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by longinvest
Mon May 25, 2015 2:10 pm
Forum: Investing - Theory, News & General
Topic: Are Bond ETFs a bad idea?
Replies: 40
Views: 2270

Re: Are Bond ETFs a bad idea?

The real question remains: was the calculated NAV really a fair price for fund redemptions? Was a bond fund really able to unload bonds at the calculated NAV price, or did remaining fund investors absorb the difference that ETF sellers had to absorb themselves? I guess that no fund company will ever...
by longinvest
Mon May 25, 2015 7:50 am
Forum: Investing - Theory, News & General
Topic: Are Bond ETFs a bad idea?
Replies: 40
Views: 2270

Re: Are Bond ETFs a bad idea?

How do you determine during the day if there is a liquidity problem? Does the bid/ask spread increase away from the norm? Would Morningstar show it as trading at a discount? In Canada, the NAV is only calculated after market close, so you can only estimate premiums or discounts during the day by ob...
by longinvest
Sun May 24, 2015 10:47 pm
Forum: Investing - Theory, News & General
Topic: Are Bond ETFs a bad idea?
Replies: 40
Views: 2270

Re: Are Bond ETFs a bad idea?

Again, limit at the mid point doesn't work. Often it will be executed because the market (together with the bid and the ask) moved higher, but it still means I sold at an unfair price at that time , and it's entirely balanced by the possibility that the entire circus moves lower. You're right about...
by longinvest
Sun May 24, 2015 12:48 pm
Forum: Investing - Theory, News & General
Topic: Are Bond ETFs a bad idea?
Replies: 40
Views: 2270

Re: Are Bond ETFs a bad idea?

The buyer will usually be (in such cases) a third party who is trying to accumulate and then destroy a basket. He knows he'll have a hard time getting rid of all the munis in the basket, so he wants a large discount before he's willing to do this. Whereas opportunistic selling from a diversified MF...
by longinvest
Sun May 24, 2015 12:43 pm
Forum: Investing - Theory, News & General
Topic: Are Bond ETFs a bad idea?
Replies: 40
Views: 2270

Re: Are Bond ETFs a bad idea?

Two reasons: 1) you've paid expenses to the fund to cover some of this; Not really. Most ETFs have lower expense ratios than mutual funds. There's, maybe, an exception with Vanguard Admiral Shares mutual funds. All the more so if the MF expenses are higher. The expenses I've paid to the mutual fund...
by longinvest
Sun May 24, 2015 12:30 pm
Forum: Investing - Theory, News & General
Topic: Stemikger "Volatility is far from synonymous with risk."
Replies: 48
Views: 2433

Re: Stemikger "Volatility is far from synonymous with risk."

A better suggestion is to stop worrying about how to define some word or another and just be explicit about what we might not want to have happen. Personally, I would not like to be doing badly in a bad time for me . This echoes William Sharpe's definition of risk as doing badly in bad times . I do...
by longinvest
Sun May 24, 2015 10:50 am
Forum: Investing - Theory, News & General
Topic: "Does Your Fund Manager Consistently Beat the Stock Market?"
Replies: 31
Views: 2202

Re: "Does Your Fund Manager Consistently Beat the Stock Market?"

Of course there is another way of looking at this.... Someone who invested $10k in 1975 would have today (I chose 1975 since that person would probably retire about now): FMAGX = $4.80M S&P 500 = $1.04M So despite the lackluster performance lately, over the long run it still looks pretty good. ...
by longinvest
Sun May 24, 2015 6:10 am
Forum: Investing - Theory, News & General
Topic: Are Bond ETFs a bad idea?
Replies: 40
Views: 2270

Re: Are Bond ETFs a bad idea?

Two reasons: 1) you've paid expenses to the fund to cover some of this; Not really. Most ETFs have lower expense ratios than mutual funds. There's, maybe, an exception with Vanguard Admiral Shares mutual funds. 2) the costs might not be large at all for the fund, since the entry/exit mechanism in i...
by longinvest
Sat May 23, 2015 9:58 pm
Forum: Investing - Theory, News & General
Topic: Are Bond ETFs a bad idea?
Replies: 40
Views: 2270

Re: Are Bond ETFs a bad idea?

ogd, If I have to sell during a liquidity crisis, why should remaining fund holders pay for me to exit the fund harmlessly? It's all about fairness. During a crisis, the problems is to establish a fair NAV for bond fund redemptions and subscriptions. If an incorrect NAV is used (due to stalled price...
by longinvest
Sat May 23, 2015 5:40 pm
Forum: Investing - Theory, News & General
Topic: Not your father's Total Bond Market Fund anymore
Replies: 60
Views: 6538

Re: Not your father's Total Bond Market Fund anymore

The Bar Cap Agg Index has stood as a model for the investment grade bond market for decades. As Jack Bogle has opined the market has changed in recent years and maybe it is time to change the index. I just supplied some data and asked if this is what people really want. Jack didn't offer an alterna...
by longinvest
Sat May 23, 2015 5:32 pm
Forum: Investing - Theory, News & General
Topic: Are Bond ETFs a bad idea?
Replies: 40
Views: 2270

Re: Are Bond ETFs a bad idea?

I remember reading several articles about liquidity problems and premium/discount swings to NAV with many types of Bond ETFs on volatile market days. I suppose this isn't a big issue with highly liquid, US gov bond ETFs, though. But what about corporate, high yield corporate, and international bond...
by longinvest
Sat May 23, 2015 9:41 am
Forum: Investing - Theory, News & General
Topic: Why government bonds at all?
Replies: 50
Views: 3142

Re: Why government bonds at all?

Charities also build infrastructure, invest in citizen's education, and do a lot of other things beneficial to the entire society. And many charities have steady cash flow that make them very low credit risks. I put it back to you: Why don't you invest in the bonds of charities and other non-profit...
by longinvest
Sat May 23, 2015 9:33 am
Forum: Investing - Theory, News & General
Topic: Why government bonds at all?
Replies: 50
Views: 3142

Re: Why government bonds at all?

But government bonds don't work that way. The government isn't a profit-producing entity and its goal is not necessarily to produce a good or service that is economically productive. Sure the government may do some economically useful things, but there are no market forces acting upon it forcing it...
by longinvest
Sat May 23, 2015 7:39 am
Forum: Investing - Theory, News & General
Topic: Taking out a HELOC to invest
Replies: 19
Views: 1606

Re: Taking out a HELOC to invest

The main reason almost nobody recommends putting all available money on the mortgage is mostly for behavioral reasons. By starting investments while paying down the mortgage, one learns about investing and, more importantly, one creates a habit of always investing. This avoids ending up house poor i...
by longinvest
Sat May 23, 2015 7:18 am
Forum: Investing - Help with Personal Investments
Topic: The Three Fund Portfolio [Portfolio help]
Replies: 5
Views: 458

Re: The Three Fund Portfolio

This might be a stupid question, so please bear wih me as I am a new investor. I understand the concept of the lazy three fund portfolio however how would I be able to accomplish this, when I have my 401k with Wells Fargo and my Roth IRA with vanguard, along with two separate funds with vanguard? T...
by longinvest
Mon May 18, 2015 7:05 am
Forum: Investing - Theory, News & General
Topic: Target Allocations between equities and bonds - Is the reasoning sound?
Replies: 49
Views: 3391

Re: Target Allocations between equities and bonds - Is the reasoning sound?

Here's where Mr. Buffett's reasoning fails for common people with average salary. Say a person is 64 planning her retirement. She's diligently invested money over the years into a 100% stock portfolio. Her portfolio has grown to an impressive $1M. Using the 4% rule of thumb, she plans on being able ...
by longinvest
Mon May 18, 2015 6:31 am
Forum: Investing - Theory, News & General
Topic: Do you think Ric Edelman is correct, never pay down mortgage
Replies: 257
Views: 23680

Re: Do you think Ric Edelman is correct, never pay down mortgage

Nobody has a lien on our home. We could lose our jobs tomorrow, the equity part of our portfolio could go to zero, liquidity could disappear, all corporate bonds could default, yet the government bond coupons of our total-bond holding would deliver enough money to pay city taxes. In other words, we ...
by longinvest
Sun May 17, 2015 7:05 pm
Forum: Investing - Theory, News & General
Topic: To ETF or Not to ETF? That is the question.
Replies: 50
Views: 5626

Re: To ETF or Not to ETF? That is the question.

Be aware of DRIP Drag with ETF's : http://www.etf.com/sections/blog/23595-your-etf-has-drip-drag.html With DRIP and a mutual fund you get the fair NAV price. With an ETF, you may get a bid/ask spread that is wider than you expect. You can just turn off DRIP or monitor your DRIP's carefully to make ...
by longinvest
Sun May 17, 2015 9:47 am
Forum: Investing - Theory, News & General
Topic: Target Allocations between equities and bonds - Is the reasoning sound?
Replies: 49
Views: 3391

Re: Target Allocations between equities and bonds - Is the reasoning sound?

Historically speaking has the market gone down and stayed down for such long periods that holding stocks would have been less preferable before retiring? In Japan, I think that it has, but that's not really important. What's important is the following. I like how Rick Van Ness explains it in Why Bo...
by longinvest
Sat May 16, 2015 8:55 am
Forum: Investing - Theory, News & General
Topic: Bonds - Picking up Nickels in Front of a Steamroller?
Replies: 50
Views: 4956

Re: Bonds - Picking up Nickels in Front of a Steamroller?

siamond wrote: c) bonds present a significant long-term risk against inflation (as you intuited).

Siamond,

Could you explain how TIPS (which are bonds) present a significant long-term risk against inflation?

Thanks,

longinvest
by longinvest
Fri May 15, 2015 7:26 am
Forum: Investing - Theory, News & General
Topic: Vanguard's email "The case for a global portfolio"
Replies: 46
Views: 4044

Re: Vanguard's email "The case for a global portfolio"

My advice is that people should have at least 20% invested in their home country market. Otherwise, a person could literally get priced out of their own country. Personally, I've settled at 50/50 Canada/Ex-Canada for my stock allocation. My bond allocation is 100% domestic as I am not comfortable w...
by longinvest
Thu May 14, 2015 7:44 pm
Forum: Investing - Theory, News & General
Topic: Vanguard's email "The case for a global portfolio"
Replies: 46
Views: 4044

Re: Vanguard's email "The case for a global portfolio"

What I would argue though is that a Canadian Investor should have more of their assets invested outside of Canada than a US Investor would invest outside the United States. The US Market is something like 45% or so of world market cap and the Canadian market is 2% to 3%. As a Canadian, what I would...
by longinvest
Tue May 12, 2015 9:01 pm
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 548
Views: 152655

Re: Variable Percentage Withdrawal (VPW)

I don't possess a Microsoft Office license; that's why I can't do it.
by longinvest
Tue May 12, 2015 5:38 pm
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 548
Views: 152655

Re: Variable Percentage Withdrawal (VPW)

I've added a "Known Problems and Solution" section to the wiki page to help future users.
by longinvest
Tue May 12, 2015 3:20 pm
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 548
Views: 152655

Re: Variable Percentage Withdrawal (VPW)

I develop the VPW spreadsheet using the open-source LibreOffice Calc software. Microsoft Excel doesn't like that the spreadsheet was not generated using itself, so it complains, but it can open the file. The warning is scary, though; it gives the impression that someone is trying to corrupt your com...
by longinvest
Tue May 05, 2015 8:28 am
Forum: Investing - Theory, News & General
Topic: Source for return standard deviation as function of AA
Replies: 5
Views: 366

Re: Source for return standard deviation as function of AA

Here's an awesome page on the Vanguard web site. Notice the three icons at the top right of the interactive chart, giving you three distinct display formats:
https://personal.vanguard.com/us/insigh ... about-risk
by longinvest
Fri May 01, 2015 9:09 am
Forum: Personal Finance (Not Investing)
Topic: VPW question [Variable Percentage WIthdrawal]
Replies: 17
Views: 1210

Re: VPW question [Variable Percentage WIthdrawal]

jcjc, Thanks for the information. Here are some additional thoughts. I agree with others: ⋅  I would maximize the inflation-adjusted income floor by delaying your husband's SS until 70. ⋅  I also recommend that you follow RM's suggestion to investigate tweaks for maximizing SS be...
by longinvest
Thu Apr 30, 2015 2:25 pm
Forum: Investing - Theory, News & General
Topic: A Returns Spreadsheet for Bogleheads
Replies: 85
Views: 13447

Re: A Returns Spreadsheet for Bogleheads

Thanks for creating this fantastic spreadsheet. I had two questions: You're welcome! 1. Employer matching contributions to my 403b should be listed as part of each month's contributions, correct? Correct. 2. I have monthly dividends that are paid out as a check, not reinvested. Should those be cons...
by longinvest
Thu Apr 30, 2015 9:35 am
Forum: Personal Finance (Not Investing)
Topic: VPW question [Variable Percentage WIthdrawal]
Replies: 17
Views: 1210

Re: VPW question [Variable Percentage WIthdrawal]

I have downloaded the VPW spreadsheet and reviewed. My thoughts are this is ONLY appropriate for someone with a stable floor ie SS and Pension or annuity OR are very wealthy. We will rely on our portfolio in the early years for 100% of our spending! Just seems like your spending can vary substantia...
by longinvest
Fri Apr 24, 2015 12:09 pm
Forum: Personal Finance (Not Investing)
Topic: Guyton-Klinger Withdrawal Decison Rules
Replies: 131
Views: 11464

Re: Guyton-Klinger Withdrawal Decison Rules

As an example: Current age: 55 Last withdrawal age: 99 AA: 75% stocks / 25% bonds => D = .75 X .4 + .25 X .2 = 35% 1st year VPW percentage = 4.9% 1st year F = current portfolio X 3.2% (where 4.9 X (1 - .35) = 3.2) That's a quite conservative initial 3.2% withdrawal rate for a 55 y.o. early retiree.
by longinvest
Fri Apr 24, 2015 11:57 am
Forum: Personal Finance (Not Investing)
Topic: Guyton-Klinger Withdrawal Decison Rules
Replies: 131
Views: 11464

Re: Guyton-Klinger Withdrawal Decison Rules

Siamond, How about an approach to smoothing that doesn't increase portfolio risk? Main idea: Consider VPW as a ceiling. Consequence: No possibility of premature depletion. The objectives: 1- Minimize withdrawal downward variations, 2- Adapt withdrawals to asset allocation and retirement horizon, 3- ...
by longinvest
Thu Apr 23, 2015 3:29 pm
Forum: Investing - Theory, News & General
Topic: What is a Boglehead?
Replies: 55
Views: 2948

Re: What is a Boglehead?

Bogleheads Investment Philosophy
by longinvest
Thu Apr 23, 2015 3:12 pm
Forum: Investing - Theory, News & General
Topic: Do you Bogleheads really follow the 3-4% SWR rule?
Replies: 48
Views: 4705

Re: Do you Bogleheads really follow the 3-4% SWR rule?

So, as I understand the SWR rule, you withdraw some nominal amount, 3 or 4% in the first year of retirement and adjust thereafter for inflation, regardless of what happens in the market. But, do you Bogleheads who are doing this actually stick to it, year in and year out? Or, when the stock market ...
by longinvest
Tue Apr 21, 2015 4:20 pm
Forum: Investing - Theory, News & General
Topic: Can't get excited about bond funds
Replies: 19
Views: 1620

Re: Can't get excited about bond funds

When I look at Vanguard's TBM fund Distribution by effective maturity , I see: Under 1 Year: 1.4% 1 - 3 Years: 25.8% 3 - 5 Years : 22.8% 5 - 10 Years: 34.3% 10 - 20 Years: 3.4% 20 - 30 Years: 11.8% Over 30 Years: 0.5% In other words, 50% of TBM will mature in less than 5 years. Another third will ma...
by longinvest
Mon Apr 20, 2015 3:49 pm
Forum: Investing - Help with Personal Investments
Topic: What are you up YTD?
Replies: 328
Views: 41227

Re: What are you up YTD?

jay22 wrote:How do you calculate your YTD returns?

I use the wiki:Calculating personal returns spreadsheet.
by longinvest
Fri Apr 17, 2015 1:56 pm
Forum: Investing - Theory, News & General
Topic: Bernstein: "If you've won the game, stop playing."
Replies: 146
Views: 15435

Re: Bernstein: "If you've won the game, stop playing."

I have a lot of respect for Dr. Bernstein, and I know that he was using an analogy. But, his analogy matches a philosophy where money invested for the long term can be gambled in the stock market (using passive index funds, of course; not real gambling in individual stocks). It then becomes importan...
by longinvest
Fri Apr 17, 2015 12:01 pm
Forum: Investing - Theory, News & General
Topic: Bernstein: "If you've won the game, stop playing."
Replies: 146
Views: 15435

Re: Bernstein: "If you've won the game, stop playing."

Call me conservative, but for me investing is not a game , so I can't technically stop playing . (I agree with Rusty on this). Risk, in my life, is ever present. I do buy insurance contracts (house, car, disability, ...), but insurance doesn't cover every possibility. I just don't know the future. I...
by longinvest
Tue Apr 14, 2015 6:21 am
Forum: Investing - Theory, News & General
Topic: Nikkei with reinvested dividends
Replies: 8
Views: 1171

Re: Nikkei with reinvested dividends

bpp updates this total-return chart yearly:

viewtopic.php?f=10&t=23036&start=100#p2379273
Image
by longinvest
Tue Apr 07, 2015 9:08 am
Forum: Investing - Theory, News & General
Topic: Do you think Ric Edelman is correct, never pay down mortgage
Replies: 257
Views: 23680

Re: Do you think Ric Edelman is correct, never pay down mort

One definition of Risk is doing badly in bad times. (William Sharpe)

The bank won't foreclose on a paid-off home mortgage.
by longinvest
Mon Apr 06, 2015 2:11 pm
Forum: Investing - Theory, News & General
Topic: Total rate of return in a portfolio
Replies: 1
Views: 389

Re: Total rate of return in a portfolio

I monitor my portfolio's performance monthly using the wiki:Calculating personal returns spreadsheet. The spreadsheet provides two types of returns: ⋅  Investor return (or internal rate of return, like XIRR). ⋅  Portfolio return (or growth of $10,000 return, comparable to the per...
by longinvest
Thu Apr 02, 2015 8:46 pm
Forum: Investing - Theory, News & General
Topic: If long-term, why not just go really high risk?
Replies: 49
Views: 5117

Re: If long-term, why not just go really high risk?

Why don't people consider long-term nominal bonds as high risk ? They have much inflation risk; maybe more so than stocks. Why shouldn't this risk be compensated? As for long-term TIPS, they don't have inflation risk, but they do have much interest rate risk. Again, why shouldn't this be compensated...
by longinvest
Thu Apr 02, 2015 8:20 pm
Forum: Investing - Theory, News & General
Topic: How does one invest without rebalancing?
Replies: 17
Views: 1739

Re: How does one invest without rebalancing?

dbr reminds me that investing in a total stock or bond market index fund is like, somehow, not rebalancing, but not exactly. The index does cause some minor rebalancing to take place. It could be argued that, to minimize risk, one should match market-weight movements and minimize transactions. As a ...
by longinvest
Thu Apr 02, 2015 7:48 pm
Forum: Investing - Theory, News & General
Topic: How does one invest without rebalancing?
Replies: 17
Views: 1739

Re: How does one invest without rebalancing?

Deleted. See my next post.
by longinvest
Thu Apr 02, 2015 7:28 pm
Forum: Investing - Theory, News & General
Topic: How does one invest without rebalancing?
Replies: 17
Views: 1739

Re: How does one invest without rebalancing?

Logically, if one does not wish to rebalance, one must always invest or withdraw money according to the current ratio of assets in the portfolio. Here's an example: Initial $10K 3-fund portfolio: $3,333 US Stocks / $3,333 Int Stocks / $3,334 US Bonds 1 month later, the portfolio has drifted to: $3,4...
by longinvest
Thu Apr 02, 2015 6:44 pm
Forum: Personal Finance (Not Investing)
Topic: 15, 20, or 30?
Replies: 26
Views: 3166

Re: 15, 20, or 30?

I would choose a home price where I could comfortably pay a 15 year mortgage, and still be able to save 15% of my gross income. If that is a struggle, I would choose a less expensive home or wait. I would also choose a home in a neighborhood where the "cost of living" is reasonable- a nei...
by longinvest
Tue Mar 31, 2015 1:58 pm
Forum: Personal Finance (Not Investing)
Topic: Guyton-Klinger Withdrawal Decison Rules
Replies: 131
Views: 11464

Re: Guyton-Klinger Withdrawal Decison Rules

OK. I'm taking a step back. There were two discussions happening in this thread. One about G-K, one about "smoothing VPW". "Smoothing VPW", to me, means reducing withdrawal volatility while still meeting VPW's objectives. If we're to replace VPW's objectives by different objectiv...
by longinvest
Tue Mar 31, 2015 1:38 pm
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 548
Views: 152655

Re: Variable Percentage Withdrawal (VPW)

Dfrank, These are all very good ideas, but the objective of the spreadsheet is mostly to illustrate VPW and let people backtest it. Keeping the spreadsheet as simple as possible allows people to investigate how it works and see that there are no hidden magical formulas. The spreadsheet is really not...
by longinvest
Mon Mar 30, 2015 1:42 pm
Forum: Personal Finance (Not Investing)
Topic: Guyton-Klinger Withdrawal Decison Rules
Replies: 131
Views: 11464

Re: Guyton-Klinger Withdrawal Decison Rules

Siamond,

I see that we are talking past each other. So, let's agree to disagree.
by longinvest
Mon Mar 30, 2015 9:15 am
Forum: Personal Finance (Not Investing)
Topic: Guyton-Klinger Withdrawal Decison Rules
Replies: 131
Views: 11464

Re: Guyton-Klinger Withdrawal Decison Rules

Siamond, FIRST: A ROBUST APPROACH TO DEAL WITH LONGEVITY AND BEQUEST MOTIVES The proper approach to tackle longevity risk is an inflation-indexed SPIA that becomes relatively cheap when one reaches 75 years old. Even at 65 years old, one can get an inflation-adjusted payout of 4%, relatively equal t...

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