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by billyt
Thu Apr 30, 2015 9:43 am
Forum: Personal Finance (Not Investing)
Topic: MA slow to use my check? should I do something?
Replies: 19
Views: 2118

Re: MA slow to use my check? should I do something?

Mailed my MA tax return on 4/13. Check still hasn't cleared. I was concerned too, now I feel better.

Thanks
by billyt
Wed Mar 18, 2015 2:19 pm
Forum: Investing - Help with Personal Investments
Topic: Interest rate hike signaled
Replies: 25
Views: 2345

Re: Interest rate hike signaled

More interestingly, bond funds are also increasing in value in response to the news.
by billyt
Thu Mar 05, 2015 2:31 pm
Forum: Personal Finance (Not Investing)
Topic: Spousal Responsibility for Nursing Home Care
Replies: 6
Views: 1015

Re: Spousal Responsibility for Nursing Home Care

An elder care attorney in your state can be a valuable resource in sorting out your options.
by billyt
Fri Jan 23, 2015 6:04 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Kevin: Before you get too deep with all these charts, I would consider the sources of error in the data, which may entirely explain the deviations you are seeing. For example, the SEC yield is a 30 day average. The actual yield on any given day can be significantly different. Furthermore, the bonds ...
by billyt
Wed Jan 21, 2015 7:10 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Hi Kevin: I was commenting on your analysis of the data. You showed that the mean difference was 0.04% with a standard deviation of 0.67%. That would make the error of the mean (divide by square root of the number of observations) something like 0.2%. So you showed that the difference between the SE...
by billyt
Tue Jan 20, 2015 5:40 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

For the ten year return, the average of the error terms is 0.04%. Right. So if you invest equal amounts in a bond fund each year for ten years, and then wait ten years, you will get almost exactly the average of the initial yields. This is totally consistent with Bogle's statement that nearly 100% o...
by billyt
Sun Jan 18, 2015 7:05 pm
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Furthermore, the reason that we focus on small differences in expense ratios is because this is something that we can control. It make sense to go for those extra basis points that Admiral shares afford. Market returns on the other hand are completely beyond any investors control. As far as predicti...
by billyt
Sun Jan 18, 2015 6:49 pm
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

The idea that nearly 100% of bond fund returns come from the interest is not mine, but comes from John Bogles "Little Book of Common Sense Investing." It is indeed common sense. If this is true, then over time, the average return must converge with the average SEC yield. I don't know how a...
by billyt
Sun Jan 18, 2015 6:28 pm
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Yes it will. If rates go up, the NAV will fall to and you will have to wait to earn that 1.87% return. If rates fall, you will get an early windfall, but earn less going forward. Shares of total bond that you buy today will earn close to 1.87% over the next ten years. Hopefully, rates will increase ...
by billyt
Sun Jan 18, 2015 6:00 pm
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Kevin: To call the difference between 2% and 3% a 33% difference, while technically correct, is a ridiculous way to look at it. Over the 10 years, your returns will be similar to the initial SEC yield, that is the bottom line. Moreover, although there may be a difference between the initial yield an...
by billyt
Sun Jan 18, 2015 12:47 pm
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

The SEC yield is forward looking. Bonds have a fixed face value and a fixed return. It doesn't take a rocket scientist to figure out their value or forward return. Bond desks trade these things furiously in an attempt to gain an advantage based on predictions of future interest rates. None of this t...
by billyt
Sun Jan 18, 2015 11:51 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

And the SEC yield is simply a standardize way for expressing the current yield.
by billyt
Sun Jan 18, 2015 11:49 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

No caveat needed. The historical record clearly shows that in spite of constantly changing interest rates and yield curves, the initial SEC yield is predicts the subsequent 10 year yield with a good degree of accuracy.
by billyt
Sun Jan 18, 2015 8:45 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

dkturner: Distribution yield can be higher or lower than SEC yield. Over time the tend to average out to the same thing.
by billyt
Sun Jan 18, 2015 8:42 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Google is your friend. Start here: How to Predict the Next Decade's Bond Returns - WSJ. It is really a no-brainer. Virtually all bond returns come from the interest. There is a reason they call it fixed income.
by billyt
Sun Jan 18, 2015 8:25 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Are we looking at the same graph? The SEC yield and 10 year returns are within 1%. It has been show in a number of studies that the initial SEC yield explains 90% of the subsequent returns.
by billyt
Sun Jan 18, 2015 7:44 am
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 142
Views: 7991

Re: Initial SEC yield and subsequent 5yr and 10yr returns

dkturner: You are misinformed. SEC yield is a very accurate predictor of subsequent 10 year return.
by billyt
Fri Jan 16, 2015 8:37 am
Forum: Personal Finance (Not Investing)
Topic: Inflation-Indexing Wish List
Replies: 12
Views: 952

Re: Inflation-Indexing Wish List

Be careful what you wish for. The CPI is currently declining.
by billyt
Fri Jan 16, 2015 8:33 am
Forum: Personal Finance (Not Investing)
Topic: New Home: All cash or mortgage?
Replies: 21
Views: 1941

Re: New Home: All cash or mortgage?

We recently faced this decision. After much discussion and analysis, we still weren't sure. Many pros and cons on both sides which tend to balance out. In the end we split the difference, putting half down. If we change our minds, we could always pay it off. We will see how this looks after a few ye...
by billyt
Wed Jan 14, 2015 2:14 pm
Forum: Investing - Theory, News & General
Topic: Short term bonds in rising interest rates?
Replies: 26
Views: 2887

Re: Short term bonds in rising interest rates?

At the present time rates are falling, not rising. The Fed may raise short term rates, but the market has much more control over longer rates. No one can tell you if investing in short term bonds today will turn out to have been the winning strategy 10 years from now.
by billyt
Tue Jan 13, 2015 3:35 pm
Forum: Investing - Theory, News & General
Topic: Bond Yield and rising interest rates
Replies: 6
Views: 753

Re: Bond Yield and rising interest rates

News flash - interest rates are not rising. They are falling.
by billyt
Mon Jan 12, 2015 12:28 pm
Forum: Investing - Theory, News & General
Topic: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit?
Replies: 87
Views: 6548

Re: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit

You thought 2008 was bad? If deflation takes hold it will absolutely kill the real estate market. Who would take out a 30 year mortgage to finance something that is going to drop in value year after year? If all asset prices are going to fall far into the future, the only thing to do is sell everyth...
by billyt
Fri Jan 09, 2015 6:36 am
Forum: Investing - Theory, News & General
Topic: The Callan Periodic Table of Investment Returns 2014
Replies: 26
Views: 4171

Re: The Callan Periodic Table of Investment Returns 2014

So the top performer for 2014 was long term treasury bonds? It figures. Judging by the posts on this forum, this has been one of the most hated/feared asset classes for several years now.
by billyt
Thu Jan 08, 2015 6:17 am
Forum: Investing - Theory, News & General
Topic: Bonds had a pretty good year in 2014?
Replies: 11
Views: 1687

Re: Bonds had a pretty good year in 2014?

Looking at past returns for bond funds is particularly misleading. Bonds are fixed income investments and over time will only return the interest payments, as NAV changes sum to zero in the long run. Yes, bond funds last year all had returns in excess of their SEC yields, with long term bonds doing ...
by billyt
Sat Dec 06, 2014 9:56 am
Forum: Investing - Help with Personal Investments
Topic: Bond Funds
Replies: 6
Views: 541

Re: Bond Funds

No need to make a prediction. This has already happened over the last year, especially in real yields (TIPS). The strategy of shortening duration in anticipation of rising rates has backfired so far, and it may get worse.
by billyt
Fri Dec 05, 2014 7:22 am
Forum: Investing - Theory, News & General
Topic: Interest Rates — How Low, For How Long?
Replies: 14
Views: 1805

Re: Interest Rates — How Low, For How Long?

You are dead wrong. Everyone on this board knows for sure that interest rates have nowhere to go but up, up, up! Just kidding... I think your analysis is well thought out. Those that have shortened the duration of their fixed income portfolio in anticipation of rising rates have lost out big time th...
by billyt
Wed Nov 05, 2014 1:05 pm
Forum: Investing - Theory, News & General
Topic: iBonds at zero % fixed
Replies: 84
Views: 10254

Re: iBonds at zero % fixed

hoops: No one is asking you to blindly accept anything. The CPI numbers have been independently verified by the Massachusetts Institute of Technology Million Prices Project as posted up thread. You don't have to trust the gov't, but independent verification is the gold standard for cross checking th...
by billyt
Thu Aug 28, 2014 7:51 am
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 17516

Re: The Worst Investment You Can Make: Buying a Home

Sell your house. Invest the money. Use the earnings to pay for rent forever.
by billyt
Tue Jul 08, 2014 5:18 am
Forum: Investing - Theory, News & General
Topic: The Risk of Short-term Bond Funds
Replies: 154
Views: 14149

Re: The Risk of Short-term Bond Funds

Thanks. I have basically been saying this over and over again to little avail. After a while, I get to exhausted to respond anymore.
by billyt
Fri Jul 04, 2014 7:14 am
Forum: Investing - Theory, News & General
Topic: The Risk of Short-term Bond Funds
Replies: 154
Views: 14149

Re: The Risk of Short-term Bond Funds

Dollar cost averaging into a bond fund for 30 years and out for 30 years is essentially the same as holding for 60 years. Money you need this month to pay your bills should be in a bank account. Money you need to spend for the next few years should be in short term bonds or CD's. Match your duration...
by billyt
Fri Jul 04, 2014 6:44 am
Forum: Investing - Theory, News & General
Topic: The Risk of Short-term Bond Funds
Replies: 154
Views: 14149

Re: The Risk of Short-term Bond Funds

This thread (and almost all the bond-panic threads) repeatedly miss the central point. All the worry is over interest rate risk (or duration risk). If you start investing at age 30 and die at 90, your holding period is 60 years, or something like 20x the duration of an intermediate bond fund. In suc...
by billyt
Wed Jul 02, 2014 1:32 pm
Forum: Investing - Theory, News & General
Topic: The Risk of Short-term Bond Funds
Replies: 154
Views: 14149

Re: The Risk of Short-term Bond Funds

Most of us hold a balanced portfolio of stocks and bonds for our investing lifetime. We are dollar cost averaging into (accumulating) and out of (decumulating) over this long time frame. Under these conditions, an intermediate term bond fund will always significantly outperform a short term bond fun...
by billyt
Wed Jul 02, 2014 12:47 pm
Forum: Investing - Theory, News & General
Topic: The Risk of Short-term Bond Funds
Replies: 154
Views: 14149

Re: The Risk of Short-term Bond Funds

The article shows returns since 2009 and quotes 1, 3 and 5 year returns. TBM returns more over all three time frames as is totally expected given its higher yield. TBM will always return more than a short term fund over a reasonably long time periods, as the returns of bond funds is determined almos...
by billyt
Wed Jul 02, 2014 12:33 pm
Forum: Investing - Theory, News & General
Topic: The Risk of Short-term Bond Funds
Replies: 154
Views: 14149

Re: The Risk of Short-term Bond Funds

It is good to see this nice clean rebuttal of all of those 'bond panic' threads from the last few years. It is hard to understand why folks think they know more than the market. Glad I stayed the course.
by billyt
Fri Jun 13, 2014 9:50 am
Forum: Personal Finance (Not Investing)
Topic: Is a 2% withdrawal rate bulletproof ?
Replies: 48
Views: 4109

Re: Is a 2% withdrawal rate bulletproof ?

You can either optimize your AA for maximum portfolio balance (for your heirs), or maximum portfolio survival (for you). These are 2 entirely different and opposite goals, so you can't optimize for both.
by billyt
Fri Jun 13, 2014 9:22 am
Forum: Investing - Theory, News & General
Topic: Should risk be stated in dollars terms instead of AA %?
Replies: 54
Views: 1512

Re: Should risk be stated in dollars terms instead of AA %?

I would think it makes the most sense to look at risk as a dollar amount. How much can you afford to lose?
by billyt
Fri May 30, 2014 10:08 am
Forum: Investing - Theory, News & General
Topic: 30 year TIPS under 1%
Replies: 25
Views: 2156

Re: 30 year TIPS under 1%

Except for tax considerations, dividends are meaningless bookeeping. It is the total return that counts.
by billyt
Mon May 26, 2014 7:32 am
Forum: Investing - Theory, News & General
Topic: If Treasury Yield's stay low.....then what?
Replies: 14
Views: 2456

Re: If Treasury Yield's stay low.....then what?

What we are trying to recover from here was a banking crisis, not a business cycle recession. This is a very different animal. The recession has been over for some time now. The effects of the near collapse of our banking system may, and indeed perhaps should, be with us for many years to come. Do w...
by billyt
Tue May 20, 2014 5:46 am
Forum: Investing - Theory, News & General
Topic: Using Dr. Pfau's research
Replies: 27
Views: 2447

Re: Using Dr. Pfau's research

Just to be clear: #3 is not a rising equity glide path. It is a constant equity model.
by billyt
Tue May 20, 2014 5:09 am
Forum: Investing - Theory, News & General
Topic: Using Dr. Pfau's research
Replies: 27
Views: 2447

Re: Using Dr. Pfau's research

The idea is that you spend from the bond side first. Your risk is not increasing and you tend to have better outcomes. Start with $100k in stocks and $300k in bonds. Let the stocks grow as you draw from the bond side. If you are not adding to stocks, you are not increasing your risk.
by billyt
Mon May 19, 2014 5:26 am
Forum: Personal Finance (Not Investing)
Topic: Down payment question
Replies: 17
Views: 1022

Re: Down payment question

We spent five days looking at potential vacation homes recently. Not quite ready to pull the trigger, but wanted to get a sense of the market we are interested in. In any case, contacted listing agents on a range of properties. We were shown 14 properties by 7 different agents. Not a single question...
by billyt
Sat May 17, 2014 8:05 am
Forum: Investing - Theory, News & General
Topic: "Bond investing: Is a bear still out there?"
Replies: 34
Views: 2876

Re: "Bond investing: Is a bear still out there?"

I agree in principle that no one knows the future. However, for me, Ben Bernanke's opinion that rates may not normalize within a current retiree's lifetime carries somewhat more weight than dozens of anonymous posters who are dead certain that rates have no where to go but up, and soon!
by billyt
Sat May 17, 2014 5:28 am
Forum: Investing - Theory, News & General
Topic: "Bond investing: Is a bear still out there?"
Replies: 34
Views: 2876

Re: "Bond investing: Is a bear still out there?"

No less than former Fed chair Ben Bernanke expects rates to stay low for quite a long time: from recent REUTERS article: "At least one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back ...
by billyt
Thu May 15, 2014 1:23 pm
Forum: Investing - Theory, News & General
Topic: Intermediate bond fund yields are getting ridiculous
Replies: 20
Views: 2699

Re: Intermediate bond fund yields are getting ridiculous

So 5 year to 10 year is 5 year differnce, at .2% per year is 1%. The ten year yield is barely 1% more than the 5.
by billyt
Thu May 15, 2014 7:17 am
Forum: Investing - Help with Personal Investments
Topic: The Great Bond prediction Bust of 2014
Replies: 12
Views: 1708

Re: The Great Bond prediction Bust of 2014

Taking profits is confusing bonds with stocks. Over a reasonable investing lifetime, virtually all of the bond fund return comes from the interest. You only get the interest if you continue to hold the bonds.
by billyt
Thu May 15, 2014 6:38 am
Forum: Investing - Help with Personal Investments
Topic: The Great Bond prediction Bust of 2014
Replies: 12
Views: 1708

Re: The Great Bond prediction Bust of 2014

Thats funny. The last I heard interest rates had no where to go but up and bond funds were going to crash and burn. Seems like I have been hearing that for some time now.
by billyt
Sun May 11, 2014 12:41 pm
Forum: Personal Finance (Not Investing)
Topic: Filing for SS Early and Investing
Replies: 26
Views: 1760

Re: Filing for SS Early and Investing

Consider these results from the FIRECALC monte carlo simulator: Today's retiree, age 62, has a nest egg of $500,000 and wants to withdraw $38,000 a year, inflation adjusted. This retiree has a SS PIA of $20,000. Starting SS at 62 yields $15,000 a year, inflation adjusted. This strategy has a 78% pro...
by billyt
Mon May 05, 2014 12:22 pm
Forum: Investing - Theory, News & General
Topic: Delay Social Security to age 70 and Spend more money at 62
Replies: 143
Views: 15394

Re: Delay Social Security to age 70 and Spend more money at

No Midareff, that is again dead wrong. You can use any withdrawal rate you care to or change it on a daily basis, but you have to apply the same withdrawal rate history to both scenarios. Makes not one bit of difference.
by billyt
Mon May 05, 2014 12:07 pm
Forum: Personal Finance (Not Investing)
Topic: 2008 housing inventory
Replies: 6
Views: 962

Re: 2008 housing inventory

Judicial impediments to foreclosures in NY are significant and many houses are still making their way through the system. The buy and rent them out scenario for outside investors is not such a good proposition in NY either. So this is playing out in slow motion.
by billyt
Mon May 05, 2014 12:04 pm
Forum: Investing - Theory, News & General
Topic: Delay Social Security to age 70 and Spend more money at 62
Replies: 143
Views: 15394

Re: Delay Social Security to age 70 and Spend more money at

No Midareff, that is dead wrong. For a given withdrawal rate, both scenarios are equal. If you claim at 62 you have a larger portfolio at 70 (and larger annual withdrawal at a given rate), but less in SS income. If you claim at 70 you have a smaller portfolio (and annual withdrawal), but higher SS i...

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