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Re: Correlations of Risk Factors in Down Markets

I think it makes more sense just to look at what HML was in down market years vs. up-market years. If I look at the annual data from 1927 to 2013, I get an average HML in up markets of 4.83 and an average of 5.25 in down markets (i.e. there is a slight advantage to value when the market is going do...
by Valuethinker
Fri Dec 19, 2014 8:39 am
 
Forum: Investing - Theory, News & General
Topic: Correlations of Risk Factors in Down Markets
Replies: 18
Views: 770

Re: Correlations of Risk Factors in Down Markets

I agree with nisiprius. Look at it this way. A crisis is defined as a time when everything goes down. Even if everything is an uncorrelated random walk then by chance sometimes everything will be down at the same time. If you only look at the periods when everything goes down, you'll find that duri...
by Valuethinker
Fri Dec 19, 2014 8:38 am
 
Forum: Investing - Theory, News & General
Topic: Correlations of Risk Factors in Down Markets
Replies: 18
Views: 770

Re: Should I sell my stocks & bonds?

If you wouldn't buy them now you shouldn't hold them now. Too much specific risk on 2 companies. The only consideration is minimizing tax on disposal. Selling the loser and the winner would do that. Do the EE Bonds look better than other 'cash substitutes' you have access to, such as ibonds? You sho...
by Valuethinker
Fri Dec 19, 2014 8:28 am
 
Forum: Investing - Help with Personal Investments
Topic: Should I sell my stocks & bonds?
Replies: 3
Views: 202

Re: Colbert Report

Fallible wrote:And "truthiness" will live on: "The quality of seeming or being felt to be true, even if not necessarily true." (Market timing? Overconfidence? Confirmation bias? Recency bias?)


Oh yes.
by Valuethinker
Fri Dec 19, 2014 6:01 am
 
Forum: Investing - Theory, News & General
Topic: Colbert Report
Replies: 17
Views: 2873

Re: Colbert Report

I'm sorry. Both Colbert and Stewart seem to be a pair of smarmy little twerps to me. I think it's not their politics, but personalities. the thing with Colbert is that he was playing a role, and he played it to form, didn't deviate from it. Satire at its best. Shades of Peter Sellers in Dr. Strange...
by Valuethinker
Fri Dec 19, 2014 6:01 am
 
Forum: Investing - Theory, News & General
Topic: Colbert Report
Replies: 17
Views: 2873

Re: What Book Are You Currently Reading? Part VI

Just Finished a Good Book If you like reading WW 2 history you might give Max Hastings "Inferno" a go. He covers a number of things not previously covered like the thousands of Allied desertions during the Italian Campaign and the thousands of non combat airmen's deaths during training ex...
by Valuethinker
Fri Dec 19, 2014 5:54 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 247
Views: 29578

Re: What Book Are You Currently Reading? Part VI

The Sleepwalkers [WW1] The big debate. On the one hand the Barbara Tuchman thesis that these statesment blundered into war, with no idea what they were getting into. The revisionist view, which I think is more accepted by modern historians, is that they had every idea what they were getting into in...
by Valuethinker
Fri Dec 19, 2014 5:46 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 247
Views: 29578

Re: What Book Are You Currently Reading? Part VI

The Fountainhead ... Ayn Rand Not a huge fiction reader. Figured I should see what the fuss is about. I think Rand's fame has to do with her telling us what we would like to hear, rather than that she is a good novellist. We would all like to believe we are John Galt, or the architect in the Founta...
by Valuethinker
Fri Dec 19, 2014 5:31 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 247
Views: 29578

Re: Gas Prices ($1.99) in North Texas

It's around $2.80 in the Bay Area. I think it may be among the lowest in the nation once median household income is taken into consideration. Now if only we could say the same thing about housing expenses! The brake in the Bay Area is presumably traffic congestion, not cost of motoring? What a lowe...
by Valuethinker
Fri Dec 19, 2014 5:19 am
 
Forum: Personal Consumer Issues
Topic: Gas Prices ($1.99) in North Texas
Replies: 15
Views: 904

Re: Gas Prices ($1.99) in North Texas

It will be interesting to see how fast consumers 'bank' this in terms of their fuel economy decisions for new cars. Quite quickly I imagine. As some have suggested, the market for used high efficiency vehicles like the Prius might show some real bargains at this point, for anyone in the market. Gas ...
by Valuethinker
Fri Dec 19, 2014 5:15 am
 
Forum: Personal Consumer Issues
Topic: Gas Prices ($1.99) in North Texas
Replies: 15
Views: 904

Re: 2x Leveraged ETFS

Don't fight the tape. Cut your losses and run. If you want to invest in oil use an unleveraged vehicle. None of us here knows whether oil goes back to $80 or down to $40. Right now, I think the balance of probability says $40, but it's just not something anyone can forecast accurately (without insid...
by Valuethinker
Thu Dec 18, 2014 12:51 pm
 
Forum: Investing - Theory, News & General
Topic: 2x Leveraged ETFS
Replies: 16
Views: 970

Re: Beta vs Excess Returns

I am trying to resolve in my mind the following quote from the Wiki on Beta: Eugene F. Fama and Kenneth R. French found that on average, a portfolio’s beta explains about 70% of its actual returns. For example, if a portfolio were up 10%, about 7% of the return can be explained by the advance of al...
by Valuethinker
Thu Dec 18, 2014 12:49 pm
 
Forum: Investing - Theory, News & General
Topic: Beta vs Excess Returns
Replies: 3
Views: 325

Re: Bond Fund vs CDs - which to use?

Normally bond funds are favoured over CDs because they pay higher yield. Conversely there is no capital loss in investing in an FDIC insured CD. You always know you will get back par value. A bond fund NAV can change up or down. (the market value of the CD swings, but if you have a 'ladder' held to ...
by Valuethinker
Thu Dec 18, 2014 12:46 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 14
Views: 1090

Re: Colbert Report

I have one relative that does quote the show as a news program from time to time. :confused Chip Various surveys have found Colbert and Daily show viewers very knowledgable about the news. For example, "viewers of the Daily Show and the Colbert Report have the highest knowledge of national and...
by Valuethinker
Thu Dec 18, 2014 7:35 am
 
Forum: Investing - Theory, News & General
Topic: Colbert Report
Replies: 17
Views: 2873

Re: Buying Vanguard Energy Index

I used to think like you. What I was really doing is just thinking that if something sold at $110 six months ago and now is at $60, then the $60 must mean it is really cheap, on sale, whatever.... As if I knew what the value should really be. What expertise do you have that is warrants you thinking...
by Valuethinker
Thu Dec 18, 2014 7:04 am
 
Forum: Investing - Help with Personal Investments
Topic: Buying Vanguard Energy Index
Replies: 14
Views: 1910

Re: Buying Vanguard Energy Index

Skeptical? The oil majors have been including a carbon tax in their long-range business models for two years already, which seems like simple due diligence, even though the prospect of such a tax in the US currently seems to be exactly nil. What if prices stay low until the wave of regulation the e...
by Valuethinker
Thu Dec 18, 2014 7:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Buying Vanguard Energy Index
Replies: 14
Views: 1910

Re: Oil's future...

If the oil is back to over 70 bucks then fracking will boom again thus more production thus lower prices So either way it won't go over a certain price due to fracking That assumes that the supply of oil is infinitely price elastic at some 'backstop' price. Say $70/bl. But that's not at all true. F...
by Valuethinker
Thu Dec 18, 2014 3:51 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 56
Views: 5885

Re: Colbert Report

Yahh it was genuine satire and I thought it made it much funnier than, say, the Daily Show.

The latter like eating sweet desserts. Funny but not nutritious always. Whereas the latter was like a fine scotch, drunk slowly and savoured.
by Valuethinker
Thu Dec 18, 2014 3:00 am
 
Forum: Investing - Theory, News & General
Topic: Colbert Report
Replies: 17
Views: 2873

Re: Oil's future...

When you have a commodity which is essential but where price changes do not immediately cause supply changes (producers produce against physical limitations, when they can produce, they can usually recover all their costs even at fairly low prices) then you are price inelastic in supply. Oil is a c...
by Valuethinker
Thu Dec 18, 2014 2:58 am
 
Forum: Investing - Theory, News & General
Topic: Oil's future...
Replies: 56
Views: 5885

Re: buying apartment in France

Beware French tax residency status! You will need professional advice on this point. You may have trouble getting a bank account with FATCA. It seems that those banks overseas that want American customers, will only go through the hassle of FATCA if they are high net worth, private banking type cust...
by Valuethinker
Thu Dec 18, 2014 2:42 am
 
Forum: Personal Finance (Not Investing)
Topic: buying apartment in France
Replies: 12
Views: 2455

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: 15
Views: 1450

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: 2173

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: 2380

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: 2380

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: 2380

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: 2380

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: 2380

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: 4171

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: 56
Views: 5885

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: 56
Views: 5885

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: 56
Views: 5885

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: 909

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: 4171

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: 7593

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: 4171

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: 7593

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: 247
Views: 29578

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: 2918

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: 2918

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: 4171

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: 461

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: 7593

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: 7593

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: 4171

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: 721

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: 4171

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: 7593

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: 56
Views: 5885

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: 56
Views: 5885

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: 4171
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