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Re: Vanguard High-Yield Corporate Bond Fund (VWEAX) ?

Anyone have a opinion on how much lower Vanguard High-Yield Corporate Bond Fund (VWEAX) will drop. Its down about 3.5% this year and down about 35 cents from this years high of $6.17. Thanks ! VWEAX is not a growth oriented investment. If you look at its historical price, it is fairly flat. So I wo...
by Valuethinker
Wed Dec 17, 2014 1:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard High-Yield Corporate Bond Fund (VWEAX) ?
Replies: 11
Views: 795

Re: Bitcoin: The worst investment in 2014

History here has taught me that there will be 'fad' investments. Things that get a lot of media coverage usually because of positive price momentum. Bitcoin. Gold. Commodities. Arguably High Yield Bonds. Emerging Markets. REITs. MLPs. Recent good performance leads to interest in investing. Also ofte...
by Valuethinker
Wed Dec 17, 2014 12:16 pm
 
Forum: Investing - Theory, News & General
Topic: Bitcoin: The worst investment in 2014
Replies: 17
Views: 1970

Re: Better inflation-indexed guaranteed options?

I don't think there is anything better than TIPS and Ibonds as a pure inflation hedge(?). Though stocks have beaten bonds over the long term, in the short term, only Ibonds and TIPS can keep up with high unexpected inflation. And only the government has the ability to print the money needed to pay ...
by Valuethinker
Wed Dec 17, 2014 6:06 am
 
Forum: Investing - Theory, News & General
Topic: Better inflation-indexed guaranteed options?
Replies: 31
Views: 2200

Re: Better inflation-indexed guaranteed options?

NWIH. If you find one, I'm moving. Best stuff that I've found are longevity annuities, GMIB annuities-which are costly. Utilities paying dividends-which you need to trade to maximize yields thus carry the additional market risk. The problem for utilities is their input costs can go up faster than t...
by Valuethinker
Wed Dec 17, 2014 6:01 am
 
Forum: Investing - Theory, News & General
Topic: Better inflation-indexed guaranteed options?
Replies: 31
Views: 2200

Re: Better inflation-indexed guaranteed options?

I don't see you mention commodities, and they are a good inflation hedge also. Sometimes maybe sometimes. It's at least theoretically possible to have inflation without commodity price inflation. For example in the late 1990s. If the US economy is buoyant that doesn't necessarily 'move the needle' ...
by Valuethinker
Wed Dec 17, 2014 5:57 am
 
Forum: Investing - Theory, News & General
Topic: Better inflation-indexed guaranteed options?
Replies: 31
Views: 2200

Re: Better inflation-indexed guaranteed options?

and the Treasury has found it in their interest to issue them (as a way to monitor inflation expectations to help the Fed with monetary policy among other reasons) so there isn't a driving need for an inflation hedging product besides them, it doesn't seem.. That may be confusing cause with effect....
by Valuethinker
Wed Dec 17, 2014 5:49 am
 
Forum: Investing - Theory, News & General
Topic: Better inflation-indexed guaranteed options?
Replies: 31
Views: 2200

Re: Better inflation-indexed guaranteed options?

When it comes to guaranteeing to beat inflation, there are very few investments available to do so. For when you're accumulating, all you have available essentially are I bonds and TIPS. Nothing else is guaranteed to match or beat inflation. Once you're retired, you have Social Security which (of c...
by Valuethinker
Wed Dec 17, 2014 5:42 am
 
Forum: Investing - Theory, News & General
Topic: Better inflation-indexed guaranteed options?
Replies: 31
Views: 2200

Re: Energy sector

It's still early in the day, but the 2nd type I described may actually be occuring today. WTI and Brent both made new lows this am and are over $2 above those lows currently. This did not come to fruition today as more weakness came in the afternoon. Expect lower lows again soon. If you have oil in...
by Valuethinker
Wed Dec 17, 2014 5:29 am
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: Oil's future...

From Wikipedia, "Tight Oil" Following are estimates of technically recoverable volumes of tight oil associated with shale formations, made by the US Energy Information Administration in 2013. Not all oil which is technically recoverable may be economically recoverable at current or antici...
by Valuethinker
Wed Dec 17, 2014 4:48 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 53
Views: 5064

Re: Oil's future...

people forget how badly oil can bust and for how long. T Boone is just being an optimist. He knows what can happen. I have nothing to say about the reasons, pro & con, i'm just saying oil can really really bust and it can totally wreck local economies and non-diversified fortunes. The plus side...
by Valuethinker
Wed Dec 17, 2014 4:47 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 53
Views: 5064

Re: Oil's future...

IMO, 2 years before supply readjust to demand. Develop Nations will migrate to lower carbon technology and underdeveloped nations will rapidly move to fossil liquids then quickly to renewables as technology improves. That might work for electric power (but we have the intermittency problem, unresol...
by Valuethinker
Wed Dec 17, 2014 4:45 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 53
Views: 5064

Re: Retirement Location [US, Australia, or Elsewhere]

I would not hold Australian equities as a hedge. The market is too thin and concentrated on a few sectors (banking and natural resources). You could hold Australian government bonds and they do pay decent yields. The other logical hold would be a retirement property in Australia. Besides the carryin...
by Valuethinker
Wed Dec 17, 2014 4:38 am
 
Forum: Personal Finance (Not Investing)
Topic: Retirement Location [US, Australia, or Elsewhere]
Replies: 4
Views: 848

Re: Energy sector

Just from minimal reading, it appears that battery cost and capacity has been improving exponentially. http://rameznaam.com/wp-content/uploads/2013/09/li-ion-battery-improvement-curve1.jpg (that capacity is total, not per gram which I think also has increased exponentially) Maybe someone could draw...
by Valuethinker
Mon Dec 15, 2014 3:06 pm
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: Is the collapse of oil price a "black swan"?

3. Impact on world economy and stock markets. Oil price drop is a good thing: is absolutely, undeniably, and unquestionably. In a closed economic system of Planet Earth, money spent on energy resources is a deadweight loss to the society. It is true, that some segment of the population benefits fro...
by Valuethinker
Mon Dec 15, 2014 12:53 pm
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Energy sector

It would seem that just plowing into energy stocks when prices are down would seem to be a "no-brainer." But I advised those interested in such a strategy to nibble and add to their positions over time. Why am I so cautious? First, bottoms are very hard to call. We don't know what a marke...
by Valuethinker
Mon Dec 15, 2014 12:47 pm
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: Is the collapse of oil price a "black swan"?

I am an oil guru, born just a few minutes ago, coming out of the woodworks. Here is my analysis. Low oil prices will fuel prosperity, first in the USA with a $100 billion boost in available money to spend, which will pull other countries toward prosperity, mostly when we buy their goods with our st...
by Valuethinker
Sun Dec 14, 2014 12:59 pm
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: What Book Are You Currently Reading? Part VI

In the Kingdom of the Ice (north pole exploration, not as good as the Shackleton books) The Warrior's Apprentice, Shards of Honor, Barrayar (really enjoyed, looking forward to reading the rest!) Basalisk Station (David Weber -- meh, will probably try another but was a little disappointed) Excession...
by Valuethinker
Sun Dec 14, 2014 11:06 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 235
Views: 28315

Re: I'm an Irrational Bond Chicken Little

While I invest nearly half my assets in equities, I fear moving some of my fixed income assets from short-term/CDs to intermediate term. I'm guessing this is irrational since the risk that equities will tumble is far greater than the risk of a slide in the NAV of intermediate term bonds. However, t...
by Valuethinker
Sun Dec 14, 2014 10:46 am
 
Forum: Investing - Help with Personal Investments
Topic: I'm an Irrational Bond Chicken Little
Replies: 32
Views: 2791

Re: I'm an Irrational Bond Chicken Little

I Historically, I think the worst case for bonds has not consisted of any sudden shocks, but rather the erosion by inflation from 1940-1980 when bonds lost close to half their real value. If you want an apocalyptic scenario, it would be this. Normally we assume that investment-grade bonds don't def...
by Valuethinker
Sun Dec 14, 2014 10:45 am
 
Forum: Investing - Help with Personal Investments
Topic: I'm an Irrational Bond Chicken Little
Replies: 32
Views: 2791

Re: Energy sector

Oil stocks are not plays on the oil price. They are *leveraged* plays on the oil price. An oil company is a huge semi-fixed cost, with revenues mostly dependent upon the price of oil. Beware that. FT today says junk debt in the energy sector now forecast to have a 14% default rate (2 different plac...
by Valuethinker
Sun Dec 14, 2014 10:43 am
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: Buy oil drilling companies stocks?

OP needs to be aware that those share prices are discounting bankruptcy in some cases.

The businesses still have value, but the debt holders will get it, not the equity holders.
by Valuethinker
Sun Dec 14, 2014 10:39 am
 
Forum: Investing - Help with Personal Investments
Topic: Buy oil drilling companies stocks?
Replies: 5
Views: 459

Re: Is the collapse of oil price a "black swan"?

It's not a black swan yet but if it continues much further it has potential. I regularly paid $0.26 cents a gallon for my first car in 1965. Only one station priced it that low, others were a couple cents higher. That inflates to $1.96 today. Gas is selling in my city for $2.05-$2.49 in the last 24...
by Valuethinker
Sun Dec 14, 2014 6:26 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

It's just stochastic churn, happens all the time, the only difference with oil being that people pay close attention to it because they think they can divine deeper meaning about the state of the world. I think they are wrong. A significant difference between the oil price and the stock market, or ...
by Valuethinker
Sun Dec 14, 2014 6:23 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Energy sector

When the oil companies themselves start buying other oil companies, that might well call the bottom (as it did in 1998 with Exxon Mobil and BP Amoco). Halliburton just bought Baker Hughes. Does that count? Remind me. Did Dick Cheney as CEO do the same thing, and then they spun it out? Ie is this ju...
by Valuethinker
Sun Dec 14, 2014 6:13 am
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: [Australian] Listed Investment Companies

I’ve talked about Index Investing with a couple of other Australian investors, however a number of them whom have looked at index investing have gone down the route of investing in LIC’s (Listed investment Companies) instead in Australia due to lower MER’s and comparable returns. For my part I hold...
by Valuethinker
Sat Dec 13, 2014 5:52 pm
 
Forum: Investing - Theory, News & General
Topic: [Australian] Listed Investment Companies
Replies: 5
Views: 717

Re: Energy sector

Oil has gone from 110+ down to 65 in a few months. Is it time to overweight the energy sector? I can think of a lot dumber things people can do with their money. The problem is that the price of oil and other commodities could go down a lot more. But I like the fact you are thinking things through ...
by Valuethinker
Sat Dec 13, 2014 5:46 pm
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: Is the collapse of oil price a "black swan"?

It's just stochastic churn, happens all the time, the only difference with oil being that people pay close attention to it because they think they can divine deeper meaning about the state of the world. I think they are wrong. A significant difference between the oil price and the stock market, or ...
by Valuethinker
Sat Dec 13, 2014 12:29 pm
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Oil's future...

This is one of those times when investors should be aware of the "stay the course" adage. As tempted as I am to buy stock in an oil company or an energy ETF, I am reminded of previous attempts to catch a falling knife. Yes. You don't know how much bad news is still in the ( ;-) ) pipeline...
by Valuethinker
Sat Dec 13, 2014 10:54 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 53
Views: 5064

Re: Oil's future...

Economist had a nice write up on this subject this week I'd recommend reading. The line that caught my attention was the idea that with America's production up 3 million b/d during the shale drilling boom - and many fields still to be developed - that America has actually challenged Saudi Arabia no...
by Valuethinker
Sat Dec 13, 2014 10:51 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 53
Views: 5064

Re: Energy sector

Drilling a well may cost from a million to a billion dollars. However, once a well is producing oil, it will produce oil inexpensively. Perhaps, you meant "relatively inexpensively." Many wells have electric pumps and you have to pay for electricity. Some wells are so far from pipelines t...
by Valuethinker
Sat Dec 13, 2014 9:49 am
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: An incredibly naiive question

Many of the contributors to this thread are obviously extremely knowledgeable about the subject at hand. I, on the other hand, know next to nothing about it. However, my gut instinct tells me that something is wrong. Several years ago the price of oil soared to record levels. Dozens of pundits appe...
by Valuethinker
Sat Dec 13, 2014 9:46 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 53
Views: 5064

Re: Is the collapse of oil price a "black swan"?

Kudlow on low oil prices. A couple of days ago Larry Kudlow gave a good explanation on why lower oil prices are good for our economy , a couple of weeks earlier he wrote an article on why "Lower Oil Prices Are Unambiguously Good. " Black swan, white swan, pink swan, good, neutral, or bad,...
by Valuethinker
Sat Dec 13, 2014 9:39 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

The reason oil prices are low is because the Saudis/Qataris are exerting pressure on Russia/Iran for their support of the Syrian regime. That happened in early eighties and early two thousands, for that same reason. They have the ability to produce oil at $15 a barrel when it costs most others abou...
by Valuethinker
Sat Dec 13, 2014 9:35 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

On black swan, it might be in technical terms of X standard deviations assuming a normal distribution around the volatility of at-the-money options as of recently, and even way out of money puts priced to a fatter 'tail' of the distribution paid off phenomenally. But like the 2008 crash? Long way t...
by Valuethinker
Sat Dec 13, 2014 9:26 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

Canadian gas taxes average $1.49 per US gal http://retail.petro-canada.ca/en/fuelsavings/2139.aspx Federal excise tax is 10 cents/ litre (38 c per US gal) . Provincial gasoline excise taxes range from 9 cents (Alberta) to 19 cents (Quebec) per litre (former would be 35 cents, later would be 72 cents...
by Valuethinker
Sat Dec 13, 2014 9:22 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

Of all the developed countries, the US has the lowest gas prices, followed by Australia and Canada. US gas prices are more than twice those in Canada: http://www.gasbuddy.com/GB_Price_List.aspx?cntry=CAN When I was in Edmonton 2 years ago gas prices were about25% more than US. However quoted prices...
by Valuethinker
Sat Dec 13, 2014 9:15 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Energy sector

mpt follower wrote:Oil has gone from 110+ down to 65 in a few months.
Is it time to overweight the energy sector?


Wait. It hasn't really hit the fan yet, in terms of Wall Street forecasts for earnings for these companies. You are still getting downgrades, I believe.
by Valuethinker
Fri Dec 12, 2014 7:05 pm
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: Energy sector

Drilling a well may cost from a million to a billion dollars. However, once a well is producing oil, it will produce oil inexpensively. So I don't see an immediate drop in supply. But we will see new investment in energy sector to drop significantly. Buying stocks is considered as an investment (in...
by Valuethinker
Fri Dec 12, 2014 7:03 pm
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: Energy sector

, but do you think that Chevron, Exxon, ConocoPhillips, Shell, and BP will be struggling in the long run? Well I'm no expert on this but seems to me that if in a few decades from now, everyone is driving battery or fuel cell powered cars, and using electric heat, etc, then hydrocarbon demand and pr...
by Valuethinker
Fri Dec 12, 2014 6:59 pm
 
Forum: Investing - Theory, News & General
Topic: Energy sector
Replies: 55
Views: 4074

Re: Is the collapse of oil price a "black swan"?

I would argue i I strongly disagree. . Clearly Irrational, this is very close to the xkcd 'someone is wrong on the internet' type of debate ;-). Godwin's Law next? ;-). My fault for taking us off topic. I was thinking very much in a strategic geopolitical sense rather than an economic one. You ment...
by Valuethinker
Fri Dec 12, 2014 8:46 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

The actual price doesn't matter as much as the stability. Oil trading around 100+-10 allows for planning. Oil at 100+-50 makes that planning much harder. Would you want to some shale oil exploration with a cost of 70 dollars/barrel if there was a good chance the price would be below that in 2 years...
by Valuethinker
Fri Dec 12, 2014 5:20 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

I would argue it is no one's long term interest to have too low oil prices. No nation that is. Oil, as they say, is geomilitarily 'the blood of victory'. I strongly disagree. Cheap energy fuels abundant prosperity. Of course it's not going to be good for single revenue oil exporters but that is a m...
by Valuethinker
Fri Dec 12, 2014 5:19 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Inflation question

Hypothetical question (trying to learn) So if in the last year, a stock or index has grown 8%, inflation has been 2%, stock or index yield has been 2%. Does this mean, the growth of the stock was 4% (actual growth) + 2% inflation (considering the stock was inflation protected) + 1.7% dividends (con...
by Valuethinker
Fri Dec 12, 2014 5:14 am
 
Forum: Investing - Theory, News & General
Topic: Inflation question
Replies: 5
Views: 685

Re: Why are Falling Oil Prices Bad for the Stock Market

I have no allegiance to this opinion about what's going on in oil prices. My point was that this is an area of concern for some market participants, and it may explain some of the recent fluctuations. You can make econometric models say whatever you want. I've done probably hundreds of them. That's...
by Valuethinker
Thu Dec 11, 2014 11:24 am
 
Forum: Investing - Theory, News & General
Topic: Why are Falling Oil Prices Bad for the Stock Market
Replies: 29
Views: 2530

Re: Is the collapse of oil price a "black swan"?

Of all the developed countries, the US has the lowest gas prices, followed by Australia and Canada. US gas prices are more than twice those in Canada: http://www.gasbuddy.com/GB_Price_List.aspx?cntry=CAN Those are loonies per liter. Multiply by .87 * 3.79 = 3.30 to get greenbacks per gallon. If you...
by Valuethinker
Thu Dec 11, 2014 11:17 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

http://econbrowser.com/archives/2014/11/a-glut-of-oil


good analysis. Interestingly I am *way* off on my memory of world oil production. The graphs say it is in the 70s m b/d. Note the importance of Canadian tar sands and US fracking.
by Valuethinker
Thu Dec 11, 2014 11:15 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Oil's future...

You are conflating the cost to take a barrel out of the ground with the national budgets. Different things. The cost to take oil out of the ground is only a very small factor in what the oil will sell for. The point is Saudia Arabia is not at an advantage cost wise and has less ability to stomach l...
by Valuethinker
Thu Dec 11, 2014 10:16 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 53
Views: 5064

Re: Is the collapse of oil price a "black swan"?

...largest price decline since the 2008 financial crisis. ...Does this qualify as a bona fide "black swan" event? If not, what does it take to be a "black swan"? Something that happens twice within 6 years is not a black swan. For oil prices, IMO the only black swan since the ad...
by Valuethinker
Thu Dec 11, 2014 10:07 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

Let me give one other maybe relevant example of something or other. A few years back, I read a news story that mentioned that there are a pretty good number of rare earths that are absolutely essential to modern high-technology products; neodymium is to magnets and thus tiny motors as rubber is to ...
by Valuethinker
Thu Dec 11, 2014 10:05 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537

Re: Is the collapse of oil price a "black swan"?

The reason oil prices are low is because the Saudis/Qataris are exerting pressure on Russia/Iran for their support of the Syrian regime. That happened in early eighties and early two thousands, for that same reason. They have the ability to produce oil at $15 a barrel when it costs most others abou...
by Valuethinker
Thu Dec 11, 2014 10:03 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7537
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