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Re: what is risk?

This has been a very informative and educational discussion with many different viewpoints, which reinforces the idea that risk tends to be viewed on a personal basis. I wanted to say that we have finally separated the definition of risk into academic definition and a pragmatic definition that helps...
by pkcrafter
Wed Oct 01, 2014 6:17 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: Google's "definition of "risk."

Rodc wrote:
Taylor Larimore wrote:Bogleheads:

Don't dispair.

When I put "DEFINITION OF RISK" into Google, it shows 496,000,000 hits.

Best wishes.
Taylor


483,241 from Bogleheads! :)


and counting...

+1 :happy

Paul
by pkcrafter
Wed Oct 01, 2014 4:47 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: what is risk?

...What I want to ask now is do you also think that some other definition might be developed that would relate to average investors in a more meaningful way? It's pretty clear that even with academic definitions, individual investors see risk very differently. Paul I, like many of my friends and re...
by pkcrafter
Tue Sep 30, 2014 4:21 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: Redoing Neglected Portfolio - Need Alternatives

chasm, the ticker DPCFX is Delaware Diversified Income Class C . Double check on this one because if that is what you have, then the expense ratio is 1.65%. noyopacific #1 ... 15 funds ... My sentiments exactly. Convincing other people may be the problem. Why? Who is on the board that would resist f...
by pkcrafter
Tue Sep 30, 2014 10:28 am
 
Forum: Investing - Help with Personal Investments
Topic: Redoing Neglected Portfolio - Need Alternatives
Replies: 10
Views: 575

Re: New Investor - Fidelity freedom funds

The news about the availability of Freedom Index funds just came out, and they would be a very good option. Don't choose these by date; instead choose by the asset allocation you want.

Paul
by pkcrafter
Tue Sep 30, 2014 12:26 am
 
Forum: Investing - Help with Personal Investments
Topic: New Investor - Fidelity freedom funds
Replies: 17
Views: 1007

Re: New Investor - Fidelity freedom funds

Hello all, I am a new investor and starting in the investing world with my 401k converted into IRA funds. I've been researching on index funds for long term usage and have been using the fidelity research for options. I am 27 and starting with around 4k in my account. I've read conflicting reviews ...
by pkcrafter
Mon Sep 29, 2014 9:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: New Investor - Fidelity freedom funds
Replies: 17
Views: 1007

Re: what is risk?

Howard Marks of Oaktree Capital has done some good work on risk. http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCAQFjAA&url=http%3A%2F%2Fwww.oaktreecapital.com%2FMemoTree%2FRisk%2520Revisited.pdf&ei=bVonVL7jCYKLoQSZ44CIDw&usg=AFQjCNG5lxPi6x1...
by pkcrafter
Mon Sep 29, 2014 12:28 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: Future equities 2% real rhetoric is hogwash

Enjoyit wrote: I have been reading lately quite a few people discussing future 2% real returns on equities and I just don't understand how that is possible. I think the general consensus is about twice that--4.0, 4.5% real, but remember these are projected estimates for the next 10 years, and many o...
by pkcrafter
Mon Sep 29, 2014 11:50 am
 
Forum: Investing - Theory, News & General
Topic: Future equities 2% real rhetoric is hogwash
Replies: 45
Views: 3563

Re: Does market cap weighted indexing logically follow from

If the efficient market hypothesis (EMH) is right, is market cap weighted index investing the only logical way to invest? I'm asking because market cap weighted indexing is usually recommended as the way to invest around here. I'm not doubting market capitalization weighting, but do we use it BECAU...
by pkcrafter
Mon Sep 29, 2014 11:19 am
 
Forum: Investing - Theory, News & General
Topic: Does market cap weighted indexing logically follow from EMH?
Replies: 17
Views: 943

Re: Read too many books... help untangle

All good input and I think the problem I am running into is the "belief" portion. So I am right. This is somewhat religious as I am afraid this is a bit of a soft science. What I do know I believe: Costs matter Active investments = gambling Rebalance Market timing is playing with fire Buy...
by pkcrafter
Sun Sep 28, 2014 9:49 pm
 
Forum: Investing - Theory, News & General
Topic: Read too many books... help untangle
Replies: 35
Views: 2426

Re: what is risk?

How can one possibly conclude that there is any significant difference in the following two definitions of risk :?: :!: Risk is exposure to a proposition of which one is uncertain. -Glyn Holton Risk is uncertainty that "matters" because it affects people's welfare. Merton et al - Financia...
by pkcrafter
Sun Sep 28, 2014 9:19 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: what is risk?

How can one possibly conclude that there is any significant difference in the following two definitions of risk :?: :!: Risk is exposure to a proposition of which one is uncertain. -Glyn Holton Risk is uncertainty that "matters" because it affects people's welfare. Merton et al - Financia...
by pkcrafter
Sun Sep 28, 2014 8:54 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: what is risk?

Bobk, first, I took no offense at your Humpty Dumpty comparison. One thing we all need to do is understand why there are such long and emotional discussions every time risk is brought up. This isn't trivial, it has to do with how we should define risk. We have to try and find a way that is actually ...
by pkcrafter
Sun Sep 28, 2014 3:21 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: what is risk?

Bobcat wrote: I fail to understand why so many posters at Bogleheads have so much trouble understanding the common definition of risk in finance and economics. This isn't hard guys. :oops: Bobcat, the common academic definitions, which you are using, fail to connect with average investors. This is a...
by pkcrafter
Sat Sep 27, 2014 11:06 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: what is risk?

I understand that bogleheads are not necessarily in complete agreement with the efficient market hypothesis, however, I believe it is safe to say that we for the most part, accept it. However, I am having a hard time understanding why volatility is considered the determining factor of risk. Almost ...
by pkcrafter
Sat Sep 27, 2014 9:02 pm
 
Forum: Investing - Theory, News & General
Topic: what is risk?
Replies: 116
Views: 4091

Re: The Three Fund Portfolio [Portfolio help]

thanks, my current plan doesnt accept Rollover, as it is sponsored by my company. I think they entered an agreement with the group we are using, this way they agreed to lower their costs if everyone stays with them. I will continue to work on it. I can roll over my prior IRA which is around 16% of ...
by pkcrafter
Sat Sep 27, 2014 11:55 am
 
Forum: Investing - Help with Personal Investments
Topic: The Three Fund Portfolio [Portfolio help]
Replies: 19
Views: 2373

Re: Fixed-Fee Advisor in Texas

NAPFA is a good start, and also Garrett Planning Network.

http://garrettplanningnetwork.com/


And this link leads to a post on a Bogleheads group in TX. You might PM a few of the members for some suggestions.

http://www.bogleheads.org/forum/viewtopic.php?f=9&t=137511
by pkcrafter
Fri Sep 26, 2014 8:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: Fixed-Fee Advisor in Texas
Replies: 7
Views: 534

Re: Is having 100% large cap not diverse enough?

1.8% :shock: Deal breaker. The advisor's portfolio is too busy--not slice and dice--minced. And yes, total stock market contains large, mid and small. No small in total international, but there is developed market and emerging market. Here's some information on diversification, but the first thing t...
by pkcrafter
Fri Sep 26, 2014 6:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is having 100% large cap not diverse enough?
Replies: 49
Views: 2838

Re: The Three Fund Portfolio [Portfolio help]

kkhanmd, Going though this exercise of summing up your holdings to get a complete big picture can be tedious, but it's well worth the effort. It is step 1. Step 2 is to do nothing until you have all your answers and have a plan of what you are going to do and how you are going to do it. That is avoi...
by pkcrafter
Fri Sep 26, 2014 6:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: The Three Fund Portfolio [Portfolio help]
Replies: 19
Views: 2373

Re: Bill Gross moving from PIMCO to Janus, Monday

BillyG wrote:Maybe they had to get rid of Bill Gross to talk El Arian into coming back? But this is pure speculation...

From what I read this morning, El-Erian will not return to PIMCO, but I would not put much into any of this right now.

Paul
by pkcrafter
Fri Sep 26, 2014 1:30 pm
 
Forum: Investing - Theory, News & General
Topic: Bill Gross moving from PIMCO to Janus, Monday
Replies: 107
Views: 8286

Re: Bill Gross moving from PIMCO to Janus, Monday

*Pimco Executive Committee Issued Warning to Bill Gross Months Ago to Improve Behavior – Sources *Gross's Behavior Didn't Subsequently Change – Sources *Gross Continued Acting Erratically, Yelled Repeatedly at Committee Members and Others - Sources *Pimco Executive Committee Put in Place Succession...
by pkcrafter
Fri Sep 26, 2014 12:15 pm
 
Forum: Investing - Theory, News & General
Topic: Bill Gross moving from PIMCO to Janus, Monday
Replies: 107
Views: 8286

Re: Anyone have experience with Met Life 401k?

You may have to provide the fund options and expense ratios--at least the lowest cost ones.




Paul
by pkcrafter
Thu Sep 25, 2014 5:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Anyone have experience with Met Life 401k?
Replies: 2
Views: 262

Re: Buy today or stick to plan?

How do you know the market went down today? Bogleheads do not watch the market every day.

Paul
by pkcrafter
Thu Sep 25, 2014 5:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: Buy today or stick to plan?
Replies: 29
Views: 2751

Re: The Paradox of Skill: Greater skill leads to more luck

I think the takeaway is that with a narrow dispersion of skill, random fluctuations will have more effect on the outcome, because the skill differences are small enough not to determine the results. By "random fluctuations" you mean luck? I think this basically is what he's saying, but it...
by pkcrafter
Thu Sep 25, 2014 5:12 pm
 
Forum: Investing - Theory, News & General
Topic: The Paradox of Skill: Greater skill leads to more luck
Replies: 11
Views: 1230

Re: Stubbornly Non-Boglehead Husband. What To Do?

The OP might have had enough of this, but I did not see this perspective given: DH is in the business, he probably knows Einhorn (hedge fund) and Berkowitz (Mutual fund) or guys just like them. A gambler? May not be, maybe just doing what they do--it's his business. There's no way a guy like this is...
by pkcrafter
Thu Sep 25, 2014 3:55 pm
 
Forum: Investing - Theory, News & General
Topic: Stubbornly Non-Boglehead Husband. What To Do?
Replies: 122
Views: 7545

Re: Cliff Notes (new post from Asness) IMO very well worth r

If you want to know how to leverage a reasonably allocated portfolio, just look at AQR risk parity funds.

https://funds.aqr.com/our-funds/global-allocation-funds/risk-parity-fund#aqrix

Paul
by pkcrafter
Thu Sep 25, 2014 1:32 pm
 
Forum: Investing - Theory, News & General
Topic: Cliff Notes (new post from Asness) IMO very well worth readi
Replies: 20
Views: 2417

Re: Can Active Fund Strategy Beat Vanilla Index Fund?

Can Active Fund Strategy Beat Vanilla Index Fund? Sometimes, but in the long term, it's not a good bet. But more important is your own behavior--that's where the biggest amount of retirement assets are lost. Getting behavioral issues right will improve returns more than anything else you can do. In...
by pkcrafter
Thu Sep 25, 2014 1:06 pm
 
Forum: Investing - Theory, News & General
Topic: Can Active Fund Strategy Beat Vanilla Index Fund?
Replies: 25
Views: 1497

Re: Asset Allocation and Safe Withdrawal Rate

Thanks for the link. Good reminder.

Paul
by pkcrafter
Thu Sep 25, 2014 12:15 pm
 
Forum: Investing - Theory, News & General
Topic: Asset Allocation and Safe Withdrawal Rate
Replies: 1
Views: 435

Re: The Paradox of Skill: Greater skill leads to more luck

technovelist wrote:This is completely unsurprising. Of course if there is a narrower dispersion of skill, luck will play a greater role. Or am I missing the point? :confused

No, you are not missing the point.

Paul
by pkcrafter
Wed Sep 24, 2014 5:30 pm
 
Forum: Investing - Theory, News & General
Topic: The Paradox of Skill: Greater skill leads to more luck
Replies: 11
Views: 1230

The Paradox of Skill: Greater skill leads to more luck

I've been looking at Michael Mauboussin's work the past few days, and some of it is pretty interesting. One thing he shows is the higher the skill level of a group, the more luck plays a role in the outcome. I'm providing three links. The first is to a rather short article on the subject and good fo...
by pkcrafter
Wed Sep 24, 2014 4:43 pm
 
Forum: Investing - Theory, News & General
Topic: The Paradox of Skill: Greater skill leads to more luck
Replies: 11
Views: 1230

Re: Dan Wiener

I am a new Vanguard investor, and have just joined this forum. Is there any merit in subscribing to Dan Wiener's newsletter? Welcome. The answer to your question is no. If you decide to be an active investor or an indexer, the answer is still no. This forum is mostly indexers, and you can find out ...
by pkcrafter
Tue Sep 23, 2014 1:26 pm
 
Forum: Investing - Theory, News & General
Topic: Dan Wiener
Replies: 19
Views: 2466

Re: Do you consider Dan Wiener to be a Boglehead?

Oh-oh, this sounds like a loaded question! :happy

Paul
by pkcrafter
Tue Sep 23, 2014 12:36 pm
 
Forum: Investing - Theory, News & General
Topic: Do you consider Dan Wiener to be a Boglehead?
Replies: 32
Views: 2079

Re: Does Equity Risk Decrease over Time?

In this discussion there are two definitions of risk. One is SD and the other is potential ending value of the portfolio. Paul Right. And who cares if there is wider variability in ending portfolio value with stocks as long as the dispersion tends to be higher than bonds. You're best bet for higher...
by pkcrafter
Tue Sep 23, 2014 12:12 pm
 
Forum: Investing - Theory, News & General
Topic: Does Equity Risk Decrease over Time?
Replies: 51
Views: 2619

Re: Could one theoretically be 100% stocks your whole life?

Nisiprius wrote: The thing that is so weird about this is that it seems that almost everyone takes their own risk tolerance and projects it onto everyone else and say "what I do is objectively correct, and you ought to do the same thing I do." Very true. Posters seem to have a hard time re...
by pkcrafter
Tue Sep 23, 2014 11:29 am
 
Forum: Investing - Theory, News & General
Topic: Could one theoretically be 100% stocks your whole life?
Replies: 43
Views: 2752

Re: The only risk of leverage is selling at the bottom

Techcrium, the answer to your question is clearly no, you can lose money on a leveraged investment even if you aren't forced to sell. There is no guarantee equities will return more than your borrowing costs. Just look at the Nikkei over the past couple decades. The MYR thread is quite long and has...
by pkcrafter
Tue Sep 23, 2014 10:57 am
 
Forum: Investing - Theory, News & General
Topic: The only risk of leverage is selling at the bottom
Replies: 46
Views: 1530

Re: Does Equity Risk Decrease over Time?

MrMatt,nicely summed up, aaaaand a big +1. ----------------------------------------------------------- Did we learn something new about reversion to the mean? Does Equity Risk Decrease over Time? Can someone please define "Equity Risk"?L. In this discussion there are two definitions of ris...
by pkcrafter
Tue Sep 23, 2014 10:17 am
 
Forum: Investing - Theory, News & General
Topic: Does Equity Risk Decrease over Time?
Replies: 51
Views: 2619

Re: Does Equity Risk Decrease over Time?

These types of threads are always entertaining. You cannot predict future stocks returns, but I can predict by posters' responses if they have a high stock allocation or not! :-) You are soooo right. grap wrote: Bad years 20-30 are ok because one may make so much :moneybag years 0-20! Seriously tho...
by pkcrafter
Mon Sep 22, 2014 10:49 pm
 
Forum: Investing - Theory, News & General
Topic: Does Equity Risk Decrease over Time?
Replies: 51
Views: 2619

Re: Advisor switching companies, self management a possibili

A bank is not a good place to invest, it is very expensive. It may not be the bank because we know that some "banks" are very suitable and free places to invest. Those banks are Bank of America with the Merrill Edge package and Wells Fargo with the PMA/WellsTrade package. Unfortunately, b...
by pkcrafter
Mon Sep 22, 2014 9:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: Advisor switching companies, self management a possibility
Replies: 14
Views: 975

Re: Does Equity Risk Decrease over Time?

Good article by Mike Piper, thanks for the link. How do posters resolve this problem: There are still those who believe stocks are less risky in the long run, say 30 years. OK, but almost everyone believes stocks are risky in the shorter term. So, what is 30 years--three 10 years terms? What if the ...
by pkcrafter
Mon Sep 22, 2014 8:44 pm
 
Forum: Investing - Theory, News & General
Topic: Does Equity Risk Decrease over Time?
Replies: 51
Views: 2619

Re: Advisor switching companies, self management a possibili

A bank is not a good place to invest, it is very expensive. The bank will normally use a sub-advisor who charges fees on top of the ones the bank charges for it's own profit. Raymond James does appear to be decent choice and certainly better than the bank, but your friend should look carefully at th...
by pkcrafter
Sun Sep 21, 2014 2:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: Advisor switching companies, self management a possibility
Replies: 14
Views: 975

Re: Trusting our advisor?

Here's the semi-annual report or the 5 year global fund, DFGBX. See pages 23-26. The fund is very diversified, and while U.S. is only 25%, it is by far the largest holding. The goal of this fund is low volatility and high quality. Again, I think it's a good choice. http://us.dimensional.com/media/do...
by pkcrafter
Sun Sep 21, 2014 1:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Trusting our advisor?
Replies: 25
Views: 1884

Re: Trusting our advisor?

pattyk, I suspect your advisor used the global fund because it is one of the few--or maybe the only-- intermediate term diversified funds that is rated AA. I think it's a very reasonable choice. added: Your equity allocation is 40% international, which is also a reasonable choice. By coincidence, it...
by pkcrafter
Sun Sep 21, 2014 10:34 am
 
Forum: Investing - Help with Personal Investments
Topic: Trusting our advisor?
Replies: 25
Views: 1884

Re: Risks associated with investing in Vanguard funds

The question has been asked many times and there is a Wiki article on it.

http://www.bogleheads.org/wiki/Vanguard_safety

Paul
by pkcrafter
Sat Sep 20, 2014 8:55 pm
 
Forum: Investing - Theory, News & General
Topic: Risks associated with investing in Vanguard funds
Replies: 11
Views: 2068

Re: Mechanics of paying a financial advisor

I have been wondering about a very basic issue related to financial advisors. Say that an advisor charges 1% of assets under management. Let's say that a particular client has $1 million dollars in her IRA. The fee is $10,000 for the first year. My question is how does the financial advisor get his...
by pkcrafter
Sat Sep 20, 2014 8:29 pm
 
Forum: Investing - Theory, News & General
Topic: Mechanics of paying a financial advisor?
Replies: 23
Views: 1337

Re: The Case Against Mid Caps? (Say it ain't so!)

Ain't so, but that's why Mel calls them Mel's unloved midcaps. They are the Rodney Dangerfield of asset classes. :happy


Paul
by pkcrafter
Sat Sep 20, 2014 9:57 am
 
Forum: Investing - Theory, News & General
Topic: The Case Against Mid Caps? (Say it ain't so!)
Replies: 23
Views: 2590

Re: please take a look at my 'gone fishing' portfolio and ra

VTSAX Vanguard Total Stock market Admiral, and TSP C/S funds - 36% changed to 45% VSIAX Vanguard Small Cap Value Fund Admiral - 11% changed to 10% VTIAX Vanguard Total International Stock Market Index Admiral - 12% Changed to 10% *VEMAX Vanguard Emerging Markets Index Admiral - 5% *VGSLX Vanguard R...
by pkcrafter
Sat Sep 20, 2014 9:03 am
 
Forum: Investing - Help with Personal Investments
Topic: please take a look at my 'gone fishing' portfolio and rate
Replies: 37
Views: 2536

Re: Hypothetical Question

An important piece of this puzzle is your current withdrawal rate. Second is why do you want to increase your stock allocation? If withdrawal rate is less than 3.5% you could probably go to a higher stock allocation, but I can't recommend small cap overweighting for retirees because it is temperamen...
by pkcrafter
Fri Sep 19, 2014 11:10 am
 
Forum: Investing - Help with Personal Investments
Topic: Hypothetical Question [Portfolio help]
Replies: 10
Views: 729

Re: Shuffling between TSP, Edward Jones, and Vanguard

How much is an 8% contribution? I'm wondering why you are so eager to use a Roth in the 25% tax bracket. Using the regular tax-deferred options will cut your taxes. Not only are your EJ funds high expense, they are front-end loaded. Go to cash in the EJ account and then call Vanguard to initiate the...
by pkcrafter
Fri Sep 19, 2014 11:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Shuffling between TSP, Edward Jones, and Vanguard
Replies: 14
Views: 1371

Re: Jason's Zweig's new dictionary ---enjoy

VOLATILITY - An investor's range of emotion regarding gains vs losses. Each investor's volatility is unique. Some are high volatility :shock: and some are low volatility. 8-) Low volatility investors produce higher returns.


Paul
by pkcrafter
Fri Sep 19, 2014 9:30 am
 
Forum: Investing - Theory, News & General
Topic: Jason's Zweig's new dictionary ---enjoy
Replies: 27
Views: 2492

Re: Proposed: 35% Maximum Bond Allocation, For Life

Landy: That ($2166/year) would last 150 years! Thanks Landy. Tis' indeed a very low withdrawal rate. :oops: Should'a been another 6 on there Apteneodytes, We see both M and MM, but I wish it were standardized. Here's where the confusion stems from. The standard financial abbreviation for million is ...
by pkcrafter
Thu Sep 18, 2014 8:48 pm
 
Forum: Investing - Theory, News & General
Topic: Proposed: 35% Maximum Bond Allocation, For Life
Replies: 37
Views: 3767
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