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Re: The incredible shrinking alpha

I checked Wikipedia and as of December 31st, 2014 the Wilshire 5000 Total Market Index had 3,698 stocks. Last I heard, there are 7,500 mutual funds in existence. I know some of them do not own stocks but there ought to be at least one stock or balanced fund for every stock in the index!! Really, how...
by nedsaid
Sun Feb 01, 2015 5:57 pm
 
Forum: Investing - Theory, News & General
Topic: The incredible shrinking alpha
Replies: 6
Views: 641

Re: Bonds vs. Some Utilities

I don't think this is an irrational strategy, just keep in mind that utility stocks will be more volatile than bonds. Stocks are still stocks. A reason you might do a substitution of dividend paying stocks for bonds is that dividend stocks give you a good shot at increasing dividend payments where b...
by nedsaid
Sun Feb 01, 2015 5:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bonds vs. Some Utilities
Replies: 10
Views: 779

Re: Are there skilled investors and managers?

Garland, I really applaud your posts here on this thread. You really are facing the old "it can't be done" set of arguments. I certainly agree that markets are mostly efficient and that it is hard to beat the indexes with active management. I agree that in the aggregate that indexing will ...
by nedsaid
Sun Feb 01, 2015 12:54 pm
 
Forum: Investing - Theory, News & General
Topic: Are there skilled investors and managers?
Replies: 22
Views: 801

Re: What Experts Say About Market-Timing

The argument seems to be made that if I can't precisely define something or precisely measure it then it doesn't exist. Well no, bubbles exist though there is not a precise definition or measurement. It is a case of "I know what it is when I see it." I don't agree that a run-up in price fo...
by nedsaid
Sun Feb 01, 2015 12:38 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About Market-Timing
Replies: 18
Views: 2979

Re: What Experts Say About Market-Timing

One of the things that causes bubbles are what I call "market religion", that is people get to believe something so strongly that they just suspend any critical thought processes. If this belief gets held by enough people over a long enough period of time this will be a cause of bubbles. H...
by nedsaid
Sun Feb 01, 2015 11:29 am
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About Market-Timing
Replies: 18
Views: 2979

Re: Forecasting REIT dividends

nedsaid wrote: Holy Cow!! REITs must really be overvalued if they are selling off their component properties. If not a sell signal, certainly an indication one shouldn't be piling into these things. Gosh, if the Real Estate Investment Trusts don't believe in real estate, that is like saying the Pop...
by nedsaid
Fri Jan 30, 2015 10:02 pm
 
Forum: Investing - Theory, News & General
Topic: Forecasting REIT dividends
Replies: 13
Views: 1256

Re: Any other investors with 70/30 portfolio?

I am 55 years old and have a 70/30 portfolio. It has been there since maybe 2003-2004. It has fluctuated a bit but essentially I have been there about 10 years or so.
by nedsaid
Fri Jan 30, 2015 9:59 pm
 
Forum: Investing - Theory, News & General
Topic: Any other investors with 70/30 portfolio?
Replies: 40
Views: 2988

Re: Forecasting REIT dividends

To start out with you need to understand the REIT index fund's yield. The following is an explanation from Vanguard. The current unadjusted effective yield is 3.41% as of 12/31/2014, which is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital g...
by nedsaid
Fri Jan 30, 2015 1:21 am
 
Forum: Investing - Theory, News & General
Topic: Forecasting REIT dividends
Replies: 13
Views: 1256

Re: The missing value premium- a 10 year global lookback

With regard to Merriman's " I show the results of an 82-year study of value stocks vs. growth stocks..." At the risk of stating the obvious, the value premium was only "discovered" in 1992, less than 25 years ago. The data that was used to discover it--data that was the result o...
by nedsaid
Fri Jan 30, 2015 1:07 am
 
Forum: Investing - Theory, News & General
Topic: The missing value premium- a 10 year global lookback
Replies: 53
Views: 2518

Re: Mr. Bogle on CNBC today--International and Bonds

My take on this is "Let Bogle be Bogle." He certainly has his opinions and I highly doubt that anything that I could say would change his mind.

One of my few areas of disagreement with Mr. Bogle is his aversion to International investing. He certainly has earned his right to his opinion.
by nedsaid
Fri Jan 30, 2015 12:53 am
 
Forum: Investing - Theory, News & General
Topic: Mr. Bogle on CNBC today--International and Bonds
Replies: 50
Views: 5775

Re: What's wrong with volatility if buy&hold

Hi nedsaid, My post where I had the VIX at 30% on a particular day was purely a hypothetical example of a day when the VIX is high. Such a day would be 50% above the average amount of volatility in the stock market. In reality, I don’t believe there has been a single day in the last three years whe...
by nedsaid
Fri Jan 30, 2015 12:28 am
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: What's wrong with volatility if buy&hold

This is an interesting issue. I have posted myself about looking at extremes of valuation and market sentiment as times to trim or add to stock positions. So I am not absolutely pure on the issue of market timing. I admit to practicing a milder form of market timing myself in other threads. What I w...
by nedsaid
Thu Jan 29, 2015 2:10 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: What's wrong with volatility if buy&hold

The other fly in the ointment is human behavior. You have laid out a very sensible strategy. But human emotion is not sensible. So let's say you sell when the market is down 15% and VIX is still high. The market drops further. You watch for VIX to go down and for the market to start to recover, one ...
by nedsaid
Thu Jan 29, 2015 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: What's wrong with volatility if buy&hold

Bob, I think you are on to something. I am not denying what you are seeing. But my gosh, isn't this technical analysis? Isn't this market timing? I thought these were two things that we have been warned over and over again not to do. I also think you are not the only person who has seen this. I comm...
by nedsaid
Thu Jan 29, 2015 12:37 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: What's wrong with volatility if buy&hold

There are those who rebalance when stocks have fallen and the percentage of stocks in the portfolio is some percentage below their target equity percentage. Buy on the dip. This is a market strategy that doubles down on risk when markets are declining and typically market risk measures are high. Wh...
by nedsaid
Wed Jan 28, 2015 11:40 am
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: Workplace net worth conversations you'd like to avoid?

There are people who will listen to sound advice and those who won't. Save your knowledge for those who would listen and perhaps act on what they have learned. Some folks just love to complain about how bad things are for them but will do nothing to better themselves. You might also run into a probl...
by nedsaid
Wed Jan 28, 2015 11:29 am
 
Forum: Personal Consumer Issues
Topic: Workplace net worth conversations you'd like to avoid?
Replies: 80
Views: 7430

Re: What Experts Say About Market-Timing

What I will say in Dr. Fama's defense is that bubbles are not perceived by the public until after the fact. That is a true statement. The financial crisis of 2008-2009 took a lot of people by surprise including yours truly. People, including distinguished experts did not realize the extent of the su...
by nedsaid
Tue Jan 27, 2015 12:39 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About Market-Timing
Replies: 18
Views: 2979

Re: What Experts Say About Market-Timing

I respect Dr. Fama and his contributions to the world of finance but I find his comments about bubbles to be unbelievable. I would be less shocked if he stated the world was flat. Bubbles are real and are caused by investor euphoria. People get carried away with excessive optimism as almost anything...
by nedsaid
Tue Jan 27, 2015 12:22 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About Market-Timing
Replies: 18
Views: 2979

Re: What's wrong with volatility if buy&hold

Another thing that I wonder is that if VIX gets to be used more as a market timing indicator, if VIX will lose its predictive powers. It is the old saying that strategies work until they don't. I think this is a useful "tool in the toolbox" but I would not make market timing decisions sole...
by nedsaid
Mon Jan 26, 2015 9:21 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: What's wrong with volatility if buy&hold

Bob, I will learn more about VIX and look at the link you posted. It looks interesting.

If memory serves me right, you do tend to see a lot of volatility near market tops.
by nedsaid
Mon Jan 26, 2015 7:48 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: What's wrong with volatility if buy&hold

A Lo strategy for an individual investor would look something like this. If the market falls at least 15% and the VIX is high (say 28 or more) sell some percent of your equity holdings (perhaps 10% or 15%). If the market continues to drop and has fallen say more than 25% and the VIX remains high, o...
by nedsaid
Mon Jan 26, 2015 7:08 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: Asness - The Small-Firm Effect Is Real, and It’s Spectac

To Cliff Asness, Thanks for posting on this forum. It is fun to know that investment experts actually read the stuff that rank amateurs like us post. It is also good to know that you have a great sense of humor. Don't feel too bad about getting beat up with foam rubber hammers on this forum. The Bog...
by nedsaid
Mon Jan 26, 2015 6:38 pm
 
Forum: Investing - Theory, News & General
Topic: Asness - The Small-Firm Effect Is Real, and It’s Spectacular
Replies: 62
Views: 6397

Re: What's wrong with volatility if buy&hold

Really, being in or out of the market when the VIX is high? I don't know about that. The trouble is with that thinking is that it does not protect you from unexpected events. Let's say that volatility was very low and VIX was low. It looks safe to be in the water. Tell me what would happen if Vladim...
by nedsaid
Mon Jan 26, 2015 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: What's wrong with volatility if buy&hold

I read that fiance professor Dr. Andrew Lo said that the markets are getting so volatile these days, that the buy and hold strategies don't work anymore. I don't exactly understand why this is the case. I thought that the whole purpose of the buy and hold strategy was to avoid caring about volatili...
by nedsaid
Mon Jan 26, 2015 1:10 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: What Experts Say About Market-Timing

I want to make it crystal clear that I am not advocating market timing. I have practiced it in milder forms discussed above but then again with a focus on market valuations and not market predictions. Years ago, Money magazine ran an article that showed that stock markets tend to go up. They tend to...
by nedsaid
Mon Jan 26, 2015 12:58 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About Market-Timing
Replies: 18
Views: 2979

Re: "5 Steps to Start Saving for Retirement"

This is really good. Like the Nike motto, we have to "Just Do It." The problem many people have is that they don't get started. I got started with imperfect investments, imperfect accounts, and imperfect advisors and have done pretty well.
by nedsaid
Mon Jan 26, 2015 12:50 pm
 
Forum: Investing - Theory, News & General
Topic: "5 Steps to Start Saving for Retirement"
Replies: 1
Views: 627

Re: Never Give Up

Good old John Bogle. He provides perspective and encouragement for investors. Thanks for posting.
by nedsaid
Mon Jan 26, 2015 11:31 am
 
Forum: Investing - Theory, News & General
Topic: Never Give Up
Replies: 1
Views: 737

Re: What's wrong with volatility if buy&hold

Volatility comes and goes. It depends on the collective nervousness of investors, particularly the big institutions. It amazes me that the investing public which is often derided for being naïve about the markets often stay relatively calm while it is often the institutions that get jittery. The art...
by nedsaid
Mon Jan 26, 2015 11:26 am
 
Forum: Investing - Theory, News & General
Topic: What's wrong with volatility if buy&hold
Replies: 52
Views: 3384

Re: Factors and zero-sum investing

This is not rocket science. A stock is unloved if there are no analysts following it and no Wall Street firms have buy/sell/hold recommendations. If unloved means no analysts follow the company, then wouldn't average daily trading volume be a better measure of how many investors are looking at a co...
by nedsaid
Mon Jan 26, 2015 1:09 am
 
Forum: Investing - Theory, News & General
Topic: Factors and zero-sum investing
Replies: 57
Views: 2937

Re: What Experts Say About Market-Timing

Ehec said "So we got: (1) perception of valuations, (2) market sentiment, (3) buying what is underfollowed and unloved (it isn't rocket science, simply count the number of wall st. analysts following the stock) and (4) finding "good companies" with only temporary problems. It kind of...
by nedsaid
Mon Jan 26, 2015 12:55 am
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About Market-Timing
Replies: 18
Views: 2979

Re: Flagship financial planner advice?

I have worked with financial planners in the past and this is what you should expect. 1) An analysis of your portfolio. Most planners use the Morningstar professional software, you will get a portfolio analysis with your current asset allocation. They will tell you how risky your portfolio is and pr...
by nedsaid
Mon Jan 26, 2015 12:37 am
 
Forum: Personal Finance (Not Investing)
Topic: Flagship financial planner advice?
Replies: 54
Views: 5305

Re: What experts say about $5,000 watches

Thank you for posting this, it was quite informative. So would Mr. Bogle buy the $500 Hamilton or the $5,000 Rolex? My guess is that he'd probably buy the $20 Timex and be perfectly happy, since it tells time and that's what a watch is for. Jack doesn't need to make a statement or try to impress an...
by nedsaid
Mon Jan 26, 2015 12:12 am
 
Forum: Personal Consumer Issues
Topic: Best watch for around $5,000?
Replies: 906
Views: 173759

Re: What experts say about $5,000 watches

Thank you for posting this, it was quite informative. So would Mr. Bogle buy the $500 Hamilton or the $5,000 Rolex?
by nedsaid
Mon Jan 26, 2015 12:09 am
 
Forum: Personal Consumer Issues
Topic: Best watch for around $5,000?
Replies: 906
Views: 173759

Re: Asness - The Small-Firm Effect Is Real, and It’s Spectac

The whole point of factor investing is to try to beat the market or perhaps achieve market return with less risk. I see factors as the "why" the market does what it does. In other words, what causes performance? Larry Swedroe has posted at length about the factors and that we should see di...
by nedsaid
Sun Jan 25, 2015 6:33 pm
 
Forum: Investing - Theory, News & General
Topic: Asness - The Small-Firm Effect Is Real, and It’s Spectacular
Replies: 62
Views: 6397

Re: What Experts Say About Market-Timing

Ehec, Thanks for your comments. Yes, I have posted about my thinking aloud, seeing both sides of issues, and plain old fashioned wishy-washiness. You are not the only one who has seen me go back and forth on my posts. Leeraar poked a bit of fun at me for making seemingly contradictory statements. Wh...
by nedsaid
Sun Jan 25, 2015 6:14 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About Market-Timing
Replies: 18
Views: 2979

Re: Asness - The Small-Firm Effect Is Real, and It’s Spectac

...I for one am confused by the ever changing factor zoo as it is has been presented up to now. Existing factors seem to come into style and go out of style, sometimes even disappear unless they are combined with yet another factor. In addition new factors emerge such as momentum, quality, profitab...
by nedsaid
Sun Jan 25, 2015 4:08 pm
 
Forum: Investing - Theory, News & General
Topic: Asness - The Small-Firm Effect Is Real, and It’s Spectacular
Replies: 62
Views: 6397

Re: Asness - The Small-Firm Effect Is Real, and It’s Spectac

He isn't really saying the small-firm effect is real. He's essentially pushing the new quality factor: "In its normal form the small firm effect is, on a host of dimensions, weak to possibly nonexistent. Once adjusted for quality exposure it is real and spectacular." I read the Asness art...
by nedsaid
Sun Jan 25, 2015 3:58 pm
 
Forum: Investing - Theory, News & General
Topic: Asness - The Small-Firm Effect Is Real, and It’s Spectacular
Replies: 62
Views: 6397

Re: WHAT EXPERTS SAY

Pretty much the lesson is to stay invested. That is amazing performance over a lifetime to go from 20 to 2,000 plus dividends. That is a pretty powerful perspective.

By the way, Happy Birthday Taylor!!
by nedsaid
Sun Jan 25, 2015 3:25 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say [about various investing topics]
Replies: 51
Views: 3371

Re: What Experts Say About Market-Timing

While I have made a lot of mistakes as an investor, at least I have had the good sense to not chase performance. To whatever extent I have practiced a mild form of market timing it was based on my perception of valuations. In other words, a form of reverse performance chasing. But whatever modest ch...
by nedsaid
Sun Jan 25, 2015 3:19 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About Market-Timing
Replies: 18
Views: 2979

Re: Factors and zero-sum investing

What I am really saying is that factor investing is based on the flaws of human nature. The question is can we outperform by exploiting human foibles? I for one am willing to try. Your argument breaks down for the Momentum factor. Yes, this is a paradox. Small and Value work in my opinion for behav...
by nedsaid
Sat Jan 24, 2015 12:10 am
 
Forum: Investing - Theory, News & General
Topic: Factors and zero-sum investing
Replies: 57
Views: 2937

Re: Malware problem on new PC

Use Malwarebytes. Don't use anything but reputable software to clean up malware. A lot of the stuff you find on the internet to clean malware is malware itself. Microsoft Security Essentials is also a good tool for viruses and malware. My computer geek guys recommend both Malwarebytes and Microsoft...
by nedsaid
Fri Jan 23, 2015 11:29 pm
 
Forum: Personal Consumer Issues
Topic: Malware problem on new PC
Replies: 42
Views: 2630

Re: Factors and zero-sum investing

If indeed I can squeeze a bit of extra performance from small-value tilting then I will do it. I will be willing to do what most people won't do, that is buy what is underfollowed and unloved. The crowd wants to go with the popular and loved. If I can outperform by hanging out with the nerds, the d...
by nedsaid
Fri Jan 23, 2015 11:12 pm
 
Forum: Investing - Theory, News & General
Topic: Factors and zero-sum investing
Replies: 57
Views: 2937

Re: Factors and zero-sum investing

The reason I have tried the factor investing is what I would call the "low hanging fruit" theory. If the low hanging fruit is there to be picked, I will pick it regardless of what market theoreticians say. I will pick the low hanging fruit off the tree or the $20 bill on the street that th...
by nedsaid
Fri Jan 23, 2015 9:21 pm
 
Forum: Investing - Theory, News & General
Topic: Factors and zero-sum investing
Replies: 57
Views: 2937

Re: How does an Efficient Market explain Buffett?

I don't know what it is with people. If somebody has success why not celebrate it and maybe try to learn something from those who achieved it? We always want to say they were "lucky" or maybe they used some secret formula that academia figures out years later. Or thinks they figured it out...
by nedsaid
Fri Jan 23, 2015 9:02 pm
 
Forum: Investing - Theory, News & General
Topic: How does an Efficient Market explain Buffett?
Replies: 257
Views: 12880

Re: What Experts Say About "Indexing"

Yes, indexing works pretty darned well. Thanks Taylor for putting together a nice collection of quotes.
by nedsaid
Fri Jan 23, 2015 5:15 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say About "Indexing"
Replies: 10
Views: 2106

Re: What is your commodities stocks/indexes allocation?

Do you own any stocks or indexes that are specifically categorized as commodities? What percentage of your goal allocation are made up of commodities? Has their poor performance caused you to modify this percentage? Does the current world situation make you think they will go up soon? Does the curr...
by nedsaid
Fri Jan 23, 2015 11:39 am
 
Forum: Investing - Theory, News & General
Topic: What is your commodities stocks/indexes allocation?
Replies: 20
Views: 1025

Re: Poll: Principles of Boglehead Philosopy

I picked use index funds, keep costs low, and diversify your investments. So far, folks seem to agree.
by nedsaid
Fri Jan 23, 2015 1:24 am
 
Forum: Investing - Theory, News & General
Topic: Poll: Principles of Boglehead Philosophy
Replies: 66
Views: 3535

Re: Gotta Be a Bear Market Coming

The economy looks strong with growth up and unemployment down. Nonetheless, I'e got to think this bull market is getting somewhat aged. While I won't resort to market-timing, I am bracing - perhaps irrationally - bracing for a major correction or bear market. It might be time to rebalance your port...
by nedsaid
Fri Jan 23, 2015 1:22 am
 
Forum: Investing - Help with Personal Investments
Topic: Gotta Be a Bear Market Coming
Replies: 64
Views: 7673

Re: Diversify my portfolio

Thank you for the site Investor Newb. (Portfolio Visualizer). I went there and plugged in 3 portfolios from 1999-2014 (15 years). Interesting results: Portfolio 1 US Stock Market 34.00% Intl Stock Market 33.00% Total Bond 33.00% Portfolio 2 US Stock Market 38.00% Small Cap Value 10.00% Intl Stock M...
by nedsaid
Fri Jan 23, 2015 1:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Diversify my portfolio
Replies: 18
Views: 1715

Re: Malware problem on new PC

InvestorNewb wrote:I use Super AntiSpyware (free edition): http://superantispyware.com/

I discovered it by trying to remove a virus from my PC, when no other software would work. It did the job and I've been using it ever since.


My computer geek guys recommend this also.
by nedsaid
Wed Jan 21, 2015 10:26 pm
 
Forum: Personal Consumer Issues
Topic: Malware problem on new PC
Replies: 42
Views: 2630
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