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EMH is close enough

http://www.bloombergview.com/articles/2014-10-10/the-market-outsmarts-everyone

the financial value of information gets used up


EMH is wrong in details but close enough to be useful in the "real world"!

Good Luck.

Harry
by dharrythomas
Sun Oct 12, 2014 2:00 pm
 
Forum: Investing - Theory, News & General
Topic: EMH is close enough
Replies: 1
Views: 309

Re: Best book on Finance I ever read, Ben Graham's Intellige

Stemikger, The Intelligent Investor is not too technical for you. It is the "mass market" version of the Graham and Dodd textbook "Security Analysis". The second book might be more technical and have more math than you want to try. You would have no trouble with the first. It is ...
by dharrythomas
Sun Oct 05, 2014 3:09 pm
 
Forum: Investing - Theory, News & General
Topic: Best book on Finance I ever read, Ben Graham's Intelligent I
Replies: 27
Views: 2654

Re: TSP [CNN Money: Fed Workers... low cost retirement plans

The problem with having Roth money in the TSP is that you cannot manage it separately and all withdrawals are proportional to account balance. I may leave the traditional balance in the TSP but my one partial withdrawal will be to move the Roth balance immediately!
by dharrythomas
Sat Oct 04, 2014 5:40 pm
 
Forum: Investing - Theory, News & General
Topic: TSP [CNN Money: Fed Workers... low cost retirement plans]
Replies: 25
Views: 2383

Re: Buffett Has 100% Equities in his Pensions Funds

1. Bonds vs stocks is a long term losing proposition, the only time in my lifetime that you could expect bonds to beat stocks was the Volker years with 15% plus tax free bond returns! 2. Pensions are different than individuals because of the law of large numbers. They can project expenses much bette...
by dharrythomas
Sat Oct 04, 2014 2:57 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett Has 100% Equities in his Pensions Funds
Replies: 39
Views: 2716

Re: Total world stock index

We use Total World as our only taxable fund. The expense ratio has been dropping consistently as the fund grows. Projecting the current differences in expense ratio forward is misleading and overstates the long term impact. I expect the difference to drop to no more than .05 in about 2.5 years. It m...
by dharrythomas
Fri Oct 03, 2014 9:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Total world stock index
Replies: 19
Views: 2425

Re: Surprise Benefit of Lower Expenses

You got a "raise" because your expenses went down. It was 5% because of the ratio of the decrease in expenses to the yield. My guess is that your yearly yield increased from 2% to 2.1%!
by dharrythomas
Thu Oct 02, 2014 6:32 pm
 
Forum: Investing - Theory, News & General
Topic: Surprise Benefit of Lower Expenses
Replies: 6
Views: 1491

Re: Let's hear your Dave Ramsey success stories

Dave Ramsey is important because he is the one voice taking about the Risk involved with Debt. We're bombarded with lessons on managing debt. You can either live below your means, save, invest, and get on the right side of compounding or you can go into debt, juggle payments, and be on the wrong sid...
by dharrythomas
Wed Sep 24, 2014 10:31 pm
 
Forum: Investing - Theory, News & General
Topic: Let's hear your Dave Ramsey success stories
Replies: 32
Views: 4338

Re: Individual Stocks

We own stock in 2 community bank start ups. (We'd have spent the funds if we hadn't bought the bank stock) Don't have a listed market value but the dividends are pretty good and increasing. My estimate is less than10% of portfolio (that we're still adding to) and that doesn't count pension income th...
by dharrythomas
Sat Sep 20, 2014 9:18 pm
 
Forum: Investing - Theory, News & General
Topic: Individual Stocks
Replies: 46
Views: 3315

Re: If you won the lottery, does boglehead thinking still wo

The boglehead method would work. Some might need an advisor to keep them from doing something stupid. Many lottery winners are bankrupt a few years after winning. For me this is all theory since I view the lottery as a tax on people who are bad at math, even worse since in education lotteries they t...
by dharrythomas
Sun Sep 07, 2014 8:12 pm
 
Forum: Investing - Theory, News & General
Topic: If you won the lottery, does boglehead thinking still work?
Replies: 39
Views: 2963

Re: Question on Buffet's recent investment advice

Just don't forget that for Mr Buffett's widow, 10% is probably several years of living expense. The asset allocation is appropriate for an individual situation. The rest of the advice is applicable for everyone.
by dharrythomas
Sat Sep 06, 2014 6:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question on Buffet's recent investment advice
Replies: 8
Views: 1754

Re: roll pension over to Trad. IRA in this situation?

Unless you're worried about the company surviving, don't do #2! The math doesn't work, it's not even close. You need to provide a little additional information about your overall financial picture before someone can give you solid advice about which option is better. 15 years is a long time. This de...
by dharrythomas
Sat Sep 06, 2014 6:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: roll pension over to Trad. IRA in this situation?
Replies: 8
Views: 504

Re: Considering divesting international position...

There are a number of people smarter than me who don't think international is required (Jack Bogle being one). Over the long term returns converge. On the other hand, if you're going to switch back and forth based on what's hot now, the odds are that you'll underperform either. The issue is that you...
by dharrythomas
Sat Sep 06, 2014 6:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Considering divesting international position...
Replies: 12
Views: 607

Re: How similar/dissimilar should my wife's Roth IRA be to m

It's up to you. We set ours up using different funds but a similar asset allocation. Some use exactly the same funds in each. Some will use different funds and asset allocations as they build a total portfolio. There is no best, it depends on what you want to do and how important it is to you to kee...
by dharrythomas
Sun Aug 31, 2014 10:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: How similar/dissimilar should my wife's Roth IRA be to mine?
Replies: 13
Views: 1005

Re: Buying a house, sell REITs?

Listen to PJW. Don't cost yourself years of tax free growth to save a little taxes now. If you make that decision, you should have invested in a traditional not a Roth IRA.

Good luck.

Harry
by dharrythomas
Sun Aug 31, 2014 10:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Buying a house, sell REITs?
Replies: 8
Views: 878

Re: Bad(?) advice given about Target Date Retirement funds

Frankly, I like them both.

We use TD funds in traditional IRA and TSP for the drawdown in risk.

I use LS Moderate Growth as the Core of my Roth. Different horizon since I don't think we'll need it.
by dharrythomas
Mon Aug 18, 2014 8:03 pm
 
Forum: Investing - Theory, News & General
Topic: Bad(?) advice given about Target Date Retirement funds
Replies: 103
Views: 6636

Re: Withdrawl from Target Retirement or Life Strategy Fund

If your modifying your asset allocation by withdrawals you are market timing. It may or may not work, depending on timeframe and how you define work. But rest assured that you've timed the market and changed the risk level and expected return of your portfolio. A balanced Vanguard fund will at least...
by dharrythomas
Sun Aug 10, 2014 2:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Withdrawl from Target Retirement or Life Strategy Fund
Replies: 51
Views: 4560

Re: Understanding implications of Shiller CAPE on retirement

The best use that I can manage is to lower my return expectations when the CAPE P/E is high. I'm paying more per unit of earnings than if the P/E were lower, if I pay more the income share left for me is less. As far as market timing, I thought the market was too frothy in the late 80s. If I'd waite...
by dharrythomas
Sat Aug 09, 2014 3:26 pm
 
Forum: Investing - Theory, News & General
Topic: Understanding implications of Shiller CAPE on retirement
Replies: 27
Views: 2518

Re: Maxing roth 401k vs trad 401k in high income tax bracket

A Roth account is also more valuable if there is any chance that you may leave it to heirs.

If I have some left, my preferred split is traditional to the church, taxable and Roth to the kids.
by dharrythomas
Thu Aug 07, 2014 4:32 pm
 
Forum: Investing - Theory, News & General
Topic: Maxing roth 401k vs trad 401k in high income tax bracket
Replies: 13
Views: 1265

Re: Maxing roth 401k vs trad 401k in high income tax bracket

Yes. Money in a Roth is more valuable than money in a traditional account or in a taxable account. If you either max out the accounts or are saving a percentage, you put more aside using a Roth account. Like many people, life style and savings are a trade off. DW will let me set aside 15% in TSP plu...
by dharrythomas
Thu Aug 07, 2014 4:27 pm
 
Forum: Investing - Theory, News & General
Topic: Maxing roth 401k vs trad 401k in high income tax bracket
Replies: 13
Views: 1265

Re: Lifestrategy fund vs. slice-and-dice in 401k

Either is OK.

If you like to play with it, s/d. If you want to "fire and forget", LSG. If you can access admiral shares, s/d is a little cheaper.

You may (or may not depending on your horizon) get a small extra return from the small and REIT.
by dharrythomas
Thu Aug 07, 2014 4:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Lifestrategy fund vs. slice-and-dice in 401k
Replies: 8
Views: 610

Re: Vanguard Star Fund Vs. Lifestrategy Moderate Growth Fund

The only other difference is that STAR has a few percentage points more equity. Either is very good.
by dharrythomas
Thu Aug 07, 2014 4:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Star Fund Vs. Lifestrategy Moderate Growth Fund
Replies: 2
Views: 704

Re: Mutual Fund for a 10 year-old

I recommend LifeStrategy Growth or the Total World Stock Index. Target Retirement, LifeStrategy Moderate Growth, STAR, or Wellington are not bad options either depending on risk tolerance. Might want to hide some of the volitility in a balanced fund for a new investor. Total World Stock Index is the...
by dharrythomas
Thu Aug 07, 2014 3:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: Mutual Fund for a 10 year-old
Replies: 10
Views: 698

Re: Maxing roth 401k vs trad 401k in high income tax bracket

I use the Roth though SC taxes are lower than CA. I'm saving more than I would the other way and I like knowing how much is mine as opposed to the uncertainty of future tax rates in a traditional account. Will we pay more than we have to? Time will tell. People here will do a great deal of math to p...
by dharrythomas
Thu Aug 07, 2014 2:51 pm
 
Forum: Investing - Theory, News & General
Topic: Maxing roth 401k vs trad 401k in high income tax bracket
Replies: 13
Views: 1265

Re: I have access to a military TSP...worth it?

I strongly recommend the Uniformed Services TSP. I just retired this year after a 30 year active and reserve career. The TSP was a great addition to the benefit package though it came later in my career and contributions were restricted in the beginning. The Roth option recently added gives you choi...
by dharrythomas
Sun Jul 27, 2014 7:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: I have access to a military TSP...worth it?
Replies: 13
Views: 1130

Re: Using retirement assets and inheritance wisely

I agree with Paul. You're doing fine except that it doesn't appear that you're close to your stated asset allocation. I'd pay off the car loan, do or buy something the two of you want and put the rest in a LifeStrategy fund. You should ask yourselves: "Why are we still saving?" If you've g...
by dharrythomas
Mon Jul 21, 2014 9:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Using retirement assets and inheritance wisely
Replies: 12
Views: 1828

Re: College Kid Looking for some Vanguard Advice

If you have earned income a Roth is a great idea in your situation. Depending on the amount of earned income you anticipate for this year either a Target Retirement or a LifeStrategy fund would be outstanding. Low cost, indexed, broad diversification.

Good luck.
by dharrythomas
Sun Jul 20, 2014 9:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: College Kid Looking for some Vanguard Advice
Replies: 7
Views: 954

Re: TSP vs Vanguard

A big part of the difference is that the TSP reaches its terminal asset allocation at the date, it is a "to" fund. Vanguard is a "through" fund which reaches its terminal asset allocation about 7 years after the target date. Most of the rest is accounted for by the fact that Vang...
by dharrythomas
Sun Jul 20, 2014 9:04 pm
 
Forum: Investing - Theory, News & General
Topic: TSP vs Vanguard
Replies: 10
Views: 1196

Re: Teaching Kids the Rules of Investing.

4 biggest issues: 1) Debt adds risk 2) Savings rate is under your control and is as critical as rate of return 3) Expenses (fees and taxes) come directly from your return) 4) Time value of money and compounding (both returns and expenses) If they master those concepts AND apply them, the rest will t...
by dharrythomas
Sat Jul 12, 2014 4:53 pm
 
Forum: Investing - Theory, News & General
Topic: Teaching Kids the Rules of Investing.
Replies: 17
Views: 2053

Re: Bernstein: Don’t Bother With International Bonds

It doesn't bother me that we own some in LifeStrategy and Target Retirement, but I don't think the potential benefit is worth the cost and effort to do it on my own.
by dharrythomas
Sun Jun 29, 2014 3:29 pm
 
Forum: Investing - Theory, News & General
Topic: Bernstein: Don’t Bother With International Bonds
Replies: 112
Views: 9773

Re: Any experience with Vanguard Life Strategy?

I agree with many of the posters above. 1) At your age you should probably invest in LS Moderate Growth (if you don't want to change it for 30 years. I think that's close to the 'sweet spot'. 2) I believe that periodic investment as you earn money is more important than picking the best investment. ...
by dharrythomas
Sun Jun 29, 2014 3:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Any experience with Vanguard Life Strategy?
Replies: 25
Views: 2471

Re: JP Morgan botched 401k distribution

I don't think this is a JP Morgan problem. I don't think what you want to do is legal. I think that any distribution has to come out in proportion to the funds in the account, pre and post tax. It's the problem of doing a back door Roth if you've already got a traditional IRA. The only good work aro...
by dharrythomas
Fri Jun 27, 2014 9:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: JP Morgan botched 401k distribution
Replies: 36
Views: 2407

Re: Improving the TSP [for current participants]

If they want people to leave money in the TSP, they need to expand withdrawal options. My one partial withdrawal will be used for the Roth portion. I might as well transfer the traditional at the same time to avoid some of the restrictions.
by dharrythomas
Thu Jun 26, 2014 10:08 pm
 
Forum: Investing - Theory, News & General
Topic: Improving the TSP [for current participants]
Replies: 37
Views: 4489

Re: If chasing market performance is bad...

We started investing in the late 80's. The problem with timing is that I thought the markets were high then with new records all the time. Based on the history at the time, we've never. Been close to what I thought was a reasonable price. Paul Volker changed the world by breaking inflation but we we...
by dharrythomas
Sat Jun 21, 2014 6:43 pm
 
Forum: Investing - Theory, News & General
Topic: If chasing market performance is bad...
Replies: 85
Views: 4969

Re: "Three Simple Rules of Investing"

Taylor,

Thanks. A valuable contribution as always.

Harry
by dharrythomas
Sat Jun 21, 2014 5:21 pm
 
Forum: Investing - Theory, News & General
Topic: "Three Simple Rules of Investing"
Replies: 6
Views: 1754

Re: out of residency since 07 - please advise

I'd pay off the student loans and sell the rental house. You will have reduced your risk significantly and increased free cash flow every month (that should put you $5-6K per month ahead of where you were last year). Then I'd work on the mortgage, remember to deduct the mortgage you give up the stan...
by dharrythomas
Sat Jun 21, 2014 2:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: out of residency since 07 - please advise
Replies: 29
Views: 3879

Re: Life Strategy Funds vs. 3 Fund portfolio

Rex, How comfortable are you with the markets and managing money? If something happens to you, what is your wife's level of interest/knowledge? If this is your first 'real' investment, a balanced fund will hide some of the turbulence. That makes it easier for some folks to sleep at night. For a smal...
by dharrythomas
Sat Jun 21, 2014 2:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: Life Strategy Funds vs. 3 Fund portfolio
Replies: 13
Views: 2207

Re: Job loss

Sorry about the job loss. It's something I worry about. Looks like you need some type of job to cover expenses for several years or cut your expenses. There is nothing you can reasonably do with $1M that will cover your expenses. Leaving the funds in the 401(k) may give you some penalty free withdra...
by dharrythomas
Sat Jun 21, 2014 1:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: Job loss
Replies: 40
Views: 2552

Re: Developing a sound framework for optimal asset allocatio

I don't read too much previous work. I try to be original. That explains a great deal. Most professional researchers begin with a literature search. You'll make more progress if you understand what went before you and build on that rather than start from scratch. There was at one time a number of p...
by dharrythomas
Sun Jun 15, 2014 5:54 pm
 
Forum: Investing - Theory, News & General
Topic: Developing a sound framework for optimal asset allocation
Replies: 44
Views: 2878

Re: Article: 60/40 produces "same" return with ~half the ri

Of course returns are not constant and neither are investors. The sequence of returns makes a big difference in the final balance. The other thing that kills investors with 100% stocks is not being able to handle the turbulence particularly as balances increase. It's not the annual return that is th...
by dharrythomas
Sun Jun 08, 2014 2:26 pm
 
Forum: Investing - Theory, News & General
Topic: Article: 60/40 produces "same" return with ~half the risk
Replies: 46
Views: 5605

Re: Intra-Family Mortgage

We did it twice with my mother. She won't do stocks and I couldn't refinance our mortgage and after fees have it cost less while we were paying it off early. We did did a no cost refi, cut our interest cost, paid her a rate of interest much higher than her CDs, kept the same payment and cut the numb...
by dharrythomas
Sun Jun 08, 2014 1:45 pm
 
Forum: Investing - Help with Personal Investments
Topic: Intra-Family Mortgage
Replies: 32
Views: 2882

Re: Another Reason to Index

There is nothing inherently incompetent about a concentrated portfolio. Greater risk for greater potential reward. Most of us don't chose that path, but look at the Sequoia Fund. Greater concentration allowed for the possibility of market beating returns. If your ideas are good you only need a few. ...
by dharrythomas
Sat Jun 07, 2014 3:18 pm
 
Forum: Investing - Theory, News & General
Topic: Another Reason to Index
Replies: 26
Views: 2642

Re: Which is superior? Slice & Dice or [Total Market]?

You pay your money you take your chances. Most of the "experts" whose opinions I value consider the factors a RISK story, so not free money. Looking at markets from a world-wide historical perspective, returns and correlations vary and markets/ countries/ civilizations can collapse and not...
by dharrythomas
Sat Jun 07, 2014 11:49 am
 
Forum: Investing - Theory, News & General
Topic: Which is superior? Slice & Dice or [Total Market]?
Replies: 48
Views: 3825

Re: How much does cost matter? (Plotting ER vs. Alpha)

For an individual fund, you can think of Alpha as being variable and temporary. You should think about the expense ratio as being constant and permanent. While that model is not exact, it's close enough to the real world for a decision making model.
by dharrythomas
Sat Jun 07, 2014 11:26 am
 
Forum: Investing - Theory, News & General
Topic: How much does cost matter? (Plotting ER vs. Alpha)
Replies: 15
Views: 1188

Re: Am I thinking this correctly? Reinvesting in IRA's

Hunter1801,

Try to reword your question. If sscritic did't answer your question, then I don't understand what you asked.

You may be using the word "re-invest" imprecisely. If we understand the question we can try to help.

Harry
by dharrythomas
Fri Jun 06, 2014 10:23 pm
 
Forum: Investing - Theory, News & General
Topic: Am I thinking this correctly? Reinvesting in IRA's
Replies: 21
Views: 1284

Re: Interesting artcle on inflation and mortgages

How do you calculate into your spreadsheet the additional RISK of a fixed payment, even if it works for most people most of the time how does an individual account for the risk of unemployment. Many have drawn down retirement accounts to make debt payments. And it just seems to work that when people...
by dharrythomas
Sun Jun 01, 2014 7:38 am
 
Forum: Investing - Theory, News & General
Topic: Interesting artcle on inflation and mortgages
Replies: 14
Views: 1257

Re: Disclaiming a Roth IRA inheritance

Not bad. The PV calculations are only valid IF the parties stick to the RMD. Real life can skew the projections as can sequence of returns. Regardless if the kids let it compound longer and the rate of return is greater than inflation, any asset would be worth more to the kids. Are there generation ...
by dharrythomas
Sat May 31, 2014 10:50 am
 
Forum: Investing - Theory, News & General
Topic: Disclaiming a Roth IRA inheritance
Replies: 26
Views: 2231

Re: Should you be worried about record profit margins

Larry,

Thanks. Particularly for the reminder that if I see it and there are many articles written on it, it's probably priced in.

Harry
by dharrythomas
Sun May 25, 2014 9:27 pm
 
Forum: Investing - Theory, News & General
Topic: Should you be worried about record profit margins
Replies: 20
Views: 2282

Re: We won best paper from S&P SPIVA worldwide!

Rick,

Congratulations and thanks for what you do.

Harry
by dharrythomas
Fri May 23, 2014 8:42 pm
 
Forum: Investing - Theory, News & General
Topic: We won best paper from S&P SPIVA worldwide!
Replies: 39
Views: 3369

Re: The Three Fund Portfolio: "Make more money and worry les

Taylor,

The article is on target. Thank you for all you do.

Harry
by dharrythomas
Tue May 20, 2014 9:37 pm
 
Forum: Investing - Theory, News & General
Topic: The Three Fund Portfolio: "Make more money and worry less"
Replies: 8
Views: 2590

Re: Is the Vanguard Balanced Index Fund all I need?

If you are 38 with only $17K set aside and a modest income with no pension, I'd try to save 15%. A better way to calculate would be to figure out how much you want to have saved then calculate how much you need to save at your expected rate of return to reach your goal. I'd go with a lower than hist...
by dharrythomas
Fri May 16, 2014 10:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is the Vanguard Balanced Index Fund all I need?
Replies: 59
Views: 6138
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