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Re: Is it time to give-up on TIPS?

<<>In April 2014, Bloomberg surveyed 67 economists, all 67 of which--100% expected the 10-year Treasury note yield, then 2.73% to rise over the following half year. Not by small amounts, but up to perhaps 4%. It is currently 2.12%.<> It's currently 1.81%. http://www.bloomberg.com/markets/rates-bond...
by richard
Mon Jan 26, 2015 9:38 am
 
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 11
Views: 690

Re: Scary taxes :(

It is normal and how progressive taxation systems generally work. As you make more each additional dollar is taxed a bit more (either through higher straight rates or reductions in allowances, discounts, exemptions etc., or some combination of both). <> OP's overall effective tax rate is likely dec...
by richard
Mon Jan 26, 2015 8:31 am
 
Forum: Investing - Help with Personal Investments
Topic: Scary taxes :(
Replies: 12
Views: 1524

Re: Is it time to give-up on TIPS?

TIPS are insurance against unexpected inflation. The time to buy (or keep) such insurance would be when no one expects much inflation.

Just like everyone else, it seems you're not very good at forecasting inflation or interest rates. Therefore, I'd just keep what you have.
by richard
Mon Jan 26, 2015 8:21 am
 
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 11
Views: 690

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Do you expect to continue receiving $37.60 per year? If not, approximately how much do you expect to receive in cash each year? I would review the actual dividend payout in dollars per share and notice that it varies over time. It also varies with the number of days in the month. Also keep in mind ...
by richard
Sun Jan 25, 2015 8:57 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: WHAT EXPERTS SAY ABOUT

Happy Birthday!

Best wishes
by richard
Sun Jan 25, 2015 5:45 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say [about various investing topics]
Replies: 48
Views: 2236

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Assume you hold $1,000 market value of Vanguard's Long-Term Tax-Exempt. It currently has a distribution yield of 3.76% and an SEC yield of 2.19%. You are receiving cash dividends at the rate of $37.60 per year. Assume interest rates don't change, the fund continues to operate as it has and you spend...
by richard
Sun Jan 25, 2015 5:27 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: How to get things wrong - Swiss Franc (CHF)

<>I have said numerous times that NO ONE can predict the future. Just because there is herd mentality that does not mean they have some greater ability to predict something that can not be predicted.<> You need to be much more precise. I predict that if I drop this ball it will fall to the floor. I...
by richard
Sun Jan 25, 2015 8:38 am
 
Forum: Investing - Theory, News & General
Topic: How to get things wrong - Swiss Franc (CHF)
Replies: 32
Views: 3484

Re: Rental Car Prices - is this the new normal ?

Cost is largely a function of where and when you're traveling and competition. There can be tremendous variation.

The car rental forums on http://www.flyertalk.com/forum/car-rent ... tners-392/ are worth browsing.
by richard
Sun Jan 25, 2015 8:24 am
 
Forum: Personal Consumer Issues
Topic: Rental Car Prices - is this the new normal ?
Replies: 50
Views: 2879

Re: Factors and zero-sum investing

Perhaps writings from some prominent finance professors will help. Try these: http://web.stanford.edu/~wfsharpe/art/active/active.htm http://www.dimensional.com/famafrench/essays/why-active-investing-is-a-negative-sum-game.aspx Trying to beat the market is a zero sum game. Some may favor deviating f...
by richard
Sun Jan 25, 2015 6:58 am
 
Forum: Investing - Theory, News & General
Topic: Factors and zero-sum investing
Replies: 55
Views: 2491

Re: Asness - The Small-Firm Effect Is Real, and It’s Spectac

<>What does this say about the reliability of what the "financial science" community has been telling us since 1981? That community was talking about the small firm effect " in its normal form ." So "everyone" used to say that the small-firm effect " in its normal...
by richard
Sun Jan 25, 2015 6:43 am
 
Forum: Investing - Theory, News & General
Topic: Asness - The Small-Firm Effect Is Real, and It’s Spectacular
Replies: 35
Views: 3510

Re: Asness - The Small-Firm Effect Is Real, and It’s Spectac

<> 1. Companies carefully compile their quarterly required info: (1) balance sheet, (2) cash-flow statement, (3) earnings statement. 2. This gets published to SEC EDGAR, and the whole world gets to see it at once, 3. Third party providers like Reuters or CapitalIQ immediately pick it up and within ...
by richard
Sun Jan 25, 2015 6:33 am
 
Forum: Investing - Theory, News & General
Topic: Asness - The Small-Firm Effect Is Real, and It’s Spectacular
Replies: 35
Views: 3510

Re: More tax efficient: Total US or Total International?

<>Regarding splitting international into separate funds, I noticed that there are two entries on 1099-DIV for Developed Markets for 2014--one with 100% qualified dividends. I assume this is because of the merger with Tax Managed International, but don't think this means anything going forward.<> Th...
by richard
Sat Jan 24, 2015 6:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: More tax efficient: Total US or Total International?
Replies: 19
Views: 1607

Re: Initial SEC yield and subsequent 5yr and 10yr returns

<> Correct me if I'm wrong, but premiums on bonds are amortized over the remaining life of the bonds held by a mutual fund aren't they? If that's the case how does the amortized yield result in a higher distribution yield than for a par bond? Doesn't the process of amortizing a premium put the dist...
by richard
Sat Jan 24, 2015 8:30 am
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: More tax efficient: Total US or Total International?

2014: TSM: 1.8% div,100% QDI TISM: 3.4% div, 72% QDI TISM gets the FTC, but as stated it's a bit of a mirage. Your total dividends, as reported to the IRS, are cash distributions plus the FTC. You get a credit for the FTC, but it's just an offset for an expense that reduces the cash you would have ...
by richard
Sat Jan 24, 2015 6:04 am
 
Forum: Investing - Help with Personal Investments
Topic: More tax efficient: Total US or Total International?
Replies: 19
Views: 1607

Re: Factors and zero-sum investing

Zero sum is when the total gains and losses by all the participants is zero. Stock markets can create situations where all participants gain or lose. Furthermore the total returns depend on the behavior of the individual investors - the sequence they buy and sell affect the total market valuation. ...
by richard
Fri Jan 23, 2015 7:02 pm
 
Forum: Investing - Theory, News & General
Topic: Factors and zero-sum investing
Replies: 55
Views: 2491

Re: Factors and zero-sum investing

I really dislike the term "zero sum" here. I don't think it applies to stocks at all, honestly. I can see someone using the term to describe the futures market, as that would be technically accurate, but even there, I think that there's a connotation to "zero sum" that makes peo...
by richard
Fri Jan 23, 2015 6:40 pm
 
Forum: Investing - Theory, News & General
Topic: Factors and zero-sum investing
Replies: 55
Views: 2491

Re: Factors and zero-sum investing

There are two traditional counter-arguments 1) Factors represent risks. Some investors prefer to take more risks in the hope of higher rewards. Those rewards are not irrational and don't represent inefficiency. Of course, those rewards are not guaranteed and factor investors may do worse, perhaps su...
by richard
Fri Jan 23, 2015 6:02 pm
 
Forum: Investing - Theory, News & General
Topic: Factors and zero-sum investing
Replies: 55
Views: 2491

Re: Efficient markets: luck v. skill

<>If we determine that it "can be done" but you cannot benefit in any way (because the secret is well-kept or because the trader charges too much for retail), then we have an academic exercise that is a waste of time for most people. If we determine that "it can be done and you can m...
by richard
Fri Jan 23, 2015 5:32 pm
 
Forum: Investing - Theory, News & General
Topic: Efficient markets: luck v. skill
Replies: 27
Views: 1696

Re: More tax efficient: Total US or Total International?

2014: TSM: 1.8% div,100% QDI TISM: 3.4% div, 72% QDI TISM gets the FTC, but as stated it's a bit of a mirage. Your total dividends, as reported to the IRS, are cash distributions plus the FTC. You get a credit for the FTC, but it's just an offset for an expense that reduces the cash you would have o...
by richard
Fri Jan 23, 2015 5:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: More tax efficient: Total US or Total International?
Replies: 19
Views: 1607

Re: Initial SEC yield and subsequent 5yr and 10yr returns

SEC yield is based on yield to maturity and YTM calculations assume that all coupon payments are reinvested at the same rate as the current yield Take a look at this link. http://en.wikipedia.org/wiki/Yield_to_maturity "All the coupons are reinvested at an interest rate equal to the yield-to-m...
by richard
Fri Jan 23, 2015 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: How to get things wrong - Swiss Franc (CHF)

Central banks are supposed to maintain price stability. If it can't do that, due to insufficient assets, what do you call it? Insolvency seems the right term. Most major central banks are targeting 2% inflation. It is not insufficient assets that are preventing them from reaching that goal. The cen...
by richard
Fri Jan 23, 2015 2:55 pm
 
Forum: Investing - Theory, News & General
Topic: How to get things wrong - Swiss Franc (CHF)
Replies: 32
Views: 3484

Re: Best Book To Learn R Programming

Reading that post is inspiring me to start watching the coursera videos. The libraries available for R look interesting.

I'd still recommend learning python first, absent a special reason, for most people.
by richard
Fri Jan 23, 2015 2:49 pm
 
Forum: Personal Consumer Issues
Topic: Best Book To Learn R Programming
Replies: 31
Views: 2788

Re: Initial SEC yield and subsequent 5yr and 10yr returns

<>In addition to my interest in how I might use the information in making investment decisions, I also just have a general, technical interest in finance topics. When people make certain statements on the forum, I sometimes like to investigate to see if I can validate them or raise some questions a...
by richard
Fri Jan 23, 2015 2:32 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: Initial SEC yield and subsequent 5yr and 10yr returns

But even if I did, SEC Yield would yield the wrong answer since it assumes compounding, which is not happening with me. Here are the basic details on the 30 day SEC yield calculation. I don't believe it assumes any compounding from reinvestment. http://en.wikipedia.org/wiki/30-day_yield The SEC has...
by richard
Fri Jan 23, 2015 2:26 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: Initial SEC yield and subsequent 5yr and 10yr returns

If you hold a bond, then distribution yield would seem a rather good predictor of distributions for the life of the bond. Principal value might fluctuate, but the payment stream stays the same. If you extend this to a bond fund (or a rolling ladder), then distributions will change based on the yield...
by richard
Fri Jan 23, 2015 2:25 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: Asness - The Small-Firm Effect Is Real, and It’s Spectac

He isn't really saying the small-firm effect is real. He's essentially pushing the new quality factor: "In its normal form the small firm effect is, on a host of dimensions, weak to possibly nonexistent. Once adjusted for quality exposure it is real and spectacular."
by richard
Fri Jan 23, 2015 1:12 pm
 
Forum: Investing - Theory, News & General
Topic: Asness - The Small-Firm Effect Is Real, and It’s Spectacular
Replies: 35
Views: 3510

Re: Initial SEC yield and subsequent 5yr and 10yr returns

<>So, my question is this - isn't it common for retirees to spend down distributions rather than reinvest, and if so, why would one then try to use SEC Yield to model the portfolio? What are you going to use instead? If the alternative is distribution yield, the question is whether distribution yie...
by richard
Fri Jan 23, 2015 1:06 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: Effect of European Central Bank QE on US bond rates?

When the US Fed has done QE, rates have gone up. When they've ended QE, rates have gone down.<> There are at least a couple of forces at play. One is that, all things being equal, the Fed buying bonds increases their prices, reducing yields. Another is that QE is stimulative and a stronger economy ...
by richard
Fri Jan 23, 2015 10:56 am
 
Forum: Investing - Theory, News & General
Topic: Effect of European Central Bank QE on US bond rates?
Replies: 6
Views: 834

Re: Poll: What Percent of TIPS in Taxable Account

<>Given a similar duration profile, aren't muni's yielding more at current rates? I know TIPs are insurance against higher inflation, the market seems to be saying they don't see inflation on the horizon at least 10 years out. Consider this by David Grabiner: This is a risk issue. Long-term munis h...
by richard
Thu Jan 22, 2015 11:59 am
 
Forum: Investing - Theory, News & General
Topic: Poll: What Percent of TIPS in Taxable Account
Replies: 27
Views: 1654

Re: How to get things wrong - Swiss Franc (CHF)

How can a central bank, with the capacity to create an unlimited amount of money, become insolvent in any meaningful sense? It's insolvent if it can't main price stability (i.e. a constant rate of inflation). That does not make sense, at least under standard definitions and practices. The normal de...
by richard
Thu Jan 22, 2015 11:43 am
 
Forum: Investing - Theory, News & General
Topic: How to get things wrong - Swiss Franc (CHF)
Replies: 32
Views: 3484

Re: How to get things wrong - Swiss Franc (CHF)

€60b per month in QE until September 2016. €1,200 b. Bigger than expected, but they should have acted much sooner.

It appears that 20% of the sovereign bond risk will be held by ECB and 80% by national central banks, which does not seem the best way to implement QE.
by richard
Thu Jan 22, 2015 8:44 am
 
Forum: Investing - Theory, News & General
Topic: How to get things wrong - Swiss Franc (CHF)
Replies: 32
Views: 3484

Re: How to get things wrong - Swiss Franc (CHF)

<>On upward valuation you are right in principle. Here's the issue, the Central Bank prints lots of Swiss Francs and buys increasing amounts of Euros. If the Euro then depreciates, the CB/ SNB has made a huge book loss. Now there's an argument about whether that matters, but you could wind up as th...
by richard
Thu Jan 22, 2015 5:22 am
 
Forum: Investing - Theory, News & General
Topic: How to get things wrong - Swiss Franc (CHF)
Replies: 32
Views: 3484

Re: Low Bond Yields and Safe Portfolio Withdrawal Rates

Recent accounting changes have been discussed extensively here and elsewere, including estimates of the magnitude of their effect. For example, http://www.philosophicaleconomics.com/2013/12/shiller/ Recent yields are as low as they've been in the post war era. http://research.stlouisfed.org/fred2/se...
by richard
Wed Jan 21, 2015 8:04 pm
 
Forum: Investing - Theory, News & General
Topic: Low Bond Yields and Safe Portfolio Withdrawal Rates
Replies: 6
Views: 737

Re: Low Bond Yields and Safe Portfolio Withdrawal Rates

Maybe this is an update including more recent CAPE? It was lower in 2013: http://www.multpl.com/shiller-pe/table?f=m We compared this to a forward-looking model that assumes an initial CAPE ratio of 27, an initial bond yield of 2.5%, an investment fee of 50 bps and an average future expected equity...
by richard
Wed Jan 21, 2015 7:17 pm
 
Forum: Investing - Theory, News & General
Topic: Low Bond Yields and Safe Portfolio Withdrawal Rates
Replies: 6
Views: 737

Re: "When you've won the game, stop playing"

We're talking about an all stock portfolio? That would explain it. :happy When I first mentioned 1% it was in the context of something in the 25/75 to 75/25 range. https://www.bogleheads.org/forum/viewtopic.php?p=2343223#p2343223 In either event, 2% is strongly opposed by the group here who believe ...
by richard
Wed Jan 21, 2015 4:03 pm
 
Forum: Investing - Theory, News & General
Topic: "When you've won the game, stop playing"
Replies: 83
Views: 8269

Re: "When you've won the game, stop playing"

<>2) Yes, 42 points at the gun is a 1% burn rate. Even CNBC couldn't screw that one up.<> What happened to the Bill Bernstein who said "Two percent is bullet-proof, 3% is probably safe, 4% is pushing it and, at 5%, you're eating Alpo in your old age" http://www.wsj.com/articles/SB11689997...
by richard
Wed Jan 21, 2015 2:01 pm
 
Forum: Investing - Theory, News & General
Topic: "When you've won the game, stop playing"
Replies: 83
Views: 8269

Re: "When you've won the game, stop playing"

<>The 42-point-ahead person is a special case, which I define as someone who will survive all but a generalized societal meltdown: someone with a burn rate of *much* less than 2%--ie, who can live on stock dividends, even if those decline by 50% (which is what happend for a while during the Great D...
by richard
Wed Jan 21, 2015 1:35 pm
 
Forum: Investing - Theory, News & General
Topic: "When you've won the game, stop playing"
Replies: 83
Views: 8269

Re: What will happen to international stocks if a Euro break

How was the Swiss central bank action a warning shot, especially one that presages a break-up of the Euro? The European Central Bank's much anticipated announcement of quantitative easing, and its effect on the CHF-EUR exchange rate, was the rationale for their move. A break-up of the Euro would be ...
by richard
Wed Jan 21, 2015 1:29 pm
 
Forum: Investing - Theory, News & General
Topic: What will happen to international stocks if a Euro breakup?
Replies: 23
Views: 1559

Re: "When you've won the game, stop playing"

<>The 42-point-ahead person is a special case, which I define as someone who will survive all but a generalized societal meltdown: someone with a burn rate of *much* less than 2%--ie, who can live on stock dividends, even if those decline by 50% (which is what happend for a while during the Great D...
by richard
Wed Jan 21, 2015 10:59 am
 
Forum: Investing - Theory, News & General
Topic: "When you've won the game, stop playing"
Replies: 83
Views: 8269

Re: W. Bernstein, WSJ 1/20/2015

You might be interested in two current threads on that article:

viewtopic.php?f=10&t=156151

viewtopic.php?f=2&t=156119&p=2342349
by richard
Wed Jan 21, 2015 10:32 am
 
Forum: Investing - Theory, News & General
Topic: "When you've won the game, stop playing"
Replies: 83
Views: 8269

Re: "When you've won the game, stop playing"

This piece was not aimed at the early retiree, who has to worry about inflation a whole lot more, nor the person who can survive on a 1.5% burn rate ("42 points ahead with 2 minutes left.") Dr. Bill, What is the approach for this individual? Does the AA matter that much for this retiree? ...
by richard
Wed Jan 21, 2015 9:05 am
 
Forum: Investing - Theory, News & General
Topic: "When you've won the game, stop playing"
Replies: 83
Views: 8269

Re: Richest 1% - Control Half of Global Wealth. How do you f

You might want to read the forum policy on topics that are non-actionable viewtopic.php?t=405
by richard
Mon Jan 19, 2015 9:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: Richest 1% - Control Half of Global Wealth
Replies: 7
Views: 969

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Apologies if I missed this, but I find it odd that SEC yield does a better job of predicting 10 year returns than 5 year returns for a fund with an average maturity of 7.5 years and an average duration of 5.5 years. Why would that be?
by richard
Mon Jan 19, 2015 9:31 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4799

Re: Does 3-funds offer higher returns or lower risk?

<>I did not state that PC was claiming the 3-fund was not efficient. I said that PC said it was not on the efficient frontier. You will have to show me that your statement is correct when it comes to the efficient frontier and not confuse efficient frontier with efficient or vice versa. Here is a t...
by richard
Sun Jan 18, 2015 5:49 pm
 
Forum: Investing - Theory, News & General
Topic: Does 3-funds offer higher returns or lower risk?
Replies: 30
Views: 2578

Re: Does 3-funds offer higher returns or lower risk?

What's your basis for saying it's not on the "efficient frontier"? Plugging in a 3-fund portfolio into the tool at PersonalCapital.com and seeing if it is on the efficient frontier. It is not. I'm with Taylor. If personalcapital is claiming that a reasonable mix of US total stock market, ...
by richard
Sun Jan 18, 2015 4:48 pm
 
Forum: Investing - Theory, News & General
Topic: Does 3-funds offer higher returns or lower risk?
Replies: 30
Views: 2578

Re: estimating atfter tax return

anpaul147, the easiest method might be to use tax software and run scenarios with the investments you're considering. Given the massive uncertainty in just about anything related to finance, the number of digits in your calculations are excessive. ogd, agreed, although it's hard to know if relative ...
by richard
Sun Jan 18, 2015 3:34 pm
 
Forum: Investing - Theory, News & General
Topic: estimating atfter tax return
Replies: 5
Views: 507

Re: Does 3-funds offer higher returns or lower risk?

The 3-fund portfolio does not appear to be on the "efficient frontier" of risk/reward, so one takes more risk to get the same reward than with some other portfolio. That means it offers lower returns for the same risk. Or for the same reward it takes higher risk. The 2-fund portfolio is p...
by richard
Sun Jan 18, 2015 3:18 pm
 
Forum: Investing - Theory, News & General
Topic: Does 3-funds offer higher returns or lower risk?
Replies: 30
Views: 2578

Re: estimating atfter tax return

@ogd, take two bonds with the same risk-adjusted returns, but different tax treatments. If your tax rate is different than the tax rate implied by market yields, then it might be profitable for you to purchase the one with the better after-tax returns, computed using your tax rate. It's analogous to...
by richard
Sun Jan 18, 2015 2:53 pm
 
Forum: Investing - Theory, News & General
Topic: estimating atfter tax return
Replies: 5
Views: 507

Re: Best Book To Learn R Programming

<>I agree with you about Python itself. But dailybagel proposed a package of Python and Panda as a replacement for R, and I don't know how it is used in comparison with R. I admit ignorance in this matter and look forward to dailybagel's clarification. Victoria I don't know either. It might be wort...
by richard
Sun Jan 18, 2015 12:38 pm
 
Forum: Personal Consumer Issues
Topic: Best Book To Learn R Programming
Replies: 31
Views: 2788
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