Search found 394 matches

by Dirghatamas
Tue Apr 25, 2017 12:29 am
Forum: Investing - Theory, News & General
Topic: Thinking in real vs. nominal
Replies: 46
Views: 2879

Re: Thinking in real vs. nominal

For those of you who do your planning strictly in terms of real growth, is the motivation simply that it makes projection easier because it eliminates the variable of inflation? For me it is much deeper than that. I think in terms of risks as both the magnitude of things going bad as well as the pr...
by Dirghatamas
Sun Apr 23, 2017 3:03 pm
Forum: Investing - Theory, News & General
Topic: Larry Portfolio Equities: What % Each Market?
Replies: 50
Views: 3566

Re: Larry Portfolio Equities: What % Each Market?

The OP asked me in a PM before starting this thread, given that I have been investing consistently in World Stocks (market weighted) for a very long time. I replied to him/her expressing my strong skepticism and caution of the idea: take world stocks by cap weight but then only invest in small value...
by Dirghatamas
Thu Apr 20, 2017 3:37 pm
Forum: Investing - Theory, News & General
Topic: Those that hold international equities at market-cap weight: what is your method?
Replies: 24
Views: 2267

Re: Those that hold international equities at market-cap weight: what is your method?

I have a question regarding Vanguard Total World Stock. This fund holds only 7774 equities. Vanguard Total Stock Market holds 3601, and Vanguard Total International Stock Market holds 6172. Does anyone know what the Total World Stock fund's index excludes? (It tracks an all-cap index.) I did some d...
by Dirghatamas
Wed Apr 19, 2017 6:16 pm
Forum: Investing - Theory, News & General
Topic: Those that hold international equities at market-cap weight: what is your method?
Replies: 24
Views: 2267

Re: Those that hold international equities at market-cap weight: what is your method?

Like others above, I hold international at cap weight and also have cap weighted funds. One way to estimate the current domestic/international split is to use Vanguard's website: 1) Take the largest US company. Right now, that company is Apple. 2) Find the percentage of Vanguard Total Market invest...
by Dirghatamas
Tue Apr 18, 2017 3:28 pm
Forum: Investing - Theory, News & General
Topic: Bill Sharpe's preferred portfolio
Replies: 21
Views: 4722

Re: Bill Sharpe's preferred portfolio

CyberBob, good work but I have concerns on the methodology. For stocks, I think this is reasonable. The index providers use free float part of public stocks. FTSE index shows ~54% in US and 46% in rest of the world so your numbers look sort of reasonable. My main concern is that the size of bond mar...
by Dirghatamas
Mon Apr 17, 2017 10:26 pm
Forum: Investing - Theory, News & General
Topic: Those that hold international equities at market-cap weight: what is your method?
Replies: 24
Views: 2267

Re: Those that hold international equities at market-cap weight: what is your method?

- Do you use a single index such as Vanguard Total World Stock Index (VTWSX)? - Do you hold U.S./International in separate indexes (such as VTSAX/VTIAX)? - If there is a need to rebalance, how often do you do this? What source do you use for the latest market weights? Yes, I have been doing this po...
by Dirghatamas
Mon Apr 17, 2017 10:01 pm
Forum: Investing - Theory, News & General
Topic: Investors backing off their equity AA primarily due to 8-year bull market?
Replies: 56
Views: 4546

Re: Investors backing off their equity AA primarily due to 8-year bull market?

So, any exchange is neutral: if someone is decreasing stocks, someone else is increasing stocks. If someone is decreasing US stocks, someone else is increasing US stocks. That's true if you are only counting shares. But since share prices can change, it is not so true in terms of capital, meaning c...
by Dirghatamas
Mon Apr 17, 2017 3:39 pm
Forum: Investing - Theory, News & General
Topic: Investors backing off their equity AA primarily due to 8-year bull market?
Replies: 56
Views: 4546

Re: Investors backing off their equity AA primarily due to 8-year bull market?

The Morningstar article says "U.S. investors" so I would assume that international investors are the ones on the other side. So this was U.S. investors only, so possibly the opposite shift was happening with non-U.S. investors. But changes in price can also effectuate a flow of funds. Rig...
by Dirghatamas
Mon Apr 17, 2017 1:42 pm
Forum: Investing - Theory, News & General
Topic: Investors backing off their equity AA primarily due to 8-year bull market?
Replies: 56
Views: 4546

Re: Investors backing off their equity AA primarily due to 8-year bull market?

Morningstar tracks asset flows and provides regular reports. Here is one from January: https://corporate.morningstar.com/US/documents/AssetFlows/AssetFlowsJan2017.pdf The main focus of that discussion is the ongoing shift from active to passive management, but if you look at the numbers and combine...
by Dirghatamas
Sun Apr 16, 2017 7:54 pm
Forum: Investing - Theory, News & General
Topic: Investors backing off their equity AA primarily due to 8-year bull market?
Replies: 56
Views: 4546

Re: Investors backing off their equity AA primarily due to 8-year bull market?

I haven't been following market news. Is there a growing trend of investors backing off their equity AA, stopping auto-investment in equity or even selling equity shares, primarily because of the 8-year bull market? Not because they are needing the money anytime soon. What does this even mean? At e...
by Dirghatamas
Sun Apr 16, 2017 7:21 pm
Forum: Investing - Theory, News & General
Topic: Regarding tax efficiency
Replies: 2
Views: 461

Re: Regarding tax efficiency

Back from my bike ride, I have time :happy No, your assertion is incorrect that tax efficiency doesn't matter in the long run (tax early vs. late will cancel out). 1) Even if your marginal tax bracket stays the same, in US at least, long term capital gains (and qualified dividends) are treated diffe...
by Dirghatamas
Sun Apr 16, 2017 1:32 pm
Forum: Investing - Theory, News & General
Topic: Is there any reason a buy-and-hold investor would buy gold?
Replies: 121
Views: 6320

Re: Is there any reason a buy-and-hold investor would buy gold?

Gold is just Bitcoin that you can make teeth out of. Bitecoin! 8-) I just snorted my morning coffee out my nose :annoyed That was good! More seriously, always good to read Buffett: either read his shareholder letters or this condensed version: "Why stocks beat gold and bonds?" http://fort...
by Dirghatamas
Sun Apr 16, 2017 12:38 pm
Forum: Investing - Theory, News & General
Topic: value of stock options
Replies: 30
Views: 1950

Re: value of stock options

I have been getting stocks options, Employee stock purchase (ESPP) and (during this decade) restricted stock units (RSU) for about 25 years now. I am a strict passive investor and hold no individual stocks as a matter of philosophy, so I never assume I can predict the future stock direction of a com...
by Dirghatamas
Fri Apr 14, 2017 5:47 pm
Forum: Investing - Theory, News & General
Topic: International Portfolio Tilt
Replies: 18
Views: 1897

Re: International Portfolio Tilt

I think your tilt is too extreme. I always invest with the world stock index and let it float (so there is no specific % of US or International). At present it is 54% US, 46% International. Once you start going much past 50% in International, things that one may shrug at like currency volatility, do...
by Dirghatamas
Fri Apr 14, 2017 4:45 pm
Forum: Investing - Theory, News & General
Topic: Jack says be realistic
Replies: 48
Views: 5803

Re: Jack says be realistic

I would disagree with Jack on his prediction. While one should have a very conservative view in planning worst case outcomes, it is a different case for highest probability or baseline expectations. I am much more bullish. 1) The world stock PE is roughly 20 or E/P is roughly 5%. If the world doesn'...
by Dirghatamas
Thu Apr 13, 2017 1:52 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing to control risk doesn't make sense to me
Replies: 160
Views: 9970

Re: Rebalancing to control risk doesn't make sense to me

Well for a lot of people here who follow Bogle's advice on international allocation we are talking about one government - but even for the others, a coordinated move between the US and Western Europe would cover enough equities to be disastrous even for a globally diversified portfolio. So, you are...
by Dirghatamas
Thu Apr 13, 2017 1:34 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing to control risk doesn't make sense to me
Replies: 160
Views: 9970

Re: Rebalancing to control risk doesn't make sense to me

No it really isn't that hard to imagine a scenario where equity holders are stripped of their ownership by a government without ending the productive capacity of the world economy. It isn't like we don't have recent history of certain companies equity holders being wiped out by the government while...
by Dirghatamas
Thu Apr 13, 2017 1:29 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing to control risk doesn't make sense to me
Replies: 160
Views: 9970

Re: Rebalancing to control risk doesn't make sense to me

There is a real possibility that the stock market could lose 90%, or even 99%, of its value, and it could take decades or centuries to recover. Is it likely to happen at some time in "future history"? I don't know, but I think so, given enough time. Does that mean years, decades, centurie...
by Dirghatamas
Wed Apr 12, 2017 9:47 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing to control risk doesn't make sense to me
Replies: 160
Views: 9970

Re: Rebalancing to control risk doesn't make sense to me

One thing I notice from these rebalancing debate threads that keep popping up, people come up with all kinds of crazy rationalizations their high stock allocations. Now we have 100% stock is the LOWEST risk approach to investing, LOL. Far as I can tell he is trolling. But who knows, people have odd...
by Dirghatamas
Wed Apr 12, 2017 3:11 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing to control risk doesn't make sense to me
Replies: 160
Views: 9970

Re: Rebalancing to control risk doesn't make sense to me

How does rebalancing during "bear markets" help the investor maintain the desired amount of risk, when one is supposed to buy the risky asset as it dives down precipitously down? Meaning, isn't one increasing one's risk when buying the risky asset as it loses and loses value? I understand...
by Dirghatamas
Mon Apr 10, 2017 2:02 pm
Forum: Investing - Theory, News & General
Topic: Philosophical Economics on Market Valuation
Replies: 3
Views: 578

Re: Philosophical Economics on Market Valuation

I read the article last night. Normally, I tend to agree with most of his blogs and he is obviously very bright and knowledgeable of finance, but I felt this particular one was a bit odd. 1) His view is not new. It is the very basis of the Dow 36000 book from late nineties. I still keep a paper copy...
by Dirghatamas
Sat Apr 08, 2017 2:46 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard account - total capital gain in %
Replies: 21
Views: 1102

Re: Vanguard account - total capital gain in %

@BobbyJoe, I know what you mean. No, Vanguard doesn't have a good presentation of information. Other brokerages do. For instance, if I need to make a decision about which shares to sell to raise money to pay this month's credit card bill, then I want to see which shares will have least gains in ord...
by Dirghatamas
Wed Mar 29, 2017 7:24 pm
Forum: Investing - Theory, News & General
Topic: Personal experience over time? [How far from retirement, time spent investing]
Replies: 31
Views: 3058

Re: Personal experience over time? [How far from retirement, time spent investing]

Age 46, investing exclusively in passive index funds since 1992 in 100% global stock funds, market weight. So I suppose a Boglehead (never agreed with him on International) for 25 years without knowing it :happy I am FI, no clue about retirement..that will depend on my emotions/continued enjoyment o...
by Dirghatamas
Wed Mar 29, 2017 7:10 pm
Forum: Investing - Theory, News & General
Topic: Doubting Shiller -- what is the "correct" P/E?
Replies: 44
Views: 2780

Re: Doubting Shiller -- what is the "correct" P/E?

Sean There are many books, papers and web articles on the "equity risk premium" perhaps being too conservative and irrational. Nisiprius gave a good pointer on the Dow 36000 ( I keep a paper copy of that much derided book, on my bookshelf as a reminder of persistent irrationality). Here is...
by Dirghatamas
Sat Mar 25, 2017 10:47 pm
Forum: Investing - Theory, News & General
Topic: Investing in the World - Part 2 and 3 [Financial Page blog article]
Replies: 23
Views: 1971

Re: Investing in the World - Part 2 and 3 [Financial Page blog article]

Siamond and now AlohaJoe Thank you guys for this excellent series of articles! I basically always agree with the view of being globally diversified (you are preaching to the choir), so instead of talking more about it, I just wanted to poke a bit, at your data carefully from multiple angles to make ...
by Dirghatamas
Fri Mar 24, 2017 6:28 pm
Forum: Investing - Theory, News & General
Topic: Is CAPE math wrong? Earnings from dividends vs. Buybacks
Replies: 6
Views: 654

Re: Is CAPE math wrong? Earnings from dividends vs. Buybacks

Just to finish this thread, in case anyone else is interested, I finished reading the excellent article noted above by 691175002 http://www.philosophicaleconomics.com/2015/03/payout/ . It indeed discusses the question that was bothering me: how does Shiller CAPE handle buybacks? It's conclusion was ...
by Dirghatamas
Thu Mar 23, 2017 6:04 pm
Forum: Investing - Theory, News & General
Topic: Is CAPE math wrong? Earnings from dividends vs. Buybacks
Replies: 6
Views: 654

Re: Is CAPE math wrong? Earnings from dividends vs. Buybacks

I looked at this issue though re tendency to pay dividends when I wrote a piece on is the CAPE 10 signalling overvaluation, and that one aspect was worth about 1 in the P/E. So lower dividend payments relative to history would lead to you adjusting the CAPE 10 by 1. Thanks Larry I am trying to unde...
by Dirghatamas
Thu Mar 23, 2017 5:53 pm
Forum: Investing - Theory, News & General
Topic: Is CAPE math wrong? Earnings from dividends vs. Buybacks
Replies: 6
Views: 654

Re: Is CAPE math wrong? Earnings from dividends vs. Buybacks

In essence: The reason for the difference is that the second company reinvests a greater share of its earnings into growth than the first company. Its earnings therefore grow faster. Because its earnings grow faster, the act of “averaging” them over a trailing 10 year period reduces them by a great...
by Dirghatamas
Thu Mar 23, 2017 4:02 pm
Forum: Investing - Theory, News & General
Topic: Is CAPE math wrong? Earnings from dividends vs. Buybacks
Replies: 6
Views: 654

Is CAPE math wrong? Earnings from dividends vs. Buybacks

A thought occurred to me while on my bike ride last evening and I couldn't answer it. Doing Internet research last night also didn't answer it (maybe I didn't search enough), so here is a puzzle for you wise folks. Concern: The CAPE math is flat out wrong if earnings come mostly from buybacks as opp...
by Dirghatamas
Sun Mar 19, 2017 11:13 pm
Forum: Investing - Theory, News & General
Topic: It's worth remembering that bull markets don't last forever
Replies: 95
Views: 6875

Re: It's worth remembering that bull markets don't last forever

Try running the same simulation, but assume you had to take retirement income every year. In that scenario, you get wiped out. Nope. You did not. Remember the 4% SWR Bengen study was published much after this bear market, so all this was already analyzed when the first studies on SWR came out. 1973...
by Dirghatamas
Sun Mar 19, 2017 10:26 pm
Forum: Investing - Theory, News & General
Topic: It's worth remembering that bull markets don't last forever
Replies: 95
Views: 6875

Re: It's worth remembering that bull markets don't last forever

whilst the United States didn't see the same level in real terms until August 1993—over twenty years after the 1973–74 crash began.[1] https://en.wikipedia.org/wiki/1973%E2%80%9374_stock_market_crash Sorry but this is plain nonsense. Use Portfolio Visualizer or some other visualization tool. When I...
by Dirghatamas
Sun Mar 19, 2017 12:05 am
Forum: Investing - Theory, News & General
Topic: Investing in the World - Part 1 [Financial Page blog article]
Replies: 44
Views: 2983

Re: Investing in the World - Part 1 [Financial Page blog article]

Siamond As usual great work! Thanks for both the time and the insights. Have you cross checked this against the similar work by others? In particular the Credit Suisse Yearbook work by Dimson et al.? Last year (2016) yearbook, they had the real returns from 1966 to 2015 (pretty close to your time pe...
by Dirghatamas
Sat Mar 18, 2017 5:28 pm
Forum: Investing - Theory, News & General
Topic: What percentage of the global stock and bond market consists of non-US assets?
Replies: 7
Views: 588

Re: What percentage of the global stock and bond market consists of non-US assets?

Valuethinker excellent document. Thanks! EyeDee Not quite. The document Valuthinker linked to is NOT corrected for free float. So, although it may be technically accurate, you can't really use it for pure indexing. It doesn't have free float for either stocks or bonds. For stocks, the case is obviou...
by Dirghatamas
Wed Mar 15, 2017 6:15 pm
Forum: Investing - Help with Personal Investments
Topic: Do you avoid international investing like Jack Bogle?
Replies: 151
Views: 8154

Re: Do you avoid international investing like Jack Bogle?

But countries ARE different. There are real variables that will affect your return and your risk. The risk of money invested in Russia or China or Yemen is different from the risk of money invested in the U.S. Right. That's why average PE are different. Much of the capital invested in stocks (anywh...
by Dirghatamas
Wed Mar 15, 2017 4:13 pm
Forum: Investing - Help with Personal Investments
Topic: Do you avoid international investing like Jack Bogle?
Replies: 151
Views: 8154

Re: Do you avoid international investing like Jack Bogle?

I will go off on a slight tangent. Picking ANY number, other than market consensus is basically a gut call you made. There is no theoretical or rational reason why that number you picked should stay constant: why should 20% or 40% or whatever, stay constant over the years?. Then, if that is to stay ...
by Dirghatamas
Tue Mar 14, 2017 4:31 pm
Forum: Investing - Theory, News & General
Topic: Why don't things "feel" bubbly?
Replies: 76
Views: 8738

Re: Why don't things "feel" bubbly?

No 20% declines since the bull began. There was an 17%-18% decline from the top in 2015 to the bottom in February 2016 and you would have thought the world was coming to an end listening to the newsletter writers and other pundits. Just to put a different spin, we DID see a bonafide bear market rec...
by Dirghatamas
Tue Mar 14, 2017 4:05 pm
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 5977

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

Just to add to my previous post, you need to additionally model two things 1) Tax drag from re balancing: Assuming taxable, the more volatile an asset e.g. small cap, the more you will need to re balance to keep risk within bounds. With 100% total stock portfolios, because there is no re balancing, ...
by Dirghatamas
Tue Mar 14, 2017 2:22 pm
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 5977

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

P.s. Dir, I'd hoped to avoid a discussion on whether Tilting actually works, as I was interested in learning about how others evaluate their risk / return trade-offs, but one point on the Tilters' theory: what they are saying is that these asset classes have an additional risk (and return) that is ...
by Dirghatamas
Tue Mar 14, 2017 1:49 pm
Forum: Investing - Theory, News & General
Topic: Why don't things "feel" bubbly?
Replies: 76
Views: 8738

Re: Why don't things "feel" bubbly?

The forward P/E is 19 and the trailing P/E is 25 to 27 for the US Stock Market. In early 2000, forward P/E's were about 32 and trailing P/E's about 45. I don't have a position on bubble or not. I have a simple numbers question. I am seeing what seems to be a much bigger disconnect than the past in ...
by Dirghatamas
Mon Mar 13, 2017 4:24 pm
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 5977

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

Dirghatamas, why don't you have any bonds? Your arguments re: anomalies and not knowing what will outperform may be accurate for your stocks, assuming that float-adjusted cap weighting is the appropriate world stock metric. T-bills outperformed the US stock market for an entire decade 2000-2010 and...
by Dirghatamas
Mon Mar 13, 2017 4:09 pm
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 5977

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

There isn't a conceptual difference between say Country bias or sector bias or so called factors: they are all bets away from the market consensus. Except that country bias has been shown through actual returns to be a bad bet while certain factors have been shown to be good bets. This is not true....
by Dirghatamas
Mon Mar 13, 2017 12:55 am
Forum: Investing - Theory, News & General
Topic: Stock exchange sizes - are your allocation close to this
Replies: 12
Views: 1043

Re: Stock exchange sizes - are your allocation close to this

Well I clicked through the link and it has very pretty pictures. It doesn't list exchanges by things like free float and whether they can be invested by foreigners. I follow the global cap weighted index. So, by definition, my assets are always in the world allocation. Interestingly enough, right no...
by Dirghatamas
Sun Mar 12, 2017 11:17 pm
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 5977

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

And you say that we are the ones making the bet? :oops: Considering that since 2000 large caps have had a real annual return of 2.27% while small caps have returned 5.88%, the 21st century doesn't seem to favor that prediction so far. When people start saying "this time, it's different," ...
by Dirghatamas
Sun Mar 12, 2017 10:59 pm
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 5977

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

That's false. Passive investing does not only mean "own the total world stock market" as some purport (you are not the first). "Passive investing is an investment strategy that aims to maximize returns over the long run by keeping the amount of buying and selling to a minimum. The id...
by Dirghatamas
Sun Mar 12, 2017 10:40 pm
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 5977

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

Have you ever actually read the academic literature? Your caricature her seems to suggest at the very least you don't understand it. It isn't simply a backtested portfolio that outperformed something else and it is not possible to have many 'factors' that materially improve the ability to explain r...
by Dirghatamas
Sun Mar 12, 2017 6:02 pm
Forum: Investing - Theory, News & General
Topic: What do you expect to achieve with your Tilt?
Replies: 85
Views: 5977

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

I'm trying to figure out whether Tilters have higher expectations than I, or are more willing to do the extra work for 0.5%. cheers, Sean Sean, IMO you are trying to do brain surgery but only have a hammer and a chisel :wink: You are trying to figure out decimal digits when even the significant dig...
by Dirghatamas
Sat Mar 11, 2017 12:27 am
Forum: Investing - Theory, News & General
Topic: Do you think about volatility drag on your portfolio?
Replies: 155
Views: 8177

Re: Do you think about volatility drag on your portfolio?

Volatility does affect CAGR. It lowers CAGR. Prove it to yourself. Create two series of returns where both series has the same average annual return. Assign different standard deviations to the two series. Calculate the CAGR for the two series. You'll see that increased volatility, decreases CAGR. ...
by Dirghatamas
Fri Mar 10, 2017 8:30 pm
Forum: Investing - Theory, News & General
Topic: Do you think about volatility drag on your portfolio?
Replies: 155
Views: 8177

Re: Do you think about volatility drag on your portfolio?

Random Walker I should be on my evening bike ride right now but partner didn't show up yet, so I will engage :( "The Myth of Volatility Drag" https://blogs.cfainstitute.org/investor/2015/03/23/the-myth-of-volatility-drag-part-1/ This is actually a halfway decent article. I will quote the r...
by Dirghatamas
Fri Mar 10, 2017 5:21 pm
Forum: Investing - Theory, News & General
Topic: Do you think about volatility drag on your portfolio?
Replies: 155
Views: 8177

Re: Do you think about volatility drag on your portfolio?

Random Walker The example you gave was combining US and International stocks. I do this. I am always invested 100% global stocks market weight. So I am obviously not going to argue about diversification. I consider the global cap weighted stocks as market neutral and starting point for stock portfol...
by Dirghatamas
Fri Mar 10, 2017 3:30 pm
Forum: Investing - Theory, News & General
Topic: Do you think about volatility drag on your portfolio?
Replies: 155
Views: 8177

Re: Do you think about volatility drag on your portfolio?

Random Walker I had not read this thread the first time, just read it right now because I had followed your thread on buying used cars from yesterday :wink: I am going to give you some tough love so don't take it with any bad intent. This thread just shows seriously confused thinking. Assets that ha...

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