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Re: Bucket Approach Redux

Christine Benz, who is usually levelheaded, has been writing columns about the bucket concept for Morningstar. Afraid I haven't been reading those columns. What bothers me deeply about the "buckets" concept is the failure of its advocates to talk through the scenario of what exactly happen...
by nisiprius
Sat Oct 25, 2014 9:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Bucket Approach Redux
Replies: 17
Views: 906

Re: Is Wells Fargo misleading my friend?

...I'm wondering if OP's friend inherited the KeyCorp shares and told the advisor that he wanted to hold onto them. Maybe the advisor talked OP's friend down from a much higher allocation to KEY? I'm not saying the portfolio's good, but it might be much better than 100% KEY! The advisor recommendin...
by nisiprius
Sat Oct 25, 2014 9:32 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is Wells Fargo misleading my friend?
Replies: 21
Views: 2146

Re: A fund "adviser's" financial strength: important?

That Advisor, Adviser, spelling always seemed odd also. Is one a corporation, and one a individual? I'll have to look that up, and update this reply If I find the answer. I'm pretty sure it simply varies. Fidelity calls FMR the "adviser." Vanguard calls The Vanguard Group the "adviso...
by nisiprius
Sat Oct 25, 2014 9:29 pm
 
Forum: Investing - Theory, News & General
Topic: A fund "adviser's" financial strength: important?
Replies: 6
Views: 399

A fund "adviser's" financial strength: important?

I am trying to understand the "run on a bond fund" scenario. A correspondent is trying to explain it to me in words of one syllable but I may not be understanding any of it correctly. Here's where I'm at. I think that: Mutual funds are committed to redeem at the end-of-day NAV. Usually we ...
by nisiprius
Sat Oct 25, 2014 8:24 pm
 
Forum: Investing - Theory, News & General
Topic: A fund "adviser's" financial strength: important?
Replies: 6
Views: 399

Re: What funds are negatively correlated with stocks?

parsi1 wrote:ProShares Short S&P500 (SH)
or if you want stronger negative correlation: ProShares UltraPro Short Dow30 (SDOW)
I believe parsi1 is telling a joke with a straight face.
by nisiprius
Sat Oct 25, 2014 6:56 pm
 
Forum: Investing - Theory, News & General
Topic: What funds are negatively correlated with stocks?
Replies: 6
Views: 690

Re: So you think you're a Risk-taker?

If you can't remember 2008-2009, then do your best to remember 2011, the year behavioral finance expert Cass Sunstein "seeing a decline in [my] fund’s value, decided to sell a significant chunk," and did so, despite talking to his co-author who told him "Reread our book!" But if ...
by nisiprius
Sat Oct 25, 2014 6:50 pm
 
Forum: Investing - Theory, News & General
Topic: So you think you're a Risk-taker?
Replies: 12
Views: 1313

Re: Asset Allocation by Roger Gibson

I have not spent quality time with it. I have the impression that Gibson's book, published in 1996, and his paper, "Asset Allocation and the Rewards of Multiple-Asset-Class Investing," Journal of Financial Planning, March 1999, were influential and may be the root source of the style of in...
by nisiprius
Sat Oct 25, 2014 5:47 pm
 
Forum: Investing - Theory, News & General
Topic: Asset Allocation by Roger Gibson
Replies: 10
Views: 1070

Re: new interesting piece by Asness on hedge funds

...you don't need market returns to add value if you have low to negative correlations... Negative correlations are truly magic, because it would mean one asset is actually canceling out the the risk of another, and in theory such an asset can indeed improve a portfolio even if the asset has zero r...
by nisiprius
Sat Oct 25, 2014 4:48 pm
 
Forum: Investing - Theory, News & General
Topic: new interesting piece by Asness on hedge funds
Replies: 22
Views: 1340

Re: new interesting piece by Asness on hedge funds

Larry, I am puzzled. Why should I be interested in an expert's self-styled "tepid" defense of hedge funds? Are you saying that you now see a limited role for some kind of hedge fund investments in an ordinary investor's portfolio? In The Only Guide to Alternative Investments You'll Ever Ne...
by nisiprius
Sat Oct 25, 2014 7:48 am
 
Forum: Investing - Theory, News & General
Topic: new interesting piece by Asness on hedge funds
Replies: 22
Views: 1340

Re: What kind of index funds did Vanguard have 1976-1992?

livesoft wrote:Total Bond Index has inception of 12/11/1986
while GNMA was born 06/27/1980.
Vanguard GNMA Fund isn't an index fund.
by nisiprius
Fri Oct 24, 2014 7:30 pm
 
Forum: Investing - Theory, News & General
Topic: What kind of index funds did Vanguard have 1976-1992?
Replies: 9
Views: 899

Re: What kind of index funds did Vanguard have 1976-1992?

There's a very good historical walkthrough by John C. Bogle: The First Index Mutual Fund . It doesn't stop with the first, but continues and carries the history up to about 1997, with a table at the end. Yes, you could add Extended Market as an outrigger to 500 Index starting in 1987 to get the tota...
by nisiprius
Fri Oct 24, 2014 7:28 pm
 
Forum: Investing - Theory, News & General
Topic: What kind of index funds did Vanguard have 1976-1992?
Replies: 9
Views: 899

Re: Active bond funds better than indexes? Pimco thinks so

The funny thing is that Oppenheimer Core Bond Fund investors were not enjoying high returns http://s10.postimg.org/rsbxlux61/Captura_de_pantalla_2014_10_24_a_la_s_5_18_37_P.png before it fell over the cliff. http://s10.postimg.org/bsta2b149/Captura_de_pantalla_2014_10_24_a_la_s_5_19_01_P.png It is c...
by nisiprius
Fri Oct 24, 2014 5:22 pm
 
Forum: Investing - Theory, News & General
Topic: Active bond funds better than indexes? Pimco thinks so
Replies: 36
Views: 2273

Re: Is Wells Fargo misleading my friend?

I think the "20% in a single stock" is the really disturbing part. Since this is "inherited money" I'm assuming it is a reasonably substantial sum... and come to think of it, these days, isn't it perfectly reasonable to buy odd lots? In a portfolio of, let's say, $100,000 or more...
by nisiprius
Fri Oct 24, 2014 4:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is Wells Fargo misleading my friend?
Replies: 21
Views: 2146

Re: Prediction: Rise of Concentrated Funds

There was a lot of interest a few years ago in "active share." https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/leadership-series_active-share.pdf Although often-cited research has suggested that active share is positively correlated with excess return, this article argue...
by nisiprius
Fri Oct 24, 2014 2:56 pm
 
Forum: Investing - Theory, News & General
Topic: Prediction: Rise of Concentrated Funds
Replies: 20
Views: 1508

Re: Reserve Primary Fund, Final Distribution

I'm getting more interested in this. I did a long slow double-take on it because I tend to forget that money market funds are, after all, a kind of mutual fund, and this is the only example of a "run" on a mutual fund that was a big enough news story to draw my attention. There are a lot o...
by nisiprius
Fri Oct 24, 2014 12:05 pm
 
Forum: Investing - Theory, News & General
Topic: Reserve Primary Fund, Final Distribution
Replies: 9
Views: 568

Re: Prediction: Rise of Concentrated Funds

I would be more interested in hearing your reasons for this prediction than in the prediction itself.
by nisiprius
Fri Oct 24, 2014 11:29 am
 
Forum: Investing - Theory, News & General
Topic: Prediction: Rise of Concentrated Funds
Replies: 20
Views: 1508

Re: Should I Sue?

This is just what I would do. But I'm a patsy. I don't regard garages, any garages, as "museum-quality storage." Garages shouldn't leak, but stuff happens. Does it leak enough to ruin a car, or a lawnmower, or bags of garden mulch, or things I usually put in garages? Is it leaking enough t...
by nisiprius
Fri Oct 24, 2014 10:42 am
 
Forum: Personal Consumer Issues
Topic: Should I Sue? [couch damaged in garage of rental]
Replies: 39
Views: 2965

Re: Active bond funds better than indexes? Pimco thinks so

What makes me queasy about actively managed bond funds is not that the manager's choices are different from the contents of the Barclay's Aggregate Index. It is that the actively managed bond funds I've looked at are so sophisticated that I literally cannot understand what is in them. ...A lot of t...
by nisiprius
Fri Oct 24, 2014 10:20 am
 
Forum: Investing - Theory, News & General
Topic: Active bond funds better than indexes? Pimco thinks so
Replies: 36
Views: 2273

Re: Active bond funds better than indexes? Pimco thinks so

...The real key is performance over time.... No, no, no. It is never about "performance," or it should never be about "performance" alone. It should always be about risk-adjusted return. This is the big way active funds get away with it. It is easy to hide risk in so many ways. ...
by nisiprius
Fri Oct 24, 2014 10:07 am
 
Forum: Investing - Theory, News & General
Topic: Active bond funds better than indexes? Pimco thinks so
Replies: 36
Views: 2273

Re: IBM: Stock Buybacks Gone Wrong?

Let’s use IBM as an example. As all business observers know, CEOs Lou Gerstner and Sam Palmisano did a superb job in moving IBM from near-bankruptcy twenty years ago to its prominence today. Their operational accomplishments were truly extraordinary. But their financial management was equally brill...
by nisiprius
Thu Oct 23, 2014 8:03 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 65
Views: 3907

Re: Avg Rate of return to assume for Retirement money

Rather than trying to make separate guesses about inflation and stock market returns, it is much better to think in real (inflation-adjusted) dollars and do all your planning in real dollars. This simplifies all sorts of things. For example, you have some idea of what your standard of living is toda...
by nisiprius
Thu Oct 23, 2014 6:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Avg Rate of return to assume for Retirement money
Replies: 2
Views: 503

Re: Is Wells Fargo misleading my friend?

I wouldn't worry so much about convincing him to change, but I would try to get him to understand his portfolio. For example if he really has 20% of his portfolio in a single stock, and it's not just one in a "diversified portfolio of many single stocks" strategy... well... he should be re...
by nisiprius
Thu Oct 23, 2014 6:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is Wells Fargo misleading my friend?
Replies: 21
Views: 2146

Re: Is Wells Fargo misleading my friend?

I would stop short in saying it is a bad portfolio - it is just not the way people here invest. For those as baffled as me: 40% WASCX Ivy Asset Strategy C WASCX, Morningstar four star performance, analyst rating neutral, expenses 1.68% which Morningstar calls "low," world allocation class...
by nisiprius
Thu Oct 23, 2014 6:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is Wells Fargo misleading my friend?
Replies: 21
Views: 2146

Re: IBM: Stock Buybacks Gone Wrong?

...I just don't get the idea that IBM might go to $0... Why not? Because they're such a big, familiar, comfortable name? Control Data went to $0, Pr1me went to $0, Digital Equipment Corporation went to $0, Wang went to $0. Burroughs and Univac are part of the corporate heritage of Unisys but I'm no...
by nisiprius
Thu Oct 23, 2014 5:14 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 65
Views: 3907

Re: What is the recommended amount of international holdings

Take the time to download and read Considerations for investing in non-U.S. equities , which really is pretty good, and then decide for yourself. Vanguard says • Non-U.S. equities should be considered for inclusion in a domestic portfolio • Although there is no right answer for all investors, empiri...
by nisiprius
Thu Oct 23, 2014 4:57 pm
 
Forum: Investing - Help with Personal Investments
Topic: What is the recommended amount of international holdings?
Replies: 15
Views: 1609

Re: The 1 Thing Successful Investors Never Do

Even if you are on a crash course, better to be in the game than out of it. It's a game? Only way you are ever going to learn. "Experience keeps a dear school, but fools will learn in no other."--Benjamin Franklin Many of the greats have crashed and burned only to come out stronger, Buffe...
by nisiprius
Thu Oct 23, 2014 3:44 pm
 
Forum: Investing - Theory, News & General
Topic: The 1 Thing Successful Investors Never Do
Replies: 11
Views: 3781

Re: Yes, 100% of economists were dead wrong about yields

I am certain that interest rates will go up. What I don't know it's when they will go up. My prediction is: the 10-year rate will double between July and December. Of 2013. Hey, look, I am already right! :D http://s7.postimg.org/fdja2phwr/Captura_de_pantalla_2014_10_23_a_la_s_3_22_00_P.png Of cours...
by nisiprius
Thu Oct 23, 2014 3:20 pm
 
Forum: Investing - Theory, News & General
Topic: 100% of [surveyed] economists were dead wrong about yields
Replies: 33
Views: 3628

Re: More funds = more "efficient" rebalancing?

You seem to believe that rebalancing in itself will improve returns. A lot of people seem to think that, because of simplistic claims that it automatically results in "buying low, selling high." Like many simplistic explanations, it sounds as if it ought to work that way, but I am convince...
by nisiprius
Thu Oct 23, 2014 12:01 pm
 
Forum: Investing - Theory, News & General
Topic: More funds = more "efficient" rebalancing?
Replies: 26
Views: 1424

Re: Active bond funds better than indexes? Pimco thinks so

...See, for example, Oppenheimer Core Bond A. I see that Nisi has already mentioned this fund. My mother was a holder - one of the reasons I am moving her IRA to Vanguard (and index funds)... How awful. Just curious: was she holding during the drop, and just how aware is she of what happened in tha...
by nisiprius
Thu Oct 23, 2014 11:05 am
 
Forum: Investing - Theory, News & General
Topic: Active bond funds better than indexes? Pimco thinks so
Replies: 36
Views: 2273

Re: Why include International Index in AA?

With regard to U.S. versus international, you can "prove" whatever you want just by picking the right time period. Past statistics are just not convincing or consistent enough to be actionable. Somehow you need to make a choice anyway. As in Vanguard's fund names, I'll use "internatio...
by nisiprius
Thu Oct 23, 2014 10:48 am
 
Forum: Investing - Theory, News & General
Topic: Why include International Index in AA?
Replies: 39
Views: 2584

Re: Active bond funds better than indexes? Pimco thinks so

They are talking as if the difference between index and active bond funds were simply the choice of bonds in the fund. Manager risk? I don't see a problem with what might be called "selection risk," the risk that the manager, trying to choose from the universe of intermediate-term, investm...
by nisiprius
Thu Oct 23, 2014 10:28 am
 
Forum: Investing - Theory, News & General
Topic: Active bond funds better than indexes? Pimco thinks so
Replies: 36
Views: 2273

Re: Why I won't have bond funds

...Did you not follow the hyperlink in the article? By risk, she meant the "risk" of not having a large enough portfolio at the time of retirement to allow for an adequate SWR... That is exactly my point. That is not "risk." Let's consider the case of someone whose investments c...
by nisiprius
Thu Oct 23, 2014 8:04 am
 
Forum: Investing - Theory, News & General
Topic: Why I won't have bond funds
Replies: 47
Views: 6332

Re: Yes, 100% of economists were dead wrong about yields

Regardless of the sampling bias, this is a very important datum--not about predictions and yields, but about tuning out the noise. Like all subcultures, the world of investing, finance, and economics are communities of people that act as echo chambers. If something seems to make good sense, people r...
by nisiprius
Thu Oct 23, 2014 7:38 am
 
Forum: Investing - Theory, News & General
Topic: 100% of [surveyed] economists were dead wrong about yields
Replies: 33
Views: 3628

Re: Why I won't have bond funds

...What's disturbing about this is that for years, we've been critical of experts telling everyone "this time it's different" - as in the tech boom in the late 1990s, for example. Now, we have experts telling us "this time it's different", but now we're supposed to pay attention...
by nisiprius
Wed Oct 22, 2014 10:06 pm
 
Forum: Investing - Theory, News & General
Topic: Why I won't have bond funds
Replies: 47
Views: 6332

Re: More in equities as you age ?

It's just a draft paper but I think it is worthy of note: Bogleheads thread started by Beliavsky: How wealth shocks affect the health of the elderly Paper: Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations , by Hannes Schwandt. I find that wealth shocks strongly affect physi...
by nisiprius
Wed Oct 22, 2014 8:43 pm
 
Forum: Investing - Theory, News & General
Topic: More in equities as you age ?
Replies: 11
Views: 999

Re: Just wondering how you personally calculate net worth

In my head. No need for great accuracy.
by nisiprius
Wed Oct 22, 2014 7:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: Just wondering how you personally calculate net worth
Replies: 53
Views: 3096

Re: question about "avoid buying the dividend"

It's not a great big deal. It's basically stale advice. The tax considerations are what they are, but the real meaning of the advice is "don't get taken by a dishonest sales technique" which... surely ???? ... is not used any more. It comes from the days when unscrupulous stockbrokers woul...
by nisiprius
Wed Oct 22, 2014 12:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: question about "avoid buying the dividend"
Replies: 11
Views: 1003

Re: "You're invited to...." (nonsense talk and dinner)

I brought up this point yesterday: 5. Other seminar attendees are probably not sharp; otherwise they would not be there. You are not likely to enjoy your table mates, and still you are likely to be influenced by their views (in addition to the views expressed by the organizers). There may even be s...
by nisiprius
Wed Oct 22, 2014 12:18 pm
 
Forum: Personal Consumer Issues
Topic: "You're invited to...." (nonsense talk and dinner)
Replies: 68
Views: 4062

Re: "You're invited to...." (nonsense talk and dinner)

It's more than disconcerting to think that one of the "guests" at the table might be a stealth salesperson. Given folks' propensity to be polite, I can imagine how table conversation might be steered. I'm never cynical enough. Never thought of that. Now that you bring it up, I'll bet ther...
by nisiprius
Wed Oct 22, 2014 9:53 am
 
Forum: Personal Consumer Issues
Topic: "You're invited to...." (nonsense talk and dinner)
Replies: 68
Views: 4062

Re: Why I won't have bond funds

...In an article on May 24, 2014 Malkiel wrote: " I think US Treasury Bonds are a little frightening today when you look at near record-low interest rates, our dysfunctional federal government and how hard it is for us to rein in our structural budget deficit"... So let me be sure I have ...
by nisiprius
Wed Oct 22, 2014 9:34 am
 
Forum: Investing - Theory, News & General
Topic: Why I won't have bond funds
Replies: 47
Views: 6332

Re: IBM: Stock Buybacks Gone Wrong?

Cringely has some interesting things to say about Buffett, too. For those who like to read things and pick stocks, I am absolutely NOT saying Cringely has the crystal ball, but I am saying that most of the financial writers are an echo chamber and it is quite interesting to read comments from an int...
by nisiprius
Wed Oct 22, 2014 7:54 am
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 65
Views: 3907

Re: IBM: Stock Buybacks Gone Wrong?

Companies can also go out of business if "Customers no longer trust [them] to manage projects well, get the projects finished, or have the projects work as promised." That part of it matters, too. Yes, really, it does. Absolutely, but I'm not sure stock buybacks are directly responsible f...
by nisiprius
Tue Oct 21, 2014 10:38 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 65
Views: 3907

Re: Forbes Article On Active vs Passive Investing

"If you look up and see a bowling ball falling out of the window you’re standing under, will you brace yourself and hope for the best? No. You’ll step out of the way." That's because a bowling ball follows the rules of physics, has inertia, and has a predictable trajectory. People like Nov...
by nisiprius
Tue Oct 21, 2014 10:28 pm
 
Forum: Investing - Theory, News & General
Topic: Forbes Article On Active vs Passive Investing
Replies: 35
Views: 3768

Re: IBM: Stock Buybacks Gone Wrong?

Companies can also go out of business if "Customers no longer trust [them] to manage projects well, get the projects finished, or have the projects work as promised." That part of it matters, too. Yes, really, it does.
by nisiprius
Tue Oct 21, 2014 10:13 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 65
Views: 3907

Re: IBM: Stock Buybacks Gone Wrong?

Anyone interested in IBM should read Robert X. Cringely's searing, scathing, lacerating, brutal, blistering, excoriating critique, The Decline and Fall of IBM . See the introduction here to get the idea. According to Cringely, Wall Street is just beginning to realize that IBM is in trouble, and acco...
by nisiprius
Tue Oct 21, 2014 10:01 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 65
Views: 3907

Re: "You're invited to...." (nonsense talk and dinner)

...A friend of mine bragged about going to time-share presentations just to get the free dinner. She said cheerfully, "Oh, I don't have any problems at all. When they come over to give me the sales talk, I just tell them 'I'm just here for the free dinner.'" And she is trying unsuccessful...
by nisiprius
Tue Oct 21, 2014 8:57 pm
 
Forum: Personal Consumer Issues
Topic: "You're invited to...." (nonsense talk and dinner)
Replies: 68
Views: 4062

Re: Why I won't have bond funds

Sigh. Today we have an environment where rates have very little room to fall and at some point will go up (we just don’t know when). Once rates finally rise, bond prices will fall, which means investors will lose money. The 10-year Treasury rate is 2.21%. It's down from 3%. It had plenty of "ro...
by nisiprius
Tue Oct 21, 2014 8:29 pm
 
Forum: Investing - Theory, News & General
Topic: Why I won't have bond funds
Replies: 47
Views: 6332

Re: Why I won't have bond funds

Sigh. Yet another example of confusing risk and return. Low return is not the same thing as risk. Low return sucks, but it doesn't make bonds "unsafe." It just makes them low in return. And of course, to the question "I wonder: is there some kind of bond that’s immune to interest rate...
by nisiprius
Tue Oct 21, 2014 8:15 pm
 
Forum: Investing - Theory, News & General
Topic: Why I won't have bond funds
Replies: 47
Views: 6332

Re: Why include International Index in AA?

It's controversial. Although the conventional wisdom strongly favors allocating 20% to 50% of one's stock holdings to international stocks, the case that it will actually help much is surprisingly weak, given the frequency and intensity with which it is recommended. I do hold international, not beca...
by nisiprius
Tue Oct 21, 2014 7:38 pm
 
Forum: Investing - Theory, News & General
Topic: Why include International Index in AA?
Replies: 39
Views: 2584

Re: What Book Are You Currently Reading? Part VI

...Curiosity got the better of me - plus I found a free Kindle download :) I said "Project Gutenberg" but actually am reading the "free Kindle download." Virtually all the Kindle books that are converted "by a community of volunteers" are PG texts, and most though not ...
by nisiprius
Tue Oct 21, 2014 6:30 pm
 
Forum: Personal Consumer Issues
Topic: What Book Are You Currently Reading? Part VI
Replies: 126
Views: 8783
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