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Re: Why does the stock market "always go up"? Will this pers

Basic Questions: ⋅  Why does the market "always go up" ? ⋅  Why are we so sure that it will keep going up? In order to invest in stocks, one has to have a fundamental belief in the continued long-term growth, creativity and dynamism of the global capitalist system. Fro...
by Simplegift
Mon Sep 08, 2014 12:30 am
 
Forum: Investing - Theory, News & General
Topic: Why does the stock market "always go up"? Will this persist?
Replies: 42
Views: 3795

Re: How is tilting any different that active value investing

One thing that struck me after seeing that picture is that many Bogleheads are in the middle area (factor investing)... I believe it's safe to say that most Bogleheads are in the "Rule-Based and Transparent Implementation" sector of Factor Investing, which is considered a passive approach...
by Simplegift
Sun Sep 07, 2014 4:51 pm
 
Forum: Investing - Theory, News & General
Topic: How is tilting any different that active value investing
Replies: 55
Views: 2499

Re: House value percentiles in states and US?

A quick search didn't turn up any U.S.-wide charts showing the distribution of housing prices. However, there were several local and regional charts, such as the one below for Seattle, WA (King County). Though Seattle home prices all across the spectrum are much higher than the national averages I b...
by Simplegift
Sun Sep 07, 2014 4:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: House value percentiles in states and US?
Replies: 2
Views: 418

Re: So, when does a market timer get back in?

Most of the market timers I know heard about the recovery wave of 2013 and have spent 2014 getting back in. This comports with the cumulative money flows into mutual funds and ETFs — which, as a buy-and-hold investor, I find completely baffling, I must admit. http://i.imgur.com/XAbAlf7.png Source: ...
by Simplegift
Sun Sep 07, 2014 2:09 pm
 
Forum: Investing - Theory, News & General
Topic: So, when does a market timer get back in?
Replies: 54
Views: 5474

Re: How is tilting any different that active value investing

I doubt that Bogleheads are ever going to agree on one conceptual framework for the place of factor investing between the worlds of passive and active management. But, for us visual types, this is one way of looking at it — and it's a model that fits my own sense of the question. http://i.imgur.com/...
by Simplegift
Sun Sep 07, 2014 1:04 pm
 
Forum: Investing - Theory, News & General
Topic: How is tilting any different that active value investing
Replies: 55
Views: 2499

Re: POLL: Has a financial firm made a mistake with your mone

Strangely, I've never experienced a mistake with "electronic money," such as bank transfers, mutual fund accounts or the like — despite my fears that something's bound to go wrong at any time. But I once went to a bank to exchange $200 in damaged physical currency for new bills. These were...
by Simplegift
Sun Sep 07, 2014 5:02 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Has a financial firm made a mistake with your money?
Replies: 52
Views: 2603

Re: Considering divesting international position...

xynder wrote:Any reason not to exchange the Vanguard Total International to the domestic Total Stock Market?

Image
Source: Manning & Napier
by Simplegift
Sat Sep 06, 2014 6:01 pm
 
Forum: Investing - Help with Personal Investments
Topic: Considering divesting international position...
Replies: 12
Views: 585

Re: Wayfaring on CAPE's Edge

From the linked article: This suggests that were are creating new record high CAPE values, which mostly crowd out the historic 10th decile values. And we can see in the topmost chart, that the lowest decile in the past two decades is not the first decile, but rather only the fifth decile. It's intri...
by Simplegift
Sat Sep 06, 2014 3:52 pm
 
Forum: Investing - Theory, News & General
Topic: Wayfaring on CAPE's Edge
Replies: 1
Views: 188

Re: Drawing down a windfall...

There’s simply not a lot of advice available on people who are drawing down their investments even prior to retirement. Since you and your wife are in your 40s, you likely have a 50-year investment horizon remaining. While it's not unreasonable to be withdrawing from your nest egg at your age, I be...
by Simplegift
Sat Sep 06, 2014 2:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Drawing down a windfall...
Replies: 55
Views: 4043

Re: Role of Non-Vanguard Index funds in your portfolio

I would not say there's necessarily a dedicated "role" for non-Vanguard funds in one's portfolio. An old maxim would probably stand the test of time — "If you can't find it at Vanguard, then you don't need it!" A couple of exceptions might be: • For sophisticated factor-tilting i...
by Simplegift
Sat Sep 06, 2014 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: Role of Non-Vanguard Index funds in your portfolio
Replies: 15
Views: 983

Re: Qualities of a Successful Investor

Howard Donnelly wrote:Can you think of others?

I'd say the most important one not mentioned is: Luck!

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Source: The Role of Luck and Skill in Investing
by Simplegift
Sat Sep 06, 2014 12:54 pm
 
Forum: Investing - Theory, News & General
Topic: Qualities of a Successful Investor
Replies: 9
Views: 500

Re: Cash to draw on - Safe Withdrawal Rate

What is the notion behind "safe" when withdrawing from a hoard of cash? In other words, when does one not concern oneself with safety and just simply live (or live simply) on savings? To seriously answer this question, I'd suggest you study the PDF book, Unveiling the Retirement Myth , by...
by Simplegift
Sat Sep 06, 2014 12:00 pm
 
Forum: Investing - Theory, News & General
Topic: Cash to draw on - Safe Withdrawal Rate
Replies: 10
Views: 1069

Re: What is the expected return of this portfolio over 50 yr

The only way to increase probability of success at the future point, is to increase your time horizon (and it sounds like that may be hard to do) or increase contributions now (and make compounding do the heavy lifting). The OP could also increase the equity allocation from 63% currently to 70%-75%...
by Simplegift
Sat Sep 06, 2014 11:19 am
 
Forum: Investing - Theory, News & General
Topic: What is the expected return of this portfolio over 50 yrs
Replies: 21
Views: 1158

Re: RAFI:No SmallCap Anomaly? Finding Smart Beta in Factor Z

1981: The Size Effect Rolf Banz, University of Chicago Analyzed NYSE stocks, 1926-1975. Finds that, in the long term, small companies have higher expected returns than large companies and behave differently. In another thread, a Forum member recently posted a paper that examined the changes in stoc...
by Simplegift
Fri Sep 05, 2014 7:48 pm
 
Forum: Investing - Theory, News & General
Topic: Finding Smart Beta in the Factor Zoo
Replies: 34
Views: 2054

Re: How is tilting any different that active value investing

What I really do not understand how value tilters can make an argument to avoid value "active" investors as the strategies are based upon the same underlying view of the market. Unless I am mistaken, what you are in effect doing is buying a diversified set of stocks that screen cheaply. H...
by Simplegift
Fri Sep 05, 2014 3:46 pm
 
Forum: Investing - Theory, News & General
Topic: How is tilting any different that active value investing
Replies: 55
Views: 2499

Re: International Investing and the USD

Personally, my primary motivation for investing in international equities is to reduce single-country stock market risk (aka home bias). No doubt, U.S. companies already have quite a bit of global exposure (with close to 50% of S&P 500 companies' revenue from overseas). But international markets...
by Simplegift
Fri Sep 05, 2014 2:00 pm
 
Forum: Investing - Theory, News & General
Topic: International Investing and the USD
Replies: 12
Views: 674

Re: frontier markets

Does anyone know the negative correlation number of it compared to the emerging markets? selftalk , it appears that frontier markets and emerging markets are becoming more highly-correlated (dark blue line) — like so many global assets these days. Likewise, frontier markets are becoming increasingl...
by Simplegift
Thu Sep 04, 2014 9:48 pm
 
Forum: Investing - Theory, News & General
Topic: frontier markets
Replies: 15
Views: 1176

Re: Let me get this straight about SCV & factor diversificat

Browser, not sure exactly what you are asking in this thread, but my sense is that each of the risk factors has independent (and changing!) correlations with the overall market and with each other (chart below). It's hard to say that the size and value factors are better than TSM or any other risk f...
by Simplegift
Thu Sep 04, 2014 6:13 pm
 
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 147
Views: 7244

Re: Why is REIT only sector fund recommended in slice & dice

Beyond portfolio diversification, another reason for a separate, overweight allocation to REITs is increased inflation protection. Based on the studies I've seen, there's strong evidence that publicly-traded equity REITs (such as Vanguard's REIT Index) have historically provided effective inflation ...
by Simplegift
Thu Sep 04, 2014 5:31 pm
 
Forum: Investing - Theory, News & General
Topic: Why is REIT only sector fund recommended in slice & dice?
Replies: 110
Views: 6762

Re: International Investing and the USD

Interesting to observe the impact of a strengthening dollar on non-hedged international investments. I understand that the US dollar has "mega-trends" where it strengthens and weakens against ALL foreign currencies over decades — but whenever I see the US dollar against individual currenc...
by Simplegift
Thu Sep 04, 2014 2:47 pm
 
Forum: Investing - Theory, News & General
Topic: International Investing and the USD
Replies: 12
Views: 674

Re: William Sharpe advises against rebalancing

Actually, when looking at the global market portfolio over time, I'm not sure that much rebalancing would be required for risk reduction. It has only deviated about +/- 10% from a 50% stock/50% bond mix over the last 50 years. http://i.imgur.com/L2xzOOs.png Source: The Global Multi-Asset Portfolio
by Simplegift
Thu Sep 04, 2014 12:09 pm
 
Forum: Investing - Theory, News & General
Topic: William Sharpe advises against rebalancing
Replies: 32
Views: 2604

Re: William Sharpe advises against rebalancing

I think a more interesting thing in the article is his wish for "a very-low-cost index fund that buys proportionate shares of all the traded stocks and bonds in the world." It certainly sounds like something Vanguard could do easily if they wanted to, but Sharpe says he's talked to his &q...
by Simplegift
Thu Sep 04, 2014 11:25 am
 
Forum: Investing - Theory, News & General
Topic: William Sharpe advises against rebalancing
Replies: 32
Views: 2604

Re: "There is no such thing as a truly passive portfolio"

The article is implying that tactical asset management (TAA) is able to improve returns by switching between asset classes based on macro-economic trends or expectations. I didn't get that from the article. His point, I think, is that we're all active managers of some sort. The issue is what we cho...
by Simplegift
Thu Sep 04, 2014 11:13 am
 
Forum: Investing - Theory, News & General
Topic: "There is no such thing as a truly passive portfolio"
Replies: 58
Views: 2055

Re: "There is no such thing as a truly passive portfolio"

The article is implying that tactical asset management (TAA) is able to improve returns by switching between asset classes based on macro-economic trends or expectations. Morningstar has repeatedly examined all the tactical asset funds in their database to see if there is any evidence of outperforma...
by Simplegift
Thu Sep 04, 2014 10:03 am
 
Forum: Investing - Theory, News & General
Topic: "There is no such thing as a truly passive portfolio"
Replies: 58
Views: 2055

Re: World's Economic Center of Gravity, AD 1 to 2003

Use Kansas City as the starting point, rather than 0/0 point off the coast of Africa, and the answer will be much different. You're exactly right, trueblueky . if you are interested in the background and methods behind this particular visualization, the creator Daniel Velkov provides a full explana...
by Simplegift
Thu Sep 04, 2014 12:39 am
 
Forum: Investing - Theory, News & General
Topic: World's Economic Center of Gravity, AD 1 to 2003
Replies: 4
Views: 577

World's Economic Center of Gravity, AD 1 to 2003

Many of you have seen a similar analysis, but just for fun, this is an entirely new visualization by Daniel Velkov showing the geographic center of world GDP as it moved across the globe from the year 1 to the year 2003. Yes, India had the biggest economy at the dawn of the first millennium AD. One ...
by Simplegift
Wed Sep 03, 2014 10:34 pm
 
Forum: Investing - Theory, News & General
Topic: World's Economic Center of Gravity, AD 1 to 2003
Replies: 4
Views: 577

Re: Why is REIT only sector fund recommended in slice & dice

This is pure rationalization to me. No sector's investable assets are all publicly traded. Logically, if you should overweight REITs because they are underrepresented in the public markets compared to their share of the national economy, then you should underweight (for example) utilities since the...
by Simplegift
Wed Sep 03, 2014 2:39 pm
 
Forum: Investing - Theory, News & General
Topic: Why is REIT only sector fund recommended in slice & dice?
Replies: 110
Views: 6762

Re: A Low-Return Future? Are We Prepared?

I barely accept all the 10-year predictions being thrown around here, but even if they are correct, no one knows what the 20 years after that will do... Can't argue at all with this, HomerJ . But it's important for investors today to at least consider that the future may be very different from the ...
by Simplegift
Wed Sep 03, 2014 11:48 am
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: Value Investing and Efficient Market Theory

I was wondering if there was any Boglehead refutation of the claim that fundamental analysis, proves that the market can be beaten consistently on average over the long run at a rate better than random chance would expect. The Efficient Market Theory (soft form) and Value Investing can peacefully c...
by Simplegift
Wed Sep 03, 2014 9:19 am
 
Forum: Investing - Theory, News & General
Topic: Value Investing and Efficient Market Theory
Replies: 14
Views: 1109

Re: A Low-Return Future? Are We Prepared?

4% is ALREADY the conservative choice. HomerJ , you might be interested in this previous thread on the 2012 study by Wade Pfau, Reality Check on Retirement Planning Assumptions — which looks at withdrawal rates using the conservative return estimates of a low-return future, about 5.1% real for stoc...
by Simplegift
Wed Sep 03, 2014 8:37 am
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: A Low-Return Future? Are We Prepared?

1. If you want to know whether frontier markets out-perform, then omitting 2% of global market cap can be very significant. 2. I suspect the 2% number was pulled out of thin air. If you can't find data on the share prices and number of shares outstanding of each company on an exchange, then you pro...
by Simplegift
Tue Sep 02, 2014 10:00 pm
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: A Low-Return Future? Are We Prepared?

Dimson-Marsh's data set doesn't have return data for something approaching the total global market until 1985. That gives us less than 30-years of data. Sorry, but this is just incorrect. Since 2013, the DMS database extending back to 1900 has had 22 countries (out of 33 stock markets total in 1900...
by Simplegift
Tue Sep 02, 2014 8:41 pm
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: A Low-Return Future? Are We Prepared?

The point is a decade of low returns is no big deal. They have happened in the past and will happen in the future. I agree. But implicit in this view is the assumption that a "higher return future" will soon follow. What long-term evidence is there (20-30 years out) that investment assets...
by Simplegift
Tue Sep 02, 2014 1:50 pm
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: 100% Stock Thread Collection

Having said that, I get the impression that the assumption, quite often, is that people will per se freak out, so we don't even try to educate them about what they "should" do during a correction... It's not just an assumption that people in general will freak out during a correction and ...
by Simplegift
Tue Sep 02, 2014 12:01 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5282

Re: A Low-Return Future? Are We Prepared?

Do you guys think the "returns" reflected in the Vanguard portfolio allocation models are realistic? What seems to be the consensus regarding the return for a 50/50 portfolio? The Vanguard portfolio models you linked to are just showing historical returns, 1926-2013. As best I know, Vangu...
by Simplegift
Tue Sep 02, 2014 9:50 am
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: A Low-Return Future? Are We Prepared?

When people say future, what time range are we talking? The difference between a 10 year range and a 50 year one is huge as far as planning goes. For quantitative investment forecasts, one can find a wide array of forecasting periods and expected returns. In fact, they are all over the map. These a...
by Simplegift
Tue Sep 02, 2014 2:39 am
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: A Low-Return Future? Are We Prepared?

By my reading of Bernstein, at least, low returns and low interest rates generally occur in low risk, highly stable economies. If things are suddenly becoming more unstable, and more risky, then that should actually lead to higher returns! It's always possible that a series of regional crises could...
by Simplegift
Mon Sep 01, 2014 5:19 pm
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: A Low-Return Future? Are We Prepared?

Just to avoid putting words in the mouths of commentators on the "low return future," I'll let Dimson, Marsh and Staunton speak for themselves, from their April 2013 article in the Financial Times: While we have now been living with low rates for several years, many investors still seem to...
by Simplegift
Mon Sep 01, 2014 4:10 pm
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: Why invest in bonds?

The risk of a stock dominated portfolio is more immediate, you wind up selling at market lows and buying back in when it's high. There's another "deeper risk" of a 100% stock portfolio — that the markets may never recover, or may not recover in your lifetime (ala the Japanese stock market...
by Simplegift
Mon Sep 01, 2014 2:29 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 6199

Re: A Low-Return Future? Are We Prepared?

Are they merely extrapolating the trend from 1980-2012 to predict low or lower interest rates in the future? Are interest rate trends that easy to predict? Most of the commentary on a "low-return future" that I've seen doesn't try to predict future interest rates. It simply observes that ...
by Simplegift
Mon Sep 01, 2014 1:26 pm
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: A Low-Return Future? Are We Prepared?

Whether or not Bernstein's theory about discount rates decreasing over the course of centuries is correct, interest rates will still vary greatly from year to year. His theory is not useful for predicting interest rates in 1, 5, 7, 10, 20 years. Other factors are more important and will dominate. Y...
by Simplegift
Mon Sep 01, 2014 10:39 am
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 189
Views: 12104

Re: Why invest in foreign funds?

mckoder wrote:But the bogleheads lazy portfolios recommend putting about a third of your money in foreign funds. I don't get it. What is the idea behind this?

Image
Source: Manning & Napier
by Simplegift
Sun Aug 31, 2014 11:36 am
 
Forum: Investing - Theory, News & General
Topic: Why invest in foreign funds?
Replies: 35
Views: 2221

Re: When to invest in China?

One of the primary drawbacks of investing in China (and other fast-growing, emerging markets) hasn't yet been mentioned — massive share dilution. The headline profit growth of Chinese companies (in green) far exceeds the growth in earnings per share, that is, what investors actually receive (in oran...
by Simplegift
Sun Aug 31, 2014 12:34 am
 
Forum: Investing - Theory, News & General
Topic: When to invest in China?
Replies: 51
Views: 2821

Re: A Primer on John Templeton

One of the more remarkable aspects (among many) of John Templeton's career was that, even back in the 1950s and 1960s, he was researching and buying international equities. This must have taken an inordinate amount of foresight, work and courage back in those days. What other investors in the U.S. w...
by Simplegift
Sat Aug 30, 2014 6:09 pm
 
Forum: Investing - Theory, News & General
Topic: A Primer on John Templeton
Replies: 28
Views: 2121

Re: When to invest in China?

On the other hand, my sense is that business is growing rapidly in China and I don't want to miss out on buying their stock early enough to make excellent profits. Make sure that you are not confusing economic growth with stock market returns. The "Chinese Miracle" has underperformed the ...
by Simplegift
Sat Aug 30, 2014 2:18 pm
 
Forum: Investing - Theory, News & General
Topic: When to invest in China?
Replies: 51
Views: 2821

Re: I'd buy an S&P 500 index fund in a pinch

It is important to find an allocation you can stick with. If it's important to you that your stock portfolio more truly represent "The Total Market" for better or worse, then adding Extended Market to the S&P500 may be worth the effort. Due to tax-loss harvests long ago, I've ended up...
by Simplegift
Sat Aug 30, 2014 1:25 pm
 
Forum: Investing - Theory, News & General
Topic: I'd buy an S&P 500 index fund in a pinch
Replies: 45
Views: 5646

Re: How low can Vanguard Fees Go?

Looking at a chart of Vanguard's falling expense ratio, compared with their growing fund assets, one might conclude that further expense reductions will come quite slowly. Once Vanguard hit about $1 trillion is assets in 2005, the average expense ratio hasn't declined very significantly. Perhaps the...
by Simplegift
Sat Aug 30, 2014 12:03 am
 
Forum: Investing - Theory, News & General
Topic: How low can Vanguard Fees Go?
Replies: 32
Views: 2213

Re: Do you mix inheritance and earned money?

In fact, and perhaps a bit irrational, I don't regard the gifted money as my own and I'm more hesitant to touch it (even for simplification). This is a common feeling with inherited money, I believe — perhaps a slight feeling that one doesn't entirely deserve the money because it wasn't earned. My ...
by Simplegift
Fri Aug 29, 2014 5:33 pm
 
Forum: Personal Consumer Issues
Topic: Do you mix inheritance and earned money?
Replies: 25
Views: 2196

Re: Your thoughts on farmland values

Very instructive post and paper, berntson, thanks.
by Simplegift
Fri Aug 29, 2014 12:21 pm
 
Forum: Investing - Theory, News & General
Topic: Your thoughts on farmland values
Replies: 29
Views: 2444

Re: High net worth in CA - what % of bonds in munis?

Several expert recommendations I've seen have a breakdown like this: 50% Taxable Bonds 25% National Munis 25% CA Munis The idea is to keep your muni exposure to half of your bond allocation, and keep your individual state exposure to half of your muni allocation. This is to protect against a blow-up...
by Simplegift
Fri Aug 29, 2014 11:51 am
 
Forum: Investing - Theory, News & General
Topic: High net worth in CA - what % of bonds in munis?
Replies: 21
Views: 1486
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