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Re: Shiller on Lofty Market Elevations

A very good summary of issues surrounding high (compared to history) PE10 is at http://fatasmihov.blogspot.de/2014/08/irrational-exuberance-meets-secular.html From that summary, while people may disagree on whether a high PE is supported by current conditions, everyone seems to agree that the fact ...
by Rodc
Tue Aug 19, 2014 9:33 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 4776

Re: Does domestic over weighting qualify as active managemen

One issue that there is a continuum of active management from barely active to hyper active. It is really the hyper active: concentrated bet, high turn over, high cost portfolios (or funds) that are the problem. S&P 500 is chosen by a committee, it is not just large cap, and it changes from time...
by Rodc
Mon Aug 11, 2014 4:42 pm
 
Forum: Investing - Theory, News & General
Topic: Does domestic over weighting qualify as active management?
Replies: 26
Views: 1205

Re: So where's that inflation many forecasted?

And I am also constantly being surprised by other things that are far more expensive than they used to be. The price of fried clams, for example. Good grief. I paid more for my fried clams than my wife paid for her lobster roll. Clams were not high, lobster was low. :) I was reading a new way to ge...
by Rodc
Mon Aug 11, 2014 3:15 pm
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2601

Re: average American eats out 203 times per year

Gropes & Ray wrote:Lunch every working day + dinner w/ my wife every weekend + vacation and miscellaneous meals out = over 200 meals for me.


Me too. We have good cafeteria at work. Not expensive.
by Rodc
Sat Aug 09, 2014 4:59 pm
 
Forum: Personal Consumer Issues
Topic: average American eats out 203 times per year
Replies: 105
Views: 6371

Re: Early 20s professional needing retirement fund advice

A real return (inflation factored out to make comparisons easy) of about 4% is fairly reasonable. Stocks long term maybe 6.5% (hsitorical US) and treasuries at about 2%. If you factor in global stock returns something less say 4.5%. Now of course might be higher or lower. Many by the time they are s...
by Rodc
Mon Aug 04, 2014 3:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Early 20s professional needing retirement fund advice
Replies: 8
Views: 998

Re: Why should a portfolio get safer as one ages?

I think what everyone is saying is true; the risk of catastrophic portfolio decline late in life and the inability to recover from it is a huge issue. However, I don't think it is an infinite transition - meaning, I agree most people should probably be less than 80/20, but it shouldn't just keep go...
by Rodc
Mon Aug 04, 2014 2:33 pm
 
Forum: Investing - Theory, News & General
Topic: Why should a portfolio get safer as one ages?
Replies: 30
Views: 2784

Re: What is your most memorable 1 week vacation?

I don't normally to one week vacations. Have had some very memorable longer ones. I did take a memorable one week vacation (just under a week) last summer. I posted about it here: http://www.bogleheads.org/forum/viewtopic.php?f=11&t=123621&p=1811361&hilit=+long%27s+peak+#p1811361 This wa...
by Rodc
Mon Aug 04, 2014 12:58 pm
 
Forum: Personal Consumer Issues
Topic: What is your most memorable 1 week vacation?
Replies: 85
Views: 6538

Re: Arnott's/RAFI 10 year 'expected' returns

I don't have a nice clear story or procedure. Over time, in studying a lot of data and learning a lot of history, I have arrived at some basic beliefs. One is that the best one can do is to very crudely assess your risk tolerance and only very crudely trade risk vs return to come up with an asset a...
by Rodc
Mon Aug 04, 2014 10:48 am
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: Arnott's/RAFI 10 year 'expected' returns

<>Personally, I think a better approach is to consider how much risk you can take or are willing to take. THAT sets your AA. That then sets some expected return - expect on the low side to be cautious, but not world record low (could be refined with current valuations, but if you are already conser...
by Rodc
Sun Aug 03, 2014 8:51 pm
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: Arnott's/RAFI 10 year 'expected' returns

No one, not Rick, not Larry, not Arnott, not Bernstein, not Grantham provide this information or even seem to understand why this is needed. But anyone who has ever worked with weighted least squares (or similar) knows this. Rod, you make this point quite frequently - and I won't dispute your wisdo...
by Rodc
Sun Aug 03, 2014 11:15 am
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: Arnott's/RAFI 10 year 'expected' returns

<>Personally, I think a better approach is to consider how much risk you can take or are willing to take. THAT sets your AA. That then sets some expected return - expect on the low side to be cautious, but not world record low (could be refined with current valuations, but if you are already conser...
by Rodc
Sat Aug 02, 2014 9:32 pm
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: Arnott's/RAFI 10 year 'expected' returns

Rod There is no intelligent way to decide on AA without making forecasts of returns. Having said that as you note one should not treat the forecast as "deterministic"--that is what I'm going to get. But only as mean of potential wide dispersion of returns. When using CAPE 10-, about as go...
by Rodc
Sat Aug 02, 2014 6:00 pm
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: Arnott's/RAFI 10 year 'expected' returns

You cannot rationally set an allocation based only on point estimates of the expected central tendencies of some unknown and unestimated distributions. Well, you can consider how many dollars of profits you're getting for each $100 spent. If this differs between two investments, your returns expect...
by Rodc
Sat Aug 02, 2014 5:48 pm
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: Arnott's/RAFI 10 year 'expected' returns

berntson wrote:What is MCS?


Monte Carlo Simulation
by Rodc
Sat Aug 02, 2014 5:46 pm
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: Arnott's/RAFI 10 year 'expected' returns

Rod You cannot rationally set an allocation based only on point estimates of the expected central tendencies of some unknown and unestimated distributions. No one, not Rick, not Larry, not Arnott, not Bernstein, not Grantham provide this information or even seem to understand why this is needed. On...
by Rodc
Sat Aug 02, 2014 1:18 pm
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: How many families use 529 plans?

This thread is making me twitch. When your kids are young, you think you have all the time in the world to save for college. You read threads like this, Suze Orman, Dave Ramsey, etc. and agree with everyone who writes that you can't take out a loan to pay for retirement. Believe me, I get it. I dra...
by Rodc
Sat Aug 02, 2014 9:55 am
 
Forum: Personal Finance (Not Investing)
Topic: How many families use 529 plans?
Replies: 107
Views: 6460

Re: Public Speaking-help

*update* It's over. I was told I did well but I'm not sure. I sort of blacked out, like Will Farrell debating in Old School. The tough part is when the Q&A part kicked off. I fielded a couple questions and I don't think I imploded. Thankfully my boss did end up jumping up and answering the rema...
by Rodc
Sat Aug 02, 2014 9:46 am
 
Forum: Personal Consumer Issues
Topic: Public Speaking-help
Replies: 79
Views: 4958

Re: Arnott's/RAFI 10 year 'expected' returns

I'm a little lost. Perhaps I would need to follow Arnott more closely to understand his language. In the graph's caption it says "first pillar" is US large cap (S&P 500) and yet US large cap and "first pillar" are not nearly the same in the graph. At any rate, without error b...
by Rodc
Sat Aug 02, 2014 9:40 am
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4622

Re: Prove adding SV will lower the risk, given the same E(r)

I still do tilt small and value because for example I have an above average ability to handle "risk that shows up at bad times", and because if I factor in pensions, social security and low debt and low need for additional income I could actually rationally increase the risk I do hold eve...
by Rodc
Fri Aug 01, 2014 5:07 pm
 
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 3996

Re: Prove adding SV will lower the risk, given the same E(r)

I would also like to add for other readers that market portfolio not being mean-variance efficient doesn't necessarily imply one should tilt (not saying tilt to SV) to increase E(R) and lower stdev. If one manages to achieve that, he will be exposed to another risk that he may not be aware of. With...
by Rodc
Fri Aug 01, 2014 2:17 pm
 
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 3996

Re: Prove adding SV will lower the risk, given the same E(r)

However, none of these posts (including Epsilon's recent post) showed that it's possible to increase E(R) and lower stdev from the market portfolio. There is value in making the observation explicit, but it strikes me as the obvious conclusion once one understands the generalization of the 2D front...
by Rodc
Fri Aug 01, 2014 11:59 am
 
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 3996

Re: Prove adding SV will lower the risk, given the same E(r)

That is all fine and fairly well understood by many. It has been discussed here any number of times. But that is hardly "proof" of anything in the real world which you seemed to desire. Yes, mathematically things can exist in the sense of being potentially true. Given such and such hypoth...
by Rodc
Fri Aug 01, 2014 9:36 am
 
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 3996

Re: Public Speaking-help

I'm giving a presentation TOMORROW to 284 folks, and I really, really, don't want to.. My palms are sweaty any time I think about it.. I'm just trying to get buy in from my bosses on the content and am concentrating on how much I'm going to enjoy a frothy beer when it's all done. Good luck to us bo...
by Rodc
Thu Jul 31, 2014 4:50 pm
 
Forum: Personal Consumer Issues
Topic: Public Speaking-help
Replies: 79
Views: 4958

Re: Prove adding SV will lower the risk, given the same E(r)

Most stated that there's no proof. But here's an academic proof why adding another portfolio (possibly SV) can increase the E(r) and stdev at the same time. In other words, there's an academic explanation for why the market portfolio is not mean-variance efficient. I doubt most can understand the f...
by Rodc
Thu Jul 31, 2014 4:48 pm
 
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 3996

Re: How many families use 529 plans?

I'm not using a 529 plan for my kids. I realize it's theoretically better, but to me the hassle of trying to guess the exact amount to save and managing a separate account isn't worth it. If my state allowed me to deduct state income tax it would obviously be a much better idea though. Took me seve...
by Rodc
Thu Jul 31, 2014 4:37 pm
 
Forum: Personal Finance (Not Investing)
Topic: How many families use 529 plans?
Replies: 107
Views: 6460

Re: Prove adding SV will increase E(r) given the same risk

Google Swedroe Fat Tail TY. I googled it and read the first 10 search results. 1. I understand what fail tail risk means. 2. Most stated, Larry's portfolio will reduce the fat tail risk without affecting the expected return and the stdev. 3. Some stated, Larry's portfolio will cut off left tail mor...
by Rodc
Thu Jul 31, 2014 1:50 pm
 
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 3996

Re: Prove adding SV will increase E(r) given the same risk

There is no proof of most anything in investing. No proof SCV will help, should be expected to help, should be expected to hurt, or will hurt. If you have a 40% estimate that your car shop is cheating you, do you find a new shop? What about 70%? Probably you won't change at 1% (heck it likely at lea...
by Rodc
Thu Jul 31, 2014 1:18 pm
 
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 3996

Re: XIRR Performance Calc Vanguard

Basically if you get a payment that is immediately reinvested you have an out and an in of the exact same amount and at the exact same time, so you can include it or not, it won't matter. (So might as well ignore and keep things simple, as others have noted.)
by Rodc
Thu Jul 31, 2014 10:52 am
 
Forum: Investing - Theory, News & General
Topic: XIRR Performance Calc Vanguard
Replies: 5
Views: 723

Re: Should retirement investors own small/value stocks at al

So, if a retiree desired about 30% in stocks, 70% bonds then Larry is suggesting the whole 30% should be in SCV? This doesn't make sense to me. If I want only 30% in stocks to reduce portfolio risk why would I want to increase risk by putting the whole wad in volatile SCV stocks? What I think Larry...
by Rodc
Wed Jul 30, 2014 8:22 pm
 
Forum: Investing - Theory, News & General
Topic: Should retirement investors own small/value stocks at all?
Replies: 36
Views: 2925

Re: Stocks: losing money for 20-30 years not uncommon

But how many put their entire nest egg into the market right before a crash and then never add any more money? I would like to see the worst 30 years for someone who invested $1,000 a year for the entire 30 years. Not quite the study you asked for but partly http://home.comcast.net/~rodec/finance/p...
by Rodc
Wed Jul 30, 2014 8:15 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 4270

Re: Which is King: Income Stream or $ Invested

Income stream up to my minimal acceptable lifestyle then dollars invested after that. That is an interesting answer. That or something similar seems like a good answer. I was think it depends on the goal, retirement lifestyle, inheritance for the kids, etc. That kind of rolls them into an integrate...
by Rodc
Tue Jul 29, 2014 8:28 pm
 
Forum: Investing - Theory, News & General
Topic: Which is King: Income Stream or $ Invested
Replies: 52
Views: 4577

Re: Stocks: losing money for 20-30 years not uncommon

Day9 wrote:It's almost as if investing involves risk, including the risk of loss of principal. :oops:


Somehow (many) people are always trying to find a way for this to not be true.
by Rodc
Tue Jul 29, 2014 8:26 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 4270

Re: Stocks: losing money for 20-30 years not uncommon

patrick wrote:Note that you can't necessarily seek safety from this possibility in bonds. US bonds, for instance, have had more than 40 year periods of negative returns.


And worse, US has had a simultaneous horrible 30-year period in stocks and bonds! They both stank at the same time.
by Rodc
Tue Jul 29, 2014 8:25 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 4270

Re: Should retirement investors own small/value stocks at al

This is a lot of the reason that I did away with my S/D portfolio with tilts a while ago. When you tilt sometimes it takes a while, if ever for the advantage to show up. I'm not getting any younger. Now I am more simplified, but still tilt a bit towards REITs. Can't seem to let that go. :happy It c...
by Rodc
Tue Jul 29, 2014 8:23 pm
 
Forum: Investing - Theory, News & General
Topic: Should retirement investors own small/value stocks at all?
Replies: 36
Views: 2925

Re: How to fix door handle?

Why spend money at Lowe's or HD if all you have to do is tighten a screw? I don't get it. Why post a message on an internet forum if all you have to do is tighten a screw? As others have mentioned, it's really hard to know what he has got going on. It sounds to some of us as if it is just loose. At...
by Rodc
Mon Jul 28, 2014 3:00 pm
 
Forum: Personal Consumer Issues
Topic: How to fix door handle?
Replies: 25
Views: 1417

Re: Do Bogleheads Feel Wealthier?

The question is simply too ill posed for me to answer.

I do however feel wealthy enough.

And that is enough for me.
by Rodc
Mon Jul 28, 2014 2:54 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do Bogleheads Feel Wealthier?
Replies: 57
Views: 4641

Re: Difference between leasing a car and renting a home

I think staying in a home for many years favors buying. And only staying a few years favors renting. In fact if that were not true rental real estate would mostly be a losing proposition for the owner who rents out the property, and that is mostly not the case. The issue is mostly the effect of the ...
by Rodc
Mon Jul 28, 2014 2:51 pm
 
Forum: Personal Finance (Not Investing)
Topic: Difference between leasing a car and renting a home
Replies: 7
Views: 1010

Re: Public Speaking-help

A couple of follow up thoughts. Humor: it depends on the audience. If you are briefing a casual audience of sales people maybe fine. Briefing your boss's boss or an Army General, not so much. Which brings up an issue: know your audience. Give some thought to what they want to get out of your talk, n...
by Rodc
Mon Jul 28, 2014 10:00 am
 
Forum: Personal Consumer Issues
Topic: Public Speaking-help
Replies: 79
Views: 4958

Re: POLL: My home is worth less/more in 2014 than in 2007?

Zillow does not know condition of the house or remodel work. It depends largely on numerical data like sq footage. In our area it is often confused by tear-down-small-house-and-build-mansion. It will list the old house details like year built and sqft with recent sales price of the new house (say 1...
by Rodc
Mon Jul 28, 2014 9:43 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: My home is worth less/more in 2014 than in 2007?
Replies: 94
Views: 5693

Re: POLL: My home is worth less/more in 2014 than in 2007?

I voted don't know and don't care. But I do care a little, and that was not an option. I don't expect to sell for 8 years or so, though sometimes things come up. I have some idea of what the house is worth, but I have not tried to carefully estimate based on comps, talking to real estate agents and ...
by Rodc
Sun Jul 27, 2014 6:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: POLL: My home is worth less/more in 2014 than in 2007?
Replies: 94
Views: 5693

Re: One of the simplest rational reasons why some should til

I'm not sure what you are getting at. The main argument in my reply to steve was that some investors are not just mean-variance investors. They also care about other things. That is the crux of the matter. I think variance is a fair approximation, good enough for many purposes. As is beta. But it i...
by Rodc
Sun Jul 27, 2014 6:28 pm
 
Forum: Investing - Theory, News & General
Topic: One of the simplest rational reasons why some should tilt
Replies: 43
Views: 4161

Re: Public Speaking-help

Do not cancel. This can be a very career limiting limitation. Higher level people need to be able to address groups of people. They need to be able to rally support for action among other things. You can learn to do this and your future self will thank you for not giving up. In the near term get a f...
by Rodc
Sat Jul 26, 2014 10:21 am
 
Forum: Personal Consumer Issues
Topic: Public Speaking-help
Replies: 79
Views: 4958

Re: 2015 Subaru Forester, which trim/options?

I have two Outbacks and they are base models. They come with many nice features standard. The price really jumps on these cars when you start adding options. More stuff = more stuff to go wrong. Electronic doo-dads become obsolete very quickly nowadays. I'm with you but I think we are a distinct mi...
by Rodc
Fri Jul 25, 2014 11:56 pm
 
Forum: Personal Consumer Issues
Topic: 2015 Subaru Forester, which trim/options?
Replies: 16
Views: 1722

Re: Should market valuations be completely disregarded?

Most Bogleheads seem to use the expression 'Market Timing' to mean anything other than fixed Strategic Asset Allocation. Would it more correct to apply the term only to Tactical Asset Allocation? Like "active" in describing a fund covers a range of territory so does "market timing&qu...
by Rodc
Fri Jul 25, 2014 7:00 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3935

Re: One of the simplest rational reasons why some should til

It seems your assumption is that SCV offers more reward for more risk. Couldn't your hypothetical wealthy and retired investor simply increase the equity portion of their portfolio if they want to take on more risk? This could be done at a lower cost and with less complexity than adding a SCV tilt ...
by Rodc
Fri Jul 25, 2014 6:57 pm
 
Forum: Investing - Theory, News & General
Topic: One of the simplest rational reasons why some should tilt
Replies: 43
Views: 4161

Re: "What Has Time Taught Bill Bernstein?"

nedsaid: I also liked that he discussed the limitations of a quantitative approach to investing. Numbers are important but they aren't the whole thing with investing, there is a whole lot more. And a whole lot less. :happy What I mean is I believe IF average investors simply follows the basic Bogle...
by Rodc
Thu Jul 24, 2014 10:22 pm
 
Forum: Investing - Theory, News & General
Topic: "What Has Time Taught Bill Bernstein?"
Replies: 19
Views: 3955

Re: Should market valuations be completely disregarded?

Rod We are not as a firm engaged in market timing at all (what I do for myself in terms of this issue can be different--as in 1998 we simply rebalanced for clients while I sold all but value funds). We only as firm use the valuation metrics to estimate odds of success in MCS. That helps determine t...
by Rodc
Thu Jul 24, 2014 9:34 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3935

Re: 2015 Subaru Forester, which trim/options?

I bought the base model. Works fine for us with two kids. Did not have a problem with cloth seats in previous cars even with 6 and 11years of use. Near as I can tell the markup on add ons is huge (seems to be where they make their profits), and unless really important something of a waste of money, ...
by Rodc
Thu Jul 24, 2014 6:32 pm
 
Forum: Personal Consumer Issues
Topic: 2015 Subaru Forester, which trim/options?
Replies: 16
Views: 1722

Re: Should market valuations be completely disregarded?

Larry, when you carefully analyze your client performance against an appropriate benchmark what has the benefit to your clients from this valuation driven market timing been? What benefit in returns, risk, or Sharpe Ratio?

Thanks.
by Rodc
Thu Jul 24, 2014 6:23 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3935

Re: The ultimate Boglehead exercise

How about rock climbing, takes a lot of discipline to keep the right form by not overgripping, lunging for holds that look good, etc. Its good to go up but after awhile you don't care if you fall because you know the system works. If you want to trad lead you have a large front end load. Sport lead...
by Rodc
Wed Jul 23, 2014 8:58 pm
 
Forum: Personal Consumer Issues
Topic: The ultimate Boglehead exercise
Replies: 30
Views: 3817
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