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Re: Indexing in EM, and Templeton's Mobius

Running Red My apologies for the error, obviously when I was transposing from my notes to the computer screen I copied the wrong data It will be corrected with data as of August 18 The following are the returns for the 5-year, 10-year, and 15-year periods ending August 18, 2014. 5-Year Annualized Re...
by larryswedroe
Tue Aug 19, 2014 2:44 pm
 
Forum: Investing - Theory, News & General
Topic: Indexing in EM, and Templeton's Mobius
Replies: 7
Views: 540

Indexing in EM, and Templeton's Mobius

http://www.cbsnews.com/news/passive-management-still-wins-in-inefficient-markets/
Often hear that active wins in less efficient markets, and Mobius often cited as a guru
Record says otherwise
Larry
by larryswedroe
Tue Aug 19, 2014 9:31 am
 
Forum: Investing - Theory, News & General
Topic: Indexing in EM, and Templeton's Mobius
Replies: 7
Views: 540

Re: High yield bonds in a portfolio

jdb
Your post "inspired" me to do an update (:-))
Larry
by larryswedroe
Mon Aug 18, 2014 8:43 pm
 
Forum: Investing - Theory, News & General
Topic: High yield bonds in a portfolio
Replies: 5
Views: 702

Re: commodity funds and currency risk

dodonnell
Only problem is that there are correlations that matter. When dollar falls commodity prices tend to rise, as I explained. That helps offset the long dollar position, and vice versa
Larry
by larryswedroe
Mon Aug 18, 2014 8:05 pm
 
Forum: Investing - Theory, News & General
Topic: commodity funds and currency risk
Replies: 8
Views: 536

Re: commodity funds and currency risk

few thoughts
First commodities around the world a dollar based. But
Second when dollars fall commodity prices tend to rise because commodities become cheap for rest of world, increasing demand for them. And of course vice versa also true
Larry
by larryswedroe
Sun Aug 17, 2014 6:03 pm
 
Forum: Investing - Theory, News & General
Topic: commodity funds and currency risk
Replies: 8
Views: 536

Re: Shiller on Lofty Market Elevations

couple of things First, dividend payments way down as fewer and fewer companies paying them. At least in theory when have lower dividend payments earnings growth should be higher and thus P/E higher, all else equal. Someone estimated this difference at being worth 1 in the Shiller PE Second, change ...
by larryswedroe
Sun Aug 17, 2014 11:31 am
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 53
Views: 4360

Re: 'Risk Creep' - new term

Love it, very persistent and pervasive in IMO most investors, including pension plans
Larry
by larryswedroe
Sat Aug 16, 2014 10:23 am
 
Forum: Investing - Theory, News & General
Topic: 'Risk Creep' - new term
Replies: 26
Views: 2120

Re: Performance chasing vs. stay-the-course.

Taylor BTW-there is good evidence from even pension plans that they are performance chasers, not just in asset managers (the managers they fire go on to outperform their replacements) but in asset classes--they increase policy weights after periods of outperformance. Amazingly they fail to understan...
by larryswedroe
Fri Aug 15, 2014 6:39 pm
 
Forum: Investing - Theory, News & General
Topic: Performance chasing vs. stay-the-course.
Replies: 4
Views: 559

Re: TIPS: a separate Bond category?

Few thoughts First you can buy long term or short term TIPS Second, note that the biggest advantage of TIPS is that they allow you to earn the term premium without taking inflation risk---the biggest risk in nominal bonds. Third, IMO the "right" way to handle this is to have TWO category o...
by larryswedroe
Fri Aug 15, 2014 6:36 pm
 
Forum: Investing - Theory, News & General
Topic: TIPS: a separate Bond category?
Replies: 13
Views: 1335

Re: good short very Bogleheadish interview with Cliff Asness

Garland
I had pleasure of having dinner with Cliff, as well as meeting with him several times, and really smart guy and great sense of humor
Larry
by larryswedroe
Fri Aug 15, 2014 9:43 am
 
Forum: Investing - Theory, News & General
Topic: good short very Bogleheadish interview with Cliff Asness
Replies: 2
Views: 736

a look at bank loan funds

http://www.etf.com/sections/index-investor-corner/22950-swedroe-bank-loan-funds-no-free-lunch.html
Another place investors look to for more yield in this environment
Hope you find it helpful
Larry
by larryswedroe
Fri Aug 15, 2014 9:42 am
 
Forum: Investing - Theory, News & General
Topic: a look at bank loan funds
Replies: 1
Views: 485

Re: Do Ex-US funds rebalance to maintain Dev:EM ratio?

countmein
Don't know, not really familiar with that selectively hedged fund---am familiar with the selectively hedged bond fund which I've owned as play on carry trade
Larry
by larryswedroe
Thu Aug 14, 2014 4:20 pm
 
Forum: Investing - Theory, News & General
Topic: Do Ex-US funds rebalance to maintain Dev:EM ratio?
Replies: 12
Views: 592

Re: Do Ex-US funds rebalance to maintain Dev:EM ratio?

countmein
First, that may have been market cap weighting at the time of inception.
Second, it might also be that they made policy decision to overweight US due to investor/advisor home country biases
Larry
by larryswedroe
Thu Aug 14, 2014 2:51 pm
 
Forum: Investing - Theory, News & General
Topic: Do Ex-US funds rebalance to maintain Dev:EM ratio?
Replies: 12
Views: 592

Re: Do Ex-US funds rebalance to maintain Dev:EM ratio?

countmein Nothing antithetical at all The funds have tilts to small and value that they want to maintain and the rebalances happens there with other people's money. You buy what you need to with cash flows vs. Selling winners Also I don't see why you would not want to market cap weight the developed...
by larryswedroe
Thu Aug 14, 2014 2:33 pm
 
Forum: Investing - Theory, News & General
Topic: Do Ex-US funds rebalance to maintain Dev:EM ratio?
Replies: 12
Views: 592

Re: Average investor even underperforms cash

Richard If the "average investor" consistently trails the market, that must mean another group consistently beats the market. Not true at all. Only true BEFORE COSTS Example, for individual investors the stocks they buy go on to underperform and the stocks they sell go on to outperform. So...
by larryswedroe
Thu Aug 14, 2014 1:29 pm
 
Forum: Investing - Theory, News & General
Topic: Average investor even underperforms cash
Replies: 8
Views: 1279

Re: Interesting BRK tidbit

and no taxes on dividends in meantime either (:-))
Larry
by larryswedroe
Thu Aug 14, 2014 1:26 pm
 
Forum: Investing - Theory, News & General
Topic: Interesting BRK tidbit
Replies: 16
Views: 1794

Interesting BRK tidbit

Berkshire Hathaway is now trading over $200,000 per share for the first time, the highest priced issue in the market

Warren has returned 22.6% per year compounded since it crossed $100 in May 1977
by larryswedroe
Thu Aug 14, 2014 12:52 pm
 
Forum: Investing - Theory, News & General
Topic: Interesting BRK tidbit
Replies: 16
Views: 1794

Re: Grade Vanguard's performance: is 77% an A?

absolutely
You should expect purely random outperformance by some active managers even if market perfectly efficient. What you see is what someone noted, that over time the percentage outperformance vs average increases.
Larry
by larryswedroe
Thu Aug 14, 2014 11:27 am
 
Forum: Investing - Theory, News & General
Topic: Grade Vanguard's performance: is 77% an A?
Replies: 10
Views: 731

Re: three reading recommendations

Jeb
Sorry don't have book any longer, but I think he means rotating between where the values are best, highest returns expected, what looks cheapest. But don't hold me to that. so might be now more international and EM as valuations much lower there.
Larry
by larryswedroe
Wed Aug 13, 2014 5:38 pm
 
Forum: Investing - Theory, News & General
Topic: three reading recommendations
Replies: 11
Views: 1821

Re: three reading recommendations

tiger
what he's saying is that if you don't decide to sell you are effectively making decision to buy at today's price, because you could sell. Without considering frictions (taxes and trading costs) that is only right way to think about it. But with real world frictions should be accounted for
Larry
by larryswedroe
Wed Aug 13, 2014 3:33 pm
 
Forum: Investing - Theory, News & General
Topic: three reading recommendations
Replies: 11
Views: 1821

Re: Understanding implications of Shiller CAPE on retirement

This is pretty simple. Valuations matter a great deal, At 10 year horizons they explain 40% of future returns ---changes in valuation (risk premiums) explain the difference. Note that you need to think of the expected return only as the mean of a wide dispersion of returns, with about 8% above and b...
by larryswedroe
Wed Aug 13, 2014 8:44 am
 
Forum: Investing - Theory, News & General
Topic: Understanding implications of Shiller CAPE on retirement
Replies: 25
Views: 2098

Re: Left Tail Smackdown*: Larry vs. Permanent Portfolio

FWIW The NY Times reporter Ron Leiber gave it that name, in our firm's lingo it's referred to as Risk Target 6 , the highest Risk Target you can achieve When we originally designed some model portfolios we labeled them RT 1, 2, 3, and 6. The numbers refer to the amount of tilt. So roughly a RT 1 por...
by larryswedroe
Wed Aug 13, 2014 8:38 am
 
Forum: Investing - Theory, News & General
Topic: Left Tail Smackdown*: Larry vs. Permanent Portfolio
Replies: 15
Views: 2391

three reading recommendations

http://www.cbsnews.com/news/dont-miss-reads-for-investors/

All worthwhile "investments" of your time

Larry
by larryswedroe
Wed Aug 13, 2014 8:33 am
 
Forum: Investing - Theory, News & General
Topic: three reading recommendations
Replies: 11
Views: 1821

Re: Does domestic over weighting qualify as active managemen

wagner
Never did I say or imply that it was bad, just that it's an active decision. larry
by larryswedroe
Mon Aug 11, 2014 10:20 pm
 
Forum: Investing - Theory, News & General
Topic: Does domestic over weighting qualify as active management?
Replies: 26
Views: 1182

Re: Risk and Return of Tilted and Market Balanced Funds

First, I am very familiar with M* rating which was changed recently because it was WRONG. Now it is more accurate. But it is clearly wrong on DFA's credit quality. Asset chaos The tilted stock funds are called “core”; I assume that means DFA touts them as suitable, even desirable, as a core stock ho...
by larryswedroe
Mon Aug 11, 2014 10:18 pm
 
Forum: Investing - Theory, News & General
Topic: Risk and Return of Tilted and Market Balanced Funds
Replies: 19
Views: 2452

Re: Does domestic over weighting qualify as active managemen

any tilt away from market cap weighting is active management. Now that doesn't necessarily make it wrong as there may be very logical reasons why you might differ in risk ability from the market. For example, since employed in US you likely have your labor capital correlated more to US stocks, which...
by larryswedroe
Mon Aug 11, 2014 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: Does domestic over weighting qualify as active management?
Replies: 26
Views: 1182

Re: So where's that inflation many forecasted?

valuethinker there is no problem with the monetary model velocity is part of the determinant of the money supply. Monetary base times Velocity. So you get inflation if velocity rises AND FED doesn't compensate by reducing monetary base. In other words as Friedman said inflation is everywhere, anywhe...
by larryswedroe
Mon Aug 11, 2014 1:55 pm
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2597

Re: So where's that inflation many forecasted?

few things First, no longer posting at Seeking Alpha, was 6 month experiment we ran. Still writing same amount and you can follow them here http://www.cbsnews.com/search/author/larry-swedroe/ and http://www.etf.com/sections/index-investor-corner.html , where you can also find Allan Roth's and Rick F...
by larryswedroe
Mon Aug 11, 2014 1:08 pm
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2597

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

And that's why I'm not really impressed with the value effect--it's really just loading on high yield Worth noting that value stocks tend to be higher leverage and weaker credits. With that said --the value stocks benefit from the "call risk" while investors in high yield have not been re...
by larryswedroe
Mon Aug 11, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428

Re: Left Tail Smackdown: Larry vs. Permanent Portfolio

Browser Just notes of caution. First there is no one right "Larry Portfolio"--the term really just means the highest tilt one can get. What equity allocation is depends on your need to take risk. The Larry Portfolio should include international exposure say for 50% of equity. And the LP eq...
by larryswedroe
Mon Aug 11, 2014 10:58 am
 
Forum: Investing - Theory, News & General
Topic: Left Tail Smackdown*: Larry vs. Permanent Portfolio
Replies: 15
Views: 2391

Re: is the S&P actively managed?

Nisi Yes funds can choose and it must only be appropriate. So somewhat easy to "game" system by choosing an easily beatable benchmark. So like R2k in particular was easy benchmark to beat due to issues around the reconstitution date. CRSP 6-10 beat it I think by something like 2% a year fo...
by larryswedroe
Mon Aug 11, 2014 10:53 am
 
Forum: Investing - Theory, News & General
Topic: is the S&P actively managed?
Replies: 10
Views: 1287

Re: So where's that inflation many forecasted?

Gropes At the risk of rapidly exhausting my tiny knowledge of macro-econ, inflation will hit when the appetite for risk returns, and people start spending more. Inflation is MONETARY phenomenon. if demand picks up you will see banks increase lending and money multiplier picks up and then as people s...
by larryswedroe
Mon Aug 11, 2014 10:51 am
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2597

So where's that inflation many forecasted?

Thought this would be of interest? So many forecasted higher inflation and thus recommended staying very short with bonds. Why haven't we had that higher inflation, yet? And will we get it? http://www.etf.com/sections/index-investor-corner/22886-swedroe-easy-monetary-policy--inflation.html?showall=&...
by larryswedroe
Mon Aug 11, 2014 10:22 am
 
Forum: Investing - Theory, News & General
Topic: So where's that inflation many forecasted?
Replies: 43
Views: 2597

Re: Endowments: Paying for complexity or performance?

Study on yale endowment found that once accounted for liquidity premiums there was no alpha generated. So Swensen's claims of being able to pick better managers doesn't hold up. He also it turns out underestimated liquidity needs. Apparently not realizing or ignoring the issue of that in severe bear...
by larryswedroe
Sun Aug 10, 2014 9:31 am
 
Forum: Investing - Theory, News & General
Topic: Endowments: Paying for complexity or performance?
Replies: 14
Views: 1045

Re: "The Cost of Chasing Returns" from St Louis Fed

note mutual funds exhibit the same behavior. Cash balances tend to be highest at market bottoms
by larryswedroe
Sun Aug 10, 2014 8:44 am
 
Forum: Investing - Theory, News & General
Topic: "The Cost of Chasing Returns" from St Louis Fed
Replies: 6
Views: 861

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

when the spreads on HY are high, it's the same time that the ERP and size and value premiums are high
Larry
by larryswedroe
Sun Aug 10, 2014 8:40 am
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428

Re: [Looking for] Larry Swedroe

Now writing once week for CBS and 3-4 for ETF.com. I post them on the Theory/Investing Boglehead site. Not posting blogs any longer for Seeking Alpha. it was "experiment" for 6 months also just finished first draft of new short book working on The quest for alpha, the hurdles are getting h...
by larryswedroe
Sat Aug 09, 2014 10:16 pm
 
Forum: Local Chapters and Bogleheads Community
Topic: [Looking for] Larry Swedroe
Replies: 9
Views: 1717

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

When looking at portfolios with same return I look at both the SD and the largest losses, and you can also see this in MCS runs to see if odds of failure go down (the odds of leaving a large estate will also go down)
Larry
by larryswedroe
Sat Aug 09, 2014 5:39 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428

Re: Prove adding SV will lower the risk, given the same E(r)

RCA I don't agree with this at all Was the price crash an efficient and accurate proxy for the true underlying value of the stock market? Of course not--it was driven by animal spirits and the ignorant masses panicking and pulling their money out Easily said in hindsight. No one knew that the Fed's ...
by larryswedroe
Fri Aug 08, 2014 9:40 pm
 
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 3986

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

Johno I agree it has pushed them into DIV paying stocks and RE and HY as well, all yield chasing And you see it in the valuations of all them. Now stocks got some of that as well. But I don't see any real sign that stocks are in a bubble or so highly valued that prices are very high in historical te...
by larryswedroe
Fri Aug 08, 2014 9:35 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

value thinker won't argue with your points but the fact remains that the Fed's actions create some negatives. First, they penalize savers and hurt those living on bond yields and that leads to many taking risks they really don't understand, creating potential big damage --like what happened in 2008-...
by larryswedroe
Fri Aug 08, 2014 6:15 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

tamales The high tilt and low beta portfolio is exactly what you are looking for--that's what the book reducing the risk of black swans shows---and it's because of how correlations shift that gets you the cutting of the left tail more than the right tail. JOhno Yes fallen angels are very different t...
by larryswedroe
Fri Aug 08, 2014 4:09 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428

star fund managers lose luster

http://www.etf.com/sections/index-investor-corner/22871-swedroe-star-fund-managers-lose-luster.html

Rarely do we see anyone holding "award winners" (or those giving them) or forecasters accountable. thought this analysis would be of interest

Larry
by larryswedroe
Fri Aug 08, 2014 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: star fund managers lose luster
Replies: 2
Views: 519

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

Tamales Alternative is simple, don't buy the HY in first place. They simply don't mix well and in portfolios you see less efficient outcomes when you add them. Stlutz IMO not fan of low vol as I just don't see the evidence--IMO it's mostly value and term exposure explaining the issue, but more impor...
by larryswedroe
Fri Aug 08, 2014 9:13 am
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

In reality here's the problem I think you might be missing I hope we agree that one should not take more risk than you have the ability, willingness and need to take.Or at very least, not the first two because the risk can show up and you may either be forced to sell due to life events or your stoma...
by larryswedroe
Thu Aug 07, 2014 11:39 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428

Re: Volatility: Oh how I love thee.

Rick
Wait till you're in the withdrawal phase and we'll see if you still love volatility (:-))
Accumulators, especially those in early stages should pray for it (or at least bear markets that don't cost them their labor capital), but withdrawers are very different story
Best
Larry
by larryswedroe
Thu Aug 07, 2014 4:56 pm
 
Forum: Investing - Theory, News & General
Topic: Volatility: Oh how I love thee.
Replies: 44
Views: 3052

Re: High Yield Bonds - Uncorrelated to Stocks and Bonds?

Nisiprius If you run factor regressions the models do a pretty good job of explaining the returns of HY without any default premium including in the regression. Not perfect of course, but pretty good But IMO a big mistake investors make is focusing solely on correlations instead of looking at when t...
by larryswedroe
Thu Aug 07, 2014 4:51 pm
 
Forum: Investing - Theory, News & General
Topic: High Yield Bonds - Uncorrelated to Stocks and Bonds?
Replies: 58
Views: 3428
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