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Re: Bonds - Are they essential in a new portfolio?

Bonds - Are they essential in a new portfolio?


No, but they are essential in a well-diversified, risk-balanced portfolio.
by pkcrafter
Wed Apr 23, 2014 12:01 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bonds - Are they essential in a new portfolio?
Replies: 7
Views: 844

Re: Does Asset Allocation beat the S&P 500?

thinker, here's another link to a study that you may find helpful.

The long term risk of global stock markets.

http://merage.uci.edu/~jorion/papers/risk.pdf

100% stocks? No, never. You can be brave, or you can be smart.

Paul
by pkcrafter
Tue Apr 22, 2014 8:59 pm
 
Forum: Investing - Theory, News & General
Topic: Does Asset Allocation beat the S&P 500?
Replies: 71
Views: 2789

Re: Long Term Risks of Global Stock Markets

Bobk, thanks for copying about the same text that I tried to copy, but couldn't. How do you do it?

Paul
by pkcrafter
Tue Apr 22, 2014 8:50 pm
 
Forum: Investing - Theory, News & General
Topic: Long Term Risks of Global Stock Markets
Replies: 9
Views: 644

Re: Long Term Risks of Global Stock Markets

Rodc, come on, don't leave us hanging. What do you think about this study, especially the finding that U.S. stocks have been systematically less risky than other countries. I have a feeling this will not continue, what do you say?

Paul
by pkcrafter
Tue Apr 22, 2014 8:45 pm
 
Forum: Investing - Theory, News & General
Topic: Long Term Risks of Global Stock Markets
Replies: 9
Views: 644

Re: Long Term Risks of Global Stock Markets

Thanks, Bob. I knew this was a pretty old paper, but I didn't read the thread where it was posted. I figured it might be worth a post for newer investors, and it was actually triggered by a post from "the thinker."

Paul
by pkcrafter
Tue Apr 22, 2014 8:07 pm
 
Forum: Investing - Theory, News & General
Topic: Long Term Risks of Global Stock Markets
Replies: 9
Views: 644

Long Term Risks of Global Stock Markets

This study isn't new, but I don't think it's been posted before.


http://merage.uci.edu/~jorion/papers/risk.pdf


Paul
by pkcrafter
Tue Apr 22, 2014 5:21 pm
 
Forum: Investing - Theory, News & General
Topic: Long Term Risks of Global Stock Markets
Replies: 9
Views: 644

Re: Typical fees for an account with Morgan Stanley ?

I have a friend who's been with Morgan Stanley since 1998. Last year, LAST YEAR! 2013 they managed to net an annual loss of 10K on his 250k portfolio. :oops: How did someone lose 4% last year? I'm wondering if I'd even be able to do it if I started January 1 2013 with full knowledge of what has hap...
by pkcrafter
Mon Apr 21, 2014 9:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Typical fees for an account with Morgan Stanley ?
Replies: 20
Views: 1615

Re: looking at the 3 fund approach....2.3% 5 yr return ???

There is a whole lot of information we don't have, which makes it very difficult to provide good suggestions, so I can only be very general. 1) include all holdings as one portfolio. 2)determine what you overall asset allocation will be 3) Use target retirement funds or lifestrategy funds (both are ...
by pkcrafter
Mon Apr 21, 2014 3:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: looking at the 3 fund approach....2.3% 5 yr return ???
Replies: 19
Views: 2352

Re: Wealthfront/Smart Beta or what?

Rick Ferri provides a good history on smart beta. There was originally a specific meaning to smart beta, but now it's used by most as a marketing tool for all kinds of portfolio twists. http://www.rickferri.com/blog/investments/smart-beta-and-tourist-investors/ And this should make you highly skepti...
by pkcrafter
Mon Apr 21, 2014 2:13 pm
 
Forum: Investing - Theory, News & General
Topic: Wealthfront/Smart Beta or what?
Replies: 3
Views: 395

Re: "Cookie Cutter Portfolios Are (Usually) Just Fine"

Thanks Taylor and Mike. The more I learn, the more I realize the less I need t know. The simple, straight forward Boglehead strategy is always very close to as good as it gets. Attempts to tweak and improve may be hazardous to your returns.

Paul
by pkcrafter
Mon Apr 21, 2014 1:26 pm
 
Forum: Investing - Theory, News & General
Topic: "Cookie Cutter Portfolios Are (Usually) Just Fine"
Replies: 4
Views: 1311

Stress-test your portfolio

Article on Stress-testing your portfolio. I'm skeptical, but would like some feedback. There is a link on pg 2 to a stress-test program where you can test your own portfolio.

http://www.marketwatch.com/story/stress-test-your-retirement-portfolio-2014-04-19?pagenumber=1


Paul
by pkcrafter
Mon Apr 21, 2014 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: Stress-test your portfolio
Replies: 5
Views: 665

Re: Does RSP performance offset it's expense ratio?

Welcome, Israelhands, LadyGeek's links provide excellent analyses by Michael Zhaung and Rick Ferri. The current market cap of Vanguard's S&P500 fund, admiral, is 66 billion and it contains 12% mid caps. RSP's market cap is about 20 billion and it contains 45% mid cap. To get to RSP's market cap ...
by pkcrafter
Mon Apr 21, 2014 9:52 am
 
Forum: Investing - Theory, News & General
Topic: Does RSP performance offset it's expense ratio?
Replies: 12
Views: 665

Re: Typical fees for an account with Morgan Stanley ?

I have a friend who's been with Morgan Stanley since 1998. Last year, LAST YEAR! 2013 they managed to net an annual loss of 10K on his 250k portfolio. :oops:

Paul
by pkcrafter
Sun Apr 20, 2014 8:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: Typical fees for an account with Morgan Stanley ?
Replies: 20
Views: 1615

Re: Help for a new invester

Nu, the correct way to calculate 401k vs Roth is to start with additions to retirement accounts before taxes . For instance, begin with 10k. You can put the entire 10 k into a 401k plan because it's untaxed at the time of the addition--and it reduces your income by the amount of the addition. The 10...
by pkcrafter
Sun Apr 20, 2014 12:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help for a new invester
Replies: 10
Views: 696

Re: Please critique my 300k portfolio

chameleon, you are now showing about 500k in total assets, and it looks like last year you had 600k. Phew! Now you want to put 300k aside for long term growth (retirement?), is that the goal? Is the remaining 200k for living expenses and other, undefined expenses? I don't think a 65/35 AA is unreaso...
by pkcrafter
Sun Apr 20, 2014 11:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Please critique my 300k portfolio
Replies: 12
Views: 1818

Re: 3 researched questions for you re: my portfolio & financ

cs97, ruralavalon has covered everything I was going to add. I wanted to emphasis that you should consider all your retirement holdings as one portfolio, not individual accounts. When doing that you can use individual funds, but the LS or TR funds are still a great choice, especially for now when yo...
by pkcrafter
Sun Apr 20, 2014 10:25 am
 
Forum: Investing - Help with Personal Investments
Topic: 3 researched questions for you re: my portfolio & finances
Replies: 23
Views: 1498

Re: Interpreting Shiller's data

Ask him....and let us know.

robert.shiller AT yale.edu


Paul
by pkcrafter
Sat Apr 19, 2014 10:56 pm
 
Forum: Investing - Theory, News & General
Topic: Interpreting Shiller's data
Replies: 4
Views: 449

Re: 3 researched questions for you re: my portfolio & financ

Hi everyone, Wow, if I have a son in the future, I am going to have to give strong consideration to naming him Paul ( pkcrafter and windhog )! I really can't adequately express my gratitude to you for your time and advice. Thanks, but we haven't done THAT much. :happy I don't know very much about t...
by pkcrafter
Sat Apr 19, 2014 1:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: 3 researched questions for you re: my portfolio & finances
Replies: 23
Views: 1498

Re: Need help, planning on making my first ever investment s

Welcome, Hey everyone! I need some help. I want to know if my plan sounds good or if there's anything important I'm not thinking about or considering. First, some background info: I'm 24 years old, zero debt, my income is about $34k, and I have $10k in savings. Instead of going out and buying a car...
by pkcrafter
Sat Apr 19, 2014 12:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need help, planning on making my first ever investment soon.
Replies: 6
Views: 398

Re: Help with Investment Advice

Thanks Johm. What would be a more reasonable return rate? My parents are willing to do a flexible withdrawal (i.e. withdrawing less or none at all on years where the market does not perform as well). Nole In your opening post you said parents would like a portfolio that would generate 5-6% a year. ...
by pkcrafter
Sat Apr 19, 2014 11:32 am
 
Forum: Investing - Help with Personal Investments
Topic: Help with Investment Advice
Replies: 9
Views: 624

Re: 3 researched questions for you re: my portfolio & financ

How much, if any, are you contributing to retirement this year? As for the 10k in taxable, that's retirement money? If so, sign up for your 401k and use the 10k for living expenses while you add an equivalent amount from your monthly income check to add to the 401k. This will effectively transfer th...
by pkcrafter
Sat Apr 19, 2014 10:44 am
 
Forum: Investing - Help with Personal Investments
Topic: 3 researched questions for you re: my portfolio & finances
Replies: 23
Views: 1498

Re: How not to invest

Thanks for the story. I'm afraid Jeff is giving engineers a bad name. While Steckbeck said a supervisor at Clermont Wealth Strategies advised him against investing in TVIX in February 2012, he bought 4,000 shares the next month from his self-managed brokerage account. The adviser, whom Steckbeck dec...
by pkcrafter
Sat Apr 19, 2014 9:28 am
 
Forum: Investing - Theory, News & General
Topic: How not to invest
Replies: 3
Views: 1099

Re: 3 researched questions for you re: my portfolio & financ

I also re-read my "question #1" just now. :oops: Next time, I need to get more sleep or wait a few days between drafting an entry to posting it. Here's my attempt to clarify my questions from #1. (I've tried to read the posts in the forum on this topic in the past, but am still confused, ...
by pkcrafter
Sat Apr 19, 2014 12:51 am
 
Forum: Investing - Help with Personal Investments
Topic: 3 researched questions for you re: my portfolio & finances
Replies: 23
Views: 1498

Re: First of two parter on what is risk

Nedsaid, volatility may be or may not be defined as risk by the person experiencing it. Volatility is normal, but volatility can transform itself into Bernstein's deep risk. Mutual fund volatility is also normally presented as one standard deviation, i.e. movement of returns 68% of the time, therefo...
by pkcrafter
Fri Apr 18, 2014 12:20 am
 
Forum: Investing - Theory, News & General
Topic: First of two parter on what is risk
Replies: 26
Views: 1673

Re: First of two parter on what is risk

BobK, ... Frank Knight clearly distinguishes uncertainty from risk: In economics, Knightian uncertainty is risk that is immeasurable, not possible to calculate. Knightian uncertainty is named after University of Chicago economist Frank Knight (1885–1972), who distinguished risk and uncertainty in h...
by pkcrafter
Fri Apr 18, 2014 12:03 am
 
Forum: Investing - Theory, News & General
Topic: First of two parter on what is risk
Replies: 26
Views: 1673

Re: First of two parter on what is risk

BobK, we have another thread going which argues the definition of average return. The SEC uses "Average Annual Return" for geometric return, which isn't quite right, but the average investor is comfortable with it and accepts it. Frank Knight clearly distinguishes uncertainty from risk: In...
by pkcrafter
Thu Apr 17, 2014 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: First of two parter on what is risk
Replies: 26
Views: 1673

Re: Draft email to investment advisor re outperforming Total

Susan, don't send the letter. You really have to be careful with comparisons. There is something called Dunn's Law, which says, "When an asset class does well, an index fund in that asset class does even better." Vanguard's S&P500 index fund is now in that position, and with the very s...
by pkcrafter
Thu Apr 17, 2014 1:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Draft email to investment advisor re outperforming Total Mar
Replies: 24
Views: 2400

Re: New Investor Portfolio/Advice

Yikes! Class C shares? Are you on good enough terms with your employer to discuss his choice of SIMPLE plans? This is bad for him as well as the employees. 1. I’m not sure what I should do with the $23k cash and the additional $600/month I am setting aside? Should I open a taxable account? Pay off s...
by pkcrafter
Thu Apr 17, 2014 1:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: New Investor Portfolio/Advice
Replies: 6
Views: 416

Re: Need Help Setting Up Port For Father

Lifestrategy Income @ 20% equity or Target Retirement Income at 30%. Higher equity will work too, but not needed. If you want to go higher, then LS conservative @ 40% or moderate, but I would not recommend anything higher. Doesn't sound like taxes will be a problem, but if he or you are concerned, t...
by pkcrafter
Thu Apr 17, 2014 10:46 am
 
Forum: Investing - Help with Personal Investments
Topic: Need Help Setting Up Port For Father
Replies: 7
Views: 336

Re: Help looking for ways to get to 50-50

Silly question, but why does your sister now want to up her AA from 36% to 50%? She can just use a different TR fund, or using TM balanced in taxable will get her 52/48. However, I agree with Wizard that keeping some cash is a good idea. She can also just buy enough TSM and/or TISM in taxable to get...
by pkcrafter
Thu Apr 17, 2014 10:32 am
 
Forum: Investing - Help with Personal Investments
Topic: Help looking for ways to get to 50-50
Replies: 19
Views: 1431

Re: New to investing, looking for insights

dratkinson wrote:
The TR 0.54% ER must be added to the ER of the underling funds


Schwab Managed Retirement Trust Fund 2050 III is a trust fund, so no ticker. Also, the 0.54% is the total ER for the fund.

https://www.schwabplan.com/FundDetail/SM350.pdf

Paul
by pkcrafter
Thu Apr 17, 2014 10:18 am
 
Forum: Investing - Help with Personal Investments
Topic: New to investing, looking for insights
Replies: 45
Views: 2704

Re: 401k in-service withdrawals

Most companies have a limit on in-service withdrawals. Two years is typical--check with your company. There may be other restrictions as well. Does your company provide a match? Your fund expenses are very high, but it's possible that all administrative fees are part of those expense ratios (ERs). S...
by pkcrafter
Thu Apr 17, 2014 9:43 am
 
Forum: Investing - Help with Personal Investments
Topic: 401k in-service withdrawals
Replies: 18
Views: 1114

Re: B-shares

Welcome,

Can you please provide the name(s) and tickers for one or two B class funds, and let us know how long you have held them.

Paul
by pkcrafter
Wed Apr 16, 2014 6:51 pm
 
Forum: Investing - Help with Personal Investments
Topic: B-shares
Replies: 6
Views: 430

Re: Why does Vanguard use average return iso compound annual

Where are people looking? The SEC instructions for a Prospectus are the instructions for a Form N-1A http://www.sec.gov/about/forms/formn-1a.pdf For a Fund (other than a money Market Fund or a Fund described in General Instruction C.3.(d)(iii)), provide the information in the following table with t...
by pkcrafter
Wed Apr 16, 2014 3:52 pm
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 4140

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

Very difficult to provide suggestions without knowing more. For instance, no income? Are you retired and only income from investments?

Take a look at this suggested formatting:

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=6212

Paul
by pkcrafter
Wed Apr 16, 2014 2:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: I don't understand whether there are costs to rebalancing
Replies: 16
Views: 1153

Re: Japan Does not Show That Stocks are Dangerous

Today in the U.S. we see CAPE 10 at 25. By historical standards that is high, in fact, other than a very recent run to 25, the only other 2 times it was exceeded resulted in run-away rises in CAPE 10, 1929 and 1999. Judging by this, we should be seeing most investors backing off equity allocations, ...
by pkcrafter
Wed Apr 16, 2014 10:53 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4094

Re: Why does Vanguard use average return iso compound annual

You're right, Dave, that one word does make a difference. I actually thought Vanguard used "total" for their returns, but nope.

Paul
by pkcrafter
Tue Apr 15, 2014 11:56 pm
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 4140

Re: Japan Does not Show That Stocks are Dangerous

Japan Does not Show That Stocks are Dangerous Yes, it does. Japan shows that a market crash can last long enough to convert shallow risk into deep risk. For those looking at Japan and coming up with reasons after the fact is kind of like how black swans are always reasoned out--after the fact. Is a...
by pkcrafter
Tue Apr 15, 2014 11:24 pm
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4094

Re: Why does Vanguard use average return iso compound annual

KyleAAA wrote: But if you label it correctly, the laymen who intuitively assume average annual return = CAGR would be confused. Hmm, maybe. I think if you use anything but average annual return the "laymen" would be confused, call the SEC and ask why they are using some confusing term. Why...
by pkcrafter
Tue Apr 15, 2014 10:52 pm
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 4140

Re: Can this 4% CD be trusted?

Pinhead, I did a little research on Sun Cities and it was enough to say, be careful. Call them and see if they want you to come in with your checkbook. :happy

Paul
by pkcrafter
Tue Apr 15, 2014 10:12 pm
 
Forum: Investing - Theory, News & General
Topic: Can this 4% CD be trusted?
Replies: 21
Views: 2419

Re: Stocks: How Bad It Can Get

Thanks Taylor, your story still conveys the dramatic impact that accompanies a very sever market fall. I've copied it and it should be required reading for all new investors. And now is an excellent time to remind investors. And for those young eager investors who can't wait for an 80-90% drop so th...
by pkcrafter
Tue Apr 15, 2014 9:18 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: How Bad It Can Get
Replies: 72
Views: 5369

Re: Target Funds

I want to second John's suggestion for choosing TR funds based on desired asset allocation rather than date. The Vanguard fund you hold is 90% stocks and the TSP fund is 75% stocks. You haven't provided any information, so it's difficult to add any additional comments. If you feel like getting a rev...
by pkcrafter
Tue Apr 15, 2014 8:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Target Funds
Replies: 4
Views: 549

Re: Stocks: How Bad It Can Get

Note that the S&P500 was down about 43% in the dotcom crash, not <40% as the chart shows. The NASDAQ was down about 78%...and lots of investors performance chasers were heavily invested in the NASDAQ. Chart of S&P500 returns going back to 1928. http://pages.stern.nyu.edu/~adamodar/New_Home_P...
by pkcrafter
Tue Apr 15, 2014 2:17 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: How Bad It Can Get
Replies: 72
Views: 5369

Re: Mother Of Bog! I'm Uncertain/Frightened To Buy Fund

Wolf, you said you did not want to spend down the 21,500/year, but it would seem to be your best strategy. You are getting 1400/month and need another 1100, so take it from the 21,500. Doing that still leaves you with 8300/year you can add to your retirement account. Doing it this way allows your po...
by pkcrafter
Tue Apr 15, 2014 12:01 pm
 
Forum: Investing - Help with Personal Investments
Topic: I Really Would Appreciate Your Advice!
Replies: 72
Views: 2725

Re: What does "invest in the market mean"

Paul yes the Altucher article was the one I was referring to Ok, here are two quotes: WHAT ABOUT MUTUAL FUNDS? No. Mutual funds, and the bank representatives that push them, consistently lie about the fees they are charging. I know this from experience. Altucher's knowledge is mostly accurate in hi...
by pkcrafter
Mon Apr 14, 2014 6:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: What does "invest in the market mean"
Replies: 11
Views: 875

Re: What does "invest in the market mean"

Welcome cetncetn,

I wonder if this is the article you are referring to?

http://www.businessinsider.com/money-cheat-sheet-2014-4''

Paul
by pkcrafter
Mon Apr 14, 2014 12:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: What does "invest in the market mean"
Replies: 11
Views: 875

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

Taking dividends is a withdrawal of total return, but it removes the option of the investor deciding on when to make the withdrawal. For instance, you will get a withdrawal during a bear market when you should not be withdrawing from equity. If you needed to create your own dividends, you could have...
by pkcrafter
Mon Apr 14, 2014 11:28 am
 
Forum: Investing - Theory, News & General
Topic: The Case for Dividend Stocks in Retirement (article)
Replies: 27
Views: 2248

Re: SCV premium is a history/math story, its not scientific

Rodc wrote:
So the "must" is much too strong.

Ah, yes, I "must" agree.

Paul
by pkcrafter
Mon Apr 14, 2014 11:04 am
 
Forum: Investing - Theory, News & General
Topic: SCV premium is a history/math story, its not scientific
Replies: 46
Views: 2255

Re: SCV premium is a history/math story, its not scientific

Rodc, are you saying this is not true?

stocks are more risky, they must pay out more than bonds to get people to take the risk of stocks.



Paul
by pkcrafter
Mon Apr 14, 2014 10:39 am
 
Forum: Investing - Theory, News & General
Topic: SCV premium is a history/math story, its not scientific
Replies: 46
Views: 2255

Re: What exactly is a risk premium?

Welcome, good first post. I think answers to your questions have been provided. I'd only add that risk/reward is always a trade-off and it isn't very prudent to take as much risk as possible in the hopes of getting higher returns. Balance is the key. Don't forget what risk means. The risk is you wil...
by pkcrafter
Mon Apr 14, 2014 10:20 am
 
Forum: Investing - Theory, News & General
Topic: What exactly is a risk premium?
Replies: 14
Views: 981
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