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Re: Bond mutual fund vs individual bonds

Why can I sell a fund anytime but need to wait for the remainder of the term to sell a bond? If this is your experience I suggest you find another broker. The discussion was about being forced to sell a bond at a loss / bad time. If you want to avoid the loss, you need to wait. Bond funds of longer...
by ogd
Fri Apr 18, 2014 7:54 pm
 
Forum: Investing - Theory, News & General
Topic: Bond mutual fund vs individual bonds
Replies: 9
Views: 710

Re: Bond mutual fund vs individual bonds

As an investor with an ongoing bond allocation, you don't care about any specific point in time. A possible exception to worrying about a specific point in time would be if you needed to sell bonds unexpectedly to meet some emergency or to re-balance into equities during a stock market crash. But e...
by ogd
Fri Apr 18, 2014 7:06 pm
 
Forum: Investing - Theory, News & General
Topic: Bond mutual fund vs individual bonds
Replies: 9
Views: 710

Re: Bond mutual fund vs individual bonds

To address a specific point: ... also "eliminates" interest rate risk because if you ALWAYS hold to maturity you do not worry about price fluctuations because your will redeem the bond at par + coupon, ... No, it doesn't eliminate interest rate risk. You know what does? Cash. Compare: 1) I...
by ogd
Fri Apr 18, 2014 5:09 pm
 
Forum: Investing - Theory, News & General
Topic: Bond mutual fund vs individual bonds
Replies: 9
Views: 710

Re: Bond mutual fund vs individual bonds

Use funds, even for Treasuries. Thau's points have little or no applicability to a young investor with access to Vanguard funds. 1) All bonds are at the whims of the bond market. You can choose to ignore it and pretend you're fine with waiting 5 years making much less interest than everyone else, bu...
by ogd
Fri Apr 18, 2014 4:51 pm
 
Forum: Investing - Theory, News & General
Topic: Bond mutual fund vs individual bonds
Replies: 9
Views: 710

Re: Fixed Income Categories

I consider CDs cash, although the more early withdrawal penalties grow (which seems to be a trend), the more they become more bond-like. No EWP's would mean they're lower-liquidity Treasuries in my book. I-bonds are short bonds in the first year, cash thereafter (the EWP is small enough to be ignore...
by ogd
Fri Apr 18, 2014 4:30 pm
 
Forum: Investing - Theory, News & General
Topic: Fixed Income Categories
Replies: 19
Views: 1094

Re: Which: Dividend Growth or High Yield Dividend?

Yes, I'm interested in yield, but yield is not the total equation. I'm asking if there are any considerations other than yield for me not to switch funds. Thank you for your observation, anyway. Taxes. Depending on your tax rate and whether you are getting more dividends that you need to spend (con...
by ogd
Fri Apr 18, 2014 4:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: Which: Dividend Growth or High Yield Dividend?
Replies: 13
Views: 1315

Re: I need a new coffee maker, any recommendations?

Some bad reviews on that product on William-Sonoma! http://www.williams-sonoma.com/products/breville-youbrew-coffee-maker-with-thermal-carafe/ Yes, indeed. Well, I'm very happy with mine and the Amazon reviews are much better. Maybe WS shoppers are less likely to leave good reviews. But point taken.
by ogd
Thu Apr 17, 2014 6:08 pm
 
Forum: Personal Consumer Issues
Topic: I need a new coffee maker, any recommendations?
Replies: 60
Views: 2139

Re: Draft email to investment advisor re outperforming Total

Susan: the other question is, what useful information would you get from his reply? All research shows that outperformance does not persist, and this includes managers with CNBC face time and yacht lengths that your guy can only dream of. So, suppose he came back with results that did beat the marke...
by ogd
Thu Apr 17, 2014 4:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: Draft email to investment advisor re outperforming Total Mar
Replies: 24
Views: 2362

Re: I need a new coffee maker, any recommendations?

I'll toss another suggestion on the higher end of the spectrum, the Breville YouBrew. $250 (steep), but it's gorgeous and built like a tank. In terms of features, it lets the water sit with the coffee for a couple of minutes like the cone-wielding baristas (and PJW, I suppose); it can do one cup at ...
by ogd
Thu Apr 17, 2014 4:12 pm
 
Forum: Personal Consumer Issues
Topic: I need a new coffee maker, any recommendations?
Replies: 60
Views: 2139

Re: Another take on the "rebalancing bonus"

You're right, it is the reset problem I'm looking at. In the context of rebalancing, keeping a portfolio at a constant 50% rate of leverage could run into the same issue... and not rebalancing the leverage gets into timing problems, that is to say that one day you feel 50% leverage is a good positi...
by ogd
Thu Apr 17, 2014 4:04 pm
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 63
Views: 3493

Re: Another take on the "rebalancing bonus"

Browser: I get what you're saying about perfect timing, but in a sense my point is independent of it. The fact is, an unsupervised "asset allocation" did oscillate between those two extremes just within the last 5 years, and who in their right mind is okay with both 50/50 and 70/30, at wha...
by ogd
Thu Apr 17, 2014 1:51 pm
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 63
Views: 3493

Re: Another take on the "rebalancing bonus"

The question remains for me: what do you do when your AA of 50/50 drifts to 70/30? What is different between the Browser that pegged his risk tolerance at 50/50 and the Browser that keeps going with 70/30? A bull market? The confidence that both Browsers are smart enough to outmaneuver it? Despite ...
by ogd
Thu Apr 17, 2014 12:24 pm
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 63
Views: 3493

Re: I don't understand whether there are costs to rebalancin

Thanks very much for all the help everyone! Few more questions: 1) Target retirement funds auto-rebalance. I'm assuming there's no free lunch there, so the rebalancing must take place via exchange and thus there's cap gains? As I understand it, they do most of this through the flow of contributions...
by ogd
Thu Apr 17, 2014 11:56 am
 
Forum: Investing - Help with Personal Investments
Topic: I don't understand whether there are costs to rebalancing
Replies: 16
Views: 1138

Re: I don't understand whether there are costs to rebalancin

This is not in an IRA or 401k. This is in a straight up Vanguard investment account where I keep my :moneybag So it seems like my options are: 1) rebalance from within the portfolio and pay taxes 2) keep enough cash on hand to rebalance 3) don't rebalance What do people do in these situations? It s...
by ogd
Wed Apr 16, 2014 7:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: I don't understand whether there are costs to rebalancing
Replies: 16
Views: 1138

Re: Another take on the "rebalancing bonus"

Has anyone done a comparative study of the traditional rebalancing method (selling high/buying low for either bonds or stocks) versus rebalancing through new purchases as much as possible? I'm somewhat averse to selling stocks, but hold bonds to both limit risk and for the opportunity to buy stocks...
by ogd
Wed Apr 16, 2014 7:01 pm
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 63
Views: 3493

Re: Another take on the "rebalancing bonus"

I did a simulation of rebalancing for the decade 2000-2009, and the bonus was quite noticeable: About 0.3% a year. I would guess there probably has been a rebalancing penalty over recent years since then. Sounds like we are in agreement, sometimes you get lucky and get a small bonus, sometimes you ...
by ogd
Wed Apr 16, 2014 6:39 pm
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 63
Views: 3493

Re: Another take on the "rebalancing bonus"

Rebalancing between assets with different risk/return characteristics needs to be judged on a risk-adjusted basis. On an absolute return basis, buy and hold will perform better over the long term, but so will 100% or 150% of the high return asset, so that's not hard.... I just want to toss a wrench...
by ogd
Wed Apr 16, 2014 5:31 pm
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 63
Views: 3493

Re: Another take on the "rebalancing bonus"

That Sharpe ratio is your "rebalancing bonus". In Bernstein's original analysis, the rebalancing bonus was defined as excess return, compared to the weighted average return, not risk-adjusted return. There's no bonus explanation here. Browser: let me just say that the full nuance of what ...
by ogd
Wed Apr 16, 2014 2:49 pm
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 63
Views: 3493

Re: Japan Does not Show That Stocks are Dangerous

What it does mean is that the Japanese crash should not have come as a surprise to anyone. This is not a crash that came "like a thief in the night." You mean with hindsight. Unless you can show me pictures of your private island and your fleet of Bentleys, neither this crash, nor the doz...
by ogd
Wed Apr 16, 2014 12:36 pm
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 3869

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

TBM is a common recommendation, but what if you have a young investor with a high allocation to stocks? I have heard that a LT treasury fund may be a better choice. One of Larry's papers indeed makes this argument, that the LT treasuries produce the most efficient portfolios when combined with a hi...
by ogd
Wed Apr 16, 2014 12:25 pm
 
Forum: Investing - Theory, News & General
Topic: Why are total bond market funds so often recommended?
Replies: 52
Views: 4308

Re: Another take on the "rebalancing bonus"

Rebalancing between assets with different risk/return characteristics needs to be judged on a risk-adjusted basis. On an absolute return basis, buy and hold will perform better over the long term, but so will 100% or 150% of the high return asset, so that's not hard. The way the story goes, my risk ...
by ogd
Wed Apr 16, 2014 12:06 pm
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 63
Views: 3493

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

Steve: nice to see other lovers of Treasuries coming out of the woodwork, for a while it seemed like it was all about Investment Grade on this forum. It mostly boils down to whether you want corporates or not. As far as I'm concerned, TBM is safe enough already if you think about it, the amount of e...
by ogd
Tue Apr 15, 2014 11:14 pm
 
Forum: Investing - Theory, News & General
Topic: Why are total bond market funds so often recommended?
Replies: 52
Views: 4308

Re: Portfolio for Young Investors: High Bonds and Risky Equi

Packer: the 50% figure is "out of nowhere" or in Valuethinker's words "unqualified" when presented as a forward-looking possibility without a strong disclaimer about the extreme conditions (inflation, oil, labor market shifts) and the extreme long term in which it occured. The or...
by ogd
Mon Apr 14, 2014 1:51 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio for Young Investors: High Bonds and Risky Equities
Replies: 30
Views: 2009

Re: My Unexpected Findings on Backtesting Vanguard ETFs

Fundy: the lazy approach without rebalancing will become more risky over time as stocks grow. As such, it is generally higher returning. Because what you looked at is a turbulent period, this bonus was probably just enough to match the efficiency of the rebalanced portfolio; over time it will actual...
by ogd
Mon Apr 14, 2014 1:13 pm
 
Forum: Investing - Theory, News & General
Topic: My Unexpected Findings on Backtesting Vanguard ETFs
Replies: 8
Views: 1219

Re: The Case for Dividend Stocks in Retirement (article)

"The math is such that a person living from dividend stocks ends up in the same place as a person selling shares, provided that the total returns of the two portfolios are exactly the same." It would seem that given a sufficient time horizon one cow keeps giving milk while the other cow g...
by ogd
Mon Apr 14, 2014 12:47 pm
 
Forum: Investing - Theory, News & General
Topic: The Case for Dividend Stocks in Retirement (article)
Replies: 27
Views: 2231

Re: Vanguard VTI and VXUS: adding more small VSS and VB/VBR

Both VTI and VXUS are a little underweight in small cap. Nitpick: both funds hold the market weight, which is by definition neither underweight nor overweight. If you add more small stocks, you'd be overweighting (or "tilting"), rather than correcting an injustice in the composition of th...
by ogd
Mon Apr 14, 2014 12:51 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard VTI and VXUS: adding more small VSS and VB/VBR
Replies: 15
Views: 1017

Re: Taxable Account - Lazy Portfolio - Index vs ETF

Newbie B and HIinvestor, see the wiki article on this topic: http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds . If at Vanguard, I recommend funds, they are simply easier to work with. Elsewhere, ETFs might indeed work best. Is this good? Or should I just go the route of the ETFs since the overall...
by ogd
Mon Apr 14, 2014 12:41 am
 
Forum: Investing - Help with Personal Investments
Topic: Taxable Account - Lazy Portfolio - Index vs ETF
Replies: 5
Views: 404

Re: Vanguard index fund vs. ETF?

some of those items did not apply to vanguard index funds . thank you for the link. they do sound very similar though, aren't they? Have you read the entire wiki? Was it unclear which items apply and which don't? I'm asking this as a contributor to that article. I was a bit confused as a Vanguard u...
by ogd
Mon Apr 14, 2014 12:34 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard index fund vs. ETF?
Replies: 13
Views: 1162

Re: The Case for Dividend Stocks in Retirement (article)

He makes one common, but bad argument: Less risk. Instead of investing for dividends, investors have been encouraged in recent decades to create their own dividends by occasionally selling shares. But recall those two huge bear markets we've had over the past 14 years. If you needed to create your o...
by ogd
Mon Apr 14, 2014 12:19 am
 
Forum: Investing - Theory, News & General
Topic: The Case for Dividend Stocks in Retirement (article)
Replies: 27
Views: 2231

Re: Portfolio for Young Investors: High Bonds and Risky Equi

Packer: the discussion of interest rates is unimportant in the context of massive bond losses, since we've already established that it was the inflation that caused the losses as rates merely followed suit (and they would have been extremely good for fixed income had there not been inflation). Now, ...
by ogd
Mon Apr 14, 2014 12:08 am
 
Forum: Investing - Theory, News & General
Topic: Portfolio for Young Investors: High Bonds and Risky Equities
Replies: 30
Views: 2009

Re: gold , silver, copper and uranium only

They are literally like twin brothers. It's just pure luck that one or the other received a few more neutrons and was able to get a nice job for a few millenia as a result. Neutrons? I was under the impression that it was the Protons that make gold be gold. It's both, but apparently gathering enoug...
by ogd
Sun Apr 13, 2014 10:30 pm
 
Forum: Investing - Theory, News & General
Topic: gold , silver, copper and uranium only
Replies: 46
Views: 2234

Re: gold , silver, copper and uranium only

"gold , silver, copper and uranium..." That makes me want to sing "One of these things is not like the others, one of these things doesn't belong." Are these really considered to be some kind of coherent class, and, if so, what is it that uranium is supposed to have in common wi...
by ogd
Sun Apr 13, 2014 7:48 pm
 
Forum: Investing - Theory, News & General
Topic: gold , silver, copper and uranium only
Replies: 46
Views: 2234

Re: gold , silver, copper and uranium only

I and many others are not comfortable with the speculation aspect of commodities in general, and precious metals in particular where so much is already stored just waiting for a panic sell. These are assets that don't produce anything, nor are they money loaned to someone to produce something. So th...
by ogd
Sun Apr 13, 2014 6:18 pm
 
Forum: Investing - Theory, News & General
Topic: gold , silver, copper and uranium only
Replies: 46
Views: 2234

Re: TIPS and the Equity Bear

Doc: while the deflationary properties of nominal bonds are nothing to sneeze at, I'd be careful judging TIPS performance based on late 2008. No. The only time since TIPS have been a "viable" bond segment that we have had a market upset like '08 was '08 itself. I'm judging TIPS performanc...
by ogd
Sun Apr 13, 2014 6:06 pm
 
Forum: Investing - Theory, News & General
Topic: TIPS and the Equity Bear
Replies: 20
Views: 1596

Re: Portfolio for Young Investors: High Bonds and Risky Equi

My comments was intended to scare so if it did I am sorry. I just think it is important to think about where we me might be in the interest rate cycle. Interest rates appear to move in large trending cycles and we appear to be at the low end of that cycle now. The last time we had a situation like ...
by ogd
Sun Apr 13, 2014 5:51 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio for Young Investors: High Bonds and Risky Equities
Replies: 30
Views: 2009

Re: Portfolio for Young Investors: High Bonds and Risky Equi

I think there is much more to be concerned on the bond side then equities. Just look at the recent TIPS auction, folks are willing to accept (lock-in) negative real yields on a pre-tax basis. If that doesn't spell mania I don't know what does. You can get a diversified portfolio of stocks with mid-...
by ogd
Sun Apr 13, 2014 4:04 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio for Young Investors: High Bonds and Risky Equities
Replies: 30
Views: 2009

Re: My financial advisor doubt

Larry82: I think you are right to have misgivings about a 1% fee. That is simply too high. I agree with you that the behavioral guidance is the biggest benefit of an advisor. However, there are other ways to achieve this, such as teaching your spouse to use and trust Vanguard's free advice, or even ...
by ogd
Sun Apr 13, 2014 3:01 pm
 
Forum: Investing - Help with Personal Investments
Topic: My financial advisor doubt
Replies: 28
Views: 3159

Re: Vanguard index fund vs. ETF?

thethinker wrote:some of those items did not apply to vanguard index funds. thank you for the link.
they do sound very similar though, aren't they?

Have you read the entire wiki? Was it unclear which items apply and which don't? I'm asking this as a contributor to that article.
by ogd
Sun Apr 13, 2014 2:48 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard index fund vs. ETF?
Replies: 13
Views: 1162

Re: TIPS and the Equity Bear

Doc: while the deflationary properties of nominal bonds are nothing to sneeze at, I'd be careful judging TIPS performance based on late 2008. If you look at the year preceding that (2007 and the first half of 2008), TIPS had had a massive run-up, which I believe was because of the oil price hike you...
by ogd
Sun Apr 13, 2014 2:40 pm
 
Forum: Investing - Theory, News & General
Topic: TIPS and the Equity Bear
Replies: 20
Views: 1596

Re: Portfolio for Young Investors: High Bonds and Risky Equi

You will be hit by a double whammy of declining bond prices and rising rates. Since 1980 we have had just the opposite so based upon history since 1980 bonds look great but over the long term inflation can kill them unlike stocks and real estate who typically rise with rising prices. This is defini...
by ogd
Sun Apr 13, 2014 2:31 pm
 
Forum: Investing - Theory, News & General
Topic: Portfolio for Young Investors: High Bonds and Risky Equities
Replies: 30
Views: 2009

Re: Question about Bonds

BaylorBears: two additional points: Safe bonds have the slight advantage over cash that they often go up when equities decline, i.e. when you need them the most. Because of this, long bonds, the most volatile of the bunch, produce the most efficient portolios when combined with a high equity allocat...
by ogd
Sun Apr 13, 2014 2:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question about Bonds
Replies: 4
Views: 650

Re: Anyone else very reluctant to buy right now?

The math is the same but the action is not the same.If you cannot see the difference between actually selling stocks to time the market vs choosing to not invest new money at the present time then I am really at a loss for words. I see the difference but it's immaterial . If you think otherwise, tr...
by ogd
Wed Apr 09, 2014 3:54 pm
 
Forum: Investing - Theory, News & General
Topic: Anyone else very reluctant to buy right now?
Replies: 124
Views: 11753

Re: Do Professional Active Investors have short-term incenti

They often do, but it makes no difference, because the short-term and the long-term goals are aligned. Things are not quite so straight forward. Suppose I'm a fund manager and that this is how the world works. If I significantly trail the market for three years running, I'll be fired. If I hold por...
by ogd
Wed Apr 09, 2014 3:37 pm
 
Forum: Investing - Theory, News & General
Topic: Do Professional Active Investors have short-term incentives?
Replies: 10
Views: 713

Re: Is Alpha Dead?

Of course, you then make a really nice point about contrarian investing. If everyone started equal-weighting or fundamental weighting, the strategies would undoubtably become less successful. A strategy ceases to be a contrarian once everyone is doing it. An investor should only expect to be reward...
by ogd
Wed Apr 09, 2014 1:19 pm
 
Forum: Investing - Theory, News & General
Topic: Is Alpha Dead?
Replies: 38
Views: 2120

Re: Is Alpha Dead?

Third, going over to the asset allocation divide which is the space us Bogleheads like to inhabit having given up on stock picking, the good results of buy and hold may well be a recency effect driven by the recentmost deep but short, market crashes. The "rational behavior" of one crash m...
by ogd
Wed Apr 09, 2014 1:10 pm
 
Forum: Investing - Theory, News & General
Topic: Is Alpha Dead?
Replies: 38
Views: 2120

Re: Do Professional Active Investors have short-term incenti

They often do, but it makes no difference, because the short-term and the long-term goals are aligned. Here's why: if we assume negligible transaction costs (e.g. efficient trading; tax implications passed onto fund shareholders or non-existent in 401k's), long-term returns are a product of short-te...
by ogd
Wed Apr 09, 2014 1:04 pm
 
Forum: Investing - Theory, News & General
Topic: Do Professional Active Investors have short-term incentives?
Replies: 10
Views: 713

Re: Anyone else very reluctant to buy right now?

The one thing that bothers me a little is the somewhat arrogant attitude displayed by many here that I will buy determined by my AA and it is the only way,the best way and any other way is just ignorant.That is the way it comes off to those who are not the most extreme doctrinaire Bogleheads. I bel...
by ogd
Wed Apr 09, 2014 3:02 am
 
Forum: Investing - Theory, News & General
Topic: Anyone else very reluctant to buy right now?
Replies: 124
Views: 11753

Re: Anyone else very reluctant to buy right now?

OGD I really respect you and your knowledge but It is different to actually sell an investment to time the market vs having uninvested money and waiting to make an initial purchase.I understand your point but it is different.I get it that if you sell we both have 500k,but it is a lot more hardcore ...
by ogd
Tue Apr 08, 2014 7:44 pm
 
Forum: Investing - Theory, News & General
Topic: Anyone else very reluctant to buy right now?
Replies: 124
Views: 11753

Re: Anyone else very reluctant to buy right now?

I just do not understand the posts from really smart people that say it does not matter.For simplicity sake,say a Sp 500 ETF is $50 share today and I buy 10,000 shares.I now have 500,000 invested.If I "quote"time the market and wait until June and the market goes down and the ETF is $40 a...
by ogd
Tue Apr 08, 2014 6:49 pm
 
Forum: Investing - Theory, News & General
Topic: Anyone else very reluctant to buy right now?
Replies: 124
Views: 11753

Re: Is Alpha Dead?

First off, staying within the realm of stocks where alpha is measured, your proposal to buy the losers and sell the winners to grab the alpha the panicked traders are leaving on the table is merely a primitive form of technical analysis. I was using "buy losers and sell winners" broadly t...
by ogd
Tue Apr 08, 2014 5:21 pm
 
Forum: Investing - Theory, News & General
Topic: Is Alpha Dead?
Replies: 38
Views: 2120
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