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Re: Arnott's/RAFI 10 year 'expected' returns

Lower than historic returns from all US assets: stocks, bonds, REIT, and other hard assets are widely expected by a number of respected market analysts. Earlier this year after reading Rational Expectations by Bill B, I shifted some of my equity exposure from US to international and now hold 60% US,...
by garlandwhizzer
Fri Aug 01, 2014 8:48 pm
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 5
Views: 389

Re: It seems Warren Buffett believes in DCA

I think DCA is a great way to invest while you're young in the accumulation phase and have a job. Every month you pay yourself first off, buying a given amount of stock in a broadly based index fund like TSM. You're busy at that point in your life and don't perhaps have time to do your market timing...
by garlandwhizzer
Fri Aug 01, 2014 8:05 pm
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 26
Views: 1764

Re: Are utility stocks no longer safe?

Utility stocks have done well as have REITS in this historic low interest rate environment as investors desperately sought yield. Small and mid cap index funds have relatively large allocations to them which is part of the reason for their outperformance in recent years. For example, the Vanguard Sm...
by garlandwhizzer
Fri Aug 01, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: Are utility stocks no longer safe?
Replies: 10
Views: 782

Re: It seems Warren Buffett believes in DCA

DCA is designed to control risk better than lump sum. It is useful if you want to get into the market, and current valuations are high or generous like they are today, and you are tired of sitting in cash or T bills getting no return. If valuations are compelling or better than average like they ten...
by garlandwhizzer
Fri Aug 01, 2014 1:59 pm
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 26
Views: 1764

Re: global diversification works in long term

Tigermoose wrote: What tends to worry me these days about international equities -- especially in Japan and Europe -- is that their demographics are horrible. The U. S. has the "echo-boom" generation that will be very productive and numerous, and so we should see some continued wealth crea...
by garlandwhizzer
Wed Jul 30, 2014 12:38 pm
 
Forum: Investing - Theory, News & General
Topic: global diversification works in long term
Replies: 19
Views: 1324

Re: Why should stocks go up over the long term?

Stock market prices grow in relation to corporate profits. Sentiment swings distort this profit growth--higher prices for a dollar of earnings sometimes, lower prices other times--but eventually markets always come back to earnings which tend to grow over time. What makes earnings grow? Population g...
by garlandwhizzer
Mon Jul 28, 2014 6:17 pm
 
Forum: Investing - Theory, News & General
Topic: Why should stocks go up over the long term?
Replies: 34
Views: 2769

Re: Larry: 20 Dollar Bills and Factor Persistence

Thanks to nedsaid and Robert T for their insightful analysis in response to my questions.

Garland Whizzer
by garlandwhizzer
Mon Jul 28, 2014 1:02 pm
 
Forum: Investing - Theory, News & General
Topic: Larry: 20 Dollar Bills and Factor Persistence
Replies: 113
Views: 9451

Re: my quarterly hedge fund update

I believe that three things may help to explain the paradox. First is cache. Investing in a hedge funds is mostly restricted to a small class, the very rich. It has cocktail party cache to say you're in so-and-so's hedge fund rather than boring plain vanilla Vanguard index funds. Recall that getting...
by garlandwhizzer
Mon Jul 28, 2014 12:44 pm
 
Forum: Investing - Theory, News & General
Topic: my quarterly hedge fund update
Replies: 11
Views: 1520

Re: Larry: 20 Dollar Bills and Factor Persistence

There is a significant group of experienced and sound market analysts--Bernstein, Grantham, Gross (apologies to Larry on this one), and Asness among them-- who are predicting future real returns for a 60/40 stock/bond portfolio to be in the zero to 2.5% over the next 7 to 10 years or so. These predi...
by garlandwhizzer
Sun Jul 27, 2014 7:13 pm
 
Forum: Investing - Theory, News & General
Topic: Larry: 20 Dollar Bills and Factor Persistence
Replies: 113
Views: 9451

Re: Profiting from Unprofitable Companies

I would respectfully like to ask Larry a question regarding factor investing. Jo Money's graph shows that from 1983 to 2014, period of 31 years, that VFINX, Vanguard's S&P 500 fund, had equal returns with DFSCX, the DFA Microcap Fund. DFA has perhaps the best reputation among financial corporati...
by garlandwhizzer
Fri Jul 25, 2014 9:50 pm
 
Forum: Investing - Theory, News & General
Topic: Profiting from Unprofitable Companies
Replies: 20
Views: 1525

Re: Interviews with Fama and Asness on small, value & moment

Read the interview with Forbes done in 2014, his most recent, tooting the horn loudly for factor investing. Makes a strong case as you would expect for someone who specializes in selling factor mining products. The question with AQR of course is not are they likely to produce alpha but are they like...
by garlandwhizzer
Fri Jul 25, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: Interviews with Fama and Asness on small, value & momentum
Replies: 2
Views: 567

Re: Profiting from Unprofitable Companies

I agree with Nisi and Jo Money that factor investing with small and value for example goes through long periods of outperformance alternating with underperformance. For the past 14 years small and value have substantially outperformed. Rather than being a positive going forward, this fact makes it m...
by garlandwhizzer
Fri Jul 25, 2014 1:57 pm
 
Forum: Investing - Theory, News & General
Topic: Profiting from Unprofitable Companies
Replies: 20
Views: 1525

Re: Dividend Growth Investing vs Index Funds

Dividend growth is an attractive strategy. So are value, momentum, quality. These attractive strategies are well known to professional investors, the ones who actually move the market and set asset prices. The real question for all these strategies is not whether they offer potential excess returns....
by garlandwhizzer
Thu Jul 24, 2014 1:42 pm
 
Forum: Investing - Theory, News & General
Topic: Dividend Growth Investing vs Index Funds
Replies: 14
Views: 1153

Re: Bonds beat stocks over the last 15 years

Robert T wrote: The equity premium can be negative for long periods of time (as can the value, size, and I would argue, momentum premium). The benefit from exposure to these factors comes from long-term discipline to stay the course. 1+ Very well put. That 15 year period includes on the equity side ...
by garlandwhizzer
Thu Jul 24, 2014 1:17 pm
 
Forum: Investing - Theory, News & General
Topic: Bonds beat stocks over the last 15 years
Replies: 93
Views: 7772

Re: Stock market recovery time

Taylor hit the nail on the head. The equity fear mongers don't take into account the effects of reinvestment of dividends. The Great Depression took 7 years to recover all equity losses which were 80% by the way. Our recent collapse of 60% in 2008-9 took only 4.5 years to fully recover. The collapse...
by garlandwhizzer
Tue Jul 22, 2014 8:59 pm
 
Forum: Investing - Theory, News & General
Topic: Stock market recovery time
Replies: 25
Views: 2691

Re: Reduce / Eliminate Emerging Market in Retirement?

Nearing_Destination wrote: It appears that most would hold the market weight in VXUS (some don't just tilt... like "GarlandWhizzer" whose international is all EM or REIT). Update. That allocation was several years ago. At the time I felt that international REITS were grossly undervalued, s...
by garlandwhizzer
Tue Jul 22, 2014 8:32 pm
 
Forum: Investing - Theory, News & General
Topic: Reduce / Eliminate Emerging Market in Retirement?
Replies: 11
Views: 1165

Re: Value Overvalued

TJSI wrote: Overvalued or not, I would like to thank James99 for the link. It contains a lot of relevant statistics and data. Thanks. 1+. I also thank James 99 for this link. I found it very interesting. Their valuation data was based on projected earnings which are usually overestimated in my exper...
by garlandwhizzer
Tue Jul 22, 2014 3:31 pm
 
Forum: Investing - Theory, News & General
Topic: Value Overvalued
Replies: 23
Views: 2294

Re: To Tilt or Not to Tilt - Rick Ferri's Latest

Whether to tilt or not is a personal decision. Those who choose a 3 fund portfolio over long periods of time will do quite well. Those who tilt in various ways will also do quite well. I don't believe there's one magic answer for everyone. It's more important to adhere to a sound investment plan tha...
by garlandwhizzer
Tue Jul 22, 2014 3:07 pm
 
Forum: Investing - Theory, News & General
Topic: To Tilt or Not to Tilt - Rick Ferri's Latest
Replies: 72
Views: 6611

Re: Can it be wrong to be too risk averse?

It can be wrong to be too risk averse. Your long term portfolio appreciation suffers and you may well find yourself running out of money during retirement. It can also be wrong not be risk averse enough. You can realize too late in a market collapse that you underestimated your risk aversion and dum...
by garlandwhizzer
Tue Jul 22, 2014 2:45 pm
 
Forum: Investing - Theory, News & General
Topic: Can it be wrong to be too risk averse?
Replies: 49
Views: 2337

Re: Adding Corporates to Total Bond Market Index

Munir wrote: Unless one panics and wants to cash out one's bond holdings during a temporary dip in bond prices, why should we gear our longterm investment plans to such temporary dips when after a few months, the corporates recovered and actually beat treasuries in their performance during the 2008 ...
by garlandwhizzer
Tue Jul 22, 2014 2:33 pm
 
Forum: Investing - Theory, News & General
Topic: Adding Corporates to Total Bond Market Index
Replies: 76
Views: 6650

Re: Tobins Q as market valuation metric

ArthurO wrote: I just wanted to get the Bogleheads take on the Tobins Q and should we be worried that it's value is 3rd highest in history, and previous 5 times when the value was that high, market returns for next 30 YEARS were negative. This statement if factually incorrect. With dividends reinves...
by garlandwhizzer
Fri Jul 18, 2014 3:04 pm
 
Forum: Investing - Theory, News & General
Topic: Tobins Q as market valuation metric
Replies: 42
Views: 2118

Re: Should I use margin to buy a balanced fund?

Taking a margin position implies two things. First, that you know the asset you're purchasing is going up in price over your holding period. Second, that you will not have to sell that asset earlier than anticipated to provide for unanticipated expenses during a personal, national, or worldwide econ...
by garlandwhizzer
Fri Jul 18, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 191
Views: 10137

Re: International exposure: does it really help?

On the question of international exposure or of overweighting factor exposure (small cap, value, momentum, etc.) there is a lot of strong feeling on both sides of these arguments. It reminds me of a medical insight: whenever there are multiple different treatments that are strongly advocated for a d...
by garlandwhizzer
Tue Jul 08, 2014 2:23 pm
 
Forum: Investing - Theory, News & General
Topic: International exposure: does it really help?
Replies: 75
Views: 7569

Re: Asset bubble?

At the worst of the crisis in 2008-9 the Fed had to choose between two very unpleasant alternatives. First choice: don't do much and let the market work it out without much intervention. It is likely that that choice would have brought about a Great Depression-like scenario, just as it did in the fi...
by garlandwhizzer
Tue Jul 08, 2014 2:07 pm
 
Forum: Investing - Theory, News & General
Topic: Asset bubble?
Replies: 8
Views: 948

Re: a close look at value and momentum

I believe AQR funds employ long-short strategies to fully exploit factors because apparently much of the premium lies in the short side. Factor investing has been reliable over long periods of time in the past and is intellectually appealing. But focusing on long-short factor strategies to the exclu...
by garlandwhizzer
Mon Jul 07, 2014 8:16 pm
 
Forum: Investing - Theory, News & General
Topic: a close look at value and momentum
Replies: 259
Views: 17350

Re: Cash allocation in a portfolio

My cash allocation is currently slightly greater than 5%, all in my personal account rather than IRA, about 3 years of living expenses which allows me to take my risk elsewhere and always sleep at night. The downside is that I miss the income of a short term tax free fund in my personal account. The...
by garlandwhizzer
Mon Jul 07, 2014 1:36 pm
 
Forum: Investing - Theory, News & General
Topic: Cash allocation in a portfolio
Replies: 42
Views: 3728

Re: Bubble, Bubble, Toil and Trouble

Very interesting article. Thanks for posting. Take home message: we are unlikely to be in an equity bubble now. Considering current interest rate background, equity prices are likely to be fair at present. No good reason for dumping equities now as some adherents of PE10 market timing advocate. The ...
by garlandwhizzer
Mon Jul 07, 2014 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: Bubble, Bubble, Toil and Trouble
Replies: 24
Views: 3595

Re: Any Bogelheads get involved in private equity?

I have a 4% maximum portfolio allocation rule to high risk/high reward, completely non-diversified investments. Currently it is invested in a biotech startup in which I was one of the original investors, no fees or commissions. My investment has been illiquid for 10 years, through the development ph...
by garlandwhizzer
Sat Jul 05, 2014 2:21 pm
 
Forum: Investing - Theory, News & General
Topic: Any Bogleheads get involved in private equity?
Replies: 31
Views: 3403

Re: Video: The Best Time to Invest

Makes a great but simple point. The most important factor for equity returns is not timing the market but time in the market. As a young investor in the accumulation phase, I believe it's wise to pay no attention at all to market gyrations and to keep buying in on a regular basis regardless of the m...
by garlandwhizzer
Sat Jul 05, 2014 2:01 pm
 
Forum: Investing - Theory, News & General
Topic: Video: The Best Time to Invest
Replies: 2
Views: 345

Re: The Risk of Short-term Bond Funds

Rick Ferri wrote: I'm not saying that short-bonds don't belong in a person's portfolio. Far from it. I'm only pointing out that trying to avoid losses by moving from a intermediate-term duration fund to an short-duration fund hasn't paid off over the past three- five- years. The opportunity cost of ...
by garlandwhizzer
Thu Jul 03, 2014 5:45 pm
 
Forum: Investing - Theory, News & General
Topic: The Risk of Short-term Bond Funds
Replies: 152
Views: 10462

Re: Current Stock Market Predictions

Certainly there are seemingly logical formulas by which you can calculate the 10 year expected returns of the stock market. The question of course is how consistently accurate are they? I tend to agree with JoMoney that projections of 10 year forward returns are often inherently flawed regardless of...
by garlandwhizzer
Tue Jul 01, 2014 1:30 pm
 
Forum: Investing - Theory, News & General
Topic: Current Stock Market Predictions
Replies: 35
Views: 5428

Re: The IPO is dying - Marc Andreessen

About what you'd expect the head of a venture capital fund to say: make it easier for unsophisticated investors to buy my products.

Garland Whizzer
by garlandwhizzer
Mon Jun 30, 2014 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: The IPO is dying - Marc Andreessen
Replies: 16
Views: 1404

Re: Suggestions for teaching new MDs about finance?

livesoft wrote: I would have thought that MDs are trained to be skeptical of everything they are taught in med school as well as their teachers and other doctors. Does this not extend to other "experts" that they may come in contact with? Basically through the long and difficult years of ...
by garlandwhizzer
Sun Jun 29, 2014 7:04 pm
 
Forum: Investing - Theory, News & General
Topic: Suggestions for teaching new MDs about finance?
Replies: 39
Views: 2675

Re: Why hedge funds faltered

I think there are two main sources that explain why hedge funds continue to suck in huge amounts of investment assets in spite of poor performance relative to index funds. First of all, the only people who invest in them are very rich. There is a certain cocktail party cache in saying you're investe...
by garlandwhizzer
Sun Jun 29, 2014 1:29 pm
 
Forum: Investing - Theory, News & General
Topic: Why hedge funds faltered
Replies: 12
Views: 1426

Re: Merton: 401(k) retirement plans face crisis

nedsaid wrote:
My point is that no matter what a retiree does, there is still a certain amount of risk that he or she assumes. There is no way around that. But there are certainly better strategies than others in dealing with this. But even the best strategies are not perfect.


1+

Garland Whizzer
by garlandwhizzer
Sun Jun 29, 2014 12:34 pm
 
Forum: Investing - Theory, News & General
Topic: Merton: 401(k) retirement plans face crisis
Replies: 188
Views: 17215

Re: Suggestions for teaching new MDs about finance?

Rather than a seminar by salesmen, I would gift each each young MD with one of Jack Bogle's books or Larry's or Rick's or Bill Bernstein's. It is important to tell them at the same time that they will be lifelong prime targets for brokers, investment advisors, and financial planners whose main aim i...
by garlandwhizzer
Sat Jun 28, 2014 5:00 pm
 
Forum: Investing - Theory, News & General
Topic: Suggestions for teaching new MDs about finance?
Replies: 39
Views: 2675

Re: Total Bond Market

Valuethinker wrote: Your best 'pure' alternative is probably a US government intermediate term bond fund OR intermediate term investment grade (in a rerun of 2008-09 the latter will significantly underperform). Good point, Valuethinker. The other side of that coin is that in a rerun of 2009-2014, th...
by garlandwhizzer
Fri Jun 27, 2014 2:45 pm
 
Forum: Investing - Theory, News & General
Topic: Total Bond Market
Replies: 5
Views: 1678

Re: Modeling the Worst Case for Stocks

I don't think I'd weight the "worst case scenario" too highly in making financial asset allocation decisions. I think the worst case is that stocks are worth nothing and everyone is dead or wishes they were. Multiple causes--huge asteroid impact like the one that wiped out the dinosaurs, s...
by garlandwhizzer
Thu Jun 26, 2014 8:31 pm
 
Forum: Investing - Theory, News & General
Topic: Modeling the Worst Case for Stocks
Replies: 41
Views: 3086

Re: Liability Matching Portfolio? Really?

#Cruncher wrote: Good point, Garland. But remember that with a ladder of TIPS, one will have the whole range of maturities to choose from for liquidation. If interest rates are low, one can liquidate longer maturities and possibly not lose any principal at all. If interest rates are high, one can li...
by garlandwhizzer
Wed Jun 25, 2014 5:47 pm
 
Forum: Investing - Theory, News & General
Topic: Liability Matching Portfolio? Really?
Replies: 71
Views: 6930

Re: Article: Conversation with John Bogle

In my opinion Jack Bogle is the greatest hero in the investing world. He has used his keen investment insight and the precision of his steel trap mind not to make billions for himself but rather to show the way for average Joes and Janes to be successful investors and improve their lives rather than...
by garlandwhizzer
Wed Jun 25, 2014 1:24 pm
 
Forum: Investing - Theory, News & General
Topic: Article: Conversation with John Bogle
Replies: 15
Views: 1896

Re: Are small and mid caps necessary?

I tilt to 40% MC+SC and 60% LC in my US portfolio and MC+SC 50%, 50%LC in international because I believe International SC+MC are better diversifiers to a US equity portfolio than international LC. Many of the investment sages who post on this board (Larry, Rick, Bill Bernstein, for example) tilt an...
by garlandwhizzer
Tue Jun 24, 2014 9:46 pm
 
Forum: Investing - Theory, News & General
Topic: Are small and mid caps necessary?
Replies: 35
Views: 2374

Re: An Argument for Long Term Treasury Bonds

I believe Larry has made the point that long term Treasuries are the best diversifier in a heavily equity dominated portfolio. The downside of long term bonds is that they sustain large principal losses in a rising interest rate/inflation environment due to their high duration. I think Larry's point...
by garlandwhizzer
Tue Jun 24, 2014 9:19 pm
 
Forum: Investing - Theory, News & General
Topic: An Argument for Long Term Treasury Bonds
Replies: 35
Views: 1854

Re: Liability Matching Portfolio? Really?

I really enjoyed Dr. Bernstein's new book, but there is one point he makes that on which I strongly disagree. LMPs may be attractive for very risk averse investors but I am not one and I don't think it necessary for everyone to have a LMP. I have won the game and I choose to keep playing. My main re...
by garlandwhizzer
Tue Jun 24, 2014 2:29 pm
 
Forum: Investing - Theory, News & General
Topic: Liability Matching Portfolio? Really?
Replies: 71
Views: 6930

Re: Do you see profit or ponzi?

At an earlier phase of my life I was taken in on a Ponzi scheme in real estate that looked so compelling on paper that it was impossible to resist. I wound up losing all my investment capital plus years later the IRS came after me to pay back taxes plus penalties for falsified real estate tax docume...
by garlandwhizzer
Sun Jun 22, 2014 6:22 pm
 
Forum: Investing - Theory, News & General
Topic: Do you see profit or ponzi?
Replies: 100
Views: 7170

Re: Thoughts on adding Vanguard Precious Metals and Mining F

In Bill Bernstein's recent excellent book, Rational Expectations, he takes the position that commodity based funds, PM, Energy, and REITS, can play a role in a diversified portfolio. They tend to outperform according to BB during inflationary times and are in a sense insurance for inflation held as ...
by garlandwhizzer
Sun Jun 22, 2014 1:54 pm
 
Forum: Investing - Theory, News & General
Topic: Thoughts on adding Vanguard Precious Metals and Mining Fund
Replies: 44
Views: 8577

Re: Do you see profit or ponzi?

Grabner's reply to this claim hits the nail directly on the head. Claims, especially by charlatans, can have a grain of truth but be totally misleading. The probability that this trading method works reliably and consistently over long periods of time to produce portfolio alpha is close to zero in m...
by garlandwhizzer
Sun Jun 22, 2014 1:02 pm
 
Forum: Investing - Theory, News & General
Topic: Do you see profit or ponzi?
Replies: 100
Views: 7170

Re: Good article on style premium investing & AQR new fund

I think AQR's long-short factor approach is interesting but... 1) It's very expensive for individual investors. Paying an additional 1.45% annually in costs relative to TSM seems like a very high hurdle in a world where most agree that going forward from here factor excess returns are going to decre...
by garlandwhizzer
Sat Jun 21, 2014 1:37 pm
 
Forum: Investing - Theory, News & General
Topic: Good article on style premium investing & AQR new fund
Replies: 62
Views: 6025

Re: Can someone explain B Bernstein's math

Thanks for the correction and clarification, #Cruncher.

Garland Whizzer
by garlandwhizzer
Thu Jun 19, 2014 1:08 pm
 
Forum: Investing - Theory, News & General
Topic: Can someone explain B Bernstein's math
Replies: 42
Views: 3967

Re: Do you see profit or ponzi?

Beware active management that claims to have discovered the "secret sauce." Many of us on this forum started out with that approach and after years or decades of bad experiences have abandoned it in favor of low cost index funds. In general asset allocation decisions carry more weight on i...
by garlandwhizzer
Thu Jun 19, 2014 12:35 pm
 
Forum: Investing - Theory, News & General
Topic: Do you see profit or ponzi?
Replies: 100
Views: 7170

Re: Retirees: Equity holdings of 90%+

I am 67 years old and have been retired for 17 years. When I first retired at age 50, I had a 100% equity portfolio and had kept one like that for my entire investing career, 10 years up until that time. I rode the bull market of the 90s but learned a hard lesson in the tech collapse of 2000 - 2003....
by garlandwhizzer
Wed Jun 18, 2014 1:58 pm
 
Forum: Investing - Theory, News & General
Topic: Retirees: Equity holdings of 90%+
Replies: 14
Views: 1618
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