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Re: Vanguard SV/SG funds vs. CRSP indexes

Don't know how this affects your result but Vanguard has a history of switching indexes making long term statistical analysis problematic ... S&P SmallCap 600 Value Index (formerly known as the S&P SmallCap 600/Barra Value Index) through May 16, 2003; MSCI US Small Cap Value Index through A...
by dkturner
Sat Sep 20, 2014 11:56 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard SV/SG funds vs. CRSP indexes
Replies: 7
Views: 597

Re: The Case Against Mid Caps? (Say it ain't so!)

It ain't so :!:

DFA's "large-cap" funds look a lot more like mid-cap funds than large-cap funds. I found it interesting that in his latest book Bill Bernstein recommends slice and dicers use mid-cap index funds for their large-cap allocations.
by dkturner
Sat Sep 20, 2014 9:34 am
 
Forum: Investing - Theory, News & General
Topic: The Case Against Mid Caps? (Say it ain't so!)
Replies: 22
Views: 2188

Re: AliBaba

Do you buy a company's stock just because you believe that it will go up in a short time period, or because you believe fundamentally that the company is good? If one of the largest companies on the planet isn't in any of the "total stock market" indices couldn't a committed total stock m...
by dkturner
Fri Sep 19, 2014 7:08 pm
 
Forum: Investing - Theory, News & General
Topic: AliBaba
Replies: 89
Views: 5236

Re: Proposed: 35% Maximum Bond Allocation, For Life

accbh wrote:
pkcrafter wrote:At that time he's 75 with 325k.

75 with 650k, actually. The assumption is that stocks will always rebound after a 15-year period.


If we were in Japan rather than the U.S. would we be making an assumption like this for planning purposes?
by dkturner
Thu Sep 18, 2014 7:14 am
 
Forum: Investing - Theory, News & General
Topic: Proposed: 35% Maximum Bond Allocation, For Life
Replies: 37
Views: 3704

Re: Randomly-weighted stock portfolios beat the index

You could use the average stock return as the benchmark. The idea being that the equal weight portfolio is the portfolio an investor should own if she really knew nothing (including knowing nothing about market cap). You should make sure that you are doing at least as well as the maximally clueless...
by dkturner
Tue Sep 16, 2014 5:01 pm
 
Forum: Investing - Theory, News & General
Topic: Randomly-weighted stock portfolios beat the index
Replies: 28
Views: 1989

Re: Randomly-weighted stock portfolios beat the index

The market is a bad benchmark? The market IS the market. What else are you going to use as a benchmark? Since the worst investors on the planet can get total market returns (less a small reduction for administrative expenses) it makes sense to use total market indices as benchmarks for determining ...
by dkturner
Tue Sep 16, 2014 12:36 pm
 
Forum: Investing - Theory, News & General
Topic: Randomly-weighted stock portfolios beat the index
Replies: 28
Views: 1989

Re: What's in your tax advantage accounts?

Tax advantaged accounts are invested about 65% in taxable bonds and 35% in stocks.

Taxable accounts are invested about 15% in tax-exempt bonds and 85% in stocks.
by dkturner
Mon Sep 15, 2014 8:32 am
 
Forum: Investing - Theory, News & General
Topic: What's in your tax advantage accounts?
Replies: 46
Views: 2441

Re: The dangerous practice of rebalancing...

Ignore the article except to poke fun at it. First rebalancing INTO risky assets during a falling market is exactly what you want to do. Its the best part of rebalancing. You are buying low! Would you, with a straight face, make this recommendation to a room full of Japanese investors? :annoyed
by dkturner
Sat Sep 13, 2014 8:52 am
 
Forum: Investing - Theory, News & General
Topic: The dangerous practice of rebalancing...
Replies: 182
Views: 12189

Re: "The Education of a Value Investor"

A "global" fund reflects *past* performance of global assets.... not the S&P 500. Are we EVER going to recognize that past data can be framed any which way we want? Were there any significant differences in the return of global stocks and U.S. Stocks during this roughly 17 year period...
by dkturner
Thu Sep 11, 2014 8:21 am
 
Forum: Investing - Theory, News & General
Topic: "The Education of a Value Investor"
Replies: 26
Views: 2564

Re: "The Education of a Value Investor"

A "global" fund reflects *past* performance of global assets.... not the S&P 500. Are we EVER going to recognize that past data can be framed any which way we want? Were there any significant differences in the return of global stocks and U.S. Stocks during this roughly 17 year period?
by dkturner
Thu Sep 11, 2014 8:00 am
 
Forum: Investing - Theory, News & General
Topic: "The Education of a Value Investor"
Replies: 26
Views: 2564

Re: Should I care about large cap value?

I was comparing the returns of U.S. large cap value compared to the S&P 500, and find that there's been little difference over the last 10-year and 15-year periods. The same seems to be true of EAFE large cap vs. EAFE LCV. Is there much of a value premium to be gained by holding LCV in a slice-...
by dkturner
Wed Sep 10, 2014 10:11 am
 
Forum: Investing - Theory, News & General
Topic: Should I care about large cap value?
Replies: 17
Views: 1197

Re: Citi: Just use leverage for 10% bond returns

http://www.bloomberg.com/news/2014-09-09/don-t-hate-credit-just-use-leverage-for-10-returns-says-citi.html Citibank has found an amazing solution for the problem of low interest rates in bonds: just use lots of leverage to get the return you want!! OK, so this was just an analyst report, I don't kn...
by dkturner
Wed Sep 10, 2014 6:20 am
 
Forum: Investing - Theory, News & General
Topic: Citi: Just use leverage for 10% bond returns
Replies: 28
Views: 2957

Re: 50-50 Wellesley-Wellington or Total Bond-Total Stock

As I understand it Wellesley has a neutral 35/65 equity/fixed income allocation while Wellington has a neutral 65/35 equity/fixed income allocation. How would an investor who would like a neutral 50/50 equity/fixed income allocation, in the Wellesley/Wellington investment style, go about constructi...
by dkturner
Mon Sep 08, 2014 7:31 am
 
Forum: Investing - Theory, News & General
Topic: 50-50 Wellesley-Wellington or Total Bond-Total Stock
Replies: 68
Views: 5384

Re: 50-50 Wellesley-Wellington or Total Bond-Total Stock

Personally, I'd pick either Wellesley or Wellington and add either a target date fund that gets you to the equity allocation you want or a life strategy fund that does the same. They don't have to be 50/50. Target date fund offer a lot of diversification in several areas not in W&W or TSM. +1 A...
by dkturner
Sun Sep 07, 2014 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: 50-50 Wellesley-Wellington or Total Bond-Total Stock
Replies: 68
Views: 5384

Re: A Primer on John Templeton

#4 seems to be anti-boglehead. In a sense the herd is the total market (index). It MAY be anti-Boglehead, but it's true. I believe that the large contingent of slicers and dicers who follow this forum would take exception to your comment. Slicers and dicers invest differently and have generated sup...
by dkturner
Fri Aug 29, 2014 7:45 am
 
Forum: Investing - Theory, News & General
Topic: A Primer on John Templeton
Replies: 28
Views: 2130

Re: invest only in vtsmx and total bond market index.

[color=#000080] Does John Bogle still recommend investing in the total stock market index fund and the total bond market index fund only Absolutely not![/u] [/i] (Anyone who thinks Jack's TSM/TBM recommendation hasn't changed hasn't been paying attention.) Jack now considers the Total Bond Market i...
by dkturner
Tue Aug 26, 2014 7:40 pm
 
Forum: Investing - Theory, News & General
Topic: invest only in vtsmx and total bond market index.
Replies: 8
Views: 1396

Re: Slice n Dicers: How much have you outperformed?

For what its worth, I ran a quick calculation, and have come up with the following numbers. . . Annualized returns of The seven fund Coffeehouse Investor Portfolio thru 12/31/13 Forgive me, Bill... the earliest edition I can find at abebooks of The Coffeehouse Investor: How to Build Wealth, Ignore ...
by dkturner
Sun Aug 24, 2014 5:03 pm
 
Forum: Investing - Theory, News & General
Topic: Slice n Dicers: How much have you outperformed?
Replies: 20
Views: 2489

Re: Defining "Stay the Course"

I'm merely curious why it's ok to deviate from one's IPS if there is a change which impacts only the deviatee but not ok if there is some kind of change which impacts the community in general. I've never heard it discussed. No hidden agenda with me. You said why wouldn't a Boglehead go beyond rebal...
by dkturner
Thu Aug 21, 2014 7:13 pm
 
Forum: Investing - Theory, News & General
Topic: Defining "Stay the Course"
Replies: 41
Views: 3739

Re: Defining "Stay the Course"

I'm merely curious why it's ok to deviate from one's IPS if there is a change which impacts only the deviatee but not ok if there is some kind of change which impacts the community in general. I've never heard it discussed. No hidden agenda with me. Because, if you change your asset allocation (red...
by dkturner
Thu Aug 21, 2014 10:47 am
 
Forum: Investing - Theory, News & General
Topic: Defining "Stay the Course"
Replies: 41
Views: 3739

Re: Defining "Stay the Course"

... Why does a change only have to be about YOU before it's actionable? What about a change in circumstances (i.e. PE10 hits 50) which arguably effects everybody? Why does the change in circumstances have to be personal before a Boglehead gets a pass from the stay the course mantra? Just curious :c...
by dkturner
Thu Aug 21, 2014 8:06 am
 
Forum: Investing - Theory, News & General
Topic: Defining "Stay the Course"
Replies: 41
Views: 3739

Re: Defining "Stay the Course"

I am a pretty consistent Boglehead with a plan and am good at mainly sticking to it. But I just had a job-related life event that suddenly changed my risk profile. As a result, I moved my 4% allocation of High Yield bond fund to intermediate bonds. I know there has been a flow recently out of high ...
by dkturner
Wed Aug 20, 2014 8:08 am
 
Forum: Investing - Theory, News & General
Topic: Defining "Stay the Course"
Replies: 41
Views: 3739

Re: Shiller on Lofty Market Elevations

grayfox wrote:
Maybe I split the difference and go 50/50. That sounds like a good wishy-washy solution.

:?: Which would you choose?


I'd go with 50/50 too. But then my favorite color is plaid.
by dkturner
Tue Aug 19, 2014 8:06 am
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 5020

Re: Market timing....Mark Hulbert

So to succeed at market timing, you need the perfect, enormous, one-time, never-to-be-repeated killing? Market timing on a smaller scale would probably be more like arbitrage, with repeated cycles of transactions. More like slowing losing your stake at the casino. :) Or, more like slowly generating...
by dkturner
Mon Aug 11, 2014 1:38 pm
 
Forum: Investing - Theory, News & General
Topic: Market timing....Mark Hulbert
Replies: 7
Views: 1236

Re: Dilbert Creator: If everyone indexed...

In a world with only passive investors, there would be much less trading than there is now, but far from zero trading. Index funds generally have turnover of at least a few percent per year. However, at least for market-cap weighted index funds, that trading is not based on perceived value of that ...
by dkturner
Thu Aug 07, 2014 3:48 pm
 
Forum: Investing - Theory, News & General
Topic: Dilbert Creator: If everyone indexed...
Replies: 28
Views: 3276

Re: Reliability of stock data prior to 1939?

One major difference with the Russell data is that the standard deviation of the returns for both large and small "value" stocks is lower than the SD for both large and small "growth" stocks. The CRSP data for 1927-1978 shows the the opposite SD result. This is undoubtedly relat...
by dkturner
Mon Aug 04, 2014 10:20 am
 
Forum: Investing - Theory, News & General
Topic: Reliability of stock data prior to 1939?
Replies: 14
Views: 880

Re: Reliability of stock data prior to 1939?

I had always been suspicious of the old data as well. My concerns were related to documenting the existence of the various "premiums", such as the "value" premium and small-cap premium. I satisfied myself that the old data was reliable in documenting the existence of both of the...
by dkturner
Mon Aug 04, 2014 7:07 am
 
Forum: Investing - Theory, News & General
Topic: Reliability of stock data prior to 1939?
Replies: 14
Views: 880

Re: Reliability of stock data prior to 1939?

I had always been suspicious of the old data as well. My concerns were related to documenting the existence of the various "premiums", such as the "value" premium and small-cap premium. I satisfied myself that the old data was reliable in documenting the existence of both of thes...
by dkturner
Sun Aug 03, 2014 12:13 pm
 
Forum: Investing - Theory, News & General
Topic: Reliability of stock data prior to 1939?
Replies: 14
Views: 880

Re: Dividend Growth Investing vs Index Funds

In a nutshell: * An index investor wouldn't pick VIG, we'd pick VTI (total stock market etf) at 0.05% fees. That's $250 not $650. * I haven't poked around enough to figure out if this is all taxable, but if so he's paying double the dividend taxes each year. That's an extra $1750. This is massively...
by dkturner
Thu Jul 24, 2014 4:52 pm
 
Forum: Investing - Theory, News & General
Topic: Dividend Growth Investing vs Index Funds
Replies: 14
Views: 1264

Re: Adding Corporates to Total Bond Market Index

Yes, but you sacrifice considerable return by insisting on wearing both a belt and suspenders. Actually you don't. Buy removing corporates and increasing treasuries you can reduce your total bond allocation and increase your equity allocation while maintaining the same "risk" in your port...
by dkturner
Thu Jul 17, 2014 10:58 am
 
Forum: Investing - Theory, News & General
Topic: Adding Corporates to Total Bond Market Index
Replies: 76
Views: 7047

Re: Adding Corporates to Total Bond Market Index

Yes, but you sacrifice considerable return by insisting on wearing both a belt and suspenders. What's wrong with tilting to corporates then increasing exposure to Treasuries when spreads widen by _____ basis points (you fill in the blank)? p.s. It's ok to keep a helmet around the house for those oc...
by dkturner
Wed Jul 16, 2014 11:37 am
 
Forum: Investing - Theory, News & General
Topic: Adding Corporates to Total Bond Market Index
Replies: 76
Views: 7047

Re: Adding Corporates to Total Bond Market Index

The counter argument to this, and it is a pretty sound one, is that rather than tilting more towards corporates instead slightly increase your stock allocation if you need more "yield" - i.e. return. Recall especially how corporates, even highly rated ones, behave in a crisis. They tank. ...
by dkturner
Wed Jul 16, 2014 8:43 am
 
Forum: Investing - Theory, News & General
Topic: Adding Corporates to Total Bond Market Index
Replies: 76
Views: 7047

Re: Total Market Index Fund Portfolio.

I have 19 years of very accurate performance statistics for my, mostly, Vanguard portfolio. Using Excel formula XIRR it shows that I have outperformed a comparable portfolio of Vanguard Total Market funds (the "no brainer" portfolio) by an annualized 162 basis points for the 19 year perio...
by dkturner
Tue Jul 15, 2014 7:17 pm
 
Forum: Investing - Theory, News & General
Topic: Persistence of SV performance
Replies: 71
Views: 3963

Re: Persistence of SV performance

Question for the board... if 20 years from now the DFA small cap value fund has a 20 year annual return 3 or 4% lower than the S&P 500, what would that mean for the small cap value framework? Over the next 20 years TSM (or S&P 500) mathematically cannot do worse than the aggregate market......
by dkturner
Tue Jul 15, 2014 1:35 pm
 
Forum: Investing - Theory, News & General
Topic: Persistence of SV performance
Replies: 71
Views: 3963

Re: [Poll] How often do you re-balance?

My largest account is a rollover IRA which is currently 100% invested in the Vanguard Wellesley Income Fund, so the answer is either daily or never. There was no daily rebalancing option so I voted for less often than yearly.
by dkturner
Tue Jul 15, 2014 5:51 am
 
Forum: Investing - Theory, News & General
Topic: [Poll] How often do you re-balance?
Replies: 25
Views: 2276

Re: Imputed income (rent) Owner occupied houses.

What happens when you're an owner occupant but decide to rent out a spare bedroom for what would equate to slightly > than 5% of the capital value of the home? I imagine one could either (1) increase the value of the "imputed" rent, or (2) use the newly acquired cash rent to reduce occupa...
by dkturner
Mon Jul 14, 2014 12:28 pm
 
Forum: Investing - Theory, News & General
Topic: Imputed income (rent) Owner occupied houses.
Replies: 21
Views: 2425

Re: Imputed income (rent) Owner occupied houses.

In coastal California, with insane land values, a landlord is lucky to get 1/2% per month in rent. In northern Illinois, due to the still depressed real estate market, a landlord can easily get 2% per month for a condo rental, although 25% of that could be eaten up by condo association fees. Ralph ...
by dkturner
Sat Jul 12, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: Imputed income (rent) Owner occupied houses.
Replies: 21
Views: 2425

Re: Imputed income (rent) Owner occupied houses.

Playing around with bogus "asset allocation" that ignores the largest asset is simply silly. The Boglehead mind functions best when dealing with stuff which has an exact known monetary value at any given time. We don't do housing or pension values very well. It is of course the classic di...
by dkturner
Sat Jul 12, 2014 10:10 am
 
Forum: Investing - Theory, News & General
Topic: Imputed income (rent) Owner occupied houses.
Replies: 21
Views: 2425

Re: Imputed income (rent) Owner occupied houses.

Professor Emeritus wrote:Playing around with bogus "asset allocation" that ignores the largest asset is simply silly.


The Boglehead mind functions best when dealing with stuff which has an exact known monetary value at any given time. We don't do housing or pension values very well.
by dkturner
Sat Jul 12, 2014 7:11 am
 
Forum: Investing - Theory, News & General
Topic: Imputed income (rent) Owner occupied houses.
Replies: 21
Views: 2425

Re: What gives with these low returns?

Active management is why, they got to greedy more than likely. But active management earned them index beating returns over the last 20 years. Even counting the last 5 years they are way ahead of where they would be had they followed an indexing strategy over the long term. I thought indexing was a...
by dkturner
Fri Jul 04, 2014 3:42 pm
 
Forum: Investing - Theory, News & General
Topic: What gives with these low returns?
Replies: 17
Views: 1589

Re: Do Wellesley's Equities Outperform?

With regard to the Wellesley and Wellington funds, I'm still waiting for that time to arrive when their outstanding past performance ceases to predict their future results. While you're waiting are you going to take advantage of the W&W "premium" or invest in Vanguards lower returning...
by dkturner
Thu Jul 03, 2014 2:34 pm
 
Forum: Investing - Theory, News & General
Topic: Do Wellesley's Equities Outperform?
Replies: 41
Views: 4935

Re: Buffett chooses S&P 500

In Berkshire Hathaway's recent yearly letter, Mr. Buffett stated that if he died, he would leave instructions for his wife to invest 90% of their money in a S&P 500 index. Why would he choose a S&P 500 index over a total US stock market index? Based on the numerous financial blogs I read, m...
by dkturner
Thu Jun 19, 2014 11:21 am
 
Forum: Investing - Theory, News & General
Topic: Buffett chooses S&P 500
Replies: 16
Views: 2653

Re: Would any number make you change your asset allocation?

chaz wrote:I stay the course.


I prefer valuation driven capital redeployment
by dkturner
Sun Jun 15, 2014 11:56 am
 
Forum: Investing - Theory, News & General
Topic: Would any number make you change your asset allocation?
Replies: 58
Views: 3517

Re: "Is Bogle Befuddling?"

Mr. Bogle's issues with TBM aren't based on the differences between Treasury and agency debt, they are concerned with the lower yields of "government" debt vs investment grade corporate debt.
by dkturner
Sat Jun 14, 2014 8:46 pm
 
Forum: Investing - Theory, News & General
Topic: "Is Bogle Befuddling?"
Replies: 57
Views: 7283

Re: What happened if you had used CAPE to time the market?

chaz wrote:Bogleheads avoid market timing.


But they like to talk about it endlessly - sort of like clergymen and sin.
by dkturner
Thu Jun 12, 2014 9:55 am
 
Forum: Investing - Theory, News & General
Topic: What happened if you had used CAPE to time the market?
Replies: 20
Views: 1765

Re: "Is Bogle Befuddling?"

That's why I was asking if it makes sense to buy the corporate bond index instead of rebalancing to total bond index since the comments seemed to indicate that. Is that what Bogle was saying ? Mr. Bogle was addressing the unusually low yield of U.S. Government securities. Increasing portfolio yield...
by dkturner
Mon Jun 02, 2014 2:31 pm
 
Forum: Investing - Theory, News & General
Topic: "Is Bogle Befuddling?"
Replies: 57
Views: 7283

Re: An astonishing record – of complete failure (FT Article)

An old joke about economics professors is that the questions on their exams never change - only the
answers do.
by dkturner
Sun Jun 01, 2014 10:48 am
 
Forum: Investing - Theory, News & General
Topic: An astonishing record – of complete failure (FT Article)
Replies: 7
Views: 2543

Re: Can we defend a 4% Safe Withdrawal Rate?

An appropriate SWR is largely dependent on the relative value of your portfolio on your actual retirement date. A realistic SWR for an individual who retired in October of 2007 would be much lower than a SWR for someone who retired in March of 2009. Prudence would dictate using a conservative assump...
by dkturner
Mon May 26, 2014 7:18 am
 
Forum: Investing - Theory, News & General
Topic: Can we defend a 4% Safe Withdrawal Rate?
Replies: 62
Views: 5538

Re: What exactly is risk-adjusted return?

Does anybody here know what method John Bogle uses to get a risk-adjusted return? He alluded to it in his lecture on Telltale Charts, but he didn't elaborate. I have heard him say something to the effect that: "one extra point of total return is priceless, one extra point of standard deviation...
by dkturner
Thu May 01, 2014 3:14 pm
 
Forum: Investing - Theory, News & General
Topic: What exactly is risk-adjusted return?
Replies: 71
Views: 2613

Re: Are Historical Returns Irrelevant?

pkcrafter wrote:As time goes on, say 20 years, you have index funds outperforming about 80% of active funds


I wonder what the percentage is for Vanguard active funds? Has anyone seen any statistics?
by dkturner
Thu May 01, 2014 11:07 am
 
Forum: Investing - Theory, News & General
Topic: Are Historical Returns Irrelevant?
Replies: 44
Views: 2967

Re: CORRECTION

virtually ALL of the major DFA equity funds have performed amazingly well since inception. In May, 2000, Morningstar's Research Director, John Rekenthaler, conducted an 18 year comparative study of DFA vs. Vanguard. He concluded: "Vanguard in a landslide." Why Investing Isn't Engineering ...
by dkturner
Wed Apr 30, 2014 4:36 pm
 
Forum: Investing - Theory, News & General
Topic: Fama/French Factors: "A Come-to-Buffet Moment" (from M*)
Replies: 74
Views: 4799
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