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Re: Outperforming vs Underperforming Investors in 2014

I'm not sure what would have greatly outperformed the S&P this year. Weren't domestic large cap stocks the best performers this year? OK, I suppose if you had just leveraged up on the S&P...
by baw703916
Sat Dec 20, 2014 1:32 am
 
Forum: Investing - Theory, News & General
Topic: Outperforming vs Underperforming Investors in 2014
Replies: 13
Views: 1622

Re: Any negative outlooks on healthcare industry's future

While the structure of how health care is delivered is likely to change (less fee for service, more collaborative, more health care systems instead of private practices etc), demand is going to increase no doubt. Technology is going to help remove a lot of the inefficiencies in the system. I think ...
by baw703916
Thu Dec 18, 2014 1:51 pm
 
Forum: Investing - Theory, News & General
Topic: Any negative outlooks on healthcare industry's future
Replies: 49
Views: 2855

Re: Effect of 0.79 correlation: fantasy vs. reality

This is an interesting modeling exercise, thanks nisiprius. I think though that there are aspects of the interplay of the asset classes that aren't captured by the correlation coefficients. In particular, as many noticed in 2008, the correlations of all risky asset classes went to ~1.0. So it doesn'...
by baw703916
Thu Dec 18, 2014 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: Effect of 0.79 correlation: fantasy vs. reality
Replies: 52
Views: 3262

Re: Vanguard's stockpickers outperform.... [news article]

Gee, it's almost like it's a lot easier to outperform after costs if costs are really low. 8-)
by baw703916
Wed Dec 17, 2014 10:37 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard's stockpickers outperform.... [news article]
Replies: 14
Views: 1926

Re: Equal weight ETF (Guggenheim's RSP) vs Vanguard VTI???

Taxes are another issue. Usually Total Stock would be something very cost effective from a tax standpoint, relative to RSP where there is more turnover : From M* Tax Cost Ratio 1-Mo 3-Mo 6-Mo YTD 1-Yr 3-Yr 5-Yr 10-Yr VTI — — — — 0.79 0.55 0.44 0.38 — — RSP — — — — 0.63 0.61 0.56 0.52 SPY — — — — 0....
by baw703916
Wed Dec 17, 2014 10:09 pm
 
Forum: Investing - Help with Personal Investments
Topic: Equal weight ETF (Guggenheim's RSP) vs Vanguard VTI???
Replies: 19
Views: 1785

Re: Equal weight ETF (Guggenheim's RSP) vs Vanguard VTI???

Thanks again to all who pointed out the obvious, which I've missed!! It's simply over-weighting mid-cap. The other idea that pops up in my mind is - Why not stay simple with VTI, and get 'more' exposure (relative to market cap weightings) to small cap? More of a bar-bell strategy if I wish to take ...
by baw703916
Wed Dec 17, 2014 7:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: Equal weight ETF (Guggenheim's RSP) vs Vanguard VTI???
Replies: 19
Views: 1785

Re: RBD in Emerging Markets Brewing

selftalk wrote:What is RBD?


Really Bad Day--a term coined by livesoft, who says that he (usually) likes to make purchases on such days.
by baw703916
Tue Dec 16, 2014 2:48 pm
 
Forum: Investing - Theory, News & General
Topic: RBD in Emerging Markets Brewing
Replies: 37
Views: 3432

Re: sizeable negative balaance on credit card--how to access

Why not just buy plane tickets for two to somewhere in Europe in 2015, on that CC of course. That should be a couple thousand $$ at least. Fly business class if that's not enough to soak up the negative balance... Uh, because I don't like spending money? The original snafu was for a business trip i...
by baw703916
Tue Dec 16, 2014 2:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: sizeable negative balaance on credit card--how to access?
Replies: 24
Views: 2781

Re: Long term care insurance?

That is what scares me. The wording is a little funny, but I believe what those lines are saying, is that 4% of individuals who reach 65 will stay > 5 years in a nursing home (10% * 40%). 4% is a high number (in my mind at least), and 5 years is a very long time. We could not absorb that event with...
by baw703916
Tue Dec 16, 2014 2:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: Long term care insurance?
Replies: 23
Views: 1863

Re: Any negative outlooks on healthcare industry's future

Mr. Market knows all that information.
by baw703916
Tue Dec 16, 2014 1:02 pm
 
Forum: Investing - Theory, News & General
Topic: Any negative outlooks on healthcare industry's future
Replies: 49
Views: 2855

Re: in the past there was a period when active outperformed

...62 to 81 was not a particularly good period for stocks. I don't have exact numbers, perhaps one of the people who has these graphs at their fingertips would care to post?... End values are $3.70 [Dow], $3.28 [T-Bills], and $1.81 [LT corporate bonds] Worth mentioning that while this looks like a ...
by baw703916
Mon Dec 15, 2014 4:13 pm
 
Forum: Investing - Theory, News & General
Topic: in the past there was a period when active outperformed
Replies: 30
Views: 1573

Re: RBD in Emerging Markets Brewing

Folks should be aware that many Vanguard ETFs will go ex-dividend this Friday week. For me that means no buying this week even if an RBD occurs this week. Thanks for the reminder. I had just checked to see if it was worth doing any tax-loss harvesting. I concluded it wasn't, but then I realized I w...
by baw703916
Mon Dec 15, 2014 2:39 pm
 
Forum: Investing - Theory, News & General
Topic: RBD in Emerging Markets Brewing
Replies: 37
Views: 3432

Re: Mebane Faber: 78% of the time you are in a drawdown

baw, drawdown definition: The drawdown is the measure of the decline from a historical peak in some variable (typically the cumulative profit or total open equity of a financial trading strategy). http://en.wikipedia.org/wiki/Drawdown_%28economics%29 I think this is the accepted definition, althoug...
by baw703916
Sun Dec 14, 2014 3:59 pm
 
Forum: Investing - Theory, News & General
Topic: Mebane Faber: 78% of the time you are in a drawdown
Replies: 18
Views: 1941

Re: "The Arithmetic of Active Management"

The author suggests that in a rising interest rate environment active more often outperforms. Sometimes Investor: In rising or declining interest rate environments, the average active fund MUST underperform. Here's proof by Nobel Laureate, William Sharpe: THE ARITHMETIC OF ACTIVE MANAGEMENT . Best ...
by baw703916
Sun Dec 14, 2014 3:54 pm
 
Forum: Investing - Theory, News & General
Topic: in the past there was a period when active outperformed
Replies: 30
Views: 1573

Re: Roth IRA is not completely free of tax considerations?

What Are Qualified Distributions? A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements. 1. It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, an...
by baw703916
Sun Dec 14, 2014 2:45 pm
 
Forum: Investing - Help with Personal Investments
Topic: Roth IRA is not completely free of tax considerations?
Replies: 19
Views: 2468

Re: in the past there was a period when active outperformed

I don't believe it. Charles D. Ellis' influential paper, The Loser's Game , was published i n 1975 , and in 1975 he said: Disagreeable data are streaming out of the computers of Becker securities and Merrill Lynch and all the other performance measurement firms. Over and over and over again, these ...
by baw703916
Sun Dec 14, 2014 2:41 pm
 
Forum: Investing - Theory, News & General
Topic: in the past there was a period when active outperformed
Replies: 30
Views: 1573

Re: Mebane Faber: 78% of the time you are in a drawdown

Papito, the time frame is 1972-2014, so during that time span, we were in drawdown 78% of the time. Note: this is real returns , so the real returns from 1973-1983 were negative (drawdown) 100% of the time. baw, I think drawdown is a word commonly used here--that's where I learned it. :happy Paul B...
by baw703916
Sun Dec 14, 2014 2:20 pm
 
Forum: Investing - Theory, News & General
Topic: Mebane Faber: 78% of the time you are in a drawdown
Replies: 18
Views: 1941

Re: in the past there was a period when active outperformed

From an article on the Barron's website: "From 1962 through 1981, the median actively managed fund returned nearly 70 percentage points more than the S&P 500 over those 20 years. Unfortunately, the good times didn’t last: From June 1983 to June 2014, the median fund underperformed the mark...
by baw703916
Sun Dec 14, 2014 2:04 pm
 
Forum: Investing - Theory, News & General
Topic: in the past there was a period when active outperformed
Replies: 30
Views: 1573

Re: Mebane Faber: 78% of the time you are in a drawdown

This article uses the word "drawdown" in a way I've never heard it used before. I thought it meant that one is taking money out. I just don't understand the psychological aspect which is supposedly at work here. I've never thought about investments in this way, and really it doesn't add an...
by baw703916
Sat Dec 13, 2014 9:28 pm
 
Forum: Investing - Theory, News & General
Topic: Mebane Faber: 78% of the time you are in a drawdown
Replies: 18
Views: 1941

Re: U.S. stocks in freefall

So while I was driving home this afternoon, I'm switching between a couple of radio stations... NPR... and a local "all news" station. And I was going nuts because I've listened to about a total of at least ten minutes of discussion about the markets that talked only about the changes --i...
by baw703916
Sat Dec 13, 2014 7:24 pm
 
Forum: Investing - Theory, News & General
Topic: U.S. stocks in freefall
Replies: 1064
Views: 188270

Re: Equal weight ETF (Guggenheim's RSP) vs Vanguard VTI???

For a fair comparison, RSP should be compared to a cap-weighted S&P 500 ETF, say SPY or VOO, rather than VTI (Total Stock Market ETF). I realize the OP was in the context of a personal portfolio construction. Is RSP more risky? Or more precisely, has greater risk shown up yet? In 2008, it droppe...
by baw703916
Sat Dec 13, 2014 4:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Equal weight ETF (Guggenheim's RSP) vs Vanguard VTI???
Replies: 19
Views: 1785

Re: What is your opinion about "tilting?"

I tilt, but I don't agree with the "everyone should" statement. I think it's pretty likely that tilting will give higher returns, but the long-term premium is nowhere near what was observed in the 2000s. 1-2% is closer to what one might expect long-term, with no guarantees and almost certa...
by baw703916
Sat Dec 13, 2014 4:03 pm
 
Forum: Investing - Theory, News & General
Topic: What is your opinion about "tilting?"
Replies: 116
Views: 8669

Re: You folks think the big one is coming?

I can say with complete confidence that the next crash is seven days closer than it was a week ago.
by baw703916
Fri Dec 12, 2014 9:36 pm
 
Forum: Investing - Theory, News & General
Topic: You folks think [a market crash] is coming?
Replies: 64
Views: 5675

Re: Don't Peek [at Your Portfolio Balance]

Nothing wrong with checking your balance; just don't do anything stupid afterwards.
by baw703916
Fri Dec 12, 2014 9:28 pm
 
Forum: Investing - Theory, News & General
Topic: Don't Peek [at Your Portfolio Balance]
Replies: 33
Views: 3884

Re: sizeable negative balaance on credit card--how to access

Thanks for the suggestions, I'll contact the bank.
by baw703916
Wed Dec 10, 2014 11:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: sizeable negative balaance on credit card--how to access?
Replies: 24
Views: 2781

Re: sizeable negative balaance on credit card--how to access

cheese_breath wrote:Keep using the credit card until you use up the balance. Judging from your original post you should use it up in 2-3 months.

Now I'm waiting to hear the excuses why this isn't reasonable.


Do you habitually pay your credit card 3 months in advance?
by baw703916
Wed Dec 10, 2014 10:37 pm
 
Forum: Personal Finance (Not Investing)
Topic: sizeable negative balaance on credit card--how to access?
Replies: 24
Views: 2781

sizeable negative balaance on credit card--how to access?

I ended up with a negative balance on my credit card--I had paid a charge which was later credited back. Now I have a negative balance on the card which is probably equal to 2-3 months of what I typically charge on it. So, I'd prefer not to just have the money sitting on the card, but is there any g...
by baw703916
Wed Dec 10, 2014 10:24 pm
 
Forum: Personal Finance (Not Investing)
Topic: sizeable negative balaance on credit card--how to access?
Replies: 24
Views: 2781

Re: What is your opinion about "tilting?"

My opinion about tilting is that we talk about it waaaay too much on this board.
by baw703916
Wed Dec 10, 2014 11:18 am
 
Forum: Investing - Theory, News & General
Topic: What is your opinion about "tilting?"
Replies: 116
Views: 8669

Re: Disadvantages of not investing in bonds

tigermilk,

Is 70/30 your AA, or were you just giving that as an example?

Thanks.
by baw703916
Sat Dec 06, 2014 11:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Disadvantages of not investing in bonds
Replies: 29
Views: 2526

Re: How can an Total US Index be improved?

The most significant way in which it could be improved is by there being more publicly traded companies. The owners of Bechtel and Koch Industries might in fact be outperforming us--we don't really have any way of knowing.
by baw703916
Sat Dec 06, 2014 10:57 pm
 
Forum: Investing - Theory, News & General
Topic: How can an Total US Index be improved?
Replies: 33
Views: 1920

Re: How can an Total US Index be improved?

nisiprius, I think DFA's funds are somewhat analogous to Vanguard's non-index bond funds, in that while technically they aren't index funds, they don't really make an effort to pick investments. Furthermore, the reason may be the same in both cases: low liquidity, which presents problems for an inde...
by baw703916
Sat Dec 06, 2014 10:30 pm
 
Forum: Investing - Theory, News & General
Topic: How can an Total US Index be improved?
Replies: 33
Views: 1920

Re: Got earthquake insurance?

So since one of the issues in a Cascadia earthquake would be a tsunami, would that be under flood insurance?
by baw703916
Sat Dec 06, 2014 8:28 pm
 
Forum: Personal Finance (Not Investing)
Topic: Got earthquake insurance?
Replies: 35
Views: 2062

Re: Got earthquake insurance?

This is a timely topic, as I may be moving to that part of the country and this is something to think about. I don't really know how the system works, as in who is providing the financial backing should say an 8.2 earthquake hit a major metro area? How sure is a holder of getting paid in a major eve...
by baw703916
Sat Dec 06, 2014 7:28 pm
 
Forum: Personal Finance (Not Investing)
Topic: Got earthquake insurance?
Replies: 35
Views: 2062

Re: Better at making than investing

You might be someone who would do well to consider a fee-only advisor. -your assets are high enough that the cost should be fairly low in terms of a ratio. -you don't feel that investing is your strength. -success given your current situation is probably a matter of avoiding major mistakes more than...
by baw703916
Sat Dec 06, 2014 5:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Better at making than investing
Replies: 17
Views: 2003

Re: Disadvantages of not investing in bonds

Thanks a lot everyone. baw703916, (since you seem to have a different opinion) can you tell us whether you'd recommend having 100% of your funds in equities? What was your strategy for doing that? Did you ever regret that strategy? Much obliged, R Maybe I didn't adequately explain my take-away from...
by baw703916
Sat Dec 06, 2014 3:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Disadvantages of not investing in bonds
Replies: 29
Views: 2526

Re: Disadvantages of not investing in bonds

Watching your portfolio fall 50% is hard to swallow and many "aggressive" investors discover they can't stomach the drop and make bad market moves as the worst possible time. The reason for diversification in general, and that includes diversifying in stock funds, is to take advantage of ...
by baw703916
Sat Dec 06, 2014 3:01 pm
 
Forum: Investing - Help with Personal Investments
Topic: Disadvantages of not investing in bonds
Replies: 29
Views: 2526

Re: Vanguard Extended Market vs Vanguard Small Cap

The extended market index has some large-caps, too. Not every large-cap is in the S&P500 index. You learn something new every day. I'm curious but lazy: can you give me some examples... big companies that S&P doesn't think are "leading companies in leading industries?" One famous ...
by baw703916
Sat Dec 06, 2014 2:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Extended Market vs Vanguard Small Cap
Replies: 12
Views: 896

Re: Vanguard Extended Market vs Vanguard Small Cap

On a slightly different topic, FTSE ex-US only holds international large caps, meaning that you won't own any international small caps. There is also a FTSE ex-US small cap fund, but if you want to stick to a single international fund at least for the present, I would suggest Total International, wh...
by baw703916
Sat Dec 06, 2014 2:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Extended Market vs Vanguard Small Cap
Replies: 12
Views: 896

Re: understanding municipal bonds

This article has apparently never heard of Vanguard's municipal bond funds. It points out issues with ladders, but neglects those with muni ETFs. The big one is that the bonds are very illiquid, even in the case of large-issue bonds that comprise MUB. Look at how the price and NAV of MUB compared to...
by baw703916
Sat Dec 06, 2014 3:28 am
 
Forum: Investing - Help with Personal Investments
Topic: understanding municipal bonds
Replies: 4
Views: 478

Re: Most stocks are losers - golden swans drive returns of i

This is the reason AGAINST the question that comes up of "Can't I just put 20-40 stocks together and make my own index?" The answer is: NO. The reason is one can decrease the RISK to the level of an index by adding that many stocks to drive down company risk, BUT one will not get the same...
by baw703916
Fri Dec 05, 2014 10:55 pm
 
Forum: Investing - Theory, News & General
Topic: Most stocks are losers - golden swans drive returns of index
Replies: 21
Views: 2631

Re: Most stocks are losers - golden swans drive returns of i

Interesting study from Chase - most stocks in an index drag down returns. It's only a handful of 'golden swans' that drive index return. https://www.chase.com/content/dam/privatebanking/en/mobile/documents/eotm/eotm_2014_09_02_agonyescstasy.pdf And of course, they are not the same stocks every year...
by baw703916
Fri Dec 05, 2014 10:49 pm
 
Forum: Investing - Theory, News & General
Topic: Most stocks are losers - golden swans drive returns of index
Replies: 21
Views: 2631

Re: "Small-Cap Performance Edge on the Wane"

But a beta >1 also means that something is riskier and has a higher expected return. Yes, you can generally expect to get paid for beta. What is in dispute is whether there is a small cap premium beyond that. (If you can find an asset with high Beta and low returns, we can profitably hedge our stoc...
by baw703916
Fri Dec 05, 2014 10:45 pm
 
Forum: Investing - Theory, News & General
Topic: "Small-Cap Performance Edge on the Wane"
Replies: 99
Views: 7198

Re: Long-short funds like QSPIX and regulations?

Since I would never in a million years ever buy this fund, I'm not sure why I would be concerned about these details. I assume Nisi isn't ever going to buy it either.
by baw703916
Fri Dec 05, 2014 7:39 pm
 
Forum: Investing - Theory, News & General
Topic: Long-short funds like QSPIX and regulations?
Replies: 9
Views: 660

Re: Most stocks are losers - golden swans drive returns of i

Thanks for posting, that was a good article.

One of the key points that sticks in my mind (paraphrased) "Most catastrophic losses in value result from factors outside the company's control, and it is unlikely that any management team could have achieved a different outcome."
by baw703916
Fri Dec 05, 2014 6:41 pm
 
Forum: Investing - Theory, News & General
Topic: Most stocks are losers - golden swans drive returns of index
Replies: 21
Views: 2631

Re: "Small-Cap Performance Edge on the Wane"

abuss368 wrote:Reversion to the mean? Stay the course?



I'm going to stay the course with my tilted portfolio. :)
by baw703916
Fri Dec 05, 2014 4:27 pm
 
Forum: Investing - Theory, News & General
Topic: "Small-Cap Performance Edge on the Wane"
Replies: 99
Views: 7198

Re: My bicycle tour from Rochester, NY to Lambertville, NJ

Cool trip, and thanks for sharing your blog!

I do have to suggest a minor correction on the spelling of Ithaca. :)
by baw703916
Fri Dec 05, 2014 4:24 pm
 
Forum: Personal Consumer Issues
Topic: My bicycle tour from Rochester, NY to Lambertville, NJ
Replies: 13
Views: 1505

Re: Vanguard calls for boardrooms shake-up

Doesn't the adage "you get what you don't pay for" apply to corporate management as well as fund management? If every CEO was paid half as much, there would be higher profits for shareholders. There is a focus on the dollar amount of executive compensation, and maybe rightly so. But the a...
by baw703916
Fri Dec 05, 2014 3:03 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard calls for boardrooms shake-up
Replies: 15
Views: 1487

Re: "Small-Cap Performance Edge on the Wane"

But a beta >1 also means that something is riskier and has a higher expected return.

Isn't this just an exercise in curve-fitting? "Beta" is the part of small cap movements that correlate with the overall market (read large caps), and "size" is the part that doesn't.
by baw703916
Fri Dec 05, 2014 2:33 pm
 
Forum: Investing - Theory, News & General
Topic: "Small-Cap Performance Edge on the Wane"
Replies: 99
Views: 7198

Re: Vanguard calls for boardrooms shake-up

Doesn't the adage "you get what you don't pay for" apply to corporate management as well as fund management? If every CEO was paid half as much, there would be higher profits for shareholders.
by baw703916
Fri Dec 05, 2014 1:56 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard calls for boardrooms shake-up
Replies: 15
Views: 1487

Re: "Small-Cap Performance Edge on the Wane"

Now if you say that riskier assets don't have higher expected returns, then why not? Are investors collectively oblivious to how risky an asset is in deciding how much they are willing to pay for it? Just like people, as a group, investors are stupid... Active mutual funds are riskier because it's ...
by baw703916
Fri Dec 05, 2014 12:09 pm
 
Forum: Investing - Theory, News & General
Topic: "Small-Cap Performance Edge on the Wane"
Replies: 99
Views: 7198
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