Search found 1297 matches
- Fri Feb 11, 2022 6:20 am
- Forum: Personal Investments
- Topic: De-leverage from mortgage during stock:bond ratio glide path
- Replies: 17
- Views: 1460
Re: De-leverage from mortgage during stock:bond ratio glide path
I managed my mortgage by counting it as a negative bond. My target allocation in 2014 was 100% net stock (and that's about the risk of 115% stock because I overweight risky stock). ... Then I decided to pay off my mortgage, keeping the same stock exposure. I sold bonds to pay off the mortgage... Similar story here. Paid off mortgage with essentially bonds. What I did was right for me and for the time. I used a 15Y mortgage (where the math worked out nicely). I am a big believer in the strategy. Not sure though in your case. How many years left on your mortgage? If it is a 30-year product, I "probably" would leave it. (I pause at the idea of aggressively pay off a mortgage with rates well below the current prevailing rates). Inste...
- Thu Feb 10, 2022 11:30 am
- Forum: Investing - Theory, News & General
- Topic: Target date funds ... so much for "set and forget" [and WSJ article]
- Replies: 567
- Views: 67568
Re: Target date funds ... so much for "set and forget" [and WSJ article]
Interesting question. Also, what happens when (as posted in another thread) investor class shares are merged with institutional class shares (to lower the expense ratio)GaryA505 wrote: ↑Thu Feb 10, 2022 11:17 am ...
Let's say that due to the dog-eat-dog competition for the lowest ER in SP500 funds, Vanguard lowers their minimum for VIIIX to $5M and lowers their minimum for VINIX to $1M. Due to the lower minimums, there is a massive outflow from VFIAX/VOO into VINIX/VIIIX. What happens to VFIAX and VOO?
- Thu Feb 10, 2022 11:16 am
- Forum: Investing - Theory, News & General
- Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
- Replies: 2297
- Views: 256345
Re: Bonds in free fall
Deleted. What I wrote was not actionable.TheTimeLord wrote: ↑Thu Feb 10, 2022 10:43 amThe real question is what are the appropriate tools to address the actual causes of inflation. Slowing the economy through rate hikes is a very blunt instrument for these issues imho.steve r wrote: ↑Thu Feb 10, 2022 10:25 amIt has since gone back over 2.01. This observation is, of course, also noise.
But the bond trend is ugly. Inflation is real. The Fed has done nothing thus far except talk -- first to say it is transitory, then to say it is not transitory, now promising to something about some date in future -- maybe (though probably likely). Overall, monetary policy is still very easy.
- Thu Feb 10, 2022 10:25 am
- Forum: Investing - Theory, News & General
- Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
- Replies: 2297
- Views: 256345
Re: Bonds in free fall
It has since gone back over 2.01. This observation is, of course, also noise.
But the bond trend is ugly. Inflation is real. The Fed has done nothing thus far except talk -- first to say it is transitory, then to say it is not transitory, now promising to something about some date in future -- maybe (though probably likely). Overall, monetary policy is still very easy.
- Thu Feb 10, 2022 9:44 am
- Forum: Personal Consumer Issues
- Topic: Reluctant to give up analog Landline—VOIP suggestions wanted
- Replies: 118
- Views: 11231
Re: Reluctant to give up analog Landline—VOIP suggestions wanted
Ooma user for a decade or so. No issues other than being taxed when I was not initially.
We pay for voicemail sent to email or some service, that I simply do not recall. Which is the point, it is set it and forget it. Though maybe three times I have had to power down and reboot.
We pay for voicemail sent to email or some service, that I simply do not recall. Which is the point, it is set it and forget it. Though maybe three times I have had to power down and reboot.
- Thu Feb 10, 2022 9:07 am
- Forum: Investing - Theory, News & General
- Topic: Does the yield curve ever invert and nothing happens?
- Replies: 32
- Views: 3512
Re: Does the yield curve ever invert and nothing happens?
I too predict that there will be a recession between 2042 and 2052,
Seriously though, does a 2-10 inversion imply a recession between 2024 and 2032? Such a prediction seems likely with or without inversion.
- Thu Feb 10, 2022 8:52 am
- Forum: Investing - Theory, News & General
- Topic: Does the yield curve ever invert and nothing happens?
- Replies: 32
- Views: 3512
Re: Does the yield curve ever invert and nothing happens?
Vineviz,
Is that definition of an inversion widely used? I ask because the 30Y treasury yields less than the 20Y. I would think (without knowing), that would count.
Is that definition of an inversion widely used? I ask because the 30Y treasury yields less than the 20Y. I would think (without knowing), that would count.
- Mon Feb 07, 2022 4:00 pm
- Forum: Investing - Theory, News & General
- Topic: Correlation of Stocks and Bonds
- Replies: 26
- Views: 2625
Re: Correlation of Stocks and Bonds
From abstract of above cited paper by McQ.
"Both common stocks and long bonds are risk assets, capable of outperforming or underperforming over any human time horizon."
Paper title says it all.
"Stocks for the Long Run? Sometimes Yes. Sometimes No."
https://papers.ssrn.com/sol3/papers.cfm ... id=3805927
Page 17
"The overall correlation of the modern era (since 1926) is 0.335, significantly lower than the .609 for the preceding 133 years."
"Both common stocks and long bonds are risk assets, capable of outperforming or underperforming over any human time horizon."
Paper title says it all.
"Stocks for the Long Run? Sometimes Yes. Sometimes No."
https://papers.ssrn.com/sol3/papers.cfm ... id=3805927
Page 17
"The overall correlation of the modern era (since 1926) is 0.335, significantly lower than the .609 for the preceding 133 years."
- Mon Feb 07, 2022 11:36 am
- Forum: Investing - Theory, News & General
- Topic: Treasury Bond Allocation by Global Weight
- Replies: 18
- Views: 1235
Re: Treasury Bond Allocation by Global Weight
I would be cautious here for two reasons. 1. What is the purpose of this diversification? As far as I (a layperson) can tell, the US has pretty much 0% chance to default on its treasuries. This is because the debt is in US dollars and if it came down to it the US could just print more money to pay its debts. This would of course have other effects, but as far as I can tell from reading stuff from financial experts, there is no real chance the US will just not pay. 2. Read https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-1/ Specifically part 2: https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-2/ the section on global vs domestic bonds. I found this data very interesting. Th...
- Mon Feb 07, 2022 11:14 am
- Forum: Investing - Theory, News & General
- Topic: Treasury Bond Allocation by Global Weight
- Replies: 18
- Views: 1235
Re: Treasury Bond Allocation by Global Weight
VCIFX is a global treasury fund. High expense ratio. So I stopped reading on it.
- Mon Feb 07, 2022 11:07 am
- Forum: Investing - Theory, News & General
- Topic: Treasury Bond Allocation by Global Weight
- Replies: 18
- Views: 1235
Re: Treasury Bond Allocation by Global Weight
Interesting strategy.
My take: With corporate bonds, you lend to corporations you own. If the company fails, both stocks and bonds are impacted. Thus higher correlations. At the same time your may want to diversify government risk.
Any research papers you read on this strategy?
Thanks.
As far as holding.
GOVT for U.S. (expense ratio down to 0.05)
IOV for Emerging Market, there is a mutual fund equivalent (expensive at 0.25 ER)
IGOV for developed government bonds ex US and EM. (expense ratio 0.35)
My take: With corporate bonds, you lend to corporations you own. If the company fails, both stocks and bonds are impacted. Thus higher correlations. At the same time your may want to diversify government risk.
Any research papers you read on this strategy?
Thanks.
As far as holding.
GOVT for U.S. (expense ratio down to 0.05)
IOV for Emerging Market, there is a mutual fund equivalent (expensive at 0.25 ER)
IGOV for developed government bonds ex US and EM. (expense ratio 0.35)
- Mon Feb 07, 2022 10:32 am
- Forum: Personal Finance (Not Investing)
- Topic: Optimal SS Benefit Age with GPO Teacher Pension Spouse
- Replies: 24
- Views: 2195
Re: Optimal SS Benefit Age with GPO Teacher Pension Spouse
Cover the amount of need using the least cost option, for the duration of need. If someone's giving away an extra $50k of coverage more than you need, and it actually costs less, you might as well take advantage. On the other hand, if you only need $100k of coverage total, and it costs less, then that would be the proper play. Thanks again. Since payments are not indexed to inflation, term life insurance is crude way to hedge my wife not being able to receive SS benefits (which is indexed). I am certain $100,000 is not enough. Heck, if inflation persists it may only cover my "final expenses." With coverage of $150,000 to $250,000, I might as well just do $250,000. (Plus, it sort of matches my near term coverage needs). In a high ...
- Mon Feb 07, 2022 6:14 am
- Forum: Personal Finance (Not Investing)
- Topic: Is there an optimal real estate : investment portfolio ratio ?
- Replies: 8
- Views: 1055
Re: Is there an optimal real estate : investment portfolio ratio ?
+1 on no ratio.Harry Livermore wrote: ↑Mon Feb 07, 2022 6:05 am
Those two properties combined are currently about 19% of our net worth. Our residence adds another 13%. I would consider the total (1/3 of our net worth) somewhat high, but this is our plan and we are sticking with it.
...
To answer you actual question: I don't think there is an optimal ratio, as far as I can tell.
Cheers
OP is at 20 percent ex home.
Harry is also at 20 percent ex home. Which he thinks it is a touch high.
I am at 20 percent and would like to own more. But my RE are more diversified. That maybe an important distinction.
- Mon Feb 07, 2022 6:04 am
- Forum: Personal Finance (Not Investing)
- Topic: Is there an optimal real estate : investment portfolio ratio ?
- Replies: 8
- Views: 1055
Re: Is there an optimal real estate : investment portfolio ratio ?
I have a somewhat similar issue (and was hoping for insightful responses). First, a quick backdrop on what I own. Then what I have learned. I have a big chunk of commercial real estate and apartment via TIAA CREF Real Estate. Here is an older chart someone posted. https://i.imgur.com/750ct9m.png It is "direct ownership." It goes up and down with the RE market, but collects rents. As you can see, it does not perform anything like a REIT index (which is more volatile than stocks) because of the structure of REITs where you own the REIT and the REIT owns the RE often with extensive leverage. It's Sharpe Ratio is off the charts (if you follow finance lingo) because the income is steady and property values change is typically steady as...
- Sun Feb 06, 2022 12:36 pm
- Forum: Investing - Theory, News & General
- Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
- Replies: 2297
- Views: 256345
Re: Bonds in free fall
... There are undoubtedly many ways you could go with bonds, each with its supporting arguments and counterarguments. What will perform best in the future? Difficult question! One option is to just be "whatever" about it, and since you say you're a Total Market guy, that might be your answer right there. Thanks. I think I am done with the month long phase of "analysis paralysis." I am at a point where I can find data to support anything I want. And BND is where I am at. What could you learn by owning them that you couldn't learn better by studying them? Personally, I bought small amounts of LTT, ITT, STT, and GOVT and realized I did not like owning them separately. So yeah, I did learn buy buying. How much STT? ITT? LTT...
- Sun Feb 06, 2022 12:27 pm
- Forum: Investing - Theory, News & General
- Topic: Fed rate hikes “priced in” to bond fund declines?
- Replies: 10
- Views: 1497
- Sun Feb 06, 2022 12:23 pm
- Forum: Investing - Theory, News & General
- Topic: Fed rate hikes “priced in” to bond fund declines?
- Replies: 10
- Views: 1497
Re: Fed rate hikes “priced in” to bond fund declines?
The Fed has much greater control over short-term overnight interest rates such as the discount rated (seldom used) and the Fed funds rate. Most bonds do not have that short of a term. In theory, long term bond rates are determined by two offsetting factors (among others): 1) How easy or tight the money supply ease. Easy money would tend to bid up prices of all assets, including long term bonds (lowering rates) and the future rate of inflation. 2) The rate of inflation. Thus, easy money if perceived to be inflationary long term will actually raise rates and lower bond prices. This will be phrased as increasing "inflation expectations." For example, easy money during a pandemic or during the great recession is not likely to stir up ...
- Sun Feb 06, 2022 10:04 am
- Forum: Personal Investments
- Topic: Total International Bond Fund?
- Replies: 20
- Views: 3177
Re: Total International Bond Fund?
Interesting. Thanks.zuma wrote: ↑Sun Feb 06, 2022 9:44 amThis post by grabiner might help clarify the SEC yield confusion.steve r wrote: ↑Sun Feb 06, 2022 9:39 am 2) I fully do not grasp that on other (past) threads, some opine (or perhaps state as fact) that SEC yields are not equivalent as the yield stink on BNDX, but are better for BNDW than BND??? I do not understand what they are talking about after reading the SEC description. Perhaps someone can source this claim. While as a total market investor, not always understanding OK, but is a concern in this instance.
Still concerned why BNDX low yields should NOT be a concern. But, I am making progress.
- Sun Feb 06, 2022 9:39 am
- Forum: Personal Investments
- Topic: Total International Bond Fund?
- Replies: 20
- Views: 3177
Re: Total International Bond Fund?
I own a significant amount of international stock. But for me, there are several things on international bonds of importance / concern. 1) It matters very little. 2) I fully do not grasp that on other (past) threads, some opine (or perhaps state as fact) that SEC yields are not equivalent as the yield stink on BNDX, but are better for BNDW than BND??? :?: I do not understand what they are talking about after reading the SEC description. Perhaps someone can source this claim. While as a total market investor, not always understanding OK, but is a concern in this instance. 3) I do suspect the above has something to do with currency hedging. According to the interest rate parity (a variant of the more well known purchasing power parity), when ...
- Sun Feb 06, 2022 8:54 am
- Forum: Personal Finance (Not Investing)
- Topic: Optimal SS Benefit Age with GPO Teacher Pension Spouse
- Replies: 24
- Views: 2195
Re: Optimal SS Benefit Age with GPO Teacher Pension Spouse
Still no clarity on retiring dates, but my wife is at risk if I pre decease her, particularly in my working years. So looking at term insurance. Turns out, 30 year term insurance is an option. Though obviously expensive, I could be insured to age 85. her need will be smaller as her remaining life expectancy decline. My gut tells me to extend. I am buying a ten year term no matter what, so really it is the extra cost of the insurance --- which makes it even more of a no brainer. My gut is also telling me to just do $250,000 as the insurance is not a particularly good bet and concerns about over insurance. 30 years seems excessive. Base the term on what you expect your spouse to need, not on what seems to be a deal. 30Y term to age 85 does s...
- Sun Feb 06, 2022 8:09 am
- Forum: Personal Finance (Not Investing)
- Topic: Optimal SS Benefit Age with GPO Teacher Pension Spouse
- Replies: 24
- Views: 2195
Re: Optimal SS Benefit Age with GPO Teacher Pension Spouse
I have long believed that the optimal age to collect SS is 70 for most individuals with average health. You can draw down your savings, and have a higher inflation hedge SS benefit. However, my wife is a teacher with a GPO pension, meaning if I die she will get none of my SS benefit. ... You should use https://opensocialsecurity.com/. If necessary, set Marital Status to Single. ... Renewing older thread, but our term life insurance policy expired (timed years ago to end with college expenses) and we are looking at renewing. Still no clarity on retiring dates, but my wife is at risk if I pre decease her, particularly in my working years. So looking at term insurance. Turns out, 30 year term insurance is an option. Though obviously expensive...
- Sat Feb 05, 2022 7:30 pm
- Forum: Personal Investments
- Topic: Total International Bond Fund?
- Replies: 20
- Views: 3177
Re: Total International Bond Fund?
I have been reading threads on this as well. Here is a good one.
viewtopic.php?f=10&t=340570
I have done back testing to 1985, the first year data for currency hedged international bonds can be found using the Simba data (found on BH). U.S. only bonds comes out very very slightly ahead.
Since 1999 though, Global Bonds (which I believe is Global with U.S. -- but not sure as with stocks it says Global ex U.S.) comes out ahead, particularly in the last decade as some international rates went negative providing a boost for bond prices. Does this continue? IDK.
https://www.portfoliovisualizer.com/bac ... sisResults
viewtopic.php?f=10&t=340570
I have done back testing to 1985, the first year data for currency hedged international bonds can be found using the Simba data (found on BH). U.S. only bonds comes out very very slightly ahead.
Since 1999 though, Global Bonds (which I believe is Global with U.S. -- but not sure as with stocks it says Global ex U.S.) comes out ahead, particularly in the last decade as some international rates went negative providing a boost for bond prices. Does this continue? IDK.
https://www.portfoliovisualizer.com/bac ... sisResults
- Sat Feb 05, 2022 4:42 pm
- Forum: Investing - Theory, News & General
- Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
- Replies: 2297
- Views: 256345
- Sat Feb 05, 2022 4:28 pm
- Forum: Investing - Theory, News & General
- Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
- Replies: 2297
- Views: 256345
Re: Bonds in free fall
This may very well be regarded as noise to some, but may be of potential interest to others, as far as predictions where bond yields are headed. I was hesitant to post this, because we all know how unreliable predictions are. What does this mean for the 10-year Treasury yield? Our valuation approach for Treasury bonds models the fair 10-year yield as a function of the average Fed funds rate over the next decade and an appropriate term premium. Using this approach, we arrive at a fair value 10-year yield of 1.8%, informing the range of 1.5% to 2.0% that we expect to prevail toward the end of 2022...Looking through the business cycle, we often observe that the 10-year Treasury yield peaks around the terminal Fed funds rate, and that it arriv...
- Fri Feb 04, 2022 11:47 am
- Forum: Investing - Theory, News & General
- Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
- Replies: 2297
- Views: 256345
Re: Bonds in free fall
My interpretation is that if jobs isn't a problem, it allows the Fed to get more hawkish to tackle inflation. If jobs became a problem, that might pull them back in a more dovish direction. Imagine if we have a recession--stagflation--and jobs become a problem, might not the Fed say, "You know what? We're all just gonna have to live with 7% inflation for a few years, while we keep rates low to support the job market." Cash and nominal bonds could have several years of, oh, I don't know, -5% real yield? It's possible , no? Reading your post. I laughed at first. 7 percent inflation, come on ...? Then thought "OK - possible", anything is possible. Then thought "probable" (with the condition of bad employment numb...
- Fri Feb 04, 2022 10:18 am
- Forum: Investing - Theory, News & General
- Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
- Replies: 2297
- Views: 256345
Re: Bonds in free fall
My guess would be that the probability of a 6th hike (in early 2023) hit 50 percent today.
- Fri Feb 04, 2022 9:37 am
- Forum: Investing - Theory, News & General
- Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
- Replies: 2297
- Views: 256345
Re: Bonds in free fall
VGLT (LTT) is NOT at a 52 week low (or that close), while VGIT (ITT), VGSH (STT), GOVT (treasuries), and BND.willthrill81 wrote: ↑Fri Feb 04, 2022 9:29 amI believe that $89.46 was the peak for BND back on July 31st, 2020. The current price of $82.09 is 8.2% off that high.
- Thu Feb 03, 2022 9:23 am
- Forum: Investing - Theory, News & General
- Topic: Why use anything but treasuries?
- Replies: 48
- Views: 8971
Re: Why use anything but treasuries?
Believers in treasuries --
Which do you prefer, why?
VGIT expense ratio of 0.04 holding ITT
GOVT expense ratio of 0.05 holding all durations
I wonder if ITT became the default option because total government was not an option a decade ago. And, until recently, its expense ratio was quite a bit higher. Or, if there are merits to ITT over GOVT.
Which do you prefer, why?
VGIT expense ratio of 0.04 holding ITT
GOVT expense ratio of 0.05 holding all durations
I wonder if ITT became the default option because total government was not an option a decade ago. And, until recently, its expense ratio was quite a bit higher. Or, if there are merits to ITT over GOVT.
- Wed Feb 02, 2022 2:57 pm
- Forum: Non-US Investing
- Topic: German BUND yield seekers rejoice | POSITIVE YIELDs
- Replies: 7
- Views: 1129
Re: German BUND yield seekers rejoice | POSITIVE YIELDs
Per CNBC.
- Yesterdays closing yield --- 0.035%
- At current time yield is --- 0.039%
- Current price change --- -.04%
- Day high/low yield .058% / .029%
- Day low / high price 99.42 / 99.908
- Percent change low price to high price is only 0.49%
- Wed Feb 02, 2022 7:25 am
- Forum: Investing - Theory, News & General
- Topic: First 20% of bonds in long-term Treasuries
- Replies: 2259
- Views: 267067
Re: First 20% of bonds in long-term Treasuries
I am less convinced on my personal finance side. I have no idea when I am going to retire, my wife is even less certain, I have a dependent child that may need help with grad school (and I paid next to nothing for undergrad, so agreed to do it), I have no clue on health care expenses, funereal expenses, nor do I have any clue on when I will need bonds to rebalance . Far too many variables. The appeal of ITT is that it truly is around or near the sweat spot on the yield curve. Much greater returns are gained going from STT (two years) to ITT (5.4 years) in yields than ITT to LTT (18.4 year duration). Recent yields of .8 / 1.5 / 2.1. I am not at all negative on LTT. In the last 151 years, since 1871, LTT and US TSM both went down 11 times. R...
- Tue Feb 01, 2022 6:44 pm
- Forum: Non-US Investing
- Topic: German BUND yield seekers rejoice | POSITIVE YIELDs
- Replies: 7
- Views: 1129
Re: German BUND yield seekers rejoice | POSITIVE YEILDs
Congrats indeed! I had to brush up on my German. Thanks for the laugh.
- Tue Feb 01, 2022 6:38 pm
- Forum: Non-US Investing
- Topic: German BUND yield seekers rejoice | POSITIVE YIELDs
- Replies: 7
- Views: 1129
German BUND yield seekers rejoice | POSITIVE YIELDs
The 10 year yield on German bonds moved into positive territory yesterday (+0.01) and tripled today (+0.03).
My question, what happens to bond (price) returns in terms of convexity?
My question, what happens to bond (price) returns in terms of convexity?
- Tue Feb 01, 2022 6:07 pm
- Forum: Investing - Theory, News & General
- Topic: First 20% of bonds in long-term Treasuries
- Replies: 2259
- Views: 267067
Re: First 20% of bonds in long-term Treasuries
After playing with this, it seems clear that the variance in returns with various interest rate movements are much tighter for the blended duration. There are cases where either all cash or all long bond outperformed the duration blend, but there are also cases where those strategies fall over and run out of money. I think I am convinced that matching duration gives much less variance in outcomes due to interest rate fluctuations, and that regular withdrawals over the covered time period don't throw that off. I would be curious in your results if you went straight Swedroe style or Rick Ferri with just Intermediate Term Treasuries ITT (as opposed to duration matching). The slope of the typically yield curve flattens / is reduced around ITT....
- Sun Jan 30, 2022 8:59 am
- Forum: Personal Consumer Issues
- Topic: Where are you seeing PERSONAL inflation issues
- Replies: 22
- Views: 1527
Re: Where are you seeing PERSONAL inflation issues
Electricity. +21 percent effective January 1, 2022 (in Connecticut).jebmke wrote: ↑Sun Jan 30, 2022 8:56 am Beef is way up but we rarely eat beef so it isn't a big hit to the spending. I don't do general food shopping so I don't see those prices. Food is not a huge spending item for us, however. For some reason, the older I get, the less I eat.
Medicare Part B premiums was one of the bigger items affecting 2022.
- Sun Jan 30, 2022 8:11 am
- Forum: Investing - Theory, News & General
- Topic: Convert all BOND ETFs to short term treasuries
- Replies: 41
- Views: 4189
Re: Convert all BOND ETFs to short term treasuries
TIPs did well last year, returning over 5 percent. Better still since 2020 (over 8 percent per year). STT had a modest lost (near zero).
However, the caution I would throw out there is that TIPs is historically thought to be a good hedge against "unexpected inflation." Those who hedged inflation ahead of the crowd (pre 2020) cashed in.
I am not sure how or if this changes the analysis going forward.
- Sat Jan 29, 2022 7:15 pm
- Forum: Investing - Theory, News & General
- Topic: Convert all BOND ETFs to short term treasuries
- Replies: 41
- Views: 4189
Re: Convert all BOND ETFs to short term treasuries
BND in a 60/40 portfolio (global stock) versus GOVT in a 62/38 portfolio w/ more risk on equity side. With nine years of data, GOVT has higher return, lower standard deviation and max drawdown, higher Sharpe and Sortino. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=3&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchma...
- Sat Jan 29, 2022 4:53 pm
- Forum: Investing - Theory, News & General
- Topic: Convert all BOND ETFs to short term treasuries
- Replies: 41
- Views: 4189
Re: Convert all BOND ETFs to short term treasuries
BND in a 60/40 portfolio (global stock) versus GOVT in a 62/38 portfolio w/ more risk on equity side. With nine years of data, GOVT has higher return, lower standard deviation and max drawdown, higher Sharpe and Sortino. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=3&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmar...
- Sat Jan 29, 2022 4:17 pm
- Forum: Investing - Theory, News & General
- Topic: Convert all BOND ETFs to short term treasuries
- Replies: 41
- Views: 4189
- Sat Jan 29, 2022 4:15 pm
- Forum: Investing - Theory, News & General
- Topic: Convert all BOND ETFs to short term treasuries
- Replies: 41
- Views: 4189
Re: Convert all BOND ETFs to short term treasuries
I am currently considering moving from BND to GOVT -- which has only treasuries and no corporate bonds. I am not a huge fan of lending to corporations that I also own. If things go bad, both the bond and the stocks suffer. If things go well, both the stocks and bonds do well. Government bonds have historically had lower correlation with stocks. A reasonable counter argument is that it is prudent to have some corporate bonds to get better yield. I am still thinking out this. The amount that it will matter is probably very little. Please keep us posted on what you decide to do. The idea of increasing credit quality while keeping duration approximately the same sounds very appealing, but I'm not yet convinced that corporate bonds are as risky...
- Sat Jan 29, 2022 3:19 pm
- Forum: Investing - Theory, News & General
- Topic: Convert all BOND ETFs to short term treasuries
- Replies: 41
- Views: 4189
Re: Convert all BOND ETFs to short term treasuries
Late? Perhaps. But just this week Fed Chair Powell signaled quite strongly his intent to raise to take action that will raise rates over the next several years. Longer term bond yields hardly moved. The main concern is inflation. A reasonable counter argument is that this was priced in. IDK. Rates have indeed come up, a little, but are no way near historic averages. The advisor is suggesting that in a rising interest rate / inflationary environment, long term bonds should be avoided. Will rates rise? IDK. But that is the advisor's play. Long term bonds have had a great run the last several decades! But the comment that long term bonds always have higher returns is flat out false . Long term treasuries suffered during the inflationary late 1...
- Sat Jan 29, 2022 9:07 am
- Forum: Personal Finance (Not Investing)
- Topic: Mortgage: 30 yr, 15 yr, or cash?
- Replies: 28
- Views: 3360
Re: Mortgage: 30 yr, 15 yr, or cash?
This was cut from a similar thread where I calculated the return you must get from the lower payments to break even. Understand this math and I think you will get why the 15 year loan is a great option . Assume a $100,000 loan. (Bankrate.com mortgage and savings calculators, deposit a .01 to start) 15 year at 2.15 percent payment of $782. The 30 year loan rate at 2.75 percent is $540 or $242 less. With this loan you will still owe $60,000 15 years out. See payment schedule. What safe rate do you need to covert $242 per month in savings to grow to $60,000 in 15 years? 4.2 percent. That is a very good essentially risk free after tax tax free rate. A "satisfactory return. " (and if todays rates are used, this safe return will be clos...
- Sat Jan 29, 2022 8:56 am
- Forum: Personal Investments
- Topic: Super Lazy portfolio, just VSMGX? [Vanguard LifeStrategy Moderate Growth]
- Replies: 117
- Views: 24969
Re: Super Lazy portfolio, just VSMGX? [Vanguard LifeStrategy Moderate Growth]
LongInvest (who is very knowledgeable) started a 10 page thread on this very fund (for tax advantage accounts).
I am a fan as well, but went a different route.
viewtopic.php?f=10&t=287967&sid=fae91d4 ... c95675f32d
I am a fan as well, but went a different route.
viewtopic.php?f=10&t=287967&sid=fae91d4 ... c95675f32d
- Fri Jan 28, 2022 3:02 pm
- Forum: Investing - Theory, News & General
- Topic: Does "international" offer any diversification?
- Replies: 483
- Views: 36886
- Fri Jan 28, 2022 2:23 pm
- Forum: Investing - Theory, News & General
- Topic: GOVT bond fund revisited | why corporates
- Replies: 4
- Views: 983
Re: GOVT bond fund revisited | why corporates
Thanks.
Certainly hard to show that choices matter is a foreseeable manner!
Thanks. (and I "think" so.)
There is also the issue of transaction/switching cost (which can be viewed as trivial, or .... about an entire years expense ratio.)
Which brings me back to this being likely trivial and unlikely to matter.
- Fri Jan 28, 2022 1:03 pm
- Forum: Investing - Theory, News & General
- Topic: Jeremy Grantham (Jan 26, 2022) being asked a lot of tough questions about his super bubble call...
- Replies: 601
- Views: 72311
- Fri Jan 28, 2022 12:56 pm
- Forum: Investing - Theory, News & General
- Topic: Jeremy Grantham (Jan 26, 2022) being asked a lot of tough questions about his super bubble call...
- Replies: 601
- Views: 72311
Re: Jeremy Grantham (Jan 26, 2022) being asked a lot of tough questions about his super bubble call...
Particularly EM (as noted above).
But also in the depths of the 2008-09 bear market.
https://www.marketwatch.com/story/if-yo ... 2020-03-23
- Fri Jan 28, 2022 11:20 am
- Forum: Investing - Theory, News & General
- Topic: GOVT bond fund revisited | why corporates
- Replies: 4
- Views: 983
GOVT bond fund revisited | why corporates
Focused on my bond fund allocation lately. I read many past threads and realize it may not matter that much (a common comment by nisiprius). I own corporate stocks and (currently) BND. On the corporate bond side, this leads to lending to companies I own.?. So, if the company is in trouble, won't both bond and share holders get hurt (in varying amounts). In fact, the annual correlation between US TSM and intermediate term corporate bonds is higher than treasuries of all kinds. Correlations with US TSM of .22 for ITB versus -.04 for STT, .03 for ITT and 0.06 for LTT (somewhat surprising to me). Simba data https://bit.ly/3f41sP1 GOVT only owns government bonds. Past threads dismissed this fund in part because (at some point in the recent past)...
- Thu Jan 27, 2022 11:08 am
- Forum: Personal Investments
- Topic: Vanguard REIT vs TIAA Direct Real Estate
- Replies: 118
- Views: 13055
Re: Vanguard REIT vs TIAA Direct Real Estate
I would add, that it is comparable to other funds offered by TIAA for (my school's) 403b. It is not so much that the ER/fees are high, as it is all ER/fees are high for my options. (For example: my school allows me to buy some Vanguard index funds, but the has TIAA add about 30-35 bps to cover costs. :? ) Hey steve, I"m not arguing with you, and not defending TIAA. But are you sure about your actual effective ER? Many of the new unbundled plans have Plan Servicing Credits/Fees . While only my one of five plans has this administrative fee model , a .05% ER Vanguard fund is only grossed up to .09%. The way the machine works is that any fund under .09% is grossed up to that number. And Revenue Sharing can lower funds just over .09% as mu...
- Thu Jan 27, 2022 10:48 am
- Forum: Investing - Theory, News & General
- Topic: I do not understand the panic, care to educate me?
- Replies: 130
- Views: 19524
Re: I do not understand the panic, care to educate me?
I suspect it is the realization that every major asset we (I) own has benefited from a decline in interest rates. (stocks, bonds, real estate) Thus, things are good now, but ...?...
Combined with experience seeing declines, BHs not being immune, and other commits above.
Combined with experience seeing declines, BHs not being immune, and other commits above.
- Thu Jan 27, 2022 10:15 am
- Forum: Personal Investments
- Topic: Vanguard REIT vs TIAA Direct Real Estate
- Replies: 118
- Views: 13055
Re: Vanguard REIT vs TIAA Direct Real Estate
Did someone in another thread (maybe you?) calculate the effective (vs. a REIT fund) expense ratio of the TIAA fund at something in the .5% range? In any case it would still be enough to be a bridge just too far for some Bogleheads. I recall that the TIAA fund reported expenses were lower some some years ago (in the upper .5% range I think), maybe before some of the financial-crisis-related changes. Yes, that was me, and I was replying to you. TREA's effective expense ratio is 0.32% to 0.58%, depending on how much you think the liquidity guarantee is worth: If you believe that the liquidity guarantee is worthless because Vanguard gets liquidity for free, then TREA's expense ratio is 0.58%. This is much higher than the Vanguard Real Estate ...