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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: 41
Views: 1196

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: 72
Views: 3697

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: 41
Views: 1196

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: 51
Views: 2446

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: 41
Views: 1196

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: 41
Views: 1196

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: 4
Views: 415

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: 35
Views: 2515

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: 4033

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: 51
Views: 3915

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: 4033

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: 4033

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: 35
Views: 2515

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: 17
Views: 1021

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: 4471

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: 980

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: 72
Views: 3697

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: 82
Views: 4054

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: 82
Views: 4054

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: 42
Views: 3759

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: 72
Views: 3697

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: 1648

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: 3844

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: 42
Views: 3759

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: 3888

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: 3844

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: 1648

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: 3844

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: 3776

Re: The ultimate Boglehead exercise

pennstater2005 wrote:My exercise is chasing my kids. It's bogleheadish because it's free.


Kids are a huge up front entry cost.

Like saying climbing is free (after you buy $1000 of equipment)

:)
by Rodc
Wed Jul 23, 2014 4:34 pm
 
Forum: Personal Consumer Issues
Topic: The ultimate Boglehead exercise
Replies: 30
Views: 3776

Re: Best Used Recreational Bicycles for New Riders

I'm beginning to think that this kind of comparison is more misleading than helpful, mostly because people mentally map "Honda Civic" to the department store bike, and the BMW to a decent, but reasonably priced bike shop bike. I was not clear. Bike recommended to beginners or non serious ...
by Rodc
Wed Jul 23, 2014 4:24 pm
 
Forum: Personal Consumer Issues
Topic: Best Used Recreational Bicycles for New Riders
Replies: 24
Views: 1744

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
Wed Jul 23, 2014 3:13 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3844

Re: Should market valuations be completely disregarded?

Few thoughts First only fools IMO ignore valuations. They matter a great deal. But it's how you use them that matters. The most important way to use them is not for timing, but to estimate future returns. Valuation metrics are the best, if far from perfect, metrics we have for estimating returns, e...
by Rodc
Tue Jul 22, 2014 8:49 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3844

Re: Should market valuations be completely disregarded?

What good is looking at the graph of relative stock valuation over long periods (including eg. late 19th century, of dubious relevance to today IMO) if you don't know how bonds were valued? I never understood why so many who advocate P/E10 (Q whatever) timings do so with no context of the valuation...
by Rodc
Tue Jul 22, 2014 7:16 pm
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 3844

Re: Thoughts on [not] rebalancing

I was 100% in US stocks. I was less aggressive than most but more aggressive than I would have been if I had read Boglehead's Guide to Investing. :confused 100% Stocks is more aggressive than most; not sure how you figure less than most. Rebalancing within stocks is not worth very much, one type of...
by Rodc
Tue Jul 22, 2014 3:20 pm
 
Forum: Investing - Theory, News & General
Topic: Thoughts on [not] rebalancing
Replies: 12
Views: 670

Re: What to do in a market correction

Maybe it is time to resubmit history: From John Merrill, "Outperforming the Market". Mr. Merrill's excellent book has a table showing that a diversifed portfolio of stocks, bonds, and cash, and held for approximately five years, would have enabled an investor to survive and eventually pro...
by Rodc
Tue Jul 22, 2014 12:58 pm
 
Forum: Investing - Theory, News & General
Topic: What to do in a market correction
Replies: 32
Views: 3083

Re: P/E Ratio: How do YOU interpret/use it?

In retirement it might have some value in that when something like P/E10 is high be careful about how much you sell to generate income because the size of your portfolio just might be artificially high. So you think buying low and selling high is a bad idea? I think selling and spending too much ba...
by Rodc
Tue Jul 22, 2014 12:38 pm
 
Forum: Investing - Theory, News & General
Topic: P/E Ratio: How do YOU interpret/use it?
Replies: 26
Views: 1351

Re: Can it be wrong to be too risk averse?

MCS can help you make such decisions as you see the consequences of your choices. For those highly risk averse investors would suggest they read Reducing the Risk of Black Swans which shows how at least historically you could have kept returns up while cutting left tail risk dramatically. I would a...
by Rodc
Tue Jul 22, 2014 11:48 am
 
Forum: Investing - Theory, News & General
Topic: Can it be wrong to be too risk averse?
Replies: 49
Views: 2336

Re: Can it be wrong to be too risk averse?

He is not very risk averse, he just doesn't know that 100% bonds are more riskier than 75% stocks and 25% bonds. If he is saving for retirement, and if he has a long investment horizon, why would he worry about temporary paper losses of the principal? http://www.youngresearch.com/wp-content/uploads...
by Rodc
Tue Jul 22, 2014 11:46 am
 
Forum: Investing - Theory, News & General
Topic: Can it be wrong to be too risk averse?
Replies: 49
Views: 2336

Re: Reduce / Eliminate Emerging Market in Retirement?

Portfolio theory says that if emerging market (EM) stocks are part of the tangent portfolio, the ratio of EM stocks to developed market stocks should not be a function of the risk aversion of the investor. If you want to reduce risk in retirement, reduce allocations to risky assets across the board...
by Rodc
Tue Jul 22, 2014 10:23 am
 
Forum: Investing - Theory, News & General
Topic: Reduce / Eliminate Emerging Market in Retirement?
Replies: 11
Views: 1165

Re: P/E Ratio: How do YOU interpret/use it?

I don't think it has much or any value for folks in the accumulation phase as far as adjusting how you invest. You might consider the likelihood of low returns for a while and increase your savings rate so you stay on track. In retirement it might have some value in that when something like P/E10 is...
by Rodc
Tue Jul 22, 2014 9:30 am
 
Forum: Investing - Theory, News & General
Topic: P/E Ratio: How do YOU interpret/use it?
Replies: 26
Views: 1351

Re: Can it be wrong to be too risk averse?

The real issue I think is are you are willing to save enough to do ok with very small returns*. If so, munis should be a reasonably safe strategy. If you have your entire portfolio in munis you should be able to be well diversified, so I disagree with the poster above who said you really should use ...
by Rodc
Tue Jul 22, 2014 9:14 am
 
Forum: Investing - Theory, News & General
Topic: Can it be wrong to be too risk averse?
Replies: 49
Views: 2336

Re: Best Used Recreational Bicycles for New Riders

Note: I am not at all a bike expert, though I do ride from time to time (maybe average two or three times a months when the weather is nice, varies some year to year, mostly easy dirt trails, an hour or so, on a 15 year old bottom end Specialized mountain bike). Did about a half day or so a month ag...
by Rodc
Mon Jul 21, 2014 1:33 pm
 
Forum: Personal Consumer Issues
Topic: Best Used Recreational Bicycles for New Riders
Replies: 24
Views: 1744

Re: Value Overvalued

I assume sarcasm.... if not, Total Stock Index fund.


nisi has nearly 25,000 posts.

What do you think the odds are he does not know about TSM funds?
by Rodc
Mon Jul 21, 2014 9:22 am
 
Forum: Investing - Theory, News & General
Topic: Value Overvalued
Replies: 23
Views: 2288

Re: Poll: Has your AA changed in the last 18 months

I picked the top option, but I don't know if you really meant it the way it applies to me. I'm on a predetermined slide towards a 20% "risk-free" asset allocation as I approach retirement. Strictly speaking, it's because I consider my ability to take risk to be lower the closer I get to r...
by Rodc
Sun Jul 20, 2014 11:17 am
 
Forum: Investing - Theory, News & General
Topic: Poll: Has your AA changed in the last 18 months
Replies: 58
Views: 3542

Re: Who else hates choosing a car?

Fortunately I only desire a mid level car that is reasonably cost effective, safe and comfortable and goes from point A to point B. Family wants one that is largish, 4WD, for hauling camping gear, yard waste, ski trips, etc. Other can be a mid sized car. I am more comfortable buying Japanese brands....
by Rodc
Fri Jul 18, 2014 4:27 pm
 
Forum: Personal Consumer Issues
Topic: Who else hates choosing a car?
Replies: 75
Views: 6422

Re: Options/guidance for a lazy person to be fit

So let's assume that people know how to exercise and know how to eat right, but just cannot get motivated? A dog doesn't do it, so what does? A heart attack? What is the epiphany that leads to real action? Is a shrink called for? Paste an unattractive picture of yourself in very little clothes on t...
by Rodc
Fri Jul 18, 2014 3:07 pm
 
Forum: Personal Consumer Issues
Topic: Options/guidance for a lazy person to be fit
Replies: 79
Views: 5525

Re: Options/guidance for a lazy person to be fit

If you want to be fit, as opposed to simply lose weight, you have to exercise. Over decades (I'm older than you) and I have really come to appreciate the need to mix things up. I simply can't do the same thing day after day without getting hurt (other than maybe something really easy like going for...
by Rodc
Fri Jul 18, 2014 1:21 pm
 
Forum: Personal Consumer Issues
Topic: Options/guidance for a lazy person to be fit
Replies: 79
Views: 5525

Re: Options/guidance for a lazy person to be fit

If you want to be fit, as opposed to simply lose weight, you have to exercise. Over decades (I'm older than you) and I have really come to appreciate the need to mix things up. I simply can't do the same thing day after day without getting hurt (other than maybe something really easy like going for ...
by Rodc
Fri Jul 18, 2014 12:01 pm
 
Forum: Personal Consumer Issues
Topic: Options/guidance for a lazy person to be fit
Replies: 79
Views: 5525
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