Bogleheads.org

I just had lunch with a friend. He mostly moved out of the stock market to CDs in 2008 and then move the last 20% out to CDs in late 2000 or so after the market declined. I don't know the exact dates, but I was wondering if a CD investor who started with a lump sum in that general period circa 2000 ...

This is just strange times. I will be more than happy to return to bonds once this "bubble" blows over and they return to a normal state of being. This keeping of the bonds artificially low is creating a spring board. Once things settle, Ill be happy to be back to 70/30. At all times, a d...

I don't have a problem with Vanguard offering managed funds along with index funds. I do think it is odd that many forum members seem to exclude Wellington and Wellesley funds from the critique normally given to managed funds. It sets up an odd philosophy - managed funds are not generally recommend...

Why did John Bogle include Wellington and Wellesley in the menu of funds on his watch? Are there any private no-fee companies that offer only index funds to the small investor? TSP is not private. DFA requires a fee. Maybe it's not a viable business model. Do private companies need the active funds...

I think it might have something to do with the life cycle of someone who becomes an investor. It's something like this: Phase 1 (from birth to first job) No money to invest, no apparent need to learn the evidence. As Larry points out, there are typically no required or even optional courses in pers...

Surely the organizers of the Bogleheads annual meeting would be willing to engage in a rational debate involving representatives of Vanguard indexed and managed funds. Again, I think you're far overestimating the interest in "converting" other VG fund holders to/from active/index funds. Y...

I think it might have something to do with the life cycle of someone who becomes an investor. It's something like this: Phase 1 (from birth to first job) No money to invest, no apparent need to learn the evidence. As Larry points out, there are typically no required or even optional courses in perso...

I read your blog and it does not appear to me to include the reason that I used active funds for a period before 2001. It was due to ignorance, you have that right. But my ignorance simply caused me feel the need for a advisor, because I did not feel ready to launch out on my own. It was ignorance t...

I rebalance once per year around my birthday. I also direct my contributions so as to move toward balance. In 2008, I rebalanced a month or so earlier than my birthday because the market was so far down. but the market kept droping I would have been better off simply sticking to my plan to rebalance...

In my case, I use to have less than 250K auto liability coverage, I had closer to the state minimum. I had to increase it to meet the minimum requirement for the umbrella insurance I applied for.

You can try playing a free futures market like this one:

http://www.ideosphere.com/

It's a hobby kind of close to investing.

I read or heard somewhere that barter is just a price optimizing process. The merchant offers a high price and some will pay that price. Others will negotiate the merchant down.

2. [~31:00], regarding whether or not his 12% is adjusted for inflation, Dave says, "I'm having trouble...I cannot find it on my website...it could be there, if it is, it shouldn't be there..but we've looked and we can't find where it says 12% adjusted for inflation...cause if that's on there,...

I don't think you and your employer could put a total of $5000 in your HSA.

The wife gets a $1,592.88

Total = 6592.88 which is greater than the 6450 family maximum.

Not sure about he rules for this kind of double coverage arrangement.

I believe the story behind the article is that fear and shock hooks readers to read an article of highly questionable merit. "Bond Volatility Sending Grim Message To Market" rings the fear bell loudly and I suspect the author is more concerned with increasing readership numbers than with ...

In some cases the death rate in a heavy vehicle with all the safety features is higher because of the type of person who tends to buy that particular model. For example the Dodge Charger, aka General Lee in the Dukes of Hazard.

Driving a car is active management. The only way to stay the course with a passively managed vehicle is by using mass transit. Talking about ESC? I'd say its pretty active, and it does things you can't do like independently braking each of the four tires to take you out of a sideways skid. You are ...

Overkill was a poorly chosen word, especially given the context. I guess I was trying to get at that the difference in results, at least with the Armada, means you would choose four wheel if absolute safety were your criterion, regardless of ESC. I don't have ESC on anything and was not really awar...

This boglehead minimizes driver fatality risk choosing a model with zero driver deaths per million registered years and with all of the "latest" safety features. Why take more risk than you have the ability, willingness and need to take? http://www.iihs.org/externaldata/srdata/docs/sr4605...

BTW, be careful to not overlook anything when you fill out the qualifying questionnaire for umbrella insurance, like that uninsured canoe (or other watercraft) that you loaned out a forgot about but still technically own. Incorrectly filling out the questionnaire is a whole other risk. I didn't hav...

I understand it is based on the level of assets. Does anyone have coverage in excess of assets? Not sure why the coverage should equal your assets. If the claim exceeds your coverage and the suit is successful, then the claim will be covered by your assets, regardless. It's a rule of thumb, so it's...

There seems to be something fishy about that information sheet.

The C class allocations don't add to 100%. This seems to imply that you would own some C and C20. Not sure what to make of it.

C20 has a higher expense ratio,

I understand it is based on the level of assets. Does anyone have coverage in excess of assets? Not sure why the coverage should equal your assets. If the claim exceeds your coverage and the suit is successful, then the claim will be covered by your assets, regardless. More assets with relatively l...

I can tell you one thing: If I ever run into an L-Fund designer on the Metro, I'm definitely going to bring this up. He will say something like this: The five L Funds were designed for the TSP by Mercer Investment Consulting, Inc. The asset allocations are based on Mercer’s assumptions regarding fu...

What that advice actually means is:

"Click on this and then click on some of the ads"

Doing to opposite of what El-Erian recommends has had a good track record in recent years if I recall correctly.

I am arguing for a <9.25% allocation to F. Based on 10 year trailing returns through 2012, difference in returns is 0.15% if you allocate 9.25% vs 0 to F instead of G. So, I'd say it won't matter much.

Now if you said you wish to replace it in order to have modern safety features like airbags, anti-lock brakes, traction control, etc,. that is a different matter, or if you are tired of the car and want something newer and can easily afford slightly used, that is another good reason too. Anti-lock ...

The G Fund has been our only fixed-income holding for about 8 years, so I also have to infer that I think I know better than the people who designed the L Funds. :happy Of course, you DIDN'T know better. F beat G in every reporting period since inception until this year. Naturally, past results do ...

I don't use the F fund, because IMO it's far too heavy in Treasuries, making it (to me) redundant with G fund holdings. Why would I buy a portion of riskier Treasuries when I can have G? If and when the bond market gets a bit less dominated by the federal government, I'd be happy to get back some i...

I think there is a case to be made for holding other fixed income investments besides the G Fund, but using Vanguard Total Bond Market/F Fund may not be the best way to do this. It's easy to construct a portfolio with very similar duration and credit quality to TBM/F Fund that takes advantage of th...

The G Fund has been our only fixed-income holding for about 8 years, so I also have to infer that I think I know better than the people who designed the L Funds. :happy Of course, you DIDN'T know better. F beat G in every reporting period since inception. Naturally, past results do not guarantee, o...

The G Fund has been our only fixed-income holding for about 8 years, so I also have to infer that I think I know better than the people who designed the L Funds. :happy Of course, you DIDN'T know better. F beat G in every reporting period since inception. Naturally, past results do not guarantee, o...

If you go all G for your bonds, then one can infer that you think you know better than the people who designed the L Funds, unless there is something special about your asset allocation. The G Fund has been our only fixed-income holding for about 8 years, so I also have to infer that I think I know...

This gives the rules for pre-existing conditions: http://en.wikipedia.org/wiki/Pre-existing_condition Are you getting insurance from an employer? If so, then you may have group insurance. If you don't have group insurance. then there are pre-existing condition rules. Also, I have read that there can...

Thorpe did the math for asset allocation to the SP500 and T-bills here: http://edwardothorp.com/sitebuildercontent/sitebuilderfiles/TheKellyCriterionAndTheStockMarket.pdf But he ended up with zero allocation to T-Bills. He concluded that you could buy SP500 on margin up to 169% of your bankroll, ass...

I am of the opinion that Bogleheads tend to undervalue safety and have relatively low safety awareness, but this does not apply to all Bogleheads. The organizations that give us the safety ratings (NHTSA and IIHS) tell us (somewhere in the small print) that the safety ratings of cars with a curb wei...

The TSP L funds have an F allocation between 6% and 9.25%. If you go all G for your bonds, then one can infer that you think you know better than the people who designed the L Funds, unless there is something special about your asset allocation.

Try increasing the variance on the 2 assets and the number of years. My hunch it that will make the rebalancing bonus obvious. Or try 1 no risk, no return asset and 1 high variance asset with some return. That will make it similar to the Shannon example. My hunch is that in your scenario rebalancin...

You have gone wrong with the statement "the average bonus over many trials is zero". You likely did not get exactly zero as the estimate from your simulations. And, in any case, you certainly did not prove that the average bonus was zero because it's not possible to do that with a simulat...

Thanks, the II paper is very good, and obviously I agree with the conclusions. But some things continue to bother me in all this. First of all, I think the paper is weak when it comes to their addressing who is on the other side of the trade. They take a whole behavioral kind of arbitrage route tha...

Is there any reason to believe that, on average, rebalancing will help more than it hurts? Not if we believe that market movements are random. After all, we rebalance with the hope that an asset with past higher/lower than average returns will have future lower/higher than average returns. Bernstei...

Is there any reason to believe that, on average, rebalancing will help more than it hurts? Not if we believe that market movements are random. After all, we rebalance with the hope that an asset with past higher/lower than average returns will have future lower/higher than average returns. Bernstei...

That's what this article is saying: Stocks rebounded on Thursday on tepid economic data that eased concerns the Federal Reserve would begin to gradually decrease its policies to stimulate growth. http://finance.yahoo.com/news/futures-flat-selloff-ahead-data-111021850.html This is actionable: you can...

Isn't it reasonable to rebalance simply to control one's exposure to risk, without concern for a "bonus"? Nitpicking... I'd say you are trying to keep it constant. If the market is going up, yes you would be reducing your exposure to risk by selling some equities. But if it is going down ...

I ran a backtest simulation for the decade of 2000-2010 with a three-fund portfolio and rebalancing. I found that returns were 0.3% per year higher with rebalancing. That said, it is easy to imagine scenarios (like the market since 2009) where rebalancing might lower your returns. Keith There's the...

I ran a backtest simulation for the decade of 2000-2010 with a three-fund portfolio and rebalancing. I found that returns were 0.3% per year higher with rebalancing. That said, it is easy to imagine scenarios (like the market since 2009) where rebalancing might lower your returns. Keith There's the...

As a rough estimate: geometric mean = arithmetic mean - 1/2 variance If you have ever noticed, the trailing returns from the stock market are about 10% per year, but the average growth of the stock market in any given year is about 19%. The estimation formula above explains how this can be the case....

Thorpe generalized Kelly for the stock market: http://edwardothorp.com/sitebuildercontent/sitebuilderfiles/TheKellyCriterionAndTheStockMarket.pdf (Thorpe probably did the same in his book "Beat the Market") There's a compilation of papers on Kelly Capital Growth Investment Criteria: http:/...

Rebalancing brings your portfolio's geometric return closer to the weighted average arithmetic return of its components. Momentum need not have anything to do with it. It is a function of diversification reducing steep losses, which we all know kills compounding. I made a post awhile ago that shows...