Bogleheads

I will explain one last time,

I write the posts. They are my views. Unless the blog post states otherwise. However, I have an editor who puts them in the proper form for the blogs---he edits in the ...

Unfortunately I was traveling and my assistant who edits all my work and prepares it for the blog wrote up that piece at my suggestion --I provided the the article and he just took that information re ...

Just a correction---as posted above writing today I would not make that statement. In fact that issue about converting capital gains into ordinary income has been discussed here and it is wrong, as st ...

However, the attraction of gold is not a high expected real return, but that it has had a negative correlation to equities — it has a tendency to do well when stocks are doing poorly. You certainly ...

First, you should not buy a bond with a longer maturity than the need for the cash

Second, given current yields I would NOT buy the 20 year, but stick to the 2025 or so bonds. At higher yields I wo ...

a Plan B trigger means you have the wrong asset allocation to start with.

It would be hard for me to find a more incorrect statement.

We live in a world of risks. If we always assumed the worst ...

Richard
A good plan executed properly is much better than a perfect plan ignored.

I compeletely agree, as I stated almost exactly

That doesnt change the fact that there is a right way.

Simpl ...

Actually there is a right way to rebalance, but it is not easy to identify. There are very complex mathematical formulas involving things like risk aversion and transactions costs and taxes. And simpl ...

The problem with the momentum data is that it does not include COSTS of implementing the strategy

The research shows that if you actually try to buy and sell based on the momentum signals the alpha ...

Market is leading indicator and employment is lagging indicator. Investors must know the difference between the two.

Yes, no mistake

I used to work with Russell Stoever and found him very helpful

Henry
Can drive yourself crazy looking for a "right" answer. There is none. One strategy is to diversify your decision.

good luck

xerty
The question is how do you know which side the risk premium is on? There is no way to know. Example, just because something is in backwardation doesn't mean there is a positive risk premium for ...

Henry
ST treasuries obviously have yields that respond very quickly to higher inflation. So they are a very good substitute. They have the disadvantage of floating real rates though. And you don't ea ...

Bill
I don't see what that has to do with PIMCO. They don't write contracts with the Chinese as counterparties, at least to my knowledge.

Roy
I fully agree that the discipline of sticking to the right plan is far more important than the asset allocation--

The AA determines the risk and return of the portfolio

Discipline determine ...

Xerty
In cases of both commodities and currencies there are both "consumers" and producers" as you point--where is the risk premium? Which is paying and which is collecting? Both have ...

Henry
First I never treat the unlikely as impossible. That is one reason I have such a low equity allocation.

Second, TIPS will do exactly what they are supposed to do in deflation, or better, tha ...

Beagler
Beat me to it ( Smile

)

As I have said before, to me this whole issue is WAY overdone. For example, you can now with just three DFA Core funds have significant exposure to all three risk facto ...

Andrew
If there is no risk story there is no expected return. PERIOD.
Trends that have worked in the past may no longer work in the future. So there is no expected return, even before costs. What yo ...

detifoss
The liquidity issue matters ONLY if you will need to access the TIPS you bought BEFORE they mature. The price risk interim is basically irrelevant.

Henry
Yes of course there is risk of ...

few points
A) Beta is the measure of an asset's risk in relation to the market. So CCF has no exposure to beta, at least directly. Indirectly you could argue it has negative exposure due to its histo ...

tony
The fund is an excellent inflation hedge and more importantly it is an excellent hedge of equity risks

However, that is only true over longer time frames---the only time frames you should be ...

Two points
First the breakeven between TIPS and nominals is just that. It does not mean that the market expects that as the inflation rate. There are other factors, for example the nominal bond shoul ...

There was a simple solution to the problem of rebalancing that could have been used. Use cash flows and dividends to rebalance and allow some style drift. The trade off is that you create tracking err ...

Henry
First, re your comments on the Philly Fed consensus. IMO that is the best estimate of the market's forecast of future inflation.

Second, remember I am not making a forecast per se about whe ...

The way to address that is two fold

A) Don't simply market cap weight. For example, DFA puts limits on any one country for that reason. That increases diversification and reduces bubble risks
B) R ...

BTW
Here is a hypothetical

Let's assume TIPS curve is flat and all TIPS are yielding 0.1 percent. Would you buy a ten-year TIPS to fill a ladder? If the answer is no, then you are saying valuation ...

Re everyone indexing. That issue is covered in Wise Investing Made Simple, chapter 21.

Few brief comments. Ain't going to happen. And even if it did that would not mean there would be no trading. C ...

Not really much to add here

Few thoughts. IMO this is all politically driven BS.

Second, so far it is only the ETFs which trade directly with the exchanges that have been impacted. PIMCO gets ex ...

Henry
I will try this

First, to me TIPS relative to nominals are a screaming buy because of the current liquidity premium in nominals. So the answer depends on what alternatives you want to consid ...

Just checked again and VTSMX currently 105B.

Les
In that range of maturity is fine IMO. Obviously the longer you go the more inflation risk you take but curve pretty steep on front end.

BTW-I am not arguing against buying the current 10-year ...

Few quick thoughts

Neither stocks nor commodities are a good direct hedge against inflation. The main reason is that they are way too volatile.

However, commodities have positive correlation wit ...

Henry
When I created tables they were meant to be simply guidelines. And one cannot create simple guidelines to meet every situation. I do a more detailed analysis when I make my decisions because, y ...

There are many myths about inflation

Like falling dollar causes inflation. Well if that was so then why from 2000 when dollar hit high against Euro of about 83 cents until last year when Euro hit $ ...

Steve
First, almost all the ones listed ahead of the Vanguard funds are money market, not equity funds. The PIMCO fund is larger at about 175b but it is an institutional fund. The American Fund is sm ...

FYI
That table was for those who only had access to FUNDS, not individual bonds.
With individual bonds you can simply shift maturities and can be basically all TIPS, or with shorter TIPS can compare ...

Here is a piece I wrote a while back on related subject

Manager of the Year

In 1999, Garrett R. Van Wagoner was named Value Line’s “Manager of the Year.” The Website for the Van Wagoner fa ...

Two points to add
First, the dividend yield is the worst of the value strategies in that it has produced the lowest value premium (compared to e/p, btm, c/p). It also has the lowest tstat.

Second, ...

Like many insurance companies they are big player.
They are also a terrible provider as far as investors go with very high expenses. The employees should rise up and demand low cost passive solutions ...

Two important points to add to DDB's comments

first is that with ST high quality bonds you don't have as good inflation protection, but reasonably close, but you do have floating real rates. With T ...

As noted yield curve particularly steep now and there is almost certainty that tax rates going up, making munis more attractive

If do go long now I would be sure to own TIPS in the tax advantaged a ...

What I can tell you is that DFAs research shows that there is momentum but costs basically eliminate any alpha if you trade on it. However, there is valuable information--if you are going to trade any ...

deleted by admin alex - Could we keep this on topic please?

hafis
The FF model does not recommend that no one invest in REITS. But taxable investors should only invest in REITs (unless in lowest brackets) if can do so in tax advantaged accounts. Institutions ...

Larry is trying to say that HY is a hybrid, and therefore it is always going to have the same regressive mix

Why do people make statements that are not true.

In the future it is certainly possi ...

Hafis
Further
If you were referring to whether investors should invest in high yield bonds I offer two points.

First, in general just because someone creates a product doesn't mean investors shou ...

Hafis
I don't see how what I wrote disagrees with anything Fama said. In fact, in working with DFA on their new products they agree fully with my view that corporate bonds have equity exposure and th ...