Bogleheads.org

By regulation, trades in dark pools must be traded at prices between the national bid and ask on public exchanges. They cannot drift away from exchange prices. So dark pools could also offer efficiencies in lessening market impact costs by allowing parties to exchange huge chunks of stock off marke...

I bet ALL trades in dark pools are inside the buy/sell spreads of the open market. Who would trade with anyone outside that range knowing that the other party can move the stock on in less than a millisecond for an instant gain.

At some point one has to wonder if the majority of accounts shouldn't be on automatic rebalance and asset allocation. Just like automated payments. The majority of people can't seem to do it properly, so for their own good a program or possibly a fiduciary advisor should put their portfolio on auto...

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Isn't disintermediation/ cutting out the middle man a perfectly rational way to reduce costs when there exists an efficient market to set the "correct" price to protect both parties' interests in a transaction? It seems to me that rather than being a threat, "dark pools" only ex...

Isn't disintermediation/ cutting out the middle man a perfectly rational way to reduce costs when there exists an efficient market to set the "correct" price to protect both parties' interests in a transaction? It seems to me that rather than being a threat, "dark pools" only exi...

"Remember that while good advice doesn't have to be expensive, bad advice almost always will cost you dearly, no matter how little you pay for it." I wonder if that may be better put as "no matter how much you pay for it"? I think it likely more people are sucked into Wall Street...

For an accumulator this tends to happen in practice as you add new moneys. When stocks fall, new moneys tend to defray the need to rebalance out of bonds.

In Australia at least this is simply answered, as the situation shouldn't arise for a prudent investor. Mortgage interest costs receive no tax relief, so return on investment has to be quite a bit higher than mortgage interest rates to break even. Even in these unusual times of low interest, the pru...

Evanescence

Naive diversification, with an eye to tax efficiency, and minimising number of funds (4). 50/50 stock/bond; 50% domestic/international stock; 50% tilt to small/ value Bonds 50% inflation linked, 50% cash/coupon Gradually increasing bonds changing till reach 50% bonds, 50% stock at retirement. Bonds ...

In other words, the high-div strategy does NOT reduce downside risk significantly (left tail). In a bad market for equities, high-div stocks can lose as much as stocks in general. What it does reduce, however, is the possible magnitude of upside gains (right tail). Maybe I'm off track here by compa...

Surely the antonym of fragile is resilient? Arguably, resilient businesses (or people) are considered valuable after withstanding "mishandling"

"Your philosophy on buying big ticket items..." is to defer buying them for a year or two. By then, some items don't seem to be so important anymore, those that survive can be funded out of cash.

I'm 50% Aussie equity, but I live here. boglerocks, I don't know where you get the "increasingly rosy" from. "Decreasingly rosy" would be a better description of local economic data and prospects, and that is already priced into the market with the ASX still about 35% off it's 20...

Can I repeat I think "benign neglect" is a great model, combined with an automatic gradual reduction from high to low equity allocation. Insomuch as Rick's advise is good for the particular sample of young investors who see him, for us non-financial advisors who's target group is different...

I'd like to defend a simple glide path/ high initial equity percentage approach for young investors, provided it can be combined with "benign neglect". My kids (early 20's) didn't bat an eye during the latest crash - their monies are tied up in superannuation (Australia, monies only access...

It takes heavy-duty coaching from someone who understands what’s going to keep a young person high in equity during their first bear market. Rick Ferri I was going to protest that it is OK for young investors to be 100% stocks as all four of mine didn't blink in the last turndown. In our case it wa...

50/50 Domestic/ International for me. As an Aussie, that's way overweight domestic, however all company tax paid on domestic dividends are credited to the shareholder. This sweet opposite-to-a-friction (there needs to be a nifty economic word for that) makes it easy to justify holding plenty of loca...

To complicate matters a little further, total futures markets relate to how many people want to write contracts. Case in point - plenty of pork bellies still, but no futures. The question is really asking which maximally diversifies buyer/seller match ups. As I understand it, total outstanding contr...

I thought active management made sense for EM. More than 84% of emerging market funds underperformed the EM index over the 5 year period according to the report. Rick Ferri Can't a stronger case be made for active management for the less efficient EM? There are less than 1,000 companies in MSCI EM....

If you have a loose $500k laying around, knock yourself out :) https://www.vanguardinvestments.com.au/retail/ret/investments/funddetailVASIF.jsp There may be relatively cheap access to the managed funds rather than the ETF's through some of the public offer super funds. I haven't looked at it for so...

No effect on market efficiency, beyond a modest (?negligable) reduction in market liquidity. Might mean slightly higher short term volatility for thinly traded stocks than might otherwise be the case.

Those who invest in "IPOs and secondary offerings" for any intended duration (short or long, investor or speculator) rely on a robust secondary market. How high would the cost of capital be with chronically poor liquidity? This is not primarily a moral issue. Surely the point for investors...

"Past performance is not a guarantee of future returns". Surely this applies just as much to all countries despite our domestic home biases. I think 50/50 domestic/ international is a nice balance between purity of cap weighting, vs. tax/ currency/ transaction cost frictions, and the reali...

In Australia DFA funds cost the same as Vanguard at around 0.35% for equity funds (read that as Vanguard charge more in Australia than in the States). I am fortunate enough to get advisor access at around 0.05%. Given there is a trivial difference, I think DFA has some clear advantages. Faced with >...

I didn't know anything when I split domestic/ international 50/50. I still dont know anything, though I do vaguely remember I must own at least some European. On the odd occasion I think I might know something, I take an aspirin and have a little lie-down until the feeling passes. Naive diversificat...

Counter intuitive question: At 62, I recently retired and my retirement benefits more than cover my lifestyle (about 120% of my expenses, including taxes-which are my main expenses...). I have accumulated assets worth about 10 years of current income. I view my retirement income as the yield of a v...

Naive diversification - always on the "mentally" efficient frontier.

Actually you got me there. I typed this one in a rush so I mistakenly churned out a bad example. Point though is that in the case of extreme under saturation of market makers, market efficiency goes down to the point where index funds become a bad choice. I probably should have stopped after the fi...

I've always thought the sImplest way to utilise momentum is just use allocation tolerance bands? Daily rebalancing = no momentum, fairly wide tolerance bands/ infrequent rebalancing = momentum. The latter also cuts down on transaction and tax costs.

This is a big issue for non-US investors with low domestic market-weights. As an Aussie, 3% domestic, 97% international is the starting point. I cant see anyone living with that. There were two things I considered in determining my allocation. Firstly, we have a huge tax advantage given to domestic ...

I need to send some documents (forms and ID, e.g. passport) overseas for an application. I want them to arrive safely but I also want to somehow arrange in advance to get my ID=passport sent back safely, without depending on the place I'm sending it to. It doesn't need to be fast, and insurance is ...

I don't use managed funds for bonds, but instead use high yielding internet account cash deposits for liquid reserves, and Treasury Bonds obtained through the RBA Small Investor facility. http://www.rba.gov.au/fin-services/bond-facility/ Treasury Fixed Coupon Bonds pay a bit less interest than term ...

Omo, the Vanguard Diversified Bond fund is 60% International Bonds, with that proportion hedged to the Australian dollar. The hedging gains as the Aussie dollar appreciated over the last year rather than interest earned likely accounted for the majority of that large distribution. The total distribu...

A very intensive read - thanks Larry.
My take-home message (translating it to the personal portfolio level) is that a widely diversified approach with a value tilt, using rebalancing bands to let momentum to have a bit of a run is a very reasonable thing to do.

They are known as TIB's here (Treasury Inflation Bonds) There are no ETF's for them If you can get them via the Reserve Bank's "Small Investor Series" that's your best bet. Mail times are a wash - currency could move randomly either way. The one-off 0.25 percent fee will be a lot cheaper t...

I'm another Australian offering an opinon. We Aussies are just a few percent of world cap, and it would be a long stretch to run equities at market weight 96%+ international exposure. Taxation frictions (even allowing for tax treaties) would make that not smart. Its not just the currency either - un...

20% of my equities have been REITs for years. It'll stay 20% till I'm carried off in a pine box.

Gold is intrinsically mostly useless, and in gross oversupply for any practical applications. Silver used to be of similar importance to gold as hard currency for many hundreds of years, and is now a tiny couple of % of its previous millenium-long real value. Silver bugs of a couple centuries ago I ...

Since international also entails currency exposure, I'd suggest you split REITs 5%/5% domestic/international, and keep your overall international allocation static. I personally am equities 50/50 domestic/international (naive diversification), and split my 20% total REITS evenly between the two. Ye...

Since international also entails currency exposure, I'd suggest you split REITs 5%/5% domestic/international, and keep your overall international allocation static.

I personally am equities 50/50 domestic/international (naive diversification), and split my 20% total REITS evenly between the two.

Good analysis. I agree there is no optimal way to rebalance.

Worth noting that more frequent rebalancing will generally incur higher costs. The frictions on continual rebalancing are likely to be higher than an infrequent transaction approach.

A lead actor in "Wall Street: Money Never Sleeps" makes a motza day trading?

I'm waiting for the sequel - "Hollywood: Bull* Never Stops".

I consider it investment porn. Tittilation of investors' self-destructive instincts deserves to be called out. I had always thought that the only reason Vanguard ran active funds is that some investors demand it. They know that the odds do not favour active management, and it is inexcusable to creat...

20% of my equities were REIT's before the crash (1/2 domestic, 1/2 international), they were ~20% around the bottom, and remain somewhere around 20% now. Stay the course Oz is an odd one in that the REIT market is very well developed (second oldest after USA?) and I don't think the valuations ever ...

20% of my equities were REIT's before the crash (1/2 domestic, 1/2 international), they were ~20% around the bottom, and remain somewhere around 20% now.

Stay the course

I think that it takes unusual math skill not to be bamboozled by a slick advisor's presentation. Better placed are the completely unengaged, provided there is a good default option for their investments. I am pleased to report in Australia at least, there are moves to mandate that the unengaged (a m...

But is the difference between an 0.6% ER and an 0.3% ER meaningful? Top quintile versus bottom quintile, sure there's a statistical difference, but can anyone actually show that there's a statistically significant difference in returns between (say) funds in the 0.3%-0.6% range and those with ERs u...

It takes a while to really get the hang of the idea that stock picking is a mug's game. Nevertheless, you are talking about only 10% of your portfolio (being all your stocks). This is not much above the 5% generally considered fair enough as "mad money" in a portfolio, so don't sweat it. M...