Search found 1937 matches

by Clive
Fri Feb 17, 2017 7:02 pm
Forum: Investing - Theory, News & General
Topic: Bonds Are Riskier Than You Think? Article implications for today?
Replies: 60
Views: 4691

Re: Bonds Are Riskier Than You Think? Article implications for today?

What is the keypoint of of this article? My take is that the article is just stating the facts Whether that is about to happen, and the bond regime about to flip, is for others to say. (Usually, by pouring a cup of tea and examining the leaves.) This column merely points out the issue . There are t...
by Clive
Thu Feb 16, 2017 11:08 pm
Forum: Investing - Theory, News & General
Topic: 20 year average versus median
Replies: 3
Views: 342

Re: 20 year average versus median

My guess is the particular time period of that second chart ... strong gains during the 1990's tempting more investors to buy stocks (relatively high). Dot com bubble bursting 2000 to 2003 causing concerns and partial (maybe full) withdrawal. Then 2008/9 financial crash causing capitulations. Net ef...
by Clive
Thu Feb 16, 2017 9:38 pm
Forum: Investing - Theory, News & General
Topic: 20 year average versus median
Replies: 3
Views: 342

Re: 20 year average versus median

In that first chart it's interesting to see how for 20 year periods started between the mid 1950's and mid 1970's how stock total returns barely maintained purchase power. 5% SWR for 20 years might just about have been OK (subject of course to sequence of returns). 3% SWR might have had around 40% o...
by Clive
Thu Feb 16, 2017 9:26 pm
Forum: Investing - Theory, News & General
Topic: 20 year average versus median
Replies: 3
Views: 342

20 year average versus median

Looking at historic US stock total returns since 1896 from a UK investor perspective (adjusted to British Pound and for UK inflation, after assuming a constant 15% dividend withholding tax) - for all 20 year periods since 1896 (calendar year granularity) and there's a marked difference between the a...
by Clive
Thu Feb 16, 2017 6:01 am
Forum: Investing - Theory, News & General
Topic: International ETFs with 0% dividend withholding tax?
Replies: 7
Views: 544

Re: International ETFs with 0% dividend withholding tax?

Without looking, IIRC something like 70% of UK FT100 (largest 100 by market cap) index is via foreign business/revenues/earnings. 50% foreign earnings for the next 250 largest (FT250) midcap index ... which in US scale compares to small cap. Above average dividends could be considered as being 'valu...
by Clive
Tue Feb 14, 2017 7:58 pm
Forum: Investing - Theory, News & General
Topic: Irish resident: Bond investing in the case of a EURO collapse
Replies: 15
Views: 1012

Re: Irish resident: Bond investing in the case of a EURO collapse

A Euro collapse would trigger a significant flight to safety reaction. I would expect significant capital inflows into U.S. markets and the dollar to strengthen relative to other global currencies. Although the UK and Germany are flight to safety currencies, they're not exactly independent from a E...
by Clive
Tue Feb 14, 2017 5:46 pm
Forum: Investing - Theory, News & General
Topic: Irish resident: Bond investing in the case of a EURO collapse
Replies: 15
Views: 1012

Re: Irish resident: Bond investing in the case of a EURO collapse

Have a look at a stock/gold 50/50 barbell as a alternative to bonds. Two extremes and if the stock is US stock that's like a long/short US$ hedged position (US$ currently being the worlds primary reserve currency). More volatile than bonds over interim periods, but ride through that volatility and t...
by Clive
Tue Feb 14, 2017 3:24 pm
Forum: Investing - Theory, News & General
Topic: Are stock valuations so high because interest rates are so low?
Replies: 28
Views: 2214

Re: Are stock valuations so high because interest rates are so low?

Bogleheads do not use leverage (except for maybe 1 of us) but there are big money players who use significant leverage. Compare ZIV (short volatility) and SPXL (3x long stock) ... and broadly they're similar . ZIV sells 5 month VIX futures, XIV sells 30 day XIV futures and is even more volatile (mo...
by Clive
Sun Feb 12, 2017 7:15 pm
Forum: Investing - Theory, News & General
Topic: In stock performance statistics or graphs, how are dividends taken into account?
Replies: 4
Views: 311

Re: In stock performance statistics or graphs, how are dividends taken into account?

It can get confusing. As a UK investor for instance Vanguard UK's US (S&P500) tracker fund (that's domiciled in Ireland) shows the total return chart along with total return figures, alongside a benchmark total return line/figures. You have to be careful however to see that the benchmark is the ...
by Clive
Sun Feb 12, 2017 4:33 pm
Forum: Investing - Theory, News & General
Topic: What is the prediction of future long-term returns for your portfolio?
Replies: 63
Views: 4599

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

Main chart is log scaled (linear scaled and the tall stock bars are clearly 'way up there', as is more evident in the bottom right chart https://s4.postimg.org/61v8q7259/Screenshot_from_2017_02_12_20_18_45.png (Avg. CAGR is the 20 year annualised of the average of the median and average values, and ...
by Clive
Fri Feb 10, 2017 3:26 pm
Forum: Investing - Theory, News & General
Topic: 96 percent of stocks are no better then TBills
Replies: 20
Views: 3146

Re: 96 percent of stocks are no better then TBills

I have read on this site and others about how index funds work by catching the rare stock that does well. Reading through a working paper linked from MRU, it looks like the skew is even higher than I thought. Only 1000 companies do better than a T Bill per the study.Glad entrepreneurs exist, but wo...
by Clive
Tue Feb 07, 2017 8:46 pm
Forum: Investing - Theory, News & General
Topic: A short study of the recent Japanese crisis
Replies: 56
Views: 4294

Re: A short study of the recent Japanese crisis

"Safe" bonds - can look pretty scary https://s24.postimg.org/kicvim6h1/2gsonmg.png More so when you consider that the UK has moved away from taxing real (after inflation) gains, towards taxing nominal gains. To a large extent, post 1980's good bond gains are down to yields declining from e...
by Clive
Tue Feb 07, 2017 8:20 pm
Forum: Investing - Theory, News & General
Topic: Too good to be true? [Bogleheads' model of index investing]
Replies: 48
Views: 5599

Re: Too good to be true?

Would 6% total return long term after inflation (but not counting taxation) be too good to be true? Depends upon the tax rate https://upload.wikimedia.org/wikipedia/commons/thumb/8/8c/Historical_Marginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners.jpg/640px-Historical_Marginal_Tax_Rate_for_Highe...
by Clive
Mon Feb 06, 2017 8:55 pm
Forum: Investing - Theory, News & General
Topic: A short study of the recent Japanese crisis
Replies: 56
Views: 4294

Re: A short study of the recent Japanese crisis

Dirghatamas wrote:You write
"
One basically needed twice as many Yen to buy US dollars 30 years ago compared to now....

When the Japanese Yen was introduced in 1871, its value was more or less the same as the US dollar 1 Yen bought 1 US$ :)

There's historic Yen/US$ price data since 1949 here
by Clive
Sun Feb 05, 2017 6:29 am
Forum: Investing - Theory, News & General
Topic: Allocation/Diversification of Equities During Withdrawal Phase
Replies: 10
Views: 849

Re: Allocation/Diversification of Equities During Withdrawal Phase

My concern is rather with the question of how the equity portion of one's holding should be allocated so that there is a maximum probability of something always being up more than other holdings (or down less than other holdings) to withdraw from . Look at LEXCX Created in 1935 with an equal number...
by Clive
Thu Feb 02, 2017 10:00 am
Forum: Investing - Theory, News & General
Topic: Is a total market fund the most diversified
Replies: 157
Views: 13214

Re: Is a total market fund the most diversified

in this dynamic world, new companies are created every year. If you invested equal weight 25 years back in the US, you would have gotten Apple and Microsoft but would have missed out on Google, Amazon, Facebook.. In the last few years you would have missed on Tesla and now on Snap. In practice buy ...
by Clive
Wed Feb 01, 2017 10:25 pm
Forum: Investing - Theory, News & General
Topic: Is a total market fund the most diversified
Replies: 157
Views: 13214

Re: Is a total market fund the most diversified

Bogle recommends the ultimate in buy-and-hold investing: a completely static portfolio. He would buy the 50 largest companies in the S&P 500 and then never buy another. Equal weighting initially, buy and hold, will find its own cap weighting over time. Additionally initially equal weight across...
by Clive
Mon Jan 30, 2017 10:48 am
Forum: Investing - Theory, News & General
Topic: Vanguard's Wellesley Income fund is incredible
Replies: 112
Views: 18389

Re: Vanguard's Wellesley Income fund is incredible

According to portfoliovisualizer, very similar since 2007 to 40/60 Small Cap Value/Bonds (click image) https://s24.postimg.org/ahjfkwq0l/Screenshot_from_2017_01_30_15_37_30.png https://s27.postimg.org/vs1k0dh0z/Screenshot_from_2017_01_30_15_44_42.png Also, compare to this 8/92 XIV/Bond (XIV (short v...
by Clive
Mon Jan 30, 2017 4:14 am
Forum: Investing - Theory, News & General
Topic: Try and hit it big with 25% of your portfolio?
Replies: 51
Views: 4934

Re: Try and hit it big with 25% of your portfolio?

But his response will be, "Who cares? I'm young and working. At least I gave it a shot with 25% of my portfolio. I can withstand the loss because this money won't be touched until later in life." How would you reply? Go for it! But why just 25%, make it a third instead, and don't concentr...
by Clive
Tue Jan 24, 2017 10:17 am
Forum: Investing - Help with Personal Investments
Topic: Using Rebalanced Leveraged ETF increase risk and return
Replies: 8
Views: 548

Re: Using Rebalanced Leveraged ETF increase risk and return

Here ya go, SPY vs 50/50 SSO/SHY. SSO is a 2x SPY fund and SHY is a very short term treasury fund. The effect is that SHY should neutralize the leverage of SSO, leaving only costs/rebalancing effects to differentiate it from SPY. Rebalanced annually it performs more or less the same. I would rebala...
by Clive
Tue Jan 24, 2017 9:45 am
Forum: Investing - Theory, News & General
Topic: Replicating Index with Individual Stocks vs Index Fund
Replies: 28
Views: 2538

Re: Replicating Index with Individual Stocks vs Index Fund

20 randomly selected stocks virtually replicates the return/risk of a index fund. After 20ish thereally is diminishing returns. This was widely quoted going back two or three decades, but recent academic work has contradicted this belief. You cannot have low risk with 20 stocks. Which academic stud...
by Clive
Sat Jan 21, 2017 9:40 pm
Forum: Investing - Theory, News & General
Topic: Replicating Index with Individual Stocks vs Index Fund
Replies: 28
Views: 2538

Re: Replicating Index with Individual Stocks vs Index Fund

Here's William Bernstein's article about returns distributions: http://www.efficientfrontier.com/ef/900/15st.htm . He concludes that you need to own the entire market. It is not clear to me how he reached that conclusion quantitatively, e.g., why is half the market not enough? Its pretty fractal to...
by Clive
Thu Jan 19, 2017 5:15 pm
Forum: Investing - Theory, News & General
Topic: Replicating Index with Individual Stocks vs Index Fund
Replies: 28
Views: 2538

Re: Replicating Index with Individual Stocks vs Index Fund

Nobody has mentioned the main reason one would consider buying the stocks directly: A legal restriction or tax structure that disadvantaged using funds. PFIC is but one example. Apply 'standard' (most common) rate tax to UK stock total returns and you might hit 0% net real. https://s29.postimg.org/...
by Clive
Thu Jan 19, 2017 4:46 pm
Forum: Investing - Theory, News & General
Topic: Formula for dividend tax drag?
Replies: 51
Views: 4433

Re: Formula for dividend tax drag?

Historic tax rates were relatively higher and fewer if any tax advantaged options were available (costs were generally higher as well). For UK basic rate taxpayer (most common tax rate), if you discount basic rate tax from dividends (more recently 20%, but historically since WW2 years as high as 47....
by Clive
Tue Jan 17, 2017 8:27 am
Forum: Investing - Theory, News & General
Topic: Why not put it all in TIPS?
Replies: 87
Views: 5253

Re: Why not put it all in TIPS?

One if not the biggest causes of serious loss is down to concentration risk. TIPS could suffer due to taxation. Or simply because consumer price inflation lags other asset price inflation. In the UK CPI has broadly lagged house prices, gold, art and stock price only inflation over the last century. ...
by Clive
Mon Jan 16, 2017 5:34 pm
Forum: Investing - Theory, News & General
Topic: Mathematics of international asset allocation
Replies: 44
Views: 4251

Re: Mathematics of international asset allocation

what I want to know is, how should your allocation depend on what currency you will use? Intuitively, forex uncertainty should justify some home bias. Observationally : Initially equal weight across a bunch of countries/currencies, diversifying equally across sectors, bought and held ... will be lo...
by Clive
Mon Jan 16, 2017 3:32 pm
Forum: Investing - Theory, News & General
Topic: Mathematics of international asset allocation
Replies: 44
Views: 4251

Re: Mathematics of international asset allocation

So the problem with your mathematics is that there's no way to get input data that's trustworthy enough to give you trustworthy output. I think it is actually even worse. While it is true that the mathematics are very sensitive to errors in inputs and past data are noisy at best, saying that really...
by Clive
Sun Jan 15, 2017 7:02 am
Forum: Investing - Theory, News & General
Topic: leverage and beating the market
Replies: 45
Views: 4139

Re: leverage and beating the market

Zvi Bodie likes 10/90. 90% in TIPS, 10% in 10x (he likes LEAPS/Options for that and loads into the equivalent of 10x leveraged stock exposure). Between trades the downside is <10% i.e. all of the Options value lost, less any gains the TIPS make. Personally I use 5x equivalents myself such as short v...
by Clive
Sun Jan 15, 2017 6:47 am
Forum: Investing - Theory, News & General
Topic: leverage and beating the market
Replies: 45
Views: 4139

Re: leverage and beating the market

SPXL 3x ETF Just wondering what about 1/3rd 3x leveraged ETF; 2/3rds cash ... Market return with a maximum possible drawdown of 33%? http://i.imgur.com/J1NRuB5.png Market return tracking it tighter if you rebalance relatively frequently such as quarterly https://s23.postimg.org/65zf3nm4r/Screenshot...
by Clive
Fri Jan 13, 2017 7:25 pm
Forum: Investing - Theory, News & General
Topic: Over what time period should stocks NOT lose money
Replies: 50
Views: 4105

Re: Over what time period should stocks NOT lose money

I don't think there is any timeline where anything is safe. People are incredibly bad at forecasting. Around the world, just in the 19-somethings, without trying to be all inclusive: Private property was confiscated in Russia, China, Eastern Europe, Cuba--foreign investment was nationalized and tha...
by Clive
Fri Jan 13, 2017 12:10 pm
Forum: Investing - Theory, News & General
Topic: Over what time period should stocks NOT lose money
Replies: 50
Views: 4105

Re: Over what time period should stocks NOT lose money

https://www.bogleheads.org/forum/viewtopic.php?p=1820900#p1820900 examples of how long it has taken to break-even (in real terms) after significant market declines across 19 countries between 1900-2010. Some of the longest include: Equities Germany: 45 years France: 43 years Italy: 37 years (I note ...
by Clive
Wed Jan 11, 2017 10:01 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 12599

Re: The Argument for More Stocks in Retirement

Historically since 1913 average dividend yield 4.2%. Average tax on dividends for a high rate taxpayer 40% (with considerable volatility around that). Market makers back in postal vote days often widened spreads out to 5% or even 10%, such that over a 10 year holding period that could have added a ...
by Clive
Mon Jan 09, 2017 1:00 pm
Forum: Investing - Theory, News & General
Topic: Over what time period should stocks NOT lose money
Replies: 50
Views: 4105

Re: Over what time period should stocks NOT lose money

World, equal weight, around 20 years http://2.bp.blogspot.com/-YddFgKJazSs/U9lVP2rqSNI/AAAAAAAAILI/Ch8xZWlxB2Y/s1600/Worst+Case+Scenario.png If you concentrate the chances are you'll lag the equal weight average. That's fractal. And a major reason IMO why cap weighted has a tendency to lag (which is...
by Clive
Sun Jan 08, 2017 8:55 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 12599

Re: The Argument for More Stocks in Retirement

Conclusions that I have made from this analysis of stock and bond data over the past 90 years is that around a 80% Stock, 20% Bond portfolio minimizes failure rates at 4% and 5% yearly withdrawal rate (constant, inflation adjusted, proportion of original investment). Furthermore, worst case scenari...
by Clive
Sat Jan 07, 2017 7:33 am
Forum: Investing - Theory, News & General
Topic: When thinking about diversification it's dispersion of returns that matters
Replies: 4
Views: 784

Re: When thinking about diversification it's dispersion of returns that matters

This MSCI paper (PDF) highlights how stock markets around the world (see table on page 6) have moved from being more home biased to being more global ... at least when measured from a Index angle. Within that however there are firms who will be predominately domestic economy reflective. Diversifyin...
by Clive
Sat Jan 07, 2017 6:53 am
Forum: Investing - Theory, News & General
Topic: I am timing the market. Why am I wrong?
Replies: 89
Views: 5984

Re: I am timing the market. Why am I wrong?

I would suggest a 50/50 stocks/bonds portfolio. That way you are always right! What about half of time 100% stock, other half of time bonds? (Average 50/50). Generally on average you'd expect similar outcome (reward) over the total period compared to constant 50/50. But within that there'd be more ...
by Clive
Fri Jan 06, 2017 11:57 pm
Forum: Investing - Theory, News & General
Topic: What gets cheap when the dollar gets strong
Replies: 32
Views: 5547

Re: What gets cheap when the dollar gets strong

If you look at the top 10 companies in the FTSE100, which are c. 40% of the index, you find HSBC, Vodafone, Glaxo Smithkline, Astra Zeneca, BP, Shell, Rio TInto, BHP etc. DIageo. So HSBC makes a lot of its money in China/ Hong Kong-- tracks the USD. Pharma companies make more than half their money ...
by Clive
Fri Jan 06, 2017 11:42 pm
Forum: Investing - Theory, News & General
Topic: What gets cheap when the dollar gets strong
Replies: 32
Views: 5547

Re: What gets cheap when the dollar gets strong

Other currencies being compared to that suggest the dollar to be relatively strong by comparison :wink: In 1874 1 Japanese Yen bought 1 US$, more recently it requires 117 Yen to buy a dollar. Over a similar period ... 1 GB Pound (which originally in the 750's was a Saxon pound weight of silver, part...
by Clive
Thu Jan 05, 2017 9:53 pm
Forum: Investing - Theory, News & General
Topic: Why S & P 500 fund is safer than Total Stock Market fund
Replies: 40
Views: 5343

Re: Why S & P 500 fund is safer than Total Stock Market fund

I am reasonably sure that virtually no one will perform "well" if the U.S. economy stagnates because we are a consumer nation and where the world comes to sell a large portion of their manufactured products. We sneeze the world catches a cold. On the flip side we have a domestic consumer ...
by Clive
Thu Jan 05, 2017 2:21 pm
Forum: Investing - Theory, News & General
Topic: Why S & P 500 fund is safer than Total Stock Market fund
Replies: 40
Views: 5343

Re: Why S & P 500 fund is safer than Total Stock Market fund

I am reasonably sure that virtually no one will perform "well" if the U.S. economy stagnates because we are a consumer nation and where the world comes to sell a large portion of their manufactured products. We sneeze the world catches a cold. On the flip side we have a domestic consumer ...
by Clive
Thu Jan 05, 2017 11:20 am
Forum: Investing - Theory, News & General
Topic: Why S & P 500 fund is safer than Total Stock Market fund
Replies: 40
Views: 5343

Re: Why S & P 500 fund is safer than Total Stock Market fund

Wouldn't it be more accurate to say "you capture that" than "you beat that"? You're going to get the gains from companies that join the S&P500. But you're also going to take the losses on the companies that depart. The hedge funds are trying to gain on both ends. TSM by defi...
by Clive
Thu Jan 05, 2017 11:03 am
Forum: Investing - Theory, News & General
Topic: Swiss Franc back down?
Replies: 4
Views: 581

Re: Swiss Franc back down?

Note the Jan 2015 jump https://chart.finance.yahoo.com/5y?chfeur=x&lang=en-GB&region=GB Jan 2015 news at the time (BBC) The Swiss franc soared as much as 30% in chaotic trade after the central bank abandoned the cap on the currency's value against the euro. The Swiss National Bank (SNB) said...
by Clive
Thu Jan 05, 2017 8:49 am
Forum: Investing - Theory, News & General
Topic: Why S & P 500 fund is safer than Total Stock Market fund
Replies: 40
Views: 5343

Re: Why S & P 500 fund is safer than Total Stock Market fund

Foreign revenue in a domestic domiciled business does not buffer it from domestic pricing. The America Abroad fund chose stocks from the 500 index that had significant foreign revenues, as an alternative to owning large cap foreign stocks from countries with less stringent accounting rules. The fun...
by Clive
Wed Jan 04, 2017 4:16 pm
Forum: Investing - Theory, News & General
Topic: Over the last 40 years, 71% of the stock market's return came from dividends, not capital appreciation,"
Replies: 91
Views: 8210

Re: Over the last 40 years, 71% of the stock market's return came from dividends, not capital appreciation,"

http://www.forbes.com/sites/steveschaefer/2015/11/13/shark-tanks-kevin-oleary-oshares-etfs-investing/#1608df442ba1 So what does this mean? Allocate more of the dividend paying stocks to capture more value? Is there a research out tthere that shows that dividend paying stocks returm more than S&...
by Clive
Sat Dec 31, 2016 6:45 am
Forum: Investing - Theory, News & General
Topic: Bogle worried about currency risk in Int'l Stocks
Replies: 34
Views: 2752

Re: Bogle worried about currency risk in Int'l Stocks

Bonds (10+ years), Notes (2 to 10 years), Bills (up to 1 year) ... Currency (immediately swappable 0% yield) tend to be more commonly collectively classified as 'Bonds'. Should you hold bonds issued solely by a single entity, or diversify across different providers as sooner or later a idiot may be ...
by Clive
Fri Dec 30, 2016 7:59 pm
Forum: Investing - Theory, News & General
Topic: Bogle worried about currency risk in Int'l Stocks
Replies: 34
Views: 2752

Re: Bogle worried about currency risk in Int'l Stocks

Firms with global/foreign earnings tend to currency hedge to the currency/country they list in, for the greater stability that provides. Sticking with a single stock market/country set of stock listings is a concentration risk, unfavourable taxes/regulations (US applies a 30% dividend withholding ta...
by Clive
Thu Dec 29, 2016 8:25 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 12599

Re: The Argument for More Stocks in Retirement

Another way to look at it is whilst the all-stock minimum historic SWR was around 3% or 4%, the maximum sustainable SWR was around 11% or 12%. More typical average SWR being 5% or 6%. The indications being that if the current SWR rises to being 10% of current portfolio value then going forward that ...
by Clive
Thu Dec 29, 2016 8:00 pm
Forum: Investing - Theory, News & General
Topic: All Weather Bond Allocation
Replies: 3
Views: 845

Re: All Weather Bond Allocation

I was under the impression that Dalio uses a SAFE of 10% gold, 20% STT, 30% T-Bills and 40% TIPS (global), with triggers to switch partially or fully to/from that ... and then uses other asset allocations when apparently safe to do so and leverages to risk parity using appropriately selected assets....
by Clive
Thu Dec 29, 2016 6:45 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 12599

Re: The Argument for More Stocks in Retirement

Thanks for those historic insights AlohaJoe. The same might be said for stocks across the 20th century. For instance UK tax rates and costs were much higher in the past, nor were the tax-advantaged choices as beneficial. Some traded via post and market makers alongside brokers could make a killing (...
by Clive
Thu Dec 29, 2016 5:34 am
Forum: Investing - Theory, News & General
Topic: Picking Individual Stocks Is Dangerous
Replies: 58
Views: 5453

Re: Picking Individual Stocks Is Dangerous

That's some pretty epic under performance. I'd bet it would be hard to under perform by that much even if you tried! If if were that easy to relatively underperform the index by individual stock picking then hedge fund management would be a walk in the park ... long index, short individual stocks. ...

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