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Re: Assett allocation market timing strategy inspired by Joh

Those who use such methods don't like to call this Market Timing, rather Dynamic Asset Allocation! Time does not enter the equation but valuations do. For most investors in accumulation static AA is fine, riding out the market cycle waves rebalancing. For those approaching or in retirement, the poss...
by magneto
Tue Sep 30, 2014 11:13 am
 
Forum: Investing - Theory, News & General
Topic: Asset allocation market timing strategy inspired by John B
Replies: 32
Views: 1617

Re: rebalancing conundrum/paradox/irony

Also, a constant asset allocation does not necessarily maintain a constant level of risk. The relative risk and stocks and bonds can change and the absolute level of risk of both can change. Was wondering also on this point about absolute risk. With say a 60/40 portfolio constant allocation, does p...
by magneto
Mon Sep 29, 2014 11:43 am
 
Forum: Investing - Theory, News & General
Topic: rebalancing conundrum/paradox/irony
Replies: 82
Views: 4559

Re: What's Your Takeaway from 2014 High Valuation

I regard Dr. Jeremy Siegel as a cheerleader for stocks who tends to put optimistic spin on things, but I also regard him as an intellectually honest academic whose numbers can be trusted. He has an interesting chart in Stocks for the Long Run , the gist of which is that even if you only buy stocks ...
by magneto
Fri Sep 26, 2014 11:55 am
 
Forum: Investing - Theory, News & General
Topic: What's Your Takeaway from 2014 High Valuation
Replies: 52
Views: 4054

Re: My IPS and rebalancing

Find neither bands nor time period rebalancing entirely satisfactory. So here is a repeat of earlier post on this subject :- We have settled on, and written into our IPS, what might be called 'Equal Percentage' (of deviation) Rebalancing, an idea borrowed from Process Control (Integral/Reset Action)...
by magneto
Thu Sep 25, 2014 11:40 am
 
Forum: Investing - Help with Personal Investments
Topic: My IPS and rebalancing
Replies: 12
Views: 1066

Re: Holding Cash because Tried to time Market

Sorry to hear of your past difficulties OP. Hope all is now going to be fine. This is a copy of post in a similar thread, where like your goodself, doubts re investing at present market valuations were creeping in. Most here will correctly say (based on past experience) that lump sum buying of stock...
by magneto
Thu Sep 18, 2014 11:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Holding Cash because Tried to time Market
Replies: 78
Views: 6390

Re: help! where to invest about 500k

It has been all cash for a while. Yes, I missed the rally of the last 5 years due to fear. I kick myself for that everyday. If I decide to go the DCA route, for how many years do you usually extend the deposits to? Most here will correctly say (based on past experience) that lump sum buying of stoc...
by magneto
Tue Sep 16, 2014 11:55 am
 
Forum: Investing - Help with Personal Investments
Topic: help! where to invest about 500k
Replies: 16
Views: 1227

Re: The dangerous practice of rebalancing...

The key sentence in the article is perhaps :- "However, if you think through the strategic ramifications of portfolio rebalancing for middle and upper-middle income families approaching retirement, it just doesn't make a lot of sense." That narrows down the field somewhat as to which inves...
by magneto
Sat Sep 13, 2014 5:31 am
 
Forum: Investing - Theory, News & General
Topic: The dangerous practice of rebalancing...
Replies: 191
Views: 14017

Re: Nikkei index 20+ years later.

-I know we are not heavily invested in Japan but if something similar happened in US what would re-balancing into a falling market accomplish? OP Something similar tho not so protracted did happen in US. 1929 et al. Taylor sometimes comments here on his family's experience, which is instructive. If ...
by magneto
Fri Sep 12, 2014 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Nikkei index 20+ years later.
Replies: 4
Views: 861

Re: ETF Proliferation leads to market inefficiencies?

A gold stock can have a significant price move based not on changes to its fundamentals or a corporate event but rather shifts in sentiment toward gold that is compounded by fund flows. Fundamentals and Sentiment both drive asset prices. With gold are there any fundamentals? The ETF is just another...
by magneto
Tue Sep 09, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: ETF Proliferation leads to market inefficiencies?
Replies: 22
Views: 1262

Re: John Hussman, smart guy, should you listen to his foreca

magneto Of course the market can be irrational at times. The problem is knowing when that occurs. To me only time we KNEW that was in late 90s when the PEs of Tech stocks got to levels that were possible to justify for single stocks but not entire sectors. And the E/P of market was below real yield...
by magneto
Tue Sep 09, 2014 5:59 am
 
Forum: Investing - Theory, News & General
Topic: John Hussman, smart guy, should you listen to his forecasts
Replies: 74
Views: 7300

Re: John Hussman, smart guy, should you listen to his foreca

I don't have any knock against Hussman at all. In fact, I think he is one of very few credible commentators out there who actually know something. He's probably even right about the market being screamingly overvalued because of all the bogus financial engineering that's been going on since 2009. A...
by magneto
Mon Sep 08, 2014 11:23 am
 
Forum: Investing - Theory, News & General
Topic: John Hussman, smart guy, should you listen to his forecasts
Replies: 74
Views: 7300

Re: Own individual stocks? Advisor recommends 20% in blue ch

I have an advisor who is recommending keeping 15%-20% of our portfolio in quality blue chip individual stocks. Here is his reasoning: Index investing is great for accumulating wealth; however, you are fully invested at all times. Years when the market is overpriced or declining, no adjustment is ma...
by magneto
Fri Sep 05, 2014 6:21 am
 
Forum: Investing - Help with Personal Investments
Topic: Own individual stocks? Advisor recommends 20% in blue chips?
Replies: 38
Views: 2662

Re: 78 year old retired father

His goals are: - Invest as much as he can with the 180k windfall to ensure a higher rate of return than he's getting in cash. - Make improvements to his home which he will gift to his predecessor (me). - Gift (after death) as much wealth as he can to his only child (me) and grand-child. I'd like to...
by magneto
Wed Sep 03, 2014 11:54 am
 
Forum: Personal Finance (Not Investing)
Topic: 78 year old retired father
Replies: 11
Views: 878

E

If you believe in warning signs, the dot-com crash had those warning signs blaring starting in 1995 or so. The entire chart you posted is therefore meaningless, since you were mostly in bonds for that period. The truth is that there are always warning signs; it's only in retrospect that we know whi...
by magneto
Tue Sep 02, 2014 11:40 am
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 6321

Re: Study: poor 5-yr U.S. returns -- overweight foreign?

Comparing CAPE for different counties is not the full story. As previous poster pointed out prospective CAPE/PE would be more useful. We need to know the growth contribution to the future total return. US may seem expensive, but superior growth may justify. This is not a prediction. The expression M...
by magneto
Fri Aug 29, 2014 11:50 am
 
Forum: Investing - Theory, News & General
Topic: Study: poor 5-yr U.S. returns -- overweight foreign?
Replies: 47
Views: 3237

Re: Sick Building Syndrome (Electrical Pollution)

Very dubious about electrical sensitivity. Other possible options :- Unkind lighting New furniture and fittings 'gassing off'. Solution keep windows open as much as possible. Can't see any obvious financial solution, other than replace all new furniture with old! but if the building itself is 'gassi...
by magneto
Thu Aug 28, 2014 5:45 am
 
Forum: Personal Consumer Issues
Topic: Sick Building Syndrome (Electrical Pollution)
Replies: 17
Views: 1379

Re: Shiller P/E nearly guaranteed to be lower in 5 years

Fact is, even if the CAPE is really high nowadays, the earnings yield (1/PE10) remains significantly higher than the (inflation-adjusted) 10-years treasury rate, which is a good yardstick of corresponding bonds yield. Here we are, with two renowned metrics (CAPE, equity/bonds premium) providing a v...
by magneto
Wed Aug 27, 2014 6:10 am
 
Forum: Investing - Theory, News & General
Topic: Shiller P/E nearly guaranteed to be lower in 5 years
Replies: 19
Views: 3457

Re: Saving for a house down payment in 5-7 years...

Cash gets my vote. Take a look at charts for stocks and bonds over the last 15 years, and ask which is the more likely looking ahead over 5-7 years, a surge in value or a loss in value? Valuations are stretched and far from historically attractive for stocks and bonds. The best case could be zero ga...
by magneto
Wed Aug 27, 2014 5:54 am
 
Forum: Investing - Help with Personal Investments
Topic: Saving for a house down payment in 5-7 years...
Replies: 13
Views: 963

Re: No room on your Windows hard drive? Cleanup Update files

Many thanks for all the good information.
by magneto
Mon Aug 25, 2014 5:47 am
 
Forum: Personal Consumer Issues
Topic: No room on your Windows hard drive? Cleanup Update files
Replies: 60
Views: 4615

Re: Shiller P/E nearly guaranteed to be lower in 5 years

For more information on where we are with Tobin's Q (and also CAPE) see :- http://www.smithers.co.uk/page.php?id=34 Key quote :- 'Although the overvaluation of the stock market is well short of the extremes reached at the year ends of 1929 and 1999, the chart shows that it has reached the other prev...
by magneto
Sun Aug 24, 2014 11:25 am
 
Forum: Investing - Theory, News & General
Topic: Shiller P/E nearly guaranteed to be lower in 5 years
Replies: 19
Views: 3457

Re: Shiller P/E nearly guaranteed to be lower in 5 years

My question is, what are the other useful measuring sticks out there, and where does Shiller's eponymous tool fit in? Is it even useful at all? I'm sure some will say that I'm beating a dead horse on this forum, but respectfully, I'm trying to shine a somewhat different light on things by presentin...
by magneto
Fri Aug 22, 2014 5:22 am
 
Forum: Investing - Theory, News & General
Topic: Shiller P/E nearly guaranteed to be lower in 5 years
Replies: 19
Views: 3457

Re: John Hussman, smart guy, should you listen to his foreca

Thanks Larry, good article.
Hussman's views will one day be right, but nobody knows when!
Meantime we have to get on with sensible allocations.
Regards
by magneto
Wed Aug 20, 2014 11:29 am
 
Forum: Investing - Theory, News & General
Topic: John Hussman, smart guy, should you listen to his forecasts
Replies: 74
Views: 7300

Re: Convincing fears on investing for now?

I tried pulling the trigger today (greater stock allocation) but I really can't stomach a 50% drop from here. I went through the 2008 stock market debacle. My stomach turned upside down and inside out, and I still get nauseated thinking back on it. I remember how long and painful the whole experien...
by magneto
Tue Aug 19, 2014 10:33 am
 
Forum: Investing - Help with Personal Investments
Topic: Convincing fears on investing for now?
Replies: 33
Views: 3370

Re: Do you hold cash/money market outside of your emergency

Some thoughts :- The Permanent Portfolio investors employ 25% cash. The term Fixed Income covers both bonds and cash. I Bonds and EE Bonds IMHO are really cash instruments and can be regarded as cash after the first year, even if they are called 'Bonds'. It is possible in the right/wrong circumstanc...
by magneto
Thu Aug 14, 2014 11:06 am
 
Forum: Investing - Help with Personal Investments
Topic: Do you hold cash/money market outside of your emergency fund
Replies: 31
Views: 2025

Re: Changing Asset Allocation in a bear market

So , to finally ask my question: How many people here agree with this statement: " in a severe bear market, if my portfolio goes below X dollars, I would change my desired asset allocation to be more conservative". A minority here (~10% in a recent poll) use Dynamic Asset Allocation and c...
by magneto
Fri Aug 08, 2014 6:07 am
 
Forum: Investing - Theory, News & General
Topic: Changing Asset Allocation in a bear market
Replies: 23
Views: 1657

Re: Rebalancing question

Every 3 or 4 months I would log on, see where I was at versus my targets, and adjust the percentages without ever looking at the balances. Since I hate sellling anything at a loss, I started thinking about what I would do. I figure if the market continues to drop I will hit a rebalancing band on ei...
by magneto
Wed Aug 06, 2014 11:20 am
 
Forum: Investing - Theory, News & General
Topic: Rebalancing question
Replies: 30
Views: 930

Re: What actions to take in a stock market crash?

Hi OP. Good question. One that bothered us equally. For some years now have settled on what might be called 'Equal Percentage' (of deviation) Rebalancing. With a shift in market levels, we rebalance quarterly a set percentage of the deviation from the target, in our case 10% of deviation. This means...
by magneto
Tue Aug 05, 2014 11:30 am
 
Forum: Investing - Theory, News & General
Topic: What actions to take in a stock market crash?
Replies: 85
Views: 5601

Re: global diversification works in long term

Exchange Rate Risk as noted earlier can influence the investor's decision on international weighting. This is touched on in the Vanguard paper, which is worth re -reading on the currency fluctuation issue and in similar vein, Siegel in 'Stocks for the Long Run', states :- 'It is very important to no...
by magneto
Wed Jul 30, 2014 11:41 am
 
Forum: Investing - Theory, News & General
Topic: global diversification works in long term
Replies: 21
Views: 1951

Re: Best way to reach initial allocation in a bull market?

I think the article I posted answered a lot of my questions. The big one is still this though: even though it seems to make sense to keep contributing to stocks in this bullish market (never know of course), is there any reason to overweight certain assets relative to your desired final allocation....
by magneto
Fri Jul 25, 2014 11:56 am
 
Forum: Investing - Theory, News & General
Topic: Best way to reach initial allocation in a bull market?
Replies: 28
Views: 2650

Re: Best way to reach initial allocation in a bull market?

Not quite sure frey where you are starting from, and where you are heading. Apart from lump sum and linear DCA, there is also the option of moving a set percentage of deviation from target(s), per month/quarter. This means shifting more funds at the start of the process and gradually tapering down (...
by magneto
Fri Jul 25, 2014 7:48 am
 
Forum: Investing - Theory, News & General
Topic: Best way to reach initial allocation in a bull market?
Replies: 28
Views: 2650

Re: New investor [UK portfolio help]

Just to add to what Ted has said, there is one short gilt tracker IGLS (0-5year gilts), with a modified duration of 2.38 years. However in my opinion it compares poorly with cash, since the distribution yield is currently 0.65%, and the total expense ratio 0.2%. I suppose it might conceivably produc...
by magneto
Fri Jul 25, 2014 4:48 am
 
Forum: Investing - Help with Personal Investments
Topic: New investor [UK portfolio help]
Replies: 7
Views: 497

Re: New investor [UK portfolio help]

The money I have made on my life is stuck on the bank, where it makes very little as you can imagine. Not clear about this as you list some investments I read some books and came up to the conclusion that I should try to do it for myself instead of looking for a “professional” to look after my buss...
by magneto
Thu Jul 24, 2014 11:14 am
 
Forum: Investing - Help with Personal Investments
Topic: New investor [UK portfolio help]
Replies: 7
Views: 497

Re: Should market valuations be completely disregarded?

I am a stumbling amateur, so no expert like Larry, but I have used valuations to set Dynamic Asset Allocations since 1990s. Also used controlled rate of approach to target, to gain momentum benefits, etc. So far it has worked out well, far better than even a 100% stock portfolio, as I fully register...
by magneto
Wed Jul 23, 2014 11:59 am
 
Forum: Investing - Theory, News & General
Topic: Should market valuations be completely disregarded?
Replies: 50
Views: 4020

Re: What to do in a market correction

AA: As equities have gone up so much in the past few years, I have been putting dividends, distributions, and new investments into bonds to maintain my AA. But I am not really happy with bonds either, so I have allowed my cash to drift up to about 1% of my portfolio. Rebalancing: I allow about 3% l...
by magneto
Tue Jul 22, 2014 11:21 am
 
Forum: Investing - Theory, News & General
Topic: What to do in a market correction
Replies: 32
Views: 3183

Re: What to do in a market correction

Don, couple of questions :-

How comfortable do you feel about your present AA targets?
What does your IPS say about rebalancing?

All Best
by magneto
Mon Jul 21, 2014 11:24 am
 
Forum: Investing - Theory, News & General
Topic: What to do in a market correction
Replies: 32
Views: 3183

Re: Ways to lose money and destroy personal wealth by invest

Has anyone mentioned yet?
failing to diversify
by magneto
Mon Jul 21, 2014 11:06 am
 
Forum: Investing - Theory, News & General
Topic: Ways to lose money and destroy personal wealth by investing
Replies: 81
Views: 9652

Re: Tobins Q as market valuation metric

Part of the original question was should we be worried that Q is showing stocks fully valued/expensive? We have already beaten to death PE10, to little avail. In a world of low interest rates what are the investment alternatives? Seems we are forced by the central banks, despite our reservations, i...
by magneto
Sat Jul 19, 2014 2:28 pm
 
Forum: Investing - Theory, News & General
Topic: Tobins Q as market valuation metric
Replies: 42
Views: 2232

Re: Tobins Q as market valuation metric

Part of the original question was should we be worried that Q is showing stocks fully valued/expensive? We have already beaten to death PE10, to little avail. In a world of low interest rates what are the investment alternatives? Seems we are forced by the central banks, despite our reservations, in...
by magneto
Sat Jul 19, 2014 6:00 am
 
Forum: Investing - Theory, News & General
Topic: Tobins Q as market valuation metric
Replies: 42
Views: 2232

Re: Market Timing vs. Market Opportunity

This is the paragraph that comes to mind when this subject turns up :- Benjamin Graham has this to say in The Intelligent Investor. ‘Since common stocks, even of investment grade, are subject to recurrent and wide fluctuations in their prices, the intelligent investor should be interested in the pos...
by magneto
Fri Jul 18, 2014 11:19 am
 
Forum: Investing - Theory, News & General
Topic: Market Timing vs. Market Opportunity
Replies: 46
Views: 3125

Re: "Stocks and shares," different things? "Peter Pan"

As a UKian have been puzzled and irritated for years when financial journalists and other commentators use the expression 'stocks and shares' with monotonous regularity. If shares (of a company), are not stocks, then what the heck are they? Looking in current FT, UK stock prices are on a page headed...
by magneto
Tue Jul 15, 2014 11:19 am
 
Forum: Investing - Theory, News & General
Topic: "Stocks and shares," different things? "Peter Pan"
Replies: 40
Views: 3417

Re: Adding Corporates to Total Bond Market Index

Great post Valuethinker
Just when also thinking in desperation about adding Corporates in violation of IPS, because of low yield on Gov't/Treasuries, along comes a blast of common sense.
Thanks
by magneto
Tue Jul 15, 2014 10:58 am
 
Forum: Investing - Theory, News & General
Topic: Adding Corporates to Total Bond Market Index
Replies: 76
Views: 7077

Re: Moving From Bonds Into Stocks

I am doing a 60/40 stock and bond allocation via my 401(K) and plan on staying the course. But hypothetically speaking, let's say that tomorrow we had a 40-50% correction in equities. Would it be foolish to move that 40% I have sitting in a bond fund into the stock portion and buying all of those e...
by magneto
Tue Jul 15, 2014 5:57 am
 
Forum: Investing - Help with Personal Investments
Topic: What To Do During A Correction In Stocks?
Replies: 31
Views: 3813

Re: In a crash, will you re-balance to maintain your target

Would rebalance progressively. Currently we move towards targets at 10% of deviation per quarter. The investor is then moving cautiously in the right direction, if seldom reaching the target. Gives system and investor stability in an uncertain world. Pick you own percentage for rate of approach.
by magneto
Mon Jul 14, 2014 11:05 am
 
Forum: Investing - Theory, News & General
Topic: In a crash, will you re-balance to maintain your target AA?
Replies: 64
Views: 4274

The Company Men

Recently caught up with this film about redundancies. Struck us that the characters were the very opposite of Bogleheads, spending up to their generous incomes and maybe well beyond. When redundancy strikes all seem financially unprepared. Has discussion about this film come up in earlier threads? C...
by magneto
Sun Jul 13, 2014 11:35 am
 
Forum: Personal Finance (Not Investing)
Topic: The Company Men
Replies: 1
Views: 702

Re: UK Foundation Portfolio

One quick additional question. A number of people have mentioned IWRD (iShares Global ETF) (inc), which has been going for a number of years with TER 0.5%. I am struggling to see the difference between IWRD and iShares other Global ETF, SWDA (acc) other than in SWDA dividends are re-invested. Is th...
by magneto
Wed Jul 09, 2014 10:51 am
 
Forum: Investing - Help with Personal Investments
Topic: UK Foundation Portfolio
Replies: 16
Views: 1593

Re: Why not include gold?

Have held gold in our portfolio, but it was scary as there was no rational way of determining whether it was cheap or expensive. With other assets bonds,stocks, cash and even real estate, valuations can be determined by measures such as earnings or yield. What to use for gold? As said above by other...
by magneto
Wed Jul 09, 2014 10:42 am
 
Forum: Investing - Help with Personal Investments
Topic: Why not include gold?
Replies: 48
Views: 3913

Re: Rent Out House or Sell House?

Lot of money tied up in one fairly illiquid asset. The gross yield 4.2%? before expenses and tax is borderline acceptable. I would be looking for 10% plus for any new RRE investments, possible when housing market low. If you like the idea of Residential Real Estate as an asset class, maybe sell the ...
by magneto
Wed Jul 09, 2014 4:44 am
 
Forum: Personal Finance (Not Investing)
Topic: Rent Out House or Sell House?
Replies: 9
Views: 1355

Re: Want international exposure? You already have it.

Browser wrote:There's a reason that returns from U.S. large cap stocks and EAFE are so highly correlated


Split apart Europe and FE and a different picture emerges, one ripe with diversification opportunities.
by magneto
Tue Jul 08, 2014 11:29 am
 
Forum: Investing - Theory, News & General
Topic: Want international exposure? You already have it.
Replies: 65
Views: 6490

Re: Cash allocation in a portfolio

Cash Target 50%, so not able to directly answer poll. Why 50%? In retirement in the UK and reducing risk. At present Gov't Bonds (Gilts) have a low allocation in the portfolio as mostly offering negative real yields, and in spite of recent rally seem to be in a bear market since May 2013, since when...
by magneto
Tue Jul 08, 2014 11:16 am
 
Forum: Investing - Theory, News & General
Topic: Cash allocation in a portfolio
Replies: 42
Views: 3842

Re: UK Foundation Portfolio

1. I've looked briefly at the "High Yield" ETFs, but have not yet been tempted as I thought they might be new and unproven. I could swap the iShares SWDA for the Vanguard VHYL - any other opinions on this approach? 2. Regarding Europe, I could potentially go for a Europe-wide ETF and then...
by magneto
Tue Jul 08, 2014 10:53 am
 
Forum: Investing - Help with Personal Investments
Topic: UK Foundation Portfolio
Replies: 16
Views: 1593
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