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The Great Recession casts a long shadow

The Great Recession Casts a Long Shadow on Family Finances - from St Louis Fed's Center for Household Financial Stability. The income and wealth of the typical American family declined between 2010 and 2013, according to the Federal Reserve’s latest Survey of Consumer Finances. These declines reduc...
by bobcat2
Tue Sep 16, 2014 8:08 am
 
Forum: Investing - Theory, News & General
Topic: 2013 Federal Reserve Survey of Consumer Finances released
Replies: 9
Views: 1662

2013 Survey shows young households losing ground

Young families are better educated than ever before, but they are earning lower real incomes. The Federal Reserve Board’s newly released 2013 Survey of Consumer Finances indicates that the median family headed by someone under 35 years of age earned $35,509 in 2013 dollars. Adjusted for inflation, ...
by bobcat2
Mon Sep 15, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: 2013 Federal Reserve Survey of Consumer Finances released
Replies: 9
Views: 1662

2013 Federal Reserve Survey of Consumer Finances released

Every three years, the Federal Reserve’s Survey of Consumer Finances (SCF) interviews thousands of American families (6,026 for the newly published 2013 edition) about their income, savings, investments and debts. It is some of the richest information available about Americans’ financial lives, par...
by bobcat2
Mon Sep 08, 2014 11:14 am
 
Forum: Investing - Theory, News & General
Topic: 2013 Federal Reserve Survey of Consumer Finances released
Replies: 9
Views: 1662

Re: What risk-return really means

The nut of what Marks is saying is by definition risky investments are investments where the outcomes are highly uncertain. That risky investments cannot be counted on to provide reliable higher long-term returns, because if they could, they would not be risky. :wink: But what riskier investments do...
by bobcat2
Fri Sep 05, 2014 11:47 am
 
Forum: Investing - Theory, News & General
Topic: What risk-return really means
Replies: 41
Views: 2319

Re: Warning level

Rob5TCP wrote:I have had two warnings in 5 years and my warning level says 1
I am guessing that is the lowest level.
Beyond that, I never even noticed that before

I have never noticed this before either. :)

BobK
by bobcat2
Fri Sep 05, 2014 9:31 am
 
Forum: Forum Issues and Administration
Topic: Warning level
Replies: 39
Views: 2253

Re: Warning level

VictoriaF wrote:
bobcat2 wrote:When you joined
When you last visited
Your total posts
Your most active forum
Your warning level


In my profile the only lines are:
- Joined
- Last visited
- Total posts

The other two are not listed.

Victoria


Actually mine has six lines, not five. I left out - most active topic.

BobK
by bobcat2
Fri Sep 05, 2014 9:26 am
 
Forum: Forum Issues and Administration
Topic: Warning level
Replies: 39
Views: 2253

Re: Warning level

I have no idea what you are talking about. If you sign in to Bogleheads and click on User Control Panel you go to the Overview tab - Front Page. On the Front Page there is a Your Activity section block prominently displayed. Within the block it shows the following: When you joined When you last vis...
by bobcat2
Fri Sep 05, 2014 9:15 am
 
Forum: Forum Issues and Administration
Topic: Warning level
Replies: 39
Views: 2253

Warning level

In looking at my profile I see there is a warning level, but I don't know what the number means. How many warning levels are there and what does each level mean?

Thanks in advance,
BobK
by bobcat2
Fri Sep 05, 2014 8:42 am
 
Forum: Forum Issues and Administration
Topic: Warning level
Replies: 39
Views: 2253

Re: What risk-return really means

Call_Me_Op wrote:Any good discussion on risk should include a good definition. We know that standard deviation of returns is not a good definition of risk.
Standard deviation is not a definition of risk. Standard deviation is a measure of risk.

See my signature for the definition of financial risk.

BobK
by bobcat2
Fri Sep 05, 2014 8:17 am
 
Forum: Investing - Theory, News & General
Topic: What risk-return really means
Replies: 41
Views: 2319

Re: What risk-return really means

It is not "reasonable to make the assumption that returns follow a normally distributed pattern." It is only reasonable if there is a good reason to believe that returns are the sum of a reasonably large number of independent random variables, each of which follows some reasonable, well-b...
by bobcat2
Fri Sep 05, 2014 8:11 am
 
Forum: Investing - Theory, News & General
Topic: What risk-return really means
Replies: 41
Views: 2319

Re: Inflation Protected Annuity versus TIPs ladder

BobK, As far as I know, all deferred, inflation adjusted annuities are not inflation adjusted from the time you buy them to the time they start to pay off. Are there some that I missed? Or are you suggesting a non inflation adjusted annuity? You are right; they are not inflation adjusted until they...
by bobcat2
Fri Sep 05, 2014 2:33 am
 
Forum: Investing - Theory, News & General
Topic: Inflation Protected Annuity versus TIPs ladder
Replies: 9
Views: 862

Re: Inflation Protected Annuity versus TIPs ladder

TIPS ladder or Annuitized Income? Advantages of annuitized income. Annuitized income addresses longevity risk. TIPS ladder does not. Annuitized income is a contingent claim and therefore you get additional income from the mortality credit. Annuitized income can be inflation adjusted. When it is inf...
by bobcat2
Fri Sep 05, 2014 1:31 am
 
Forum: Investing - Theory, News & General
Topic: Inflation Protected Annuity versus TIPs ladder
Replies: 9
Views: 862

Re: What risk-return really means

The following is a post I made two years that is still true today. :) Note that this is a distribution of daily returns. With relatively low correlation between daily returns, the returns over longer periods are closer to a normal distribution. This is a general principle in statistics. The Central...
by bobcat2
Thu Sep 04, 2014 11:24 pm
 
Forum: Investing - Theory, News & General
Topic: What risk-return really means
Replies: 41
Views: 2319

Re: 100% Stock Thread Collection

Hi cjking et al, The idea that investing a small portion of your portfolio in LEAPS options is vastly more risky and expensive than investing in stock funds is simply wrong in my opinion. We disagree. Investing in futures is cheap. Investing in LEAPS is somewhat more expensive but fairly safe. I can...
by bobcat2
Wed Sep 03, 2014 4:10 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

Phineas J. Whoopee writes. We seem to have descended into a contentious argument over whether 100% stock holders should be 105% holders instead, claiming if they're not they're behaving inconsistently at best. I am certainly not arguing that. I'm asking why there are so many threads about 100%, and ...
by bobcat2
Wed Sep 03, 2014 1:44 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

bobcat2, Have you not read any of the above? Are you just loading up your gun for your next point without reflecting on the counter argument? There is a clear difference in the risk:return profile between a jump from 80-85% equities and 100-105%. 5% does not equal 5% in both instances. They are not...
by bobcat2
Wed Sep 03, 2014 1:01 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

So none of the Bogleheads that rent will go to 105% stocks, yet those that own are quite happy to go much much higher than that. Doesn't pass the smell test. :P If great numbers of Bogleheads are willing to do the latter, there should be at least a modest number of Bogleheads willing to do the forme...
by bobcat2
Wed Sep 03, 2014 12:47 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

So many Bogleheads think 100% equity is just fine and not that risky, but all have discovered that 105% is just too risky. Why do you think that? Even "conservative" Bogleheads often have far more than 105% in equities. See my above post. If it were true that many conservative Bogleheads ...
by bobcat2
Wed Sep 03, 2014 12:06 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

So many Bogleheads think 100% equity is just fine and not that risky, but all have discovered that 105% is just too risky. It seems to me that if 100% is fine to a large group of investors, then a significant portion of those investors would be fine with 105%. Yet it is almost impossible to find a t...
by bobcat2
Wed Sep 03, 2014 11:40 am
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

The buying long LEAPS is a losing strategy in that you lose more in the option premium you are paying than you gain from the leverage. If you want to do this right you buy some index based futures contracts and borrow money at close to LIBOR at IB (LIBOR +.025% to 1.5%): https://www.interactivebrok...
by bobcat2
Wed Sep 03, 2014 8:45 am
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

Hi guys, Purchasing an indexed call contract involves no borrowing of money. Why not go from 100% to 105% stocks by investing 98% in stocks and 2% in indexed stock call options. What is the big extra risk here? The worst that can happen to the options is that they expire worthless and your portfolio...
by bobcat2
Wed Sep 03, 2014 2:19 am
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

If someone believes bonds are a necessity for a portfolio, why not hold a leveraged bond position? Holding bonds is often central to an LDI strategy. A leveraged bond position makes no sense in the LDI framework. ...taking a defensive stance that you're going to average 100% of your savings into a ...
by bobcat2
Tue Sep 02, 2014 6:04 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

I have trouble understanding why those who believe 100% allocation to stocks is a good idea, wouldn't also believe that investing more than 100% would be an even better idea. So why don't we see threads advocating 105% or 110% stocks? Where is the magic in 100%? If you think holding 100% equities i...
by bobcat2
Tue Sep 02, 2014 3:42 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: 100% Stock Thread Collection

I have trouble understanding why those who believe 100% allocation to stocks is a good idea, wouldn't also believe that investing more than 100% would be an even better idea. So why don't we see threads advocating 105% or 110% stocks? Where is the magic in 100%? Jeremy Siegel is typically bullish on...
by bobcat2
Tue Sep 02, 2014 3:09 pm
 
Forum: Investing - Theory, News & General
Topic: 100% Stock Thread Collection
Replies: 93
Views: 5314

Re: Safe floor and Safe Withdrawal Rate

I am retired now and starting to take money out of my IRA to live on. Have no pension. I am confused about having a "safe floor" of investment for the necessary things in retirement, and using the Safe Withdrawal Rate for money in retirement. What is a safe floor? Is it only made up of SP...
by bobcat2
Sat Aug 30, 2014 10:17 am
 
Forum: Investing - Theory, News & General
Topic: Safe floor and Safe Withdrawal Rate
Replies: 19
Views: 1423

Recent Changes In The Gains From Delaying Social Security

Recent Changes In The Gains From Delaying Social Security Stanford Institute for Economic Policy Research Discussion Paper authored by John Shoven and Sita Slavov From the conclusions section of the paper. We have shown that the gains from delaying Social Security have improved dramatically, partic...
by bobcat2
Tue Aug 26, 2014 12:16 pm
 
Forum: Investing - Theory, News & General
Topic: Recent Changes In The Gains From Delaying Social Security
Replies: 1
Views: 613

Re: POLL: Age for Collecting Social Security Benefits

Here is a link to a post by bobcat2 (aka BobK) that provides a concrete example of the benefit of delaying SS. This is one reply in a 136 post BH thread; it's a good thread to read for those interested in the present value analysis of the decision on when to start collecting benefits. Bogleheads • ...
by bobcat2
Mon Aug 25, 2014 12:08 pm
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Age for Collecting Social Security Benefits
Replies: 103
Views: 7489

Re: Liability Matching Portfolio

The wiki actually is extremely well-written on this topic. If people are interested in life-cycle finance, it's definitely worth a read. LadyGeek, Blbarnitz, and myself thank you for the kind words. I pushed the ideas and they were kind enough to edit and include them in a very pleasant collaborati...
by bobcat2
Wed Aug 13, 2014 1:25 am
 
Forum: Investing - Help with Personal Investments
Topic: Liability Matching Portfoloio
Replies: 36
Views: 3281

Re: Liability Matching Portfoloio

Again, the LMP is not a portfolio; it is an income stream. I agree. LMP is a poor way of thinking about this. We are taking the lifecycle hypothesis of economics and applying it to the household using a liability driven investment (LDI) strategy. Basic household consumption is completely matched by...
by bobcat2
Tue Aug 12, 2014 10:59 am
 
Forum: Investing - Help with Personal Investments
Topic: Liability Matching Portfoloio
Replies: 36
Views: 3281

Re: POLL: What age to purchase SPIA?

Buy them in chunks over time. By the time you are 70 income from Social Security, db pension, and your life annuities should provide you with your desired safe floor level of retirement income. As you age and remain healthy (?) you should augment the level of annuitized income so that when you reach...
by bobcat2
Sun Aug 10, 2014 10:13 am
 
Forum: Investing - Help with Personal Investments
Topic: POLL: What age to purchase SPIA?
Replies: 11
Views: 1110

Re: Retirement Research Conference in DC in August (free)

The 2014 Retirement Research Consortium Meeting will be held tomorrow and Friday (August 7-8) at the National Press Club in Washington, DC. The event is free of charge, but registration is required. You can view the agenda and sign up for the conference at the following link at the Boston College Ce...
by bobcat2
Wed Aug 06, 2014 10:44 am
 
Forum: Local Chapters and Bogleheads Community
Topic: Retirement Research Conference in DC in August (free)
Replies: 3
Views: 593

Re: International investing. A good call by our mentor.

Bobcat2 in another thread raised a great point about International investing, that is currency risk. Whatever amount you have invested in International Stocks and Bonds is the degree to which you are exposed to currency risk, that is unless the fund purchases currency hedges. His point was how much...
by bobcat2
Sun Aug 03, 2014 11:40 am
 
Forum: Investing - Theory, News & General
Topic: International investing. A good call by our mentor.
Replies: 145
Views: 12511

Re: All money in TIPs??

Bob, would you not also mention that not the entirety of the assets go to annuities and TIPS? I think there should always be room for some equity investing. Yes, there is certainly room for equity investing, and a retiree can have a combined equity and life annuity strategy. When equities in a give...
by bobcat2
Fri Aug 01, 2014 10:57 am
 
Forum: Investing - Help with Personal Investments
Topic: All money in TIPs??
Replies: 25
Views: 3020

Re: All money in TIPs??

On paper you would be good candidate for a SPIA. I may not have explained my situation well. The reason that I am thinking about a TIPs ladder because it seems to me to be a very adequate retirement strategy. There are people like Zvi Bodie's (http://www.zvibodie.com) from Boston U that feel strong...
by bobcat2
Fri Aug 01, 2014 10:31 am
 
Forum: Investing - Help with Personal Investments
Topic: All money in TIPs??
Replies: 25
Views: 3020

Re: global diversification works in long term

Investors should consider building globally diversified equity portfolios that avoid the persistent and worldwide phenomenon of home-country bias. That's when you allocate a greater weight to your home-country stocks than their percentage of total global market capitalization. The great majority of...
by bobcat2
Wed Jul 30, 2014 9:28 am
 
Forum: Investing - Theory, News & General
Topic: global diversification works in long term
Replies: 21
Views: 1926

Re: Why should stocks go up over the long term?

Stocks of particular companies do not for the most part go up over the long-term. Stocks that are growing in value change over time because economies are dynamic. Many of the biggest US stocks today were tiny or non-existent in 1980. Many of the biggest stocks in 2050 are undoubtedly tiny or non-exi...
by bobcat2
Mon Jul 28, 2014 7:51 pm
 
Forum: Investing - Theory, News & General
Topic: Why should stocks go up over the long term?
Replies: 34
Views: 2906

Re: Make Income the Outcome

Leaving legacies is estate planning. That is different than planning for retirement. In consumption smoothing you plan for retirement by attempting to keep your living standard about the same in retirement as it was before you retired. In order to do that you invest for retirement in mostly safe ass...
by bobcat2
Sat Jul 26, 2014 12:54 pm
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 49
Views: 3938

Re: Make Income the Outcome

I think for many Bogleheads this (is) a headscratcher. You say that if I concentrate on getting the largest portfolio I can I'll undermine my ability to generate appropriate levels of income? Huh? I realize this basic proposition of finance is a headscratcher to many investment enthusiasts. That's ...
by bobcat2
Fri Jul 25, 2014 10:13 am
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 49
Views: 3938

Make Income the Outcome

The problems with the current (retirement) system, as I see it, are two-fold: One is around the lack of meaningful information given to consumers and the other is around the stated lump sum goal of most superannuation plans. ... My view is that putting relatively complex decisions in the hands of i...
by bobcat2
Fri Jul 25, 2014 9:53 am
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 49
Views: 3938

Retirement Research Conference in DC in August (free)

The 2014 Retirement Research Consortium Meeting will be held on August 7-8, 2014 at the National Press Club in Washington, DC. The event is free of charge, but registration is required. You can view the agenda and sign up for the conference at the following link at the Boston College Center for Reti...
by bobcat2
Mon Jul 21, 2014 2:33 pm
 
Forum: Local Chapters and Bogleheads Community
Topic: Retirement Research Conference in DC in August (free)
Replies: 3
Views: 593

Re: Lifecycle Financial Planning Spreadsheet

I'd start by trying the free online ESPlanner Basic tool here - Link - https://basic.esplanner.com/ and here - https://basic.esplanner.com/ESPlannerBasic/about/ESPlannerBasic . After running ESPlanner Basic I would compare those answers with what you are getting in your spreadsheet. Economist Wade P...
by bobcat2
Mon Jul 21, 2014 2:17 pm
 
Forum: Personal Finance (Not Investing)
Topic: Lifecycle Financial Planning Spreadsheet
Replies: 3
Views: 921

DC BHs meeting Sunday - July 20 - new location & time

Update - Our next meeting is this coming Sunday, July 20, 3:00-5:30, in the second floor meeting room at the Arlington, VA Central Library, 1015 N. Quincy Street, Arlington, VA 22201. IIRC the second floor meeting room is on the south side of the library. The library has a free parking lot behind th...
by bobcat2
Fri Jul 18, 2014 11:02 am
 
Forum: Local Chapters and Bogleheads Community
Topic: DC BHs meeting Sunday - July 20 - new location & time
Replies: 1
Views: 301

Re: Master thread for Washington DC Area Bogleheads

Update - Our next meeting is this coming Sunday, July 20, 3:00-5:30, in the second floor meeting room at the Arlington, VA Central Library, 1015 N. Quincy Street, Arlington, VA 22201. IIRC the second floor meeting room is on the south side of the library. The library has a free parking lot behind th...
by bobcat2
Wed Jul 16, 2014 12:32 pm
 
Forum: Local Chapters and Bogleheads Community
Topic: Master thread for Washington DC Area Bogleheads
Replies: 6
Views: 1099

Re: Delaying SS while working past age 70

My point with all of the above is simply that it doesn't make sense to broadly refer to delaying Social Security as actuarially neutral (or worse than neutral, or better than neutral). Wherever the decision falls on that spectrum for unmarried people, it's significantly better for a high-PIA spouse...
by bobcat2
Sun Jul 13, 2014 9:00 am
 
Forum: Personal Finance (Not Investing)
Topic: Delaying SS while working past age 70
Replies: 135
Views: 10157

Re: Merton: 401(k) retirement plans face crisis

Hi gmaynardkrebs, You wrote. I must respectfully disagree. Merton is talking about the dire cases. Merton claims that we have a "retirement crisis"; that to me sounds quite dire, and very different from what you suggest he means, inter alia, that a lot of people might not be meeting their ...
by bobcat2
Sun Jul 13, 2014 8:36 am
 
Forum: Investing - Theory, News & General
Topic: Merton: 401(k) retirement plans face crisis
Replies: 188
Views: 17702

Re: Merton: 401(k) retirement plans face crisis

gmaynardkrebs wrote. The range of outcomes, including negative outcomes, always and everywhere increases with time when riskier assets are added. (See Bodie's hurricane path analogy.) Adding risk, by definition, increases the risk of a shortfall in retirement. That's true and using Monte Carlo analy...
by bobcat2
Sun Jul 13, 2014 12:18 am
 
Forum: Investing - Theory, News & General
Topic: Merton: 401(k) retirement plans face crisis
Replies: 188
Views: 17702

Re: Merton: 401(k) retirement plans face crisis

Reliance on Monte Carlo simulations, ie., volatility risk = real world risk. Basically, the Taleb "Black Swan" critique of Merton. But, I acknowledge the Shiller point you make, that it was not actually Merton, but the way his ideas were misused at LTCM, that was the problem. That said, I...
by bobcat2
Sat Jul 12, 2014 8:29 pm
 
Forum: Investing - Theory, News & General
Topic: Merton: 401(k) retirement plans face crisis
Replies: 188
Views: 17702

Re: Delaying SS while working past age 70

I priced a $200/month $2,400 a year real life annuity at Income Solutions for a 66 year old single woman. BobK BobK, shouldn't you have priced an annuity for a 67-year-old woman? Social Security pays her $32,400 when she is 67. I don't think so. She can get $32,400 real annuitized income for life b...
by bobcat2
Sat Jul 12, 2014 3:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: Delaying SS while working past age 70
Replies: 135
Views: 10157

Re: Merton: 401(k) retirement plans face crisis

I am not conflating anything. I was simply trying to indicate reaching a level of savings that could assure a future level of income, long before that income is needed. 4% is as good a rule of thumb as any. It most certainly is not. The best way to cost a future real income stream is to price a rea...
by bobcat2
Sat Jul 12, 2014 12:53 pm
 
Forum: Investing - Theory, News & General
Topic: Merton: 401(k) retirement plans face crisis
Replies: 188
Views: 17702

Re: Merton: 401(k) retirement plans face crisis

Consider the Long-Term Capital Management debacle in 1998, when the Federal Reserve leaned on financial titans to rescue a massive hedge fund and stave off global fallout. Lots of people hold that the moral of the LCTM story was the failed thinking of two of the firm's founders, Robert Merton and M...
by bobcat2
Sat Jul 12, 2014 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: Merton: 401(k) retirement plans face crisis
Replies: 188
Views: 17702
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