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by nedsaid
Sat Dec 03, 2022 5:35 pm
Forum: Personal Investments
Topic: should I move on [from advisor]?
Replies: 25
Views: 2234

Re: should I move on [from advisor]?

I would say that Northwest Mutual is probably my least favorite place for anyone to invest. I have never worked in the insurance industry, but I had a friend who worked for them briefly, I will just say that I was not impressed.

Not against Advisors but if you can learn how to invest, this will save you a ton of money over a lifetime. No loads, no commissions, no advisory fees ever again if you learn well from this forum.
by nedsaid
Sat Dec 03, 2022 2:50 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

Why did insurance companies stop offering inflation adjusted annuities? Is it because they can't predict future inflation and hence considered them too risky? If so, then if experts in risk, insurance companies, consider future inflation too risky to write into a nonrevocable contract in the form of a COLA, why does it make sense for the average person to take on that inflation risk? It appears insurance companies are offloading inflation risk onto the purchasers, and since folks are buying annuities without COLA's, why wouldn't they? My guess is that few consumers wanted them, it was difficult for insurance companies to properly price them, and is was just easier to guarantee a fixed increase each year. Also TIPS sometimes have negative r...
by nedsaid
Sat Dec 03, 2022 2:44 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

Which leads me to a second question. If one is interested in TIPS, is it better to buy them individually and hold them to maturity, or is a TIPS fund good enough?

I suppose that when TIPS funds veer into negative real yield territory, it likely means that prices are way up. Of course, we have seen real yields turn positive as TIPS Net Asset Values fell.
by nedsaid
Sat Dec 03, 2022 2:37 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

Hi Bill: Thanks for posting in the thread discussing your article. Asset pricing is very important and right now with TIPS having positive real yields, this is a great time to set up TIPS ladders. Not so long ago, TIPS had negative real yields so in that environment one would be locking in losses in purchasing power which defeats their purpose. I was even cautious about buying TIPS when their real yields were slightly positive. Valuation and asset pricing matter and matter a lot. I remember asking around the forum about TIPS and shared my concerns about buying them when real yields were barely positive or even negative. Some said to go ahead and buy regardless of price if you desire inflation protection and others were wary of buying TIPS w...
by nedsaid
Sat Dec 03, 2022 12:22 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

What is becoming evident here is that people are feeling a bit freer to disagree with folks who have almost Guru status here. I have high respect for Dr. Bill Bernstein, whom John Bogle said was the smartest man that he ever met. It was like he was so revered that his name was spoken in hushed tones. There is a poster here that I like a lot, partly because he was willing to take Bernstein on, sometime back there was a discussion of Liquid ETFs holding more illiquid Bonds and if this would create a big problem in a market crisis. Bernstein said that he would never recommend that anyone hold Bonds within an ETF and this person took him on and said that ETFs were the perfect vehicle in which to own Bonds. Not sure anyone had dared to do that b...
by nedsaid
Sat Dec 03, 2022 11:30 am
Forum: Personal Investments
Topic: Help with Portfolio (Husband Passed Away)
Replies: 31
Views: 3201

Re: Help with Portfolio (Husband Passed Away)

I will speak the unspoken question here. Do you have too much house? If so, downsizing might be a great option.
by nedsaid
Sat Dec 03, 2022 11:27 am
Forum: Investing - Theory, News & General
Topic: WSJ: Public REITs Are Down, Nontraded REITs Are Up. Which Is Right?
Replies: 67
Views: 8665

Re: WSJ: Public REITs Are Down, Nontraded REITs Are Up. Which Is Right?

Don't know anything about Blackstone or their REIT fund. I am at their website right now. My only experience with these is from being a Financial Advisor's part time assistant. These can be good investments, I suppose it boils down to the expertise and the integrity of the managers and of course the quality of the properties. Larry's firm would have the opportunity to develop good relationships with such managers. When I was having Ameriprise do financial planning for me, I was pitched a few of these Private REITs. So those experiences and what I read here are the extent of my knowledge. Thanks Nedsaid. I too was looking up the fund but could not locate the expense ratio. Best. Tony Fundrise to the rescue. They post a fee schedule, compari...
by nedsaid
Sat Dec 03, 2022 11:25 am
Forum: Investing - Theory, News & General
Topic: Latest Thoughts from Larry Swedroe
Replies: 262
Views: 55534

Re: Latest Thoughts from Larry Swedroe

I thought I would resurrect this old thread. For a while, I couldn't access Larry's twitter feed without starting my own Twitter account. It looks like that with new ownership, I can view his feed again. In Advisor Perspectives, Larry has a new article called Lies, Damned Lies, and Performance Benchmarks. A search will bring it up. Don’t trust analysis from managers that shows they have outperformed an appropriately selected, passive benchmark. That is true for mutual funds, and new research shows it is equally accurate when it comes to endowments and pension funds. mutual funds routinely select benchmarks that provide them with the greatest degree of performance, even to the extent of switching benchmarks if a different one will boost the...
by nedsaid
Sat Dec 03, 2022 11:22 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

I suppose what will happen is that we will replay the entire thread on the Allan Roth article regarding the 4% withdrawal rate being made easier. This Bernstein article is a follow-up to the Roth article where Bernstein gives Roth the attaboys. Hi nedsaid, I had long breaks in visiting the Bogleheads and missed the thread discussing Allan Roth's article. Could you please post a link to it? Thank you, Victoria Here is the thread, similar to this one. https://www.bogleheads.org/forum/viewtopic.php?t=388845 Here is Allan Roth's article in Advisor Perspectives. https://www.advisorperspectives.com/articles/2022/10/24/the-4-rule-just-became-a-whole-lot-easier?utm_source=boomtrain&utm_medium=email&utm_campaign=AP+Newsletter+2022-10-25+647...
by nedsaid
Sat Dec 03, 2022 11:19 am
Forum: Investing - Theory, News & General
Topic: VNQI Global ex-U.S. Real Estate ETF is cheap, now yielding 8%
Replies: 38
Views: 8441

Re: VNQI Global ex-U.S. Real Estate ETF is cheap, now yielding 8%

Garland, never in my wildest imaginations would I think that an entire asset class could be a Value trap. I remember the Merriman advisor telling me back in 2008 that International Real Estate was a recommended asset class. They were splitting their 6% REIT allocation between US REITs and International Real Estate at 3% each. Nearly all of my REIT investments are in the United States, I own a Global Real Estate fund which has my only investment in International Real Estate. I own Vanguard REIT Index ETF in another account and Fidelity Real Estate Index in yet another account. I also directly own Weyerhauser, a United States Timber REIT. Hi Nedsaid - I may have asked you previously, and if I did, I apologize in advance. Are you familiar wit...
by nedsaid
Sat Dec 03, 2022 11:11 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

I suppose what will happen is that we will replay the entire thread on the Allan Roth article regarding the 4% withdrawal rate being made easier. This Bernstein article is a follow-up to the Roth article where Bernstein gives Roth the attaboys. Hi nedsaid, I had long breaks in visiting the Bogleheads and missed the thread discussing Allan Roth's article. Could you please post a link to it? Thank you, Victoria Here is the thread, similar to this one. https://www.bogleheads.org/forum/viewtopic.php?t=388845 Here is Allan Roth's article in Advisor Perspectives. https://www.advisorperspectives.com/articles/2022/10/24/the-4-rule-just-became-a-whole-lot-easier?utm_source=boomtrain&utm_medium=email&utm_campaign=AP+Newsletter+2022-10-25+647...
by nedsaid
Sat Dec 03, 2022 11:07 am
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Hi Nedsaid - Many years ago there was an excellent poster on the forum, “Jerry Lee” (who also used another avatar for a while). He is a DFA financial advisor who I learned much from reading his articles and recommendations. Jack Bogle, however, as far as I recall was not onboard with factor investing, but rather market capitalization weighted index funds. Best. Tony Hi Tony: I might have stumbled upon a few of Jerry Lee's posts. I just went past 10 years as a poster here on Bogleheads and I was a lurker a few years before that. Can't remember when I found out about this forum, it might have been the famous article in Money Magazine called "Here Come The Bogleheads." If I ever would start my own asset management company, I would t...
by nedsaid
Sat Dec 03, 2022 10:40 am
Forum: Investing - Theory, News & General
Topic: WSJ: Public REITs Are Down, Nontraded REITs Are Up. Which Is Right?
Replies: 67
Views: 8665

Re: WSJ: Public REITs Are Down, Nontraded REITs Are Up. Which Is Right?

Just FYI, Larry Swedroe invests in BREIT (a nontraded reit) and I trust his judgment on good investing options. https://twitter.com/larryswedroe/status/1444381648473280514 Wow. Larry gets to be a bit less Boglehead each day. Hi Nedsaid - I am surprised Larry invests in Blackstone’s BREIT fund. I would expect this may be a higher cost fund? Would you know the expense ratio? Wasn’t Larry positive regarding International REITs years ago? Best. Tony Don't know anything about Blackstone or their REIT fund. I am at their website right now. My only experience with these is from being a Financial Advisor's part time assistant. These can be good investments, I suppose it boils down to the expertise and the integrity of the managers and of course th...
by nedsaid
Sat Dec 03, 2022 10:33 am
Forum: Investing - Theory, News & General
Topic: Latest Thoughts from Larry Swedroe
Replies: 262
Views: 55534

Re: Latest Thoughts from Larry Swedroe

I thought I would resurrect this old thread. For a while, I couldn't access Larry's twitter feed without starting my own Twitter account. It looks like that with new ownership, I can view his feed again. In Advisor Perspectives, Larry has a new article called Lies, Damned Lies, and Performance Benchmarks. A search will bring it up. Don’t trust analysis from managers that shows they have outperformed an appropriately selected, passive benchmark. That is true for mutual funds, and new research shows it is equally accurate when it comes to endowments and pension funds. mutual funds routinely select benchmarks that provide them with the greatest degree of performance, even to the extent of switching benchmarks if a different one will boost thei...
by nedsaid
Sat Dec 03, 2022 10:19 am
Forum: Investing - Theory, News & General
Topic: WSJ: Public REITs Are Down, Nontraded REITs Are Up. Which Is Right?
Replies: 67
Views: 8665

Re: WSJ: Public REITs Are Down, Nontraded REITs Are Up. Which Is Right?

jh wrote: Wed Nov 02, 2022 11:10 am Just FYI, Larry Swedroe invests in BREIT (a nontraded reit) and I trust his judgment on good investing options.

https://twitter.com/larryswedroe/status ... 8473280514
Wow. Larry gets to be a bit less Boglehead each day.
by nedsaid
Sat Dec 03, 2022 10:05 am
Forum: Personal Investments
Topic: Help with Portfolio (Husband Passed Away)
Replies: 31
Views: 3201

Re: Help with Portfolio (Husband Passed Away)

A realistic look at your expenses are in order, as others have said $70K in spending every year is likely not sustainable.

There is a long time friend that I have known for years and years and years. Haven't seen the friend for probably six years now and googled the name to see if something would pull up. A Sheriff's sale of the person's home pulled up and I had sorrow over that. The person wasn't particularly financially astute and must have gotten too deep into debt. I wondered if equity had been taken out of the home to cope with rising living expenses and wound up not being about to stay in the home. Pretty sad.

That is a very good lesson for all of us.

Best wishes,

Ned
by nedsaid
Sat Dec 03, 2022 9:55 am
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

What you can do is see how asset classes performed under different conditions with backtesting. The limitation of course, is that market events and market eras don't repeat themselves exactly. There are things you can learn. And yes, you can use reasonable assumptions and modeling to see what the future might look like, models are just that, only an approximation of reality, some models are better than others, but the best are still imperfect. It boils down to random guesses versus educated guesses and I would pick the educated guesses every time. Hi Nedsaid - Not that it impacts investments decisions, but it lends additional weight and support of folks with smart money: I read that Arnold Schwarzenegger owns part of DFA (in Santa Monica) ...
by nedsaid
Sat Dec 03, 2022 9:41 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

vineviz wrote: Sat Dec 03, 2022 8:56 am
Blue456 wrote: Sat Dec 03, 2022 8:36 am
Stormbringer wrote: Sat Dec 03, 2022 8:24 am Is there any data on how many pensions are indexed to inflation? I suspect the number is fairly low, but I'm not sure.
Federal and state pensions are indexed to inflation.
Not all state pensions are indexed to inflation.
My state's PERS has annual increases of 2%.
by nedsaid
Sat Dec 03, 2022 9:40 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

You could check the dividend yields for REIT indexes and Stock Indexes at Morningstar. I am not thinking too much about dividend yield as I am still reinvesting everything. Real earnings adjusted for inflation is a good concept, good luck calculating that. Got to be careful about talking about dividends as this could start the equivalent of a pie fight or a barroom brawl. :wink: Yeah, I don't want to make it sound like I think dividends are the only component of returns. But it is interesting to think about whether or not these assets are responding to unexpected inflation independent of things like changes in the yield curve/discount rates. The latter sort of change is having a big impact on stock prices, fund NAVs, and so on. But that do...
by nedsaid
Sat Dec 03, 2022 9:29 am
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Your points are well taken regarding back testing. I have made these points many times myself including comparing data from decade to decade. But imperfect as it is, it is what we have. The notable alternative to backtesting is using forward-looking probabilistic asset models which use current data as input variables. Those models can be derived from a combination of theory and carefully controlled and tested historic observations. That is also imperfect. But it is a much better way to use historical information to inform our financial planning than backtesting. Indeed, in a way, backtesting is doing the same sort of thing, just in a really obviously bad way. What you can do is see how asset classes performed under different conditions wit...
by nedsaid
Fri Dec 02, 2022 11:54 pm
Forum: Personal Investments
Topic: Looking for recent analysis on CD rates after Fed's Powell indicated rate increase would slow but terminal rate 5-7%
Replies: 15
Views: 3035

Re: Looking for recent analysis on CD rates after Fed's Powell indicated rate increase would slow but terminal rate 5-7%

I remember that before the 2008-2009 financial crisis that 6% to 7% interest rates were the norm. Guess that means I am getting old. That is probably ancient history for younger Bogleheads, to them that would seem to be the time when Mastodons walked the earth.
by nedsaid
Fri Dec 02, 2022 11:50 pm
Forum: Investing - Theory, News & General
Topic: Is DFA still popular these days?
Replies: 19
Views: 2776

Re: Is DFA still popular these days?

There used to be a lot of DFA related discussion on this forum, but less so in the past couple of years (my perception might be off). I am curious to know what people feel about DFA in general these days. A long time ago, I considered setting up a DFA type portfolio instead of the regular Vanguard 2-4 total xxx index portfolio. At the time, I just didn't have enough money, so I went with the Vanguard approach. I did however set my mom up with a financial advisor a while back (mostly to avoid a I got hit by bus situation) and the advisor setup a DFA portfolio for her. It's got like a lot of funds, but I am not doing the rebalancing. In any case, the portfolio has done pretty well so far in its conservative ways. What's the feeling these day...
by nedsaid
Fri Dec 02, 2022 11:33 pm
Forum: Investing - Theory, News & General
Topic: VNQI Global ex-U.S. Real Estate ETF is cheap, now yielding 8%
Replies: 38
Views: 8441

Re: VNQI Global ex-U.S. Real Estate ETF is cheap, now yielding 8%

VNQI is cheap, very cheap, and it has been that way for a long, long time. I believe to some extent in fundamentals and I took the VNQI valuation bait many years ago. I watched as it continued to get cheaper and cheaper relative to US REITS and US stocks. I believe VNQI's share price is less now than it was 10 years ago. PE now is well less than 10, PB is well less than 1 and dividends over the past year have been 8%. It sounds like a screaming buy, but for more than a decade it has been a "value trap." Valuation disparity between US and INTL has been a very misleading indicator of future returns for more than a decade in real estate and equities. Those who firmly believe in PE and PB as indicators of future returns have been dea...
by nedsaid
Fri Dec 02, 2022 11:23 pm
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

abuss368 wrote: Fri Dec 02, 2022 8:56 pm
nedsaid wrote: Thu Dec 01, 2022 2:02 pm Taylor, I never thought I would be the guy mounting a spirited defense of Total Bond Market Index.
Hi nedsaid -

That was priceless! 😂

Hope you are well.
Tony
Never thought it would happen but I think I am becoming Taylor Larimore. :wink:
by nedsaid
Fri Dec 02, 2022 7:15 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

A concept that people need to understand is that there can be a delay, sometimes a pretty big delay in when you get your inflation adjustment from whatever asset class you are invested in. Such asset classes such as Stocks, TIPS, REITs are touted as inflation fighters but in 2022, all of these inflation fighters are down in price even as inflation has, well, inflated. So it isn't like the adjustment for inflation is immediate. For Stocks, the inflation adjustment might take a decade or more. For TIPS, I suspect folks will see their "inflation adjustment" in the NAV for their TIPS funds over the next 3-4 years as the duration risks works its way through. REITs are stocks, so their "adjustment" could be delayed in very si...
by nedsaid
Fri Dec 02, 2022 6:56 pm
Forum: Personal Investments
Topic: Help with Portfolio (Husband Passed Away)
Replies: 31
Views: 3201

Re: Help with Portfolio (Husband Passed Away)

Since all the investments are in tax-advantaged accounts (IRAs, Roths), there are no tax-consequences from selling them all and just buying Vanguard LifeStrategy Moderate Growth. That leaves the taxable account. I'd probably just pay off the mortgage with some of that, then just make the rest 60/40 in Total Stock Market Index and perhaps some US Treasury fund. So you would end up with only 3 funds for the entire portfolio, but more than 3 accounts. Of course, there are other possible portfolios that would be suitable for you. My brother suggested transferring everything into Vanguard LifeStrategy Moderate Growth. I haven't decided if it's worth paying off mortgage since it's such a low rate (1.8). Not sure what to do with taxable account, ...
by nedsaid
Fri Dec 02, 2022 6:20 pm
Forum: Investing - Theory, News & General
Topic: The 4% Rule Just Became a Whole Lot Easier - Allan Roth
Replies: 409
Views: 76677

Re: The 4% Rule Just Became a Whole Lot Easier - Allan Roth

If one were to purchase the 30 year TIPS ladder in a non-retirement brokerage account, I understand the income tax due on the"phantom income". Would this be a worse-case scenario?: Year 1 the inflation index increases your bond by 5%, and you owe the tax on the phantom income. Year 2 there is deflation by 5%. And so on.....on alternate years, the inflation number goes up, and then goes down by the same amount. So when the bond matures, the value will even out to the face value (equal number of inflation and deflation years), but you will have paid tax every other year for no income at the end. I know this is highly unlikely, but just checking to see if I understand this correctly. I'm honestly not sure I understand your question,...
by nedsaid
Fri Dec 02, 2022 6:14 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

A concept that people need to understand is that there can be a delay, sometimes a pretty big delay in when you get your inflation adjustment from whatever asset class you are invested in. Such asset classes such as Stocks, TIPS, REITs are touted as inflation fighters but in 2022, all of these inflation fighters are down in price even as inflation has, well, inflated. So it isn't like the adjustment for inflation is immediate. For Stocks, the inflation adjustment might take a decade or more. For TIPS, I suspect folks will see their "inflation adjustment" in the NAV for their TIPS funds over the next 3-4 years as the duration risks works its way through. REITs are stocks, so their "adjustment" could be delayed in very si...
by nedsaid
Fri Dec 02, 2022 4:44 pm
Forum: Investing - Theory, News & General
Topic: The 4% Rule Just Became a Whole Lot Easier - Allan Roth
Replies: 409
Views: 76677

Re: The 4% Rule Just Became a Whole Lot Easier - Allan Roth

If one were to purchase the 30 year TIPS ladder in a non-retirement brokerage account, I understand the income tax due on the"phantom income". Would this be a worse-case scenario?: Year 1 the inflation index increases your bond by 5%, and you owe the tax on the phantom income. Year 2 there is deflation by 5%. And so on.....on alternate years, the inflation number goes up, and then goes down by the same amount. So when the bond matures, the value will even out to the face value (equal number of inflation and deflation years), but you will have paid tax every other year for no income at the end. I know this is highly unlikely, but just checking to see if I understand this correctly. I'm honestly not sure I understand your question,...
by nedsaid
Fri Dec 02, 2022 4:29 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

A concept that people need to understand is that there can be a delay, sometimes a pretty big delay in when you get your inflation adjustment from whatever asset class you are invested in. Such asset classes such as Stocks, TIPS, REITs are touted as inflation fighters but in 2022, all of these inflation fighters are down in price even as inflation has, well, inflated. Absolutely! That said, I do assume if someone had set up something like a TIPS ladder to produce real income, it has performed as expected. However, if you were looking at, say, the market value of that TIPS ladder, it would have been much higher a year ago than it is now, thanks to the quite dramatic drop in real interest rates. Actually, for that matter--is anyone actually ...
by nedsaid
Fri Dec 02, 2022 4:21 pm
Forum: Investing - Theory, News & General
Topic: Is DFA still popular these days?
Replies: 19
Views: 2776

Re: Is DFA still popular these days?

DFA is still good and they still enjoy popularity but they have had some asset flow out of their firm. This is the reality of a business built on Factor investing, in what had been a market led by Large Growth and FAANG+Microsoft+Tesla, DFA funds are going to underperform in such a market. Hence, the outflows. Since about mid-2020, Value has been leading the market and DFA should be performing better relative to the market. My prediction is that if Value continues to do relatively well then client money should start flowing back in. Are there sites comparing DFA values? I am curious to know what would have achieved if I had use DFA. IE more small and value. The performance data is available. I go to Morningstar. You can get a lot of portfo...
by nedsaid
Fri Dec 02, 2022 12:54 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

When CPI-adjusted SPIAs were first available, the reduction in initial payout rate was 30%, but that reduction rose to about 45%, which made them unpopular. Whether or not a hypothetical inflation-adjusted SPIA is expensive would be based on whether the reduction in initial payout is fair value for the net present value of the inflation risk. For what it's worth a handful of Bogleheads have an AIG CPI-adjusted annuity that was issued in a short period of time just before AIG crashed and had to be bailed out by the Fed during the 2008-9 financial crisis. My mother has one. She's now 86 and enjoying the annual inflation-kicker to her income on that annuity. That being said, it turned out to be a deal that was too good to be true. Fortunately...
by nedsaid
Fri Dec 02, 2022 12:39 pm
Forum: Investing - Theory, News & General
Topic: Is DFA still popular these days?
Replies: 19
Views: 2776

Re: Is DFA still popular these days?

DFA is still good and they still enjoy popularity but they have had some asset flow out of their firm. This is the reality of a business built on Factor investing, in what had been a market led by Large Growth and FAANG+Microsoft+Tesla, DFA funds are going to underperform in such a market. Hence, the outflows. Since about mid-2020, Value has been leading the market and DFA should be performing better relative to the market. My prediction is that if Value continues to do relatively well then client money should start flowing back in.
by nedsaid
Fri Dec 02, 2022 12:20 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

Well, is inflation protection expensive or is it not expensive? There was quite a loss of income upfront for those who bought CPI adjusted annuities and it took years for the monthly payments of the inflation protected annuity to catch up with the monthly payments of the nominal annuity. Hi Nedsaid, I didn't mean to offend, but the point I was trying to make in that post was that annuitization is much less costly than bond ladders, if the goal is simply income. With regard to the expense of inflation protection, I observed that when CPI adjusted (full COLA) life annuities were available, their price was roughly the same as a graded life annuity, where the graded life annuity annual escalation rate was about 50 basis points above the 20 yea...
by nedsaid
Fri Dec 02, 2022 12:19 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

When talking about stocks (or really any asset) and inflation, I think it is really critical to distinguish both expected inflation and unexpected inflation, and short-term versus long-term periods. Long-term nominal assets, including nominal SPIAs, are priced in part based on long-term expected inflation. I believe it is still possible to get SPIAs with what they call "cost of living adjustments", meaning the payments go up a fixed amount every year. Assuming that belief is right, if those predetermined COLAs were around expected inflation, your SPIA might work out fine--as long as inflation was as expected. The thing that particularly concerns me, though, is unexpected inflation. And in particular, I am concerned about long-ter...
by nedsaid
Fri Dec 02, 2022 12:10 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

Well, is inflation protection expensive or is it not expensive? There was quite a loss of income upfront for those who bought CPI adjusted annuities and it took years for the monthly payments of the inflation protected annuity to catch up with the monthly payments of the nominal annuity. Inflation protection is, broadly speaking, NOT expensive. The difference in expected return between nominal Treasuries and TIPS is almost always minimal now that the market is mature, and doesn't even have a consistent sign. When they were available, CPI-linked income annuities had lower initial payouts but that wasn't because the "inflation protection" was expensive. It was because the payouts were expected to increase over the lifetime of the a...
by nedsaid
Fri Dec 02, 2022 12:09 pm
Forum: Investing - Theory, News & General
Topic: Is DFA still popular these days?
Replies: 19
Views: 2776

Re: Is DFA still popular these days?

How reputable is Avantis? It's not bitcoin, but DFA and Vanguard are a known quantity. I'd recommend reading the Avantis threads. Your questions will be answered. Avantis is owned by American Century. They have been in business since 1958. They are reputable. Also there is this recent podcast from the Avantis Chief Investment Officer, Eduardo Repetto, that answers these questions and others. He worked at DFA for many years before going to Avantis. https://rationalreminder.ca/podcast/228 Avantis is very reputable. The folks at American Century are great and they have allowed Eduardo Repetto and his team the independence to do their best job. Essentially, American Century performs all of the back office functions for Avantis so all Repetto's...
by nedsaid
Fri Dec 02, 2022 11:00 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

Another thing that Bobcat2 pointed out so well in another thread is that inflation protection is expensive, ... . I did not point out that inflation protection is expensive. What I did point out was that bond ladders are expensive, if the goal is lifetime income. Getting to keep assets in the estate after you die is costly. Putting it another way, the mortality credit embedded in life annuities is large. I compared TIPS ladders to graded life annuities. Even graded life annuities that increased at 4% per year were much cheaper than 30 year TIPS ladders. BobK aka Bobcat2 Well, is inflation protection expensive or is it not expensive? There was quite a loss of income upfront for those who bought CPI adjusted annuities and it took years for t...
by nedsaid
Thu Dec 01, 2022 9:21 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

Yeah, self-insuring against longevity is obviously an option for sufficiently wealthy people. However, I would point out one of the downsides of that approach is the likelihood of passing away with a large estate. This is not necessarily seen as the worst thing that can happen, but I think in many cases one might suggest both the investor and their beneficiaries could have been better off if the investor had given away more of that wealth while they were alive. So that to me is an intriguing, somewhat subtle argument for annuities--that if used judiciously, you might be able to give more of your wealth away while alive. Including, for that matter, out of the income from your annuity. This!^^^ (bold added) Taylor Larimore and his late wife ...
by nedsaid
Thu Dec 01, 2022 8:09 pm
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Is there a reason we're all calling vineviz 'Vince' now? I don't see anything about his given name in his profile or signature, and I assume doxxing someone who has chosen to post pseudonymously is against some sort of policy... I have called Vineviz by his first name on occasion because he has made no secret of his real name. Others here have done the same. I put Vineviz into the search box on Google and different things popped up including his Instagram account and his Advisory firm. Clearly, he has made no attempt to hide who he is. Just like I call Randomwalker Dave, as he has posted his real first name, the only other things I know about him is that he is a Physician and that he is a Buckingham client. It isn't that I am violating som...
by nedsaid
Thu Dec 01, 2022 8:07 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

The thing that bugs me about these discussions is the inability to admit that the other person with whom one disagrees has a point. It seems egos get involved here and the rhetoric can get a bit overheated. No solution to the twin problems of dealing with inflation and not exhausting the portfolio in retirement is going to be perfect. There are trade-offs and even the best solutions have flaws. The best we can do is try to hedge against the biggest risks we might face but we can't guard against them all. When some guru uses terms like "Russian roulette" to describe any investment approach that doesn't 100% adhere to their recommended strategy, I think the discussion was probably overheated before it even began. In any case, this ...
by nedsaid
Thu Dec 01, 2022 4:10 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

The thing that bugs me about these discussions is the inability to admit that the other person with whom one disagrees has a point. It seems egos get involved here and the rhetoric can get a bit overheated. No solution to the twin problems of dealing with inflation and not exhausting the portfolio in retirement is going to be perfect. There are trade-offs and even the best solutions have flaws. The best we can do is try to hedge against the biggest risks we might face but we can't guard against them all. I didn't know we were doing that. Dr. Bernstein discusses the pros and cons of TIPs vs. Annuities -- it's not dogmatic. It's important to weigh those trade-offs when deciding how to handle our retirement dollars when we enter retirement. E...
by nedsaid
Thu Dec 01, 2022 4:01 pm
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

So I did the best I could with what I had. OK, but if the best you can do is something that is unreliable for the purpose at hand, then unfortunately this means that mode of analysis isn't helpful at all. In other words, the fact there is no good backtest available to assess these issues is not a surprise to me. But that doesn't mean we should use a backtest that doesn't actually help, simply because it is the "best" available. The implication that I was dishonest with my presentation is amazing and really against the spirit of this forum. I apologize, because I sincerely did not intend to imply any such thing. To clarify, what I meant by "internal contradiction" was not any sort of intentional dishonesty, but rather an...
by nedsaid
Thu Dec 01, 2022 3:50 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

The thing that bugs me about these discussions is the inability to admit that the other person with whom one disagrees has a point. It seems egos get involved here and the rhetoric can get a bit overheated. No solution to the twin problems of dealing with inflation and not exhausting the portfolio in retirement is going to be perfect. There are trade-offs and even the best solutions have flaws. The best we can do is try to hedge against the biggest risks we might face but we can't guard against them all. Solve longevity risk by taking up increasingly dangerous hobbies as your portfolio gets drawn down. Solve inflation risk by spending two hours a week recording "not financial advice" YouTube videos hocking Krugerrands whenever in...
by nedsaid
Thu Dec 01, 2022 3:48 pm
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Is there a reason we're all calling vineviz 'Vince' now? I don't see anything about his given name in his profile or signature, and I assume doxxing someone who has chosen to post pseudonymously is against some sort of policy... Wrt. the discussion nedsaid was having with vineviz, I see this less as a matter of academics vs pragmatism and more as a matter of different views of the purpose of bonds in a portfolio. Here's a sampling of some teleological disagreements one might have about bonds: * Are bonds purely fixed income? * Are bonds meant purely as a means of matching future liabilities? * Are bonds "meant for safety" in the sense that the principal of the bonds themselves must be at minimal risk at any given time? * Are bond...
by nedsaid
Thu Dec 01, 2022 3:31 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"
Replies: 776
Views: 69683

Re: Bill Bernstein: "Playing Inflation Russian Roulette in Retirement"

The thing that bugs me about these discussions is the inability to admit that the other person with whom one disagrees has a point. It seems egos get involved here and the rhetoric can get a bit overheated. No solution to the twin problems of dealing with inflation and not exhausting the portfolio in retirement is going to be perfect. There are trade-offs and even the best solutions have flaws. The best we can do is try to hedge against the biggest risks we might face but we can't guard against them all.
by nedsaid
Thu Dec 01, 2022 3:08 pm
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

The comparison that I did above was the best I could do using real life examples. I used investor shares of Vanguard funds because I knew they would have the longest performance records. Fortunately, I could access data back to January 1992. I cannot run these kind of comparisons back to the early 1970's, the period right after World War II, the Great Depression, or further back from that is that this is beyond the life spans of most mutual funds. Retail index funds were only available since 1976. Even if I use asset class data, Portfolio Visualizer only goes back so far. So I did the best I could with what I had. The implication that I was dishonest with my presentation is amazing and really against the spirit of this forum. I used real li...
by nedsaid
Thu Dec 01, 2022 2:02 pm
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Taylor, I never thought I would be the guy mounting a spirited defense of Total Bond Market Index.
by nedsaid
Thu Dec 01, 2022 1:22 pm
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

If you can keep returns about the same but reduce volatility, over long periods of time this can make a sizeable positive difference. Then you haven't actually kept the assumed returns about the same. The mathematical models you are talking about basically do that--implicitly assume higher returns for the less volatile asset mix, then "reveal" this assumption as they do the math involved. Nedsaid: The concept of reducing volatility drag sounds great but very hard to put into practice. The effect of what Vince is recommending is that US Treasuries are an excellent diversifier to stocks most all of the time. So for example, during the 2008-2009 financial crisis, US Treasuries were up when most everything else was down. You repeat t...
by nedsaid
Thu Dec 01, 2022 11:16 am
Forum: Personal Investments
Topic: Thoughts on bond component for Avantis or DFA three fund portfolio
Replies: 93
Views: 7056

Re: Thoughts on bond component for Avantis or DFA three fund portfolio

I am considering a three fund ETF portfolio of either Avantis or DFA funds. However, I am less "sold" on their bond offerings. Does anyone have any thoughts about the merits of either AVIG (Avantis Core Fixed Income ETF) or DFCF (DFA Core Fixed Income ETF)? Any thoughts on the merits of sticking with BND rather than experimenting with either AVIG or DFCF? Thanks! This should answer your question. I went to Portfolio Visualizer and compared Vanguard Total Bond Market Index Investor shares with Vanguard Intermediate Term Treasury Fund Investor Shares. The data goes back from January 1992 through November 2022. Almost 30 years of data. Edit: I added the Vanguard Long Term Treasury fund Investor Shares. . . . . . . . . . . . . . . . ...