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Re: Do Companies Index Their Profits?

I have to say it's a sign of a bull market, and maybe a bull market that is very long in the tooth, when investors start posting asking why companies don't invest their cash balances in the stock market. Have we forgotten Japan? 2008-09 in global markets? Apple holds huge cash balances partly for ta...
by Valuethinker
Mon Dec 22, 2014 4:59 pm
 
Forum: Investing - Theory, News & General
Topic: Do Companies Index Their Profits?
Replies: 15
Views: 845

Re: Do Companies Index Their Profits?

If management put the company's money into equity markets, and they lost money, they'd get sued for failure of fiduciary duty, for sure. I am not sure why you feel that way about losing money in the equity markets. Companies lose money all the time on their capital investments. Obviously, they hope...
by Valuethinker
Mon Dec 22, 2014 4:54 pm
 
Forum: Investing - Theory, News & General
Topic: Do Companies Index Their Profits?
Replies: 15
Views: 845

Re: Do Companies Index Their Profits?

Do companies index their profits? You hear about companies like Apple hoarding loads of cash. Why don't they set up something like a 3-fund portfolio (e.g. total stock market index, bonds, etc.)? Do they believe they can invest that cash internally and generate a greater return with new products th...
by Valuethinker
Mon Dec 22, 2014 1:40 pm
 
Forum: Investing - Theory, News & General
Topic: Do Companies Index Their Profits?
Replies: 15
Views: 845

Re: Do Companies Index Their Profits?

I know the company I used to work for invested in different short term securities: Firms frequently accumulate temporary investments in marketable securities to provide the cash for a plant construction program, dividend payment, or other large expenditure. Thus, firms may issue bonds and stocks be...
by Valuethinker
Mon Dec 22, 2014 1:39 pm
 
Forum: Investing - Theory, News & General
Topic: Do Companies Index Their Profits?
Replies: 15
Views: 845

Re: Do Companies Index Their Profits?

I've wondered why companies that retain earnings purely for tax reasons don't invest in stock indexes. Because generally that is the job of fully diversified shareholders. Company management has no reason to claim superior expertise than Vanguard, say. They would be better (except for tax) simply t...
by Valuethinker
Mon Dec 22, 2014 1:38 pm
 
Forum: Investing - Theory, News & General
Topic: Do Companies Index Their Profits?
Replies: 15
Views: 845

Re: How to make a long bet on Crude Oil

Hi, With the fall in Crude Oil's prices lately I have been thinking on taking a long bet on its recovery in the upcoming months/years. I was wondering if others on the forum are feeling similarly and more importantly, how can I make that bet? i.e what ETF or index can I use to make the trade on cru...
by Valuethinker
Mon Dec 22, 2014 1:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to make a long bet on Crude Oil
Replies: 28
Views: 2080

Re: How to make a long bet on Crude Oil

A somewhat leveraged long bet on crude going higher would be to buy the drillers right now. They have been slaughtered, taken out back, and shot in the head again for good measure. If oil goes up 20%, they go up 50%. You have got to find the ones with minimal debts though. Say the value of a drille...
by Valuethinker
Mon Dec 22, 2014 1:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to make a long bet on Crude Oil
Replies: 28
Views: 2080

Re: Need to liquidate - sell individual stocks or index fund

Hi Everyone, I'm purchasing a house next month and need to liquidate some securities to make the down payment. I have 50% of my investments in index funds and the other 50% in individual stocks from my pre-boglehead days. Here's my dilemma: liquidating my index funds may be more tax efficient since...
by Valuethinker
Mon Dec 22, 2014 11:14 am
 
Forum: Investing - Help with Personal Investments
Topic: Need to liquidate - sell individual stocks or index funds
Replies: 10
Views: 456

Re: Should I sell my stocks & bonds?

What are the unrealized gains on the stocks, and what's your tax rate? If it doesn't cost anything to sell, the "would you buy it now?" makes sense, but tax consequences can be prohibitive. I took a closer look and they are going to almost wash each other out, the gain on one is about the...
by Valuethinker
Mon Dec 22, 2014 11:13 am
 
Forum: Investing - Help with Personal Investments
Topic: Should I sell my stocks & bonds?
Replies: 15
Views: 1918

Re: Should I sell my stocks & bonds?

OP has answered first question. Given gains and losses about balance out, he/she should SELL those holdings and reinvest in diversified equity index portfolios (as according to his her IPS). On the EE bonds there may be some merit in keeping them. See the discussion here. If they are paying 4% that ...
by Valuethinker
Mon Dec 22, 2014 11:11 am
 
Forum: Investing - Help with Personal Investments
Topic: Should I sell my stocks & bonds?
Replies: 15
Views: 1918

Re: vanguard international bond fund

The "diversification" that's left is diversification of interest rates in different companies, diversification across economies national policies. I'd hazard a guess that what motivated Vanguard's foray into international bonds is a hope of escaping the "financial repression" of...
by Valuethinker
Mon Dec 22, 2014 11:08 am
 
Forum: Investing - Theory, News & General
Topic: vanguard international bond fund
Replies: 11
Views: 1359

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

Yep, it was a swan: Why oil is crashing and the black swan event of 2014: The price of oil is down by 40 percent in six months and hardly anyone saw this coming. Longer-term the world is going to face uncertain volatility especially if oil stays at these new prices levels. If you were to say that o...
by Valuethinker
Mon Dec 22, 2014 7:12 am
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 92
Views: 8792

Re: Gas Prices ($1.99) in North Texas

Don't be fooled by the low gas price and rush out and buy big SUVs or trucks. If you are in the market for a new vehicle, there are huge discounts on fuel - efficient cars right now. FWIW, I purchase my vehicles based upon need - how I'm going to use them, rather than just the current price of fuel...
by Valuethinker
Sun Dec 21, 2014 10:08 am
 
Forum: Personal Consumer Issues
Topic: Gas Prices ($1.99) in North Texas
Replies: 45
Views: 2836

Re: Gas Prices ($1.99) in North Texas

[OT comments removed by admin LadyGeek] [Response to OT comments removed by admin LadyGeek] [OT comments removed by admin LadyGeek] [Response to OT comments removed by admin LadyGeek] [OT comments removed by admin LadyGeek] Yes. It's a 'salient price' so the feel good factor associated with it drop...
by Valuethinker
Sun Dec 21, 2014 10:04 am
 
Forum: Personal Consumer Issues
Topic: Gas Prices ($1.99) in North Texas
Replies: 45
Views: 2836

Re: (Australia) index advice

In investing a Very High Yield fund you are taking a lot of risk. Woodside for example will probably cut its dividend with lower gas and oil prices. Australian utilities have not figured out how to deal with the rise of PV solar and will have demand falls if industry and mining shut down. Similarly ...
by Valuethinker
Sun Dec 21, 2014 6:14 am
 
Forum: Investing - Help with Personal Investments
Topic: (Australia) index advice
Replies: 8
Views: 690

Re: Buying Vanguard Energy Index

One reads that Americans are buying SUVs again... Today's SUVs are much smaller and have far more fuel efficient engines than in the past. Besides, most of them are crossover vehicles and not SUVs. More like minivans without the minivan look. A good point, and I gather the new Ford E150 (best selli...
by Valuethinker
Fri Dec 19, 2014 12:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Buying Vanguard Energy Index
Replies: 22
Views: 2668

Re: Buying Vanguard Energy Index

I don't think it's a bad idea presuming you have a longer term outlook, because energy WILL get more expensive at some point in the future. Will the energy sector outperform the S&P 500 or the total market over the next few years? That's hard to know. I do invest in the Vanguard Energy ETF (VDE...
by Valuethinker
Fri Dec 19, 2014 10:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Buying Vanguard Energy Index
Replies: 22
Views: 2668

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
Fri Dec 19, 2014 10:52 am
 
Forum: Investing - Help with Personal Investments
Topic: Buying Vanguard Energy Index
Replies: 22
Views: 2668

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: 22
Views: 1479

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: 22
Views: 1479

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: 15
Views: 1918

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: 260
Views: 31622

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: 260
Views: 31622

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: 260
Views: 31622

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: 45
Views: 2836

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: 45
Views: 2836

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: 1085

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: 462

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: 58
Views: 4259

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: 22
Views: 2668

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: 22
Views: 2668

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: 6081

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: 6081

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: 13
Views: 2859

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: 1492

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: 2205

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: 2409

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: 2409

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: 2409

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: 2409

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: 2409

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: 4205

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: 6081

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: 6081

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: 6081

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: 929

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: 4205

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: 92
Views: 8792

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: 4205

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: 92
Views: 8792
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