmed they stopped opening presents and we put away unopened items for a few months) and (2) fund 529 instead i...
by Rodc
Fri Aug 28, 2015 8:22 pm
Forum: Investing - Theory, News & General
Topic: Why doesn't the 3 fund portfolio have TIPS?
Replies: 38
Views: 2718

Re: Why doesn't the 3 fund portfolio have TIPS?

I think I get it. I just think the language is confusing when people keep saying "unexpected inflation" when referring to high-sigma inflation outcomes. Do not confuse this with Gaussian statistics. That only exists in simple textbooks. And at any rate misses the point. The language for w...
by Rodc
Fri Aug 28, 2015 8:19 pm
Forum: Personal Finance (Not Investing)
Topic: Dear In-Laws: Less toys, more 529
Replies: 70
Views: 6390

Re: Dear In-Laws: Less toys, more 529

I think in many cases you could have ONE conversation about this subject. Most people in my experience are fairly reasonable if approached with some sensitivity and kindness. Let your wife bring it up. Don't demand, just let them know that the kids have more than they need, you are running out of ro...
by Rodc
Fri Aug 28, 2015 8:05 pm
Forum: Investing - Theory, News & General
Topic: Do "valuations" affect your asset allocation?
Replies: 52
Views: 2221

Re: Do "valuations" affect your asset allocation?

I rebalance. When stocks are running up a lot you end up selling stocks to buy bonds. This tends to happen when valuations are high (though if E goes up with price it may not be). The reverse is also true. So valuations play a subtle implicit role. Another factor is how close I am to my retirement g...
by Rodc
Fri Aug 28, 2015 7:50 pm
Forum: Investing - Theory, News & General
Topic: Why doesn't the 3 fund portfolio have TIPS?
Replies: 38
Views: 2718

Re: Why doesn't the 3 fund portfolio have TIPS?

@Rodc What is unexpected inflation? Do you mean variance in inflation outcomes? So basically investors pay a premium for TIPS to avoid variance in their real returns. Since nominal bonds have higher expected returns they will outperform TIPS in the long run What I mean is the following. Market part...
by Rodc
Fri Aug 28, 2015 7:34 pm
Forum: Investing - Theory, News & General
Topic: The Oft-Ignored Fact: Real stock returns were only 2.2% since 1870.
Replies: 22
Views: 2776

Re: The Oft-Ignored Fact: Real stock returns were only 2.2% since 1870.

knpstr wrote:enormous difference between stocks and bonds using your numbers.

compound at 4.6% on $10,000 for 145 years is $6.8 million
compound at 8.6% on $10,000 for 145 years is $1.5 billion

Bonds? No thank you.


You must have really good genes.
by Rodc
Fri Aug 28, 2015 7:18 pm
Forum: Personal Finance (Not Investing)
Topic: Joint finances and cash management
Replies: 38
Views: 2815

Re: Joint finances and cash management

Joint checking and savings. Of course retirement accounts are separate. My wife nominally has her own credit card, but she put me on it so I have a card on the same account that I keep stashed so if on travel and I lose the main household card I have a back up. But she uses it sometimes for personal...
by Rodc
Fri Aug 28, 2015 7:03 pm
Forum: Personal Finance (Not Investing)
Topic: Budgeting infrequent expenses (refrigerator, new tires, paint house, etc)
Replies: 27
Views: 2282

Re: Budgeting infrequent expenses (refrigerator, new tires, paint house, etc)

Many of those are not so hard to predict when they will be needed. Also, maybe more to the point, easy to predict when the odds go up. If you put 20-year shingles on your roof you can plan to have the funds in hand by year 15 and then whenever they need replacing you are good to go. You know about h...
by Rodc
Fri Aug 28, 2015 5:56 pm
Forum: Investing - Theory, News & General
Topic: Why doesn't the 3 fund portfolio have TIPS?
Replies: 38
Views: 2718

Re: Why doesn't the 3 fund portfolio have TIPS?

Historically short or intermediate treasuries have done ok inflation-wise over the long haul and so did ok for the long term buy and hold investor. Not necessarily. For instance, from the end of 1940 to the end of 1981, in real terms: 10-year treasuries lost 55% 3-month treasuries lost 34% Data is ...
by Rodc
Fri Aug 28, 2015 3:58 pm
Forum: Personal Finance (Not Investing)
Topic: Emergency fund or debt?
Replies: 15
Views: 907

Re: Emergency fund or debt?

Sounds like a tough spot.

I would try hard to get some sort of minimal emergency fund in place.

I would think about trying to hold on until the teens are out of high school and sell the house. (any equity?)

Best of luck.
by Rodc
Fri Aug 28, 2015 3:54 pm
Forum: Investing - Theory, News & General
Topic: Why doesn't the 3 fund portfolio have TIPS?
Replies: 38
Views: 2718

Re: Why doesn't the 3 fund portfolio have TIPS?

In general TIPS have lower expected return vs nominal treasury - just the cost of having inflation insurance if you will. TIPS are not for expected inflation - they are for unexpected inflation (you may know that). Historically short or intermediate treasuries have done ok inflation-wise over the lo...
by Rodc
Fri Aug 28, 2015 2:34 pm
Forum: Investing - Theory, News & General
Topic: Why no diversification benefit for international in this week's crash?
Replies: 90
Views: 8052

Re: Why no diversification benefit for international in this week's crash?

I care about short run results for rebalancing. If there's a flash crash in one asset I want to be able to sell my other assets to rebalance into it and restore my AA and get better returns by buying low and selling high. But when all assets fall at the same time, no rebalancing bonus can be gained...
by Rodc
Fri Aug 28, 2015 2:24 pm
Forum: Personal Consumer Issues
Topic: Power Switch & Camera - Remotely Triggered
Replies: 7
Views: 275

Re: Power Switch & Camera - Remotely Triggered

Could you simply call your next door neighbor and say "Hey, I was wondering, is there any ice hanging off my roof?" Funny guy , ha ha - actually our electrician who would install the heating wires proposed a manual timer that our neighbor could turn on from inside the house but remote con...
by Rodc
Fri Aug 28, 2015 2:06 pm
Forum: Personal Consumer Issues
Topic: Power Switch & Camera - Remotely Triggered
Replies: 7
Views: 275

Re: Power Switch & Camera - Remotely Triggered

Could you simply call your next door neighbor and say "Hey, I was wondering, is there any ice hanging off my roof?"
by Rodc
Fri Aug 28, 2015 12:15 pm
Forum: Investing - Theory, News & General
Topic: Cash is king over short-term bonds
Replies: 61
Views: 5536

Re: Cash is king over short-term bonds

Depending on what you want to do CDs can certainly make sense for some people. On the other hand how much cash are you talking about? A difference in a small fraction of a percent against a modest cash/FI allocation is not going to make much of a difference. Might be enough for you to care, but not ...

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