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Re: My husband's " WILL", $ left for me to live on....

I suggest more life insurance, if possible, paid by him (perhaps from the rent you'll be charging), with you as,beneficiary.
by Rodc
Sat Aug 30, 2014 7:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: My husband's " WILL", $ left for me to live on....
Replies: 258
Views: 16982

Re: The Worst Investment You Can Make: Buying a Home

So, if you think of stocks as an investment you will over buy stocks (and under buy bonds)? Or vice versa? I own a lot of stocks and bonds in my MFs and ETFs. The question was: did you over buy one of them because you thought it is as an investment. I can answer for myself: no. I also did not over ...
by Rodc
Fri Aug 29, 2014 11:53 am
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 15884

Re: The Worst Investment You Can Make: Buying a Home

A home that is your residence is not an investment, it is an expense plain and simple. If you make the mistake of viewing it as an investment you'll make a number of behavioral errors, the most common one being buying too much house. +1. When I started living independently, I looked for a place tha...
by Rodc
Fri Aug 29, 2014 9:20 am
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 15884

Re: International allocation

Since 1972, a 50/50 portfolio of TSM/TISM rebalanced annually has had a meaningfully higher return than either TSM or TISM alone, with a stdev only a tiny bit higher than TSM. That's the virture in holding two assets that have similar returns by are imperfectly correlated. http://tiny.cc/0sj9kx (Th...
by Rodc
Thu Aug 28, 2014 1:43 pm
 
Forum: Investing - Theory, News & General
Topic: International allocation
Replies: 73
Views: 4131

Re: Purchasing a bathtub

use; occasional soak.. no shower, have a separate shower length: we're 5' 4" and 5" 10" what is the best size material: Is acrylic acceptable or is cast iron "the only way to go" Sounds like a 6 footer and deeper if you will use it and its only purpose is to soak, presuming...
by Rodc
Thu Aug 28, 2014 12:17 pm
 
Forum: Personal Consumer Issues
Topic: Purchasing a bathtub
Replies: 8
Views: 528

Re: Purchasing a bathtub

You really need to figure out what you are going to do with it, that is, what do you really need it to provide. Are you/wife never, now and then, frequently going to actually take a soak in the tub vs take a standing shower? Are you going to never, now and then, frequently take a shower together? If...
by Rodc
Thu Aug 28, 2014 11:20 am
 
Forum: Personal Consumer Issues
Topic: Purchasing a bathtub
Replies: 8
Views: 528

Re: The Worst Investment You Can Make: Buying a Home

A more relevant comparison is of the homes one would buy or rent, and considering that these are not the same types of homes, the results are more likely to favor rent. That is like valuing containers of yogurt without paying attention to the fact that one is 6oz and the other 5.3oz. Maybe you don'...
by Rodc
Thu Aug 28, 2014 10:31 am
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 15884

Re: Zegna Suits

I would hope that Zegna is considered moderate taste and not extravagant, especially for a wedding groom garment. Not sure why I'm weighing at this point, but... :) Zenga would not be a moderate non extravagant purchase for someone in your income bracket. But hey, you are entitled to be extravagant...
by Rodc
Thu Aug 28, 2014 10:22 am
 
Forum: Personal Consumer Issues
Topic: Zegna Suits
Replies: 197
Views: 8922

Re: The Worst Investment You Can Make: Buying a Home

A more relevant comparison is of the homes one would buy or rent, and considering that these are not the same types of homes, the results are more likely to favor rent. That is like valuing containers of yogurt without paying attention to the fact that one is 6oz and the other 5.3oz. Maybe you don'...
by Rodc
Thu Aug 28, 2014 9:22 am
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 15884

Re: The Worst Investment You Can Make: Buying a Home

Sell your house. Invest the money. Use the earnings to pay for rent forever. If my house was owned free and clear, and I sold it and used a 4% withdrawal rate, the proceeds would be modestly short of enough to rent the same house. The economics of buying vs renting are very location and even proper...
by Rodc
Thu Aug 28, 2014 9:17 am
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 15884

Re: Study: poor 5-yr U.S. returns -- overweight foreign?

I'm all ears to a reason why it is rational to entirely exclude valuation from a US v foreign stock allocation decision, but 'everyone on this board thinks so' (which is manifestly not true anyway) is a weak argument IMO. If markets are perfectly efficient(weak), then the expected real, local curre...
by Rodc
Thu Aug 28, 2014 9:08 am
 
Forum: Investing - Theory, News & General
Topic: Study: poor 5-yr U.S. returns -- overweight foreign?
Replies: 47
Views: 3171

Re: How do you usually pay for something under $5?

Cash is an annoyance. Please, everyone use cards. I don't want to stand there while the cashier counts out $0.78 in change. Half the time cash is faster, because you don't have to wait for the card to go through. I balance my check book so I generally do not use debit cards anymore. So mostly cash ...
by Rodc
Wed Aug 27, 2014 3:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: How do you usually pay for something under $5?
Replies: 28
Views: 1188

Re: Motif Investing - own the S&P500 for less

Sounds nice for the sort of person who wants investing to be a hobby. Kind of like brewing your own beer. Benefits are low and effort high, but you really do it for the enjoyment of the process. If one would enjoy the process, and can avoid making mistakes (including the increased risks associated w...
by Rodc
Wed Aug 27, 2014 11:53 am
 
Forum: Investing - Theory, News & General
Topic: Motif Investing - own the S&P500 for less
Replies: 75
Views: 3541

Re: Shiller P/E nearly guaranteed to be lower in 5 years

Fact is, even if the CAPE is really high nowadays, the earnings yield (1/PE10) remains significantly higher than the (inflation-adjusted) 10-years treasury rate, which is a good yardstick of corresponding bonds yield. Here we are, with two renowned metrics (CAPE, equity/bonds premium) providing a v...
by Rodc
Wed Aug 27, 2014 9:26 am
 
Forum: Investing - Theory, News & General
Topic: Shiller P/E nearly guaranteed to be lower in 5 years
Replies: 19
Views: 3312

Re: Emerging markets 1900-2013

I do think the writeup would be improved with a more explicit analysis of risks. For example sample CAGR is given without an associated risk metric (say standard deviation). . I agree, the yearbook did not provide the standard deviation numbers with the aggregate long-term returns, and their messag...
by Rodc
Tue Aug 26, 2014 4:53 pm
 
Forum: Investing - Theory, News & General
Topic: Emerging markets 1900-2013
Replies: 53
Views: 4707

Re: Can a Boglehead put down 10% on a house?

Buying a house is as much a lifestyle choice as an economic decision. By all means pay attention to the $ for the house and vs renting (but also remember your current rent is for nothing like a house, so think about house rent vs house buy even more than apartment rent vs house buy). While it is a l...
by Rodc
Tue Aug 26, 2014 12:48 pm
 
Forum: Personal Finance (Not Investing)
Topic: Can a Boglehead put down 10% on a house?
Replies: 30
Views: 2434

Re: Emerging markets 1900-2013

Hi Robert, very interesting. Thanks.

I do think the writeup would be improved with a more explicit analysis of risks. For example sample CAGR is given without an associated risk metric (say standard deviation).
by Rodc
Tue Aug 26, 2014 12:31 pm
 
Forum: Investing - Theory, News & General
Topic: Emerging markets 1900-2013
Replies: 53
Views: 4707

Re: Study: poor 5-yr U.S. returns -- overweight foreign?

You know the answer.

Market timing is a total crap shoot.

Better IMHO to simply roll with the markets.

If you wish to time the markets or if you wish to call it "tactical asset allocation" at least stick with Bernstein's recommendation to tilt only several percent.
by Rodc
Tue Aug 26, 2014 12:25 pm
 
Forum: Investing - Theory, News & General
Topic: Study: poor 5-yr U.S. returns -- overweight foreign?
Replies: 47
Views: 3171

Re: Rate of Return

What time horizon? The long term real return on intermediate treasuries is about 2%, so 3% seems rather optimistic in decent times and we don't have decent times. There have been long periods with intermediate treasuries at around 1% real. Currently 0% or even slight negative is fair in the short te...
by Rodc
Mon Aug 25, 2014 2:03 pm
 
Forum: Investing - Theory, News & General
Topic: Rate of Return
Replies: 3
Views: 434

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: 4910

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: 1227

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: 2664

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: 6438

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: 1012

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: 2797

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: 91
Views: 7653

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: 4701

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: 4701

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: 4701

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: 4701

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: 4701

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: 4701

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: 4701

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: 4701

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: 6568

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: 4988

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: 4701

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: 4009

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: 4009

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: 4009

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: 4009

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: 4988

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: 4009

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: 6568

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: 4009

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: 4009

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: 725

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: 2941

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: 4300

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: 4584
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