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It would be nice to get your comments on the May 10th Asness, Frazzini, and Pedersen SSRN paper: [url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2259244]Low Risk Investing Without Industry Bets Thanks Jebediah ... I would also like to see Larry's comments. I am in the minimum volatility spa...

Given your high six figure investments are aggressive (age - 20 in bonds) ... paying down you home makes (conservative) some sense. That said, all at once moves are dicey. Perhaps a 7 arm (fixed for 7 years) and pay it off in 7 years (or 5 year ARM). Sort of a middle ground between paying now or 15 ...

Hello, A variation of this question is a staple of the forum: invest or pay down a mortgage? Close, but not exactly. In this example you free up $6,000 a year (at $500) a month but pay $1,500 (@300k loan ?) a year to get this. In the early years out, you would need one heck of a return OVER the 2-3...

Thanks RODC I guess I clumsly drew the same conclusion. I altered what SIMBA provided while keeping it simple (& perhaps sloppy). I suggest it would have been better to use a different er if you feel you made a bad assumption. I would further suggest you recalculate based on what you feel is a b...

The graph is entirely misleading. The differences on the x-axis are totally meaningless. The range is all of 0.4%! Way below the level of noise. For all intents and purposes the SD of these portfolios is identical, they are all equal. The range on the y-axis is even more meaningless; it looks to be...

Thanks All. Summarizing a lot of statements: Currently REITS are not the best short term investment ... pending tax law changes, their recent growth in this sector, popularity of dividends plays and the fact that historically low yields = low returns, etc. Histororically, the higher return of REITs ...

... Big changes in the sector though, in that time: - creation, due to change in tax laws (date?) - massive expansion of the market cap of the sector (but still much smaller than it was in the 1990s) - a banking-credit cycle that led to sector blowup - significant changes in 1986 Tax Act, that made...

The easiest correction would be to change the period to 1990-2012. Kept the exp. ratio at 2 for REITs (keeping returns roughly equal to TSM 8.65ish) Similar chart.

Following an earlier thread, I decided to take a fresh look REITs in a 4-fund portfolio. I used Simba data (1972-2012). My focus is on minimizing downside risk (down standard deviation) and not return. The holdings are: TISM - 25% ITT - 25% TSM - vary REITS (adjusted)- vary REITs are adjusted by add...

100% of invested dollars is in equities. ... I have an emergency fund in cash. It's not invested. ... I chose this strategy because 50% of my net worth is my paid for house ... Circumstances matter ... Hoosier makes sense to me ... Mortgaging a home to the hilt (many discussions on this due to low ...

inbox788 wrote:[
Therefore, the correct answer is to have between 0% - 100% international allocation!!!

Perfect! My allocation is correct then.

To further your point, even emerging markets is something like 4 percent Samsung.

Maybe the question should be how much international small cap.

momar wrote:

Gauntlet wrote:The choice of an investor's percentage of equities that are international is much less important than the choice of percentage of the overall portfolio that is in bonds.

+1. You will be fine anywhere between 20-55% and it is unlikely you will notice the difference unless you squint really hard.

+2

After reading the paper I decided to do some of my own research using Simba Data (1972 to 2012) I found nothing conclusive - it depends on your goals and beliefs going forward - particularly related to emerging markets: Goal 1 - Minimize Downward Standard Deviation 100% TSM (US) does this To see if ...

Boggler reminds me of me when I first started posting here; lots of questions, very indecisive, all over the place, afraid to take action. It's all part of the journey. +1 reminds me of me too ... curious, wants to learn, etc. (is there anyone who thought he wouldn't buy something?) Good luck B!

boggler (OP) posted an image (see below) showing: ⋅ 3 different portfolios ALL with 10-year 10% annual return. ⋅ Volatility of 5%, 10%, 20%, respectively. Volatility = higher expected return. All else is bogus stuff to waste time! I have permission to say... "Arithmetic art...

Another angle on this thread is that correlations are dynamic.

In another Vanguard study back to 1926 (not focusing on just treasuries) long run correlations have been closer to .25, but vary.

http://www.vanguard.com/pdf/s130.pdf

Another example ... Clearly triple levered ETFs are more Volatile ... so they must have greater returns .... No. Suppose during a year there are 120 days up one percent and 120 days down 1 percent. The math works out to be down 1 percent for the year (excel formula: =1.01^120*0.99^120) Triple the da...

Great and timely post! Thank you.
I like table 1 ... treasuries offer valid downside protection ...

I don't really understand this effect. Could you explain it? Ideally, wouldn't we hold lots of funds rather than just a handful to maximize this effect? Try this explanation ... You are up 25% one year down 20% the next. Average growth of 2.5 (5/2) $100 grows to $125 then loses one fifth its value ...

boggler wrote: It sounds like the counterargument I'm hearing is that commodities (ex. gold) aren't a true investment. What do you make of this?

Opinions vary... this is for you to decide ... if you stomached the low return of commodities in the 1980s and 1990s it paid you back big time the last 13 years.

3CT_Paddler wrote:There is a strong correlation between the performance of precious metals relative to other assets and interest in PP.

Well stated ... gold goes up and interest grow ... correlation coefficient is high indeed.

Got $200k to invest. I told myself I'd put it all in Wednesday (tomorrow). But the market has gone up dramatically over the past few days, and now I'm spooked. Should I still do it? No! Not because of the market but because you are still grasping for a plan. At best, invest 1/3 in your best idea (t...

I don't think that (per Boggler last post). I think gold has real value as a currency of last resort. Most don't. I think the PP is wonderful in its simplicity and diversification. That said, things may not play out as I expect for a very very very long time. When things go poorly, I will bail (and ...

Boggler Many on this site have discussed PP. Read this thread - it will take a few days (72 pages nearly 4,000 post!) http://www.bogleheads.org/forum/viewtopic.php?t=15434&postdays=0&postorder=asc&start=0 A lot of people are skeptical about gold. Some (not me) question the performance as...

Great headline on article from Economist
http://www.economist.com/news/finance-and-economics/21576683-fund-managers-trade-too-much-retail-investors-can-learn-not-dont-just-do

Clearly a BH way ... mentions expense ratios, trading cost, not trading and even value ...

You are looking at nominal returns, I am talking about real returns. In real terms, the 70s was not a fun ride for a strictly stock/bond investor. Fair enough ... This thread on the diversification benefits of long-treasuries ... not if other assets generate more diversification - real assets like ...

A portfolio of stocks and LTT would get decimated in a supply shock driven inflation. Stocks and bonds are claims on the flows coming from operating assets. In a supply shock, the real growth rate (or sometimes the absolute amount) of those flows slows considerably. In that environment (think 1970s...

Also, ACWV which is all countries based on market cap, but buys less volatile stocks.... That's a new one to me. And very interesting. Lower than market weight for US v foreign, no small caps, but does have some emerging markets. And holding just the lower volatility stocks. I didn't know anything ...

The target date fund or Vanguard "LifeStrategy" idea is tempting. What's the right way to compare these against VT? I actually prefer the market-weighted international allocation in VT, for what it's worth. You will have a little less International ... but .... you will have total indexes...

Great post. I want 100% VT because of the higher return and the total simplicity. That said, the points about risk adjusted returns are well-taken, and I'm willing to add a bond allocation. There are two options: 1) Devote all my tax-advantaged accounts to BND (coincidentally, these accounts compri...

You are absolutely headed in the right direction. Low cost index fund investing is a good move. You are asking questions to which opinions vary. Vanguard estimates that the optimal mix of international is around 35 to 40 percent. By optimal, I mean the amount the reduces risk and volatility the most...

K66

I am curious.

What happens to Plan B if you increase stocks to say 64% - 65% to get the 11.1% standard deviation of plan C?

My guess is plan C comes out ahead but by a fraction of a tenth - but IDK - meaning stick with what your comfortable with.

Great post! Very timely. Your findings are consistent with my expections -- rebalancing reduces risk (volalitity), hurts returns when compared to not rebalancing (over long periods of time), but helps "risk adjusted returns" measurements (Sharp, Sortino). The rules used to rebalance matter...

... At some point, I will probably hold my nose and sell some stock to buy some bonds even though it is something I am not too enthusiastic about. In other threads, I have called this the investment equivalent of eating my spinach. I here that. A new posting I am reading on rebalancing at High Wate...

So part of the "opportunity" of rebalancing, it seems to me, is to gradually correct mistakes as knowledge grows. ... So I think the questions to ask yourself every time you rebalance go something like, "is this AA in line with my goals now?" "Have I learned some new things...

I edited my above post ... my take on what some do is simply pay attention ... some great investors do this ... my favorite story was John Templeton stating in the late 1980s said on TV that the Dow (at under 5,000) would pass Japan's NIKKEI (at over 30,000 at the time). Both indexes were moving tar...

[Lots of stuff] . Rebalancing isn't something to get "excited" about. It's a required discipline to control portfolio risk. You don't let your "winners run" because if you do, then you end up with a riskier portfolio than your original plan - and just at the wrong time. The 90s ...

You strike me as a "set it and forget it" type investor. This can actually be good as it allows you to focus on other things :!: Your Target Retirement funds are a great idea in your case. To get more bond exposure and more international all you would need to do is move Vanguard Total Stoc...

It was noted about that program that Jack must surely have meant ERs of 0.1% not 1.0%. Noted by who .... I mean I noted he said 1 percent as well ... but was it noted by someone more than bloggers on BH? Sadly, I think a lot of people either would be thrilled with ER around 0.50 because they would ...

The funds you listed don't include the small-cap (Russell 2000) or international (MSCI EAFE) indexes; check the expenses on those funds. If your 401(k) doesn't have a low-cost small-cap or international fund, then you can hold those funds in your IRA; Vanguard offers Small-Cap Index and Total Inter...

I hated 2008-2009. I was scared . I was worried . I found myself saying things like "please please, if the Dow ever gets back to 10,000 I'll just sell everything and not get into the stock market again every." The extent of my visceral reaction was larger than I expected. It wasn't just a...

6 Roth & taxable(small) ACWV (All Country Index Min Volatility) Fidelity 403b FFNOX Four In One Index TIAA-CREF 403b Vanguard Signal U.S. Index Vanguard Signal International Index Vanguard Signal Bond Index Vanguard Signal TIPS I would drop down to three if TIAA-CREF gave me an Index all in one ...

The sub headline in the economist article

Either governments are not serious about climate change or fossil-fuel firms are overvalued

I go with the former.

I think you will find most people here would be of the opinion that choosing a low vol etf would be a form of sector betting, and thus go against the principle of index investing. In the limited articles I have read on low vol, the idea that I came away with is that it doesn't really 100% guarantee...

Not many on this site invest in this space. I do. That said I think you should do more homework. I would start by reviewing the Wiki on Low Volatility. You need to understand differences between low vol and min vol. http://www.bogleheads.org/wiki/Low_Volatility_Index_returns You should understand wh...

Reading the latest edition of Random Walk, I'm reminding of the ol 18% INTL being the sweet spot for minimum volatility with increased return. But that could just be a number for the relatively short time period studied. Maybe that's why Bogle suggest around 20%... but that just seems too low. The ...

The fees in this case would make little difference, the question would be does the retirement fund fit into my investment plan? John +1 Saving $100 is nothing in the scheme of things. To me the one fund solution is great as it makes staying the course much easier. This adds value to me. There will ...

According to Morningstar Vg Total Intl Stock holds 16.97% emerging markets. The benchmark M* uses lists EM as17.06%. As of 3/31/13: Vanguard Total International Stock Index Fund Admiral Shares - 19.4% Emerging Markets Mike What Vanguard considers Emerging Markets is not the same as what Morningstar...

Hi, Since low volatility is explained by value and term risk, does that mean it'll not do well when interest rates rise? Well ... it matters what you think the answer to the question in the thread is. Many think the answer is yes ... however... As STLUTZ points out the holdings on M* do not suggest...

I guess I hadn't considered that. After the bubble burst there was a lot of negative publicity around ARM's as I'm sure you know and it hadn't occurred to me to consider them as a viable option. It'd be worth at least doing the math before we make a purchase. I can see how it could make sense in so...