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Medicaid, irrevocable trusts & income limits

Many people place assets into an irrevocable trust in order to reduce net worth so that they will be eligible for Medicaid. However, Medicaid also has an income limit. How do people deal with the income limit, especially as the trusts all seem to be set up to pass through all income from the underly...
by richard
Sat Sep 20, 2014 8:58 am
 
Forum: Personal Finance (Not Investing)
Topic: Medicaid, irrevocable trusts & income limits
Replies: 10
Views: 741

Re: Inflation Bonds - Staying the Course?

There is likely not a major risk of substantial unexpected inflation. This means inflation protection should be inexpensive, so why not buy some? The Fed is having trouble reaching its 2% inflation target and is under tremendous pressure to push for lower inflation, even though this would hurt emplo...
by richard
Thu Sep 18, 2014 10:41 am
 
Forum: Investing - Theory, News & General
Topic: Inflation Bonds - Staying the Course?
Replies: 43
Views: 3085

Re: summary of two new papers on low volatility

A number of academic papers have demonstrated within the last few years that low-volatility stocks have provided greater returns than higher-volatility stocks. As I’ve mentioned before, these findings run counter to economic theory, which predicts that higher expected risk is compensated with a hig...
by richard
Sat Sep 06, 2014 9:58 am
 
Forum: Investing - Theory, News & General
Topic: summary of two new papers on low volatility
Replies: 15
Views: 1210

Re: Markets defy experts

Listening to experts is often a mistake. Investing based on expert predictions is even worse. 1) Argentina defaulted on its debt. Solely as a result of a controversial ruling by a US court. Argentina is otherwise ready, willing and able to pay. 2) The end of quantitative easing and the start of the ...
by richard
Thu Sep 04, 2014 11:26 am
 
Forum: Investing - Theory, News & General
Topic: Markets defy experts
Replies: 20
Views: 2422

Re: William Sharpe advises against rebalancing

This seems a better explanation of Sharpe's views on rebalancing. CR: What about adaptive allocation? I know you’ve written about the subject. WS: Here is a simple way to think about this. Assume that at the moment stock values are 60% of the total value of bonds and stocks, that bond values are 40%...
by richard
Thu Sep 04, 2014 11:00 am
 
Forum: Investing - Theory, News & General
Topic: William Sharpe advises against rebalancing
Replies: 32
Views: 2622

Re: The mystery of MOM

Momentum is a well-established, empirical fact. That's quite a statement. Do you still like AQR's momentum fund? It has 5 years of returns, and it doesn't look like there was a momentum premium captured over that time period... http://quotes.morningstar.com/chart/fund/chart.action?t=AMOMX&regio...
by richard
Wed Sep 03, 2014 1:02 pm
 
Forum: Investing - Theory, News & General
Topic: The mystery of MOM
Replies: 8
Views: 1024

Re: Is now a good time to buy bonds?

See the clear upwards trend?
Image

Fortunately, we're the only ones to notice, so we'll make a killing when everyone else finds out about this.
by richard
Wed Sep 03, 2014 8:30 am
 
Forum: Investing - Theory, News & General
Topic: Is now a good time to buy bonds?
Replies: 18
Views: 1910

Re: Bond Bubble?

technovelist wrote:I'm still waiting to see what happens if the Fed ever tries to shrink its balance sheet, even if by just letting the bonds mature.

Look at what happened to interest rates after the Fed starting cutting QE.
by richard
Fri Aug 29, 2014 3:51 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Bubble?
Replies: 10
Views: 916

Re: Burton Malkiel Opinion in WSJ -- "Are Stock Prices ..."

Published prediction articles very often "seem[] well reasoned" My posting from a similar board made moment ago : "I could predict that the Buffalo Bills will win the 2015 Super Bowl. If I'm correct, I can remind everyone. If I'm incorrect, nobody will remember." It is not a pre...
by richard
Thu Aug 28, 2014 11:31 am
 
Forum: Investing - Theory, News & General
Topic: Burton Malkiel Opinion in WSJ -- "Are Stock Prices ..."
Replies: 26
Views: 3030

Stock returns over the FOMC cycle

We document that since 1994 the US equity premium follows an alternating weekly pattern measured in FOMC cycle time, i.e. in time since the last Federal Open Market Committee meeting. The equity premium is earned entirely in weeks 0, 2, 4 and 6 in FOMC cycle time (with week 0 starting the day befor...
by richard
Thu Aug 28, 2014 7:59 am
 
Forum: Investing - Theory, News & General
Topic: Stock returns over the FOMC cycle
Replies: 0
Views: 132

Re: Burton Malkiel Opinion in WSJ -- "Are Stock Prices ..."

Published prediction articles very often "seem[] well reasoned"
by richard
Thu Aug 28, 2014 7:57 am
 
Forum: Investing - Theory, News & General
Topic: Burton Malkiel Opinion in WSJ -- "Are Stock Prices ..."
Replies: 26
Views: 3030

Re: Playing Apple Lossless music files on android

I haven't tried it, but this was the first google hit: https://code.google.com/p/andless/
Presumably you'd have to turn on the setting to install apps not from the app store.
by richard
Thu Aug 28, 2014 7:53 am
 
Forum: Personal Consumer Issues
Topic: Playing Apple Lossless music files on android
Replies: 9
Views: 827

Re: SP500 and recency bias

My standard advice on adjusting asset allocation is to wait a few months before acting and, if you're changing to favor something that has gone up recently (or to cut back on something that has gone down recently), wait at least twice as long. The exception is if you're changing due to personal circ...
by richard
Tue Aug 26, 2014 11:22 am
 
Forum: Personal Finance (Not Investing)
Topic: SP500 and recency bias
Replies: 23
Views: 2149

Re: S&P500 over 2000

Doctor Shiller's predictions From CNBC dated 31 December 2010 - Using long term analysis, Professor Robert Shiller, macromarkets chief economist at Yale University and the co-creator of the S&P/Case-Shiller Home Price Index, told CNBC on Friday that the S&P 500 may reach 1430 by the year 20...
by richard
Tue Aug 26, 2014 8:18 am
 
Forum: Investing - Theory, News & General
Topic: S&P500 over 2000
Replies: 68
Views: 5432

Re: I need "Ultra High Net Worth" investing advice please

The US Trust and JPM PBs of the world can't be all that bad given the high profile clients that use them if accounts are kept to basic investments. I think fees are a concern at any level of wealth, these are just magnified because of the dollar amount. If I make at least $2m for income what's $200...
by richard
Mon Aug 25, 2014 2:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: I need "Ultra High Net Worth" investing advice please
Replies: 225
Views: 18501

Re: How Do Rising Interest Rates Affect Stock Prices?

There are generally two reasons rates rise - the economy is getting stronger, leading to increased demand for loans, increasing interest rates. This is usually good for stocks. - the Fed believes the economy is overheating and raises interest rates to slow inflation. This is usually bad for stocks. ...
by richard
Sat Aug 23, 2014 11:35 am
 
Forum: Investing - Theory, News & General
Topic: How Do Rising Interest Rates Affect Stock Prices?
Replies: 5
Views: 791

Re: Defining "Stay the Course"

<>I'm merely curious why it's ok to deviate from one's IPS if there is a change which impacts only the deviatee but not ok if there is some kind of change which impacts the community in general. I've never heard it discussed. No hidden agenda with me. The idea is generally to trust the market, in t...
by richard
Sat Aug 23, 2014 8:59 am
 
Forum: Investing - Theory, News & General
Topic: Defining "Stay the Course"
Replies: 41
Views: 3739

Re: Is the Aggregate Index Too Heavy in Treasuries?

Has maturity increased? Duration increases as interest rates decrease, so the drop in interest rates could be enough to account for the duration change. Looking at the long-term trends (chart below), the duration of the Barclays U.S. Aggregate Index was fairly constant at around 4.5 years for the t...
by richard
Fri Aug 22, 2014 9:49 am
 
Forum: Investing - Theory, News & General
Topic: Is the Aggregate Index Too Heavy in Treasuries?
Replies: 63
Views: 3282

Re: Is the Aggregate Index Too Heavy in Treasuries?

What do you mean by risk? How are you quantifying it? Fair question. For me it's the "risk creep" referred to earlier in this post (ie moving proportion of Tresaury vs Corporate) combined with the convexity risk of MBS. Just seems to me that if I set the ratio of Treasury to Corporate, I'...
by richard
Fri Aug 22, 2014 9:43 am
 
Forum: Investing - Theory, News & General
Topic: Is the Aggregate Index Too Heavy in Treasuries?
Replies: 63
Views: 3282

Re: Is the Aggregate Index Too Heavy in Treasuries?

Simplegift, the historical graph you posted is fantastic, many thanks. I've been struggling with this question for some time as I approach retirement. In addition to the significant variability over time, I'm actually more disturbed by what appears to be a long term trend to significantly more MBS ...
by richard
Fri Aug 22, 2014 7:54 am
 
Forum: Investing - Theory, News & General
Topic: Is the Aggregate Index Too Heavy in Treasuries?
Replies: 63
Views: 3282

Re: Is the Aggregate Index Too Heavy in Treasuries?

<> But meanwhile, Doc, in an interesting thread entitled Vanguard Bond funds Style change , pointed out that due to gradually increasing duration, Total Bond and some other "intermediate"-term bond funds have crossed a boundary and has moved from "moderate" to "extensive&qu...
by richard
Fri Aug 22, 2014 7:51 am
 
Forum: Investing - Theory, News & General
Topic: Is the Aggregate Index Too Heavy in Treasuries?
Replies: 63
Views: 3282

Re: [live off dividends?] How the rich stay/get richer??

The rich are not rich because of dividends. It's because they work harder and are willing to take more risks than others. Perhaps a little luck helps, but it would be an anomaly for someone to make $2 million dollars one year and then drop everything to sit back and collect dividends. JT Having the...
by richard
Wed Aug 20, 2014 12:07 pm
 
Forum: Investing - Theory, News & General
Topic: [live off dividends?] How the rich stay/get richer??
Replies: 62
Views: 4991

Re: Which countries really provide health care to all citize

<>The video Richard references <> I would leave you with a last point, an educational one about economics. The Incidental Economist is the 'go to' blog for US healthcare information. Austin Frakt, a health economist, is a relative of one of the Mods here. I encourage everyone to read it.<> The pres...
by richard
Wed Aug 20, 2014 11:32 am
 
Forum: Personal Finance (Not Investing)
Topic: Which countries really provide health care to all citizens?
Replies: 12
Views: 1496

Re: How the rich stay/get richer??

What matters is that the spending is significantly less than the total growth per year. It makes no difference whether that growth comes from dividends or appreciation, or both. Agreed. The dividends vs principal is a red herring. The hypothetical rich guy could be invested in stocks that pay no di...
by richard
Wed Aug 20, 2014 10:15 am
 
Forum: Investing - Theory, News & General
Topic: [live off dividends?] How the rich stay/get richer??
Replies: 62
Views: 4991

Re: [live off dividends?] How the rich stay/get richer??

The rich are not rich because of dividends. It's because they work harder and are willing to take more risks than others. Perhaps a little luck helps, but it would be an anomaly for someone to make $2 million dollars one year and then drop everything to sit back and collect dividends. JT Having the...
by richard
Wed Aug 20, 2014 10:13 am
 
Forum: Investing - Theory, News & General
Topic: [live off dividends?] How the rich stay/get richer??
Replies: 62
Views: 4991

Re: Implied future real interest rates

The current market forecast of real interest rates is consistent with a 'Secular Stagnation Theory'. The title of the linked article is "Secular Stagnation, Meet Data". <>It's also consistent with a 'Quantitative Easing' theory that the Fed was successful in forcing down interest rates at...
by richard
Wed Aug 20, 2014 9:50 am
 
Forum: Investing - Theory, News & General
Topic: Implied future real interest rates
Replies: 7
Views: 889

Re: Shiller on Lofty Market Elevations

A very good summary of issues surrounding high (compared to history) PE10 is at http://fatasmihov.blogspot.de/2014/08/irrational-exuberance-meets-secular.html From that summary, while people may disagree on whether a high PE is supported by current conditions, everyone seems to agree that the fact ...
by richard
Tue Aug 19, 2014 8:11 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 5020

Re: Shiller on Lofty Market Elevations

A very good summary of issues surrounding high (compared to history) PE10 is at http://fatasmihov.blogspot.de/2014/08/i ... cular.html
by richard
Tue Aug 19, 2014 5:39 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 5020

Re: Shiller on Lofty Market Elevations

One scenario is that stocks won't crash, but rather will plod along as inflation heats up at some point in the future. You have to ask, where is that inflation going to come from? Worker wages have been flat or slightly declining for 30 years. The average household savings rate, which was up to 8% ...
by richard
Tue Aug 19, 2014 5:38 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 5020

Implied future real interest rates

The first graph shows the instantaneous forward real interest rate -- basically, what the market thinks the cost of overnight funding should be in real terms at some future date -- as derived from TIPS yields. There are more precise ways to do this, but it's close enough for a blog post. http://s9....
by richard
Mon Aug 18, 2014 7:34 am
 
Forum: Investing - Theory, News & General
Topic: Implied future real interest rates
Replies: 7
Views: 889

Re: Shiller on Lofty Market Elevations

I link to a long disagreement with Shiller in viewtopic.php?f=10&t=145010&newpost=2158429
by richard
Sun Aug 17, 2014 5:38 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller on Lofty Market Elevations
Replies: 55
Views: 5020

Response to Shiller's "lofty" CAPE - where should it be?

The second quote is particularly interesting - what should be a normal p/e? An extremely naive take would be to assume the efficient market hypothesis: that the marginal trader and the marginal firm know what they are doing, and that the margin the earnings of the companies in the index are equally ...
by richard
Sun Aug 17, 2014 3:28 pm
 
Forum: Investing - Theory, News & General
Topic: Response to Shiller's "lofty" CAPE - where should it be?
Replies: 3
Views: 855

Re: Strategic Default

The only thing about the moral issue is that businesses and wealthy people don't usually have moral issues with these questions. It's a deal gone south and you operate under the laws as written. Others may disagree and I understand that too. It's much easier to have moral issues with things that hu...
by richard
Fri Aug 15, 2014 10:58 am
 
Forum: Personal Finance (Not Investing)
Topic: Strategic Default [on a property]
Replies: 42
Views: 3247

Re: Average investor even underperforms cash

If the "average investor" consistently trails the market, that must mean another group consistently beats the market.
by richard
Thu Aug 14, 2014 10:16 am
 
Forum: Investing - Theory, News & General
Topic: Average investor even underperforms cash
Replies: 8
Views: 1290

Re: Left Tail Smackdown*: Larry vs. Permanent Portfolio

I don't seem to have any trouble ignoring tracking error, and my portfolio is REALLY far from any "conventional" one, even including the PP as "conventional". So I guess I must just be weird. :oops: For tracking error to be an issue, you have to track both your own portfolio and...
by richard
Wed Aug 13, 2014 8:43 am
 
Forum: Investing - Theory, News & General
Topic: Left Tail Smackdown*: Larry vs. Permanent Portfolio
Replies: 15
Views: 2465

Re: Left Tail Smackdown*: Larry vs. Permanent Portfolio

I don't seem to have any trouble ignoring tracking error, and my portfolio is REALLY far from any "conventional" one, even including the PP as "conventional". So I guess I must just be weird. :oops: For tracking error to be an issue, you have to track both your own portfolio and...
by richard
Tue Aug 12, 2014 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: Left Tail Smackdown*: Larry vs. Permanent Portfolio
Replies: 15
Views: 2465

Re: Poll: What's the name of Argentina's stock market?

<>But what does this have to do with what weight to assign to Argentina relative to, say, China?<> The name of the stock market is rather low on the list of things I'd regard as important in considering its economy or markets. Much more important information would include the current bond default f...
by richard
Sat Aug 09, 2014 8:47 am
 
Forum: Investing - Theory, News & General
Topic: Poll: What's the name of Argentina's stock market?
Replies: 37
Views: 2452

Re: Expected REIT (dividend) return

There's no way to know.

We don't know the future dividend rate or the future reinvestment price or if VNQ will do better or worse the VYM.

You could run calculations based on current dividend rates and prices, but that would be essentially useless for planning.
by richard
Fri Aug 08, 2014 3:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Expected REIT (dividend) return
Replies: 9
Views: 709

Re: Volatility: Oh how I love thee.

[assume bond prices stay level when stocks start dropping). In this case, stocks need to drop by 18.21% before rebalancing is triggered. any long-term benefit. - DDB ddb, Great calculations !! At first I thought, what the heck is he talking about?? How can it be so much (18.21%). Then I did the mat...
by richard
Fri Aug 08, 2014 7:33 am
 
Forum: Investing - Theory, News & General
Topic: Volatility: Oh how I love thee.
Replies: 44
Views: 3139

Re: Finding Smart Beta in the Factor Zoo

The paper includes a good list of things to consider. Remember these are evidence, not conclusive. Summarizing from the studies cited above, the following set of characteristics would constitute evidence of an actual factor: 1. The factor was discovered many decades ago; it has survived numerous dat...
by richard
Thu Aug 07, 2014 7:30 am
 
Forum: Investing - Theory, News & General
Topic: Finding Smart Beta in the Factor Zoo
Replies: 34
Views: 2106

Re: AARP: The Great Pension Sell-Off

That's a funny line, but I assume you know that people today live longer than they did 20 years ago, so using a 20 year old table of life expectancies is to the advantage of one side of the equation and to the disadvantage of the other. I am sure you are a fair minded person and wouldn't want to tr...
by richard
Tue Aug 05, 2014 3:10 pm
 
Forum: Investing - Theory, News & General
Topic: AARP: The Great Pension Sell-Off
Replies: 30
Views: 3621

Re: Scott Burns Blog, Is inflation Coming Back?

All spending is paid to someone. Put another way, on an aggregate level, spending equals income. Isn't more income a good thing? Lower real interest rates are good for the economy. The Fed has a hard time lowering nominal interest rates below zero, but if inflation is higher, zero nominal interest r...
by richard
Tue Aug 05, 2014 2:51 pm
 
Forum: Personal Finance (Not Investing)
Topic: Scott Burns Blog, Is inflation Coming Back?
Replies: 7
Views: 930

Re: What actions to take in a stock market crash?

has everyone forgotten the famous PLAN B? I was wondering the same thing. The answer seems to be "yes". If I understood correctly the purpose of Plan B, it is not for Bogleheads (that did their homework); it's for people that got their asset allocation wrong: http://www.bogleheads.org/for...
by richard
Mon Aug 04, 2014 8:02 pm
 
Forum: Investing - Theory, News & General
Topic: What actions to take in a stock market crash?
Replies: 85
Views: 5586

Re: What actions to take in a stock market crash?

4ransom wrote:has everyone forgotten the famous PLAN B?

I was wondering the same thing. The answer seems to be "yes".
by richard
Mon Aug 04, 2014 7:13 pm
 
Forum: Investing - Theory, News & General
Topic: What actions to take in a stock market crash?
Replies: 85
Views: 5586

Re: Arnott's/RAFI 10 year 'expected' returns

<>I think there's some cognitive dissonance going on here re: what the term "free lunch" actually means. I for one certainly don't equate an asset class of relatively attractive valuation and related risk/return profile as representing a "free lunch," not when the valuation is r...
by richard
Sun Aug 03, 2014 11:58 am
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4844

Re: Arnott's/RAFI 10 year 'expected' returns

<>Personally, I think a better approach is to consider how much risk you can take or are willing to take. THAT sets your AA. That then sets some expected return - expect on the low side to be cautious, but not world record low (could be refined with current valuations, but if you are already conser...
by richard
Sun Aug 03, 2014 11:48 am
 
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 4844

Re: Reliability of stock data prior to 1939?

The first state law regulating securities fraud was in 1911. The main federal regulatory framework was adopted in the 1933 and 1934. Is there any good reason to believe securities data before these dates was reliable? p/e ratios may be the most used metric. Not only were reported earnings often frau...
by richard
Sun Aug 03, 2014 10:52 am
 
Forum: Investing - Theory, News & General
Topic: Reliability of stock data prior to 1939?
Replies: 14
Views: 880

Backtesting

Interesting summary: • Most firms and portfolio managers rely on backtests (or historical simulations of performance) to allocate capital to investment strategies. • After trying only 7 strategy configurations, a researcher is expected to identify at least one 2-year long backtest with an annualized...
by richard
Sun Aug 03, 2014 10:12 am
 
Forum: Investing - Theory, News & General
Topic: Backtesting
Replies: 1
Views: 264
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