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Re: CA int municipal bond fund vs. Vanguard int muni fund

Agree with ogd here. As mentioned upthread, 50% of the bond portfolio maximum in municipals is what I've seen recommended (see "Taxable Ted" in William Bernstein's Four Pillars of Investing ). And no more than one-quarter or one-third of the bond portfolio in single-state munis. This has b...
by Simplegift
Tue Nov 18, 2014 3:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: CA int municipal bond fund vs. Vanguard int muni fund
Replies: 32
Views: 2132

Re: Is investing more risky today today than before the inte

With the internet and the digital age do you feel investing is more or less risky, or the same? The behavioral risks are certainly greater. If one panics during a market correction or crash, it's much easier to sell or make portfolio changes with a few clicks of the mouse. Before the internet, one ...
by Simplegift
Tue Nov 18, 2014 10:27 am
 
Forum: Investing - Theory, News & General
Topic: Is investing more risky today today than before the internet
Replies: 29
Views: 2550

Re: Portfolio Returns — Bright Light on the Far Horizon?

fwiw, There's no evidence that demographics are destiny in terms of returns. Good point, they are not directly related. But Dimson, Marsh and Staunton in their 2014 Global Returns Yearbook report a relationship between aggregate GDP growth and real equity returns (at least for developed countries, ...
by Simplegift
Mon Nov 17, 2014 10:13 am
 
Forum: Investing - Theory, News & General
Topic: Portfolio Returns — Bright Light on the Far Horizon?
Replies: 5
Views: 1032

Re: Portfolio Returns — Bright Light on the Far Horizon?

Or will other factors intervene? Other factors often do intervene. In fact, it's common for emerging economies to experience a " middle income trap ," where they've lost their competitive edge in exporting manufactured goods (because their wages are on the rise), but they're not able to k...
by Simplegift
Sun Nov 16, 2014 8:49 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio Returns — Bright Light on the Far Horizon?
Replies: 5
Views: 1032

Portfolio Returns — Bright Light on the Far Horizon?

Many recent Forum topics have focused on the "low return future" and today's historically low yields and high asset prices across the board. A few of the discussion themes have been: • Lower global GDP growth, as rates of population growth and productivity are both declining. • Low real in...
by Simplegift
Sun Nov 16, 2014 12:25 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio Returns — Bright Light on the Far Horizon?
Replies: 5
Views: 1032

Re: Joel Greenblatt: Market Cap weighted indexes not recomme

Vanguard has nice research report showing that equal-weighted and fundamental indexes are simply more tilted to smaller stocks and value stocks than the broad market, cap-weighted indexes (chart below). If the small and value factors outperform, the alternative indexes will outperform (and vice vers...
by Simplegift
Sat Nov 15, 2014 10:12 pm
 
Forum: Investing - Theory, News & General
Topic: Joel Greenblatt: Market Cap weighted indexes not recommended
Replies: 15
Views: 2293

Re: CA int municipal bond fund vs. Vanguard int muni fund

As mentioned, only you can decide the tradeoff between the risks of the single-state bond fund versus the tax advantages it offers to you personally. However, several expert recommendations I've seen allocate the bond portfolio like this: • 50% Taxable Bonds • 25% National Munis • 25% CA Munis The i...
by Simplegift
Sat Nov 15, 2014 5:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: CA int municipal bond fund vs. Vanguard int muni fund
Replies: 32
Views: 2132

Re: Global Growth and Expected Returns — Why So Low?

Given the decreasing rates of population growth today that we saw in the OP (for both mature and emerging economies), it's only a matter of time that individual countries start to experience negative total population growth . Japan of course is the headline nation today for a shrinking population (a...
by Simplegift
Sat Nov 15, 2014 4:03 pm
 
Forum: Investing - Theory, News & General
Topic: Global Growth and Expected Returns — Why So Low?
Replies: 35
Views: 2461

Re: Why Not 100% Treasuries if your Risk is on the Equity Si

However, if the purpose of your bonds is to protect you in worst case scenarios , isn't this why you should be 100% Treasuries? There's no argument that U.S. Treasuries have historically provided the best portfolio protection during market corrections and periods of market stress, or that they will...
by Simplegift
Fri Nov 14, 2014 5:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why Not 100% Treasuries if your Risk is on the Equity Side?
Replies: 40
Views: 3579

Re: David Stockman interview

Didn't listen to the interview video, but Mr. Stockman's thesis for several years has been that "when interest rates 'normalize', it's going to cause a dramatic re-pricing of the financial markets." The problem is that there's no evidence indicating that interest rates must revert upward t...
by Simplegift
Fri Nov 14, 2014 1:10 pm
 
Forum: Investing - Theory, News & General
Topic: David Stockman interview
Replies: 7
Views: 953

Re: Why Not 100% Treasuries if your Risk is on the Equity Si

^^ Great graphic, Mountain Man. I believe it could be applied to 95% of the threads about bonds in the portfolio!
by Simplegift
Fri Nov 14, 2014 12:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why Not 100% Treasuries if your Risk is on the Equity Side?
Replies: 40
Views: 3579

Re: Global Growth and Expected Returns — Why So Low?

If the equation is GDP = Prod + Pop, then Prod = GDP - Pop. Put another way, productivity is calculated from GDP and labor. It's more a plug number than an explanatory variable. What you're saying makes sense. But I was just trying to point out that productivity growth far overshadows employment gr...
by Simplegift
Fri Nov 14, 2014 11:54 am
 
Forum: Investing - Theory, News & General
Topic: Global Growth and Expected Returns — Why So Low?
Replies: 35
Views: 2461

Re: Global Growth and Expected Returns — Why So Low?

"Productivity growth remains by far the most significant driver of GDP growth" This is a tautology. You could as easily say GDP growth is the most significant driver of productivity. Inputs to production, including technology, labor and materials, would seem a better explanation. What was...
by Simplegift
Fri Nov 14, 2014 10:12 am
 
Forum: Investing - Theory, News & General
Topic: Global Growth and Expected Returns — Why So Low?
Replies: 35
Views: 2461

Re: 30% In International Stocks?

Not mentioned so far is that adding international stocks and their currency risk can also provide a valuable diversification benefit against domestic fiscal and monetary policy. For example, domestic inflationary pressures are usually bad for domestic bonds and stocks and often lead to currency depr...
by Simplegift
Thu Nov 13, 2014 10:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: 30% In International Stocks?
Replies: 53
Views: 4627

Re: How Do You Use the VIX (Fear & Greed Index)?

How do you use the VIX (Fear & Greed Index) in order to make or influence your personal investment decisions? The only time I ever see the VIX Index is when a well-known set of investment charts is newly published each quarter. And whenever I see this particular chart below, it reminds me again...
by Simplegift
Thu Nov 13, 2014 2:27 pm
 
Forum: Investing - Theory, News & General
Topic: How Do You Use the VIX (Fear & Greed Index)?
Replies: 15
Views: 1089

Re: Global Growth and Expected Returns — Why So Low?

Just to add: If interested in a more in-depth, comprehensive treatment of this subject, some good research was recently published by Antolin-Diaz et al. from the UK in October 2014: • Summary Paper: Is Economic Growth Permanently Lower? • Academic Version: Following the Trend: Tracking GDP When Long...
by Simplegift
Thu Nov 13, 2014 11:45 am
 
Forum: Investing - Theory, News & General
Topic: Global Growth and Expected Returns — Why So Low?
Replies: 35
Views: 2461

Global Growth and Expected Returns — Why So Low?

In the 2014 version of their Global Investment Returns Yearbook, the team of Dimson, Marsh and Staunton write, "Many investors and commentators have misunderstood the evidence on economic growth and equity performance. Though difficult for investors to capture in portfolio returns, stronger GDP...
by Simplegift
Thu Nov 13, 2014 11:44 am
 
Forum: Investing - Theory, News & General
Topic: Global Growth and Expected Returns — Why So Low?
Replies: 35
Views: 2461

Re: International Stock Diversification — A New Look

I was surprised at this data and it made me reconsider international diversification. It seems that internationalization of large cap corporations in terms of revenue generation is more pervasive than I had realized. I had the same reaction. It turns out that many countries are much more export-ori...
by Simplegift
Wed Nov 12, 2014 2:43 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: International Stock Diversification — A New Look

Well given this data, how do you explain the delta between international stocks and US stocks. Two points come to mind: • First, international diversification is primarily about spreading and balancing risk, not seeking higher returns — though improved risk-adjusted returns should result from addin...
by Simplegift
Wed Nov 12, 2014 12:10 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: Junk bond fund NAVs

^^ Personally, I don't have the statistics or mathematics background to always follow your analyses and posts, grayfox , but your "bulls-eye" charts are spectacular. They convey your results nicely for us visual types. Bravo! PS. Is the scale on these charts always the same? That is, do th...
by Simplegift
Wed Nov 12, 2014 3:42 am
 
Forum: Investing - Theory, News & General
Topic: Junk bond fund NAVs
Replies: 86
Views: 5118

Re: International Stock Diversification — A New Look

Not sure how this factors into regional considerations for asset allocation, but don't think we need to throw 'country of domicile' out the window just yet (I don't intend to make any changes). Will be interesting to see more analysis. Agree that country-of-domicile still has relevance — if for no ...
by Simplegift
Tue Nov 11, 2014 10:04 am
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: For the next year or so, why shouldn't we be in all-cas

I have no doubt that interest rates will rise next year. Economists writing in the International Monetary Fund's 2014 World Economic Outlook note that global real interest rates have been trending lower since 1982, long before the Great Recession and the Fed's quantitative easing program — and to q...
by Simplegift
Mon Nov 10, 2014 8:14 pm
 
Forum: Investing - Theory, News & General
Topic: For the next year or so, why shouldn't we be in all-cash?
Replies: 54
Views: 6681

Re: International Stock Diversification — A New Look

Still, one unanswered question persists: What are the true numbers for an all-international portfolio? Are these the right percentages? Did the Economist or Blackrock include them? I've looked, Angst , but I've not been able to find those revenue numbers in published reports. Neither of the origina...
by Simplegift
Mon Nov 10, 2014 7:03 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: International Stock Diversification — A New Look

Colee is right. Something weird is going on. Suppose international has no US revenue. The 50/50 portfolio would then have 60(.5)+0(.5)=30% US revenue. The 50/50 chart says that it has 28%. But international companies do have US revenue exposure, so the number has to be higher than 30%. I believe yo...
by Simplegift
Mon Nov 10, 2014 3:22 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: International Stock Diversification — A New Look

I'm not following your rationale. Shouldn't 50% international be more than 30% US revenue, given that non-US companies export to the US? Maybe it will help to just start with the global market-cap portfolio as the baseline (shown below, and in the pie chart on the right in the OP), instead of the a...
by Simplegift
Mon Nov 10, 2014 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: International Stock Diversification — A New Look

Let me ask it another way: At 100% US, I have 60% revenue exposure to the US. I go to 50% US / 50% Cash ---> now I have 30% exposure. How does 50% US / 50% Int give me 28% exposure? No, the equity portion of your portfolio still has 60% revenue exposure to the U.S. economy. Look again at the pie ch...
by Simplegift
Mon Nov 10, 2014 1:10 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: International Stock Diversification — A New Look

Even though I'm not quite sure what to make of this data, it is an eye-opener. To be honest, I'm not quite sure what to make of this data either. Over the years, I've slowly increased my international stock allocation to the point where I'm currently at 60% U.S./40% International. Looking at the re...
by Simplegift
Mon Nov 10, 2014 12:54 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: International Stock Diversification — A New Look

So 100% US has 60% revenue exposure to the US, but 50/50 has 28% revenue exposure to the US? International would need to have negative revenue exposure to the US for that to be true. Not exactly. The U.S. is certainly a big market for U.S. companies (60% of revenue), but it's not such a big market ...
by Simplegift
Mon Nov 10, 2014 12:31 pm
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: International Stock Diversification — A New Look

Ok but is that data accurate? I mean we know multinationals will use tax-havens to shelter money when they can. Is it always the case that revenue attributed to someplace is actually generated there? Maybe people in Ireland really do buy that many apple computers and iPhones but ... From what I can...
by Simplegift
Mon Nov 10, 2014 10:18 am
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: International Stock Diversification — A New Look

The data appears to be going only in one direction. What's seems to be missing is the percentage of revenue generated by international companies in US sales. The data would look quite different if international sales in the US was included. This was my thought as well. I think the message will be a...
by Simplegift
Mon Nov 10, 2014 9:59 am
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

International Stock Diversification — A New Look

As we all know, with increasing globalization and the rise of multinationals, companies today are providing more and more goods and services to customers beyond their home country. However, traditional stock indexes still use the country of domicile and primary listing to assign each company to a sp...
by Simplegift
Mon Nov 10, 2014 1:21 am
 
Forum: Investing - Theory, News & General
Topic: International Stock Diversification — A New Look
Replies: 51
Views: 5200

Re: Emerging Market Stocks — Who Is Reaping the Rewards?

To further break down the degree of revenue exposure that developed markets have to emerging markets, The Economist provides the nice chart below for 2013. It shows that the largest developed markets today all derive from 20%-30% of their revenue from the emerging economies (dark blue): http://i.img...
by Simplegift
Sat Nov 08, 2014 5:37 pm
 
Forum: Investing - Theory, News & General
Topic: Emerging Market Stocks — Who Is Reaping the Rewards?
Replies: 7
Views: 1422

Re: Emerging Market Stocks — Who Is Reaping the Rewards?

Lots of U.S. and European companies have made significant investments in emerging markets companies over this timeframe. You probably own some portion of the "non-investable" part through ownership of U.S. and other developed market firms. Good point — and this is something I've been curi...
by Simplegift
Sat Nov 08, 2014 1:29 pm
 
Forum: Investing - Theory, News & General
Topic: Emerging Market Stocks — Who Is Reaping the Rewards?
Replies: 7
Views: 1422

Re: Emerging Market Stocks — Who Is Reaping the Rewards?

Just to add, checking with a second source , it confirms that the average "free-float" for emerging stock markets as a whole was 55% in mid-2013 (same as the chart in the OP). However, a breakdown by individual emerging market countries (table below) shows quite a range, from a high of 66%...
by Simplegift
Sat Nov 08, 2014 8:55 am
 
Forum: Investing - Theory, News & General
Topic: Emerging Market Stocks — Who Is Reaping the Rewards?
Replies: 7
Views: 1422

Emerging Market Stocks — Who Is Reaping the Rewards?

Like many investors perhaps, my assumption has always been that, over the last 20 years, the equity markets in emerging countries were becoming much more liquid, more transparent and more integrated with the global economy as a whole. However, reading through a recent report from the International M...
by Simplegift
Sat Nov 08, 2014 2:16 am
 
Forum: Investing - Theory, News & General
Topic: Emerging Market Stocks — Who Is Reaping the Rewards?
Replies: 7
Views: 1422

Re: Index Fund Return Assumptions

Would you happen to know the Shiller PE10 for Vanguard Total International Stock Fund? Don't know of a source for the Vanguard Total International Stock Fund directly, but you can get CAPE data for individual countries worldwide from these two websites: • Star Capital has CAPE data for around 50 co...
by Simplegift
Thu Nov 06, 2014 5:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: Index Fund Return Assumptions
Replies: 7
Views: 502

Re: Index Fund Return Assumptions

When you run retirement age projections, what kind of return do you assume if you are investing in various index funds? For bonds , the current yield is a good predictor of future returns. Today, Vanguard's Total Bond Index is yielding about 2.5% nominal — less projected inflation of 2% (the curren...
by Simplegift
Thu Nov 06, 2014 4:37 pm
 
Forum: Investing - Help with Personal Investments
Topic: Index Fund Return Assumptions
Replies: 7
Views: 502

Re: International index

Most indexes only include companies with a certain percentage of "free-float" stock — that is, shares that are available to all investors ("investable"). Shares are not considered investable if they are closely-held by private control groups, by other publicly-traded companies or...
by Simplegift
Thu Nov 06, 2014 1:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: International index
Replies: 4
Views: 396

Re: Is deflation possible and how do you hedge against it?

High-quality bonds, preferably Treasuries. For a good recent discussion on deflation hedging, see this Forum thread from a few weeks ago:

How Does One Hedge Against Deflation?
by Simplegift
Wed Nov 05, 2014 11:25 pm
 
Forum: Investing - Theory, News & General
Topic: Is deflation possible and how do you hedge against it?
Replies: 4
Views: 644

Re: Interest is so low that Germans have to pay for savings

Don't know who David Kotak is but that information posted above is factually incorrect. I'll let you do the digging, since you posted it. Not sure what you're getting at, but the Federal Reserve Bank of St. Louis includes similar examples, from both the U.S. and Europe, in their January 2013 report...
by Simplegift
Wed Nov 05, 2014 1:08 pm
 
Forum: Investing - Theory, News & General
Topic: Interest is so low that Germans have to pay for savings
Replies: 19
Views: 1924

Re: Interest is so low that Germans have to pay for savings

The US had some deflation in the past as well. Did it ever get to the point where people have to pay banks to hold their money? There was an article last year in The Big Picture blog with a bit of history on negative nominal interest rates: There is only a limited history of the use of negative int...
by Simplegift
Wed Nov 05, 2014 12:47 pm
 
Forum: Investing - Theory, News & General
Topic: Interest is so low that Germans have to pay for savings
Replies: 19
Views: 1924

Re: Explaining muni bond spreads

PIMCO had a short article recently that explained in layperson's terms the effect that the 2008 financial crisis had upon liquidity in the municipal bond market: The credit crisis eliminated a number of marginal demand providers from the market: leveraged municipal hedge funds, foreign bank municipa...
by Simplegift
Mon Nov 03, 2014 10:30 am
 
Forum: Investing - Theory, News & General
Topic: Explaining muni bond spreads
Replies: 40
Views: 3428

Re: Shiller PE10 - by the numbers

Similar to the OP, an alternative way of looking at the historical PE10 data, in the chart below. Personally, I don't find it hard to believe that PE10 could remain high for decades to come. If real interest rates continue to stay low, due to declining global investment rates and increased savings r...
by Simplegift
Sat Nov 01, 2014 1:01 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller PE10 - by the numbers
Replies: 26
Views: 2738

Re: Does the future of exp ratios factor into your decision?

Vanguard's average expense ratios have also been falling since 1975, as their assets-under-management have grown, which won't be news to long-time Vanguard investors. However, it does appear that Vanguard's average expense ratio has been flat or declining very slowly since 2005 — indicating there ma...
by Simplegift
Fri Oct 31, 2014 11:45 am
 
Forum: Investing - Theory, News & General
Topic: Does the future of exp ratios factor into your decision?
Replies: 21
Views: 1095

Re: Does the future of exp ratios factor into your decision?

Lower asset-weighted expense ratios could just indicate that investors are increasingly choosing lower cost mutual funds (which they definitely are), but the simple average expense ratio of all equity mutual funds has also been falling (red line in chart below) — indicating an industry-wide trend to...
by Simplegift
Fri Oct 31, 2014 10:06 am
 
Forum: Investing - Theory, News & General
Topic: Does the future of exp ratios factor into your decision?
Replies: 21
Views: 1095

Re: Does the future of exp ratios factor into your decision?

So I guess the question is, is it possible to get any indication as to whether expense ratios will increase or decrease? Overall, the industry-wide trend is in your favor. Expense ratios of both actively-managed and index mutual funds have been declining for over a decade: http://i.imgur.com/w7kmlc...
by Simplegift
Fri Oct 31, 2014 9:38 am
 
Forum: Investing - Theory, News & General
Topic: Does the future of exp ratios factor into your decision?
Replies: 21
Views: 1095

Re: Yield Curve Investigations

Kevin, as you continue your explorations of the term structure of interest rates, you deserve a nice "art chart" to perhaps inspire your work. Thanks for your stalwart efforts!

Image
Source: Zero Hedge
by Simplegift
Thu Oct 30, 2014 7:23 pm
 
Forum: Investing - Theory, News & General
Topic: Yield Curve Investigations
Replies: 70
Views: 6634

Re: Possibility of financial markets breakdown / transformat

With the awareness that the financial market exchanges may not be integris and therefore their survival is precarious. Prior to 2008, I used to have vague concerns about a breakdown of the global financial system. During the financial crisis, however, after seeing the extent to which the "powe...
by Simplegift
Thu Oct 30, 2014 2:52 pm
 
Forum: Investing - Theory, News & General
Topic: Possibility of financial markets breakdown / transformation?
Replies: 16
Views: 1802

Re: A Backtest of the Dividend Growth Model, 1871-2010

Personally, I ended up with a mix of both methods, using the Bogle approach with earnings growth, but doing the full math in real terms. All good points, siamond . The important thing here is for investors not to get lost in the minutia and to find a version of the forecast model that makes sense a...
by Simplegift
Thu Oct 30, 2014 8:52 am
 
Forum: Investing - Theory, News & General
Topic: A Backtest of the Dividend Growth Model, 1871-2010
Replies: 70
Views: 4446
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