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Re: Does this strategy invite unnecessary risk?

My OP was not to suggest this 'idea' is the smart thing to do, but rather to ask if there is any validity to such a portfolio or if most people here totally disagree with this path. Previous surveys of the forum have shown that there is a pretty strong majority sentiment here to hold a significant ...
by dbr
Thu Apr 17, 2014 9:24 am
 
Forum: Investing - Theory, News & General
Topic: Does this strategy invite unnecessary risk?
Replies: 26
Views: 1293

Re: Does this strategy invite unnecessary risk?

This is just "tilting" and it's not idiotic so long as you know why you are doing it and use low-cost funds to do it (not individual stocks)... The idiotic part is the reference to "slight." OK, I agree with that. Putting 2% or 3% of your total lump into a tilt position really i...
by dbr
Wed Apr 16, 2014 5:42 pm
 
Forum: Investing - Theory, News & General
Topic: Does this strategy invite unnecessary risk?
Replies: 26
Views: 1293

Re: Does this strategy invite unnecessary risk?

The Wizard wrote:This is just "tilting" and it's not idiotic so long as you know why you are doing it and use low-cost funds to do it (not individual stocks)...


The idiotic part is the reference to "slight."
by dbr
Wed Apr 16, 2014 4:45 pm
 
Forum: Investing - Theory, News & General
Topic: Does this strategy invite unnecessary risk?
Replies: 26
Views: 1293

Re: Does this strategy invite unnecessary risk?

Telling people they should be "slightly" more invested in something or another is idiotic on the face of it.
by dbr
Wed Apr 16, 2014 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: Does this strategy invite unnecessary risk?
Replies: 26
Views: 1293

Re: High Yield Bonds as an Annuity?

Those who criticize the high yield bond fund for "overspending" or "eating its own seed corn" are being hypocrites if they simultaneously admonish people to only look at total return of stock funds because "it doesn't matter how much the dividend payments are, it's only the...
by dbr
Wed Apr 16, 2014 3:23 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds as an Annuity?
Replies: 19
Views: 1260

Re: High Yield Bonds as an Annuity?

I don't want to be part of a discussion about income, but I would urge discussion that does not confuse holding investments (bonds) with buying insurance (annuities). The idea of a bond, which is designed to ensure return of principal while providing uncertain income, is exactly opposite that of an ...
by dbr
Wed Apr 16, 2014 9:20 am
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds as an Annuity?
Replies: 19
Views: 1260

Re: Reducing employer stock exposure

P.S. Pretty amazing that only 10 companies make up 14.4% of all VTSAX's holdings. Wanting more company-level diversification seems like a strong incentive to tilt using small and mid cap funds. This, on the other hand, is always a striking observation, but I don't think I have ever seen an analysis...
by dbr
Wed Apr 16, 2014 9:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Reducing employer stock exposure
Replies: 5
Views: 306

Re: Reducing employer stock exposure

As hoppy points out, 1%-2% is not significant, not even close.
by dbr
Wed Apr 16, 2014 8:58 am
 
Forum: Investing - Help with Personal Investments
Topic: Reducing employer stock exposure
Replies: 5
Views: 306

Re: Math challenged

Hey! Our cars are decent! I'm not planning on getting another one. My husband will get a "newer" car after he retires, and when I retire we'll go to one vehicle. Great idea to assuage guilt. our cars are 12-14 years old. :oops: Ha, ha! (insert Nelson Muntz https://www.youtube.com/watch?v=...
by dbr
Wed Apr 16, 2014 8:54 am
 
Forum: Investing - Theory, News & General
Topic: Math challenged
Replies: 18
Views: 1422

Re: what bond funds to hold(Bernstein's Sheltered Sam)

I understand the reason for holding bonds, to hedge against a market downturn(I think...). About holding those particular funds, it's because Mr. Bernstein suggested so. I admit I have very little knowledge in the different types of bonds out there(muni, federal, corporate and so on) and plan to ed...
by dbr
Wed Apr 16, 2014 8:49 am
 
Forum: Investing - Help with Personal Investments
Topic: what bond funds to hold(Bernstein's Sheltered Sam)
Replies: 6
Views: 626

Re: Math challenged

our cars are 12-14 years old. :oops: Ha, ha! (insert Nelson Muntz https://www.youtube.com/watch?v=rX7wtNOkuHo ) Mine are older than that :D But seriously, you are an example of how to be successful at managing this thing, and you can have decent cars too in the long run -- I mean there is more than...
by dbr
Wed Apr 16, 2014 8:38 am
 
Forum: Investing - Theory, News & General
Topic: Math challenged
Replies: 18
Views: 1422

Re: Please Help me understand 3-fund portfolio

To my original reason for this post, I am trying to understand the basic reason for a 3 fund portfolio. Do people use the 3 fund portfolio because two funds (listed above) are expected to increase if one fund were to fall (for example, if the US Stock Market drops by 30%, do people expect the Bond ...
by dbr
Wed Apr 16, 2014 8:31 am
 
Forum: Investing - Theory, News & General
Topic: Please Help me understand 3-fund portfolio
Replies: 21
Views: 1674

Re: Help with Improving my Portfolio

I'm thinking to buy the 4 funds separately rather than as the LIfe Strategy fund because it seems to give me more freedom for tax efficiency and more freedom to change the percentages if I get braver in the future. Does this make sense or is it just as good to put everything in the Life Strategy Mo...
by dbr
Tue Apr 15, 2014 8:24 am
 
Forum: Investing - Help with Personal Investments
Topic: Help with Improving my Portfolio
Replies: 45
Views: 2559

Re: Math challenged

Or just stupid. šŸ˜ I understand about PE ratios and total returns (more or less) and get the advantage of Vanguard index funds being cheaper versus many 401k funds. Now for what I don't get. How does that translate number-wise? For instance, If a person had a 1m portfolio what does the extra 1% in f...
by dbr
Mon Apr 14, 2014 6:57 pm
 
Forum: Investing - Theory, News & General
Topic: Math challenged
Replies: 18
Views: 1422

Re: Save for 25 years = $1million?

The OP posed the question in a way that the saver would not save a constant amount each year, but would be able to increase it a bit every year. I think that's a nice way to think about it. I know that we were able to save more and more each year as we stopped buying things and our mortgage payment...
by dbr
Mon Apr 14, 2014 6:51 pm
 
Forum: Investing - Help with Personal Investments
Topic: Save for 25 years = $1million?
Replies: 22
Views: 3964

Re: Help with Improving my Portfolio

I think retiredjg and others are sending you in the right direction. There seem to be a lot of questions about these funds: 1.7% Mutual Beacon (BEGRX) (0.84 %) Held at Franklin Templeton 1.72% Mutual Quest Z (MQIFX ) (.90 %) Held at Franklin Templeton 3.01 % TRowe Price Equity Income PRFDX (.68%) He...
by dbr
Mon Apr 14, 2014 6:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with Improving my Portfolio
Replies: 45
Views: 2559

Re: LED bulb prices

"My led bulbs that are on dimmers give off a horrible humming noise. I did use Cree 60watt a19 style bulbs in my recessed canisters but I don't believe this to be a problem as I have used regular incandescent bulbs in these recessed canisters before with no noise problem. I really can't believ...
by dbr
Mon Apr 14, 2014 12:06 pm
 
Forum: Personal Consumer Issues
Topic: LED bulb prices
Replies: 104
Views: 8086

Re: SCV premium is a history/math story, its not scientific

Strangely enough, I agree with Larry above as well as with what Nisi wrote. But the point is that as believable as the analysis is, in my judgement it does not dictate that an investor "should" seek the advantages of small and value premiums. It does dictate that an investor can feel able ...
by dbr
Mon Apr 14, 2014 9:01 am
 
Forum: Investing - Theory, News & General
Topic: SCV premium is a history/math story, its not scientific
Replies: 46
Views: 2218

Re: The market portfolio vs. value tilts

When this question was presented to Larry S.in a BH post, he seemed to agree that either way, increasing the equity allocation OR tilting, would potentially increase both the expected return and the risk of the portfolio by a similar amount. What tilting does (that simply increasing the equity allo...
by dbr
Mon Apr 14, 2014 8:54 am
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3039

Re: Help with Improving my Portfolio

I do not understand: 1) How you have no idea what you will spend in retirement and 2) Why you will have no social security benefit - either your own or ex spouse or widow benefit It seems to me if you are not able to live on roughly $36K of income from a $900K portfolio that this is a train wreck s...
by dbr
Mon Apr 14, 2014 8:50 am
 
Forum: Investing - Help with Personal Investments
Topic: Help with Improving my Portfolio
Replies: 45
Views: 2559

Re: suggestion for awd luxury sedan

I have also been looking around for a car replacement and so far I'm not seeing anything in the awd so-called luxury sedan segment that seems to make sense. I am also not an SUV enthusiast, even for the so-called crossover designs. At this point I may well be looking forward to owning a 16-17-18 yea...
by dbr
Mon Apr 14, 2014 8:47 am
 
Forum: Personal Consumer Issues
Topic: suggestion for awd luxury sedan
Replies: 39
Views: 2830

Re: The Case for Dividend Stocks in Retirement (article)

That article is probably more in the category of "not even wrong" than it is erroneous.
by dbr
Mon Apr 14, 2014 8:43 am
 
Forum: Investing - Theory, News & General
Topic: The Case for Dividend Stocks in Retirement (article)
Replies: 27
Views: 2214

Re: SCV premium is a history/math story, its not scientific

The comments above are outstanding and should be enshrined somewhere.
by dbr
Mon Apr 14, 2014 8:41 am
 
Forum: Investing - Theory, News & General
Topic: SCV premium is a history/math story, its not scientific
Replies: 46
Views: 2218

Re: Financial plan for pensioned in-laws

Target Retirement income or Life Strategy Income are as aggressive as I would suggest for very conservative parents who have reached their goal. For my own knowledge, why would you recommend a very conservative asset allocation for a couple who, as the original poster stated, has all of their expen...
by dbr
Mon Apr 14, 2014 8:37 am
 
Forum: Investing - Help with Personal Investments
Topic: Financial plan for pensioned in-laws
Replies: 19
Views: 1193

Re: Portfolio Volatility is a Big Drag on Returns

All of the above and the geometric mean is for compounding, which takes us full circle to investing. There is also the quadratic mean useful for calculating power in electrical circuits and that also turns up in finding the standard deviation of products of independent random variables. The latter i...
by dbr
Sun Apr 13, 2014 11:28 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 25
Views: 1822

Re: Portfolio Volatility is a Big Drag on Returns

Then there is this: http://en.wikipedia.org/wiki/Generalized_mean and even this: http://en.wikipedia.org/wiki/Quasi-arithmetic_mean Or . . . maybe we should apply this one in which we cause the difference between arithmetic and geometric to disappear: http://en.wikipedia.org/wiki/Arithmetic-geometri...
by dbr
Sun Apr 13, 2014 8:59 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 25
Views: 1822

Re: Help with Improving my Portfolio

What I pick up here is a lot of uncertainty about income and spending. I am trying to reconcile several statements about needing $500K to live on for awhile at what appears to be a spending rate of maybe $100K a year but then saying being able to invest for a retirement income of $37K for life would...
by dbr
Sun Apr 13, 2014 2:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with Improving my Portfolio
Replies: 45
Views: 2559

Re: Financial plan for pensioned in-laws

Strangely enough the most appropriate thing to do might be for them to start here: http://www.bogleheads.org/wiki/Getting_started It really is all about learning the fundamentals of investing (and even financial planning) from the beginning. The questions you are asking might well fall toward the en...
by dbr
Sun Apr 13, 2014 2:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Financial plan for pensioned in-laws
Replies: 19
Views: 1193

Re: If not dollar cost averaging...then what?

I'd forget the phrase "DCA", it's misused and confusing. Instead, remember this phrase: "The sooner I put my money to work, the greater my expected returns" . As soon as you get funds tagged for long term investing, invest them. I Agree. The term Dollar Cost Averaging means diff...
by dbr
Sun Apr 13, 2014 1:45 pm
 
Forum: Investing - Theory, News & General
Topic: If not dollar cost averaging...then what?
Replies: 15
Views: 771

Re: Use brokerage window for REITS and TIPS?

With all due respect, holding a 5% position in TIPS is absolutely pointless. There might be an argument for certain investors in somewhat unusual situations to hold 100% TIPS or 100% of their bonds in TIPS, but I don't think you are in that kind of situation. Putting some fraction of your stocks in ...
by dbr
Sun Apr 13, 2014 12:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Use brokerage window for REITS and TIPS?
Replies: 7
Views: 470

Re: Why does Vanguard use average return iso compound annual

According to this article it may not be correct to use harmonic mean for geometric mean:

http://en.wikipedia.org/wiki/Pythagorean_means

And there is this:

http://en.wikipedia.org/wiki/Generalized_mean

which is something I was not aware of before.
by dbr
Sun Apr 13, 2014 10:10 am
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 4068

Re: Portfolio Volatility is a Big Drag on Returns

We have a similar thread, from a different perspective: Three-fund portfolio returns and variance drain Also see the wiki: Variance drain People really need to read the above. I would say the bottom line is that this has nothing to do with anything of significance to real investing and is simply a ...
by dbr
Sun Apr 13, 2014 10:03 am
 
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 25
Views: 1822

Re: A foolish investor?

The odd thing is that neither of these gentlemen seems to understand what seems obvious to me: their mistake was overestimating their risk tolerance and having too high a stock allocation. Neither of them seems willing to accept that their risk tolerance is what it is. Why exactly do you think you ...
by dbr
Sun Apr 13, 2014 9:56 am
 
Forum: Investing - Help with Personal Investments
Topic: A foolish investor?
Replies: 13
Views: 1524

Re: The market portfolio vs. value tilts

One thing that some investors may be missing when they tilt to small-cap stocks is that there is more than one aspect of risk. If you go back to the origin of MPT, there was one measure of risk, which was variation in the total return. So you plot standard deviation on the x-axis and total return o...
by dbr
Sun Apr 13, 2014 9:44 am
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3039

Re: The market portfolio vs. value tilts

As a higher-level point, I became a lot more relaxed around here when I finally realized some posters use the word "diversification" to mean "concentration into particular types of stocks." PJW That one is a real mind bender, isn't it? I don't think people like Fama and French u...
by dbr
Sat Apr 12, 2014 3:42 pm
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3039

Re: Online Retirement Calculators

Financial Engines gave me a stunning answer for what my monthly income would be, and then I realized it assumed I would annuitize all our assets at retirement. Well, it did give you the known answer for the most effective way to fund a retirement with the assets available, but people have railed at...
by dbr
Sat Apr 12, 2014 9:35 am
 
Forum: Personal Finance (Not Investing)
Topic: Online Retirement Calculators
Replies: 17
Views: 1659

Re: Vanguard VTI and VXUS: adding more small VSS and VB/VBR

Tilting to small and value is a much discussed strategy. There are running threads on the subject even as we speak and there are articles on the subject in the Wiki. My personal evaluation is that it can make sense to tilt to small and value allocations but that one should not do so until thoroughly...
by dbr
Sat Apr 12, 2014 9:30 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard VTI and VXUS: adding more small VSS and VB/VBR
Replies: 15
Views: 1010

Re: Online Retirement Calculators

Does anyone have a favorite online retirement calculator? I have tried a lot of them, but can't seem to find a great one. Thanks! None of them are great ones but many of them are useful for proving insight into the situation. We do have to assume we are talking about probabilistic calculators that ...
by dbr
Sat Apr 12, 2014 9:23 am
 
Forum: Personal Finance (Not Investing)
Topic: Online Retirement Calculators
Replies: 17
Views: 1659

Re: The market portfolio vs. value tilts

Most of my model portfolios have small value stocks because of their premium. And yes, they have more volatility than other stock classes, but you can't look at volatility for one asset class in your portfolio by itself. You have to look at what the combinations of asset classes do to both returns ...
by dbr
Sat Apr 12, 2014 8:52 am
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3039

Re: My IRA Investment Approach

So I had some 50K in several different IRAs. Here is what I did: 1. Put 20% each in ITOT, IEMG, IEFA, ACWI and TLT (they are all commission free at Fidelity) 2. Every month I contribute $450 (~5500/12) to my Non-Deductible IRA (income too high for a deductible IRA), convert to Roth-IRA, and buy whi...
by dbr
Fri Apr 11, 2014 11:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: My IRA Investment Approach
Replies: 2
Views: 193

Re: The market portfolio vs. value tilts

Mr. Bogle's point, both in his book and his speech is that growth and value revert to the mean and therefore there is no premium for on or the other. The elephant in the room, that Mr. Bogle never addressed to my knowledge, is that small value stocks have what appears to be a consistent premium ove...
by dbr
Fri Apr 11, 2014 11:09 pm
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3039

Re: The market portfolio vs. value tilts

Higher returns with less risk is what you get if you combine long or intermediate term government bonds or treasuries with small value stocks - see my article. If you believe that the small value stock premium isn't real, then by all means, ignore it. Well, I thought you were talking about risk and...
by dbr
Fri Apr 11, 2014 11:07 pm
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3039

Re: The market portfolio vs. value tilts

Since RTM appears to be absent for small value stocks, it clearly is not as universal as Bogle and others try to portray it. TRM taken to the extreme would dictate that all stock classes are created equal and must over the long run have similar returns. That just is not the case and would defy all ...
by dbr
Fri Apr 11, 2014 10:57 pm
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3039

Re: Annuities

In the words of Donald Rumsfeld, there are: - the known known -the known unknown -and the unknown unknown And in this area of SPIAs, I sense the unknown unknown can come back to haunt me. Am I right? Yes, but that problem is not unique to annuities and may be more severe for every other alternative...
by dbr
Fri Apr 11, 2014 10:37 pm
 
Forum: Investing - Theory, News & General
Topic: Annuities
Replies: 59
Views: 3818

Re: why would i keep $3,000 in a vanguard roth brokerage mma

thanks for all the feedback. i tried to open the link without success :? Try this link to vanguard's forms page for open a retirement account: https://personal.vanguard.com/us/litfulfillment/ELFMainResults?cat=OAFM&subCat1=ORET&subCat2= From that page, look for a form for "Opening a re...
by dbr
Fri Apr 11, 2014 10:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: why would i keep $3,000 in a vanguard roth brokerage mma
Replies: 12
Views: 1114

Re: why would i keep $3,000 in a vanguard roth brokerage mma

thanks for all the feedback. i tried to open the link without success :? Try this link to vanguard's forms page for open a retirement account: https://personal.vanguard.com/us/litfulfillment/ELFMainResults?cat=OAFM&subCat1=ORET&subCat2= From that page, look for a form for "Opening a re...
by dbr
Fri Apr 11, 2014 10:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: why would i keep $3,000 in a vanguard roth brokerage mma
Replies: 12
Views: 1114

Re: Playing Defense

Incidentally, for those looking to allocation strategies hoping to garner extra through rebalancing, this is the results over the past decade of someone who invested $10,000 each year into . . . Why do people think rebalancing is a trick to get more return from an allocation that is not all stock t...
by dbr
Fri Apr 11, 2014 10:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Playing Defense [against possible market correction]
Replies: 36
Views: 2915

Re: A foolish investor?

Would need to no more about your need ,ability and willingness to assume risk.Suggest you consult Larry Swedroes method for assessings these.You maybe a little high on risk or not. Vanguard life strategy funds also offer some guidance in this. Best wishes I agree. If you need high return to meet yo...
by dbr
Fri Apr 11, 2014 8:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: A foolish investor?
Replies: 13
Views: 1524

Re: why would i keep $3,000 in a vanguard roth brokerage mma

How is it possible to open a brokerage account anywhere without provision of a place in the account to deposit and exchange cash without a minimum? The brokerage accounts I have hold cash in any amount but there does not seem to be any particular "investment" identified other than "ca...
by dbr
Fri Apr 11, 2014 6:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: why would i keep $3,000 in a vanguard roth brokerage mma
Replies: 12
Views: 1114

Re: AA question regarding taxable and inheritance

Is this AA reasonable? In particular, I'm not certain if I should be using a muni bond fund for tax purposes. The portfolio is expected to be inherited so the tax basis will be stepped up at time of death, but I'm not sure that covers the income the bonds will generate. Maybe it's not enough to mat...
by dbr
Fri Apr 11, 2014 4:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: AA question regarding taxable and inheritance
Replies: 4
Views: 254
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