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by dkturner
Sun May 24, 2015 8:09 am
Forum: Investing - Theory, News & General
Topic: another look at dividend paying stocks and valuations
Replies: 63
Views: 4211

Re: another look at dividend paying stocks and valuations

The higher dividend strategy and the dividend growth strategies used to work pretty well. Dividends have always been an important component of the returns you get from stocks. Higher dividends were often a sign of value and dividend growth was a sign of quality. Jeremy Siegel wrote a book called &q...
by dkturner
Sat May 23, 2015 7:12 pm
Forum: Investing - Theory, News & General
Topic: another look at dividend paying stocks and valuations
Replies: 63
Views: 4211

Re: another look at dividend paying stocks and valuations

On the other hand, if I don't trust management to be responsible reinvesting the money they would be using to pay the dividend( & thereby weaken the company's cash position), why should I trust them with any of my money? if you're into passive investing you will buy anything, regardless of its ...
by dkturner
Tue May 19, 2015 3:31 pm
Forum: Investing - Theory, News & General
Topic: Supreme Court rules in favor of 401k participants who object to high fees
Replies: 31
Views: 3048

Re: Supreme Court rules in favor of 401k participants who object to high fees

Well if revenue sharing will be a target for lawsuits, I would guess a majority of pension plans (defined contribution ) will lose lawsuits. I would imagine that our small business would simply close down our plan Why? transparency generates economic efficiency. We already contribute 20% of salary ...
by dkturner
Tue May 19, 2015 12:04 pm
Forum: Investing - Theory, News & General
Topic: Supreme Court rules in favor of 401k participants who object to high fees
Replies: 31
Views: 3048

Re: Supreme Court rules in favor of 401k participants who object to high fees

Does this mean as trustees, we cannot offer actively managed mutual funds? Or can we do so as long as we offer a menu of low cost index funds as well? We offer total stock, total bond and total international as well as vanguard REIT, TIPS and convertibles. We do not offer index funds for small cap ...
by dkturner
Mon Apr 20, 2015 12:52 pm
Forum: Investing - Theory, News & General
Topic: Bernstein: "If you've won the game, stop playing."
Replies: 146
Views: 15464

Re: Bernstein: "If you've won the game, stop playing."

When Bill Bernstein talks about investing in bonds he probably means short-term US Treasuries. Are those bonds risky? They were for my grandmother who lived as a widow (savings stopped when gramps died in 1970) from 1970-1991 and would only use short term "safe" fixed income investments. ...
by dkturner
Mon Apr 20, 2015 12:02 pm
Forum: Investing - Theory, News & General
Topic: Bernstein: "If you've won the game, stop playing."
Replies: 146
Views: 15464

Re: Bernstein: "If you've won the game, stop playing."

William Bernstein advises retirees and near-retirees to avoid investing in risky assets such as stocks, at least with money needed to provide an adequate income stream. Is anybody acting on this advice and what is your strategy? I am not acting on his advice. I view bonds as just as risky to my ret...
by dkturner
Fri Apr 17, 2015 10:15 am
Forum: Investing - Theory, News & General
Topic: Bernstein: "If you've won the game, stop playing."
Replies: 146
Views: 15464

Re: Bernstein: "If you've won the game, stop playing."

What happens if you've won the game and, ten years into retirement, the rules of the game change? Example: Social Security becomes means tested and the formula says you don't need the SS benefits you have relied on for a significant portion of your living expenses.
by dkturner
Tue Mar 31, 2015 11:37 am
Forum: Investing - Theory, News & General
Topic: Riddle Me This [Vanguard's bond target so far from Bogle's]
Replies: 10
Views: 1903

Re: Riddle Me This

Jack Bogle no longer controls what Vanguard recommends. I would not think that when a founder is no longer in control that the firm would continue on with the founder's line of thinking. Also, Mr. Bogle is not infallible. And neither are the folks working for Vanguard. Kahneman's Thinking, Fast &am...
by dkturner
Sat Mar 28, 2015 10:55 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri's 30 year market forecast 2015
Replies: 137
Views: 14711

Re: Rick Ferri's 30 year market forecast 2015

My 30 year market forecast... they will be up. Attempt any sense of accuracy and you're kidding yourself. I thing the real value of these exercises in predicting future return of various asset classes is the relative returns, not the numerical guesses. About all that can be said about numerical ret...
by dkturner
Fri Mar 27, 2015 4:07 pm
Forum: Investing - Theory, News & General
Topic: The Capitalism Distribution
Replies: 8
Views: 1336

Re: The Capitalism Distribution

I think this is one of the best arguments (besides the low cost thing) for owning a broad index fund like total stock market. From the article: 39% of stocks had a negative lifetime total return (2 out of every 5 stocks are a money losing investment) 18.5% of stocks lost at least 75% of their value...
by dkturner
Fri Mar 20, 2015 3:17 pm
Forum: Investing - Theory, News & General
Topic: The Most Likely Portfolio Peril — Inflation or Deflation?
Replies: 40
Views: 4075

Re: The Most Likely Portfolio Peril — Inflation or Deflation

I'm looking at an August 22, 1992 article (The zero option) I clipped from The Economist dealing with the impact of price stability on equity and bond returns. The article references research from Morgan Stanley covering the years 1871-1991 which breaks down price movements into deflation, price sta...
by dkturner
Fri Mar 20, 2015 12:59 pm
Forum: Investing - Theory, News & General
Topic: Managing Endowment Funds in a Bogleheaded Way
Replies: 3
Views: 531

Re: Managing Endowment Funds in a Bogleheaded Way

As a newish member of a non-profit's investment committee, I was recently surprised to get unanimous support for a change to a completely passive approach to managing our $10M endowment. As some of you know (and many would guess) these funds are almost always put in the hands of money management fi...
by dkturner
Fri Mar 20, 2015 10:11 am
Forum: Investing - Theory, News & General
Topic: Long-term performance of value vs cap-weighted index
Replies: 9
Views: 680

Re: Long-term performance of value vs cap-weighted index

There is a chart of Wellington vs SP500 total return from 1/1979 to 10/2014 http://remonsy.com/daily/vanguard-etf-funds/vanguard-wellington-analyzed/ The main difference is that Wellington did not participate in the "bubble" from 1990 to 2001, but it was on par with the SP500 in mid 2001....
by dkturner
Fri Mar 20, 2015 9:58 am
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 113
Views: 15294

Re: Is it time to give-up on TIPS?

Each year I wrestle with the same question.... what to leave alone vs consolidate - with regard to bonds as a safety net. For years I have held Vanguard TIPS (VIPSX) - for the ever looming interest rate increase... along with the Vanguard LT Bond (VWESX) - good times corp lending... and the Total B...
by dkturner
Wed Mar 18, 2015 4:10 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Accounting & Calculating Returns Accurately
Replies: 20
Views: 598

Re: Tax Loss Accounting & Calculating Returns Accurately

Here's an example taken from my situation. I have a tax loss carryover which has lasted for years and will last for several more years. I can only deduct $3,000 per year from my taxable income, which reduces my total tax liability by about $1,000 so I have an additional $1,000 per year of "fou...
by dkturner
Wed Mar 18, 2015 3:35 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Accounting & Calculating Returns Accurately
Replies: 20
Views: 598

Re: Tax Loss Accounting & Calculating Returns Accurately

Is it possible that you are overthinking the tax loss issue? Here's an example taken from my situation. I have a tax loss carryover which has lasted for years and will last for several more years. I can only deduct $3,000 per year from my taxable income, which reduces my total tax liability by about...
by dkturner
Wed Mar 18, 2015 2:47 pm
Forum: Investing - Theory, News & General
Topic: Why does this 3x ETF outperform?
Replies: 2
Views: 568

Re: Why does this 3x ETF outperform?

MIDU is a 3x mid cap ETF (3x the S&P midcap 400). It has far outperformed it's 3x weighting since inception (beginning 2009). I can't figure it out. The index is up about 200% MIDU is up about 960% Way more than 3x. Or is my math wrong? http://i59.tinypic.com/dwosbp.jpg Based on the chart you p...
by dkturner
Mon Mar 16, 2015 8:29 am
Forum: Investing - Theory, News & General
Topic: Why the popularity of dividends? What's the counterargument?
Replies: 70
Views: 5335

Re: Why the popularity of dividends? What's the counterargum

One of the concerns often posted on this website is the fear that an investor will panic during a serious stock market downturn and sell out at the bottom, because (s)he learned, belatedly, that (s)he was too aggressively invested. An investor who is focused on living primarily on the dividends and ...
by dkturner
Sat Mar 14, 2015 9:22 am
Forum: Investing - Theory, News & General
Topic: Russell 2000 underperformance
Replies: 7
Views: 1195

Re: Russell 2000 underperformance

You can't have negative Alpha in an index fund. Alpha measures the portfolio manager's active management over the index. In index funds there is no active management. I just ran IWM's alpha against the Russell 2k and got a alpha of -.02%. IWM's expense ratio is -.02%. Apparently you weren't around ...
by dkturner
Wed Mar 11, 2015 7:28 am
Forum: Investing - Theory, News & General
Topic: Bond credit risk is unique from equity risk
Replies: 12
Views: 1326

Re: Bond credit risk is unique from equity risk

Robert T references this paper in the "Collective Thoughts" sticky: Default Risk - most of the premium is explained by same factors that influence equity returns "We show that expected default accounts for a surprisingly small fraction of the premium in corporate rates over treasurie...
by dkturner
Wed Mar 11, 2015 6:10 am
Forum: Investing - Theory, News & General
Topic: Bernstein: 2% investment returns over next 20 years
Replies: 216
Views: 24569

Re: Bernstein: 2% investment returns over next 20 years

Anyone know bond returns from 1940 to 1970? Before inflation went crazy? For the period 1940-1970 investment grade corporate bonds provided an annualized nominal return of 2.3% and Treasury bonds returned 1.9%. That's the "good" news. CPI averaged 3.4% from 1940-1970, "before inflati...
by dkturner
Tue Mar 10, 2015 8:33 am
Forum: Investing - Theory, News & General
Topic: Bernstein: 2% investment returns over next 20 years
Replies: 216
Views: 24569

Re: Bernstein: 2% investment returns over next 20 years

Do we really think think the rate of return of sole-proprietorship local businesses can be all that different from that of public corporations? In the case of a local sole proprietorship probably not, but there is the issue of the "liquidity premium" with respect to private equity investm...
by dkturner
Sat Mar 07, 2015 10:28 am
Forum: Investing - Theory, News & General
Topic: New DOW Component
Replies: 40
Views: 2872

Re: New DOW Component

The DJIA is, as its name suggests, just an "average" and a somewhat strange one. However, stocks are stocks and the DJIA really isn't all that bad a measure of "the stock market." Yes, and the total return of the DJIA , the S&P 500 and the Wilshire 5000 are remarkably simila...
by dkturner
Wed Mar 04, 2015 4:19 pm
Forum: Investing - Theory, News & General
Topic: Fidelity Fixed Income
Replies: 10
Views: 1125

Re: Fidelity Fixed Income

eastwayroad wrote: Recently had a 1st time conversation with a Fidelity fixed income specialist to discuss my current bond holdings and future moves as I approach retirement. Though he was by no means trying to sell me on anything specific, I sensed a bias against ETF's/Funds and towards individual...
by dkturner
Wed Mar 04, 2015 12:44 pm
Forum: Investing - Theory, News & General
Topic: Ulysses Contract
Replies: 12
Views: 1377

Re: Ulysses Contract

Why would you want to prevent an investor from selling stocks if the stock market is going down? How would this have worked in late 1929?
by dkturner
Wed Mar 04, 2015 12:38 pm
Forum: Investing - Theory, News & General
Topic: Fidelity Fixed Income
Replies: 10
Views: 1125

Re: Fidelity Fixed Income

Recently had a 1st time conversation with a Fidelity fixed income specialist to discuss my current bond holdings and future moves as I approach retirement. Though he was by no means trying to sell me on anything specific, I sensed a bias against ETF's/Funds and towards individual corporate or muni ...
by dkturner
Wed Mar 04, 2015 11:19 am
Forum: Investing - Theory, News & General
Topic: Fiduciary duty - pending legislation
Replies: 7
Views: 902

Re: Fiduciary duty - pending legislation

In my mind, there's a fine line between rulemaking and legislation. Obama gave a speech at AARP last week supporting the fiduciary requirement change. So far as I can tell, there is not yet a current proposed rule to comment on. I would appreciate knowing when and how to comment. Personally, I woul...
by dkturner
Wed Mar 04, 2015 8:31 am
Forum: Investing - Theory, News & General
Topic: Fiduciary duty - pending legislation
Replies: 7
Views: 902

Re: Fiduciary duty - pending legislation

Pending legislation is out of bounds here, so expect a lock. On the other hand, "Should I look for a fiduciary advisor" is not about pending legislation. Mike Piper has these thoughts: http://www.obliviousinvestor.com/should-financial-advisors-be-fiduciaries/ L. Actually I believe the OP ...
by dkturner
Tue Mar 03, 2015 3:34 pm
Forum: Investing - Theory, News & General
Topic: Poll: Increasing international equities
Replies: 70
Views: 5566

Re: Poll: Increasing international equities

Started reinvesting dividends from domestic stock holding into international holdings last year - started A little too early.
by dkturner
Tue Mar 03, 2015 8:45 am
Forum: Investing - Theory, News & General
Topic: "Lessons Learned With Stocks Up 60% From the Precrash High"
Replies: 12
Views: 3602

Re: "Lessons Learned With Stocks Up 60% From the Precrash Hi

Its a good article, although if you do a little fiddling with measurement points, you find that the 60% increase also roughly applies if you step further back and measure from late spring early summer 2000. Over that time period, the annual return falls to about 3.3% or so. In any case, I'd like to...
by dkturner
Tue Mar 03, 2015 8:07 am
Forum: Investing - Theory, News & General
Topic: What's your average ER? [Expense Ratio]
Replies: 123
Views: 8094

Re: What's your average ER? [Expense Ratio]

.15

I like Vanguard's low cost actively managed funds.
by dkturner
Mon Mar 02, 2015 12:21 pm
Forum: Investing - Theory, News & General
Topic: [Vanguard] active funds are beating the passive index funds
Replies: 13
Views: 3008

Re: active funds are beating the passive index funds

Give it about 10 years and see how those "index beating" funds have done against their benchmarks. My prediction is that 75-80% of these funds will trail their benchmark indexes after all that time. The reasons? Incorrect buy/sell decisions, transaction costs, and management fees. As Mr. ...
by dkturner
Mon Mar 02, 2015 10:32 am
Forum: Investing - Theory, News & General
Topic: Yale Endowment Report 2014
Replies: 45
Views: 4989

Re: Yale Endowment Report 2014

This is an amazing thread. We have several of the usual suspects questioning the reported return on the private equity portion of Yale University's endowment fund which is clearly stated in the text of the annual report. Confusion is caused because the clumps of asset allocations seem to be similar ...
by dkturner
Sun Mar 01, 2015 8:31 am
Forum: Investing - Theory, News & General
Topic: Not "Staying the Course"
Replies: 40
Views: 5100

Re: Not "Staying the Course"

If the stock market were to drop, say 50%, like it has done twice in the last 15 years, I would be hard pressed to avoid raising my equity allocation from my 50% "target" to, say 65%. I would be inclined to do this despite my - former - resolve to never rebalance from bonds, only into bonds.
by dkturner
Fri Feb 27, 2015 10:35 am
Forum: Investing - Theory, News & General
Topic: NYT: "As Hedge Fund Returns Falter,..."
Replies: 21
Views: 1763

Re: NYT: "As Hedge Fund Returns Falter,..."

Total assets under management $1.9 million. 15-year total return -8.23%. 15-year investor return -10.70%. I always wonder about these funds with $1.9 million in assets... what are they like, really? What is the actual number of people investing in them? Nisi, you're an old timer. Don't you remember...
by dkturner
Wed Feb 25, 2015 11:42 am
Forum: Investing - Theory, News & General
Topic: Admiral Shares vs ETFs for stocks
Replies: 10
Views: 1006

Re: Admiral Shares vs ETFs for stocks

Other than the automatic contribution, what is the difference if I put $10k towards the mutual fund (VTSAX) vs the ETF version (VTI) ? Vanguard's Total Stock Market Admiral shares (VTSAX) have a $10k minimum purchase and an expense ratio of 0.05%. The ETF version of this (VTI) also has an expense r...
by dkturner
Tue Feb 24, 2015 11:59 am
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 72
Views: 5555

Re: Why Bonds With 20 Year Horizon?

For savings with a 20+ year horizon (i.e. I'm 35 and plan to retire at 65) why own any bonds? From the 1920s until today I haven't found a 20 year period where bonds beat stocks. Seems INCREDIBLY likely that stocks will beat bonds over any 20 year period in the next 50 years. This is assuming I can...
by dkturner
Tue Feb 24, 2015 11:15 am
Forum: Investing - Theory, News & General
Topic: Rebalancing vs. Timing the market
Replies: 23
Views: 1052

Re: Rebalancing vs. Timing the market

Once a year regardless of what is going on "in the market" during the year :happy If you balance once per year do you pick a particular day in advance (like your birthday, or the last day of October) or do you wait until there is a substantial movement of equities to the upside or downside?
by dkturner
Sat Feb 21, 2015 1:38 pm
Forum: Investing - Theory, News & General
Topic: Bonus for transferring accounts
Replies: 6
Views: 780

Re: Bonus for transferring accounts

livesoft wrote:There are a few risks:
1. If transferring from Vanguard, some Vanguard propopents will have less respect for you.


I'm not sure what Vanguard propopents are but I sure wouldn't want to get on the wrong side of one of them. :twisted:
by dkturner
Fri Feb 20, 2015 9:34 am
Forum: Investing - Theory, News & General
Topic: The 8x retirement savings rule
Replies: 83
Views: 8556

Re: The 8x retirement savings rule

Second, the 67yo above has reached $100K net salary (after tax), has $50K expenses, and (s)he retires because of that rule of thumb: • $100K x 8 = $800K • $50K expenses = 6.25% of $800K • NO ONE in their right mind today, for a likely 20+ year period (age 87+), should tell you to withdraw in retire...
by dkturner
Thu Feb 19, 2015 8:35 am
Forum: Investing - Theory, News & General
Topic: The 8x retirement savings rule
Replies: 83
Views: 8556

Re: The 8x retirement savings rule

William Bernstein says you've won the game when you have 25x your salary saved. Sounds like a great goal to me! 8-) Actually, I think he says you've won the game when you have 20-25X your residual living expenses saved. He defined residual living expenses as your retirement spending need less pensi...
by dkturner
Wed Feb 18, 2015 7:38 am
Forum: Investing - Theory, News & General
Topic: Calculating TIPS duration?
Replies: 6
Views: 462

Re: Calculating TIPS duration?

I'm trying to calculate the duration of some individual TIPS I own. The purpose of the exercise is to make sure the average duration of my total bond portfolio is within a range I find acceptable. I'm looking for a method that's approximately correct. Here's a prior thread on the general topic: htt...
by dkturner
Mon Feb 16, 2015 9:52 am
Forum: Investing - Theory, News & General
Topic: Mega backdoor: convince employer to allow after-tax contribs
Replies: 6
Views: 851

Re: Mega backdoor: convince employer to allow after-tax cont

I posted this in the Mega backdoor Roth thread , but it got lost in the other discussions. Anyone on this thread have worked as a benefits coordinator for 401k for their employer? My employer has an excellent 401k plan where they match 50% of my pre-tax contributions up to the federal max. However,...
by dkturner
Sun Feb 15, 2015 6:50 am
Forum: Investing - Theory, News & General
Topic: why stocks outperform other asset classes in the long run ?
Replies: 51
Views: 3776

Re: why stocks outperform other asset classes in the long ru

Please do not forget that stocks have been artificially manipulated since 2008, when the federal bailout took place, and after with multiple QEs. I have No trust in the so called "free stock market". And this is why stocks and index funds have not outperformed money markets, in my opinion...
by dkturner
Fri Feb 13, 2015 9:58 am
Forum: Investing - Theory, News & General
Topic: Seeking alpha is flawed. Ex-ante alpha must be 0.
Replies: 17
Views: 1461

Re: Seeking alpha is flawed. Ex-ante alpha must be 0.

knpstr wrote:
acegolfer wrote:Can you explain why one measures alpha?


Job security.


+1

If alpha isn't positive the model needs to be "tweaked" :wink:
by dkturner
Fri Feb 13, 2015 9:15 am
Forum: Investing - Theory, News & General
Topic: Seeking alpha is flawed. Ex-ante alpha must be 0.
Replies: 17
Views: 1461

Re: Seeking alpha is flawed. Ex-ante alpha must be 0.

Some investors (perhaps non BHs) calculate ex-post alpha using asset pricing models such as CAPM, 3-factor, 4-factor, etc. What's the objective? 1. If the model is correct, then ex-ante alpha for any security is 0. There's no alpha to seek. 2. If the model is wrong, then one is using a wrong model ...
by dkturner
Wed Feb 11, 2015 11:23 am
Forum: Investing - Theory, News & General
Topic: More evidence that we are dopey investors
Replies: 19
Views: 2104

Re: More evidence that we are dopey investors

Here’s more evidence that left to our own devices, we are dopey investors: I got a letter from my 457b deferred compensation plan (for public-sector employees in my state) yesterday. Of concern to the custodian/advisor, it said, was the outsized allocation of assets in the plan, by individual inves...
by dkturner
Wed Feb 11, 2015 11:05 am
Forum: Investing - Theory, News & General
Topic: 30 year tips auction: TBA 2/12 0.75% yield?
Replies: 39
Views: 3646

Re: 30 year tips auction: TBA 2/12 0.75% yield?

29 year tip yield @ 0.745%. looks like my yield forecast of 0.75% for the 30 year auction may be too low! 1% here we come??? Remember at auction the coupon yield is rounded down and the bonds is sold at a discount. If the non-competitive yield at the auction is .74 the resulting coupon will be 5/8 ...
by dkturner
Mon Feb 09, 2015 10:59 am
Forum: Investing - Theory, News & General
Topic: Currency-Hedged International Funds? Why?
Replies: 8
Views: 769

Re: Currency-Hedged International Funds? Why?

I've been seeing all these articles lately in the financial press (which is useless noise, I know) about currency hedged international funds. I don't get it. Doesn't that take away the whole point of international stocks providing portfolio diversification, in that they provide natural currency div...
by dkturner
Sat Feb 07, 2015 9:02 am
Forum: Investing - Theory, News & General
Topic: Mr. Bogle's current bond investing advice--what is it?
Replies: 27
Views: 4764

Re: Mr. Bogle's current bond investing advice--what is it?

Thank you for taking the time to post, Mike. It's great to hear Jack's thoughts. I can't say I would dive into a corporate bond index fund with mixed maturities that included LT issues, but I think the ST and IT corporate index funds that Vanguard rolled out in 2010 are wonderful low-cost options t...

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