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Re: 2014 Honda Civic EX-L vs 2014 Acura ILX(Base)

Since you are considering Acura, it sounds like you have not owned Lexus/Acura/Infiniti level cars but interested in these brands. If you want to own that type of brand at least once in your life, ILX will be a cheaper option. If you find out that it's not worth owning such brand, then you will not ...
by acegolfer
Wed Jul 23, 2014 11:49 pm
 
Forum: Personal Consumer Issues
Topic: 2014 Honda Civic EX-L vs 2014 Acura ILX(Base)
Replies: 12
Views: 602

Re: A case against Index Funds in India

AFAIK, market inefficiency (semi strong EMH) implies the current price does not reflects all the public information. Then it's possible for an expert fund (not all funds) to outperform the market consistently. The question is, how do you know which fund is the expert fund? Someone is knowingly on t...
by acegolfer
Wed Jul 23, 2014 4:42 pm
 
Forum: Investing - Theory, News & General
Topic: A case against Index Funds in India
Replies: 32
Views: 1521

Re: A case against Index Funds in India

However, I will not use indexing in emerging markets with corruptions (I'm not saying India is. I have no idea.). One of the key requirements for indexing to work is efficient market. If not, it's easy to beat the market and indexing (even with diversification effect) will not work. This is not tru...
by acegolfer
Wed Jul 23, 2014 3:31 pm
 
Forum: Investing - Theory, News & General
Topic: A case against Index Funds in India
Replies: 32
Views: 1521

Re: Is there any downside to investing in bond futures?

Perhaps I was being a bit hasty there, but the risk of the interest rates shifting is always there for any bond investment, and that part is extremely well documented. But if we make the assumptions that none of us have a crystal ball with respect to interest rates, it makes sense to talk about two...
by acegolfer
Wed Jul 23, 2014 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

lee1026 wrote:Sure, but "assume interest rates are unchanged" is part of any bond investment for anything but money market investments.


Any source to verify your statement?
by acegolfer
Wed Jul 23, 2014 2:19 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

I don't know what it is going to be, but I am counting on the fact that the yield curve is usually upwards sloping, and that inverted yield curves are fairly rare. Upward slope is irrelevant in your example. To make 2.52% gain as you predicted, you need assume the 3-yr zero rate will stay the same ...
by acegolfer
Wed Jul 23, 2014 1:32 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

To see how big that difference is, consider buying the 4 year STRIPS, holding for a year, and then selling it as a 3 year STRIPS. The difference in price is 2.52%. You will have to buy very long yielding munis to have a comparable yield and open yourself up for far more interest rate risk. How do y...
by acegolfer
Wed Jul 23, 2014 12:34 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

The conversion factors for bonds deliverable against a T-Bond futures contract adjust for the difference between the market price of the actual bond and the theoretical price of a 20-year-to-maturity, 6% coupon, noncallable T-Bond. The theoretical underlying is the 20-year, blah, blah, blah, bond, ...
by acegolfer
Wed Jul 23, 2014 11:31 am
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

The price is the future price, decreased by the future value of the coupons you won't receive. I covered that. The underlying is a theoretical, 20-years-to-maturity, 6% coupon, noncallable T-Bond. The futures price is S0 × (1+r)^T, where S0 is the (theoretical) price for the (theoretical) underlyin...
by acegolfer
Wed Jul 23, 2014 10:50 am
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

The price of a bond futures will be (surprise, surprise!) the future value of today's price on the bond, increased at the risk-free rate for the term of the futures contract. F0 = Future value of today's price increased at the Rf? What do you mean by future value of today's price? How do you know w...
by acegolfer
Wed Jul 23, 2014 10:39 am
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: International Allocation in some funds...

@OP I found the description of S&P 500 companies from fool.com As the name suggests, the S&P 500 consists of 500 companies from a diverse range of industries. Contrary to a popular misconception, the S&P 500 is not a simple list of the largest 500 companies by market capitalization or by...
by acegolfer
Wed Jul 23, 2014 7:50 am
 
Forum: Investing - Theory, News & General
Topic: International Allocation in some funds...
Replies: 18
Views: 669

Re: A case against Index Funds in India

@OP, Those 3 points against indexing are not just for India in particular. I have seen similar arguments against indexing in U.S. However, I will not use indexing in emerging markets with corruptions (I'm not saying India is. I have no idea.). One of the key requirements for indexing to work is effi...
by acegolfer
Wed Jul 23, 2014 7:41 am
 
Forum: Investing - Theory, News & General
Topic: A case against Index Funds in India
Replies: 32
Views: 1521

Re: Is there any downside to investing in bond futures?

The price of a bond futures will be (surprise, surprise!) the future value of today's price on the bond, increased at the risk-free rate for the term of the futures contract. F0 = Future value of today's price increased at the Rf? What do you mean by future value of today's price? How do you know w...
by acegolfer
Wed Jul 23, 2014 7:18 am
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

As long as you don't overexpose yourself by trading more notional than you have cash in the account it is essentially unlevered. Can you elaborate this using an example? AFAIK, to be unlevered, the amount deposited in your margin account must be the same as the underlying asset price, which never h...
by acegolfer
Tue Jul 22, 2014 11:03 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

There is no unlimited liability for buying a fully collateralized bond future. You pay whatever market price is at the time and when the future matures, someone owes you a $100k face treasury bond. It's true that for US treasuries, the margin requirements for futures are tiny, often around only 2% ...
by acegolfer
Tue Jul 22, 2014 11:03 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Is there any downside to investing in bond futures?

Sure, but in theory, if a person puts $N dollars into a futures account, and trade on a bond future worth $N, it would be the same as if that person never leveraged, right? No. That's not how futures works. When you long or short a futures contract, you have to deposit cash into your margin account...
by acegolfer
Tue Jul 22, 2014 10:45 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Best Way to Show Google Docs via Wi-Fi on a TV: Chromeca

Yes, it works. I also tested casting Slides (powerpoint) in full screen mode with automatic play and it works.

2 issues that I don't know the answer to.

1. No auto loop. Once it reaches the end, it stays at the last slide.
2. Adjusting auto play speed.
by acegolfer
Tue Jul 22, 2014 10:28 pm
 
Forum: Personal Consumer Issues
Topic: Best Way to Show Google Docs via Wi-Fi on a TV: Chromecast?
Replies: 6
Views: 447

Re: Is there any downside to investing in bond futures?

All derivatives have leverage effects that increases the risk and magnifies the returns. To many investors, increased risk is the downside to investing in futures.
by acegolfer
Tue Jul 22, 2014 10:14 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1552

Re: Any Regulation on Mutual Fund ER Change?

Thanks for the SEC regulation. It is accompanied by a numerical example that illustrates the total dollar amounts that an investor could expect to pay on a $10,000 investment if he or she received a 5% annual return and remained invested in the fund for various time periods. Using ER, one can calcul...
by acegolfer
Tue Jul 22, 2014 10:09 pm
 
Forum: Investing - Theory, News & General
Topic: Any Regulation on Mutual Fund ER Change?
Replies: 3
Views: 379

Any Regulation on Mutual Fund ER Change?

To my understanding, ER is not fixed. And today's ER only affects today's fee not over the next 1 year. I presume a fund can arbitrary increase the management fee, which results in higher ER. Q: Is there a regulation to prevent funds from arbitrary increasing the fees/ER? For example, do they have t...
by acegolfer
Tue Jul 22, 2014 5:48 pm
 
Forum: Investing - Theory, News & General
Topic: Any Regulation on Mutual Fund ER Change?
Replies: 3
Views: 379

Re: If you consistently outperform (pre-fees), why not lower

Some people are willing to pay higher fees for what they perceive as better service. Espresso whenever they come in. Mail Fedex'd to you because you are so important. Minimum $500K investment so you don;t have to deal with the riff-raff. Offices that ooze money. People in suits and ties that look l...
by acegolfer
Tue Jul 22, 2014 4:12 pm
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: NY Times Article - a case for index investing

I have another q about the paper. The reporter looked at the last 5 years and stated that there were only 2 funds that stayed in the top 25% persistently. This is similar to the probability = 0.25^5 * 2982 = 2.79. If the performance is independent (another way of saying past performance doesn't pred...
by acegolfer
Tue Jul 22, 2014 2:56 pm
 
Forum: Investing - Theory, News & General
Topic: NY Times Article - a case for index investing
Replies: 23
Views: 2862

Re: If you are a winner before fees, why not lower the ER?

Sorry for the late reply. You 2 asked me to state the group of funds. But I don't know the fund names and asked whether a study will suffice instead, which you didn't reply. So I assumed that you don't need the study. I always think avoiding questions by answering a different question is rude in th...
by acegolfer
Tue Jul 22, 2014 2:46 pm
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

You seem to be assuming that funds that consistently have beaten the market in the past will continue to do so in the future. There's no way to know as a fund manager that you'll beat the market in the future. Your question reads to me that there is some assumption that past success will be replica...
by acegolfer
Tue Jul 22, 2014 1:25 pm
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

+1 I'm sure there are armies of mathematicians whose job it is to maximize fees without losing customers. The average investor doesn't even know what they're paying in fees. Thanks for your 2nd answer. It refutes my assumption that the demand elasticity > 1. In other words, you are saying that aver...
by acegolfer
Tue Jul 22, 2014 1:22 pm
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

Why do you keep asking yourself if you can provide studies to demonstrate the existence of funds that would have consistently beaten the market over multiple decades except for the impact of their high fees, but then being so rude to yourself as to not give an answer. Are you just messing with us? ...
by acegolfer
Tue Jul 22, 2014 1:19 pm
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

2. The winners (after fees) don't stay as winners consistently (no persistence). The problem is that the managers don't truly know if they have persistence or not. So....the manager beats the benchmark for a few years on a pre-expense basis. What to do? If you lower the fees, you lower your income....
by acegolfer
Tue Jul 22, 2014 12:02 pm
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

Only if you assume the increased size won't affect performance. Additionally, I don't think constant cost is a reasonable assumption. A big influx of money means you'll probably need to hire more analysts to invest it all reasonably. I have to believe the people who have been doing this for decades...
by acegolfer
Tue Jul 22, 2014 11:59 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

My experience talking with my co-workers suggests that they're clueless about expense ratios. They complain about the 401K charges because those show up in red on the reports, but they ignore the expense ratios because those are hidden. And once funds start talking about their expense ratios and wh...
by acegolfer
Tue Jul 22, 2014 11:48 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

Erhan wrote:At this point, can you please share the group of funds that fall in #3?


As I replied to Twins Fan, can I provide studies?
by acegolfer
Tue Jul 22, 2014 11:38 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

You have a strong belief, they have data and people expert at analyzing markets. Let me ask BH. If a fund consistently beat the market 100% after fees for the last 10-30 years, will you invest in such fund? If yes, then my guess is not off. (Should I make a poll for this?) @richard, I never believe...
by acegolfer
Tue Jul 22, 2014 11:36 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

Erhan wrote:I believe the studies show that active funds who beat the market one year has less chance to do so next year. In fact, beating the market in a given year does not mean that they can beat it again next year.


That's #2. I guess you didn't read about #3.
by acegolfer
Tue Jul 22, 2014 11:28 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

What am I missing? The part about fleecing investors for all they're worth? Sure, they could lower their prices, but as long as people are willing to pay them, why should they? A firm which is talented enough to beat the market might well be talented enough to figure out a business model, including...
by acegolfer
Tue Jul 22, 2014 11:20 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

2. The winners don't stay as winners consistently (no persistence). 3. Before fees, however, a group of funds beat the market consistently. Um, what?? How can winners not stay winners consistently, but there are funds that consistently win? Can you share what group of funds are the consistent winne...
by acegolfer
Tue Jul 22, 2014 11:18 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

CABob wrote:You are suggesting that funds intentially run at a loss? That doesn't sound like a good business plan to me.


Sorry, typo in OP. The operating cost is much smaller than fees. So lowering fees will not result in loss. In fact, it will increase profit. I explained why in OP.
by acegolfer
Tue Jul 22, 2014 11:17 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: If you are a winner before fees, why not lower the ER?

The excess fees result in higher income to the corporation / owners of the fund? Sounds like they are short sighted. If they can show that they beat the market every year, they will get more fund inflows, which will boost profits. Wouldn't you invest in a fund if it consistently beat the market ove...
by acegolfer
Tue Jul 22, 2014 10:58 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

If you consistently outperform (pre-fees), why not lower ER?

Studies (provided upon request) showed that 1. Average active managed funds (after fees) don't beat the market. 2. The winners (after fees) don't stay as winners consistently (no persistence). 3. Before fees, however, a group of funds beat the market consistently. My question is if you are running t...
by acegolfer
Tue Jul 22, 2014 10:45 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1131

Re: NY Times Article - a case for index investing

Why 25%? Is that the percentage that a fund will beat the index in any given year? In other words, index fund is the 75% percentile of all funds. Is this true? If one ranks by annual returns, what's the average percentile of index funds such as TSM? I thought it was about 70 percentile (= 30% of fun...
by acegolfer
Tue Jul 22, 2014 10:18 am
 
Forum: Investing - Theory, News & General
Topic: NY Times Article - a case for index investing
Replies: 23
Views: 2862

Re: Will baby boomers retiring spell doom for the markets

Toons wrote:With all due respect :happy "Noise"


+1
by acegolfer
Tue Jul 22, 2014 10:07 am
 
Forum: Investing - Theory, News & General
Topic: Will baby boomers retiring spell doom for the markets
Replies: 38
Views: 3544

Re: Poll - Do you use Quicken?

The admiral shares conversion was a hassle (I'd forgotten about it since it happened years ago). Unfortunately I bought TSM and had dividends reinvested. I knew I needed to get the number of shares right for each lot in order to maintain cost basis properly. I ended up building a conversion spreads...
by acegolfer
Tue Jul 22, 2014 10:00 am
 
Forum: Personal Finance (Not Investing)
Topic: Poll - Do you use Quicken?
Replies: 63
Views: 2707

Re: Bond strategy resilient to rate increase

In fact, when the Fed unexpectedly increase the Fed Funds target rate, the bond prices can go up. Rate increase is bad news for the stock market and the stock prices will fall. There's a good chance the bond prices can increase.
by acegolfer
Mon Jul 21, 2014 9:28 pm
 
Forum: Investing - Theory, News & General
Topic: Bond strategy resilient to rate increase
Replies: 12
Views: 1075

Re: Poll - Do you use Quicken?

I'm pretty good with Excel. But I use quicken because

1. 1-click update accounts
2. can input gross income and split into many categories, which helps income tax planning
3. net worth report
4. monthly income/expense report
5. update investments using the latest prices
by acegolfer
Mon Jul 21, 2014 7:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: Poll - Do you use Quicken?
Replies: 63
Views: 2707

Re: Poll - Do you use Quicken?

I'm surprised that Excel is so widely used. I've written elaborate applications in Excel and VB for Apps, but why would I jump through hoops to do what Quicken does out of the box? I have never used Quicken but can it aggregate various investments into allocation types and perform a rebalancing ana...
by acegolfer
Mon Jul 21, 2014 7:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Poll - Do you use Quicken?
Replies: 63
Views: 2707

Re: How much do you spend on your hobby annually?

I'm a huge fan of old style inter-clan (alliance) war games that require long term strategical planning rather than fast fingers. Which games? Europa Universalis? This is something that I might be interested in for retirement (no real time for a lot of game play right now) so I don't know if a sepa...
by acegolfer
Sun Jul 20, 2014 3:39 pm
 
Forum: Personal Consumer Issues
Topic: How much do you spend on your hobby annually?
Replies: 77
Views: 6931

Re: [Poll] % of 3 funds in your financial asset portfolio?

The #1 response so far (71 ppl) is 0-25%. I should have created more options for that segment.
by acegolfer
Sat Jul 19, 2014 6:55 am
 
Forum: Investing - Theory, News & General
Topic: [Poll] % of 3 funds in your financial asset portfolio?
Replies: 31
Views: 1655

Re: [Poll] % of 3 funds in your financial asset portfolio?

sscritic wrote:
acegolfer wrote: Please include equivalent funds (even S&P500 funds) representing the total markets.

500 is not total. I think I know what total means. I counted my totals, not my sorta, maybe, partially, totals.


Everyone knows 500 is not total. But most BH use 500 for TLH. Don't you?
by acegolfer
Fri Jul 18, 2014 8:40 pm
 
Forum: Investing - Theory, News & General
Topic: [Poll] % of 3 funds in your financial asset portfolio?
Replies: 31
Views: 1655

[Poll] % of 3 funds in your financial asset portfolio?

1. Please include all your financial assets such as retirement accounts, 529, etc. 2. Do not include cash per wiki. 3. It doesn't have to be strictly Vanguard funds, Please include equivalent funds (even S&P500 funds) representing the total markets. 4. For those who don't know three-fund portfol...
by acegolfer
Fri Jul 18, 2014 2:49 pm
 
Forum: Investing - Theory, News & General
Topic: [Poll] % of 3 funds in your financial asset portfolio?
Replies: 31
Views: 1655

Re: Larry: 20 Dollar Bills and Factor Persistence

Larry, Among the many reasons in the literature are liquidity, more irreversible investments, higher sd of earnings, higher sd of dividends, greater leverage, less access to capital sources which tend to dry up in crises, You think the above risks are systematic risk. 2 wiki entries on systematic ri...
by acegolfer
Thu Jul 17, 2014 11:14 am
 
Forum: Investing - Theory, News & General
Topic: Larry: 20 Dollar Bills and Factor Persistence
Replies: 82
Views: 6742

Re: Larry: 20 Dollar Bills and Factor Persistence

If SV is riskier, I am still waiting for someone to explain why from 1972-2013, the SD of SV is lower than that of SG (per Simba's data). Isn't 40 years a sufficiently long period upon which to make this assessment? Because low SD doesn't mean higher expected return in an asset pricing model. Let's...
by acegolfer
Thu Jul 17, 2014 10:33 am
 
Forum: Investing - Theory, News & General
Topic: Larry: 20 Dollar Bills and Factor Persistence
Replies: 82
Views: 6742

Re: Larry: 20 Dollar Bills and Factor Persistence

Larry, thanks for finally explaining why SV is riskier. Now you asked me what I believe and why. IMO, those risks that you mentioned are all idiosyncratic risks not a systematic risk. If you are going to say idiosyncratic risk matters, then we will have to start a new discussion. I know that 3-facto...
by acegolfer
Thu Jul 17, 2014 10:21 am
 
Forum: Investing - Theory, News & General
Topic: Larry: 20 Dollar Bills and Factor Persistence
Replies: 82
Views: 6742
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