Search found 792 matches

by Jebediah
Thu Jun 03, 2021 6:05 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

Large investors can and have invested in residential at scale. Indeed, lots of those costs you are mentioning have economies of scale, such that if anything it is less, not more, costly for large investors than small investors as a percentage of capital invested. That's incorrect. Institutional investors are 2% of the SFR market. So they can and have done it. That is 2% of a very large market. 2% is nothing. For comparison, institutional is 55% of multifamily, and that's where SFR is headed. Huge untapped market for them, and they are just getting started. Your charts and discussion only account for half the return. The other half comes from yields, an extremely low volatility source of return. Your charts and discussion are also not speci...
by Jebediah
Wed Jun 02, 2021 10:05 pm
Forum: Investing - Theory, News & General
Topic: "Why You Should Wait Out the Wild Housing Market" - Atlantic
Replies: 115
Views: 19456

Re: "Why You Should Wait Out the Wild Housing Market" - Atlantic

So market timing stocks is bad, but market timing real estate is good? The house you are looking at buying doesn't have a dozen analysts spending 24/7 thinking about what the right price for the house is. It is very possible that residential real estate is exploitable in the way the stock market is not. Now if you have the skill to do that is a whole different issue. A lot of people are too time constrained (i.e. want to be in the house in the next 2 months) to do extensive amounts of bargin hunting... The thing with the current situation is that it seems like the risk of your house being worth 20% more or less in 2 years is abnormally high. We know some of the conditions that lead to our current situation will not last for ever but for ho...
by Jebediah
Wed Jun 02, 2021 8:42 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

Large investors can and have invested in residential at scale. Indeed, lots of those costs you are mentioning have economies of scale, such that if anything it is less, not more, costly for large investors than small investors as a percentage of capital invested. That's incorrect. Institutional investors are 2% of the SFR market. That number is about to increase dramatically but it will take several years before it plateaus. As for where is the risk--at various points in time in various places, large sets of residential units have experienced declining real values, sometimes catastrophically so. For example, in the U.S., in the post-WWII urban-flight/suburbanization era that lasted until the 1980s or so, lots of pre-war neighborhoods exper...
by Jebediah
Wed Jun 02, 2021 7:39 pm
Forum: Personal Investments
Topic: Going to sell 50% of my taxable account stocks to buy first home
Replies: 48
Views: 7869

Re: Going to sell 50% of my taxable account stocks to buy first home

Cash is smart. Mortgage interest is thousands per year of wasted money, year after year after year. Also, you have a major bidding advantage as a cash buyer. Buy now. Institutional bulk buying is just getting established. Not likely things will get cheaper. Do you think those institutional bulk buyers are buying with cash? 1, about as relevant to the OP as life on Mars. Pretty sure OP is not an institution and is not buying houses by the hundreds with other people's money. 2, if borrowing they sure as heck aren't doing mortgages at 3%. and yes, oftentimes they are using cash. Invitation Homes has debt financing for roughly half of their homes: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001687229/47de959a-b23a-43bd-8d8a-a06af212886a.pdf $9B...
by Jebediah
Wed Jun 02, 2021 9:51 am
Forum: Personal Investments
Topic: Going to sell 50% of my taxable account stocks to buy first home
Replies: 48
Views: 7869

Re: Going to sell 50% of my taxable account stocks to buy first home

Disagree. Buying the house means staying invested in a higher-expected-returning asset (vs current stock valuations). Mortgage rates are only low relative to past rates which are irrelevant. Compared to the yield curve, they are normal. The lenders are making money. Paying thousands a year for a loan you didn't need sure isn't "free money" to me. I've thought a lot about this recently as I refinanced to a very low rate and was considering whether to pay down the mortgage an additional $10k per year or invest $10k per year. I calculated that paying off early would save me $60k in interest and reduce the mortgage to 18 years; however investing $10k per year over 18 years would return about $340k (assuming 6% annualized return). How...
by Jebediah
Wed Jun 02, 2021 9:39 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

It’s not off the mark. It’s all about location, price and environment. You have one example of it working for you. I just exited a property in a market that fell apart after 2008 and took more than 10 years to get back to the highs of that era. I would have made more money in a reit index and even more in a total market index with a lot less hassle about leaks, toilets not flushing, association special assessments, higher real estate taxes, etc. Certain properties are more conducive to others in earning high returns. Others are not, especially when more fingers have their hands in the pie. Institutions aren’t just figuring this out - reits investing in this space have been in it for decades, this is not a new phenomena. People desperate fo...
by Jebediah
Wed Jun 02, 2021 12:59 am
Forum: Personal Investments
Topic: Going to sell 50% of my taxable account stocks to buy first home
Replies: 48
Views: 7869

Re: Going to sell 50% of my taxable account stocks to buy first home

Tingting1013 wrote: Wed Jun 02, 2021 12:27 am
Jebediah wrote: Wed Jun 02, 2021 12:19 am Cash is smart. Mortgage interest is thousands per year of wasted money, year after year after year. Also, you have a major bidding advantage as a cash buyer.

Buy now. Institutional bulk buying is just getting established. Not likely things will get cheaper.
Do you think those institutional bulk buyers are buying with cash?
1, about as relevant to the OP as life on Mars. Pretty sure OP is not an institution and is not buying houses by the hundreds with other people's money. 2, if borrowing they sure as heck aren't doing mortgages at 3%.

and yes, oftentimes they are using cash.
by Jebediah
Wed Jun 02, 2021 12:48 am
Forum: Personal Investments
Topic: Going to sell 50% of my taxable account stocks to buy first home
Replies: 48
Views: 7869

Re: Going to sell 50% of my taxable account stocks to buy first home

I want to be an all-cash buyer (so I don't waste money and going through the paperwork effort of getting a mortgage, closing costs, appraisal costs etc).” 1. IMO you’re wasting more money by cashing out, paying taxes, and not staying invested. FAR more. Rates are at free-money levels, and if you’re a first-time homebuyer you may get special terms/offers. Disagree. Buying the house means staying invested in a higher-expected-returning asset (vs current stock valuations). Mortgage rates are only low relative to past rates which are irrelevant. Compared to the yield curve, they are normal. The lenders are making money. Paying thousands a year for a loan you didn't need sure isn't "free money" to me. 2. Most people new to homebuying ...
by Jebediah
Wed Jun 02, 2021 12:19 am
Forum: Personal Investments
Topic: Going to sell 50% of my taxable account stocks to buy first home
Replies: 48
Views: 7869

Re: Going to sell 50% of my taxable account stocks to buy first home

Cash is smart. Mortgage interest is thousands per year of wasted money, year after year after year. Also, you have a major bidding advantage as a cash buyer.

Buy now. Institutional bulk buying is just getting established. Not likely things will get cheaper.
by Jebediah
Tue Jun 01, 2021 11:55 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

If the returns were consistently that good, Unless you think the paper in question is misrepping the data, they are that good. I can guarantee you that big companies would get into it quickly, just as they did in the peer-to-peer lending space. Since you're saying that property selection isn't important, they don't have to do much, if any, vetting and can just buy up as much real estate as their capital allows, then sit back and let the 8.5% returns, less some incidental costs from running such a business, roll in. This is what's happening now. Institutions and other big players are buying up SFRs by the thousands and investing heavily in technology to make the buying process and maintenance manageable at scale. Selection matters little so...
by Jebediah
Tue Jun 01, 2021 8:34 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

But you should have a red flag popping up in your mind if you think you can safely do that with only 3 months of rent. It doesn't make economic sense for that to be true, so you might be missing something, including possibly the risk of higher depreciation than you are assuming. Cost of capital is a real cost, even if you front the capital yourself. If your real value is decreasing that offsets your rents. I know some places have done well thanks to price appreciation, looking backward. Whether they will do as well going forward is a different question Obviously. But if you believe the current cashflows on offer-- or, 8.5% average historical returns-- make no economic sense without great risk, where is the risk? Where is the volatility? Th...
by Jebediah
Tue Jun 01, 2021 7:01 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

But you should have a red flag popping up in your mind if you think you can safely do that with only 3 months of rent. It doesn't make economic sense for that to be true, so you might be missing something, including possibly the risk of higher depreciation than you are assuming. Can you show the arithmetic that indicates it doesn't make economic sense? (And actually, I think maintenance is likely to be somewhere between the square footage rule and 1% rule, so more realistically maybe 2.5 - 3 months pre-profitability). Sure. If I understood your math correctly, you were looking at something like a real return of 4.3% assuming it was rented out all 12 months. The current risk-free real rate of return on long-term investments is negative. So,...
by Jebediah
Tue Jun 01, 2021 4:27 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

NiceUnparticularMan wrote: Tue Jun 01, 2021 4:12 pm
But you should have a red flag popping up in your mind if you think you can safely do that with only 3 months of rent. It doesn't make economic sense for that to be true, so you might be missing something, including possibly the risk of higher depreciation than you are assuming.
Can you show the arithmetic that indicates it doesn't make economic sense? (And actually, I think maintenance is likely to be somewhere between the square footage rule and 1% rule, so more realistically maybe 2.5 - 3 months pre-profitability).

I don't know why you find 3.4 months surprising. I think 3.4 is probably longer than average (has a lowish cap rate).
by Jebediah
Tue Jun 01, 2021 3:59 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

NiceUnparticularMan wrote: Tue Jun 01, 2021 2:52 pm
Jebediah wrote: Tue Jun 01, 2021 2:17 pm In my particular case, there is no debt, so all I need is a couple of months of rent to be profitable assuming no price appreciation.
So this logic seems to be assuming away costs like taxes and maintenance.

And I again note there is a basic "too good to be true" aspect to this logic.
Tax = 1.1 months rent.
Insurance = 0.3 months rent.
Using the 1% rule, maintenance = 2 months rent. (Using square footage rule, maintenance = 0.5 months rent.)

Profitable after 3.4 months.
by Jebediah
Tue Jun 01, 2021 2:17 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

The comment about profitability was way off the mark, though. No, it most definitely was not . I've lost count of the number of people who've come to this forum asking about rentals on which they are cash flow negative, and many others aren't making much, if any, more than Treasuries. Further, even if they are making more than Treasuries, that does not make them a better investment. There is significant risk with rental properties as a quick perusal of threads where those who have owned rentals for many years will quickly attest. Yes, it can be very lucrative. But not every property in every area is lucrative. I'm glad to hear that you have very profitable rental properties. That is likely in no small part a function of your area. In gener...
by Jebediah
Tue Jun 01, 2021 11:49 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

OTOH, only a relatively small proportion of properties are likely to function as financially profitable rentals, and it's more difficult to make the numbers work today than it was even a few years ago. No easy answers. What? It's almost impossible for a property to NOT function as a "financially profitable rental". If it wasn't doable, nobody would do it. The friction is the effort, not the profitability. Here's an example of an 'easy answer': I just threw 700k in bond money yielding $4k a year at an SFR. That money now yields $40k a year. Everyone I know who has been successful in rentals says that it's important to find the right properties and that the math just doesn't work well on most properties. There's a difference betwee...
by Jebediah
Tue Jun 01, 2021 12:03 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

willthrill81 wrote: Mon May 31, 2021 7:18 pm OTOH, only a relatively small proportion of properties are likely to function as financially profitable rentals, and it's more difficult to make the numbers work today than it was even a few years ago. No easy answers.
What? It's almost impossible for a property to NOT function as a "financially profitable rental". If it wasn't doable, nobody would do it. The friction is the effort, not the profitability.

Here's an example of an 'easy answer': I just threw 700k in bond money yielding $4k a year at an SFR. That money now yields $40k a year.
by Jebediah
Mon May 31, 2021 1:21 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's article on Single family house rentals
Replies: 88
Views: 11030

Re: Larry Swedroe's article on Single family house rentals

I suppose this means Stone Ridge is about to start a residential RE fund exclusive to Larry's clients.
by Jebediah
Tue May 25, 2021 9:29 pm
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 5577
Views: 623794

Re: Small Cap Value heads Rejoice !!!

I agree with excluding AVEM due to its low factor exposure, but I disagree with excluding EM entirely. EM is more volatile and less correlated with US equities, which makes it a better diversifier for a US based portfolio. I'm personally using FEMS, but I would also consider DGS, EMGF, and possibly others before excluding EM entirely. Avantis is said to be coming out with more funds later this year so I am hopeful they come out with an EM Value fund similar to DFA's DFEVX. I am also looking to add some EM exposure, but want a stiffer value tilt. FNDE is my current plan and is quite valuey. Regressions are similar to DFEVX other than a big negative size loading. PXH is a similar version from Invesco (uses book as well, doesn't include buyba...
by Jebediah
Mon May 24, 2021 12:20 pm
Forum: Personal Investments
Topic: House as portion of "bond" portfolio?
Replies: 45
Views: 10035

Re: House as portion of "bond" portfolio?

alex_686 wrote: Mon May 24, 2021 10:22 am Mortgages are definitely negative mortgages.
You should put that in your sig .
by Jebediah
Fri May 21, 2021 1:33 pm
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 6103

Re: Value and Momentum- Zero premium for twenty years

Forester wrote: Fri May 21, 2021 11:57 am 21st May 2001 to 20th May 2021

SPY S&P 500 +362%

IJS Small Cap Value +541%

Probably US TSM is similarly expensive today vs small cap value. The CAPE 20 years ago in late May was around 33/34. So over two decades SCV is ahead, had no lost decade, and has a better setup for the 2020s :sharebeer
Small cap growth (IJT) outperformed small cap value (IJS) by 1% pa in this period because the value "premium" was negative.
by Jebediah
Fri May 21, 2021 9:36 am
Forum: Investing - Theory, News & General
Topic: ETFs for inflationary environments
Replies: 16
Views: 2672

Re: ETFs for inflationary environments

Scott S wrote: Tue Feb 23, 2021 10:34 am If you think we're in for 3%+ sustained inflation, take out a big loan right now! I can get a 15-year mortgage at under 2% in my area.
Doesn't that advice assume that rates rise with inflation? Fed seems to be incentivized to keep rates low with ever more bond purchases so maybe don't count on it.
by Jebediah
Thu May 20, 2021 12:41 pm
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 6103

Re: Value and Momentum- Zero premium for twenty years

https://images.aqr.com/-/media/AQR/Documents/Perspectives/The-Long-Run-Is-Lying-to-You.pdf Above is a link to a Cliff Asness article discussing the potential for the value premium. He basically says that valuation changes matter a lot and that the value premium is there if you account for the increased valuations of growth stocks. And of course high valuations predict for lower future returns. The current valuation spread between growth and value remains near all time highs. I would add, that while value hasn’t looked good over the last decade in the US, SV has outperformed some in Int. Dave First of all, I'm not sure about an appeal to authority when that authority is trying to sell you something. Second, the argument is that if you don't...
by Jebediah
Thu May 20, 2021 11:55 am
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 6103

Re: Value and Momentum- Zero premium for twenty years

https://images.aqr.com/-/media/AQR/Documents/Perspectives/The-Long-Run-Is-Lying-to-You.pdf Above is a link to a Cliff Asness article discussing the potential for the value premium. He basically says that valuation changes matter a lot and that the value premium is there if you account for the increased valuations of growth stocks. And of course high valuations predict for lower future returns. The current valuation spread between growth and value remains near all time highs. I would add, that while value hasn’t looked good over the last decade in the US, SV has outperformed some in Int. Dave First of all, I'm not sure about an appeal to authority when that authority is trying to sell you something. Second, the argument is that if you don't...
by Jebediah
Thu May 20, 2021 11:35 am
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 6103

Re: Value and Momentum- Zero premium for twenty years

Ketawa wrote: Thu May 20, 2021 10:46 am By your logic, Quality and Size are still valid and as large as ever.
Quality and BAB, yes. Size is complicated, depends on quality.
by Jebediah
Thu May 20, 2021 9:14 am
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 6103

Value and Momentum- Zero premium for twenty years

Long-Short Factor Returns: 5/20/2001 - Present Value ... -1.2 % Momentum ... 0.0 % Quality ... 3.5 % Size ... 2.9 % Twenty years seems like enough time to declare value and momentum over. Grazed away. Yesterday's news. https://www.portfoliovisualizer.com/factor-statistics?s=y&factorDataSet=0&marketArea=0&__checkbox_ffmkt=true&__checkbox_ffsmb=true&__checkbox_ffsmb5=true&__checkbox_ffhml=true&__checkbox_ffmom=true&__checkbox_ffrmw=true&__checkbox_ffcma=true&__checkbox_ffstrev=true&__checkbox_ffltrev=true&__checkbox_aqrmkt=true&__checkbox_aqrsmb=true&__checkbox_aqrhml=true&__checkbox_aqrhmldev=true&__checkbox_aqrmom=true&__checkbox_aqrqmj=true&__checkbox_aqrbab=true&...
by Jebediah
Mon May 17, 2021 8:05 pm
Forum: Personal Investments
Topic: Deadbeat stocks!
Replies: 8
Views: 1304

Re: Deadbeat stocks!

It's a trash heap. Total market investors own hundreds of awful, nowhere-near-profitable "companies", if you can call them that. Have a look at a few random balance sheets, you wont believe how bad it is. Now look at past performance of a quality-oriented mutual fund or say, BRK. None of it seems to matter.
by Jebediah
Sat May 15, 2021 10:38 am
Forum: Investing - Theory, News & General
Topic: AQR Style Premia Update; Certainly Low Correlations
Replies: 100
Views: 9981

Re: AQR Style Premia Update; Certainly Low Correlations

I posit that the outcome (8% stdev, 1% return) is exactly what is expected from the strategy. The marketing was simply dishonest about the expected returns.
by Jebediah
Fri May 14, 2021 6:13 pm
Forum: Personal Investments
Topic: Please review early retirement plan
Replies: 38
Views: 6547

Re: Please review early retirement plan

wannaretireearly covered the basics but with the additional information you provided you are in good shape. Both should do a backdoor Roth this year. Then do Roths for the next few years while your wife is working. Once she stops working you should be in a low tax bracket. You can withdraw 5 year old contributions from your Roth and then do a Roth conversion from your tax deferred account to replace the money in the Roth. Work out the tax implications so that you can withdraw from taxable and Roth while staying in a low tax bracket until age 59.5. Then add tax deferred to the mix with a eye on keeping your marginal tax rate relatively stable pre SS benefits, post SS benefits, and after RMDs begin. I'm in the same boat as the OP regarding t...
by Jebediah
Fri May 14, 2021 5:58 pm
Forum: Investing - Theory, News & General
Topic: Inflation, banking and real estate
Replies: 25
Views: 3187

Re: Inflation, banking and real estate

I would think rents would more or less keep up with high inflation but home prices would not because with inflation you assume rising mortgages rates which should depress prices.
by Jebediah
Fri May 14, 2021 5:45 pm
Forum: Personal Finance (Not Investing)
Topic: Selling a rental property without realtor
Replies: 19
Views: 1786

Re: Selling a rental property without realtor

Curious how one does FSBO and avoids the 3% buyer's agent? Just say sorry, not gonna pay it?
by Jebediah
Thu May 13, 2021 5:54 pm
Forum: Investing - Theory, News & General
Topic: AQR Style Premia Update; Certainly Low Correlations
Replies: 100
Views: 9981

Re: AQR Style Premia Update; Certainly Low Correlations

Anyway, selling value type investments after underperformance just isn’t good strategy. Not sure why momentum hasn’t helped it more... but maybe shorting growth has just been that bad. Here’s Cliff’s Gut Punch essay. He describes how the bad streak is due first to value. During this period momentum helped but not enough. Second, when value started to do well, it wasn’t enough to overcome a poor stretch for momentum. I think he’s saying the rapidity of the value turn around is what hurt momentum. He hopes that if value starts to make an extended positive run, then momentum will likewise go in a positive direction. Strongly recommend this essay. Actually, I recommend all of Cliff Asness’ essays. His style is great. Educational, clear, and fu...
by Jebediah
Wed May 12, 2021 10:22 pm
Forum: Investing - Theory, News & General
Topic: AQR Style Premia Update; Certainly Low Correlations
Replies: 100
Views: 9981

Re: AQR Style Premia Update; Certainly Low Correlations

Random Walker-

The uncorrelation is the easy part. It would be interesting to know how you personally feel about QSPIX's 1% return, 8% stdev, and -40% drawdown since inception. Is it fulfilling its promise of equity-like returns with bond-like volatility? In particular, what do you make of the fact that the management fees are greater than the annual return? Is that, in your estimation, a good investment?
by Jebediah
Wed May 12, 2021 10:10 pm
Forum: Personal Investments
Topic: 10 million dollar dilemma
Replies: 56
Views: 15057

Re: 10 million dollar dilemma

Lose money: Terrible as it puts my retirement plans at risk Make enough just to break even with inflation: Not bad Make a little more than inflation: Great Make a lot more than inflation: Theoretically should be very great, but realistically it would only have marginal benefit. ... What would you guys do in my situation? I'd suggest (at your age) you need 40% stock index funds at a minimum to keep up with inflation over the remaining years of your life. Vanguard just so happens to have a fund that fits the bill. The Vanguard LifeStrategy Conservative Growth Fund. Globally diversified. 40% stock / 60% bond. Current dividend yield is near 1.65%. So, take the dividends, and if necessary, sell a tiny chunk as needed. If you're looking for more...
by Jebediah
Wed May 12, 2021 4:24 pm
Forum: Personal Finance (Not Investing)
Topic: Should I tear down my house?
Replies: 57
Views: 7129

Re: Should I tear down my house?

I don't think this has been suggested yet: forget this house and forget buying a new one. Sell it and rent something nice.
by Jebediah
Sun May 09, 2021 8:40 pm
Forum: Investing - Theory, News & General
Topic: Latest Thoughts from Larry Swedroe
Replies: 262
Views: 55534

Re: Latest Thoughts from Larry Swedroe

Agree with you re VBR. I like both the low expense ratio and the fact that it's half mid cap. I split it with AVUV to get value exposure from micro to mid caps at an overall reasonable cost.
by Jebediah
Sat May 08, 2021 4:43 pm
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 5577
Views: 623794

Re: Small Cap Value heads Rejoice !!!

MotoTrojan wrote: Sat May 08, 2021 1:22 pm
I actively chose Alpha Architect over Avantis as I strongly believe in their use of an earnings based multiple (EV/EBIT) rather than P/B, and I am onboard with the concentrated value approach, along with their emphasis on quality companies, and believe it will outperform the Avantis/DFA SCV offerings in the long-term (just as it's net 2% costs index has).
Also like AA in theory but something is off with their implementation. A 50/50 QVAL/QMOM port has -5.92 alpha since inception.
by Jebediah
Sat May 08, 2021 4:07 pm
Forum: Investing - Theory, News & General
Topic: Please review small value tilt portfolio
Replies: 34
Views: 4589

Re: Please review small value tilt portfolio

40 voo
10 vbr
10 avuv
20 vxus
10 avdv
10 fnde


- VBR is a nice way to get cheap mid-value exposure to spread out your HmL over more market cap. TLH with IJJ
- VFVA has negative mom load IIRC, skip it
- AVUV for real-deal SCV exposure. TLH with the not quite as good IJS
- increase EM exposure. FNDE for EM value if you want it. DGS if you really want it to be small value.
- if too much EM in the above, swap VXUS for VEA
by Jebediah
Fri Apr 09, 2021 8:47 pm
Forum: Personal Investments
Topic: AA - Too conservative?
Replies: 27
Views: 3582

Re: AA - Too conservative?

Would rebalancing create capital gains taxes? If so, let it ride. Rebalancing is one of the most overrated BH rules.
by Jebediah
Thu Apr 08, 2021 3:12 pm
Forum: Personal Investments
Topic: How should I invest cash just sitting in the bank?
Replies: 27
Views: 4771

Re: How should I invest cash just sitting in the bank?

investuntilimrich wrote: Tue Apr 06, 2021 8:54 pm Honestly I would just hold cash for now. There will be a buying opportunity for stocks or real estate coming up but I'd let everything deflate first.
Right, and when that buying opportunity arises the sky will be falling and cash-holders will say 'oh I'm just waiting for the dust to settle'.
by Jebediah
Sat Apr 03, 2021 9:07 pm
Forum: Personal Investments
Topic: Anyone tax gain harvesting from stock bought last March
Replies: 26
Views: 2335

Re: Anyone tax gain harvesting from stock bought last March

TheTimeLord wrote: Sat Apr 03, 2021 7:53 pm Question, maybe I am missing something, but why would I ever want to use my losses to cancel LTCG instead of cancelling ordinary income and short term capital gains?
Why would you have short term realized gains?
by Jebediah
Sat Apr 03, 2021 7:38 pm
Forum: Personal Investments
Topic: Anyone tax gain harvesting from stock bought last March
Replies: 26
Views: 2335

Re: Anyone tax gain harvesting from stock bought last March

nalor511 wrote: Sat Apr 03, 2021 6:07 pm
climber2020 wrote: Sat Apr 03, 2021 5:52 pm Question for the experts:

If you've been tax loss harvesting regularly over the years and have built up a solid amount of carryover losses, are these losses used up when you do tax gain harvesting?
If you have carryover losses then any gains will immediately eat up those losses, dollar for dollar, yes. So usually you would not want to do both of those things, usually you would pick the most beneficial one
So say you're a retiree with a low income (from investments only) and carryover losses. Which is better: hang on to the losses as long as possible (no TGH), or harvest gains to eat up the losses and then harvest more at LTCG of 0% ?
by Jebediah
Tue Mar 23, 2021 9:19 pm
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 36221
Views: 4684975

Re: U.S. stocks in free fall

hnd wrote: Tue Mar 23, 2021 6:56 pm I've been selling some covid stocks that i bought after the giant dip to lock in some long term gains. I assume many are doing the same.
I don't get this. Realizing taxes seems not at all worth whatever the taking-some-off-the-table value you perceive.
by Jebediah
Thu Mar 18, 2021 11:48 pm
Forum: Personal Finance (Not Investing)
Topic: "If You Can" equivalent for home buying?
Replies: 9
Views: 2038

Re: "If You Can" equivalent for home buying?

Nolo's Essential Guide to Buying Your First Home...not as eloquent as Bernstein but good enough. Skim through it to get the basic idea of the various elements and then let your realtor be your guide. They'll walk you through the whole thing, that's their job. So focus mainly on finding a good realtor. Best way to do that is via personal recommendation.
by Jebediah
Mon Mar 08, 2021 6:47 pm
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 5577
Views: 623794

Re: Small Cap Value heads Rejoice !!!

vineviz wrote: Mon Mar 08, 2021 5:24 pm
jason2459 wrote: Mon Mar 08, 2021 5:14 pm It's the only point of view that matters to you. Doesn't mean it's right for everyone.
Except that rebalancing is 100% certain to be effective at managing risk and virtually no chance of increasing returns.
Rebalancing when you have embedded capital gains is not recommended. The (realized/non-deferred) tax hit far exceeds any potential cost from increased risk.
by Jebediah
Sat Feb 20, 2021 9:44 am
Forum: Non-US Investing
Topic: does holding bonds in the current market make sense?
Replies: 33
Views: 4719

Re: does holding bonds in the current market make sense?

climber2020 wrote: Sat Feb 20, 2021 8:41 am
marinero wrote: Fri Feb 19, 2021 10:44 am Like many people I hold 20% in bonds, but I am increasingly wondering if there's any sense to that. The way the bond markets are going there's unlikely to be any return any time soon and there's even talk that equities and bonds are not as uncorrelated as they once were.
It may not be the same this time, but here's what happened with bonds during the first half of the prior decade when the federal interest rate was zero and had nowhere to go but up:

Image

It's not the same this time. 2010 started with 5 year treasuries at 2.65. 2021 started with 5YT at 0.36.

IMO the OP should time the bond market and move to cash. You can get 0.6 in a savings account.
by Jebediah
Wed Jan 06, 2021 11:57 am
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 5577
Views: 623794

Re: Small Cap Value heads Rejoice !!!

rascott wrote: Wed Jan 06, 2021 11:52 am
decapod10 wrote: Wed Jan 06, 2021 11:47 am Why is SCV up so much today? Something to do with the election?
Yes. The assumption that a lot more fiscal stimulus is coming now.... which is most beneficial to smaller, cyclical firms.
And...WAG... banks (which tend small value) are rallying because more stimulus -> inflation -> higher interest rates -> better for bank profits ?
by Jebediah
Wed Jan 06, 2021 9:48 am
Forum: Investing - Theory, News & General
Topic: Sell it in 401k, immediately buy it back in taxable: any tax issue?
Replies: 6
Views: 949

Sell it in 401k, immediately buy it back in taxable: any tax issue?

I hold an ETF in a solo 401k. It has appreciated. I want to sell it and immediately rebuy it in taxable to maintain the exposure. Reason is to make room for something else in the tax-advantaged space. Is there any tax issue with this sell and re-buy move?
by Jebediah
Tue Jan 05, 2021 7:07 am
Forum: Investing - Theory, News & General
Topic: Felix paper on factor investing; different factors
Replies: 120
Views: 17283

Re: Felix paper on factor investing; different factors

YRT70 wrote: Fri Jan 01, 2021 8:34 am
VTI/VXUS, AVUV/AVDV is the bulk of my portfolio.

Not sure if you know but AVDV doesn't contain EM, VXUS does. The only 'small value' fund in EM is DGS but it's expensive and it isn't really value. I'm planning to sell it but haven't decided what to get instead.
Similar to your port, I do the following:
1/4 VOO
1/8 VBR
1/8 AVUV
----------
1/4 VXUS
1/8 AVDV
1/16 FNDE
1/16 DGS

- I like VOO instead of VTI as small cap is already well covered in VBR and AVUV
- FNDE + DGS = EM all cap value. About 1/3 of Ex-US is EM
- I like to combine VBR and AVUV to spread out value coverage in cap space from micro to mid cap (VBR is half midcap, AVUV is a third micro). VBR also helps with total ER.
by Jebediah
Thu Dec 24, 2020 2:03 pm
Forum: Investing - Theory, News & General
Topic: A Gut Punch (Cliff Asness of AQR on the performance of multifactor equity models)
Replies: 304
Views: 23708

Re: A Gut Punch (Cliff Asness of AQR on the performance of multifactor equity models)

vineviz wrote: Thu Dec 24, 2020 8:44 am
There can be no doubt that a portfolio exposed to multiple independent sources of systematic risk is more diversified than a portfolio which is exposed to only one.
Imagine there's a sub-sector of the economy that only exists in one region of one country, something like say, Internet of Things, and this sub sector has 25 public companies. It just so happens that a portfolio of these 25 companies loads up well on all the standard equity risk factors. Is this portfolio more diversified than VT (a world equity TSM fund)? Only by the most contorted definition.