Bogleheads.org

If you don't buy a ticket, you have a 100% probability of having $2 on Sunday morning. If you do buy a ticket, you have a 100,000,000:1 or so probability of not having that $2 on Sunday morning. Keith The odds of having the $2 on Sunday are significantly better than that. Per the Powerball website,...

I guess if you would ask who is the next Jack Bogle, you might have to accept that Jack Bogle was possibly the next to someone else.

I think that all great men stand on the shoulders of giants, not in their shadows.

That said, I nominate Gus Sauter.

Keith

someone should calculate the chance of winning if you don't buy a ticket. it isn't zero. It's infinite. People are getting a little too giddy on the lines at the store - saw one feller tonight (not me) drop a cool Benjamin on it, then proceed to tell the store clerk he was buying more when he got h...

Jane Bryant Quinn says: (http://www.aarp.org/money/budgeting-saving/info-05-2013/safest-investment-path-for-retirement.html) But by the time you reach an older age and your paycheck stops, you need reliable sources of income to pay your bills. This transition from aggressive to conservative investin...

As the old joke might start:

Will you sleep with me for $600M? If so, ...

Keith

I took the cash. The $2 is in my pocket.

I bet I'll have more than you will (in the Powerball account) on Sunday morning.

Keith

May I pile on? Teach him how to fish. Stay out of advising him what to do now. At best, you might say that he realizes he made a mistake. If he had stayed the course he would now be fully invested. So, the logical thing to do is ...? The behavioral thing needs to be addressed. Mistake 1 was selling....

This is a question I’m curious about. Let’s say for instance you invested 50% in the Total Stock Market index Fund and 50% in the Total Bond Index fund in your 401K or IRA your entire working life. You readjusted your asset allocation every year on your birthday to keep the 50/50 allocation. Now it...

If the estate and trust lawyer brings up managing our investments, he may well end up being fired. If that happens, why not ask the lawyer about his estate planning and his investments? He may need advice from you. Actually, we had a good chat. He is a Rick Ferri fan, and uses the Core Four. Keith

I am in a balanced fund so really don't have to worry about rebalancing. When the market tanks as it did in 2008, those who are in individual stock and bond funds and maintain their AA actually seem to have an advantage because they can buy more of the decreasing asset and sell more of the increasi...

A silly stock-picking contest named "La Bolsa Millonaria" http://www.bolsamillonaria.com.co was organized by my native country's stock market body; 2000 teams of finance students, under a faculty advisor, were playing it. Of course a Boglehead strategy can't be tested in three weeks, but ...

I didn't mean to derail the thread or propose a DFA vs Vanguard contest. My point was that I think it's hard to argue that there's not significantly different risk/return profiles happening in different corners of the market. And if so, why couldn't that differentiation be refined with further stud...

OverTheHill, Wondering what do you make of this [nonsense --admin LadyGeek] ?... DFA Small Value (DFSVX), since inception (1993): Growth of 10K -> $103,681 Vanguard Total Stock (VTSMX), same period: Growth of 10K -> $55,228 Really? Here's what Yahoo Finance shows: http://chart.finance.yahoo.com/z?s...

Jebediah wrote:OverTheHill,

Wondering what do you make of this [nonsense --admin LadyGeek]?...

DFA Small Value (DFSVX), since inception (1993): Growth of 10K -> $103,681

Vanguard Total Stock (VTSMX), same period: Growth of 10K -> $55,228

Let me make a wild guess: DFSVX is riskier than VTSMX?

Keith

The "secret sauce" analogy is good. Choose one: 1. There is no secret sauce 2. There is a secret sauce, but we have 90% of the ingredients - good enough 3. Only Warren Buffet knows the other 10% of the ingredients 4. We figured out the other 10%, but the recipe is too complicated to make a...

If the estate and trust lawyer brings up managing our investments, he may well end up being fired. If that happens, why not ask the lawyer about his estate planning and his investments? He may need advice from you. We'll see. In order to do this I had to tell him my net worth. I suppose a 1% AUM of...

We met at my office to discuss about my disability insurance. Investing and whole life insurance are typical side topic that always seem to come up. Yes, gird your loins! I expect the same thing when we meet tomorrow with our estate planning lawyer to bring our trust up to date. The choices we made...

ruralavalon wrote:Nonsense, its all (except gold) included

Is GLD (the ETF) not included?

Keith

Today I saw a financial advisor for the first time since I became a boglehead just 6 months ago. Before that, I had met with a few of them. As I was listening to his pep talk, I was amazed at the nonsense he was saying. I mean, what he was saying sounded awfully familiar because I had heard the sam...

Thank you all for your responses! Looks to me like this little adventure cost you 1.5% over three trading days. You're making a pretty good case that you should hire an AUM manager. He'd only cost 1% for a whole year! Or: Remind me again why you use low-cost funds? :P Seriously, it's small mistakes...

A couple of comments. First, since retirement involves drawing down, rebalancing can be aided by pulling out funds from the most tax efficient accounts, subject to minimal withdrawals. Except, as pointed out by Nick (Norton750) above, if you are to do such selective withdrawals you should not have ...

I'd love to see a three-dimensional dynamically rotatable presentation of all the stocks listed on the New York Stock Exchange, plotted according to their Fama-French factor loadings. Well, let's see. Something like Ensight http://www.ceisoftware.com/ensight10/what-is-ensight/ can plot 3D data, ani...

Any more comments on charts (vs. material properties and applications)? Well, Yes. Let's start with the observation that all financial charts are lousy. Does anyone have nominations for any good ones? Engineering and simulation (particularly fluid dynamics) have long been at the forefront of visual...

Please see "Scientific Method". Wikipedia is as good a source as any. Form a hypothesis or a theory. Get data to test the theory. If the data validates the theory, good. Example: Low cost passive index funds have better returns for investors than high cost active non-index funds. If the th...

That's what I've decided to do. Downsize my dreams, try to save 50% or more of my income for the next 20+ years while I'm working, and hope that it's enough. If things turn out better than expected then I guess it'll be a nice surprise. I think that's a little out of balance. As a rule of thumb, 1%...

Keith, I am recently retired and am looking to simplify my AA. I am attracted to the simplicity of your AA approach - but I am uncomfortable with one aspect of it. By choosing a Life Strategy fund you have linked your equity and bond holdings. This is good for simplicity and automatic rebalancing. ...

I am a latecomer to this thread. I invest in Total Market funds because I believe they are on the efficient frontier, not because of past performance. In a similar vein, I do not indulge in any kind of market timing, and pay no heed to momentum or reversion to the mean. By investing in Vanguard Life...

That's what I've decided to do. Downsize my dreams, try to save 50% or more of my income for the next 20+ years while I'm working, and hope that it's enough. If things turn out better than expected then I guess it'll be a nice surprise. I think that's a little out of balance. As a rule of thumb, 1%...

Isn't telling young people to load up on equities the exact opposite of what Bodie would recommend? Seems like a major conflict within this little article. From the article: When you're young, you can't be too aggressive when buying mutual funds that invest in stocks. I think this is Jane Bryant Qu...

In the AARP Bulletin, a distillation of advice from Bodie, Pfau, and Bernstein:

http://www.aarp.org/money/budgeting-sav ... ement.html

Keith

TomatoTomahto wrote:Pascal's Wager

Not.

We have thrashed this one before. Pascal's Wager is not useful in making financial decisions, for the probabilities are not simply one or zero.

See: JD Williams, "The Compleat Strategyst".

Keith

Keith, What happens if the market stays low for more than 6 years, which it is quite capable of doing? ... The variable part of our portfolio is above our "floor", the essential income we need to live. I think it is very unlikely the market will go south and stay there for more than a few...

I have elevated mental accounting to be a science: Six years 6/30 = 1/5 = 20% of our assets are in high quality short term bond funds. The rest is in Vanguard LifeStrategy Moderate, which is rebalanced to 60/40 every day. The effective portfolio is about 50/50. Wife is 60, I am 62. I don't care if e...

Leaded glass windows? A good use for lead.

Again, I am drawn to Edward Tufte's books, including "The Visual Display of Quantitative Information". Classics.

Which brings to mind Peter Norvig's classic on the Gettysburg Address in Powerpoint.

http://norvig.com/Gettysburg/

Keith

Mr. Bogle and others have suggested 7% may be an optimistic number when making decisions regarding the markets future and its relationship to saving, investing, etc. IOW, will have to save much more and expect much less over the rest of my working career. Is that 7% primarily a function of dividend...

Go here

https://personal.vanguard.com/us/whatwe ... e/finda529

and click on Texas on the map.

Keith

I would never hang my hat on one indicator, and one thought would be that margin is higher due to the very low interest rate environment we are in. My cab driver Ben told me not to worry about it, for it is a paradigm shift and we are at a new permanently higher plateau of margin use. RM :D Ben has...

Yes, I know.

But, I already hold DFA funds. And, I may continue to hold them at Schwab as a custodian.

But, I may not transfer them in kind to Vanguard as a custodian? No trades intended.

I already have the piece that individual investors are too stupid to understand what DFA does.

Keith

Why would anyone expect that two companies that happen both to be friends to individual investors (which is what the friend/enemy list was about) would necessarily be friends of each other? They are competitors, pure and simple. I would like to hold DFA funds, but cannot do so if Vanguard is the cu...

Mike Piper, in his weekly roundup http://www.obliviousinvestor.com/investing-blog-roundup-friends-and-enemies/ refers to Daniel Solin's list of friends and enemies http://money.usnews.com/money/blogs/On-Retirement/2013/05/09/investing-a-friends-and-enemies-list who says: Vanguard and Dimensional Fun...

boggler wrote:Keith,
This is all based on backtested data, right? How do we know this will hold in the future?

grayfox has give the same reply I would have.

My point was simply that the OP is about risk and return and AA. Thinking about that in the context of the Efficient Frontier helps, I think.

Keith

It is worthwhile to contemplate the efficient frontier graph. (All disclaimers apply.) http://www.lancasterpollard.com/Uploads/Images/newsletters/Efficient-Frontier-Bigger.jpg The vertical axis is rate of return, the horizontal axis is risk, or volatility = beta or standard deviation. The frontier i...

I've learned over the past few weeks that there are two investment topics that people become very passionate about - gold and houses. Rick Ferri I must admit that my first instinct was to find something to critique based on the title of the thread. But then I read the blog and it was mostly benign....

YDNAL wrote:

umfundi wrote:Arithmetic artifacts do not create investment strategies.

Keith, do I have your permission to use this as my signature.

Be my guest!

Keith

This test is assuming the same average arithmetic returns. When talking about arithmetic returns, volatility acts as a drag, lowering the geometric return. If they had the same geometric returns than they would all end up at the same end point as you expected. The volatility harvesting strategy tha...

In theory, if there were really a rebalancing bonus, couldn't you just pick two stocks at random and continually rebalance between them to maintain a 50/50 allocation? When stock A goes down, sell stock B to buy it, and vice versa. If this isn't an effective strategy for free money (and I'm sure it...

I see the value of rebalancing and volatility harvesting in the theoretical example you give. But what is the value in a real world market? It depends. The simulations I did over the decade to 2012 showed it is worth about 0.3% or less per year. That was for systematic investing and rebalancing eve...

Also you did not explain how you came to the conclusion that "average" houses are "supposed" to appreciate at the rate of inflation. There is nothing mysterious about this. A home doesn't pay income and it doesn't grow into two houses over time. Homes are a hard asset. They go u...

I should be so lucky.

Our house is now worth about what we paid for it in 1993, not inflation adjusted.

Welcome to SE Michigan.

Keith

This thread may be locked, but here is an actionable suggestion: You don't know. So, diversify. Most of our retirement savings are in traditional IRAs, so over the past few years I have been concentrating on funding Roths. I have also been funding an HSA but paying medical expenses out of current in...