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Re: Why invest in bonds?

Robert T wrote: Tolerable loss. If you can tolerate a 50 percent loss (a halving of your assets) at any one time without baling (selling out), then 100% equities may be okay for a long-term investor. If you can't tolerate this loss and sell out the market bottom, you would likely have better long-te...
by garlandwhizzer
Mon Sep 01, 2014 1:51 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 5501

Re: A Low-Return Future? Are We Prepared?

Simplegift wrote: Bottom line: Any investor who expects and plans for future stock market returns (and bond returns!) like were seen in the last half of the twentieth-century is in for a rude shock and disappointment. We can reasonably predict those returns certainly won't be repeated. Better to mak...
by garlandwhizzer
Fri Aug 29, 2014 12:40 pm
 
Forum: Investing - Theory, News & General
Topic: A Low-Return Future? Are We Prepared?
Replies: 167
Views: 9853

Bond Bubble?

Here's the link to a piece suggesting a worldwide bond bubble < www.marketwatch.com/story/beware-the-enormous-bubble-in-bonds-2014-08-29 > Many have been calling for bonds to suffer for years and yet it hasn't happened. Is this just another cry that the sky is falling or is there something more to i...
by garlandwhizzer
Fri Aug 29, 2014 12:20 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Bubble?
Replies: 10
Views: 884

Re: Economic Forecasts

The graph shows estimates of medicare expenses going forward. It does not show total health care costs for the elderly. Total health care costs continue to rise faster than either inflation or GDP growth. The difference in cost and medicare payments comes out of the pockets of the elderly and I susp...
by garlandwhizzer
Thu Aug 28, 2014 1:09 pm
 
Forum: Investing - Theory, News & General
Topic: Economic Forecasts
Replies: 5
Views: 656

Re: Emerging markets 1900-2013

Very interesting post, Robert T. The real question is will the future be a repeat of the past, rhyme with it, or be something entirely different? That in my mind at least is unknown at present. There is now a conjunction of factors in essentially all DMs that have never before existed in history. Fi...
by garlandwhizzer
Wed Aug 27, 2014 1:54 pm
 
Forum: Investing - Theory, News & General
Topic: Emerging markets 1900-2013
Replies: 53
Views: 4707

Re: first of three part series on hedge funds

Good post, thanks Larry. Perhaps investors and pension funds are waking up.

Garland Whizzer
by garlandwhizzer
Mon Aug 25, 2014 12:45 pm
 
Forum: Investing - Theory, News & General
Topic: first of three part series on hedge funds
Replies: 2
Views: 332

Re: Good interview with John Bogle

Jaxfann wrote: To go from 80/20 to 25/75 in one move was a huge change and very different to the philosophy continually expounded on this board by very intelligent members. I am surprised that at his age at the time he was so exposed to equities also. Clearly given extraordinary circumstances Bogle ...
by garlandwhizzer
Thu Aug 21, 2014 11:04 pm
 
Forum: Investing - Theory, News & General
Topic: Good interview with John Bogle
Replies: 34
Views: 3691

Re: Brad Delong commenting on Shiller's NYTimes piece

Interesting. Thanks for the post.

Garland Whizzer
by garlandwhizzer
Thu Aug 21, 2014 10:46 pm
 
Forum: Investing - Theory, News & General
Topic: Brad Delong commenting on Shiller's NYTimes piece
Replies: 4
Views: 993

Re: Good interview with John Bogle

I never tire of listening to John Bogle. He makes it all sound so simple, reducing all the complexity of investing into simple elegant common sense. Investing history has shown time and again that his approach is rock solid. What a contrast to Wall Street "geniuses" peddling complex snake ...
by garlandwhizzer
Thu Aug 21, 2014 1:43 pm
 
Forum: Investing - Theory, News & General
Topic: Good interview with John Bogle
Replies: 34
Views: 3691

Qu

Larry wrote when the spreads on HY are high, it's the same time that the ERP and size and value premiums are high Larry Good point, Larry. However in the crash of 2008-9, the Vanguard Small Cap Value fund lost 56% of its value compared to 29% in the Vanguard High Yield Corporate fund. The most impor...
by garlandwhizzer
Wed Aug 20, 2014 1:20 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 73
Views: 4763

Re: Indexing in EM, and Templeton's Mobius

Great post, Larry. Thanks. The simple arithmetic of indexing once again defeats costly genius.

Garland Whizzer
by garlandwhizzer
Tue Aug 19, 2014 2:13 pm
 
Forum: Investing - Theory, News & General
Topic: Indexing in EM, and Templeton's Mobius
Replies: 10
Views: 988

Re: Long term bond tilting?

I always appreciate Robert T's thorough and insightful analysis. His bond post is a great example of this.

Garland Whizzer
by garlandwhizzer
Tue Aug 19, 2014 2:02 pm
 
Forum: Investing - Theory, News & General
Topic: Long term bond tilting?
Replies: 14
Views: 1262

Re: Morningstar data vs Factsheets

Doc wrote in response to my post: garlandwhizzer wrote: Vanguard's numbers are in my opinion more solidly grounded in current reality. The question is what you are going to do with the numbers. If you are looking at the numbers with respect to some academic study then the past year actual may be the...
by garlandwhizzer
Sun Aug 17, 2014 3:26 pm
 
Forum: Investing - Theory, News & General
Topic: Morningstar data vs Factsheets
Replies: 5
Views: 658

Re: Shiller on Lofty Market Elevations

I believe that the problem with high valuations by PE 10 or any other measure is not limited to stocks, but also includes bonds and real estate. There is a great deal of money in the world looking for opportunity, creating huge demand which has far exceeded the supply of attractive investment opport...
by garlandwhizzer
Sun Aug 17, 2014 3:15 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 4910

Re: Going 60+% international? (US resident)

I agree with the Vanguard article on international asset allocation. Namely, if you wish to add international (Bogle for example doesn't so clearly not everyone must do this), the upper limit should be market cap exposure which currently is less than 60% international. Equity valuations at present p...
by garlandwhizzer
Sat Aug 16, 2014 7:47 pm
 
Forum: Investing - Theory, News & General
Topic: Going 60+% international? (US resident)
Replies: 83
Views: 5956

Re: Morningstar data vs Factsheets

Morningstar gives projected earnings and book value estimates for next year. Vanguard gives earnings and book value of the past year. One year of difference can take into account estimates of earnings and book value growth or decline for the next year. I need to insert here that future earnings esti...
by garlandwhizzer
Sat Aug 16, 2014 7:27 pm
 
Forum: Investing - Theory, News & General
Topic: Morningstar data vs Factsheets
Replies: 5
Views: 658

Re: BI: High Yield six-sigma event

I used to hold some HYB but no longer. Interest spreads between HYB and Treasuries or Investment Grade Corporates have narrowed and the quality of most HYB funds has declined in recent years in my opinion. At times in the past the yield spread over safer bonds offered a sufficiently attractive risk/...
by garlandwhizzer
Thu Aug 14, 2014 11:16 pm
 
Forum: Investing - Theory, News & General
Topic: BI: High Yield six-sigma event
Replies: 24
Views: 2035

Re: good short very Bogleheadish interview with Cliff Asness

Good interview. Cliff Asness is very knowledgeable in my opinion and always worth listening to. Bogle is one of his two heros, not what you might expect from one whose products compete with cap weighted indexes.

Garland Whizzer
by garlandwhizzer
Thu Aug 14, 2014 10:45 pm
 
Forum: Investing - Theory, News & General
Topic: good short very Bogleheadish interview with Cliff Asness
Replies: 2
Views: 746

Re: GOLDMAN: A 'Dramatic Divergence' Is Coming To Stocks & B

I don't know of any knowledgeable financial analyst who thinks US bond returns will be at historical norms going forward. On the other hand, the same can be said for US stocks. We're in a world of low expected returns from all investment assets in my opinion. Stocks are harder to predict in terms of...
by garlandwhizzer
Thu Aug 07, 2014 12:37 pm
 
Forum: Investing - Theory, News & General
Topic: GOLDMAN: A 'Dramatic Divergence' Is Coming To Stocks & Bonds
Replies: 13
Views: 1466

Re: AARP: The Great Pension Sell-Off

This article just touches on a small but visible part of a huge iceberg. I believe that the future holds for us as a nation serious economic challenges when it comes to funding retirement, medical care cost, and long term care for our retiring workers. I hope I'm wrong on this one but it seems to me...
by garlandwhizzer
Tue Aug 05, 2014 2:35 pm
 
Forum: Investing - Theory, News & General
Topic: AARP: The Great Pension Sell-Off
Replies: 30
Views: 3589

Re: It seems Warren Buffett believes in DCA

CaptainSegfault wrote: So, my cat walked on my keyboard and sold all my stocks. Should I DCA the resulting lump sum back to my target AA or should I just fix it? Why is my answer any different than the answer for someone who just received a lump sum, all else equal? Money is fungible -- my situation...
by garlandwhizzer
Mon Aug 04, 2014 11:07 pm
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 3986

Re: Vanguard Unethical?

There is a certain irony to a lawyer calling out Vanguard for being unethical.

Garland Whizzer
by garlandwhizzer
Mon Aug 04, 2014 1:19 pm
 
Forum: Personal Finance (Not Investing)
Topic: Vanguard sued for charging too little
Replies: 187
Views: 21149

Re: global diversification works in long term

Tigermoose wrote in response to my post: garlandwhizzer wrote: These are good points, Tigermoose, but I believe the market knows about them and current prices reflect that information. By many fundamental measures, PE, PB, PDIV, etc., both DM stocks and EM stocks are undervalued relative to their US...
by garlandwhizzer
Mon Aug 04, 2014 1:14 pm
 
Forum: Investing - Theory, News & General
Topic: global diversification works in long term
Replies: 21
Views: 1918

Re: International investing. A good call by our mentor.

I agree with JoMoney that the US is in a favorable economic position for equity investing relative to the rest of the world. Certainly historically those who remained strictly in the US on equities have done very well. International equity exposure adds a diversification benefit to a US equity portf...
by garlandwhizzer
Sat Aug 02, 2014 11:59 pm
 
Forum: Investing - Theory, News & General
Topic: International investing. A good call by our mentor.
Replies: 145
Views: 12395

Re: It seems Warren Buffett believes in DCA

Leeraar wrote: DCA is when you have all the money available, but choose to divide it into small periodic investments. I thought dollar cost averaging was investing an equal amount of dollars at regular intervals (monthly works well because that's often when paychecks come out) from cash into investm...
by garlandwhizzer
Sat Aug 02, 2014 1:42 pm
 
Forum: Investing - Theory, News & General
Topic: It seems Warren Buffett believes in DCA
Replies: 44
Views: 3986

Re: how do I find out PE10 of foreign stock markets?

Thanks, cjking, for the post. Very interesting. The valuation disparities are quite striking. We all know there's a tradeoff between risk and reward but safer equity (US) seems very expensive relative to riskier equity (Russia, etc.,) on a valuation basis. This is why forward projections by multiple...
by garlandwhizzer
Sat Aug 02, 2014 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: how do I find out PE10 of foreign stock markets?
Replies: 75
Views: 12769

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: 78
Views: 4701

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: 44
Views: 3986

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: 22
Views: 2098

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: 44
Views: 3986

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: 21
Views: 1918

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: 2889

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: 9761

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: 1568

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: 9761

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: 22
Views: 2005

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: 581

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: 22
Views: 2005

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: 1244

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: 8101

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: 2736

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: 1181

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: 2334

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: 6718

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: 2438

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: 7013

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: 2171

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: 322
Views: 22263

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: 7709

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: 977
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