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Re: Active or Not, I Love Wellington

besides is there another fund somewhere trying to track the Wellington Composite Index I could switch to?


65% VOO (S&P 500)
35% QLTA (A-AAA bond index)

If you want a portfolio that more resembles Wellington, use VLUE instead of VOO.
by stlutz
Sat Dec 20, 2014 12:04 pm
 
Forum: Investing - Theory, News & General
Topic: Active or Not, I Love Wellington
Replies: 80
Views: 7503

Re: Is VG Portfolio Tool too aggressive?

Interesting, tfb. I just ran it myself and was surprised at how conservative it recommended I should be. Regardless, another good exercise is to use the Firecalc and cfiresim retirement calculators. One thing I've noticed from playing with those is that there is a pretty broad range of stock allocat...
by stlutz
Sat Dec 20, 2014 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Is VG Portfolio Tool too aggressive?
Replies: 16
Views: 783

Re: Bond Fund vs CDs - which to use?

Are you sure about this? Are you sure this perception isn't a result of recency bias? Yes, I am focused on the last 20 years or so. When correlations have been higher, so have rates. That is, if treasuries aren't providing a contra-cyclical portfolio benefit, they will need to provide more standalo...
by stlutz
Fri Dec 19, 2014 10:31 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 41
Views: 2627

Re: CD or Treasury ladder trade-off

I should have added to my post above that the CDs make the most sense for the OPs situation. I was just objecting to generalizing to retail investors as a whole.
by stlutz
Fri Dec 19, 2014 9:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: CD or Treasury ladder trade-off
Replies: 29
Views: 1521

Re: CD or Treasury ladder trade-off

You are correct that CDs currently are a much better deal than Treasuries for the retail investor. The best comparison is to a Treasury of the same maturity, since both are essentially default-risk-free. Currently you can get a 5-year CD with a rate of 2.25% or better with an early withdrawal penal...
by stlutz
Fri Dec 19, 2014 9:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: CD or Treasury ladder trade-off
Replies: 29
Views: 1521

Re: Bond Fund vs CDs - which to use?

In other words, I would choose whether I want to invest in a bond fund, in CDs, or in both of them (a fixed allocation to each) and put that in my Investment Policy Statement. I would not wait for better or worse conditions to switch from one to the other or vice versa. I really agree with longinve...
by stlutz
Fri Dec 19, 2014 8:52 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 41
Views: 2627

Re: Effect of 0.79 correlation: fantasy vs. reality

It seems to me that you're focusing only on the Beta risk of SCV. Yes the correlation is high between SCV and LC but isn't that all about Beta? If that were all there was to it, you would be correct. But what about the diversification that SCV adds in terms of greater size and value factor loadings...
by stlutz
Fri Dec 19, 2014 5:40 pm
 
Forum: Investing - Theory, News & General
Topic: Effect of 0.79 correlation: fantasy vs. reality
Replies: 52
Views: 3278

Re: Effect of 0.79 correlation: fantasy vs. reality

Thanks to nisi for starting another interesting thread. I was getting lost in the math and was also interested in livesoft's question about rebalancing, so I decided to approach it a little bit differently. I took the Simba spreadsheet and reduced the annual returns of SCV by 3.01% per year so I cou...
by stlutz
Fri Dec 19, 2014 4:30 pm
 
Forum: Investing - Theory, News & General
Topic: Effect of 0.79 correlation: fantasy vs. reality
Replies: 52
Views: 3278

Re: Correlations of Risk Factors in Down Markets

Most small value funds peaked around June 2007 and didn't bottom out until early March 2009. Just using 2008 provides you with what value funds did in the middle of the financial crash, but excises the beginning and the end. Using DFSVX, RZV, and PXSV as examples of real funds, they all dropped mor...
by stlutz
Fri Dec 19, 2014 1:50 am
 
Forum: Investing - Theory, News & General
Topic: Correlations of Risk Factors in Down Markets
Replies: 22
Views: 1308

Re: Do you travel with friends?

I enjoy both traveling solo and traveling with friends. I find that the key to traveling with friends is that somebody is actually "in charge" of the trip. That doesn't mean that this person dictates everything, but they determine what the "feel" of the trip is going to be like. ...
by stlutz
Fri Dec 19, 2014 12:05 am
 
Forum: Personal Consumer Issues
Topic: Do you travel with friends?
Replies: 41
Views: 3066

Re: Correlations of Risk Factors in Down Markets

I think it makes more sense just to look at what HML was in down market years vs. up-market years. If I look at the annual data from 1927 to 2013, I get an average HML in up markets of 4.83 and an average of 5.25 in down markets (i.e. there is a slight advantage to value when the market is going dow...
by stlutz
Thu Dec 18, 2014 11:38 pm
 
Forum: Investing - Theory, News & General
Topic: Correlations of Risk Factors in Down Markets
Replies: 22
Views: 1308

Re: TD Ameritrade

by stlutz
Wed Dec 17, 2014 10:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: TD Ameritrade
Replies: 3
Views: 730

Re: Individual Bonds vs. Bond Funds

First off, a bond fund holds a bunch of individual bonds, so I would ask why you "prefer" individual bonds? Return-wise, it depends as to how good of a job you do when buying your bonds. In most cases, a fund will probably do better than an individual at doing this, but it's certainly poss...
by stlutz
Wed Dec 17, 2014 1:17 am
 
Forum: Investing - Help with Personal Investments
Topic: Individual Bonds vs. Bond Funds
Replies: 9
Views: 1136

Re: Better Costs: ETFs or Admiral Shares?

Tangentially related to costs, but curious about people's error rate when exchanging funds vs. trading ETFs. I once made a mistake with an exchange (moved into the wrong "Intermediate Term... " fund) but I've never made a mistake with an ETF trade.
by stlutz
Wed Dec 17, 2014 12:21 am
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3763

Re: Vanguard "upgrades" to brokerage accounts

Vanguard is pushing hard (here at the end of 2014) to convince everyone to "upgrade" to brokerage accounts. They want the moves completed by January 20, 2015. Where did you get that idea? My accounts aren't even eligible for "upgrade" yet (and I don't think most people's on this...
by stlutz
Mon Dec 15, 2014 9:01 pm
 
Forum: Investing - Theory, News & General
Topic: "Vanguard converting mutual fund accounts to brokerage?
Replies: 252
Views: 16631

Re: in the past there was a period when active outperformed

I've read in other places that the 1970s was a period where mutual fund managers on average outperformed. This wiki page (http://www.bogleheads.org/wiki/US_mutual_fund_performance_studies) lists a lot of the papers on the subject. It says that the studies on aggregate show that, "before costs, ...
by stlutz
Sun Dec 14, 2014 2:50 pm
 
Forum: Investing - Theory, News & General
Topic: in the past there was a period when active outperformed
Replies: 30
Views: 1573

Re: Why is a natural gas stock (UPL) caught in the oil downt

I think this chart makes it easier to see what has happened to the natural gas price--looks like a drop of over 20% to me.

http://www.nasdaq.com/markets/natural-g ... meframe=1y
by stlutz
Sun Dec 14, 2014 2:25 pm
 
Forum: Investing - Theory, News & General
Topic: Why is a natural gas stock (UPL) caught in the oil downturn?
Replies: 7
Views: 702

Re: Investing more when the market is down.

I disagree with many of the comments thus far. First off, the number of shares you own of something is purely an arbitrary number. If a company has a 2:1 split, do you now own twice as much? Of course not. What matters is the value of what you own. If your holding was worth $100 yesterday and $110 t...
by stlutz
Sun Dec 14, 2014 12:16 pm
 
Forum: Investing - Theory, News & General
Topic: Investing more when the market is down.
Replies: 22
Views: 2295

Re: 6 years into career, finally time to address the unavoid

A few thoughts for what they are worth-- I'm a fan of 60/40 as an allocation that you can hold for most of your life. If you've discussed risk tolerance with multiple professionals and they both recommend 60/40, I wouldn't let a website saying you should be 90/10 steer you in another direction. The ...
by stlutz
Sat Dec 13, 2014 5:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: 6 years into career, finally time to address the unavoidable
Replies: 28
Views: 4585

Re: Wealthfront Direct Indexing Platform

I would only do it with a tax-advantaged account.


There is zero point in doing this in a tax advantaged account since pretty much all the benefit is tax loss harvesting.


:oops:
by stlutz
Fri Dec 12, 2014 11:39 pm
 
Forum: Investing - Theory, News & General
Topic: Wealthfront Direct Indexing Platform
Replies: 22
Views: 2741

Re: Wealthfront Direct Indexing Platform

I would only do it with a tax-advantaged account. Otherwise, think of what your Schedule D will look like with hundreds of individual securities. It's not just the tax loss selling but also the corporate actions (e.g. spin-offs). We've also discussed this article in the past that argues that the ben...
by stlutz
Fri Dec 12, 2014 10:55 pm
 
Forum: Investing - Theory, News & General
Topic: Wealthfront Direct Indexing Platform
Replies: 22
Views: 2741

Re: Umbrella Liability Insurance - Need it or not?

How many times have you made an error in judgment when driving your vehicle and gotten lucky? For most of us, the answer is quite a few times. Back up to any one of those and put a pedestrian where you shouldn't have been. Then decide whether or not the umbrella policy is a good idea. I've always sa...
by stlutz
Fri Dec 12, 2014 7:55 pm
 
Forum: Personal Finance (Not Investing)
Topic: Umbrella Liability Insurance - Need it or not?
Replies: 49
Views: 4491

Re: Is the collapse of oil price a "black swan"?

Just as there is not an RBD unless livesoft calls it, it is not a Black Swan until Victoria tells us it is. As she hasn't posted yet in this thread, the answer is "no".

:D
by stlutz
Fri Dec 12, 2014 7:48 pm
 
Forum: Investing - Theory, News & General
Topic: Is the collapse of oil price a "black swan"?
Replies: 87
Views: 7635

Re: Car accident lawsuits: do plantiffs know insurance limit

If you have an umbrella policy, the attorney that your insurance company will provide for you will do the negotiation, not you. Even if it's not the law that they have to provide info., it's likely a plaintiff would know you have umbrella insurance. A jury would not know this, however. Regardless, a...
by stlutz
Fri Dec 12, 2014 7:40 pm
 
Forum: Personal Finance (Not Investing)
Topic: Car accident lawsuits: do plantiffs know insurance limits?
Replies: 7
Views: 1055

Re: Goal: 1% real. Does this portfolio work?

Is this a reasonable portfolio for the stated goal? Does it seem adequately "all weather"? Yes, of course. I'm with the others that's it not what I would do exactly, but it's a very reasonable portfolio. : Does it protect well-enough against both deflation and inflation? I think the quest...
by stlutz
Fri Dec 12, 2014 1:24 am
 
Forum: Investing - Help with Personal Investments
Topic: Goal: 1% real. Does this portfolio work?
Replies: 14
Views: 1631

Re: Bonds and Beta

Beta can be calculated relative to anything--the S&P 500, a bond index, or the daily temperature in Albuquerque. So, the key is too look at what it is being calculated against. Taking ST-TE as an example (https://personal.vanguard.com/us/funds/snapshot?FundId=0041&FundIntExt=INT#tab=2): It h...
by stlutz
Wed Dec 10, 2014 10:43 pm
 
Forum: Investing - Theory, News & General
Topic: Bonds and Beta
Replies: 2
Views: 246

Re: What is your opinion about "tilting?"

You didn't really have the perfect choice for me. I used to believe that tilting would significantly increase returns. I no longer do. However, I maintain my tilt because I believe in staying the course than I believe anyone's forecasts about which stocks will out/underperform the market.
by stlutz
Tue Dec 09, 2014 11:21 pm
 
Forum: Investing - Theory, News & General
Topic: What is your opinion about "tilting?"
Replies: 116
Views: 8676

Re: Does splitting int'l markets increase returns?

To me this is chasing after a past problem. The idea looks great when you look at Japan 1989--you would have felt really smart if you had limited your exposure to that market before it crashed. Nothing like it has happened since, however. About 10 years ago I implemented such a split in my accounts....
by stlutz
Tue Dec 09, 2014 1:45 am
 
Forum: Investing - Theory, News & General
Topic: Does splitting int'l markets increase returns?
Replies: 21
Views: 1777

Re: Selling brokered CDs, corporate bonds, and muni bonds?

If it was me I would: a) Sell all of the corporate bonds. They will be the most liquid and will involve the least amount of challenge/cost to unload. b) Keep the CDs. Brokered CD rates are substantially above Treasury rates right now, so I'd be inclined to hold on. One thing to watch out for with th...
by stlutz
Tue Dec 09, 2014 1:38 am
 
Forum: Investing - Help with Personal Investments
Topic: Selling brokered CDs, corporate bonds, and muni bonds?
Replies: 6
Views: 510

Re: Selling brokered CDs, corporate bonds, and muni bonds?

When do the bonds mature? What type of credit rating do they have?
by stlutz
Mon Dec 08, 2014 10:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Selling brokered CDs, corporate bonds, and muni bonds?
Replies: 6
Views: 510

Re: Returning to college at age 32: Help picking a major

A little bit of a different situation, but my department at work recently hired someone who was a psychology professor who went back to school and got a CS degree. He interned at our company last summer and then was hired on full time after he graduated a year later.
by stlutz
Sun Dec 07, 2014 5:50 pm
 
Forum: Personal Consumer Issues
Topic: Returning to college at age 32: Help picking a major
Replies: 19
Views: 1206

Re: Variable Percentage Withdrawal (VPW)

... or you can get annual returns back to 1971 here. http://finance.yahoo.com/q/pm?s=VWINX+Performance :happy
by stlutz
Sun Dec 07, 2014 1:25 pm
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 510
Views: 89872

Re: How did brokered CDs fare in the Great Recession?

During the darkest days of the financial crisis, you can safely assume that anything that was not a nominal Treasury bond was going down and not up. The problem with brokered CDs is that they are a buy-and-hold to maturity investment. The trading costs are just too high to sell early. During a liqui...
by stlutz
Sat Dec 06, 2014 10:54 pm
 
Forum: Investing - Theory, News & General
Topic: How did brokered CDs fare in the Great Recession?
Replies: 11
Views: 1221

Re: How can an Total US Index be improved?

I think you actually could get improvement over the TSM if the focus is shifted from beating the market (or earning a "risk premium" if you wish to be more academic about it) toward managing risk. For example, I would really prefer to not have any company be more than 1% of a TSM portfolio...
by stlutz
Sat Dec 06, 2014 10:49 pm
 
Forum: Investing - Theory, News & General
Topic: How can an Total US Index be improved?
Replies: 33
Views: 1920

Re: VBS upgrade roll out has started

Just to be clear: am I correct that this change eliminates the 3 day wait for a sold ETF to go to Money Market Fund? No. Many if not most brokerages will let you trade with unsettled funds. However, you cannot withdraw the money until the trade actually settles at T+3. This this is not a VG thing--...
by stlutz
Sat Dec 06, 2014 11:33 am
 
Forum: Investing - Theory, News & General
Topic: "Vanguard converting mutual fund accounts to brokerage?
Replies: 252
Views: 16631

Re: Why So Many Used Prius for Sale?

If you are buying a 2010 Prius with low miles you are in very little danger of needing a battery replacment anytime soon (they are warrantied for 100K anyhow). If you were talking about buying one with 150K miles, then you should be more concerned. It seems like replacments get more common at 200K m...
by stlutz
Sat Dec 06, 2014 2:43 am
 
Forum: Personal Consumer Issues
Topic: Why So Many Used Prius for Sale?
Replies: 51
Views: 6832

Re: What do you do with Fidelity Rewards?

I use mine to buy stock in sushi and chocolate companies.
by stlutz
Sat Dec 06, 2014 1:08 am
 
Forum: Personal Finance (Not Investing)
Topic: What do you do with Fidelity Rewards?
Replies: 34
Views: 1818

Re: Vanguard cd question

Now, If I buy a 5 year cd and hold it till five years will the 2.25 rate fluctuate? Or, are they talking about if you have to sell it before it matures? I have never heard of a cd rate fluctuating? The rate will not fluctuate. If you invest $10,000 in a CD, you will get $225 each year in interest. ...
by stlutz
Thu Dec 04, 2014 10:41 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard cd question [Brokered CDs]
Replies: 25
Views: 2924

Re: Where should I exchange USD for ERUO?

For travelers, ATMs are the best option. But this is a bit of a different situation as it sounds like you really want to give real cash before she goes. How much do you plan to give? If it's not a lot you may just want to eat the fee and go to a Travelex location nearby.
by stlutz
Tue Dec 02, 2014 11:44 pm
 
Forum: Personal Finance (Not Investing)
Topic: Where should I exchange USD for ERUO?
Replies: 6
Views: 587

Re: Will Vanguard ever offer a passbook savings account?

Many brokerage firms use a bank deposit program where your cash position is deposited with program banks as opposed to using a MM fund. That is what Fidelity's Cash Management Account uses, for example. It's not a way to get competitive savings rates (Fidelity currently pays .07%), but it does provi...
by stlutz
Tue Dec 02, 2014 11:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: Will Vanguard ever offer a passbook savings account?
Replies: 36
Views: 2362

Re: Schiller's data set and the Facts of the Matter

A few quick comments: --On the monthly average prices: These will make stocks look a little bit less volatile than they actually are. I think the benefit is that it removes any seasonality factors. The Fed also averages interest rate data if you download monthly or annual numbers from the H.15 relea...
by stlutz
Tue Dec 02, 2014 1:30 am
 
Forum: Investing - Theory, News & General
Topic: [Shiller's] data set and the Facts of the Matter
Replies: 14
Views: 1654

Re: Small cap value premium

RZV is a very concentrated version of a SCV fund. I don't know that I would say it's the most "pure" (despite the fact that the index has the word "pure" in the name :happy ) option. None of the other more "standard" SCV funds, whether the be a DFA fund or an ETF, went ...
by stlutz
Tue Dec 02, 2014 12:07 am
 
Forum: Investing - Theory, News & General
Topic: Small cap value premium
Replies: 150
Views: 14391

Re: Donor Advised Funds to Lower Capital Gains Tax

Actually, I use Schwab. :D

But they have the same minimums, policies etc. as Fido. I would use Fido over Vanguard for the reasons you have stated.
by stlutz
Mon Dec 01, 2014 10:32 pm
 
Forum: Investing - Help with Personal Investments
Topic: Donor Advised Funds to Lower Capital Gains Tax
Replies: 5
Views: 506

Re: Small cap value premium

My point is the reason SCV is cheaper (i.e. returns more) is because it is more volatile. Given a choice, people will pay more for less volatile investments. In this case, those less volative investments are large cap stocks. If volatile small cap stocks returned the same as less volatile large cap...
by stlutz
Mon Dec 01, 2014 10:28 pm
 
Forum: Investing - Theory, News & General
Topic: Small cap value premium
Replies: 150
Views: 14391

Re: What is like a bond but is only taxed at long term gains

Interesting. If you buy a bond at a discount, but then end up selling it at an even greater discount, is this now treated as an ordinary income loss or a capital loss In terms of an individual bond: Suppose you bought a bond maturing in 10 years today for $90 (a $10 discount). 5 years from now, you...
by stlutz
Mon Dec 01, 2014 10:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: What is like a bond but is only taxed at long term gains.
Replies: 11
Views: 1325

Re: Fidelity or Schwab Brokerage account

Neither will harass you for keeping a small balance. I bank at Schwab but I don't invest there. My brokerage account there currently has a balance of $1.27.
by stlutz
Mon Dec 01, 2014 10:04 pm
 
Forum: Personal Finance (Not Investing)
Topic: Fidelity or Schwab Brokerage account
Replies: 28
Views: 2577

Re: Donor Advised Funds to Lower Capital Gains Tax

Has anyone had experiences using a Donor Advised Fund to get around their capital gains tax bill? Did you have trouble giving to the charities of your choice? Do you get to set the allocation? Do the fees make this too high for a Boglehead? Lots of people here, including myself, use them in part to...
by stlutz
Mon Dec 01, 2014 10:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: Donor Advised Funds to Lower Capital Gains Tax
Replies: 5
Views: 506

Re: An alternative to alternative investments [QSPIX]

At the end of the day, it comes down to belief - what each investor believes. Staying the course is what matters. Belief is needed to stay the course. I agree that Robert T's post was excellent. However, I disagree. I think strong belief is a problem. Why? Nobody's beliefs stay fixed through time. ...
by stlutz
Mon Dec 01, 2014 9:57 pm
 
Forum: Investing - Theory, News & General
Topic: An alternative to alternative investments [QSPIX]
Replies: 205
Views: 20255

Re: Donor Advised Fund with lower minimum investment?

Schwab also works well. Have had no issues with donating VG funds held at VG.
by stlutz
Sun Nov 30, 2014 8:49 pm
 
Forum: Personal Finance (Not Investing)
Topic: Donor Advised Fund with lower minimum investment?
Replies: 12
Views: 1007

Re: Fidelity's retirement savings guideline-Only need 8x sal

In real life, I see retirees all of the time, they aren't out and about doing the jig at night, they aren't in bars and restaurants, and seeing plays during the day, they are living life the way most folks do, run errands, watch the tube, visiting friends and family, attending religious services, t...
by stlutz
Sun Nov 30, 2014 1:11 pm
 
Forum: Personal Finance (Not Investing)
Topic: Fidelity's retirement savings guideline-Only need 8x salary?
Replies: 45
Views: 5098
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