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Re: What's your one big takeaway from the Crash of 2008?

As a followup question, how is it possible that an ETF like BND got thru this period pretty much unscathed (except for a downward spike in Oct 2008 that quickly recovered)? I wonder what the composition of BND was at the time. Hi Tamales, Much of the Vanguard Total Bond Fund (BND and VBMFX) was in ...
by docneil88
Thu Sep 25, 2014 2:27 am
 
Forum: Investing - Theory, News & General
Topic: What's your one big takeaway from the Crash of 2008?
Replies: 310
Views: 45138

Re: What evidence would prove the Boglehead mentality wrong?

There is no evidence you can present to convince them that you are beating the indexes (your active beats their passive) that they cannot explain away. 40 or 50 years is not a long enough time frame to convince them that it isn't just chance- so you flipped heads 6 out of 10 times for the past 40 y...
by docneil88
Sat Sep 20, 2014 3:03 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 15218

Re: What evidence would prove the Boglehead mentality wrong?

I don't believe the typical Boglehead would ever accept any evidence that they are wrong. They have already made up their minds. Hi BradMajors, The paper I referenced above, "The Arithmetic of Active Investing," presents a rather convincing argument to support the claim [believed by pract...
by docneil88
Thu Sep 18, 2014 6:30 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 15218

Re: What evidence would prove the Boglehead mentality wrong?

Doing nothing is not always cheaper than doing something. If you have a leaky roof, and don't fix it to save money, eventually you will have a rotted frame. Doing no research can lead one to invest in companies that lose money. In this case that is worse than doing research, realizing the company l...
by docneil88
Thu Sep 18, 2014 6:02 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 15218

Re: What evidence would prove the Boglehead mentality wrong?

And that is because the costs for the average actively managed dollar are higher, even in the pendulum-swing scenario above. Is this true? If an index is a zombie index, and it's obvious to Joe-on-the-street, Joe doesn't need to do much research, or even rumination, to figure out how to invest more...
by docneil88
Thu Sep 18, 2014 4:57 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 15218

Re: What evidence would prove the Boglehead mentality wrong?

Index funds rely on the price discovery performed by active traders. If no one actively traded and if everyone stopped doing research and due diligence, the index would zombify. At that point active investing would outperform index investing. Active investors and passive investors are symbiotic. If...
by docneil88
Thu Sep 18, 2014 2:55 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 212
Views: 15218

Re: IRS: bitcoins are property for tax purposes in U.S.

Speaking as a person familiar with both software and hardware, a digital computer is just an analog computer simulating a digital computer. PJW For those interested, here's a thread I started which I believe helps explains this idea: The dependence of digital upon analog http://www.bogleheads.org/f...
by docneil88
Mon Aug 18, 2014 2:08 am
 
Forum: Investing - Theory, News & General
Topic: IRS: bitcoins are property for tax purposes in U.S.
Replies: 28
Views: 2781

Re: Dilbert Creator: If everyone indexed...

If there were no trading, I wonder if some stocks would have value at all. You certainly aren't buying Brk.A for the dividend. 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...
by docneil88
Thu Aug 07, 2014 2:32 pm
 
Forum: Investing - Theory, News & General
Topic: Dilbert Creator: If everyone indexed...
Replies: 28
Views: 3292

Dilbert Creator: If everyone indexed...

Scott Adams, who created Dilbert, has an MBA in economics and management from UC Berkeley. Here are some excerpts of his musings from The Scott Adams Blog dated August 4, 2014 ( http://www.dilbert.com/blog/entry/how_to_make_more_money_in_stocks/) : An investment advisor needs to justify his pay, and...
by docneil88
Thu Aug 07, 2014 1:44 pm
 
Forum: Investing - Theory, News & General
Topic: Dilbert Creator: If everyone indexed...
Replies: 28
Views: 3292

Re: Larry Swedroe Q: sequence risk

...don't you face a risk that SV will underperform during a critical period, such as the end of the saver's timeframe or the beginning of the retiree's? Don't you face more "sequence risk" with a smaller group of asset classes in you portfolio? Malcolm Hi mlewis, Those risks can be largel...
by docneil88
Fri Jun 13, 2014 3:52 am
 
Forum: Investing - Theory, News & General
Topic: Larry Swedroe Q: sequence risk
Replies: 5
Views: 944

Re: Ordering Rules at Market Open

Related questions: If one places an order before the open, does it matter in any way how soon before the open the order is placed? For example, is there any queue-related or price advantage or disadvantage to placing an order 10 hours before the open vs. 5 hours vs. 1 minute? Thanks. Best, Neil
by docneil88
Sat Mar 22, 2014 5:37 pm
 
Forum: Investing - Theory, News & General
Topic: Ordering Rules at Market Open
Replies: 10
Views: 987

Re: S&P 500 10-Yr Expected Equity Risk Premium

http://www.aqr.com/Portals/1/ResearchPapers/ShillerPECommentary_AQRCliffAsness.pdf Thanks billjohnson for that excellent link. Here's a key chart from from the article (Shiller PE = PE10): http://greenbackd.files.wordpress.com/2013/03/asness-shiller-pes.jpg Hi manwithnoname, One purpose of my post ...
by docneil88
Wed Mar 12, 2014 3:00 pm
 
Forum: Investing - Theory, News & General
Topic: S&P 500 10-Yr Expected Equity Risk Premium
Replies: 7
Views: 1178

Re: How to Predict the Next Decade's Bond Returns

The title of the article is "How to Predict the Next Decade's Bond Returns: Current Yields Are a Good Indicator of What You Will Earn Over Time" by Chris Gay, WSJ, March 3, 2014. It's brief, but makes some important points. The quote in the original post is a paraphrase of John Bogle. If y...
by docneil88
Mon Mar 10, 2014 9:14 pm
 
Forum: Investing - Theory, News & General
Topic: How to Predict the Next Decade's Bond Returns
Replies: 2
Views: 556

Re: Stock pickers' market?

The Wall Street Journal has an article today wherein some market analysts suggest that we are now in a stock pickers' market. They point to statistics which suggest that the correlation between movements in the S&P 500 index and its' component stocks is declining and therefore actively managed ...
by docneil88
Mon Mar 10, 2014 8:42 pm
 
Forum: Investing - Theory, News & General
Topic: Stock pickers' market?
Replies: 19
Views: 1227

Re: S&P 500 10-Yr Expected Equity Risk Premium

This is a common observation, but the point of using something like PE10 is to smooth out economic cycles. It is unclear that the recent economic crisis was just part of the "cycle" in the relevant sense, so unclear how reliable PE10 is in such circumstances. My own preferred way for thin...
by docneil88
Mon Mar 10, 2014 6:38 pm
 
Forum: Investing - Theory, News & General
Topic: S&P 500 10-Yr Expected Equity Risk Premium
Replies: 7
Views: 1178

S&P 500 10-Yr Expected Equity Risk Premium

Calculating S&P 500 10-Yr Expected Annualized Equity Risk Premium (ERP) over 10-Year US Treasury Bonds Four Key Premises: (1) The expected S&P 500 ERP over 10-Year Treasury Bonds is more important and relevant to a long-term investor than the expected ERP over 3-Month T-Bills. (2) Because e...
by docneil88
Mon Mar 10, 2014 5:57 pm
 
Forum: Investing - Theory, News & General
Topic: S&P 500 10-Yr Expected Equity Risk Premium
Replies: 7
Views: 1178

Re: Benjamin Graham thinks current S&P valuations are reason

I also don't understand why you see a move into cash as a protection against unexpected inflation. If that's your concern, you should be holding TIPS. In fact, the move into cash to me seems to be one of the biggest risk increasing parts of your scheme, since it is a guaranteed real loss and since ...
by docneil88
Sun Mar 09, 2014 3:44 pm
 
Forum: Investing - Theory, News & General
Topic: Benjamin Graham thinks current S&P valuations are reasonable
Replies: 54
Views: 7687

Re: Basic Efficient Market Theory Q

Actually, I think you are quite right theoretically and that index investors are a source of noise in an efficient market because they are buying and (during retirement) selling stocks and thereby affecting the pricing of stocks without using any information related to the value of the individual s...
by docneil88
Sun Mar 09, 2014 2:24 am
 
Forum: Investing - Theory, News & General
Topic: Basic Efficient Market Theory Q
Replies: 23
Views: 1746

Re: The Stock Market's Relentless Bid, Explained

http://finance.yahoo.com/blogs/the-exchange/the-stock-market-s-relentless-bid--explained-163536177.html by Josh Brown Yes, a greater proportion of money is going into index funds and managed accounts with assets under management (AUM) fees. But one cannot conclude from that that there will be a rel...
by docneil88
Sat Mar 08, 2014 11:35 pm
 
Forum: Investing - Theory, News & General
Topic: The Stock Market's Relentless Bid, Explained
Replies: 22
Views: 2985

Re: The Stock Market's Relentless Bid, Explained

this ties into something i mentioned in another thread.. if everyone woke up tomorrow a boglehead, and implemented a buy-and-hold index fund strategy, i feel like something terrible would happen, economically speaking. i have no evidence to support that though. And the answer is the same as always....
by docneil88
Sat Mar 08, 2014 11:31 pm
 
Forum: Investing - Theory, News & General
Topic: The Stock Market's Relentless Bid, Explained
Replies: 22
Views: 2985

Re: "The Stock Market's Relentless Bid, Explained"

duplicate thread. Hi ERMD, You're right, the other thread is here: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=134496&newpost=1984277. Sorry. Before starting my thread, I did a search for the author's name "Josh Brown" within bogleheads.org, and this article didn't come u...
by docneil88
Sat Mar 08, 2014 11:22 pm
 
Forum: Investing - Theory, News & General
Topic: "The Stock Market's Relentless Bid" Duplicate Thread--ended
Replies: 3
Views: 1014

"The Stock Market's Relentless Bid" Duplicate Thread--ended

"The Stock Market's Relentless Bid, Explained" by Josh Brown, CEO of Ritholz Wealth Management and commentator on CNBC's Fast Money http://finance.yahoo.com/blogs/the-exchange/the-stock-market-s-relentless-bid--explained-163536177.html Excerpts from the article: ...In 2005, fee-based accou...
by docneil88
Sat Mar 08, 2014 11:10 pm
 
Forum: Investing - Theory, News & General
Topic: "The Stock Market's Relentless Bid" Duplicate Thread--ended
Replies: 3
Views: 1014

Re: Can Vanguard Become Too Big?

While Vanguard's secular growth continues, its periods of net-fund-outflows are minimized in length and size. This increases the likelihood that 50 years from now, unrealized gains in Vanguard's low turnover index funds will be a massive percentage of the fund. And some of those gains will be 50 yea...
by docneil88
Fri Mar 07, 2014 6:17 am
 
Forum: Investing - Theory, News & General
Topic: Can Vanguard Become Too Big?
Replies: 24
Views: 3821

Re: Can Vanguard Become Too Big?

Yes. Vanguard can become too big. All of the math that says that chasing alpha doesn't matter and you shouldn't do it depends on other people chasing alpha. If no one else is chasing alpha, then indexing becomes the wrong thing to do, and stock picking is the way to achieve maximum return. No matte...
by docneil88
Fri Mar 07, 2014 6:02 am
 
Forum: Investing - Theory, News & General
Topic: Can Vanguard Become Too Big?
Replies: 24
Views: 3821

Re: How much is a fair hourly fee?

Assume you or someone you know wants professional investment help and is willing to pay an hourly fee plus expenses (similar to the billing arrangements of an attorney). What do you think a fair hourly fee would be? I'm going to throw out a number that I believe is a fair starting point for this co...
by docneil88
Sun Mar 02, 2014 9:57 pm
 
Forum: Investing - Theory, News & General
Topic: How much is a fair hourly fee?
Replies: 86
Views: 5165

Re: Maximum upside of bonds?

The US 10-year note yield has never gone negative. So that limits the upside price of a 10-year. There's also the maximum downside to consider. The US 10-year note yield reached over 14% in 1982. That would wreak utter havoc on prices. And it's not inconceivable that the US government credit quality...
by docneil88
Tue Feb 18, 2014 8:11 pm
 
Forum: Investing - Theory, News & General
Topic: Maximum upside of bonds?
Replies: 14
Views: 1332

Re: "How Vanguard Funds Stacked Up"

The Vindication of Simplicity! Simple in the way that a computer's graphical user interface is simple: simple for the user/customer, but that masks a deep complexity beneath the surface. For example, if you buy a single fund, the Vanguard Total Stock Market Index Fund ( VTSMX and VTI ) (the world's...
by docneil88
Fri Feb 07, 2014 12:29 am
 
Forum: Investing - Theory, News & General
Topic: "How Vanguard Funds Stacked Up"
Replies: 16
Views: 2529

Re: Jason Zweig: When a Giant Gain Causes Pain

Levett wrote:Conjugal allocation.

Ha! Or perhaps "love and friendship allocation." Don't direct too much of your emotional energy towards one person. Faithful marriage can be wonderful, but be sure to have some close friends and perhaps one or more beloved children or grandchildren.
by docneil88
Mon Feb 03, 2014 11:09 pm
 
Forum: Investing - Theory, News & General
Topic: Jason Zweig: When a Giant Gain Causes Pain
Replies: 14
Views: 2784

Re: misguided interest in div strategies

in http://seekingalpha.com/article/1900721-misguided-interest-in-dividend-paying-stocks : DFA's March 2013 study, "Global Dividend-Paying Stocks: A Recent History," studied the data from 23 developed markets over the period 1991-2012. The following is a summary of their findings: The simp...
by docneil88
Mon Feb 03, 2014 1:42 am
 
Forum: Investing - Theory, News & General
Topic: misguided interest in div strategies
Replies: 200
Views: 15800

Re: Jason Zweig: When a Giant Gain Causes Pain

Levett wrote:As Terrance Odean, a behavioral-finance professor at the University of California, Berkeley, puts it: “Investors should diversify emotionally as well as financially."

Is Odean making an argument for polygamy?
by docneil88
Tue Jan 28, 2014 3:47 am
 
Forum: Investing - Theory, News & General
Topic: Jason Zweig: When a Giant Gain Causes Pain
Replies: 14
Views: 2784

Coverage for funds stolen via unauthorized transactions

I am in search of an insurance policy that will cover at least $1 million of funds stolen via unauthorized/fraudulent transactions in my accounts. I know that US financial institutions often cover such losses for their customers, but what about cases in which they, for whatever reason, do not. I wan...
by docneil88
Fri Jan 17, 2014 10:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: Coverage for funds stolen via unauthorized transactions
Replies: 0
Views: 206

Re: Commodities Funds: A Decade of Disaster

What would be a good fund or ETF that represents 'global commodity producers'? I am currently looking at GNR, are there any other comparable ones? Vanguard's funds seem to be either Energy or Precious Metals centric, that too within US. Fidelity recently introduced some sector specific ETF's but th...
by docneil88
Sun Dec 22, 2013 8:58 pm
 
Forum: Investing - Theory, News & General
Topic: Commodities Funds: A Decade of Disaster
Replies: 196
Views: 13761

Re: Commodities Funds: A Decade of Disaster

Careful: what you're describing is not realized contango, but something else, what some call "trader's contango," the difference between the *current* spot and the current futures price. But that's not what counts, which is realized contango: the difference between the *future* spot and t...
by docneil88
Sun Dec 22, 2013 8:14 pm
 
Forum: Investing - Theory, News & General
Topic: Commodities Funds: A Decade of Disaster
Replies: 196
Views: 13761

Re: residential real estate as an investment,

100% sure residential real estate gets you better return than market under these conditions: * you buy 20% under market after all rehab costs * 20% leverage with fixed rate loan * 2-3% positive spread between net rent and mortgage interest, including management fee allowance and capital reserve all...
by docneil88
Fri Dec 20, 2013 5:47 am
 
Forum: Investing - Theory, News & General
Topic: residential real estate as an investment,
Replies: 78
Views: 7954

Re: residential real estate as an investment,

In my opinion stocks come pre-leveraged, whereas with real estate you have to do it yourself. Agreed, though with a 20% down payment on a home, one's leverage upon purchase is 5 to 1. Only a small percentage of stocks have built-in leverage that high or higher. (My measure of the true built-in leve...
by docneil88
Thu Dec 12, 2013 3:32 am
 
Forum: Investing - Theory, News & General
Topic: residential real estate as an investment,
Replies: 78
Views: 7954

Re: Is there a new size of small, mid and large caps???

According to Morningstar's "style box" methodology, they use a floating system that's designed to avoid being significantly affected by market movements: Rather than a fixed number of "large cap"or "small cap" stocks, Morningstar uses a flexible system that isn't adver...
by docneil88
Sat Dec 07, 2013 3:02 am
 
Forum: Investing - Theory, News & General
Topic: Is there a new size of small, mid and large caps???
Replies: 4
Views: 510

Re: The 'Hold Bonds to Maturity' Problem

As Bogleheads often write, bond funds are equivalent to rolling ladders of the same credit quality and average duration. Assets have market values, whether or not their owners want to pay attention to them. Posters who claim they're avoiding risk by buying and rolling a ladder with each bond held t...
by docneil88
Mon Dec 02, 2013 9:02 pm
 
Forum: Investing - Theory, News & General
Topic: The 'Hold Bonds to Maturity' Problem
Replies: 65
Views: 3413

Testosterone, Cortisol, and Investing

Just read an interesting 2011 article from The Economist (I searched bogleheads.org and didn't find any prior reference to it): "Rogue Hormones" http://www.economist.com/node/21530111 , and here's an excerpt talking about research by John Coates, a neuroscientist at Cambridge University an...
by docneil88
Mon Dec 02, 2013 12:04 am
 
Forum: Investing - Theory, News & General
Topic: Testosterone, Cortisol, and Investing
Replies: 4
Views: 600

Re: Bill Bernstein: "Take risk off the table"

Even Dr. Bill is noticing the market craziness these days: And if you’re like me, you like leaning even more against the wind, so that when you see valuations like this, you want your equity allocation to be less than it was two years ago. So if you were 55 percent/45 percent two years ago, maybe t...
by docneil88
Tue Nov 26, 2013 2:53 pm
 
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 17960

Re: Equal Location or Asset Location?

umfundi wrote:While we are here, a pop quiz: Who said
If you do own your own home, you will probably find that the house you live in is the best investment you ever made in your life
?

Just googled that expression and the only hit I got for that string was your post above.
by docneil88
Sun Nov 24, 2013 11:36 pm
 
Forum: Investing - Theory, News & General
Topic: Equal Location or Asset Location?
Replies: 42
Views: 1895

Re: Equal Location or Asset Location?

I voted yes for asset location, but almost all of my 20% allocation to bonds is in taxable accounts, and almost none of it is in my tax advantaged accounts. I do this partly for easy access (without an early withdrawal penalty) to low risk, highly liquid assets. But I also do this because bonds are ...
by docneil88
Sat Nov 23, 2013 1:07 am
 
Forum: Investing - Theory, News & General
Topic: Equal Location or Asset Location?
Replies: 42
Views: 1895

Re: Delete Wiki on Tax-Efficient Asset Location

Only if those returns aren't significantly different. I think the whole point is that one general rule does not hold for all circumstances. I was providing a counter-example to demonstrate that your "self-evident" statement is false. For example, there's no benefit in putting bonds earnin...
by docneil88
Sun Nov 17, 2013 8:18 pm
 
Forum: Investing - Theory, News & General
Topic: Delete Wiki [Article] on Tax-Efficient Asset Location
Replies: 285
Views: 17437

Re: The cult of PE10 - so what?

MnD wrote:PE10 is barely more predictive than PE1.

I wonder if anyone has run numbers to see whether combining PE1 and PE10 is more "predictive" in long-term backtests than either individually, and if so by how much. My hunch is that the combo is more predictive. Best, Neil
by docneil88
Sun Oct 27, 2013 4:47 pm
 
Forum: Investing - Theory, News & General
Topic: The cult of PE10 - so what?
Replies: 69
Views: 4212

Re: Shiller Thinks Owning a Home is a Terrible Investment

And as Yale economist Robert Shiller has noted, the real rate of return to owning a home has been close to zero for the past century, substantially less than the stock market. "Housing traditionally is not viewed as a great investment," he added. "It takes maintenance, it depreciates...
by docneil88
Sat Oct 19, 2013 5:14 am
 
Forum: Investing - Theory, News & General
Topic: Shiller Thinks Owning a Home is a Terrible Investment
Replies: 255
Views: 21925

Re: PE Expansion Since 2009

How about this? http://www.multpl.com/ The table version by month is more precise: http://www.multpl.com/table?f=m . Interestingly, the table shows the S&P 500 PE hit a high of 123.8 on May 1, 2009, due primarily to a collapse of earnings during the 2008-2009 financial crisis. As of today, Sep....
by docneil88
Fri Sep 27, 2013 5:07 pm
 
Forum: Investing - Theory, News & General
Topic: PE Expansion Since 2009
Replies: 15
Views: 1056

Re: Can you trust muni credit ratings

From http://www.cbsnews.com/8301-505123_162-57601584/can-investors-trust-credit-ratings-on-muni-bonds/ : And a state isn't likely to build more highways just because of higher ratings. So inflated ratings don't lead to more fees for the raters of the bonds. The same conflict of interest doesn't exis...
by docneil88
Fri Sep 20, 2013 2:11 am
 
Forum: Investing - Theory, News & General
Topic: Can you trust muni credit ratings
Replies: 51
Views: 2781

Re: What is the current equity risk premium, and how calcula

IMO as good an estimate of the return on stocks is the adjusted E/P of Shiller CAPE 10 So today 24.15 inverted to 4.14. Then adjust for the average lag in earnings of 5 years by multiplying by 1.075 (1.5% real historical growth in earnings) and you get a real return forecast of about 4.5%. I've see...
by docneil88
Thu Sep 19, 2013 11:42 pm
 
Forum: Investing - Theory, News & General
Topic: What is the current equity risk premium, and how calculated?
Replies: 31
Views: 2024

1874-2004:S&P500 EPS grew anz'd 1.7% pts > than inflat. Why?

From an April 11, 2006 article by Mark Hulbert at http://www.marketwatch.com/story/earnings-growth-in-historical-perspective : According to data compiled by Yale Economics Prof. Robert Shiller, earnings per share on the S&P 500 grew at a 3.8% annualized rate between 1874 and 2004. In inflation-a...
by docneil88
Sat Sep 14, 2013 7:16 pm
 
Forum: Investing - Theory, News & General
Topic: 1874-2004:S&P500 EPS grew anz'd 1.7% pts > than inflat. Why?
Replies: 14
Views: 1210

Re: Rental real estate post - what's the catch?

Many of us have at least some experience with owning our own homes. And we know how many hours a week we spend dealing with that home, even without any tenant issues, given the never-ending cycle of repairs, maintenance, and renovations. With having a full-time job, just one home is a lot of work f...
by docneil88
Thu Sep 12, 2013 12:37 am
 
Forum: Investing - Theory, News & General
Topic: Rental real estate post - what's the catch?
Replies: 97
Views: 7643

Re: Rental real estate post - what's the catch?

The property has already appreciated quite substantially, so I doubt he will ever be underwater on the mortgage. ... In this situation, what is the risk? Hi boggler, The risk is that the value of the property goes dramatically down from here, and he loses the equity he has now built up. Deciding if...
by docneil88
Sun Sep 08, 2013 5:04 pm
 
Forum: Investing - Theory, News & General
Topic: Rental real estate post - what's the catch?
Replies: 97
Views: 7643
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