Search found 1297 matches

by steve r
Sun Mar 03, 2024 4:44 pm
Forum: Personal Investments
Topic: Avge or VT?
Replies: 23
Views: 2109

Re: Avge or VT?

.... My problem is that whenever I try to use multiple funds I end up messing with the allocation or changing my mind about which funds to use, so I try to take advantage of one-fund solutions to prevent myself from messing up. I get this. Me too. I bought AVGE at the right time and got very lucky (I mean literally I sold a mutual fund, market gapped down the next morning when I bought AVGE and spiked up for the day. I end up selling it a month or so later. Also at the right time in hindsight. Also luck. Not at all for any timing reason but because my gut instinct is total market. So, you need to sort of know what you believe and do not believe. If you believe TSM, then VT or Fidelity. If you believe otherwise, AVGE. Both are good to not t...
by steve r
Mon Feb 26, 2024 6:39 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5215
Views: 830069

Re: International (Non-US) versus US Equities (The "Arguments")

watchnerd wrote: Mon Feb 26, 2024 9:08 am
I you hold global market cap, you're always underperforming something.

It's behaviorally great.
This is the quote of the day. Of course, you are always outperforming something as well. :wink:
by steve r
Sat Feb 24, 2024 3:35 pm
Forum: Investing - Theory, News & General
Topic: Bill Sharpe's preferred portfolio
Replies: 681
Views: 156861

Re: Bill Sharpe's preferred portfolio

Free Float and the Preferred Portfolio. I do not get it. Reading my old post, I once did. I suspect there is a flaw in my logic. For simplicity, assume ONLY two companies (A & B) with a known value of $100. We would want to own them equally, 50/50. Now assume all of company A is floated, but half of company B is NOT. The value of company's B floated shares is $50 (with the value of the non-floated portion being $50) and an efficient market would presumably recognize this. The floated CAP weight values is now $150 Now, based on Sharpe, the most efficient holding of the companies is 67% A and 33% B (based on floating shares) I am not at all sure why the 67/33 or for that matter the 50 / 50 portfolio would be preferred over the other. I th...
by steve r
Sat Feb 24, 2024 3:26 pm
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

StillGoing wrote: Sat Feb 24, 2024 4:33 am
I am fairly convinced (with admittedly, only partial evidence) that the answer to the question McQ has posed in this thread, i.e., "Can you do better than BND?" is "sometimes yes and sometimes no", but that predicting at any given time precisely what will do better is probably not possible.

cheers
StillGoing
+1 Great comment.

But I suspect even this statement will not be universally agreed with. :wink:
by steve r
Fri Feb 23, 2024 4:13 pm
Forum: Investing - Theory, News & General
Topic: Bill Sharpe's preferred portfolio
Replies: 681
Views: 156861

Re: Bill Sharpe's preferred portfolio

djm2001 wrote: Fri Feb 23, 2024 2:49 pm
steve r wrote: Fri Feb 23, 2024 2:48 pm This study, cited by Scott Cederburgs paper discussed on BH's earlier, pegs U.S. market cap weight at 42.5 percent of global equities.

That seems at odds with my understanding and several comments up thread. Does anyone understand how the differences can be this vast?

https://www.sifma.org/wp-content/upload ... s-2Q23.pdf


THANKS.
Float adjustment.
Thanks. And I see this thread had a discussion on this previously.
by steve r
Fri Feb 23, 2024 4:11 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5215
Views: 830069

Re: International (Non-US) versus US Equities (The "Arguments")

What is the global market cap weight of U.S. equities? For us MCW this is important. Answers vary. But SIFMA has it at 42 percent. (?) https://www.sifma.org/wp-content/uploads/2023/04/SIFMA-Research-Quarterly-Equities-2Q23.pdf (this is from a footnote in Cederburg's paper) VT has it at 60 percent U.S. Anyone know the reason for the vast differences. It's been mentioned that Vanguard uses float-adjusted indexes. Might want to check on that. Thanks. I have my homework to do. But this seems to be it. I wonder what the impact of global equities having so many non-floating shares relative to the U.S. mean for equity performances. I mean MCW of global equities is cut by 40 percent! (and the U.S. has some non-floating shares for executives and th...
by steve r
Fri Feb 23, 2024 2:48 pm
Forum: Investing - Theory, News & General
Topic: Bill Sharpe's preferred portfolio
Replies: 681
Views: 156861

Re: Bill Sharpe's preferred portfolio

This study, cited by Scott Cederburgs paper discussed on BH's earlier, pegs U.S. market cap weight at 42.5 percent of global equities.

That seems at odds with my understanding and several comments up thread. Does anyone understand how the differences can be this vast?

https://www.sifma.org/wp-content/upload ... s-2Q23.pdf


THANKS.
by steve r
Fri Feb 23, 2024 2:40 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5215
Views: 830069

Re: International (Non-US) versus US Equities (The "Arguments")

What is the global market cap weight of U.S. equities? For us MCW this is important.

Answers vary. But SIFMA has it at 42 percent. (?)https://www.sifma.org/wp-content/upload ... s-2Q23.pdf (this is from a footnote in Cederburg's paper) VT has it at 60 percent U.S.

Anyone know the reason for the vast differences.
by steve r
Fri Feb 23, 2024 7:13 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5215
Views: 830069

Re: International (Non-US) versus US Equities (The "Arguments")

Or you could look at the longer term data of 80 years which shows similar returns, only sometimes in those micro periods US does poorly and exUS does well and vice versa This is simply not true. US equities have outperformed non-US equities by 2.7 percentage points annualized in the post-WWII period (roughly 80 years). Compounding that 2.7% annualized difference over 80 years makes a massive difference. It’s anything but “similar.” See page 22 of the recent Goldman Sachs report. https://privatewealth.goldmansachs.com/outlook/2024-isg-outlook.pdf Unless you invested in the immediate post WW2 or WW1 period that premium is completely gone. The last decade may be a new period of premium, or just given back like Japan. We don’t know. The vast m...
by steve r
Wed Feb 21, 2024 6:07 pm
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

This is true, of course. But it is hard to make up for a 20+ percent decline in bond prices when yields are 4 percent. If rates remain the same going forward (at 4 percent) it will take 5+ years to recover. But yes, bonds are a better buy than when yields were much lower. But that of course is not the right way to look at it, i.e., recovery from, because there is nothing you are recovery from. When you bought a 5 year duration bond fund yielding 1% at that time, you were clearly planning on getting 1% return on it over 5 years, there is no false advertising there at all. Current bond yields are the best predictor of future returns. Therefore, when rates went from 1% to 4%, you are still going to get the same, the 15% drop in price is compe...
by steve r
Wed Feb 21, 2024 3:13 pm
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

Bogleheads are an elite group of investors with far more knowledge than the average investor. And yet, the reaction to bond fund performance in 2022 is evidence of a real lack of knowledge of the basics. This can lead to behavioral errors when confronted with a challenging market. In this case, the market of 2022 was pretty normal and to be expected. It's easy to put together a 3-fund portfolio after reading a book or two. It's much more difficult to go beyond superficial knowledge and avoid behavioral errors after the portfolio is set up. So yes, while many Bogleheads can do this, most investors are not prepared intellectually or behaviorally to self-manage a portfolio. Pretty ironic that so many otherwise informed people believe rising r...
by steve r
Wed Feb 21, 2024 2:24 pm
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

edge wrote: Wed Feb 21, 2024 11:36 am There are multiple benefits you are missing:

- portfolio efficiency w/ better asset correlation than long bonds (of any kind)
- ability to reallocate or drawdown without worrying about extreme volatility

Both of these are offset by purchase limitations so the key is to start early and max it every year.

I am not sure what you are saying here.

Simba data has annual correlation rates with any asset in Analyze Series tab.

LTT, ITT, TIPS have considerably lower correlation with total stock market than TIPS. TIPs correlation is 0.31 with U.S. and .33 with International stocks. The others are near zero (positive or negative).

Even in 2022, with high inflation, TIPs did worse than ITT.
by steve r
Mon Feb 19, 2024 4:47 pm
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

... This thread uses SD of annual returns as the risk measure. That only makes sense for long-term analyses to the extent that 1y return volatility translates to 10y, 20y, or 30y return volatility. The analyses I've seen indicate that there is a relationship between short-term and long-term volatility for risky assets , but it's far from perfect. Of course the long-term real volatility of a TIPS held to maturity is as close to 0 as we can get; i.e., we know the long-term real return with high certainty. I could care less about the monthly or annual volatility of my 2047 TIPS. I bought them to deliver a known amount of real income in 2047 (and to a lesser extent to contribute to real income in earlier years from the coupons). This is my ris...
by steve r
Mon Feb 19, 2024 4:39 pm
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

So, what I am hoping to get out of this thread is which bond fund is the best product for managing an overall portfolio? Is it BND? My money is literally on ITT. That is a different question than which product is best for LMP -- which is clearly individually owned TIPs (or iBonds). My approach to this is to view the bond portfolio as not met by a single fund. We can determine what average duration we want at a given point in the lifecycle, then using a mix of bond funds meet that target, giving us flexibility. The target duration and credit quality can be same as ITT, although met by a combination of long, short, intermediate bonds, and even t-bills, of both nominal and TIPS. For instance, 25% LTT, 50% STIPS, and 25% T-Bills can provide a ...
by steve r
Mon Feb 19, 2024 7:48 am
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

... This thread uses SD of annual returns as the risk measure. That only makes sense for long-term analyses to the extent that 1y return volatility translates to 10y, 20y, or 30y return volatility. The analyses I've seen indicate that there is a relationship between short-term and long-term volatility for risky assets , but it's far from perfect. Of course the long-term real volatility of a TIPS held to maturity is as close to 0 as we can get; i.e., we know the long-term real return with high certainty. I could care less about the monthly or annual volatility of my 2047 TIPS. I bought them to deliver a known amount of real income in 2047 (and to a lesser extent to contribute to real income in earlier years from the coupons). This is my ris...
by steve r
Sun Feb 18, 2024 12:18 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5215
Views: 830069

Re: International (Non-US) versus US Equities (The "Arguments")

In my opinion, and others may view this differently of course, if I were to invest at global market cap weight that means I would be betting 40% of my portfolio against America. I’m reminded of what Warren Buffet said to his shareholders in the 2022 Berkshire Hathaway Annual Report (page 9): “At Berkshire we hope and expect to pay much more in taxes during the next decade. We owe the country no less: America’s dynamism has made a huge contribution to whatever success Berkshire has achieved—a contribution Berkshire will always need. We count on the American Tailwind and, though it has been becalmed from time to time, its propelling force has always returned. I have been investing for 80 years—more than one-third of our country’s lifetime. D...
by steve r
Sun Feb 18, 2024 11:21 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5215
Views: 830069

Re: International (Non-US) versus US Equities (The "Arguments")

Has anybody adjusted their portfolio based on arguments, one way or the other, in this thread? I'm genuinely curious if this discussion has moved the needle for anybody. There is a benefit even if you do not change your allocation. By publicly arguing your position, you are entrenching your conviction which you will need whenever your approach starts underperforming. Goes for both sides. Even if it turns out you are wrong, it is better to have utter conviction regardless of facts (as long as it is directionally not wrong). Helps stay the course which is lot more important. Pound it in as Munger says. +1 Good stuff. But to answer Joe's question, yes. Somewhat. I am not sure if it is this thread specifically, but I used to think of internati...
by steve r
Sat Feb 17, 2024 1:00 pm
Forum: Personal Investments
Topic: Fidelity Zero Funds
Replies: 64
Views: 6074

Re: Fidelity Zero Funds

As pointed out by others, one way to play this is to maximize use of FZILX (international) where the expense ratio SAVINGS is greatest.

For me, I have a two fund portfolio in our Roths with FZILX and ITT. And a two fund work retirement account with US and a total bond fund. I adjust bonds to get domestic equity/international to taste (which for me is a global cap weight of international) realizing the work account will be taxed on the way out. :wink:

We are in our mid 50s, and all contributions are going into bonds as a glide path pre-retirement strategy, meaning I do not need to adjust my U.S. versus international allocations often if ever.
by steve r
Sat Feb 17, 2024 12:52 pm
Forum: Personal Investments
Topic: Fidelity Zero Funds
Replies: 64
Views: 6074

Re: Fidelity Zero Funds

Cocoa Beach Bum wrote: Fri Feb 16, 2024 11:37 am People might also be interested in BNY Mellon's "zero" ETFs:
BKLC - BNY Mellon US Large Cap Core Equity ETF
BKAG - BNY Mellon Core Bond ETF

They've been operating since April, 2020 and have attracted significant assets, so it doesn't appear they'll fade away soon.
Interesting. I read this site a lot and never heard of it. I would say that the AUM for both is not significant (roughly $2B). I am curious what the bid ask spread is typically. But I can wait till Tuesday. :wink:
by steve r
Sat Feb 17, 2024 6:48 am
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

Which bond type fund is best? I played before with this using Simba data and am replicating it here. A 3 fund portfolio: 40 US / 30 Int/ 30 bond Data from 1963 because the yield on the ten year started where 2023 ended. This minimizes a bias in favor on LTT if yields fall which occurs if you start your study in 1970 or a later year. For the first 7 years the portfolio is 70 US / 30 BND. (data issue). All had a Sharpe ratio of .42 BND 9.05 /12.36 (CAGR / std. dev.) LTT 9.26 / 12.54 ITT 9.07 12.12 BND had a somewhat lower Sortino of .72 versus .74 If you go to the "thousandths" place, LTT comes out a little better than ITT with Sharpe and Sortino. But we are talking a trivial amount. And, if you use an all U.S. portfolio, the leader...
by steve r
Sat Feb 17, 2024 6:04 am
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

TIPs didn't exist in late 1960s and 1970s, but had they existed, is there really any question you would much rather be holding VTIP than BND through that cycle? Here are the returns for FIPDX (TIPs) and VISGX (ITT) and VBTLX (total bond) in inflationary 2022. -13.16 -12.05 -10.69 Yes, BND faired worse, but the winner was ITT. I would not have predicted that. The winner was VSIGX. Other ITT funds may have fared worse. VSIGX has a shorter duration than FIPDX. FUAMX is an ITT index fund with duration closer to FIPDX and fared worse than FIPDX in 2022. This goes back to my point that historically, ITTs have done enough of a better job of diversifying equity risk than BND to hold them with a somewhat shorter duration, simultaneously reducing po...
by steve r
Fri Feb 16, 2024 5:37 pm
Forum: Investing - Theory, News & General
Topic: Can you do better than BND?
Replies: 278
Views: 35051

Re: Can you do better than BND?

loukycpa wrote: Tue Feb 13, 2024 10:39 am
TIPs didn't exist in late 1960s and 1970s, but had they existed, is there really any question you would much rather be holding VTIP than BND through that cycle?
Here are the returns for FIPDX (TIPs) and VISGX (ITT) and VBTLX (total bond) in inflationary 2022.

-13.16 BND/VBTLX
-12.05 TIPS/FIPDX
-10.69 ITT / VISGX

Yes, BND faired worse, but the winner was ITT. I would not have predicted that.

So, yes, I think there is a question.
:wink:

Good thread.
by steve r
Fri Feb 16, 2024 4:55 pm
Forum: Investing - Theory, News & General
Topic: Worldwide version of NTSX on the way [RSSB new global return stacking ETF]
Replies: 59
Views: 9871

Re: Worldwide version of NTSX on the way [RSSB new global return stacking ETF]

RSSB (basically 100% VT/100% VGTI) is worse than holding just 100% VT because cash is superior to intermediate bonds. At least, portfolio visualizer shows a CAGR of 2.14% for VGTI over the last 14 years and you can definitely get a higher interest than 2.14% from just interest on cash/removing borrowing costs of cash. let's say you have a 20 year investment horizon, how is RSSB "worse" than VT? When the borrowing margin cost is higher than the yield of bond you are holding, it would be a drag on returns, would it not? Yes, you get the diversification benefit of a 50 / 50 portfolio, but at a cost, no? RSBB makes a lot more sense when the yield curve slopes upward. At least you get a modest return even if yields are flat for the pe...
by steve r
Thu Feb 15, 2024 7:10 pm
Forum: Personal Investments
Topic: Fidelity 3 Fund Portfolio and Magnificent 7 Question
Replies: 6
Views: 765

Re: Fidelity 3 Fund Portfolio and Magnificent 7 Question

2) At the end of 2023 - the magnificent 7 made up 28% of the S&P500. That seems way out of balance. What are the risks of holding a large portion of portfolio in IVV which tracks the S&P and is so overweighted to just 7 companies? I agree. So that is why the US Total Stock Market Index is often recommended (not just the S&P500) and international stocks are added in the three fund portfolio. But then you get to the rabbit hold of how much of each of these things. You may consider VT for the first 15 years then add bonds. The Mag 7 will be half this ish. This is part of my rationale for international at global market cap weights. Note that if you back test at all for the last few years, the approach with the highest share in the ...
by steve r
Mon Feb 05, 2024 5:01 pm
Forum: Personal Consumer Issues
Topic: Calculating a "true" SAT average admissions score
Replies: 67
Views: 5697

Re: Calculating a "true" SAT average admissions score

Dug deep in this recently with my high school senior. The advice on this has become pretty consistent since the class of 2021, but I’m going to simplify. 1. High School course rigor is the most important element. 2. High School class ranking second. 2. High School GPA and Extracurricular are next 3. SAT/ACT is the following. As you have pointed out the new published average SAT/ACT score are way up because so many people are opting to not take the test or not submit there test scores. This has become an unintentional benefit to the schools since they all spend so much time trying to manipulate there “selectiveness” and “stack ranking” by places like US News & World Report. So the current guidance is NOT to submit scores of your results...
by steve r
Tue Jan 30, 2024 5:24 pm
Forum: Personal Investments
Topic: Portfolio Review please - Small-Cap Tilt GeoBuffett V1.2
Replies: 23
Views: 2218

Re: Portfolio Review please - Small-Cap Tilt GeoBuffett V1.2

mbouck wrote: Sun Jan 28, 2024 4:35 pm ...

I was able to backtest to 2013 - good enough.

...
Thoughts?
My thought is that ten years is a nothing burger when it comes to back testing.

Major secular changes come and go. Bonds had a 40 year period of outperforming longer run trends.

Small value has periods of outperformance and underperformance.

To make things more complex, the further back you go the less relevant the data is going forward.
by steve r
Tue Jan 23, 2024 4:16 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 473
Views: 33789

Re: More Evidence Against Factor Investing

The link between risk and expected return is a fundamental investment principal that extends back tens of thousands of years. If we measure risk using volatility, then we may simply be measuring a term premium – which does make sense. Markets should reward investors for committing capital for longer. But even the fact the size premium seems to have dissolved would seem to suggest equity markets aren't rewarding investors for investing in smaller, riskier businesses at all. And why would they? And certainly Treasuries shouldn't be returning the same as junk over 40-50 years. Those should be opposite ends of the risk spectrum. The junk bond versus treasuries is an an argument (made by others) for low volatility investments. In that literatur...
by steve r
Sun Jan 21, 2024 12:22 pm
Forum: Investing - Theory, News & General
Topic: Do Bond Funds Really Make Sense for the Long Run?
Replies: 399
Views: 38700

Re: Do Bond Funds Really Make Sense for the Long Run?

The title of this post is intended as a counterpoint to the one I started based on John Reckenthaler's summary of Professor McQuarrie's paper showing that stocks don't always outperform bonds over time. Deep in that thread are these comments from Dr. McQ which I found quite riveting and thought worthy of starting another thread with: "One of my great fears is that the FAJ paper will be misinterpreted as "McQ thinks I should own more bonds," or "McQ tells me I should expect bonds to beat stocks," yada yada. So it is good to have some negative comments from me about bond funds here on the thread. Here is another fragment from the work in progress: Bond funds are a mistake, a bad product, a wrong turn taken in the con...
by steve r
Sun Jan 21, 2024 6:50 am
Forum: Investing - Theory, News & General
Topic: Do Bond Funds Really Make Sense for the Long Run?
Replies: 399
Views: 38700

Re: Do Bond Funds Really Make Sense for the Long Run?

.. As someone said above, the first question you need to ask yourself is why do you want bonds at all. And then you need to pick the instrument best equipped to meet that need. Individual bond or bond fund, inflation protection or not. Your risk tolerance and need for simplicity play into every single one of those questions. +1 I love this line. For me, the purpose of bonds is to diversity stock risk, period. Stocks for the long run -- sometimes yes (for 200+ years on average yes). Sometimes no, so some bonds. For others in this thread, the purpose of bonds is to create a "pension like" payment stream (real or nominal) with very low middle man expenses. Cutting out the middle man makes sense to me. For this purpose bonds make a l...
by steve r
Sat Jan 20, 2024 2:13 pm
Forum: Investing - Theory, News & General
Topic: Morningstar article: Do Stocks Really Make Sense for the Long Run?
Replies: 180
Views: 26799

Re: Morningstar article: Do Stocks Really Make Sense for the Long Run?

... Also, LTT backtested well. Still does. Early last year I back tested different bond allocations with a portfolio back to 1963 (because 2023 and 1963 had roughly similar 10 year yields at the start of the year). LTT did best in return and risk adjusted, but not by much over ITT. And, like a lot of things, you really need to buy into the theory of greater diversification benefits. I tried it, yields went up, and said no thank you. I still think treasuries are a better diversifying asset with stocks than anything with corporate bonds in the mix. That is a different thread. ... As for LTT backtesting well, we were in a multi-decade bond bull run with declining rates. That may not hold true going forward. ... That is why I back tested from ...
by steve r
Sat Jan 20, 2024 1:34 pm
Forum: Investing - Theory, News & General
Topic: Morningstar article: Do Stocks Really Make Sense for the Long Run?
Replies: 180
Views: 26799

Re: Morningstar article: Do Stocks Really Make Sense for the Long Run?

...
rockstar wrote: Fri Jan 19, 2024 4:33 pm The problem with corporate bonds is that they get called. So you really don’t know your expected duration unless you buy an individual one and know the first call date. That is more risk than I’m willing to take on the bond side.
Right.

But also, for corporate bonds, when the stuff hits the fan for some portion of bonds, they both bonds and stocks get hit. I just find it odd that I am both the lender (bond holder) and borrower (equity holder), meaning I am going to eat the transaction cost.
by steve r
Fri Jan 19, 2024 4:37 pm
Forum: Personal Consumer Issues
Topic: what to put in a time capsule that will be valuable in 50 or 100 years?
Replies: 65
Views: 6212

Re: what to put in a time capsule that will be valuable in 50 or 100 years?

a sealed Taylor Swift vinyl album Excellent music is timeless, which explains why this will be worthless within 5 years. I can tell you haven't actually listened to anything other than the singles that are played on the radio. She's universally known as one of the greatest lyricists of the modern era. I just read her lyrics to one of her radio hits “Shake It Off”. They’re vacuous as all heck. She’s just a pop tart with a large following. She says she loves you And you know that can't be bad Yes, she loves you And you know you should be glad, ooh She loves you, yeah, yeah, yeah She loves you, yeah, yeah, yeah With a love like that You know you should be glad But sure, Taylor Swift is the one with vacuous lyrics. You ain't nothin' but a houn...
by steve r
Fri Jan 19, 2024 4:22 pm
Forum: Investing - Theory, News & General
Topic: Morningstar article: Do Stocks Really Make Sense for the Long Run?
Replies: 180
Views: 26799

Re: Morningstar article: Do Stocks Really Make Sense for the Long Run?

The ghost of @vineviz hangs over this thread like a spectre. I think his greatest contribution was teaching us how to calculate fixed-income duration using one's personal, unique and usually diminishing investment horizon. Personally, I don't share his conviction that small value and emerging markets, for example, are necessarily legitimate diversifiers with respect to the US stock market simply based on past performance--but I'm doing it, anyway, for better or worse. His consulting business website is still up. First 20% in LTT though.... I think he made many interesting contributions to this board. I certainly learned a lot from his posts, and they sparked many of the best discussions on this site. The first 20% in LTT thread was a great...
by steve r
Fri Jan 19, 2024 4:10 pm
Forum: Personal Consumer Issues
Topic: what to put in a time capsule that will be valuable in 50 or 100 years?
Replies: 65
Views: 6212

Re: what to put in a time capsule that will be valuable in 50 or 100 years?

A copy of "The Little Book of Common Sense." Preferably signed and first edition. :wink:
by steve r
Mon Jan 15, 2024 3:39 pm
Forum: Investing - Theory, News & General
Topic: 100% defensive stocks vs 60/40
Replies: 155
Views: 19590

Re: 100% defensive stocks vs 60/40

Logan Roy wrote: Fri Sep 02, 2022 8:34 am ...
I don't believe there's a diversification benefit from corporate bonds that can't be achieved with cash. Meaning, as I think Swensen noted, they're unlikely to make portfolios particularly efficient. It's a watered down equity market risk.
I agree with this. If you do bonds, I think it should be either ITT or LTT (or some sort of liability matching).

What you are speaking of in general is sector tilting.
by steve r
Mon Jan 15, 2024 6:00 am
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

Re: TIAA Real Estate -- Interesting Chart versus VNQ

Northern Flicker wrote: Sun Jan 14, 2024 8:36 pm You cannot measure risk-adjusted return of TRE using Sharpe ratios from outcome samples. TRE return data uses estimates and appraisals, so volatility is blurred in the returns.
Right. At least I agree they should be taken with a grain of salt.

The measures are based on annual data. So perhaps while not perfect, but somewhat insightful. Even with the volatility being blurred, it is not as if TIAA RE came out ahead -- just very good.

I no longer need TIAA RE.

I do need bonds at this point in my life. But that is not for a TIAA RE thread.

And I need to drop "VT and chill" from my signature. That is easy.
by steve r
Sun Jan 14, 2024 2:11 pm
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

Re: TIAA Real Estate -- Interesting Chart versus VNQ

Tiaa has recommended allocating to Tiaa RE for diversification purposes. Pre-2008 they often recommended 60% CREF Stock 15% TIAA RE 25% CREF Bond Market as a cookie cutter default portfolio. Post-2008 they lowered their Tiaa RE allocation recommendation to 10%, but currently it is closer to 5% in their target date products: https://www.nuveen.com/en-us/mutual-funds/tiaa-cref-lifecycle-2045-fund Interestingly, they use Vanguard index funds (and no RE) in their index-fund-based target date products: https://www.tiaa.org/content/dam/tiaa/microsites/pdfs/transition/misc/mc3_insert.pdf I do think that if an investor would like to hold an allocation to commercial real estate beyond REIT holdings in equity portfolios, TIAA RE is a better diversif...
by steve r
Sun Jan 14, 2024 1:53 pm
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

Re: TIAA Real Estate -- Interesting Chart versus VNQ

Maybe you should try this strategy instead: "Owning the stock market over the long term is a winner's game. Attempting to beat the market is a loser's game. Don't look for the needle in the haystack. Just buy the haystack. Jack Bogle| VT and Chill" Considering the size of the commercial real estate market that is outside of publicly traded REITs, holding VTSAX is nowhere close to owning the US haystack, despite holding the publicly traded REIT haystack. TIAA RE of course doesn't get you there either. Nonetheless, considering the uncertainies in global real estate at present, I am content with the publicly traded REIT exposure of a market index or similar portfolio. Right. There probably is no good way to do a commercial real esta...
by steve r
Sun Jan 14, 2024 7:21 am
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

Re: TIAA Real Estate -- Interesting Chart versus VNQ

Maybe you should try this strategy instead: "Owning the stock market over the long term is a winner's game. Attempting to beat the market is a loser's game. Don't look for the needle in the haystack. Just buy the haystack. Jack Bogle| VT and Chill" Considering the size of the commercial real estate market that is outside of publicly traded REITs, holding VTSAX is nowhere close to owning the US haystack, despite holding the publicly traded REIT haystack. TIAA RE of course doesn't get you there either. Nonetheless, considering the uncertainies in global real estate at present, I am content with the publicly traded REIT exposure of a market index or similar portfolio. Right. There probably is no good way to do a commercial real esta...
by steve r
Sun Jan 14, 2024 7:20 am
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

Re: TIAA Real Estate -- Interesting Chart versus VNQ

popoki wrote: Sat Jan 13, 2024 5:13 pm Maybe you should try this strategy instead: "Owning the stock market over the long term is a winner's game. Attempting to beat the market is a loser's game. Don't look for the needle in the haystack. Just buy the haystack. Jack Bogle| VT and Chill"
Made me laugh. I am good at the VT part, it is the "and chill" part I struggle with. :wink:

But also, I got to go with the options my employer provides.
by steve r
Fri Jan 12, 2024 6:02 pm
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

Re: TIAA Real Estate -- Interesting Chart versus VNQ

Very interesting comparison. The TIAA real estate account seems to have less risk and a lower return than REITs. There is a FAQ on the TIAA website that says (in questions B7 and D3) that the account portfolio has traditionally held between 15 - 25% in US Treasuries and other marketable securities, in part to cover potential withdrawals by account participants. (Currently, that figure seems to have been reduced to about zero, presumably because of increased withdrawals by account participants over the last couple of years.) So, that is one possible reason for the difference in risk and return. In the same FAQ, question G2 addresses the historical volatility of annualized returns of the account, compared to bonds, stocks, REITs and cash, me...
by steve r
Fri Jan 12, 2024 5:44 pm
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

Re: TIAA Real Estate -- Interesting Chart versus VNQ

petulant wrote: Fri Jan 12, 2024 5:25 pm
I did try VGSIX 50/50 with CASHX as a quick and dirty unlevered simulation and it was in the right outcome area.
Right.

Image

It did start a few months later. I bit bumpier ride.
by steve r
Fri Jan 12, 2024 5:33 pm
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

Re: TIAA Real Estate -- Interesting Chart versus VNQ

petulant wrote: Fri Jan 12, 2024 5:25 pm
I think the implication is that trading the TIAA real estate account for VNQ might be a fair increase in risk.
For sure.

For clarity, for my own purposes the analysis more as a proxy to compare what I already own in RE in my index funds.
by steve r
Fri Jan 12, 2024 4:44 pm
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate -- Interesting Chart versus VNQ
Replies: 26
Views: 2973

TIAA Real Estate -- Interesting Chart versus VNQ

I have done very well with TIAA Real Estate. I maxed it out, saw it go up in 2021 and 2022 and got out. But timing is lucky. When I sold, I thought I will definitely being rebuying. In deciding on getting back in versus simplifying, I stumbled into this maxing out the chart on M*. https://i.postimg.cc/jqf1Fj2x/TIAA-RE-1.jpg Beautiful right? Particularly if you can time it. Then I compared it to a REIT index ETF - VNQ. https://i.postimg.cc/Z5sjRkns/TIAA-RE-2.jpg I know one is direct real estate, and one is a fund of REITs. I also understand why expense ratios are different and that you pay for liquidity with direct real estate. But the return differences are stunning. Plus, I own REITs as part of my stock holdings. Just reconsidering.
by steve r
Sun Jan 07, 2024 4:26 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5215
Views: 830069

Re: International (Non-US) versus US Equities (The "Arguments")

Craig,

The context of this post was reminded of this in the recent to much in "Apple" thread. Here is another less used argument for international, that is a small part of my thinking.

A couple large cap US TSM mega firms (currently Microsoft and Apple) can take upwards of over 15 percent of one's portfolio between two firms or so. Some feel that maybe too much concentration risk, if you will.

International is a natural way to dilute such shares (without overweighting smaller corporations).
by steve r
Mon Jan 01, 2024 7:43 pm
Forum: Investing - Theory, News & General
Topic: Does which Value Index Fund You Select Matter? (in a predicable way).
Replies: 3
Views: 548

Re: Does which Value Index Fund You Select Matter? (in a predicable way).

Different providers define large/mid/small differently, and they use slightly different criteria for value/growth. I don't know what Fidelity uses, but Vanguard uses an uncommon scheme from CRSP where large = mega + mid, and small = everything else. So Vanguard's mid has very little overlap with other common uses of mid (like S&P 400). And Vanguard's small-cap ranges from a little lower than the bottom of the S&P 500 all the way to down to microcap stocks. Next, different index providers classify value/growth different. One provider might use p/e and p/s for value, and another has p/e and p/b. And they might measure over different periods. Plus, they score differently how they decide "valuey" and "growthy" thing...
by steve r
Mon Jan 01, 2024 6:42 pm
Forum: Investing - Theory, News & General
Topic: Does which Value Index Fund You Select Matter? (in a predicable way).
Replies: 3
Views: 548

Does which Value Index Fund You Select Matter? (in a predicable way).

In looking at Value Indexes to select, I see very different returns over the last few years. https://www.fidelity.com/mutual-funds/investing-ideas/index-funds?ccsource=sl_100820&imm_pid=700000001009773&immid=100820_SEA&imm_eid=ep35415530201&utm_source=GOOGLE&utm_medium=paid_search&utm_account_id=700000001009773&utm_campaign=MUT&utm_content=58700004265124968&utm_term=fidelity+zero+fund&utm_campaign_id=100820&utm_id=71700000009120113&gad_source=1&gclid=EAIaIQobChMI_J3Cxba9gwMVpmZHAR2W9goCEAAYASABEgJD1fD_BwE&gclsrc=aw.ds Over the past few years, Vanguard's small, mid, and large cap value funds outperform their Fidelity counterpart. Coincidence? Does this matter in a predictable way? The p...