Search found 192 matches
- Tue Dec 19, 2023 6:57 pm
- Forum: Investing - Theory, News & General
- Topic: Odd reporting of Vanguard Inflation Protected Securities Real Yield
- Replies: 2
- Views: 428
Re: Odd reporting of Vanguard Inflation Protected Securities Real Yield
Thank you very much, Geologist!
- Tue Dec 19, 2023 6:25 pm
- Forum: Investing - Theory, News & General
- Topic: Odd reporting of Vanguard Inflation Protected Securities Real Yield
- Replies: 2
- Views: 428
Odd reporting of Vanguard Inflation Protected Securities Real Yield
For the date 12/14/23 VAIPX (Vanguard Inflation Protected Sec Admiral) reported a real yield of 2.33. For the same date the Daily Treasury Par yield Curve Rate for 7 year TIPS was 1.71. The Average Effective Maturity for VAIPX is 7.1 and its Average Duration is 6.4 so I would expect these real yields to be much closer than 2.33 vs 1.71. This is not a one time event; there is typically a large difference. I understand that VAIPX contains several different TIPSs in the fund and a TIPS is a single bond, but if the maturities match shouldn't the reported real yield be a lot closer than this? Can anyone help me understand this or point me toward the appropriate reading?
- Thu Sep 20, 2018 7:15 pm
- Forum: Investing - Theory, News & General
- Topic: Vanguard MultiFactor fund vs ETF after tax return
- Replies: 6
- Views: 980
Re: Vanguard MultiFactor fund vs ETF after tax return
Thanks all.
I had overlooked the August thread- thanks GammaPoint for the link.
I had overlooked the August thread- thanks GammaPoint for the link.
- Thu Sep 20, 2018 11:43 am
- Forum: Investing - Theory, News & General
- Topic: Vanguard MultiFactor fund vs ETF after tax return
- Replies: 6
- Views: 980
Vanguard MultiFactor fund vs ETF after tax return
I know it is early, but the since-inception returns on these 2 investments on the Vanguard site are strikingly different. When looking at value, small value, high dividend yield, and total stock market returns from the Vanguard mutual fund vs the Vanguard ETF of the same type, there is basically NO difference in return, after tax on distributions return, and after tax on distributions and sale return. For the multifactor ETF, the since inception after tax return is 5.65 and 3.44 on net distributions vs distributions and sales tax, respectively. For after tax returns on the mutual fund, the returns are 2.82 and 1.81, respectively. Jeepers! Is that related to the pairing, unlike prior Vanguard mutual funds and their associated ETF, not being ...
- Wed Apr 11, 2018 7:27 pm
- Forum: Investing - Theory, News & General
- Topic: Unimpressive category averages of "systematic trend" aka "managed futures", multialternatives, market neutral, etc.
- Replies: 107
- Views: 16811
Re: Unimpressive category averages of managed futures, multialternative, market neutral, etc.
Strong support for keeping it simple, not getting tied up in complexity, and not feeling bad about it.
Thanks, Nisi!
Thanks, Nisi!
- Sat Apr 07, 2018 12:34 pm
- Forum: Personal Investments
- Topic: "Vanguard weather"
- Replies: 1
- Views: 890
"Vanguard weather"
Just saw this from Mr Buckley's CEO's Perspective in just received annual report.
"Although volatility can test investor's nerves, we sometimes think of this as "Vanguard weather"-- a time when having a disciplined, low-cost, and long-term approach to investment management serves investors well."
I like this guy more all the time!
"Although volatility can test investor's nerves, we sometimes think of this as "Vanguard weather"-- a time when having a disciplined, low-cost, and long-term approach to investment management serves investors well."
I like this guy more all the time!
- Thu Apr 05, 2018 7:01 pm
- Forum: Investing - Theory, News & General
- Topic: Bill Bernstein, new podcast
- Replies: 56
- Views: 10162
Re: Bill Bernstein, new podcast
I think being number 1 would put it in the top 10.
- Sun Nov 05, 2017 9:33 am
- Forum: Personal Investments
- Topic: Should one use REITs
- Replies: 54
- Views: 23930
Re: Should one use REITs
The paper from Vanguard was https://personal.vanguard.com/pdf/icreecr.pdf I note that the original poster initially referred to a "large cap" fund and my reply was to his later mention of total stock market. I worried that as the REITs live mostly in the mid and small cap he might not have a full market weight in a large cap fund. Despite Vanguard's mid cap holding 7.1% REITs and small cap 11.86%, the difference between total stock market, large cap index, and Index 500 is not that great and wouldn't for me indicate a need for a separate REIT allocation (3.74% total stock market, 2.43% large cap index, and 2.28% Index 500). My fixed allocation to a REIT fund is significantly driven by most of my equity holdings being DFA, which sp...
- Sat Nov 04, 2017 6:58 pm
- Forum: Personal Investments
- Topic: Should one use REITs
- Replies: 54
- Views: 23930
Re: Should one use REITs
Total stock market includes REITs up to their market weight, so you have REITs in the 3 fund portfolio. Vanguard has a paper (I believe) that notes that since most real estate is privately held, the index funds actually underweight REITs; thus direct ownership of REIT funds might bring you closer to actual market balance. Dr Bernstein (and I believe Mr Swedroe) would suggest, though, that now is not a great time to INITIATE an overweight to REITs as valuations are so high.
I own a 5% allocation to international and 5% to domestic REITs, but have had the same (total 10%; used to be all domestic before international was available to me) allocation for years.
If I didn't, I probably would not start one now.
I own a 5% allocation to international and 5% to domestic REITs, but have had the same (total 10%; used to be all domestic before international was available to me) allocation for years.
If I didn't, I probably would not start one now.
- Sat Jul 02, 2016 11:52 am
- Forum: Investing - Theory, News & General
- Topic: A Look at REITs, and a new study; math appendix
- Replies: 3
- Views: 780
Re: A Look at REITs, and a new study; math appendix
Thanks to you both.
- Sat Jul 02, 2016 10:34 am
- Forum: Investing - Theory, News & General
- Topic: A Look at REITs, and a new study; math appendix
- Replies: 3
- Views: 780
A Look at REITs, and a new study; math appendix
The article provided and the discussion are excellent; thank you Larry and all discussants.
I dodn't want to interrupt that excellent thread with a plea to shear me if some ignorance.
The following is from the article:
Assuming real earnings grow about 2% a year, we would need to multiply the CAPE 10 earnings yield by 1.1 [1 + (5 x .02)].
If earnings growth is 2% per year, would the formula for 10 years out not be current earnings times (1 + 0.02)^10 or ~ 1.2. ie can someone help me understand the (5x0.02) multiplier?
(And if livesoft reads this, point me toward a text where I can kearn to fish )
I dodn't want to interrupt that excellent thread with a plea to shear me if some ignorance.
The following is from the article:
Assuming real earnings grow about 2% a year, we would need to multiply the CAPE 10 earnings yield by 1.1 [1 + (5 x .02)].
If earnings growth is 2% per year, would the formula for 10 years out not be current earnings times (1 + 0.02)^10 or ~ 1.2. ie can someone help me understand the (5x0.02) multiplier?
(And if livesoft reads this, point me toward a text where I can kearn to fish )
- Wed May 25, 2016 4:47 pm
- Forum: Investing - Theory, News & General
- Topic: a new look at the size premium
- Replies: 44
- Views: 6314
Re: a new look at the size premium
Thank you, Larry.
Interesting article. Thanks for posting and for the response.
Best regards
Interesting article. Thanks for posting and for the response.
Best regards
- Wed May 25, 2016 12:46 pm
- Forum: Investing - Theory, News & General
- Topic: a new look at the size premium
- Replies: 44
- Views: 6314
Re: a new look at the size premium
Is there confidence that the screens used by DFA are adequate to "control your junk?"
- Thu Feb 04, 2016 11:46 am
- Forum: Investing - Theory, News & General
- Topic: Curious Results on Portfolio Visualizer
- Replies: 4
- Views: 822
Re: Curious Results on Portfolio Visualizer
Thanks Livesoft.
I always loved that Yogi quote, until it was used to apply to something I was doing and now it scares me to death.
I purchased DGS when it first became available, but our plan changed a few years after that and no longer contained a brokerage window, so I switched back to the Vanguard (and later DFA) Emerging Market allocation. I have not, and will not with this move change the total allocation to EM, but you're right in that it will be a new allocation component to small. Unfortunately (for the recent years, fortunately before that) I have also been over-weighted to emerging. And now Yogi is picking at me from the other side.
I always loved that Yogi quote, until it was used to apply to something I was doing and now it scares me to death.
I purchased DGS when it first became available, but our plan changed a few years after that and no longer contained a brokerage window, so I switched back to the Vanguard (and later DFA) Emerging Market allocation. I have not, and will not with this move change the total allocation to EM, but you're right in that it will be a new allocation component to small. Unfortunately (for the recent years, fortunately before that) I have also been over-weighted to emerging. And now Yogi is picking at me from the other side.
- Thu Feb 04, 2016 11:16 am
- Forum: Investing - Theory, News & General
- Topic: Curious Results on Portfolio Visualizer
- Replies: 4
- Views: 822
Re: Curious Results on Portfolio Visualizer
Thanks Lack_ey. I'm sure you're right about my misreading the regression analysis. I was not aware of the region issue, and did not look at confidence intervals. I just input tickers and read (Lazy, I know). I was hoping Portfolio Visualizer would allow me to remain ignorant of the nuts and bolts of regression analysis. I'll look further into the bottom of the page.
- Thu Feb 04, 2016 10:35 am
- Forum: Investing - Theory, News & General
- Topic: Curious Results on Portfolio Visualizer
- Replies: 4
- Views: 822
Curious Results on Portfolio Visualizer
DFA Emerging Market Small Cap recently became available to me on company retirement menu. I have been using the DFA Emerging Market Fund and guessed it might be good to split the EM allocation to gather some size loading. I looked on Morningstar and saw a median market cap for the EM fund at 13,134 million dollars, and for the small EM fund at 736 million; the small cap EM looked like a reasonable idea for size loading. Then I went to Portfolio Visualizer and, matching origination dates (04/01/1998), saw there was trivial difference in Fama-French 3-Factor size loadings. Wondering if there was a recent change that would cause divergence between current Morningstar data and a longer series on Portfolio Visualizer I looked at the most recentl...
- Sun Nov 22, 2015 2:47 pm
- Forum: Personal Investments
- Topic: The future for TIPS (VIPSX)
- Replies: 22
- Views: 5011
Re: The future for TIPS (VIPSX)
Thanks, DBR and ogd.
I was totally confused. I thought the idea was generation of the real coupon as the income guarantee, a permanent annuity.
I get it now. It is a date specific annuity, with a projected expiration date based based on withdrawal schedule, with proceeds being total returns. My confusion was thinking it a new idea rather than just an alternative allocation to the same issue of decummulation.
I misread the paper as the VTL (Virtual TIPS Ladder) being level one, rather than level 2. On re-reading I see it clearly as level 2 and analagous to "a fixed time annuity."
Thanks for your responses, though I will pass on the offer of the VIPSX wrapper from OGD Management Service.
I was totally confused. I thought the idea was generation of the real coupon as the income guarantee, a permanent annuity.
I get it now. It is a date specific annuity, with a projected expiration date based based on withdrawal schedule, with proceeds being total returns. My confusion was thinking it a new idea rather than just an alternative allocation to the same issue of decummulation.
I misread the paper as the VTL (Virtual TIPS Ladder) being level one, rather than level 2. On re-reading I see it clearly as level 2 and analagous to "a fixed time annuity."
Thanks for your responses, though I will pass on the offer of the VIPSX wrapper from OGD Management Service.
- Sun Nov 22, 2015 1:54 pm
- Forum: Personal Investments
- Topic: The future for TIPS (VIPSX)
- Replies: 22
- Views: 5011
Re: The future for TIPS (VIPSX)
I like Merton's idea of a virtual TIPS ladder as I am intimidated by the complexity of building, following, then bequeathing a multirung ladder of individual TIPS. But a reliable stream of retirement income seems at risk if events like those applying at Vanguard currently (no dividend payout for VIPSX) recur. Sure looks like a benefit of an actual ladder to me.
- Sat Feb 28, 2015 8:40 pm
- Forum: Investing - Theory, News & General
- Topic: "2015 Annual Letter by Scott Burns and Kennon Grose"
- Replies: 8
- Views: 1827
Re: "2015 Annual Letter by Scott Burns and Kennon Grose"
Or, said more simply, "Thanks for the post, Taylor."
- Sat Feb 28, 2015 8:38 pm
- Forum: Investing - Theory, News & General
- Topic: "2015 Annual Letter by Scott Burns and Kennon Grose"
- Replies: 8
- Views: 1827
Re: "2015 Annual Letter by Scott Burns and Kennon Grose"
That is not meant to be snark toward a brilliant teacher from whom we have all learned a lot. Dr Bernstein has said himself of tactical allocation that sometimes even doing what seems right is wrong, but as long as you are right most of the time, you win. What I have to learn and keep being reminded of is that I'm not as smart as Dr Bernstein, and I have to listen and remember the admonitions to diversify and stay the course.
- Sat Feb 28, 2015 8:32 pm
- Forum: Investing - Theory, News & General
- Topic: "2015 Annual Letter by Scott Burns and Kennon Grose"
- Replies: 8
- Views: 1827
Re: "2015 Annual Letter by Scott Burns and Kennon Grose"
Speaking of being caught out by the REITS point: Expected REIT Returns? Postby Bill Bernstein » Mon May 06, 2013 9:10 pm Hi all: I very rarely post a new topic, but I do feel compelled to comment on REITs. I’ve seen more than a few posters remark favorably on the high realized returns of REITS, along with the “fat” dividend yield, the implication being that this can be expected to continue. If I’ve learned anything from Jack Bogle, it’s the fundamental equation of expected return (ER): ER = dividend yield + dividend/earnings growth + speculative return. The yield is easy . . . around 3%. Dividend/earnings growth is a tad harder, but easy enough to derive from the NAREIT database; over the past 41 years, dividends have grown at 2.6% pa; unfo...
- Sat May 03, 2014 3:29 pm
- Forum: Personal Investments
- Topic: Re-investing Dividends During Retirement
- Replies: 3
- Views: 840
Re-investing Dividends During Retirement
In a a recent response on a thread on withdrawing principal from bond funds, pkcrafter said the following: I leaned my withdrawal strategy from Taylor. Withdraw late in the year, Nov or Dec. so withholding time is minimal. I reinvest all divs and interest. If you take them you lose control on withdrawals. For instance, in a market decline you don't want dividends--you want to reinvest at the lower price. Paul and Taylor are two maximally level headed guys, but it would seem to me that reinvesting dividends and capital gains would complicate tax loss harvesting and increase the risk of generating a wash sale in a taxable account. The opposite approach of taking dividends and capital gains in cash would seem to ease re-balancing. In reviewing...
- Thu Apr 17, 2014 9:04 pm
- Forum: Investing - Theory, News & General
- Topic: How is bond average maturity measured/reported
- Replies: 4
- Views: 639
Re: How is bond average maturity measured/reported
Jeepers!
Thanks ,David.
So basically the call provisions of the muni bond then give it adverse properties of lengthening effective maturity while your principle value is getting crushed by increasing interest rates.
And the ~1.4 year lengthening of maturity you thought you were accepting for an extra percent return can then in to years of extended maturity in a rising interest environment?
I feel violated.
Thanks ,David.
So basically the call provisions of the muni bond then give it adverse properties of lengthening effective maturity while your principle value is getting crushed by increasing interest rates.
And the ~1.4 year lengthening of maturity you thought you were accepting for an extra percent return can then in to years of extended maturity in a rising interest environment?
I feel violated.
- Thu Apr 17, 2014 5:35 pm
- Forum: Investing - Theory, News & General
- Topic: How is bond average maturity measured/reported
- Replies: 4
- Views: 639
Re: How is bond average maturity measured/reported
Thank you Landy.
When one looks at the average maturity of the long term fund, it looks like a trivial step up from the intermediate fund. The difference in yields easily meets the criteria usually put forward for adding term. I was using it in place of the intermediate fund, but it appears to be holding some REALLY LONG positions that are completely hidden by Vanguard's reporting.
When one looks at the average maturity of the long term fund, it looks like a trivial step up from the intermediate fund. The difference in yields easily meets the criteria usually put forward for adding term. I was using it in place of the intermediate fund, but it appears to be holding some REALLY LONG positions that are completely hidden by Vanguard's reporting.
- Thu Apr 17, 2014 9:24 am
- Forum: Investing - Theory, News & General
- Topic: How is bond average maturity measured/reported
- Replies: 4
- Views: 639
How is bond average maturity measured/reported
The recent thread on whither total bond fund had an interesting comparison of Vanguard reported vs Morningstar reported bond maturities. In looking at other bond funds I was puzzled by this result for Vanguard Long Term Tax Exempt: Morningstar: 1 to 3 years 2.89 3 to 5 Years 1.85 5 to 7 Years 4.88 7 to 10 Years 8.28 10 to 15 Years 18.29 15 to 20 Years 22.24 20 to 30 Years 37.05 Over 30 Years 4.52 "Average Effective Maturity" 8.3 years Vanguard: Under 1 Year 7.7% 1 - 3 Years 8.4% 3 - 5 Years 15.8% 5 - 10 Years 60.0% 10 - 20 Years 5.0% 20 - 30 Years 2.7% Over 30 Years 0.4% "Average maturity" 6.1 years Questions: 1) How can 3.1% bonds with maturity over 20 years (Vanguard) be reconciled with 41.57% over 20 years (Morningsta...
- Thu Apr 10, 2014 6:21 am
- Forum: Personal Investments
- Topic: Is 0.5% too much for iShares High Yield Bonds (HYG)?
- Replies: 6
- Views: 1703
Re: Is 0.5% too much for iShares High Yield Bonds (HYG)?
You might search for an opinion from Rick Ferri on the site about bond etfs. I believe he does not like them in general because of a structural problem concerning the potential behavior of spreads in times of market stress.
- Tue Mar 25, 2014 6:47 am
- Forum: Personal Consumer Issues
- Topic: BBQ Road Trip
- Replies: 50
- Views: 6361
Re: BBQ Road Trip
The one I'd recommend in Wilson NC is Parkers.
- Mon Nov 18, 2013 11:23 am
- Forum: Investing - Theory, News & General
- Topic: REITs worth the trouble?
- Replies: 23
- Views: 5536
Re: REITs worth the trouble?
I should note that Malkiel has really gone off the efficient market rails on China, and that Swensen is ill, was (is?) on leave of absence due to cancer. I don't know that either has updated their books in light of the 2008 crisis. Re: Vanguard REIT Index valuation? (Postby abuss368 » Sun May 06, 2012 5:07 pm) I was at a meeting with David Swensen a couple of weeks ago and he again reiterated his high recommendation for REITs. I believe this would indicate that David Swenson's updated, post 2008 crisis opinion is unchanged. I would further suggest that, while Swenson is clearly an institutional type investor, his entire focus in "Unconventional Success" is on the individual investor. He makes special emphasis of the ways in which...
- Wed Nov 13, 2013 12:02 am
- Forum: Investing - Theory, News & General
- Topic: Expected Returns by Antti Ilmanen
- Replies: 55
- Views: 9299
Re: Expected Returns by Antti Ilmanen
I think he managed money for a small mutual fund company called Norway; not sure what the historical returns were, but I believe the fund is still in operation.
- Sun Nov 10, 2013 11:19 am
- Forum: Investing - Theory, News & General
- Topic: John Bogle's "Philosophical Disagreement" with Eugene Fama
- Replies: 104
- Views: 13446
Re: John Bogle's "Philosophical Disagreement" with Eugene Fa
I did notice how vehemently Mr. Bogle was opposed to being influenced by Mr. Fama's work. I am wondering if it goes beyond just the EMH philosophy? Guess we will never know, but does not sound like they are good "friends"? I have seen Mr. Bogle numerous times not agree with other opinions, but he seemed extra irrate about this one. I could (and probably am) completely wrong about this, but just saw his reactiong quite interesting. Good luck. Jack Bogle wrote: Perhaps to my shame, I didn't even learn of Eugene Fama's "efficient market hypothesis" (EMH) until a decade after my creation of the 500 Index Fund. Rather, I was inspired by another Nobel laureate, economist Paul Samuelson, who in his 1974 essay in the Journal of...
- Sat Sep 21, 2013 4:02 pm
- Forum: Investing - Theory, News & General
- Topic: Vanguard International Value YTD
- Replies: 4
- Views: 1119
Re: Vanguard International Value YTD
It's a stock pickers market.
It is not just that (active) value is doing better; International growth is doing better, too (up 15.67% vs ~ 10.5% for the blend index. Look too at Capital Opportunity, Primecap Core, and Selected Value vs their nearest index competitor. Every now and then things line up to make Petrocelli look brilliant.
(of course, Petrocelli is brilliant).
It is not just that (active) value is doing better; International growth is doing better, too (up 15.67% vs ~ 10.5% for the blend index. Look too at Capital Opportunity, Primecap Core, and Selected Value vs their nearest index competitor. Every now and then things line up to make Petrocelli look brilliant.
(of course, Petrocelli is brilliant).
- Sat Aug 31, 2013 12:08 pm
- Forum: Personal Investments
- Topic: Retirement Income Strategy
- Replies: 22
- Views: 3932
Re: Retirement Income Strategy
The Vanguard personal investors site allows you to compare funds from other fund families to related Vanguard funds. This might be helpful, though be cautious not to look as much at recent returns (your advisor will have been very careful to screen for particularly well performing funds over recent time intervals to influence your choice) as at characteristics that suggest future returns and current risks. For instance, the short term muni fund from Wells Fargo looks superior to the similar Vanguard from a return basis, but carries more risk with 50 % of holdings being A rated or lower, while 25 % in the case of the Vanguard short term muni.
- Fri Aug 30, 2013 9:35 am
- Forum: Personal Consumer Issues
- Topic: "Why Wal-Mart Will Never Pay Like Costco" (Bloomberg)
- Replies: 21
- Views: 3175
Re: "Why Wal-Mart Will Never Pay Like Costco" (Bloomberg)
I enjoyed this; thanks.
She had a follow up piece reporting on the fact that a significant fraction of people you see working at Costco are not Costco employees, but contracted labor. They are part time, ~ 11.00/hour, and with no benefits. I guess it's easier to feel good about how you treat your employees when you keep the employees you are mistreating off the books.
She had a follow up piece reporting on the fact that a significant fraction of people you see working at Costco are not Costco employees, but contracted labor. They are part time, ~ 11.00/hour, and with no benefits. I guess it's easier to feel good about how you treat your employees when you keep the employees you are mistreating off the books.
- Sun Aug 11, 2013 11:06 am
- Forum: Investing - Theory, News & General
- Topic: John Hussman is almost a Boglehead
- Replies: 8
- Views: 2259
- Sun Aug 11, 2013 11:04 am
- Forum: Investing - Theory, News & General
- Topic: John Hussman is almost a Boglehead
- Replies: 8
- Views: 2259
John Hussman is almost a Boglehead
From tomorrow's Market Comment: "Investors adhering to a buy-and-hold strategy, diversified across asset classes, fully recognizing the potential depth of intervening declines, and committed to remaining passive over the course of the market cycle, are encouraged to adhere to that discipline. If you question your commitment to stay with a buy-and-hold through a difficult period, remember that the best point to shift from one studied long-term discipline to another is when the existing discipline has performed well relative to the alternative. Too many investors abandon studied disciplines when they encounter a period of difficulty, chasing ones that have recently performed well. Unless one also studies that switching strategy and demon...
- Wed Jul 24, 2013 6:53 pm
- Forum: Investing - Theory, News & General
- Topic: Kitces Article on SPIAs using Retirement Plan Assets
- Replies: 6
- Views: 1116
Re: Kitces Article on SPIAs using Retirement Plan Assets
Thank you for posting this. Having just scanned so far, my concerns are two:
In one conceptual framework, the inflation adjusted spia is not declining in value with age; the yearly payout still reflects a virtual fixed allocation. ie the $500,000.00 "fixed" in spia is still "worth" $500,000.00 based on it's yearly income, not $300,000.00 as in Kitces' example.
It is very dependent on return assumptions, historical US assumptions. What if the "new normal" produced Japan-type returns, or W Bernstein type returns, for the next 20-30 years (of great significance to Bogleheads above age 40-50). The attraction of SPIAs to me is the safety; I am not dependent on return variations that are unknowable.
In one conceptual framework, the inflation adjusted spia is not declining in value with age; the yearly payout still reflects a virtual fixed allocation. ie the $500,000.00 "fixed" in spia is still "worth" $500,000.00 based on it's yearly income, not $300,000.00 as in Kitces' example.
It is very dependent on return assumptions, historical US assumptions. What if the "new normal" produced Japan-type returns, or W Bernstein type returns, for the next 20-30 years (of great significance to Bogleheads above age 40-50). The attraction of SPIAs to me is the safety; I am not dependent on return variations that are unknowable.
- Fri Nov 09, 2012 7:18 pm
- Forum: Investing - Theory, News & General
- Topic: FAJ: An Interview with Eugene Fama
- Replies: 10
- Views: 1540
Re: FAJ: An Interview with Eugene Fama
Thank you. Great interview. It is really special to be able to "listen in" on a conversation between two of the giants of finance.
- Sat Oct 27, 2012 10:07 am
- Forum: Personal Investments
- Topic: Vanguard Long-term vs. Interm-term tax exempt
- Replies: 14
- Views: 3230
Re: Vanguard Long-term vs. Interm-term tax exempt
OOPS! I believe what is going on is that the effective duration as computed by Vanguard includes the probability that the bond will be called. Thus, a 30-year bond issued in 2004 but callable after 10 years may have an effective duration of only two years now because the low interest rates make the call very likely. David, Is the corollary to that the possibility that if interest rates rise significantly, the bonds will NOT be called and the bond fund I thought had a duration of 6 years actually has a duration of 18 years. If that's the case, the potential added cost of the 0.5% yield over Intermediates is not 1% per percent increase in nominal interest rates, but 13%! Have I underestimated how large a problem this negative convexity could ...
- Fri Oct 26, 2012 2:09 am
- Forum: Personal Investments
- Topic: Vanguard Long-term vs. Interm-term tax exempt
- Replies: 14
- Views: 3230
Re: Vanguard Long-term vs. Interm-term tax exempt
Doesn't the long term seem like the better deal. If you have decided to go out 4.9 in duration, for only one more year you gain 0.58%. It is the steepest point on the curve comparing short to limited to intermediate to long, and seems to meet Larry Swedroe's guideline of yield per year of maturity that makes it worthwhile to extend.
- Mon Aug 27, 2012 5:34 pm
- Forum: Personal Investments
- Topic: Short Term Bond Fund vs Prime Money Market
- Replies: 30
- Views: 7811
Re: Short Term Bond Fund vs Prime Money Market
Glad I wasn't using Short Term Investment Grade as a "cash" account in 2008:
You want your rainy day money to be stable, because it could rain on 12/7. Livesoft was dead on:
S-T Investment-Grade Inv
Fund Inception Date 10/29/1982
High High Date Low Low Date
$10.81 01/22/2008 $9.57 12/08/2008
You want your rainy day money to be stable, because it could rain on 12/7. Livesoft was dead on:
If you are at all worried about interest rate risk, do not buy a bond fund.
Once you stop worrying about interest rate risk, then you can consider a bond fund.
- Tue Aug 21, 2012 1:19 pm
- Forum: Investing - Theory, News & General
- Topic: Index or active? It's your portfolio return that matters.
- Replies: 21
- Views: 3367
Re: Index or active? It's your portfolio return that matters
Thanks Rick. I appreciate your analysis. The database you are using is new to me and I believe puts more rigor into the analysis than previously. Analyses I have seen before typically excluded "dead" funds and suggested the over-performance of index over active would have been even more apparent had the underperforming funds been included. This approach of including them in their renamed and merged forms is an improvement; nice that it tells the same story.
- Tue Aug 21, 2012 11:38 am
- Forum: Investing - Theory, News & General
- Topic: Bogle includes corporate bonds in his portfolio
- Replies: 70
- Views: 12563
Re: Bogle includes corporate bonds in his portfolio
I agree that on this particular issue you are probably right about Dr Bernstein. But I believe such a stand would be against a previously stated principle of the benefit of adding a less correlated, equally yielding asset to a portfolio; when you consider rebalancing, the combination is a winner.Be it far from me to speak for William Bernstein, but I doubt very much that he would agree with your conclusion regarding junk bonds and their beneficial effects.
Regarding the 90% equity decline; I'm afraid I may be in plan B by then.
- Tue Aug 21, 2012 6:48 am
- Forum: Investing - Theory, News & General
- Topic: Bogle includes corporate bonds in his portfolio
- Replies: 70
- Views: 12563
Re: Bogle includes corporate bonds in his portfolio
Unfortunately, the risk of corporate bonds and their strong correlation with equities show up at the wrong time and do not provide liquidity just when one needs it. There were significant declines in corporates, even in short term ones during the 2008-09 stock market crash. There is nothing stopping you from taking on risk in the bond portion of your portfolio, but in doing so you will sacrifice some liquidity, and your bonds will have a higher correlation with your equities. This additional risk in your bonds will probably show up at the wrong time, and you will suffer significant declines right along with your equity investments. But is a reasonable synthesis that you can have your cake and eat it too? A 50/50 portfolio requires only 25%...
- Sun Aug 19, 2012 12:31 am
- Forum: Personal Investments
- Topic: Total bond vs Total Intermediate bond fund
- Replies: 19
- Views: 6264
Re: Total bond vs Total Intermediate bond fund
Vanguard wrote: Distribution by maturity (% of fund) as of 01/31/2012 Total Bond Mkt Index Adm Under 1 Year 3.5% 1 - 3 Years 23.8% 3 - 5 Years 28.4% 5 - 10 Years 30.1% 10 - 20 Years 4.0% 20 - 30 Years 9.9% Over 30 Years 0.3% Total 100.0% Inter-Term Bond Index Adm Under 1 Year 0.2% 1 - 3 Years 0.2% 3 - 5 Years 1.4% 5 - 10 Years 98.1% <-- Notice this! 10 - 20 Years 0.1% 20 - 30 Years 0.0% Over 30 Years 0.0% Total 100.0 Does anyone worry about the rather poor diversification of Intermediate Bond Fund re interest rate risk. My understanding was that part of the safety of the fund was that, if interest rates go up, you will be investing in higher coupon bonds as the individual bonds within your fund mature. If interest rates go up 5% over 4 yea...
- Thu Jun 14, 2012 8:15 pm
- Forum: Personal Investments
- Topic: Bond Allocation
- Replies: 3
- Views: 763
Re: Bond Allocation
With current rates your option three of increasing muni holdings seems to me to make the most sense. Holding Total Bond Index in tax advantages space with a 1.87% SEC yield when one could hold Intermediate Term (or even Long Term) Tax exempt in taxable with a tax equivalent yield of 2.9 to 3.7% seems to me to be passing on a lot of yield. Is the 70% AAA of the former (with 10% B rated) really worth giving up 1 to 1.8% yearly to a muni fund with only 3-7% of B rated munis? In the lowest 7 figure portfolio with a 35% bond allocation, that would provide enough added return to buy a really good watch every year, or 10 Mercedes sedans over a 30 year investing career. That said, I personally would not surpass 50% of a bond allocation into munis i...
- Sun Jun 03, 2012 11:35 am
- Forum: Investing - Theory, News & General
- Topic: Rebalancing into Poverty
- Replies: 211
- Views: 17374
Re: Rebalancing into Poverty
Cut-Throat is starting to win me over. The view that he proposes that NOT rebalancing into an equity decline is in fact choosing to take that decline disproportionately from the equity side is clear. Where he got me, though was in what the resulting decline does to relative expectations for future returns. Assuming one has set one's initial allocation appropriately based on expected returns and risks, a 50% decline followed by another will present an enticing PE10 and Gordon equation result. To not rebalance then, absorb the totality of the loss from stocks, and not take advantage of markedly increased expected returns (equivalent to selling predominately from stocks in the face of a market decline) seems to fly in the face of our usual bel...
- Sat Jun 02, 2012 5:08 pm
- Forum: Forum Issues and Administration
- Topic: I can't connect to bogleheads.org
- Replies: 46
- Views: 8614
Re: I can't connect to bogleheads.org
To mingstar/Larry and Alex,
Everything is working great for me now. No problems viewing the site, and sign in was easy as well.
Thank you so much for your efforts.
Everything is working great for me now. No problems viewing the site, and sign in was easy as well.
Thank you so much for your efforts.
- Sat May 26, 2012 10:42 am
- Forum: Forum Issues and Administration
- Topic: I can't connect to bogleheads.org
- Replies: 46
- Views: 8614
Re: I can't connect to bogleheads.org
Will try ninjacloak.
Thanks, Toons.
Thanks, Toons.
- Sat May 26, 2012 10:07 am
- Forum: Forum Issues and Administration
- Topic: I can't connect to bogleheads.org
- Replies: 46
- Views: 8614
Re: I can't connect to bogleheads.org
I'm locked out also. None of my home computers can log on, though I can still get in from work ( but not much time to read the blog there).
I'll miss you guys (and will try to get back on periodically in hopes the problem is resolved).
Good thing they didn't take out Nisi or Livesoft (yet).
I'll miss you guys (and will try to get back on periodically in hopes the problem is resolved).
Good thing they didn't take out Nisi or Livesoft (yet).
- Sun May 13, 2012 11:54 am
- Forum: Investing - Theory, News & General
- Topic: Why or why not TIPS
- Replies: 11
- Views: 2405
Re: Why or why not TIPS
To extend this question to "Why not TIPS now?" , I would add the following: L. Swedroe "Shifting TIPS Allocation:" Real Yield.............% of bonds in TIPS < 1.5%........................ 0% 1.5% – 2%..................... 0 – 25% 2.0% – 2.5%................. 25 – 50% 2.5% – 3.0%................. 50 – 75% > 3.0% .......................75 – 100% Modification of same by TFB: I modified Mr. Swedroe’s strategy table and came up with my own. Basically I’m shifting more slowly towards TIPS than what Mr. Swedroe suggested because I “require” or “demand” higher yields. Here’s my plan: Real Yield.................... % of bonds in TIPS < 2.0%.............................. 0% N/A Not interested in TIPS 2.0% – 2.5%..... ................