Search found 1254 matches

by longinvest
Wed Jul 29, 2015 11:34 am
Forum: Investing - Theory, News & General
Topic: "A Random Walk Down Wall Street"
Replies: 11
Views: 1260

Re: "A Random Walk Down Wall Street"

Any successful technical scheme must ultimately be self defeating. The moment I realize that prices will be higher after New Year's Day than they are before Christmas, I will start buying before Christmas ever comes around. If people know a stock will go up tomorrow, you can be sure it will go up t...
by longinvest
Wed Jul 29, 2015 10:39 am
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

The point I guess I'm trying to make is any timing or valuation models that result in portfolio changes isn't mainstream Boglehead philosophy. Just to be clear, I haven't seen many in this thread advocating the use of "expected returns" as a timing or a valuation tool for portfolio change...
by longinvest
Wed Jul 29, 2015 7:27 am
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

Suppose that I am 65 years old and have $1,000,000 portfolio invested 50/50 in TSM/TBM. I will fund my 30-year retirement by withdrawing from the portfolio. I am willing to spend down the portfolio. How much should I withdraw each year? Of course, everyone is familiar with the 4% + inflation withdr...
by longinvest
Tue Jul 28, 2015 7:35 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

"Job one for any investor is to estimate asset class returns. For the first time, Antti Ilmanen has assembled into one volume all of the tools necessary for this task: for the working money manager, a unique treasure trove of analytical techniques and empirical evidence; for the academic, a co...
by longinvest
Tue Jul 28, 2015 7:17 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: Boglehead Contests

Bogleheads: Many years ago I started the Boglehead Contests to demonstrate how difficult it is to forecast stock market returns. I pay no attention to stock market forecasts. They are meaningless to a buy and hold investor -- and usually wrong. We get what the market gives. Best wishes. Taylor Than...
by longinvest
Tue Jul 28, 2015 6:56 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

I have yet to see anybody, in this thread, provide an actionable alternative, like a better way to construct a portfolio using return predictions that is guaranteed to outperform the proposed good enough portfolio built without return predictions. Okay, that is fair enough. I dropped a couple words...
by longinvest
Tue Jul 28, 2015 4:59 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

lack_ey, I will not reply to your comments related to a hypothetical (unactionable) example that assumes being privy to some priviledged information. In Canada, it is illegal to trade on the markets taking advantage of such information. I am relatively confident that it is also illegal to do so in t...
by longinvest
Tue Jul 28, 2015 4:48 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

I have yet to see anybody, in this thread, provide an actionable alternative, like a better way to construct a portfolio using return predictions that is guaranteed to outperform the proposed good enough portfolio built without return predictions. Okay, that is fair enough. I dropped a couple words...
by longinvest
Tue Jul 28, 2015 2:45 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

There also seems to be some changing of the language, or I just misinterpreted some things. It's hard to get what is meant. [*] I said that to make an asset allocation choice, there is no need for taking into consideration future return predictions. Note that I did not say that one cannot or should...
by longinvest
Tue Jul 28, 2015 11:15 am
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

As I said... It quickly turns in a religious debate (notably with the tone set by the OP). Which means that the only exercise in futility here is to even try to discuss the matter in a rational manner. Hopeless. Both sides will stick to their guns, and zero progress will be made. Personally, I woul...
by longinvest
Tue Jul 28, 2015 7:58 am
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

It's not a prediction of future returns that would keep me away from the get-rich-quick scheme; it's my conviction that I am unlikely to be given an invitation to join a select club of investors that have found the recipe to beat the market. :) Ah, so you hold the global market portfolio? Maynard, ...
by longinvest
Tue Jul 28, 2015 7:50 am
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

In other words: Can you guarantee that you'll build a better portfolio than the above good enough portfolio, using return predictions? Depends how you define "better" really, as all this stuff is probabilistic. Nobody can guarantee better return, just maybe a higher likelihood of some mor...
by longinvest
Tue Jul 28, 2015 6:48 am
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

There's a natural human tendency to want to predict future returns. Ya think? Your good-for-nothing brother-in-law asks you to hand over some of your hard earned money to invest in another of his half-baked, get-rich-quick schemes. Wouldn't you want to do some analysis to see if there is a chance o...
by longinvest
Mon Jul 27, 2015 11:36 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

I am a 3 fund guy myself, but we should recognize that the boglehead philosophy involves one key ingrained assumption. "Stuff always goes up over the long term" ... Chan, ⋅  Do you expect a TIPS bond to pay inflation-adjusted coupons every 6 months and an inflation-adjusted prin...
by longinvest
Mon Jul 27, 2015 11:22 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

I don't forecast future returns when I take into account my understanding of assets characteristics (nature of bonds and stocks) and market dynamics (the impact of offer and demand on prices) when setting an allocation. Just so we're clear and have an understanding, do you disagree about there bein...
by longinvest
Mon Jul 27, 2015 10:42 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

In other words: Can you guarantee that you'll build a better portfolio than the above good enough portfolio, using return predictions? You can't guarantee anything in investing, but we all rely on predictions to construct our portfolios .. That statement is FALSE . You do include me in your "w...
by longinvest
Mon Jul 27, 2015 8:16 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

[...quote...] Exactly right. All the OP 'proved' is that there is dispersion. Er, sure. This doesn't mean that the mean point in such dispersion isn't valuable information. EACH AND EVERY OF US (accumulators, retirees, the OP) make assumptions about future returns (including some level of dispersio...
by longinvest
Mon Jul 27, 2015 7:38 pm
Forum: Investing - Theory, News & General
Topic: Vanguard's Developed & Emerging Markets Indexes — Transition Details
Replies: 48
Views: 3436

DCA wins over Lump Sum!

Relevant quote: In a July 21 note on China's recent equity market volatility, Joseph Brennan, Malvern, Pa.-based principal and global head of equity indexing with Vanguard, said the fund has yet to start investing in A shares but will begin later this year, spreading its purchases over a 12-month p...
by longinvest
Mon Jul 27, 2015 7:29 pm
Forum: Investing - Theory, News & General
Topic: 50/50 asset allocation
Replies: 69
Views: 5479

Re: 50/50 asset allocation

There is a long-term bond fund that even bond-phobes might appreciate in bear markets ... Here's 2008's experience -- iShares 20+ Year Treasury Bond (TLT): +31% --SPDR S & P 500 (SPY): -37% -- Vanguard Total Bond Market ETF (BND): +7.5% Wouldn't it be nice to re-balance into beat-down stocks fr...
by longinvest
Mon Jul 27, 2015 4:51 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

As stated, these can be anchored to TIPS return held to maturity, which "needs no return prediction." [aside from the likelihood the government pays you back on those, maybe] If I understand you, you are saying that any Boglehead that ever considered that the U.S. government would pay the...
by longinvest
Mon Jul 27, 2015 4:09 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

So how do we know when to retire or what our assets will support if gauging the magnitude of future returns is futile? One has to make some assumptions about the future in order to plan for the future. You can easily determine that a TIPS ladder will let you retire for 30 years with a little less t...
by longinvest
Mon Jul 27, 2015 4:00 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

Cash is not an investment. It is useful as a reserve for short-term expected expenses. I do not consider cash as part of my portfolio. Bonds and bond-likes instruments (like CDs) carry a higher interest rate. Cash has high predictability in the short term. Looks like lower volatility than bonds. Wh...
by longinvest
Mon Jul 27, 2015 3:29 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

So how do we know when to retire or what our assets will support if gauging the magnitude of future returns is futile? One has to make some assumptions about the future in order to plan for the future. You can easily determine that a TIPS ladder will let you retire for 30 years with a little less t...
by longinvest
Mon Jul 27, 2015 3:20 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

Re: The Futility of Predicting Future Returns

I don't disagree with the limited predictability of asset class behaviors to varying degrees, with stocks being very widely unpredictable, but I don't see how we can go from no estimates to returns to international/domestic splits and stock/bond splits without more information than what's given. Ba...
by longinvest
Mon Jul 27, 2015 1:57 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 86
Views: 3727

The Futility of Predicting Future Returns

There's a natural human tendency to want to predict future returns. If I knew exactly how much markets will return between now and my retirement, and between my retirement and my death, I would know exactly how much money I need to save on each paycheck. Better, yet, I could put all my money in the ...
by longinvest
Mon Jul 27, 2015 11:42 am
Forum: Investing - Theory, News & General
Topic: Slice and Dice: why not?
Replies: 84
Views: 4496

Re: Slice and Dice: why not?

Who said "expect SEC Yield"? If you think I said that, you are putting word in my mouth, I wrote to use SEC Yield to forecast return. You didn't, but I've seen that kind of prediction (without a range) quite often. You have probably seen it, too. You're preaching to the loudest voice in t...
by longinvest
Mon Jul 27, 2015 10:29 am
Forum: Investing - Theory, News & General
Topic: estimate future real returns ?
Replies: 16
Views: 1244

Re: estimate future real returns ?

Is there a way to estimate real returns for a 50/50 and 60/40 stock bond allocation using Total stock market index fund and Total bond market index fund for the next 10 years ? Coachz, Here's my take on it, from another thread: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=170207&p=...
by longinvest
Mon Jul 27, 2015 9:54 am
Forum: Investing - Theory, News & General
Topic: Slice and Dice: why not?
Replies: 84
Views: 4496

Re: Slice and Dice: why not?

For bonds, forecast returns using YTM or SEC Yield for bond funds. Using SEC Yield as a prediction assumes that a fund will distribute back principal to investors (on maturity) in addition to coupons until the duration becomes 0 and the fund is closed. This is not how a bond fund works! A bond fund...
by longinvest
Mon Jul 27, 2015 9:27 am
Forum: Investing - Theory, News & General
Topic: Should you invest in currency-hedged foreign stock funds?
Replies: 3
Views: 197

Re: Should you invest in currency-hedged foreign stock funds?

Here's a Vanguard paper saying the reverse. Currency management: Considerations for the equity hedging decision https://personal.vanguard.com/pdf/icrcmc.pdf When an investor’s primary motivation is risk management of a global-equity portfolio, applying portfolio theory implies adjusting the currency...
by longinvest
Mon Jul 27, 2015 9:07 am
Forum: Investing - Theory, News & General
Topic: 50/50 asset allocation
Replies: 69
Views: 5479

Re: 50/50 asset allocation

Personally I have found that my target drawdown rate of 1-2%, I get very little benefit from varying withdrawals based on market conditions, so I will cross that bridge when I get to it. So, your target is up to 100 times your projected annual expenses. You're lucky! I couldn't pick such a high tar...
by longinvest
Mon Jul 27, 2015 8:51 am
Forum: Investing - Help with Personal Investments
Topic: Need a Piece of Evidence on the Boglehead Strategy
Replies: 34
Views: 2746

Investing in Total Markets

Investing in Total Markets, by John Norstad http://www.norstad.org/finance/total.html The arguments for investing in total markets are based on market history, simple arithmetic, and financial theory. Many people feel that the strongest arguments for investing in total markets are based on market hi...
by longinvest
Mon Jul 27, 2015 8:41 am
Forum: Investing - Theory, News & General
Topic: 50/50 asset allocation
Replies: 69
Views: 5479

Re: 50/50 asset allocation

HISTORICAL DATA, 30 yetirement 4% drawdown rate: 75-95% equity: 93.04% success 3% drawdown rate: 20-100% equity : 100% success OK, we're back to another SWR straw man! Of course, there was a need for another SWR post of the day ... No rational human would ever continue to spend an inflation-adjuste...
by longinvest
Sun Jul 26, 2015 5:38 pm
Forum: Investing - Help with Personal Investments
Topic: Why invest in BNDX's when 30 day SEC yield = 0.76%.
Replies: 102
Views: 6683

Re: Why invest in BNDX's when 30 day SEC yield = 0.76%.

I hope that you can spare some additional patience to help me check that I really understand you clearly. Generally correct. A refinement is that your real counterparty in the hedge is another customer of Bank CP who wishes to hedge $1100 back to euros at the current exchange rate, but the bank enc...
by longinvest
Sun Jul 26, 2015 3:56 pm
Forum: Investing - Help with Personal Investments
Topic: Why invest in BNDX's when 30 day SEC yield = 0.76%.
Replies: 102
Views: 6683

Re: Why invest in BNDX's when 30 day SEC yield = 0.76%.

As I've cited in my previous post, the total currency hedging cost (tracking error) has been of an annualized 2% for a major S&P 500 index ETF hedged to the Canadian dollar, between 2006 and 2011. This is significant. All this during a time when, as far as I know, the ETF didn't have to deal wi...
by longinvest
Sun Jul 26, 2015 3:22 pm
Forum: Investing - Help with Personal Investments
Topic: Why invest in BNDX's when 30 day SEC yield = 0.76%.
Replies: 102
Views: 6683

Re: Why invest in BNDX's when 30 day SEC yield = 0.76%.

So, I'll avoid it until someone actually explains it to me like if I was not a derivatives trader (which I am not). Theoretical maximum risk is paying the currency hedge premiums, but still having the entire currency exposure unhedged due to zero payout from the hedge contract. I think VG was claim...
by longinvest
Sun Jul 26, 2015 2:21 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 100
Views: 9571

Re: Scott Burns – Don’t quit your day job.

I have to disagree with you on the additional 1-3 years. Don't you remember, not so long ago, Prof. Pfau predicting a 1.8% SWR for 2010 retirees? He was so wrong, and we're talking of an academic with a Ph.D. specializing in retirement, here! We've been enjoying a 4-5 year bull market since then. C...
by longinvest
Sun Jul 26, 2015 1:17 pm
Forum: Investing - Help with Personal Investments
Topic: Why invest in BNDX's when 30 day SEC yield = 0.76%.
Replies: 102
Views: 6683

Re: Why invest in BNDX's when 30 day SEC yield = 0.76%.

Bonds are the less risky part of my portfolio. I have trouble including riskier stuff there, unless I better understand the risk and its size. You mean like unhedged international bonds? Without currency hedging, currency volatility would dominate the comparatively lower volatility of the bonds the...
by longinvest
Sun Jul 26, 2015 1:06 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 100
Views: 9571

Re: Scott Burns – Don’t quit your day job.

Someone who postponed retirement 1-3 years in 2010 would be financially much better off than the person who didn't. We will have to agree to disagree. BobK Anybody who postpones retirement 1-3 years, in any year, will be in better financial shape than the person who didn't. :oops: Will you personal...
by longinvest
Sun Jul 26, 2015 12:58 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 100
Views: 9571

Re: Scott Burns – Don’t quit your day job.

So, concretely, for people recently retired or about to retire, there is not much actionable other than the basic Bogleheads approach of selecting an appropriate AA and not try to time the market. A retiree can build a predictable base income using delayed Social Security (and a CD ladder to bridge...
by longinvest
Sun Jul 26, 2015 11:49 am
Forum: Investing - Theory, News & General
Topic: Would Demand For Bonds Temper the Drop in NAV
Replies: 13
Views: 783

Re: Would Demand For Bonds Temper the Drop in NAV

Sometimes this timing is legitimate. If the instrument you're using an alternative is not accessible to the market at large, like bank CDs or Stable Value funds, then it isn't as much "market timing" as "good deal hunting". Nothing forbids pricing discrepancies that the market i...
by longinvest
Sun Jul 26, 2015 11:40 am
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 100
Views: 9571

Re: Scott Burns – Don’t quit your day job.

The next 10-15 years are very important to people that have recently retired or are about to retire. These low dividend yields and interest rates are going to have an impact that can't be waved away by believing (hoping?) things will be better 20-30 years from now. :( BobK Let's agree that current ...
by longinvest
Sun Jul 26, 2015 11:17 am
Forum: Investing - Theory, News & General
Topic: Would Demand For Bonds Temper the Drop in NAV
Replies: 13
Views: 783

Re: Would Demand For Bonds Temper the Drop in NAV

I personally would probably hold more bonds once rates rise again. But then again, it smacks of thinking I can time the bond market! Drat! Very Unbogleheadish. Sometimes this timing is legitimate. If the instrument you're using an alternative is not accessible to the market at large, like bank CDs ...
by longinvest
Sun Jul 26, 2015 11:14 am
Forum: Investing - Theory, News & General
Topic: Would Demand For Bonds Temper the Drop in NAV
Replies: 13
Views: 783

Re: Would Demand For Bonds Temper the Drop in NAV

Max, The way I look at it is this. As I have a balanced portfolio (it contains both stocks and bonds), my AA forces me to hold less bond* when they are expensive (low yields). If bonds became cheaper (higher yields), my AA would force me to buy more bonds. * I actually mean fewer bonds, in the sense...
by longinvest
Sun Jul 26, 2015 10:44 am
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 100
Views: 9571

Re: Scott Burns – Don’t quit your day job.

Bob, Inflation is also significantly lower than in the 70s and 80s. Yes we know current nominal bond yields, but the duration of TBM is only 5 years. If one's investment horizon is much longer than that (something like 30 years for a retiree), current yields tell us pretty much nothing about the tot...
by longinvest
Sun Jul 26, 2015 10:29 am
Forum: Investing - Theory, News & General
Topic: 50/50 asset allocation
Replies: 69
Views: 5479

Re: 50/50 asset allocation

Either this, or hold 90/10 and rebalance. I did some simulations with cfiresim and 90/10 seemed to outperform 100/0 in success rate. And, of course, you most probably simulated a brain-dead 30-year SWR retirement that nobody would do (no rational human would continue withdrawing an inflation-adjust...
by longinvest
Sun Jul 26, 2015 10:17 am
Forum: Investing - Theory, News & General
Topic: What 2008/09 has done to me
Replies: 158
Views: 18725

Re: What 2008/09 has done to me

What 2008/2009 has done to me... Well, a few things : 1. I decided to continue to be ultra conservative with my investments, that has meant no stocks or index funds, but only CDs, munis, deferred annuities or equivalent 2. I also decided to buy a condo cash in the Fall of 2008, and planned to keep ...
by longinvest
Sun Jul 26, 2015 7:40 am
Forum: Investing - Theory, News & General
Topic: "Total" Stock No More So than "Total" Bond
Replies: 52
Views: 3789

Re: "Total" Stock No More So than "Total" Bond

I just posted a link to the following article on another thread. http://vanguardadvisorsblog.com/2014/12/08/busting-a-bond-index-myth-or-dont-call-me-hal/ I’m not really sure how the misconception that running a bond index fund is as simple as turning on a computer got started. Perhaps it’s just eas...
by longinvest
Sun Jul 26, 2015 7:14 am
Forum: Investing - Theory, News & General
Topic: Are Stocks Overvalued? A Survey of Equity Valuation Models
Replies: 202
Views: 11459

Re: Are Stocks Overvalued? A Survey of Equity Valuation Models

By the way, a "passive" "bond fund" may be a tautology. A friend in our local Bogleheads chapter tells of touring Vanguard in Malvern, PA. The bond department is much larger (in terms of desks) than the stock department. He said that TSM, for all its billions, is managed (monito...
by longinvest
Sat Jul 25, 2015 9:46 pm
Forum: Investing - Help with Personal Investments
Topic: Why invest in BNDX's when 30 day SEC yield = 0.76%.
Replies: 102
Views: 6683

Re: Why invest in BNDX's when 30 day SEC yield = 0.76%.

Investors who want to avoid currency hedging completely probably should avoid investing in equities. Companies routinely hedge future expected revenue back to their home currency using cash flow hedges. Stocks make up the riskier part of my portfolio. I don't mind them doing all kind of stuff; I ac...

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