Search found 3752 matches

by Aptenodytes
Tue Jun 13, 2017 3:49 pm
Forum: Personal Investments
Topic: High risk due to 20% in junk bonds? Or because of long-term holdings?
Replies: 4
Views: 1388

Re: High risk due to 20% in junk bonds? Or because of long-term holdings?

Normally you are better off ignoring such shorthand labels and focusing on what the fund holds or what the fund managers do.
by Aptenodytes
Sat May 20, 2017 4:33 am
Forum: Personal Finance (Not Investing)
Topic: Delay SS, but claim if market plunges
Replies: 49
Views: 6802

Re: Delay SS, but claim if market plunges

If you use up your longevity-risk mitigation doing sequence-of-returns mitigation, then you no longer have something you thought was important to have.

Better to have separate strategies for the two risks, I think.
by Aptenodytes
Mon Mar 13, 2017 8:28 am
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 10151

Re: What do you expect to achieve with your Tilt?

We all inherit the same market history, so if expected return means historic returns it is better to look them up than to ask us.

If expected returns means what do I expect from future returns, then the level of precision goes way down. Nowhere near the tenth of a percentage point.

I don't estimate my expected return mathematically. I expect my tilt to provide returns about equal to the total market with less volatility (it is a Larry portfolio). That's enough precision for me. Somewhere along the line I'm sure I calculated an expected return but that was for portfolio construction purposes, and I'm no longer doing that.
by Aptenodytes
Sun Feb 26, 2017 12:39 pm
Forum: Personal Finance (Not Investing)
Topic: New Member Here, Looking for some suggestions
Replies: 24
Views: 3423

Re: New Member Here, Looking for some suggestions

Welcome to the forum and congratulations on getting the gumption to bare your financial soul. It isn't easy. You've provided a lot of detail, but left out a few important things. 1) At present, how much of your own money are adding to the 401k and IRA? You kind of imply 0 but you don't come right out and say (unless I missed it which is possible). 2) Do you get an employer match on 401k contributions? 3) For all the loans except the furniture loan, are you making only the minimum monthly payments? You should be, but you don't say. You mention making one extra mortgage payment per year. That really should be devoted to paying off one of the higher rate debts, but in the big picture it isn't a big deal. You are spending half of your pre-tax i...
by Aptenodytes
Sun Feb 26, 2017 11:52 am
Forum: Investing - Theory, News & General
Topic: Why has Vanguard increased International Stock and International Bond in Balanced Funds and Portfolio Recommendations?
Replies: 33
Views: 7561

Re: Why has Vanguard increased International Stock and International Bond in Balanced Funds and Portfolio Recommendation

lack_ey wrote:In the long term, having returns like Scenario B is worse than Scenario A, but everybody seems to fixate on the kinds of drops you see in Scenario A.
That seems an exaggeration. The Sharpe Ratio is designed to incorporate both and is a pretty standard way to characterize both risk and return in a single, comparable, dimension.
by Aptenodytes
Sun Feb 26, 2017 11:48 am
Forum: Personal Investments
Topic: Portfolio Backtesting
Replies: 2
Views: 734

Re: Portfolio Backtesting

The Tools and Calculators wiki has a section on backtesting. It only has three entries, but one is the Simba backtesting spreadsheet which is quite a treasure.

When you refer to accuracy problems with Portfolio Visualizer, are you talking about accuracy of the data that the Visualizer uses to drive its tests, or the methodology it uses (in other words, are you seeing bad data and bad outputs or good data and bad outputs? One thing I like about the Simba spreadsheet is that it isn't hard to swap in your own data if you want, for whatever reason.
by Aptenodytes
Thu Feb 23, 2017 6:04 am
Forum: Investing - Theory, News & General
Topic: How to Rebalance with Rate Hikes Looming
Replies: 49
Views: 12115

Re: How to Rebalance with Rate Hikes Looming

This is not a rebalancing question. All your bond holdings have interest rate risk, not just the ones you buy in order to rebalance.

Your brain is tricking you into thinking the new bond purchases matter more than the old, but it is really just the opposite.

There are basically two approaches to interest rate risk. 1) diversify and forget about it (e.g. Invest in Total Bond), or 2) lower your exposure by shortening your average duration. Whatever you choose should be carried out without regard to rebalancing - - it just isn't relevant.

Also you shouldn't let anxiety about interest rate risk put you off of rebalancing. You chose an AA for a good reason.
by Aptenodytes
Thu Feb 23, 2017 5:53 am
Forum: Personal Investments
Topic: HSA investment advice and tax question
Replies: 4
Views: 1467

Re: HSA investment advice and tax question

When you are young, if you are confident you won't need to withdraw from the HSA until retirement, you should be putting your most risky assets there. I presume you have space for bonds in your 401k and tIRA, which give you tax efficiency but lack the tax-free withdrawals of the HSA. If you think there's a possibility you might need to withdraw before retirement you could put a few percentage points in bonds. Or you could conceptualize a medical emergency fund and keep some fixed amount in safe assets for that. From an investment perspective, though, it will still be better to tap into your regular emergency fund for unanticipated medical costs instead of the HSA. There's no reason to mirror your overall AA or overweight bonds. As you appro...
by Aptenodytes
Tue Feb 21, 2017 9:27 am
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 307
Views: 32864

Re: Extreme Valuations, and why you should reconsider

I mean seriously Aloha - 1929 and 1999 valuations, with huge policy uncertaintly not priced in. And you want to continue to not take "SOME" off the table? It has already been pointed out to you that 1929 PEs are not comparable to 2017 PEs. So I'd drop that red herring from your analysis, otherwise you risk making a bad decision. 1999 may be fair, but then you end up with a different conclusion, don't you? And if you are worried about price then why not invest in value stocks rather than dumping a chunk of equities across the board. Here's a comparison of small-value versus total stock market for 1999-present. This graph doesn't tell me that dumping stocks in 1999 would have been wise. https://dl.dropboxusercontent.com/u/4718056/P...
by Aptenodytes
Sat Feb 18, 2017 6:32 am
Forum: Personal Investments
Topic: Advice on what to do with CD coming due
Replies: 10
Views: 1778

Re: Advice on what to do with CD coming due

You are clearly saving for something, but we don't know how much you need or when you might spend it. We don't know if you have come up with a desired asset allocation or, if you have one, what it is. We don't know if the CD is in a taxable account or not (we can guess that it is not but it might not be).

You probably need to fill in some details if you want useful responses.
by Aptenodytes
Sat Feb 18, 2017 6:26 am
Forum: Personal Investments
Topic: Question on cash needs in taxable account
Replies: 19
Views: 2738

Re: Question on cash needs in taxable account

Normally the emergency fund is in cash outside of your investment portfolio, so your scenario wouldn't arise. The reason is the anxiety you point to.
by Aptenodytes
Tue Feb 14, 2017 5:01 pm
Forum: Personal Finance (Not Investing)
Topic: Please help! Father is addicted to Timeshares
Replies: 19
Views: 4381

Re: PLEASE HELP! Father is addicted to TIMESHARES

I was thinking for a second that your dad might be able generate some income from the timeshares through AirBnB (though clearly less than the costs) but then I realized: shouldn't it be the case that AirBnB has killed off whatever small justification there may have once been for timeshares? AirBnB is essentially a global time share that lets you stay wherever you want, any time you want. No equity investment required. It might be an eye-opener to see what rates are being charged through AirBnB at resorts where your dad has timeshares. I suppose the time share associations all forbid renting out through AirBnB, but so do many of the places where I've used AirBnB. Are there other family members that might conceivably enjoy staying at his time...
by Aptenodytes
Tue Feb 14, 2017 4:49 pm
Forum: Investing - Theory, News & General
Topic: Beating the market through behavioral finance.
Replies: 51
Views: 5305

Re: Beating the market through behavioral finance.

I hope you like reading lots of quotes from smart people, because within minutes Taylor Larimore will send you about 50. They will tell you that although it is true that you can count on many people making consistent mistakes regarding market timing, the only way to outperform those mistake-makers is not to play their game better, but not to play their game at all. The following two strategies both benefit from the mistakes that people make buying high and selling low, and enable you to avoid them: 1) be a buy/hold/rebalance investor. This is the way that Taylor believes in, and all his quotes will support it, and they are all irrefutable. The reason: you may be smarter than all of the mistake-makers, but you aren't smart enough to know whe...
by Aptenodytes
Fri Feb 10, 2017 1:38 pm
Forum: Investing - Theory, News & General
Topic: What is the prediction of future long-term returns for your portfolio?
Replies: 64
Views: 9255

Re: What is the prediction of future long-term returns for your portfolio?

If someone asks you "what number do I need?" your first question to them should be "what do you want to do with it?" In your case you neglected to say what you will do with your prediction, so there's no way to answer.

What decision are you planning to make that depends on having a prediction of portfolio returns?
by Aptenodytes
Fri Feb 10, 2017 1:08 pm
Forum: Investing - Theory, News & General
Topic: Why don't stock prices go up on payday?
Replies: 50
Views: 11684

Re: Why don't stock prices go up on payday?

My first inclination in these cases is to eyeball the data. The easiest question to ask is "Does trading volume vary significantly by day of month?" It would take a bit more work to do a more precise exploration of "Does trading volume go up significantly on the days most likely to be paydays?" It only took 3 minutes to do the first one and I don't feel like doing the second.

I don't see anything big enough to make a difference in prices. There are some differences by day that are statistically significant, but the magnitude seems trivial.

Image
by Aptenodytes
Fri Feb 10, 2017 8:49 am
Forum: Investing - Theory, News & General
Topic: Fresh Look at the "Larry Portfolio" from Portfolio Charts
Replies: 125
Views: 28621

Re: Fresh Look at the "Larry Portfolio" from Portfolio Charts

columbia wrote:Suppose someone substituted a global cap weight fund (VT) for SCV and International Small....at what percentage of equities would it be a reasonable substitute for the Larry Portfolio?
As the old joke goes, "you can't get there from here." There's no percentage of a total market fund that does what the LP does -- trimming tail risks while preserving expected returns. The LP replaces total-market investing with small-value and international-small -- you can't undo that and call the results a reasonable substitute. If your cake recipe calls for baking soda and sugar, you can't say "how much extra baking soda should I use if I don't have any sugar."
by Aptenodytes
Fri Feb 10, 2017 8:31 am
Forum: Personal Investments
Topic: IRA Account Strategy - Spouse Overlap
Replies: 20
Views: 2873

Re: IRA Account Strategy - Spouse Overlap

I agree with Ethelred. If the 2 accounts have low correlation it could get hard to rebalance. Moreover, you can't achieve anticorrelation (one goes up when the other goes down) without using esoteric asset categories. The normal components of a boglehead portfolio are all positively correlated with one another. What purpose would anticorrelation even serve? Ensures that one spouse always feels bad? Before you think too much about the solution perhaps you should think more about the objective. Thank you for the comment. I never saw it as making anyone feel bad ,but diversifying so that we don't miss areas. Maybe that's just you projecting. If your goal is to have a diversified portfolio, then you don't need to worry at all about differences...
by Aptenodytes
Mon Feb 06, 2017 9:55 am
Forum: Personal Investments
Topic: IRA Account Strategy - Spouse Overlap
Replies: 20
Views: 2873

Re: IRA Account Strategy - Spouse Overlap

I agree with Ethelred. If the 2 accounts have low correlation it could get hard to rebalance.

Moreover, you can't achieve anticorrelation (one goes up when the other goes down) without using esoteric asset categories. The normal components of a boglehead portfolio are all positively correlated with one another.

What purpose would anticorrelation even serve? Ensures that one spouse always feels bad?
Before you think too much about the solution perhaps you should think more about the objective.
by Aptenodytes
Mon Feb 06, 2017 9:44 am
Forum: Investing - Theory, News & General
Topic: Should retirees build a reserve for RMDs?
Replies: 16
Views: 3806

Re: Should retirees build a reserve for RMDs?

Just to be clear, it is spending that creates the concern, not RMDs. RMDs can be deposited in the asset category they came from. Spending can be lower or higher than RMDs.
by Aptenodytes
Mon Feb 06, 2017 9:36 am
Forum: Investing - Theory, News & General
Topic: Fresh Look at the "Larry Portfolio" from Portfolio Charts
Replies: 125
Views: 28621

Re: Fresh Look at the "Larry Portfolio" from Portfolio Charts

I'm using a Vanguard-funds-for-equities version of the Larry Portfolio and have chosen to mitigate the bond risk on the bond side only. My treasuries are 6 years or less duration. I have a large position in a stable value fund. And I've got a modest set of 10-year TIPS that will be held to maturity. I'm at 30% equities, half international, and would rather leave the equities as is because I think my bond risk is rather low over the long term. Stable value has a guaranteed floor. I don't care if treasuries drop in value for a few years. I've relied more on custom portfolio simulations than backtesting. I prefer to use lower real returns on the bond side than show up in backtesting. For full disclosure i also hold high yield corporate bonds w...
by Aptenodytes
Sat Feb 04, 2017 6:27 am
Forum: Investing - Theory, News & General
Topic: Maintaining Asset Allocation when Value Averaging
Replies: 7
Views: 1277

Re: Maintaining Asset Allocation when Value Averaging

The idea of what an AA is changes under value averaging. You are having to keep a bunch of cash on the sidelines, for example, which you'd never do otherwise. Is that part of your AA or not? Or you might consider your bonds not to be part of your portfolio, and just target the value of your stocks, drawing from or adding to bonds as needed. Either way you are departing heavily from the standard approach to an AA.

I don't see how you can possibly maintain a constant AA except through definitional sleight of hand.
by Aptenodytes
Fri Feb 03, 2017 2:12 pm
Forum: Personal Investments
Topic: IRA Account Strategy - Spouse Overlap
Replies: 20
Views: 2873

Re: IRA Account Strategy - Spouse Overlap

You have to explain your motivation for maximizing the difference between the two accounts before we can answer you. We can't help you achieve your goal if we don't know what it is.
by Aptenodytes
Fri Feb 03, 2017 8:28 am
Forum: Investing - Theory, News & General
Topic: Index Investors getting a free ride
Replies: 53
Views: 8647

Re: Index Investors getting a free ride

This article is merely an attempt to dress up the tired old argument that passive investing will stop working when too many people do it. Been discussed and debunked many times, including on this forum.

Wrapping the argument in free-riding terms only makes it sillier. Both active and passive investors are engaging in voluntary actions in pursuit of private gain. Both are using information derived from the aggregate actions of all investors. Neither is motivated by a desire to create a public good and neither is free riding.
by Aptenodytes
Sun Jan 29, 2017 1:30 pm
Forum: Personal Investments
Topic: What do you include in your asset allocation calculations?
Replies: 43
Views: 7179

Re: What do you include in your asset allocation calculations?

This doesn't have to be complicated or contentious. 1) when you determine the target AA of the portfolio of investment accounts, you take into account everything that matters with respect to your need and ability to take risk, your liquidity needs, and your non-tangible behavioral psychology needs. How you take it all into account will be idiosyncratic - - there are no universal guidelines. People who tell you there's one formula that works for everyone are wrong, and people who tell you they ignore all these things are almost definitely not being fully honest. 2) once you have a target AA for your investment accounts, you can ignore everything else because the only decisions you are making concern only these accounts. That is, when you do ...
by Aptenodytes
Sun Jan 29, 2017 12:11 pm
Forum: Personal Investments
Topic: On the Int'l Funds fence
Replies: 18
Views: 2334

Re: On the Int'l Funds fence

Based on your responses to the replies the only research I think you need to do concerns the behavioral mistakes investors are prone to and the strategies that help avoid them. It looks to me like your biggest risk is not making the wrong choice on international stocks, but rather being plagued with doubt no matter your choice. You may be best off with an approach to investing that lets you tune out all information. A target date fund, as someone suggested, can be part of such an approach.
by Aptenodytes
Fri Jan 27, 2017 6:12 pm
Forum: Personal Investments
Topic: Is Optum Bank calculating my YTD return incorrectly?
Replies: 11
Views: 1590

Re: Is Optum Bank calculating my YTD return incorrectly?

For the numbers to agree the dates would have to be identical and you would have to have not added or subtracted anything into your HSA.

If you meet those conditions then one or both numbers is/are wrong.

Also it doesn't matter, right? I ignore all these things when I look at my accounts.
by Aptenodytes
Thu Jan 26, 2017 10:57 am
Forum: Personal Investments
Topic: Vanguard High-Yield Corp. Adm. VWEAX
Replies: 16
Views: 6803

Re: Vanguard High-Yield Corp. Adm. VWEAX

The only argument I've seen for high-yield bonds that made any sense to me is the one Rick Ferri has made, which amounts to there being a unique risk factor associated with the high-yield bond market. This is a minority view, but Rick's logic makes sense to me and I keep 25% of my "bond" holdings in the Vanguard high-yield fund. (this is a higher percentage than Rick recommends but I have a larger percentage in very-low-risk holdings (TIAA TRAD, individual TIPS, intermediate Treasuries) than his model bond portfolio. If you agree with Rick that there's a unique risk factor embedded in the high-yield market, then you should hold high-yield bonds all the time. If you don't agree with him about that point then there's no reason to ho...
by Aptenodytes
Fri Jan 20, 2017 2:50 pm
Forum: Investing - Theory, News & General
Topic: RMD question
Replies: 20
Views: 3654

Re: RMD question

Am I right in assuming that you have a kind of bucket strategy, with a dedicated portion of your AA devoted to holding the assets from which you take your RMDs? If you are not using a bucket strategy, then you don't need to alter you fund mix just because you are taking RMDs -- you simply make withdrawals that maintain or restore your target AA. If you are using a bucket strategy, then I think the answer basically is derived from whichever flavor of buckets you subscribe to. I find them all to be highly mystical. But they seem to share in common a notion that you need a bucket with extremely low volatility, meaning either cash or short-term bonds. But that doesn't mean that's where your RMDs come from, because they almost all have you engag...
by Aptenodytes
Wed Jan 18, 2017 10:21 am
Forum: Investing - Theory, News & General
Topic: Spending HSA money versus other
Replies: 21
Views: 3639

Re: Spending HSA money versus other

kenschmidt wrote:Are you maxing out other tax deferral accounts that have better expense ratios such as IRA or 401(k)? Your strategy does make sense if you are using all of the other options already; if not, you'd probably be better served putting your cash into an IRA at Vanguard than using that cash for medical expenses.
If the OP is willing to track all qualified medical expenses forever, then it is probably better to go the other way -- max out the HSA and then put what you can into the IRA. The ERs don't seem to be a trump -- the Vanguard Small-Cap Index is an option at ER=.23%.

In general HSA investment options get better over time, sometimes very quickly.
by Aptenodytes
Wed Jan 18, 2017 10:07 am
Forum: Personal Investments
Topic: Building a TIPs Ladder
Replies: 14
Views: 7612

Re: Building a TIPs Ladder

I believe the most common approach to building a TIPS ladder around here is to do so in one fell swoop, as dbr explains and as the spreadsheet Raybo links to describes. When you build the ladder that way, you have no choice but to buy TIPS in the secondary market. If you want to limit yourself to original issue TIPS, then you can still build a ladder but it will be constructed gradually and it will have some irregular gaps in the rungs for a while. I personally don't see anything wrong with this gradual approach for the average person. If you wanted to limit yourself to original issue TIPS, you could do the following as a very simple approach 2017: sit tight 2018-2033: buy a 10-year TIPS ($15k) each year 2034 onward: sit tight What that app...
by Aptenodytes
Mon Jan 16, 2017 1:43 pm
Forum: Personal Investments
Topic: Suggestions for Low Duration Bond Fund
Replies: 20
Views: 2870

Re: Suggestions for Low Duration Bond Fund

If you follow the signals in the yield curves, there are times when the market tells you to put your bond holdings in very short-term bonds for which there are seldom good mutual funds available. In those circumstances you may wish to switch to CDs, if they are available to you in your accounts.

I believe your average investor considers 2-3 years to be the lowest end of the duration pool they care about.
by Aptenodytes
Sat Jan 14, 2017 5:56 pm
Forum: Personal Investments
Topic: Cardinal Sin - went to cash the day before 2016 election
Replies: 56
Views: 8337

Re: Cardinal Sin - went to cash the day before 2016 election

It isn't clear if you want advice on how to avoid a repeat of your November mistake or if you are asking what your AA should be. Do you know what your AA was before the election? What was it and what did you think of it? It is hard for strangers to tell you what your AA should be.
by Aptenodytes
Fri Jan 13, 2017 3:30 pm
Forum: Personal Investments
Topic: Dollar-Cost-Average over HOW MANY years?
Replies: 61
Views: 6342

Re: Dollar-Cost-Average over HOW MANY years?

The trick is to decide on a scheme that gets you in the market fast and calm. Your scheme may be what you need. The algorithms and incantations and magic dust that work for one person fall flat for another. Deviations from lump sum are judged in terms of how well they get you invested quickly and calmly.
by Aptenodytes
Fri Jan 13, 2017 3:23 pm
Forum: Personal Consumer Issues
Topic: what local pharmacy?
Replies: 57
Views: 5682

Re: what local pharmacy?

It was my doctor who recommend a local mom and pop pharmacy in my town. A local doctor in general practice should have well founded opinions on the local pharmacies.
by Aptenodytes
Fri Jan 13, 2017 2:02 pm
Forum: Personal Finance (Not Investing)
Topic: Predicting future Net Worth
Replies: 31
Views: 6867

Re: Predicting future Net Worth

It helps to be as specific as possible in articulating the decisions you will be making that depend on your net worth estimate. Otherwise you won't formulate the indicator properly. You may discover that nothing depends on it and can save yourself some time. There's an interesting book by Doug Hubbard, How to Measure Anything. He says the failings of most measurement systems is that they don't think carefully enough about how the metrics will be used in support of specific decisions, and they rely too much on guesswork to work out which metrics will do the best job. The implication is that all of us are probably using seriously suboptimal portfolio tracking systems. The only reason to project the value of your house is if you think the cost...
by Aptenodytes
Thu Jan 12, 2017 10:26 am
Forum: Investing - Theory, News & General
Topic: 2016 Callan Periodic Table of Investment Returns
Replies: 27
Views: 6584

Re: 2016 Callan Periodic Table of Investment Returns

I toyed around with a different way to present this information, The main changes are: + It goes back to 1985 + I tried to cover the most-utilized asset categories among Bogleheads (e.g. I added REITs and I dropped international-developed) + As does the Callan table it stacks each asset category in descending order of annual returns, year by year, but it connects the positions with a line to help illustrate dynamic patterns. The labels on the right vertical axis correspond to the 2016 ranks. The animated gif cycles through each asset category in order of 2016 ranks. I didn't try to visualize absolute returns -- the main point of the table seems to be showing how ranks are very unstable. The data are all from siamond's most recent update to ...
by Aptenodytes
Mon Jan 09, 2017 9:02 am
Forum: Investing - Theory, News & General
Topic: Over what time period should stocks NOT lose money
Replies: 50
Views: 7334

Re: Over what time period should stocks NOT lose money

I think the OP's question is a very useful way to frame risk -- it has much more intuitive punch than things like standard deviations and it relates very directly to an aspect of the portfolio that has real decision-relevance. It also lends itself well to visualization. Below is a chart made from the 1871-1916 S&P data in the Simba spreadsheet -- converted to real returns using the inflation data also contained in the spreadsheet and then made into total returns for trailing 10, 15 and 20 year periods. The 10 and 15 year periods each dipped negative, but the 20 never did. [edited to clarify that graph has misleading label -- it charts "return in percentage" not total dollars. Sorry -- moving too fast"] https://dl.dropboxu...
by Aptenodytes
Sun Jan 08, 2017 7:55 am
Forum: Personal Investments
Topic: Monitoring returns
Replies: 1
Views: 546

Re: Monitoring returns

1) to track returns you only need to monitor contributions, withdrawals and balances. No need to track things like commissions, dividends and fees--their impact shows up in the balance. 2) there are several options for how to track your returns. Search the forum for terms like "personal returns" or "spreadsheet." 3) comparing your projected returns to your actual returns won't tell you much that is useful. That difference will be driven largely by market conditions. I think what you want to do is to compare your personal return to the return of a comparable benchmark. E.g.you could pick a target date fund with the same AA, though if you are in the UAE there may not be any target date funds that match your AA. You could m...
by Aptenodytes
Fri Jan 06, 2017 9:57 am
Forum: Investing - Theory, News & General
Topic: How much inflation do Bogleheads predict?
Replies: 13
Views: 1925

Re: How much inflation do Bogleheads predict?

You can make sensible decisions about managing inflation risk without making a specific quantitative prediction about the inflation rate. You do the same kind of thing when you decide what types of insurance coverage to get on your car, which health plan to select, which washing machine to buy, etc. Moreover, in many ways the most important decisions we make about risk under uncertainty have to do with extreme possibilities, not the most likely outcomes. And for extremes the quantitative methods are far less robust so using qualitative heuristics and rules of thumb are probably the best you can do anyway. Things are different if you are managing a multi-billion dollar pension or something like that, in which case you are pooling the risk pr...
by Aptenodytes
Fri Jan 06, 2017 9:48 am
Forum: Investing - Theory, News & General
Topic: Can someone explain Vanguard's higher turnover rates vs Index Funds?
Replies: 22
Views: 3992

Re: Can someone explain Vanguard's higher turnover rates vs Index Funds?

Both funds have the same maturity profiles. My guess is that more investors use the Treasury fund as a temporary parking lot for money moving in and out of equities and that people in the government bond fund are more likely to be sitting tight for the longer term. As far as I can fathom there's more or less no other way to drive different turnover rates in these two funds -- turnover is a function of how long the fund holds onto an instrument and the pattern of money coming in and leaving the fund.

I don't believe Treasury buybacks have been large enough to account for the differences in this particular case.
by Aptenodytes
Fri Jan 06, 2017 9:08 am
Forum: Personal Consumer Issues
Topic: Requirements to change passwords frequently?
Replies: 42
Views: 4877

Re: Requirements to change passwords frequently?

My employer requires it. My impression is that the more a place takes cybersecurity seriously across the board, the more likely they are to require frequent password changes. It makes intuitive sense to me. E.g. sometimes hackers get hold of lists of usernames and passwords. The more often you change your password, the less likely someone with one of those lists can do you in.
by Aptenodytes
Fri Jan 06, 2017 7:48 am
Forum: Investing - Theory, News & General
Topic: What inflation rate do you use for your planning?
Replies: 105
Views: 12789

Re: What inflation rate do you use for your planning?

Church Lady wrote:This discussion is timely for me as I am using I-ORP to run some retirement scenarios. This tool requires users to peer into the crystal ball and tell it what inflation will be over the 30 or 40 years of your retirement. Other such tools have a similar annoying requirement.

If I knew the answer to that, I'd be running a hedge fund ...

This chart is interesting: http://www.usinflationcalculator.com/in ... ion-rates/
Usually you can spoof those scenario tools into doing everything in real terms by entering an inflation rate of 0%. The results will tell you the numbers are nominal but you know they are real.
by Aptenodytes
Tue Jan 03, 2017 9:51 am
Forum: Non-US Investing
Topic: Dilemma: bonds, cash or 100% stocks for now in present climate?
Replies: 55
Views: 7232

Re: Dilemma: bonds, cash or 100% stocks for now in present climate?

Where to put your bond money can be tricky, but if you overthink it you'll make mistakes. There's no way to offer any suggestions without knowing what you have available to you. Different accounts have different restrictions. In your account, can you buy CDs? Can you buy individual bonds? Do you have no-commission access to the popular low-fee bond index funds (e.g. the Vanguard Treasury funds or equivalents)? Do you have access to the Vanguard Total Bond Fund at no commission?

By the way, better not to consider your emergency fund as part of your portfolio, otherwise you'll make inappropriate rebalancing moves.
by Aptenodytes
Mon Jan 02, 2017 11:25 am
Forum: Investing - Theory, News & General
Topic: What inflation rate do you use for your planning?
Replies: 105
Views: 12789

Re: What inflation rate do you use for your planning?

I am still trying to understand what personal planning decision is impacted by assuming inflation is 2.9% versus 3.5% (versus whatever). What exactly would one do differently as a result of analysis with different inputs? What's the decision point being addressed? Grogs gave one -- if you have a pension that is not adjusted for inflation and you need to estimate your future portfolio withdrawals, you've got to come up with an estimate of the real value of those pension payments. I can imagine other scenarios where it would matter, though in general I don't think it matters for most people, including me. Perhaps you have all your income streams and portfolio returns available as real returns, but you are planning on some far-off spending on...
by Aptenodytes
Mon Jan 02, 2017 10:49 am
Forum: Investing - Theory, News & General
Topic: What are you up YTD? [Year To Date]
Replies: 5250
Views: 906948

Re: What are you up YTD? [Year To Date]

livesoft wrote:
wk522 wrote:Up 9.18% in 2016.
2016 returns:
+4.67% VTIAX
-8.99% VGHCX
So if most of your funds were medicocre to down, how do you explain your up 9.18% performance? I gotta get some of that.
Well, High-Yield Corporate was up 11.2%, not 4.3, so that would help boost the average. And VFIDX was up 4.0%, not down 2%, so maybe these numbers need a second look.
by Aptenodytes
Mon Jan 02, 2017 1:55 am
Forum: Investing - Theory, News & General
Topic: What inflation rate do you use for your planning?
Replies: 105
Views: 12789

Re: What inflation rate do you use for your planning?

I don't try to forecast inflation. I do all planning (what little I do) in real terms. +1 KlangFool I'm with jebmke and KlangFool on this one. If you project spending and returns in nominal terms and then project inflation separately, you just magnify the error and uncertainty. Far easier to do everything in real terms, though many of the online calculators make it a bit difficult to play ball. Can you show me how you do this? I've often wondered if my method properly captures the inflation adjustment. My calculations: 20 yrs. nominal return- (1.065)^20 = 3.52 times principal. 20 yrs real return (3% inflation forecast, 6.5% nominal)- (1.035)^20 = 1.99 times principal. What you are doing is the opposite of what we do. We skip your step 1 as...
by Aptenodytes
Sun Jan 01, 2017 1:20 pm
Forum: Investing - Theory, News & General
Topic: What inflation rate do you use for your planning?
Replies: 105
Views: 12789

Re: What inflation rate do you use for your planning?

KlangFool wrote:
jebmke wrote:I don't try to forecast inflation. I do all planning (what little I do) in real terms.
+1

KlangFool
I'm with jebmke and KlangFool on this one. If you project spending and returns in nominal terms and then project inflation separately, you just magnify the error and uncertainty. Far easier to do everything in real terms, though many of the online calculators make it a bit difficult to play ball.
by Aptenodytes
Sat Dec 31, 2016 2:43 pm
Forum: Investing - Theory, News & General
Topic: What are you up YTD? [Year To Date]
Replies: 5250
Views: 906948

Re: What are you up YTD? [Year To Date]

8.9% AA was 50-50 January-October. Since then 30% equities. Weighted average would be 46.7% equities. Equities have been 50% international all year. Modest small-value tilt Jan-Oct; heavy tilt since then. Like most people I'm answering a different question than the one posed in the title. I'm telling my portfolio return, XIRR-style. Benchmarking is hard with this portfolio. The V. 2015 target date fund has the same equity percentage, if you do a weighted average of mine. But its international exposure is less (40% of equities), it doesn't tilt, and it holds international bonds. So kind of apples/oranges, but it returned 6.2%. My "bond" portfolio is a bit funky too: TIAA Traditional, 48% (3.75% return) High-Yield Corporate, 23% (11...
by Aptenodytes
Wed Dec 21, 2016 4:03 pm
Forum: Investing - Theory, News & General
Topic: Stable Value Funds in Portfolio
Replies: 45
Views: 9628

Re: Stable Value Funds in Portfolio

What I did was put a new column in the Simba backtesting spreadsheet with historical data on my stable value fund (TIAA-TRAD), and then used the spreadsheet's tool for exploring alternative portfolios.

It didn't really change the overall picture very much. But it makes sense to use more accurate data for your stable value fund instead of using a proxy.