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Re: non US bonds - a new asset class?

The conclusion is somewhat incorrect. As long as: - intl bonds have long-term positive returns, AND - given the 4x4 correlation matrix of the {3 asset-class + intl bond} portfolio, there is an asset allocation that increases the Sharpe of the portfolio with all the 4 asset classes, then it makes se...
by stlutz
Thu Nov 27, 2014 5:02 am
 
Forum: Investing - Help with Personal Investments
Topic: non US bonds - a new asset class?
Replies: 11
Views: 625

Re: How to find refundable airfare or open ticket ?

Have you considered a trip insurance policy that allows you to cancel for any reason?
by stlutz
Thu Nov 27, 2014 4:48 am
 
Forum: Personal Consumer Issues
Topic: How to find refundable airfare or open ticket ?
Replies: 15
Views: 728

Re: non US bonds - a new asset class?

Is this an asset class which should be included.


They offer higher risk and lower yield than comparable US bonds. So, I say no.
by stlutz
Wed Nov 26, 2014 7:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: non US bonds - a new asset class?
Replies: 11
Views: 625

Re: Small cap value premium

60/40 in what time frame? 1 year or 30 years? If you think it's 60/40 in 10+ year time frames I think you are being overly conservative: http://us.dimensional.com/pdf/the_risk_ ... eliver.pdf In any timeframe. I'm approaching it differently than DFA is. They are basically saying that there is a mea...
by stlutz
Wed Nov 26, 2014 7:02 pm
 
Forum: Investing - Theory, News & General
Topic: Small cap value premium
Replies: 138
Views: 8682

Re: Should I Fix 1999 Grand Marquis (182K Miles)

For the opposing view (i.e. to keep it), enter this into google: crown vic site:fatwallet.com
by stlutz
Wed Nov 26, 2014 6:43 pm
 
Forum: Personal Consumer Issues
Topic: Should I Fix 1999 Grand Marquis (182K Miles)
Replies: 13
Views: 957

Re: How long did your IT career last? At what age did it en

Most of the IT people at my company (finance industry) are older than you.
by stlutz
Wed Nov 26, 2014 6:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: How long did your IT career last? At what age did it end?
Replies: 33
Views: 1900

Re: Opinions Please - REIT's vs. EM

My opinion is that I see no special reason to tilt to either, so I'd sell the REITs and add them to your total market funds. But who cares about my opinion. It doesn't sound like this move will really make any real difference in your life. As such, I don't see any reason not to just rebalance to you...
by stlutz
Wed Nov 26, 2014 6:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: Opinions Please - REIT's vs. EM
Replies: 9
Views: 598

Re: Shiller CAPE 10 — Why So High These Days?

I started to write a number of things but found myself just repeating what SimpleGift already said, so I won't. :D Perhaps a more succinct way to state it is that future equity returns will correlate much more closely to the amount of war, depression, and high inflation there is than to whatever som...
by stlutz
Wed Nov 26, 2014 6:11 pm
 
Forum: Investing - Theory, News & General
Topic: Shiller CAPE 10 — Why So High These Days?
Replies: 38
Views: 2225

Re: Roth versus Traditional Debate

This should only be made complicated for purposes of entertainment. Otherwise, there are really just two things to keep in mind: 1) What matters is not how much tax is paid when but how much money you have after tax. 2) Suppose your *marginal* tax rate when contributing is 25%. You have a choice bet...
by stlutz
Wed Nov 26, 2014 5:44 pm
 
Forum: Investing - Theory, News & General
Topic: Roth versus Traditional Debate
Replies: 17
Views: 929

Re: Small cap value premium

First I don't know anyone that would say the small value premium is certain if long enough horizon. I know I never said it, nor would, and Random Walker didn't say it. Hi Larry, In their paper, "Volatility and Preimiums in US Equity Returns", Fama and French state that there is a 6.1% pro...
by stlutz
Tue Nov 25, 2014 12:39 am
 
Forum: Investing - Theory, News & General
Topic: Small cap value premium
Replies: 138
Views: 8682

Re: Wellington Closed?

by stlutz
Tue Nov 25, 2014 12:25 am
 
Forum: Investing - Theory, News & General
Topic: Wellington Closed?
Replies: 2
Views: 917

Re: Small cap value premium

Excess returns are not a free lunch. They are compensation for taking on more risk. That risk is not just measured in SD. There are many ways to view risk. For example one is doing especially badly in bad times for value companies. The equilibrium is not just expected return, it's expected return r...
by stlutz
Mon Nov 24, 2014 10:38 pm
 
Forum: Investing - Theory, News & General
Topic: Small cap value premium
Replies: 138
Views: 8682

Re: Vanguard Ultra-Short-Term Bond Fund coming in early 2015

So, this fund is basically a taxable version of VG Short-Term Tax Exempt, which currently yields .3% and has a duration of 1.0. Sounds like the new fund will be taxable but otherwise very similar. With some credit risk mixed in, I'd expect a yield around .3% as well.
by stlutz
Mon Nov 24, 2014 9:34 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard Ultra-Short-Term Bond Fund coming in early 2015.
Replies: 39
Views: 3886

Re: Retiring soon- Hoping for Comments on My Plan

From my side of the keyboard it looks like you're being ridiculously conservative. Question #1) Is $60K in expenses before or after tax? Question #2) In terms of your pension payout, can you defer taking that until later? What would be the payout then? Those questions asked, I'm basically seeing $60...
by stlutz
Sun Nov 23, 2014 3:09 pm
 
Forum: Investing - Help with Personal Investments
Topic: Retiring soon- Hoping for Comments on My Plan
Replies: 7
Views: 1350

Re: Proposed Lifetime Retirement Investment Approach

A few thoughts: 1) When people are just starting out with investing, it's more accurate to say that the asset allocation doesn't matter much. How much is saved dwarfs the return of the [then small] savings. 2) I don't see how this is any different than using a VG Target Retirement fund--start out al...
by stlutz
Sun Nov 23, 2014 2:55 pm
 
Forum: Personal Finance (Not Investing)
Topic: Proposed Lifetime Retirement Investment Approach
Replies: 28
Views: 2302

Re: Making money/career in Trading

The best way to make money in trading is to do it with other people's money.
by stlutz
Sat Nov 22, 2014 7:00 pm
 
Forum: Investing - Theory, News & General
Topic: Making money/career in Trading
Replies: 25
Views: 2353

Re: Vanguard offers login security code

Lets Recap VG security features (feel free to correct/add any features): 1. Username has been updated to 12 characters (still does not recognize upper/lower case) 2. Password has been updated to 20 characters (still does not recognize upper/lower case) 3. 2 factor/step verification is being rolled ...
by stlutz
Fri Nov 21, 2014 10:34 pm
 
Forum: Personal Consumer Issues
Topic: Vanguard offers login security code
Replies: 70
Views: 6143

Re: Small cap value premium

I would be careful about any analysis with Vanguard small index fund when go way back because for much if not the majority of its life its benchmark was the R2K which was awful index to use (and why Vanguard eventually dropped it). The r2k underperforrmed the similar CRSP 6-10 index by about 2% a y...
by stlutz
Fri Nov 21, 2014 10:31 pm
 
Forum: Investing - Theory, News & General
Topic: Small cap value premium
Replies: 138
Views: 8682

Re: Small cap value premium

Anyone else tired of small cap value premium discussions?


Sorry, I tried my best to end them: viewtopic.php?f=10&t=96441

:happy
by stlutz
Thu Nov 20, 2014 12:17 am
 
Forum: Investing - Theory, News & General
Topic: Small cap value premium
Replies: 138
Views: 8682

Re: Vacation in France

By all means spend a few days in Paris, but definitely spend more time in less urban areas. Aside from being a better way to spend time with your GF, outside of Paris the French people are wonderful. And, as others have noted, you don't *have* to spend $10K to travel in Europe (and you can still do ...
by stlutz
Wed Nov 19, 2014 1:20 am
 
Forum: Personal Consumer Issues
Topic: Vacation in France
Replies: 96
Views: 5016

Re: Quit Cobra to go on Obamacare?

With most people in your situation (i.e. no children), health care is used very little most of the time then gets used all in one big bunch because something bad happens. When it does, what do you care about? For me, I care about what doctors I can see *in-network* (out of network care is generally ...
by stlutz
Tue Nov 18, 2014 10:23 pm
 
Forum: Personal Finance (Not Investing)
Topic: Quit Cobra to go on Obamacare?
Replies: 23
Views: 2862

Re: Glidepath (target date) investments distort asset alloca

There are different types of savings. When people, be they young or old, raid their retirement accounts when they lose their jobs, the issue isn't the allocation of the retirement account, it's that they have inadequate other savings. We save for a lot of different things in our lives. There is reti...
by stlutz
Tue Nov 18, 2014 10:10 pm
 
Forum: Investing - Theory, News & General
Topic: Glidepath (target date) investments distort asset allocation
Replies: 20
Views: 2832

Re: Personal $$ Review - a product of Trev H and Livesoft

A few thoughts: --I agree with the prior poster that you should have more bonds. However, if you do want to keep a low bond allocation (e.g. under 25%), I would use Treasury bonds--VG Intermeidate Term Government bond is a great choice or if you do ETFs SCHR is another great option. Treasury bonds h...
by stlutz
Tue Nov 18, 2014 12:09 am
 
Forum: Investing - Help with Personal Investments
Topic: Personal $$ Review - a product of Trev H and Livesoft
Replies: 8
Views: 1266

Re: Fidelity 2-Factor authentication fail...

I'm curious what people *want* Fidelity to do in this case?

10 or 12 years ago I had lost my VG password and had to wait for them to snail me a new one. That is one approach.
by stlutz
Fri Nov 14, 2014 9:14 pm
 
Forum: Personal Consumer Issues
Topic: Fidelity 2-Factor authentication fail...
Replies: 13
Views: 1113

Re: The Sell in May and go away myth, why does it persist

There actually was a paper on this subject a couple of years back. Just Google, "Sell in May and go away just won't go away."
by stlutz
Sat Nov 08, 2014 12:05 am
 
Forum: Investing - Theory, News & General
Topic: The Sell in May and go away myth, why does it persist
Replies: 15
Views: 2199

Re: ETF premium/discount

Are the prices we see based mostly on after-hours trading for those international markets? I'm curious how that is determined exactly. The NAV reported during US market hours will be the close price in the local market adjusted for any currency rate changes that occurred since then. For further dis...
by stlutz
Sat Nov 01, 2014 11:32 am
 
Forum: Investing - Theory, News & General
Topic: ETF premium/discount
Replies: 7
Views: 779

Re: “Risk and Return Within the Stock Market: What Works Bes

Here's my take, there is really no low vol phenomenon. But having looked extensively at the low vol I'm very skeptical, again mostly it's high vol that is bad, not low vol that is good. It gets about same returns as the other quintiles except the highest. The "low vol phenomenon" is that ...
by stlutz
Sat Nov 01, 2014 12:26 am
 
Forum: Investing - Theory, News & General
Topic: “Risk and Return Within the Stock Market: What Works Best?”
Replies: 30
Views: 3991

Re: Portfolio Analysis - What to do in 2015?

The extra funds you are adding are not adding any diversification. The S&P 500 is about 80% of the Total Stock Market. TSM is a 63% of the Target Retirement 2050 fund. The TR 2050 fund basically owns every stock and investment grade bond issued worldwide. You don't get more diversified than that...
by stlutz
Fri Oct 31, 2014 11:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Analysis - What to do in 2015?
Replies: 7
Views: 1579

Re: Anyone consider retiring to Vancouver, Washington?

If I was going to live in that area I would pick Portland over Vancouver simply because I don't want to get out of the car and pump my own gas when it's raining out. :D
by stlutz
Fri Oct 31, 2014 10:24 pm
 
Forum: Personal Consumer Issues
Topic: Anyone consider retiring to Vancouver, Washington?
Replies: 45
Views: 4432

Re: Considering short-term, investment-grade bonds for Roth

Since you have an equity-heavy allocation, the question should be selecting which bonds work best with that type of portfolio. That is, you want bonds that are more likely to go up when equities go down. Treasuries are the bonds that are mostly likely to do this. Compare the 2008 performance of the ...
by stlutz
Fri Oct 31, 2014 10:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Considering short-term, investment-grade bonds for Roth IRA
Replies: 20
Views: 950

Re: ETF premium/discount

Negative means it's selling at a discount.

One thing to keep in mind is that, depending upon the ETF, the NAV is somewhat of an estimate. This is true with non-Treasury bond ETFs as well as international ETFs anytime after early morning hours when most international markets are closed.
by stlutz
Fri Oct 31, 2014 9:33 pm
 
Forum: Investing - Theory, News & General
Topic: ETF premium/discount
Replies: 7
Views: 779

Re: Schwab expands no commission ETFs-no early sell fee

Okay--to explain my "second class" comment. I was basing it on the following: 1) Expense ratios. I personally have a policy against paying more than .2% for any ETF. So, that wipes out most of the non-Schwab options at Schwab. 2) Trading costs. SLYV was mentioned as a good option. However,...
by stlutz
Fri Oct 31, 2014 6:06 pm
 
Forum: Investing - Theory, News & General
Topic: Schwab expands no commission ETFs-no early sell fee
Replies: 42
Views: 3212

Re: Schwab expands no commission ETFs-no early sell fee

Schwab's own ETFs are great funds and in some cases are the best option in their class. The other ETF one-source funds are completely underwhelming. It's basically made up of a bunch of higher-cost funds that have struggled to acquire assets. The supermarket lets Schwab complete with TD, Vanguard an...
by stlutz
Fri Oct 31, 2014 12:33 am
 
Forum: Investing - Theory, News & General
Topic: Schwab expands no commission ETFs-no early sell fee
Replies: 42
Views: 3212

Re: ITOT vs. VTI

These pages provide a good comparison between the two: http://www.etf.com/ITOT http://www.etf.com/VTI ITOT is the weakest offering in the iShares Core lineup, IMO. I would expect a "total market" fund to own thousands of stocks, not just 1500. ITOT covers about 90% of the US market; VTI co...
by stlutz
Sun Oct 26, 2014 9:58 am
 
Forum: Investing - Help with Personal Investments
Topic: ITOT vs. VTI [iShares Total US Stock ETF vs. Vanguard]
Replies: 14
Views: 971

Re: A fund "adviser's" financial strength: important?

I suppose we've seen recently what a run on a bond fund in an orderly market looks like with PIMCO. In 2009 we saw liquidity in the TIPS market dry up. There were no mass redemptions of TIPS funds, so we just saw that a disorderly market didn't lead to panic selling. Those give us concrete examples ...
by stlutz
Sat Oct 25, 2014 9:39 pm
 
Forum: Investing - Theory, News & General
Topic: A fund "adviser's" financial strength: important?
Replies: 6
Views: 772

Re: Barrons article...Charles Schwab company

Couple of interesting things I noticed: Within the next few weeks, Bettinger says Schwab will offer a Web-based advice platform for the general investing public, followed by a version for its independent investment advisors. This robo-investing product will design custom portfolios based on what wil...
by stlutz
Sat Oct 25, 2014 9:20 pm
 
Forum: Investing - Theory, News & General
Topic: Barron's on Schwab [CEO prefers Indexing for 401ks]
Replies: 16
Views: 2240

Re: front-running, MSCI USA vs Total market fund

There is very little indexed to the MSCI USA index so I would not worry about front running there.

That said, I'd generally prefer the total market fund assuming equivalent expenses.
by stlutz
Fri Oct 24, 2014 10:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: front-running, MSCI USA vs Total market fund
Replies: 1
Views: 412

Re: Best health insurance plan for a bad year (cancer)?

Welcome to the forum--sorry your first post couldn't be about happier things. It sounds like she is basically guaranteed to hit her out of pocket maximum next year. As such, plan 2 makes more sense since it has a substantially lower OOP maximum. And, as you note, having out-of-network coverage is al...
by stlutz
Fri Oct 24, 2014 10:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: Best health insurance plan for a bad year (cancer)?
Replies: 30
Views: 2354

Re: TSA [is it a hassle to opt out of scanning?]

Just go through the scanner. As was noted above, they don't use the X-ray machines anymore.
by stlutz
Wed Oct 22, 2014 10:38 pm
 
Forum: Personal Consumer Issues
Topic: TSA [is it a hassle to opt out of scanning?]
Replies: 42
Views: 2256

Re: Three Possible Outcomes for Future Investment Returns

The 1980s were in many ways perfect for bond investors--prices had the possibility of high inflation built in while actual inflation was much lower. Treating this perfect world as being a key part of the mean is not what I would do. Real rates a probably lower than what the future mean will be, but ...
by stlutz
Wed Oct 22, 2014 8:57 pm
 
Forum: Investing - Theory, News & General
Topic: Three Possible Outcomes for Future Investment Returns
Replies: 32
Views: 2358

Re: Importing yields from treasury.gov into Google spreadshe

I haven't use google spreadsheets before. But, for this data I've always just used copy and paste from the website (e.g. http://www.treasury.gov/resource-center ... &year=2013) into a LibreOffice spreadsheet
by stlutz
Wed Oct 22, 2014 8:47 pm
 
Forum: Investing - Theory, News & General
Topic: Importing yields from treasury.gov into Google spreadsheet
Replies: 18
Views: 1696

Re: So do we care more about change in bond price or bond yi

Given two bonds with the same maturity date, the one with the higher coupon will have a lower duration. So, the bumps probably indicate that that bonds trade more on the basis of duration than maturity.
by stlutz
Wed Oct 22, 2014 8:29 pm
 
Forum: Investing - Theory, News & General
Topic: So do we care more about change in bond price or bond yield?
Replies: 178
Views: 14249

Re: Why is VIPSX (TIPS) active?

Individual TIPS can only be sold in large quantities At Vanguard and Fidelity, they can be bought and sold in 1 bond ($1000) increments. Spreads are generally around 40 to 50 cents (i.e. <.50%). LTPZ holds a grand total of 6 bonds, so there isn't a whole lot of "management" going on for t...
by stlutz
Tue Oct 21, 2014 11:19 pm
 
Forum: Investing - Theory, News & General
Topic: Why is VIPSX (TIPS) active?
Replies: 18
Views: 1743

Re: IBM: Stock Buybacks Gone Wrong?

Remember that a buyback is just another way to pay a dividend.

Why do you think that IBM management would have made better investments with those profits than their shareholders would have? At the end of the day I trust investors to allocate capital more than I trust managers to.
by stlutz
Tue Oct 21, 2014 8:26 pm
 
Forum: Investing - Theory, News & General
Topic: IBM: Stock Buybacks Gone Wrong?
Replies: 65
Views: 4151

Re: Why do Engineers Think They’ll Be Good at Picking Stocks

Based upon the small sample size of people I know, I would change Victoria's assumption a little bit and focus more on retired engineers. While they are working, they have an outlet for their approaches from 8 to 5. It's when they retire that they then turn their focus to stock picture, trading comm...
by stlutz
Tue Oct 21, 2014 8:21 pm
 
Forum: Investing - Theory, News & General
Topic: Why do Engineers Think They’ll Be Good at Picking Stocks?
Replies: 135
Views: 10654

Re: Health care tilt

Just to be contrarian, one could argue that investing in the healthcare sector is actually a great hedge to the risks of working in it. In any business, the rewards can go to capital or they can go to labor. If doctors get replaced by robots, who wins big? Healthcare companies. On the other hand, if...
by stlutz
Tue Oct 21, 2014 8:15 pm
 
Forum: Investing - Theory, News & General
Topic: Health care tilt
Replies: 77
Views: 4029

Re: So do we care more about change in bond price or bond yi

Got it--I see what you're doing now. I've never actually messed much with zero-coupon bonds before. I think that return "hump" around year 6 may disappear if you use the zero-coupon yield curve as opposed to the "regular bond" yield curve. A regular 10 year bond yields 2.2% but a...
by stlutz
Tue Oct 21, 2014 12:25 am
 
Forum: Investing - Theory, News & General
Topic: So do we care more about change in bond price or bond yield?
Replies: 178
Views: 14249

Re: Individual Bonds versus Bond Funds - Again

I like the in-the-weeds discussions on this, but at the end of the day it's really a simple as remembering that a bond fund holds individual bonds. If I have portfolio of 50 individual bonds and ogd has a fund with the exact same 50 bonds, they will behave the same. The liquidity risks are slightly ...
by stlutz
Mon Oct 20, 2014 7:54 pm
 
Forum: Investing - Theory, News & General
Topic: Individual Bonds versus Bond Funds - Again
Replies: 17
Views: 1262

Re: So do we care more about change in bond price or bond yi

Hi Kevin, Thanks for the post. I don't think I agree with your inputs into the PRICE function. When calculating the price gain from holding the bond, I think you need to use a settlement date one year in the future (i.e. 10/20/15) as that is what the price one-year from now would be based on. So, lo...
by stlutz
Mon Oct 20, 2014 7:43 pm
 
Forum: Investing - Theory, News & General
Topic: So do we care more about change in bond price or bond yield?
Replies: 178
Views: 14249
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