Larry Swedroe: Market Plunge May Not Have Been A Bad Idea
Larry Swedroe: Market Plunge May Not Have Been A Bad Idea
Boglehead Larry Swedroe has a TV Interview entitled,
Stock Market Plunge May Not Have Been A Bad Idea online at
http://www.kplr11.com/entertainment/kpl ... 4772.story
I always enjoy learning from Larry.
Stock Market Plunge May Not Have Been A Bad Idea online at
http://www.kplr11.com/entertainment/kpl ... 4772.story
I always enjoy learning from Larry.
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few thoughts
First glad you enjoyed the interview
Second, who the hell is Jack Strauss?
Third, you can take the boy out of the Bronx (left in 1977) but not the Bronx out of the boy. I grew up in Pelham Parkway, went to PS 105, PS 127, Christopher Columbus HS, Baruch College and NYU for masters
BTW--I tell everyone I played basketball for UCLA, which is the truth, as Baruch (a DIII school) is the
University on the
Corner of
Lexington
Avenue and 23rd street!!!!
Second, who the hell is Jack Strauss?
Third, you can take the boy out of the Bronx (left in 1977) but not the Bronx out of the boy. I grew up in Pelham Parkway, went to PS 105, PS 127, Christopher Columbus HS, Baruch College and NYU for masters
BTW--I tell everyone I played basketball for UCLA, which is the truth, as Baruch (a DIII school) is the
University on the
Corner of
Lexington
Avenue and 23rd street!!!!
- SVariance1
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Re: few thoughts
Must not be a lot of New Yorkers here. After 5 seconds of hearing you speak, I knew where you grew up. Good Joke about UCLA! I took many classes on Lex and 23.larryswedroe wrote:
Third, you can take the boy out of the Bronx (left in 1977) but not the Bronx out of the boy. I grew up in Pelham Parkway, went to PS 105, PS 127, Christopher Columbus HS, Baruch College and NYU for masters
BTW--I tell everyone I played basketball for UCLA, which is the truth, as Baruch (a DIII school) is the
University on the
Corner of
Lexington
Avenue and 23rd street!!!!
Mike
http://www.slu.edu/x21366.xml
Larry, I think you probably have more practical advice for the average investor than J. Strauss, who apparently has an interest in forecasting.
Larry, I think you probably have more practical advice for the average investor than J. Strauss, who apparently has an interest in forecasting.
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.
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Beagler
There are only three types of forecasters
Those that don't know where the market is going
Those that don't know they don't know
And the most prevalent kind, those who know they don't know but get paid lots of money to pretend they do!!!!
Those that don't know where the market is going
Those that don't know they don't know
And the most prevalent kind, those who know they don't know but get paid lots of money to pretend they do!!!!
Yeah I was thinking the same thing. Who the heck is Jack Strauss?bob90245 wrote:Who's Jack Strauss? Maybe he was on an adjacent segment and there was teleprompter snafu.
Last edited by rustymutt on Sat Aug 20, 2011 7:02 pm, edited 1 time in total.
Even educators need education. And some can be hard headed to the point of needing time out.
Re: few thoughts
I caught that. The lady that interviewed you was sweet.larryswedroe wrote:First glad you enjoyed the interview
Second, who the hell is Jack Strauss?
Third, you can take the boy out of the Bronx (left in 1977) but not the Bronx out of the boy. I grew up in Pelham Parkway, went to PS 105, PS 127, Christopher Columbus HS, Baruch College and NYU for masters
BTW--I tell everyone I played basketball for UCLA, which is the truth, as Baruch (a DIII school) is the
University on the
Corner of
Lexington
Avenue and 23rd street!!!!
Even educators need education. And some can be hard headed to the point of needing time out.
Re: few thoughts
Indeed. The first two words out of your mouth were enough.larryswedroe wrote:
Third, you can take the boy out of the Bronx (left in 1977) but not the Bronx out of the boy.
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Re: few thoughts
larryswedroe wrote:First glad you enjoyed the interview
Second, who the hell is Jack Strauss?
Third, you can take the boy out of the Bronx (left in 1977) but not the Bronx out of the boy. I grew up in Pelham Parkway, went to PS 105, PS 127, Christopher Columbus HS, Baruch College and NYU for masters
BTW--I tell everyone I played basketball for UCLA, which is the truth, as Baruch (a DIII school) is the
University on the
Corner of
Lexington
Avenue and 23rd street!!!!
We, as Bogleheads, owe you a lot for your valuable contribution to this forum--would you mine posting your current portfolio what look like so that we can learn some thing from you
bests wishes
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my portfolio
very high quality munis dominate, like 55%. For taxable FI using DFA ST extended credit quality fund which I consider 15% equity risk in my allocations and DFA 2 year global. That brings FI to about 70%
Equity bit different than would like permanently due to TLH trades so holding now DFA TM Marketwide Value about 40% of equity (instead of the DFA TM SV FUND I used to own prior to early 09) and DFA ISV about 45% and DFA EMV about 15%. Will eventually move to new Bridgeway TM SV Fund for US SV exposure (though big k gains are involved, though getting smaller daily). So it is very low beta, extreme tilt portfolio.
Public equity is only about 10% of my portfolio now. I manage my equity by max dollar amount of exposure and a target dollar, not percent. So if X is target and Y is max, when it exceeds Y I sell down to X. I have no minimum equity exposure.
The remainder, roughly 20%, is mostly interest in my firm and Focus Financial Partners which acquired part of my firm several years ago. And all of that isn't really equity risk as it relates to AUM mostly and that is say 40-50% bonds.
I have very low marginal utility of wealth so while large ability and willingness to take risk, little need, and IMO one should almost always choose the lowest risk from the three tests. So I slept quite well through 2008 and sleeping well now. Sleeping well and enjoying life is the goal of my portfolio, in other words, preserving wealth has very different strategy than creating wealth. At one time was basically 100% stocks.
I hope that is helpful
Equity bit different than would like permanently due to TLH trades so holding now DFA TM Marketwide Value about 40% of equity (instead of the DFA TM SV FUND I used to own prior to early 09) and DFA ISV about 45% and DFA EMV about 15%. Will eventually move to new Bridgeway TM SV Fund for US SV exposure (though big k gains are involved, though getting smaller daily). So it is very low beta, extreme tilt portfolio.
Public equity is only about 10% of my portfolio now. I manage my equity by max dollar amount of exposure and a target dollar, not percent. So if X is target and Y is max, when it exceeds Y I sell down to X. I have no minimum equity exposure.
The remainder, roughly 20%, is mostly interest in my firm and Focus Financial Partners which acquired part of my firm several years ago. And all of that isn't really equity risk as it relates to AUM mostly and that is say 40-50% bonds.
I have very low marginal utility of wealth so while large ability and willingness to take risk, little need, and IMO one should almost always choose the lowest risk from the three tests. So I slept quite well through 2008 and sleeping well now. Sleeping well and enjoying life is the goal of my portfolio, in other words, preserving wealth has very different strategy than creating wealth. At one time was basically 100% stocks.
I hope that is helpful
Larr swedroe
larryswedroe wrote:There are only three types of forecasters
Those that don't know where the market is going
Those that don't know they don't know
And the most prevalent kind, those who know they don't know but get paid lots of money to pretend they do!!!!
We, as Bogleheads, owe you a lot for your valuable contribution to this forum--would you mine posting your current portfolio what look like so that we can learn some thing from you
bests wishes
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Re: my portfolio
A few surprises, at least for me.larryswedroe wrote:very high quality munis dominate, like 55%. For taxable FI using DFA ST extended credit quality fund which I consider 15% equity risk in my allocations and DFA 2 year global. That brings FI to about 70%
Equity bit different than would like permanently due to TLH trades so holding now DFA TM Marketwide Value about 40% of equity (instead of the DFA TM SV FUND I used to own prior to early 09) and DFA ISV about 45% and DFA EMV about 15%. Will eventually move to new Bridgeway TM SV Fund for US SV exposure (though big k gains are involved, though getting smaller daily). So it is very low beta, extreme tilt portfolio.
Public equity is only about 10% of my portfolio now. I manage my equity by max dollar amount of exposure and a target dollar, not percent. So if X is target and Y is max, when it exceeds Y I sell down to X. I have no minimum equity exposure.
The remainder, roughly 20%, is mostly interest in my firm and Focus Financial Partners which acquired part of my firm several years ago. And all of that isn't really equity risk as it relates to AUM mostly and that is say 40-50% bonds.
I have very low marginal utility of wealth so while large ability and willingness to take risk, little need, and IMO one should almost always choose the lowest risk from the three tests. So I slept quite well through 2008 and sleeping well now. Sleeping well and enjoying life is the goal of my portfolio, in other words, preserving wealth has very different strategy than creating wealth. At one time was basically 100% stocks.
I hope that is helpful
Why use ST bond fund to take equity risk? Why not use equity to take equity risk? Isn't that what you tell us for junk bonds?
I'm a bit surprised to see you don't have an DFA Core funds. I know you highly recommend them. Is it a tax issue, or do you think it is better to S&D the core?
Jack "A Chip and a Chair" Strauss
http://en.wikipedia.org/wiki/Jack_Strauss
http://en.wikipedia.org/wiki/Jack_Strauss
DSK?
Dominique Gaston André Strauss-Kahn?rustymutt wrote:Yeah I was thinking the same thing. Who the heck is Jack Strauss?bob90245 wrote:Who's Jack Strauss? Maybe he was on an adjacent segment and there was teleprompter snafu.
Victoria
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Leif
1) I am not using the DFA ST fund to get equity exposure, it is to use as a holding place until (I hope) TIPS yields get back to at least average historical levels and IMO this is the best alternative while I wait. High corporate spreads and steep yield curve, only investment grade and no calls. I simply take into account in my AA that I have 15% exposure to equity risk (to make sure I don't exceed my max equity amount(
2) I don't use core funds, which I highly recommend, IMO they are the best in portfolio design today and big improvement over using individual building blocks, because I want more tilt, as extreme as I can get, to allow me to hold as little equity as possible.
I hope that is helpful
2) I don't use core funds, which I highly recommend, IMO they are the best in portfolio design today and big improvement over using individual building blocks, because I want more tilt, as extreme as I can get, to allow me to hold as little equity as possible.
I hope that is helpful
Re: Leif
Thanks Larry.larryswedroe wrote:1) I am not using the DFA ST fund to get equity exposure, it is to use as a holding place until (I hope) TIPS yields get back to at least average historical levels and IMO this is the best alternative while I wait
Where is the line drawn between a high yield bond fund and this ST lower rated (but still investment grade) fund? Would this fund still be OK with you if it was intermediate term?
Why did you give up on DFA TM SV?
Last edited by Leif on Sun Aug 21, 2011 10:16 pm, edited 2 times in total.
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Leif
The vanguard high yield is the first level below investment grade basically
Junk bonds are CCC. That explains the basically double equity exposure because credit risk doesn't increase arithmetically as you go down in rating, it increases much faster.
You should prefer fund that is AAA/AA--has very little equity risk. The DFA fund goes to A. And is roughly 30/30/20/20 if memory serves in the four brackets, AAA/AA/A/BBB. The lower the rating and the longer the term the more equity risk you are taking, and should account for it. The historical evidence is that the "sweet spot" for corporate credit risk is about up to three years.
It's not that I gave up on DFA TM SV, it's that Bridgeway is able to construct a fund with higher loadings---and will control growth by limiting access. Fund is also a bit different, using multiple screens, instead of one for determining value--and that has added a bit of diversification return.
Hope that helps
Larry
Junk bonds are CCC. That explains the basically double equity exposure because credit risk doesn't increase arithmetically as you go down in rating, it increases much faster.
You should prefer fund that is AAA/AA--has very little equity risk. The DFA fund goes to A. And is roughly 30/30/20/20 if memory serves in the four brackets, AAA/AA/A/BBB. The lower the rating and the longer the term the more equity risk you are taking, and should account for it. The historical evidence is that the "sweet spot" for corporate credit risk is about up to three years.
It's not that I gave up on DFA TM SV, it's that Bridgeway is able to construct a fund with higher loadings---and will control growth by limiting access. Fund is also a bit different, using multiple screens, instead of one for determining value--and that has added a bit of diversification return.
Hope that helps
Larry
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lbill
They have a new fund the TM OMNI SV --BOSVX and similar not tax managed version for tax advantaged accounts
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lbill
should not have to ask---I would not recommend it if did not think otherwise (:-)) And note it's not even close IMO.
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lbill
like DFA Bridgeway screens out REITS. Certainly would not want to own them in a fund that is held in taxable account anyway. But REITS really are separate asset class, not value stocks, they just happen to have high BtMs.
That's a plus for me re:Bridgeway. Now if I could just et into it via Vanguard (IRA). Guess there are no institutional class shares available for this fund.
"Life can only be understood backward; but it must be lived forward." ~ Søren Kierkegaard |
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"You can't connect the dots looking forward; but only by looking backwards." ~ Steve Jobs
Vanguard does offer BRSVX, but it might not be like BOSVX. For example, it looks like it has about 10% in REIT holdings.
"Life can only be understood backward; but it must be lived forward." ~ Søren Kierkegaard |
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"You can't connect the dots looking forward; but only by looking backwards." ~ Steve Jobs
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Re: Leif
Larry,larryswedroe wrote:1) I am not using the DFA ST fund to get equity exposure, it is to use as a holding place until (I hope) TIPS yields get back to at least average historical levels and IMO this is the best alternative while I wait. High corporate spreads and steep yield curve, only investment grade and no calls. I hope that is helpful
Did I miss the last TIPS update? I must have, since I thought the last one stated TIPS were still slightly better than nominal.
RM
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Random
Do to market crisis and some other things like travel schedul we have delayed the TIPS update, should be out next week.
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Re: Random
Thanks Larry.larryswedroe wrote:Do to market crisis and some other things like travel schedul we have delayed the TIPS update, should be out next week.
RM