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Re: Mom and Pop Step Up Their Trading

Oh oh. This is not what I want to see. When the average guy starts performance chasing into stocks, my eyebrow shoots up. This is not the late 1990's and the heyday of day trading. But this is something to keep an eye on.
by nedsaid
Thu Apr 24, 2014 9:14 am
 
Forum: Investing - Theory, News & General
Topic: Mom and Pop Step Up Their Trading
Replies: 19
Views: 1398

Re: Do you use a dry powder/tactical asset allocation strate

I do not use a dry powder strategy. My money market funds from selling stock mutual funds in 2000 eventually all went into bond funds. I put the money funds into a investment grade intermediate term bond fund, a TIPS fund, and an International Bond fund. At my age, my rebalancing is just one way, fr...
by nedsaid
Thu Apr 24, 2014 9:12 am
 
Forum: Investing - Help with Personal Investments
Topic: Do you use a dry powder/tactical asset allocation strategy?
Replies: 28
Views: 2322

Re: CDs or Conservative Portfolio

My first thought is that you should keep probably $60K or a bit more in CD's and bank deposits. For you, that would be 6+ months of emergency funds. Keep in mind that "secure" jobs really aren't all that secure and you are particularly vulnerable to layoffs in your 50's. Another possibilit...
by nedsaid
Thu Apr 24, 2014 8:48 am
 
Forum: Investing - Help with Personal Investments
Topic: CDs or Conservative Portfolio
Replies: 2
Views: 310

Re: Help with Investment Advice

My expectations of future returns are 6-7% from stocks and maybe 3% from bonds. If your folks have 20% in stocks, their expected returns will probably be about 3.8 percent. If you were optimistic, you could say 4 percent. If you were a little pessimistic about 3.5 percent. Their expectations of earn...
by nedsaid
Sun Apr 20, 2014 1:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with Investment Advice
Replies: 9
Views: 628

Re: NYT: Re-education of a Brash Young Stock Picker

It really boils down to correct investor behavior rather than picking the "right" investments. Reading Peter Lynch's books did not turn me into Peter Lynch but I did okay as a stock picker. What was most important was that I was patient and stuck with stocks even when things looked bad. I ...
by nedsaid
Sun Apr 20, 2014 1:09 pm
 
Forum: Investing - Theory, News & General
Topic: NYT: Re-education of a Brash Young Stock Picker
Replies: 23
Views: 2852

Re: Blog:William Bernstein’s Coward’s Portfolio

The sad thing is that if all the Bogleheads saw the light and went to a three-fund portfolio that this forum would go out of business. There would be nothing to discuss. No "unloved midcaps", no "slice and dice", no arguments about commodities in a portfolio, no stock picking, et...
by nedsaid
Sun Apr 20, 2014 12:38 pm
 
Forum: Investing - Theory, News & General
Topic: Blog:William Bernstein’s Coward’s Portfolio
Replies: 30
Views: 4694

Re: Oh No! My Tilt has untilted!

Where the anti-proverb came from was the wacky greeting cards my grandmother and her uncle would recycle and trade. They made good use of whiteout to cover the previous person's signature on the card. They had a wonderful sense of humor. It is funny because it is so true!!
by nedsaid
Sun Apr 20, 2014 12:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Oh No! My Tilt has untilted!
Replies: 15
Views: 2296

Re: Mel's Unloved Mid-Caps Finally Getting Some Respect

This is where I have disagreed with the Merriman folks and the "slice and dicers." The mid-cap sector of the stock market is a very profitable sector. My favorite mutual fund company calls it "the sweet spot" of the stock market. I owned a couple of their mid-cap growth funds (th...
by nedsaid
Sun Apr 20, 2014 11:59 am
 
Forum: Investing - Theory, News & General
Topic: Mel's Unloved Mid-Caps Finally Getting Some Respect
Replies: 46
Views: 3390

Re: NYT: Re-education of a Brash Young Stock Picker

Packer16, you are right about going against the grain. First of all, one of Nedsaid's rules of investing says something like this. Upon buying an investment you will soon come across a newspaper article or a TV report telling you that whatever you just did was a mistake and completely wrong. This is...
by nedsaid
Sun Apr 20, 2014 11:33 am
 
Forum: Investing - Theory, News & General
Topic: NYT: Re-education of a Brash Young Stock Picker
Replies: 23
Views: 2852

Re: NYT: Re-education of a Brash Young Stock Picker

Another couple thoughts on stock picking. I think the "sweet spot" for diversification of an individual stock portfolio is 15-20 stocks diversified across industry sectors. A person can pretty easily follow these companies, particularly if you subscribe to a service like Morningstar. And I...
by nedsaid
Sun Apr 20, 2014 11:11 am
 
Forum: Investing - Theory, News & General
Topic: NYT: Re-education of a Brash Young Stock Picker
Replies: 23
Views: 2852

Re: NYT: Re-education of a Brash Young Stock Picker

One reason that stock picking often doesn't beat the market is that it involves intangible factors that cannot be quantified. Yes, buying at a good price is important. If you want to take the time and really dig into the financials and the footnotes, that is really helpful. Checking to see if the di...
by nedsaid
Sun Apr 20, 2014 10:50 am
 
Forum: Investing - Theory, News & General
Topic: NYT: Re-education of a Brash Young Stock Picker
Replies: 23
Views: 2852

Re: NYT: Re-education of a Brash Young Stock Picker

Berntson, my research was several things. Recommendations from my broker. Valueline at the public library. Reading Barron's, the Wall Street Journal, Kiplinger's, Money Magazine, and other publications for ideas. A great idea came from Barron's in an interview with Jeff Vinik, who managed Fidelity M...
by nedsaid
Sat Apr 19, 2014 6:10 pm
 
Forum: Investing - Theory, News & General
Topic: NYT: Re-education of a Brash Young Stock Picker
Replies: 23
Views: 2852

Re: Does this strategy invite unnecessary risk?

I would echo Livesoft's comments. The important thing is to have all the bases covered. Again, I like what Vanguard has done with it's Retirement Target Date Portfolios. Four funds that cover US Stocks, International Stocks, US Bonds, and International Bonds. You get almost everything in a simple po...
by nedsaid
Sat Apr 19, 2014 11:24 am
 
Forum: Investing - Theory, News & General
Topic: Does this strategy invite unnecessary risk?
Replies: 42
Views: 2573

Re: NYT: Re-education of a Brash Young Stock Picker

This was a good article. It is pretty sobering when folks like Warren Buffett and Peter Lynch say that most people should buy and hold the broad index funds. Outperforming the market CAN be done but few do it consistently and the longer the time frame, the longer the odds. I still own individual sto...
by nedsaid
Sat Apr 19, 2014 8:34 am
 
Forum: Investing - Theory, News & General
Topic: NYT: Re-education of a Brash Young Stock Picker
Replies: 23
Views: 2852

Re: Does this strategy invite unnecessary risk?

There are a lot of things to think about in implementing a tilting strategy. Coupling a Total Market Index with Small Cap Value is actually a great idea. It certainly is a lot simpler that all the slices. In my opinion, it is really important to overweight the mid/small-caps for a couple of reasons....
by nedsaid
Sat Apr 19, 2014 8:18 am
 
Forum: Investing - Theory, News & General
Topic: Does this strategy invite unnecessary risk?
Replies: 42
Views: 2573

Re: Does this strategy invite unnecessary risk?

As I understand it, the "Larry portfolio" is 30% small cap value stocks and 70% one year treasuries. This portfolio has performed well. Larry invests in US Small Value, International Small Value, and Emerging Markets Small Value. My take on this is that in my opinion this is extreme tiltin...
by nedsaid
Fri Apr 18, 2014 9:36 pm
 
Forum: Investing - Theory, News & General
Topic: Does this strategy invite unnecessary risk?
Replies: 42
Views: 2573

Re: Retirement Portfolio Advice

The first thing that I see is that you are using active funds in your taxable account. This could create a bit of a tax problem as you have to pay taxes on capital gains and dividend distributions even if you reinvest them. Many investors are not aware of this. As you reinvest the capital gains and ...
by nedsaid
Fri Apr 18, 2014 8:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Retirement Portfolio Advice
Replies: 7
Views: 899

Re: Oh No! My Tilt has untilted!

I started this thread with a bit of humor in mind and in hopes of generating some enlightening discussion. My portfolio really did "untilt", caused by a shift in the large cap area. I hoped this would spur a discussion of the difficulties that people face when tilting their portfolios. Act...
by nedsaid
Fri Apr 18, 2014 8:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Oh No! My Tilt has untilted!
Replies: 15
Views: 2296

Re: Value & Growth - 20 Years In Style

Dimensional Fund advisors believes in the performance factors like small, value, momentum, quality, and illiquidity. Vanguard in their heart of hearts does not. So one would expect DFA to do a better job of screening for value than Vanguard. The DFA funds should be more value-ee or exhibit better va...
by nedsaid
Fri Apr 18, 2014 6:06 pm
 
Forum: Investing - Theory, News & General
Topic: Value & Growth - 20 Years In Style
Replies: 14
Views: 1087

Re: First of two parter on what is risk

Hopefully, I am not like the Generals wanting to fight the last war. Inflation is foremost on my mind as an investor because I have seen its effects on purchasing power over time. So my portfolio is constructed with that in mind. One risk that I am not thinking much about is DEFLATION, which can hap...
by nedsaid
Fri Apr 18, 2014 5:41 pm
 
Forum: Investing - Theory, News & General
Topic: First of two parter on what is risk
Replies: 26
Views: 1673

Re: Which: Dividend Growth or High Yield Dividend?

Oh man!! Don't chase yield either in bonds or in stocks. If the long predicted rise in interest rates finally occurs then your High Yield Dividend fund will likely be hit hardest of your stock funds. The reason being more competition from bonds for yield. A family member has reached for yield and I ...
by nedsaid
Fri Apr 18, 2014 5:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: Which: Dividend Growth or High Yield Dividend?
Replies: 13
Views: 1439

Re: Oh No! My Tilt has untilted!

Livesoft, you are exactly right. I do own individual stocks in my retirement portfolio, all together they are a bit less than 15%. I think what probably happened was that 2-3 stocks probably shifted from one category to another. Over time, I noticed that REITs have gone from mid-value to mid-core. A...
by nedsaid
Fri Apr 18, 2014 4:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Oh No! My Tilt has untilted!
Replies: 15
Views: 2296

Re: Oh No! My Tilt has untilted!

The Seeking Alpha charts do a lot to answer the question. Yes, Growth outperformed Value in both Large Cap and Small Cap stocks. The exception was that Mid Cap Value outperformed Mid Cap Growth. So it appears that what I am seeing is the great performance of Large Cap Growth.
by nedsaid
Thu Apr 17, 2014 11:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Oh No! My Tilt has untilted!
Replies: 15
Views: 2296

Re: First of two parter on what is risk

There are a couple of ways that I look at investment risk. First is the risk of loss of purchasing power over time. That is risk from inflation. Second is the risk from the volatility of markets. Unfortunately, we often have to accept the second risk (volatility) to defeat the first risk which is th...
by nedsaid
Thu Apr 17, 2014 11:05 pm
 
Forum: Investing - Theory, News & General
Topic: First of two parter on what is risk
Replies: 26
Views: 1673

Re: Doesn't Matter - Does Matter - Good Post by Ben Carlson

There is nothing at all wrong with High IQ. I don't think the point is to disparage intelligence. Being very intelligent is a big advantage in life. What I would say is what matters is what you do with what you have. There is a difference between high intelligence and good judgment. If you have the ...
by nedsaid
Thu Apr 17, 2014 10:52 pm
 
Forum: Investing - Theory, News & General
Topic: Doesn't Matter - Does Matter - Good Post by Ben Carlson
Replies: 58
Views: 5204

Re: Portfolio "Floor" - worst case is the mattress

In the days before FDIC Insurance, people would bury their cash in a jar in the back yard. Banks were not too well trusted. We just take so much for granted today.
by nedsaid
Thu Apr 17, 2014 10:45 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio "Floor" - worst case is the mattress
Replies: 2
Views: 604

Re: Vanguard IRA Insights

I do have a small ROTH IRA, most of my retirement funds are in my workplace savings plan and in my Traditional IRAs. I do think ROTH IRAs are a great deal for the young investor. I have not made any conversions into my ROTH, only making modest contributions every year. I haven't gone heavy into the ...
by nedsaid
Thu Apr 17, 2014 10:32 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard IRA Insights
Replies: 7
Views: 869

Re: Oh No! My Tilt has untilted!

Yes, you are right that I am getting this from the Morningstar Stylebox of my portfolio. I was wondering if others had experienced this.
by nedsaid
Thu Apr 17, 2014 10:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Oh No! My Tilt has untilted!
Replies: 15
Views: 2296

Re: Retirement defeasance

The Zero Coupon Bond strategy is actually a great idea. This would be a "matching" strategy that Bob K often talks about. The problem is that interest rates are still really low and may not "normalize" for at least a couple more years. I am stock heavy for my age in part because ...
by nedsaid
Thu Apr 17, 2014 9:40 pm
 
Forum: Investing - Theory, News & General
Topic: Retirement defeasance
Replies: 29
Views: 2657

Oh No! My Tilt has untilted!

My value oriented portfolio is now almost split 50/50 between value and growth. This must mean that Growth stocks have been doing well relative to Value stocks. I have seen this in the large cap part of my portfolio. The small/mid cap allocations between value/core/growth have not changed. Anyone el...
by nedsaid
Thu Apr 17, 2014 9:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Oh No! My Tilt has untilted!
Replies: 15
Views: 2296

Re: Japan Does not Show That Stocks are Dangerous

By golly, if I keep posting I will be right about something sooner or later!!
by nedsaid
Thu Apr 17, 2014 6:42 pm
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: You don't want to be member of the hedge fund club

My foggy memory banks remember that the non-profit that I work for did put money to work in hedge funds. There was an investment guy that was very articulate and convincing and got them to invest. One of our consultants asked why the heck our not-for-profit company was making such an investment. It ...
by nedsaid
Thu Apr 17, 2014 6:40 pm
 
Forum: Investing - Theory, News & General
Topic: You don't want to be member of the hedge fund club
Replies: 13
Views: 2296

Re: Avoiding VNQ due to interest rate [Vanguard REIT]

Despite the predictions of higher interest rates, I did not sell my REITs. I also kept my bond funds in the Intermediate Term range despite advice to shorten my maturities. So far, my decision to stay the course has been vindicated. Investing is more complicated than buying and selling on the basis ...
by nedsaid
Thu Apr 17, 2014 6:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: Avoiding VNQ due to interest rate [Vanguard REIT]
Replies: 28
Views: 2294

Re: Where are the Opportunities now ?

I don't advocate market timing but I believe that investors should pay attention to valuations. I also look at money flows to give me an idea of investor sentiment. So if I see investors piling into a particular asset class, my enthusiasm for that asset class is less because I know that investors of...
by nedsaid
Thu Apr 17, 2014 6:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Where are the Opportunities now ?
Replies: 28
Views: 2006

Re: Asset allocation over time

If you are conservative, age in bonds is a good rule. I think that age in bonds minus ten is a better rule of thumb, I just think the age in bonds is too conservative. The Vanguard Funds don't agree with this either and their Target Date 2045 fund is now 89% in stocks. So 11% in fixed income versus ...
by nedsaid
Thu Apr 17, 2014 5:57 pm
 
Forum: Investing - Theory, News & General
Topic: Asset allocation over time
Replies: 23
Views: 1233

Re: Does this strategy invite unnecessary risk?

I enthusiastically endorse Paul Merriman. I have made changes to my portfolio to get the "small" and "value" tilts that he talks about. If indeed the small and value premiums are low hanging fruit, why not pick it? I think the potential for extra return is worth the effort. The w...
by nedsaid
Thu Apr 17, 2014 5:41 pm
 
Forum: Investing - Theory, News & General
Topic: Does this strategy invite unnecessary risk?
Replies: 42
Views: 2573

Re: Japan Does not Show That Stocks are Dangerous

I have also stated many times that valuations don't predict the direction of the market but give you a good idea of what market returns might be going forward. It makes perfect sense to take valuations into account when you invest. As I posted above, whatever shifts I made in my portfolio were actua...
by nedsaid
Thu Apr 17, 2014 5:29 pm
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: Draft email to investment advisor re outperforming Total

It is a difficult decision to drop an investment advisor you have had a long-term relationship with. I might be in a minority on this forum but I think there is value in being able to "call your money" and get some hand holding when markets get tough. Part of an advisor's job is to keep yo...
by nedsaid
Thu Apr 17, 2014 5:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Draft email to investment advisor re outperforming Total Mar
Replies: 24
Views: 2406

Re: Japan Does not Show That Stocks are Dangerous

Okay, I have made the statements that valuations matter and matter a lot. And I have advocated taking advantage of extremes in market sentiment. How does this relate to real life? What did I do in real life? In 2000, I sold about 30% of my stock mutual funds and went to cash. I had an equal amount i...
by nedsaid
Thu Apr 17, 2014 4:09 pm
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: The dangers of backtesting and overfitting data - paper

I remember one string where a poster confidently stated that he had backtested his strategies and this gave him confidence in his approach. Feeling a bit like a smart aleck, I asked him if he had performed rigorous "future testing." I do believe in looking at past data and learning from it...
by nedsaid
Thu Apr 17, 2014 3:48 pm
 
Forum: Investing - Theory, News & General
Topic: The dangers of backtesting and overfitting data - paper
Replies: 31
Views: 1778

Re: Japan Does not Show That Stocks are Dangerous

Would you rather invest your money in the stock market in the depths of the 1973-74 stock market when P/E's were 8 or in early 2000 when market P/E's got up to about 32? In which scenario were the future returns higher? Of course valuations matter.
by nedsaid
Thu Apr 17, 2014 9:25 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: Why are total bond market funds so often recommended?

I own the Vanguard Total Bond Market Index myself in my workplace savings plan. Low cost, diversified, and good performance relative to other bond funds is good enough for me. Maybe it is just me, but I like diversification in bonds just as I like diversification in stocks. Yes, Treasuries are "...
by nedsaid
Wed Apr 16, 2014 2:40 am
 
Forum: Investing - Theory, News & General
Topic: Why are total bond market funds so often recommended?
Replies: 52
Views: 4471

Re: You don't want to be member of the hedge fund club

One reason people invest in the hedge funds is the prestige factor. People like to have their money invested by a well known money manager. Plus it makes you seem smarter and more sophisticated. Telling your wealthy friends at a cocktail party that you have your money in a three index fund portfolio...
by nedsaid
Wed Apr 16, 2014 2:10 am
 
Forum: Investing - Theory, News & General
Topic: You don't want to be member of the hedge fund club
Replies: 13
Views: 2296

Re: Japan Does not Show That Stocks are Dangerous

I am going to come to Bernston's defense here. Whether you disagree with his post or not or if you think there were problems with the data, there are things that emerge from this thread. First, valuations matter and they matter a whole lot. Or as Warren Buffett said, "Geometric progressions eve...
by nedsaid
Wed Apr 16, 2014 1:57 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: confusing familiar with safe, international investing

Good article Larry. I believe in International investing and have done so for many years.
by nedsaid
Tue Apr 15, 2014 9:50 am
 
Forum: Investing - Theory, News & General
Topic: confusing familiar with safe, international investing
Replies: 1
Views: 303

Re: Why is mid-cap discussed so much less than large and sma

If you are looking for a "Tiger in the Tank" for your portfolio, small caps and particularly small cap value put more "kick" into your portfolio. That comes at the price of higher volatility. The mid-caps are a happy medium between small and large. Most of the growth potential fr...
by nedsaid
Tue Apr 15, 2014 9:47 am
 
Forum: Investing - Theory, News & General
Topic: Why is mid-cap discussed so much less than large and small?
Replies: 19
Views: 1247

Re: Investments/Allocations

I think a 50% stock/50% bond portfolio for a retiree is an appropriate asset allocation. I like what you have done, no need to change a thing. Abuss368 makes great comments about REITS, I too have invested in this asset class for a long time. US REITs have been fantastic investments and provided me ...
by nedsaid
Mon Apr 14, 2014 10:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Investments/Allocations
Replies: 11
Views: 668

Re: What % of stock market "drive" is gambling?

Nisiprius, now you have done it!! DFA will come up with a small cap "horseflesh" fund screened for momentum and profitability and Vanguard will come up with the pure "total market horseflesh index" with no screening but lower costs. This will be new must-have asset class. Serious...
by nedsaid
Sun Apr 13, 2014 7:12 pm
 
Forum: Investing - Theory, News & General
Topic: What % of stock market "drive" is gambling?
Replies: 42
Views: 3960

Re: My financial advisor doubt

I went to a couple Paul Merriman seminars led by Tom Cock back in 2007. The pitch they presented was that an investor could perform the tilting strategies using Vanguard Funds and they showed you how to do it. But they claimed that they could deliver a 1% performance premium over Vanguard even with ...
by nedsaid
Sun Apr 13, 2014 6:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: My financial advisor doubt
Replies: 28
Views: 3181

Re: The market portfolio vs. value tilts

As a higher-level point, I became a lot more relaxed around here when I finally realized some posters use the word "diversification" to mean "concentration into particular types of stocks." PJW As they add more factors, like MOM, Profitability, etc they are screening our more an...
by nedsaid
Sun Apr 13, 2014 5:56 pm
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3191
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