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Re: Anti-anti-fragile, or, the Contrapositive

Taleb is talking about sensitivity to volatility or uncertainty, not a particular type of outcome (e.g., adverse or advantageous economic event). It helps to remember his first career was an options trader on Wall Street. An options seller is fragile, an options buyer is antifragile.
by market timer
Sat Jan 24, 2015 9:37 pm
 
Forum: Investing - Theory, News & General
Topic: Anti-anti-fragile, or, the Contrapositive
Replies: 4
Views: 432

Re: What Book Are You Currently Reading? Part VI

Carl Walsh, Monetary Theory and Policy, 3rd edition.
by market timer
Sat Jan 24, 2015 2:56 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 436
Views: 56281

Re: Silly to consider buying a home because of interest rate

Mortgage rates haven't gone down as much but still people who took out mortgages a year ago rather than waiting till now lost a significant % too (maybe more like 15%). Just because you don't mark that to market like an ETF or short futures position doesn't mean the loss didn't happen. There is one...
by market timer
Thu Jan 22, 2015 12:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: Silly to consider buying a home because of interest rates?
Replies: 29
Views: 2717

Re: EE bonds vs iBonds

Not to divert the topic, but was wondering if anyone has looked at the chances of a 20/80 portfolio not doubling in a 20 yr. horizon. Just wondering how important is the guarantee to double if something else could do the same with very little volatility and not annual restriction on how much one ca...
by market timer
Thu Jan 22, 2015 11:30 am
 
Forum: Investing - Help with Personal Investments
Topic: EE bonds vs iBonds
Replies: 29
Views: 2340

Re: Silly to consider buying a home because of interest rate

As an interest rate trade, I think it would be better to short long-term Treasuries until you are ready to buy a house with a mortgage. Now is not a bad time to do so. This trade would have lost over 40% last year. True, the 30-year bond went from 4.0% to under 2.5% in the past year. To me, now see...
by market timer
Thu Jan 22, 2015 11:14 am
 
Forum: Personal Finance (Not Investing)
Topic: Silly to consider buying a home because of interest rates?
Replies: 29
Views: 2717

Re: Silly to consider buying a home because of interest rate

As an interest rate trade, I think it would be better to short long-term Treasuries until you are ready to buy a house with a mortgage. Now is not a bad time to do so.
by market timer
Wed Jan 21, 2015 10:26 pm
 
Forum: Personal Finance (Not Investing)
Topic: Silly to consider buying a home because of interest rates?
Replies: 29
Views: 2717

Re: Valuation of I Bonds

I'm struggling a little with your equation and how to fill in the pieces. Does it make sense to use a higher rate than short-term treasuries because FDIC bank accounts are available paying 1.25%? There is this recent thread from Kevin M showing that CDs have on average yielded 100bps over comparabl...
by market timer
Mon Jan 19, 2015 10:24 pm
 
Forum: Investing - Theory, News & General
Topic: Valuation of I Bonds
Replies: 29
Views: 2901

Re: Valuation of I Bonds

I love the analysis, Timer, and other pieces of this discussion, but I just can't wrap my head around comparing TIPS and I Bonds without regard to differences in tax treatment, though I realize that introduces a lot of person-specific variables that would be impossible to meaningfully simplify. Acc...
by market timer
Mon Jan 19, 2015 10:09 pm
 
Forum: Investing - Theory, News & General
Topic: Valuation of I Bonds
Replies: 29
Views: 2901

Re: Birthday gift ideas for a 7 year old chess player

I would not recommend a Super Mario Brothers chess set. If you want to get a chess set, here is one that the boy would use regularly at any age: http://www.amazon.com/Expressions-Tournament-Chess-Black-Canvas/dp/B000JMCLME A few other ideas: Searching for Bobby Fischer, DVD: http://www.amazon.com/Se...
by market timer
Mon Jan 19, 2015 1:47 am
 
Forum: Personal Consumer Issues
Topic: Birthday gift ideas for a 7 year old chess player
Replies: 19
Views: 1485

Re: Valuation of I Bonds

TL;DR version: Recent vintage 0% fixed rate I bonds are conservatively worth 3% more than redemption value. My best guess for "true" value is 4.5% above redemption value. Since it looks like the only source of information at my disposal on relevant TIPS options prices is from the iShares T...
by market timer
Sun Jan 18, 2015 9:39 pm
 
Forum: Investing - Theory, News & General
Topic: Valuation of I Bonds
Replies: 29
Views: 2901

Re: Valuation of I Bonds

Agree that one should not redeem I bonds when 1-year TIPS yield less (barring idiosyncratic reasons). The reason I suggested 5-year TIPS as the basis for comparison is analytic tractability. The framework I suggested cuts down the redemption option events to 5, every 5 years. This sacrifices some pr...
by market timer
Sat Jan 17, 2015 11:15 pm
 
Forum: Investing - Theory, News & General
Topic: Valuation of I Bonds
Replies: 29
Views: 2901

Re: Best Book To Learn R Programming

Have you looked at Coursera? Johns Hopkins offers a course in R, along with a data science specialization track that is based on R.
by market timer
Sat Jan 17, 2015 11:09 pm
 
Forum: Personal Consumer Issues
Topic: Best Book To Learn R Programming
Replies: 29
Views: 2593

Re: Valuation of I Bonds

I agree that I bonds are more attractive than today's 5-year TIPS. The question we're trying to answer is, by how much? The answer depends on the value of the redemption option.
by market timer
Sat Jan 17, 2015 3:24 am
 
Forum: Investing - Theory, News & General
Topic: Valuation of I Bonds
Replies: 29
Views: 2901

Re: Valuation of I Bonds

I bonds are currently far more complicated to value, using an embedded options framework, than EE bonds. The real yield curve is currently positive at 5 years and longer--the 5-year constant maturity real yield at 0.1%. What this means is that the redemption option (put option) on a 0% fixed rate I ...
by market timer
Fri Jan 16, 2015 7:15 pm
 
Forum: Investing - Theory, News & General
Topic: Valuation of I Bonds
Replies: 29
Views: 2901

Re: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit

Agree that deflation is the "indicator". The real problem is that deflation can be a long-term downward spiral. How would you fix it? The downward spiral happens when asset prices, supported by debt, decline in value, resulting in loan defaults, liquidation of the asset in a fire sale, le...
by market timer
Tue Jan 13, 2015 12:05 am
 
Forum: Investing - Theory, News & General
Topic: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit?
Replies: 87
Views: 6139

Re: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit

A decline in demand, often due to people revising their expectations about the future and credit tightening as a result, typically leads to deflation. Not sure the Fed would tighten credit in the face of deflation and falling demand. I was referring to a tightening in credit from the private sector...
by market timer
Mon Jan 12, 2015 10:57 pm
 
Forum: Investing - Theory, News & General
Topic: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit?
Replies: 87
Views: 6139

Re: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit

The current situation is prices are maybe rising at 1% and bank interest rates are 1-2%. If people respond to a real interest rate, then we should be having a spending boom in the US, UK etc. Which is not what we are seeing. The relevant comparison is how much less people would spend given higher r...
by market timer
Mon Jan 12, 2015 9:32 pm
 
Forum: Investing - Theory, News & General
Topic: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit?
Replies: 87
Views: 6139

Re: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit

Deflation isn't necessarily a bad thing. In fact, in many theoretical models, the optimal monetary policy involves deflation, such as the Friedman rule . The US economy enjoyed robust growth in the 19th century, during which prices experienced mild deflation. http://www.marketoracle.co.uk/images/200...
by market timer
Mon Jan 12, 2015 11:35 am
 
Forum: Investing - Theory, News & General
Topic: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit?
Replies: 87
Views: 6139

Re: Why not long-term bond fund for the long haul?

It would have been better to ask this question a year ago. Asking now strikes me as performance chasing. I have a hard time believing long term yields can do anything but rise from today's levels.
by market timer
Mon Jan 12, 2015 12:42 am
 
Forum: Investing - Help with Personal Investments
Topic: Why not long-term bond fund for the long haul?
Replies: 11
Views: 1367

Re: Is a Sub-4% SWR a Boglehead Quirk?

Something is off....either my analysis is missing something or the model is far too pessimistic. You can get a good picture of the average retiree's income/expenses by looking at the Consumer Expenditure Survey, broken down by occupation here: http://www.bls.gov/cex/2013/combined/occup.pdf In 2013,...
by market timer
Sun Jan 11, 2015 10:26 pm
 
Forum: Investing - Theory, News & General
Topic: Is a Sub-4% SWR a Boglehead Quirk?
Replies: 177
Views: 10623

Re: Oil Price Hedging - How does an individual do it?

So, out of USO, USL, and BNO, which one do you think is the most objective reflection of the current oil prices? My guess is USL. http://www.unitedstatescommodityfunds.com/ I'm not exactly sure how to interpret your question. In terms of which would do better to hedge your liability of future oil c...
by market timer
Sun Jan 11, 2015 9:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: Oil Price Hedging - How does an individual do it?
Replies: 31
Views: 3234

Re: What Book Are You Currently Reading? Part VI

Valuethinker wrote:George Packer?

He wrote one of the better books about Iraq in the early days of the invasion 'Assassin's Gate'.

Yes, George Packer, my mistake. I'll edit.
by market timer
Sun Jan 11, 2015 9:55 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 436
Views: 56281

Re: What Book Are You Currently Reading? Part VI

Finished The Unwinding: An Inner History of the New America by George Packer, the 2013 National Book Award winner for nonfiction. Thought this was a fascinating tour of the period 1978-2012 through the lives of a diverse set of people mostly born in the 60s. The theme is how the institutions that su...
by market timer
Sun Jan 11, 2015 7:47 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 436
Views: 56281

Re: Poll: Do you own I Bonds?

The closest securities to I bonds are short term TIPS. Here is a graph of 5-year TIPS real yields: http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=WJa I really liked I bonds when 5-year TIPS real yields were highly negative and I was paying a marginal tax rate of close to 40%. Now that my...
by market timer
Sun Jan 11, 2015 3:33 am
 
Forum: Investing - Theory, News & General
Topic: Poll: Do you own I Bonds?
Replies: 62
Views: 5447

Re: Oil Price Hedging - How does an individual do it?

Anyone attempting any kind of hedging against an oil price spike (~$100/barrel) in the next 5 years with ETFs should read this: http://www.fool.com/investing/etf/2013/04/18/why-this-oil-etf-could-do-better-than-crude.aspx That article is from 2013. The oil market has moved from backwardation to con...
by market timer
Sun Jan 11, 2015 2:59 am
 
Forum: Investing - Help with Personal Investments
Topic: Oil Price Hedging - How does an individual do it?
Replies: 31
Views: 3234

Re: Looking to protect my downside - considering I/EE bonds,

I'm more confident that I Bonds are a solid option. Are EE bonds an insane choice at 0.0 fixed if I'm 99% sure we'll hold to maturity? Given how much EE bonds are yielding over long term Treasuries, EE bonds are very attractive if you can hold them for 20 years. I'm less convinced that I bonds are ...
by market timer
Fri Jan 09, 2015 9:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Looking to protect my downside - considering I/EE bonds, CDs
Replies: 15
Views: 1786

Re: Oil Price Hedging - How does an individual do it?

lee1026 wrote:There are mini futures contracts. Granted, those are also kind of big. (500 barrels)

The minis (QM) are only liquid for the first couple months. CL has reasonable liquidity out to nearly 2020.
by market timer
Thu Jan 08, 2015 3:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Oil Price Hedging - How does an individual do it?
Replies: 31
Views: 3234

Re: Oil Price Hedging - How does an individual do it?

If you are looking to hedge your own consumption, you would buy USO and sell it as you consume oil. For example, suppose your family consumes 50 barrels of oil per year, and you want to lock-in today's prices for the next 20 years of consumption. Oil is about $50/barrel, so you'd spend $1K/year at c...
by market timer
Thu Jan 08, 2015 12:32 am
 
Forum: Investing - Help with Personal Investments
Topic: Oil Price Hedging - How does an individual do it?
Replies: 31
Views: 3234

Re: Reasonably priced personal finance _textbook_

I used an older version of this as a textbook in one of my classes: http://www.amazon.com/Journal-Complete- ... 30733600X/
by market timer
Tue Jan 06, 2015 5:11 am
 
Forum: Personal Finance (Not Investing)
Topic: Reasonably priced personal finance _textbook_
Replies: 11
Views: 1053

Re: [Poll] Is your generation better off than parents' or ki

Financially, my parents (Boomers) are better off than I expect I'll ever be, by far. They became multimillionaires with a high school diploma. I did a PhD, just barely cracked seven figures, and stopped working--just don't have the same ambition they had. I think each generation tries to make up for...
by market timer
Mon Jan 05, 2015 9:40 am
 
Forum: Personal Finance (Not Investing)
Topic: [Poll] Is your generation better off than parents' or kids'
Replies: 16
Views: 984

Re: Help with investments of in-laws

How about putting everything, except for an emergency fund, into an annuity? This will provide the maximum safe withdrawal rate. For retired people with low six-figure investments, I think this makes the most sense.
by market timer
Mon Jan 05, 2015 1:11 am
 
Forum: Investing - Help with Personal Investments
Topic: Help with investments of in-laws
Replies: 7
Views: 1037

Re: Can you make money betting on random coin flips?

Browser wrote:It shows it is possible to make money from an "asset" with random outcomes (coin tossing) that has a zero arithmetic expected return.

It's a zero expected geometric return. The arithmetic expected return is .5(100%) + .5(-50%) = 25%.
by market timer
Sun Jan 04, 2015 11:46 pm
 
Forum: Investing - Theory, News & General
Topic: Can you make money betting on random coin flips?
Replies: 295
Views: 16496

Re: What will be the biggest investment surprises of 2015?

It is a widely held belief that hiking interest rates leads to lower inflation via the aggregate demand channel. It makes for an easy-to-understand story about the operation of central banks. However, the evidence for this is actually quite weak. I think the biggest surprise will be when the Fed st...
by market timer
Sun Jan 04, 2015 9:35 pm
 
Forum: Investing - Theory, News & General
Topic: What will be the biggest investment surprises of 2015?
Replies: 76
Views: 7429

Re: What will be the biggest investment surprises of 2015?

It is a widely held belief that hiking interest rates leads to lower inflation via the aggregate demand channel. It makes for an easy-to-understand story about the operation of central banks. However, the evidence for this is actually quite weak. I think the biggest surprise will be when the Fed sta...
by market timer
Fri Jan 02, 2015 10:49 pm
 
Forum: Investing - Theory, News & General
Topic: What will be the biggest investment surprises of 2015?
Replies: 76
Views: 7429

Re: Career Relevance

Is it possible to make a career out of bartending? Business majors are terribly common. It seems that the main point of the degree is to get an internship your junior year and a full-time job offer in the fall of your senior year. Without these, it's a much harder road to get a professional job. Per...
by market timer
Fri Jan 02, 2015 10:29 pm
 
Forum: Personal Finance (Not Investing)
Topic: Career Relevance
Replies: 31
Views: 3342

Re: High Home Price-to-Income ratios - unhealthy?

With $220K income, there are places in Jersey which are 20-25 minutes away from Manhattan. From what I've heard--I didn't research it myself--the public schools are not very good in the areas where housing is affordable. You're also unlikely to get a house with a yard. To get a combination of good ...
by market timer
Fri Jan 02, 2015 9:23 pm
 
Forum: Personal Finance (Not Investing)
Topic: High Home Price-to-Income ratios - unhealthy?
Replies: 46
Views: 4823

Re: High Home Price-to-Income ratios - unhealthy?

I didn't know $220K gross income is now considered "middle" class. Keep in mind this is household income for a dual-income couple. In Manhattan, the top 10% of households earned $420K/year or more, and many of these households are not even dual-income couples. The households I know who ea...
by market timer
Fri Jan 02, 2015 9:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: High Home Price-to-Income ratios - unhealthy?
Replies: 46
Views: 4823

Re: What Book Are You Currently Reading? Part VI

Finished House of Debt . I agree entirely with Larry Summers' review (available here: http://www.ft.com/intl/cms/s/2/3ec604c0-ec96-11e3-8963-00144feabdc0.html#axzz3NePKnajg) that the book summarizes some great economics research for the first 2/3rds, but then Mian and Sufi stretch a bit too far in t...
by market timer
Fri Jan 02, 2015 3:34 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 436
Views: 56281

Re: Another Student Loan Thread.

Any chance you can postpone the marriage for 9 years?
by market timer
Thu Jan 01, 2015 10:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Another Student Loan Thread.
Replies: 5
Views: 802

Re: What do you drive, and why?

Our main family car is a Toyota Alphard. Good for hauling 7-8 people around for shopping.
by market timer
Thu Jan 01, 2015 10:04 pm
 
Forum: Personal Consumer Issues
Topic: What do you drive, and why?
Replies: 183
Views: 14602

Re: Why is VUSTX (Long term Treasury) up 25%?

Having said that; when is VUSTX appropriate? It's appropriate as one component of a balanced portfolio. Since the financial crisis, VUSTX has been an excellent hedge against equity risk, zigging regularly when equities zag (this correlation is best viewed on a daily frequency). VUSTX is also an att...
by market timer
Thu Jan 01, 2015 8:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why is VUSTX (Long term Treasury) up 25%?
Replies: 6
Views: 586

Re: Why is VUSTX (Long term Treasury) up 25%?

I would not consider VUSTX an appropriate holding for an emergency fund due to duration risk. If rates go up, you can lose a lot of money. Consider a shorter duration bond fund.
by market timer
Thu Jan 01, 2015 8:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why is VUSTX (Long term Treasury) up 25%?
Replies: 6
Views: 586

Re: What are you up YTD?

Finished the year up 16%. Profited from the decline in long term interest rates in the first half of the year, but gave back some gains in the fourth quarter after buying oil and the Japanese yen. I'm going into 2015 with an allocation that's roughly 20% precious metals, 20% WTI and oil majors, 30% ...
by market timer
Thu Jan 01, 2015 11:06 am
 
Forum: Investing - Help with Personal Investments
Topic: What are you up YTD?
Replies: 271
Views: 30052

Re: High Home Price-to-Income ratios - unhealthy?

Metropolitan NY sprawls over about 7000 square miles. How this can be viewed as a place where growth is constrained by zoning is beyond me. There is almost nowhere in the US where urban sprawl is constrained. I think the idea is that metro NYC wouldn't spread out over 7000 square miles if not for z...
by market timer
Thu Jan 01, 2015 10:35 am
 
Forum: Personal Finance (Not Investing)
Topic: High Home Price-to-Income ratios - unhealthy?
Replies: 46
Views: 4823

Re: Your opinions on keeping money out of the market

It is better to re-evaluate your need, willingness, and ability to take risk after a multi-year bull market and all-time high than in the midst of a bear market. Consider adding more fixed income and commodities.
by market timer
Thu Jan 01, 2015 10:10 am
 
Forum: Investing - Help with Personal Investments
Topic: Your opinions on keeping money out of the market
Replies: 11
Views: 2105

Re: Do commodities provide a real return?

I bet you that if you come up with a diversified commodities index, you can figure out if these beat inflation or not. Hint: inflation should be very closely related to a basket of such commodities. Commodity inflation actually doesn't track inflation as measured by the CPI very well. The main reas...
by market timer
Thu Jan 01, 2015 2:51 am
 
Forum: Investing - Theory, News & General
Topic: Do commodities provide a real return?
Replies: 25
Views: 1003

Re: What Book Are You Currently Reading? Part VI

Sorry if I gave you a bum steer. If it's boring, forget it. 25% is a good sample, if it hasn't grabbed you by then it probably isn't going to. I mean, you've gotten to the part about "Why cannot we be buried as eggs in neat little cells with ten or twenty thousand pounds each wrapped round us ...
by market timer
Thu Jan 01, 2015 2:36 am
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 436
Views: 56281

Re: What Movie Have You Recently Watched?

I also watched the trailer for Rushmore, really pumped to watch it, not only does it seem like my type of movie but Jason Schwartzman is one of my favorite actors. The irony is I usually find his characters "annoying" but in a comical, cant take your eyes off the screen kind of way. I thi...
by market timer
Thu Jan 01, 2015 2:28 am
 
Forum: Personal Consumer Issues
Topic: What Movie Have You Recently Watched?
Replies: 444
Views: 52665

Re: What Movie Have You Recently Watched?

Someone mentioned Grand Budapest Hotel, I saw this a few months ago and thought it was awesome. It just had a different "feel" than the majority of movies today, hard to explain without actually seeing it. The aesthetics and cinematography really made it stand out. The feel is very simila...
by market timer
Tue Dec 30, 2014 7:01 pm
 
Forum: Personal Consumer Issues
Topic: What Movie Have You Recently Watched?
Replies: 444
Views: 52665

Re: What Book Are You Currently Reading? Part VI

Tried reading The Way of All Flesh , after all the Nisiprius quotes from that book. Really struggled to get into it, maybe because I have so little background in Christianity. Gave up after reading 25%. Might return to it. Now reading House of Debt , a nonfiction book on the role of household debt i...
by market timer
Tue Dec 30, 2014 6:56 pm
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 436
Views: 56281
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