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Re: You may want to rethink the odds of ever needing LTCi

And everything said so far could also be said of homeowners insurance. Most people never use it, and when it is needed the coverage is often incomplete and some insurers are bad about paying claims. And when a home is damaged, often a person could afford to pay for repairs without insurance. And sta...
by nisiprius
Sat Sep 13, 2014 8:58 pm
 
Forum: Personal Finance (Not Investing)
Topic: You may want to rethink the odds of ever needing LTCi
Replies: 59
Views: 5448

Re: Why do so many think their home is a foolproof investmen

I think it is salesmanship, pure and simple. They think it is a foolproof investment because the realtor tells them it is. Worse yet (a common phenomenon) they hear this propaganda, not only directly, when their guard may be up, but also filtered indirectly through trusted friends who've bought hous...
by nisiprius
Sat Sep 13, 2014 10:16 am
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6264

Re: Strong dollar = tilt international?

Just to be clear, I don't think people should change their domestic/international percentages based on their personal predictions regarding currency movement... I think you've got it exactly backwards, at least to a first approximation. Let's say some German stock costs €50 euros per share. Let's sa...
by nisiprius
Fri Sep 12, 2014 9:10 pm
 
Forum: Investing - Theory, News & General
Topic: Strong dollar = tilt international?
Replies: 15
Views: 1333

Re: Individual Stocks

I used to, and I don't any more. I never did it a lot--I have made perhaps 20 brokerage stock transactions in my life. (My lifetime profit is positive, no idea what my lifetime internal rate of return is). The last time I traded a stock was in 3/2000, when I sold 25 shares of a stock for $3114 after...
by nisiprius
Fri Sep 12, 2014 8:54 pm
 
Forum: Investing - Theory, News & General
Topic: Individual Stocks
Replies: 29
Views: 1905

Re: "A Boring Investor's Gambling Portfolio" -Allan Roth

I've seen this before, and I don't buy it: So if there is an inner gambler in you, go for it, but do it with preset rules that will minimize your losses. Typically, the gambling portion allocated should be no more than 5 percent of your portfolio. The question is this. Suppose you are someone who is...
by nisiprius
Fri Sep 12, 2014 7:24 pm
 
Forum: Investing - Help with Personal Investments
Topic: "A Boring Investor's Gambling Portfolio" -Allan Roth
Replies: 8
Views: 1532

Re: A 'really good book' you did NOT enjoy

The Fountainhead. One of the characters reminded me of a coworker at the time. Very depressing. Does anybody seriously think that is a "really good book"???? That's interesting. I thought it was a fairly bad book, and I really enjoyed it. Like Ian Fleming's James Bond books, or like Fifty...
by nisiprius
Fri Sep 12, 2014 7:48 am
 
Forum: Personal Consumer Issues
Topic: A 'really good book' you did NOT enjoy
Replies: 226
Views: 10659

Re: Individual stock

A semi-serious reply. The best way to have a shot at making huge gains in a stock would be to start a company--a successful company--go public, and cash out. The "origin stories" of companies, or at least technology companies in the last thirty years or so, are all the same. If you think a...
by nisiprius
Fri Sep 12, 2014 7:39 am
 
Forum: Investing - Theory, News & General
Topic: Individual stock
Replies: 21
Views: 1176

Re: Individual stock

Had an interesting discussion with a co-worker today. He bought $1K Apple shares in early 90s. Needless to say, he's jumping with joy right now. By the way, if he bought it in the early 1990s, he is to be congratulated and admired for hanging on to it through the years of Steve Jobs' exile, and the...
by nisiprius
Fri Sep 12, 2014 7:34 am
 
Forum: Investing - Theory, News & General
Topic: Individual stock
Replies: 21
Views: 1176

Re: 100% Small and Value Tilting

JohnnyFive, you are missing the theory behind tilting. (I don't know how much credence to give the theory but you need to understand what the theory is ). You are missing the distinction between "return" and "RISK-ADJUSTED return." Small-caps do not have higher risk-adjusted retu...
by nisiprius
Fri Sep 12, 2014 6:38 am
 
Forum: Investing - Theory, News & General
Topic: 100% Small and Value Tilting
Replies: 70
Views: 3990

Re: Individual stock

Had an interesting discussion with a co-worker today. He bought $1K Apple shares in early 90s. Needless to say, he's jumping with joy right now. If he hasn't sold, he shouldn't be jumping with joy. That's counting his chickens before they've hatched. His personal results are undefined until he sell...
by nisiprius
Thu Sep 11, 2014 7:49 pm
 
Forum: Investing - Theory, News & General
Topic: Individual stock
Replies: 21
Views: 1176

Re: Future direction of U.S. stock market

For rustymutt and others who may not have "gotten" it, this is the complete chart from Dimson & al, with legends: http://s10.postimg.org/7xpsoa355/Captura_de_pantalla_2014_09_11_a_la_s_6_39_34_P.png And this chart, from 1900 to the present, shows what happened in 1917: http://s10.posti...
by nisiprius
Thu Sep 11, 2014 7:33 pm
 
Forum: Investing - Theory, News & General
Topic: Future direction of U.S. stock market
Replies: 23
Views: 2084

Re: Buffett: Modern investment theory is horse-pucky

That's what he does now - but how do you think he got to now ? I think somewhere Buffet said that "how he got to now" -- being a rich guy -- no longer works because now-a-days mis-pricings get smoked out too fast for there to be any opportunty to take advantage of. Perhaps that's why he r...
by nisiprius
Thu Sep 11, 2014 6:36 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9120

Re: Buffett: Modern investment theory is horse-pucky

Clearly_Irrational wrote:
nisiprius wrote:Wow. Just wow. Breathtaking. Bookmarked.


Meh, he defines his conclusion then accepts his definition.
What's your take on "one cannot expect to get paid for a risk that can be eliminated without cost?"
by nisiprius
Thu Sep 11, 2014 5:19 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9120

Re: Buffett: Modern investment theory is horse-pucky

http://www.cfapubs.org/doi/full/10.2469/faj.v65.n6.6 ...The notion of the existence of “uncorrelated return” assets with handsome risk premiums flies in the face of financial theory and conflicts with empirical evidence. So, reject it we must. Accordingly, on behalf of self-respecting investment pr...
by nisiprius
Thu Sep 11, 2014 5:07 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9120

Re: Costco vs Amazon?

We use both. We like both. It never even occurred to me to compare them, because their range of competency is so different. I tend to go to Costco (and Walmart*) not so much for price, as because they have a non-overlapping selection of merchandise with other stores. Sometimes I think that the main ...
by nisiprius
Thu Sep 11, 2014 2:43 pm
 
Forum: Personal Consumer Issues
Topic: Costco vs Amazon?
Replies: 60
Views: 4460

Re: Why did REITs drop today?

It was Nassim Nicholas Taleb who really nailed it, in The Black Swan : One day in December 2003, when Saddam Hussein was captured, Bloomberg News flashed the following headline at 13:01: U.S. TREASURIES RISE; HUSSEIN CAPTURE MAY NOT CURB TERRORISM. Whenever there is a market move, the news media fee...
by nisiprius
Thu Sep 11, 2014 2:33 pm
 
Forum: Investing - Theory, News & General
Topic: Why did REITs drop today?
Replies: 26
Views: 3993

Re: Why did REITs drop today?

During 2000-2002 it seemed that every morning they would report that the Nikkei and Hang Seng were down in response to U.S. declines, and then every morning they would report that the Dow and the S&P were down in response to Asian declines!
by nisiprius
Thu Sep 11, 2014 2:33 pm
 
Forum: Investing - Theory, News & General
Topic: Why did REITs drop today?
Replies: 26
Views: 3993

Re: Buffett: Modern investment theory is horse-pucky

This much is clear. "Modern portfolio theory" as used today in practice creates what is billed as an "optimum" portfolio on the basis of opinions, not just on data , and thus is a case of garbage in, artistically decorated garbage out. What can I say? Some people are misusing it...
by nisiprius
Thu Sep 11, 2014 1:54 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9120

Re: Buffett: Modern investment theory is horse-pucky

Nisi, When was "efficiency market theory" used in this thread? I'm not seeing it. I referred to MPT (modern portfolio theory) in my post--that is a real thing (Sharpe et al.). I'm not sure what "modern investment theory" is, a misnomer for MPT? Brad Don't know, and not sure abou...
by nisiprius
Thu Sep 11, 2014 12:02 pm
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9120

Re: Buffett: Modern investment theory is horse-pucky

"Investing is not a science."--John C. Bogle, Clash of the Cultures.

By the way, just when and how did the efficient market hypothesis become the "Efficient Market Theory?"
by nisiprius
Thu Sep 11, 2014 10:57 am
 
Forum: Investing - Theory, News & General
Topic: Buffett: Modern investment theory is horse-pucky
Replies: 119
Views: 9120

Re: Future direction of U.S. stock market

The red line shows the fifty-year record of a non-U.S. national stock market. I've drawn a couple of red arrows. Do you think they represent reasonable projections of the likely future range of performance for that stock market? Oh, you know, there are never any guarantees, of course, but sensible p...
by nisiprius
Thu Sep 11, 2014 10:11 am
 
Forum: Investing - Theory, News & General
Topic: Future direction of U.S. stock market
Replies: 23
Views: 2084

Re: "The Education of a Value Investor"

P.S. I am often intrigued by the distinction between "value investor" and "passive investor with a tilt toward the value factor..."
by nisiprius
Thu Sep 11, 2014 9:03 am
 
Forum: Investing - Theory, News & General
Topic: "The Education of a Value Investor"
Replies: 26
Views: 2475

Re: "The Education of a Value Investor"

Doesn't it bother you that so many professional investors claim to be using a "Warren Buffett approach?" Buffett, as far as I know, has never taught or written or codified his approach, and has never suggested he had a methodology that could be used by anyone else but him. Of course his me...
by nisiprius
Thu Sep 11, 2014 9:00 am
 
Forum: Investing - Theory, News & General
Topic: "The Education of a Value Investor"
Replies: 26
Views: 2475

Re: AARP Bulletin mentions Bogleheads Guide to Retirement Pl

Online here: http://www.aarp.org/work/retirement-pla ... tml#slide1

Well, the article is by Allan Roth, a frequent Bogleheads attendee... and by the way one of the other books he recommends is by Mike Piper ("Oblivious Investor"), Can I Retire?
by nisiprius
Wed Sep 10, 2014 8:52 pm
 
Forum: Investing - Theory, News & General
Topic: AARP Bulletin mentions Bogleheads Guide to Retirement Planni
Replies: 11
Views: 701

Re: Should anyone invest in short-term bonds at this point?

Ogd, I saw some folks in other threads talking about the risk of banks changing their withdrawal terms. I know for some CDs, they're worth it, even with the penalties -- even with a penalty, the yield would be more than 1%, which is what my parents are getting on a money market at a local bank. So ...
by nisiprius
Wed Sep 10, 2014 3:12 pm
 
Forum: Investing - Theory, News & General
Topic: Should anyone invest in short-term bonds at this point?
Replies: 46
Views: 3764

Re: Best article on Vanguard's philosophy and history?

Len33 wrote:Thanks for the recommendations. For my current purpose, I specifically need a newspaper or magazine article. Any suggestions there?
Could you be clearer about what that purpose might be? What's Time, Inc. got that Mc-Graw Hill ain't got?
by nisiprius
Wed Sep 10, 2014 10:57 am
 
Forum: Investing - Theory, News & General
Topic: Best article on Vanguard's philosophy and history?
Replies: 10
Views: 722

Re: Should I care about large cap value?

http://www.coffeehouseinvestor.com/wp-content/uploads/2008/05/coffeehousereturns_piechart.jpg I don't tilt, but I'll point out that Bill Schultheis' Coffeehouse Portfolio, which I think is a reasonable touchstone for conventional wisdom regarding slice-and-dice, is 10% each of large blend, large va...
by nisiprius
Wed Sep 10, 2014 10:48 am
 
Forum: Investing - Theory, News & General
Topic: Should I care about large cap value?
Replies: 17
Views: 1144

Re: Total World is 50% Intl?!

It's easy to get caught up in interesting theoretical ideas about hedging one's career etc. and not look at prosaic real-world details... I'm not Baron Rothschild or Alfred WInslow Jones, I'm just a retired guy who saved some of his salary. If you lose your U.S. job and your U.S. house because its 2...
by nisiprius
Wed Sep 10, 2014 8:52 am
 
Forum: Investing - Theory, News & General
Topic: Total World is 50% Intl?!
Replies: 17
Views: 2186

Re: Do you keep paper copies of your investment statements?

Those of you who have a) electronic-only financial records, and b) have another person sharing your financial life with you... ...have you done any reality checks to find out whether your partner can find those records? That is, have you actually asked your partner to find them and verified that he ...
by nisiprius
Wed Sep 10, 2014 7:43 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you keep paper copies of your investment statements?
Replies: 33
Views: 1891

Re: How much value can an advisor add for the average invest

When I looked at the CFP exam and the description of what a CFP is supposed to do, I got the impression that investment advice is only supposed to be a small, almost trivial part of the services. I think the "value" an advisor is supposed to provide is being able to answer questions like t...
by nisiprius
Wed Sep 10, 2014 6:56 am
 
Forum: Investing - Theory, News & General
Topic: How much value can an advisor add for the average investor?
Replies: 71
Views: 4470

Re: ow Does Paying Off a Mortgage Affect Your Credit Score

I've always just done what seemed to make financial sense and let the credit score fall where it may. After we had the house paid for, we never had any major need for credit again--do you see something specific ahead for which you're likely to need a large loan? Equifax says While you may be expecti...
by nisiprius
Wed Sep 10, 2014 6:28 am
 
Forum: Personal Finance (Not Investing)
Topic: ow Does Paying Off a Mortgage Affect Your Credit Score
Replies: 16
Views: 1464

Re: What's the riskiest Bogleheadish asset?

Why not look at the 2000-2002 crash? Because I plead guilty to putting more mental weight on downside risk than upside risk. Parenthetically, 2000-2002 is interesting. That's a period of time during which several of the popular "low correlation," "diversifier" asset classes actu...
by nisiprius
Wed Sep 10, 2014 6:17 am
 
Forum: Investing - Theory, News & General
Topic: What's the riskiest Bogleheadish asset?
Replies: 81
Views: 6789

Re: What's the riskiest Bogleheadish asset?

Trying to take the question in the spirit in which I think the poster meant it, I would say REITs are the "winner," with emerging markets stock a close runner-up, because in 2008-2009, Vanguard REIT Index (VGSIX) dropped more than Vanguard Small-Cap Value Index (VISVX), or DFA US Micro Ca...
by nisiprius
Wed Sep 10, 2014 5:54 am
 
Forum: Investing - Theory, News & General
Topic: What's the riskiest Bogleheadish asset?
Replies: 81
Views: 6789

Re: What's the riskiest Bogleheadish asset?

Trying to take the question in the spirit in which I think the poster meant it, I would say REITs are the "winner," with emerging markets stock a close runner-up, because in 2008-2009, Vanguard REIT Index (VGSIX) dropped more than Vanguard Small-Cap Value Index (VISVX), or DFA US Micro Cap...
by nisiprius
Tue Sep 09, 2014 9:49 pm
 
Forum: Investing - Theory, News & General
Topic: What's the riskiest Bogleheadish asset?
Replies: 81
Views: 6789

Re: How much do investors care about social impact?

Part of the value of a socially responsible investing fund is that the fund itself lobbies the companies, votes their shares, and generally tries to use the power of ownership to influence the behavior of the companies it invests in. Pax World Fund has $1.7 billion in assets, Domini Social Equity $1...
by nisiprius
Tue Sep 09, 2014 8:16 pm
 
Forum: Investing - Theory, News & General
Topic: How much do investors care about social impact?
Replies: 32
Views: 1379

Re: historical return of micro cap equities

Before you start looking for "the historical return of micro caps" you need to ask "will micro cap ETFs give you the historical return of micro caps?" Be sure you read this short article by Rick Ferri: The Truth About Micro-Cap Index Funds . In 2009, "The Wilshire US Micro-C...
by nisiprius
Tue Sep 09, 2014 6:43 pm
 
Forum: Investing - Theory, News & General
Topic: historical return of micro cap equities
Replies: 6
Views: 503

Re: Total World is 50% Intl?!

The Investment Strategy and Policy statement, linked from the Portfolio and Management tab on Vanguard's page describing the fund, says: The fund employs a “passive management”—or indexing—investment approach designed to track the performance of the FTSE Global All Cap Index, a free-float-adjusted, ...
by nisiprius
Tue Sep 09, 2014 6:35 pm
 
Forum: Investing - Theory, News & General
Topic: Total World is 50% Intl?!
Replies: 17
Views: 2186

Re: Best article on Vanguard's philosophy and history?

I really liked The House that Bogle Built: How John Bogle and Vanguard Reinvented the Mutual Fund Industry (2011 edition) by Lewis Braham, and I thought it put Bogle and Vanguard in a very positive light--but apparently John C. Bogle does not feel that way. I think publisher Mc-Graw Hill meets your ...
by nisiprius
Tue Sep 09, 2014 6:16 pm
 
Forum: Investing - Theory, News & General
Topic: Best article on Vanguard's philosophy and history?
Replies: 10
Views: 722

Re: Less than 30% of active fund managers beat their benchma

In reality it's probably the other way around (and thus much worse): the obsession with counts and "wins" encourages bad behavior. Any gambler or active manager can follow a gambling system that almost guarantees a >50% chance of winning, basically by doubling bets until a win occurs. Thi...
by nisiprius
Tue Sep 09, 2014 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: Less than 30% of active fund managers beat their benchmarks
Replies: 18
Views: 888

Re: What's the worst "too-good-to-be-true" to happen to you?

I actually learned an interesting little life lesson when I was about 10 or 11 years old. I got a letter in the mail from the daughter of some good friends of my parents. It said it was an "international postal game," and I was supposed to mail a postcard to the name at the top of the list...
by nisiprius
Tue Sep 09, 2014 3:34 pm
 
Forum: Personal Consumer Issues
Topic: What's the worst "too-good-to-be-true" to happen to you?
Replies: 23
Views: 2831

Re: Colleague being fleeced by insurance agent / Ponzi Schem

What are the underlying investments in annuities and insurance? Bonds. And the underlying materials in Turner's "Wind, Steam, and Speed" are Winsor & Newton paints. I can buy the same paints Turner used, but I can't do the same things with it Turner did. (Actually I can't paint at all...
by nisiprius
Tue Sep 09, 2014 3:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Colleague being fleeced by insurance agent / Ponzi Scheme?
Replies: 54
Views: 5167

Re: Jason Zweig: Can peers burn holes in your portfolio?

Reminds me of a study that shows that one of the biggest factors in obesity is whether you live in an area of the country that has high obesity or not.
by nisiprius
Tue Sep 09, 2014 2:18 pm
 
Forum: Investing - Theory, News & General
Topic: J. Zweig - smart investors you should follow - bogleheads
Replies: 19
Views: 2441

Re: ETF Proliferation leads to market inefficiencies?

Tangentially, one of the interesting things I picked up from The Rise of Mutual Funds: An Insider's View , by Matthew P. Fink, that the early days of "investment companies" involved bitter rivalry between investment companies headquartered in New York which concentrated on closed-end funds...
by nisiprius
Tue Sep 09, 2014 2:15 pm
 
Forum: Investing - Theory, News & General
Topic: ETF Proliferation leads to market inefficiencies?
Replies: 22
Views: 1236

Re: Rather macabre but necessary question

With regard to burn rate, you might be able to get an insurer to make that judgement for you. That is, there might be an insurer willing to quote you on an SPIA (single premium immediate annuity) based on "medical underwriting." If you can convince an insurer that your life expectancy is s...
by nisiprius
Tue Sep 09, 2014 2:07 pm
 
Forum: Personal Finance (Not Investing)
Topic: Rather macabre but necessary question
Replies: 72
Views: 5347

Re: Do you keep paper copies of your investment statements?

Yep. We faithfully keep a paper copy of the annual statement of all 4 of the investments accounts we have. It's in a couple of binders in the fire safe. We have been doing this since we started investing 40 years ago. With the Vanguard statements, I only save the "year-to-date" statement ...
by nisiprius
Tue Sep 09, 2014 11:50 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you keep paper copies of your investment statements?
Replies: 33
Views: 1891

Re: ETF Proliferation leads to market inefficiencies?

SpaceCommander, you can search for "Overunity" on YouTube and pull up dozens and dozens of videos made by people who say they have built, or think they have built, or are very close to building perpetual motion machines. ("It doesn't quite work yet but these meter readings prove that ...
by nisiprius
Tue Sep 09, 2014 11:27 am
 
Forum: Investing - Theory, News & General
Topic: ETF Proliferation leads to market inefficiencies?
Replies: 22
Views: 1236

Re: Bank Closing My Account With No Reason Given

So this is a bit bizarre and I have never heard of anything like this happening. I have an account with Citizens Bank, in perfectly good standing since the day that I opened it in 2005. You are probably lucky. I have a very low opinion of Citizen's Bank because of the way they treated me when I was...
by nisiprius
Tue Sep 09, 2014 11:05 am
 
Forum: Personal Finance (Not Investing)
Topic: Bank Closing My Account With No Reason Given
Replies: 38
Views: 3922

Re: Bank Closing My Account With No Reason Given

"just as you can close your account anytime without giving a reason, so can we." "In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread."--Anatole France. ...if so, what course of action would you say I...
by nisiprius
Tue Sep 09, 2014 10:03 am
 
Forum: Personal Finance (Not Investing)
Topic: Bank Closing My Account With No Reason Given
Replies: 38
Views: 3922

Re: What's the worst "too-good-to-be-true" to happen to you?

My dad swore that his uncle once gave him a compass (gadget with the magnetic needle that points north, not circle-drawing tool)--and then cruelly said "why don't you take it apart and see how it works?"
by nisiprius
Tue Sep 09, 2014 9:59 am
 
Forum: Personal Consumer Issues
Topic: What's the worst "too-good-to-be-true" to happen to you?
Replies: 23
Views: 2831

Re: Less than 30% of active fund managers beat their benchma

Something odd is going on here, and it doesn't support their basic thesis that managers suck / are just lucky. If you think active management underperforms on average, the longer the time frame you use, the more clear that should be. Well, pleading guilty to using "direction, not magnitude&quo...
by nisiprius
Tue Sep 09, 2014 8:47 am
 
Forum: Investing - Theory, News & General
Topic: Less than 30% of active fund managers beat their benchmarks
Replies: 18
Views: 888
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