Search found 9443 matches

by HomerJ
Mon Feb 27, 2017 2:39 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

What is CER at 20 years? Me, I just plan around getting a percent or two less than historical return, and I've been pleasantly surprised. CER at 20 years: 97% of the months had real return within +/-6% of 6.3% The outliers were at around 1962 (low) and 1980 (high). 1962, 20 years later was 1982. Yo...
by HomerJ
Mon Feb 27, 2017 2:11 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

E10P at 30 years: 88% of the months had real return within +/-4% of E10/P CER at 30 years: 90% of the months had real return within +/-2% of 6.3% This is really interesting information. But for 20-year forecasts, the error bands (for E10P) are only about 4% for a 97% confidence level. What is CER a...
by HomerJ
Mon Feb 27, 2017 1:30 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

grayfox wrote:But for 20-year forecasts, the error bands are only about 4% for a 97% confidence level.


Citation needed.

I know you calculated this once, but I find it hard to believe that such a high confidence level is not in literature somewhere.
by HomerJ
Mon Feb 27, 2017 12:18 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

But it takes little more time than it does to annually rebalance your fixed allocation (certainly less than the time to compose 9614 posts) to determine expected returns and adjust accordingly. Adjust how? If you mean save more (or less), or plan to work longer (or less), you can do that using ACTU...
by HomerJ
Mon Feb 27, 2017 11:26 am
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

well all I can say is that IMO it literally makes no sense to set an AA without having an expected return for the assets you are investing in. In fact it makes no sense to invest in anything without having an expected return. We expect a positive long-term return from stocks, and we expect it to be...
by HomerJ
Mon Feb 27, 2017 1:32 am
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

You ARE doing it wrong if you aren't looking at the relative expected returns of various assets. Here's simple example, If bond yields are 6% and valuations have mean expected return of say 4% (which is about what they had in 2000) and you have a need to take risk of 5% to take your goal, you can b...
by HomerJ
Mon Feb 27, 2017 1:11 am
Forum: Personal Finance (Not Investing)
Topic: BH thoughts on Time shares
Replies: 112
Views: 6523

Re: BH thoughts on Time shares

As for renting in my location, it's nearly impossible to rent either unit for the same as the maintenance fee, unless you've got somebody who has to rent their unit out in very short notice. That has been my experience over the past decade. One needs to compare ALL comparable rentals in the area, n...
by HomerJ
Mon Feb 27, 2017 12:30 am
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

When you make a plan you MUST estimate returns to know how much equity risk you need. I agree, but Boglehead Investment Planning makes no mention of expected returns when determining one's asset allocation Yep. I find it very surprising that Larry thinks many of the Bogleheads on these boards (many...
by HomerJ
Sun Feb 26, 2017 11:45 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

Homer3 wrote: Actually, your subsequent investment results were barely affected at all... comparing a low PE10 This was a response to my point that investing in 1982 when PE10 was 7 produced dramatically better results than in 2000 when PE10 was 44. Homer3 points out that returns have been decent s...
by HomerJ
Sun Feb 26, 2017 12:02 am
Forum: Investing - Help with Personal Investments
Topic: risk of my Tesla deposit
Replies: 118
Views: 6817

Re: risk of my Tesla deposit

I love the idea of a 100% EV car, though. I absolutely hate the idea of a 100% EV car. I know I'm weird, but I hate it when my phone battery dies, I hate it when my laptop battery dies, I would REALLY hate it if my car battery died. I don't want to have to worry about that. Gas stations are everywh...
by HomerJ
Sat Feb 25, 2017 11:51 pm
Forum: Investing - Help with Personal Investments
Topic: risk of my Tesla deposit
Replies: 118
Views: 6817

Re: risk of my Tesla deposit

cannondale wrote:My Model X costs me 30% less than my newer Honda Accord to insure. It depends on your insurance company.


How is that possible? You're comparing a $90,000 car to a $30,000 car.
by HomerJ
Sat Feb 25, 2017 4:26 pm
Forum: Personal Consumer Issues
Topic: critique Italian itinerary
Replies: 31
Views: 1734

Re: critique Italian itinerary

Word of warning: when we were there, nearly everything outside of Milan was pretty much "cash only." Lots of Rolex-wearing proprietors at restaurants and even hotels telling us "there's a cash machine just three blocks away." Even our HomeAway condo in Milan insisted that the fo...
by HomerJ
Fri Feb 24, 2017 6:58 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

willthrill81 wrote: Further, how do account for valuations being 'high' for the last 25 years, with only a brief exception? That hasn't happened before. Does that mean that we're truly in 'uncharted territory'? I think that an honest answer would have to be 'maybe'. I agree with this statement. As ...
by HomerJ
Fri Feb 24, 2017 4:47 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

My changes aren't based on valuations explicitly, but all else being equal they should follow them. Exactly... I think it's a question of the cart before the horse here. Higher valuations can indeed cause changes to one's risk profile but that's because valuations moving higher are correlated with ...
by HomerJ
Fri Feb 24, 2017 2:43 pm
Forum: Investing - Help with Personal Investments
Topic: Help for Pre-Retirement Income
Replies: 2
Views: 276

Re: Help for Pre-Retirement Income

Hello all, New here and have a main question of whether or not it is feasible to have a goal of $2-3k per month of investment income by age 45. My picture/thoughts are below: We would like to have a monthly passive income flow by 45-50 so that we could choose to "step back" some from our ...
by HomerJ
Fri Feb 24, 2017 2:19 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

Further, how do account for valuations being 'high' for the last 25 years, with only a brief exception? That hasn't happened before. Does that mean that we're truly in 'uncharted territory'? I think that an honest answer would have to be 'maybe'. This is important. "Maybe" is indeed a rea...
by HomerJ
Fri Feb 24, 2017 1:44 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

learning head You seem to be missing the point. It has nothing to do with market timing as I said. Only that valuations have changed and that changes your assumptions about expected returns and that changes your need to take risks as well. Homer, I agree but you miss the point, it is the rising val...
by HomerJ
Fri Feb 24, 2017 1:34 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

Seems to me people talk about: - bad market timing: when you want to buy / sell based on your perception of price, even though "true" metrics suggest the risk and expected returns are the same; and thus buy/sell decision will change your risk and AA - good market timing: when you want to ...
by HomerJ
Fri Feb 24, 2017 11:49 am
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

But here simple example. Let's say you start with $1mm and you set AA based on that at 60/40. The next day you inherit $1mm, so your need to take risks falls and you reset the AA at 40/60. Now take same situation but you started early and now have $2mm do to market returns being much higher than ex...
by HomerJ
Thu Feb 23, 2017 6:03 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

I wonder if there is a chart of CAPE-10 based forecasts of US stocks since the beginning of CAPE-10 vs actual returns (nominal or real) so that we can see how well CAPE-10 predictions have turned out so far. Boglesmind I made some charts like that a couple of years ago. I looked at how well the inv...
by HomerJ
Thu Feb 23, 2017 4:10 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

Also of course in taxable accounts you get the foreign tax credit for taxes paid, which is why should have preference for international in taxable and domestic in tax advantaged if have option Larry This is NOT quite that simple, Larry. While you get foreign tax credit in taxable account, you also ...
by HomerJ
Thu Feb 23, 2017 2:08 pm
Forum: Investing - Help with Personal Investments
Topic: Retirement savings: Lots of $, job prospects weak
Replies: 36
Views: 3852

Re: Retirement savings: Lots of $, job prospects weak

I don't know if any credible investment advisor recommends 100% equities. Weird advice being given here. Read one or two of the recommended books on the Bogleheads wiki. Charles Ellis recommends 100% equities. Even Vanguard recommends 90% equities for someone the age of the OP. This is crazy. This ...
by HomerJ
Thu Feb 23, 2017 1:54 pm
Forum: Personal Finance (Not Investing)
Topic: BH thoughts on Time shares
Replies: 112
Views: 6523

Re: BH thoughts on Time shares

My biggest issues here are the broad generalizations. The broad generalizations are true. There are always exceptions to the rule. I doubt very seriously that more than 1% of time-shares in the world have maintenance fees of 1k, but can be rented easily for 4k. Why haven't you bought 50 of these? M...
by HomerJ
Thu Feb 23, 2017 1:52 pm
Forum: Personal Finance (Not Investing)
Topic: BH thoughts on Time shares
Replies: 112
Views: 6523

Re: BH thoughts on Time shares

My biggest issues here are the broad generalizations. The broad generalizations are true. There are always exceptions to the rule. I doubt very seriously that more than 2% of time-shares in the world have maintenance fees of 1k, but can be rented easily for 4k. Why haven't you bought 50 of these? B...
by HomerJ
Thu Feb 23, 2017 1:38 pm
Forum: Personal Finance (Not Investing)
Topic: BH thoughts on Time shares
Replies: 112
Views: 6523

Re: BH thoughts on Time shares

My biggest issues here are the broad generalizations. The broad generalizations are true. There are always exceptions to the rule. I doubt very seriously that more than 2% of time-shares in the world have maintenance fees of 1k, but can be rented easily for 4k. Why haven't you bought 50 of these? B...
by HomerJ
Thu Feb 23, 2017 1:26 pm
Forum: Personal Finance (Not Investing)
Topic: BH thoughts on Time shares
Replies: 112
Views: 6523

Re: BH thoughts on Time shares

My biggest issues here are the broad generalizations. The broad generalizations are true. There are always exceptions to the rule. I doubt very seriously that more than 1% of time-shares in the world have maintenance fees of 1k, but can be rented easily for 4k. Why haven't you bought 50 of these? M...
by HomerJ
Thu Feb 23, 2017 1:14 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

"..these seemingly tightly-correlated charts that John presents as evidence for his extremely low predictions are not evidence of the “historical reliability” of those predictions. The charts are demonstrable curve-fits that exploit superficial coincidences in the historical data being analyze...
by HomerJ
Thu Feb 23, 2017 12:41 pm
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 9921

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

Sure that makes sense, but no one even knows if the stock market is a normal distribution. Dropping the mean doesn't necessarily mean the standard distribution end-points will move the same amount. If you admit the distribution may not be normal, if anything this might mean fatter tails, greater un...
by HomerJ
Thu Feb 23, 2017 10:54 am
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

Hi all, I seems you are not reading the data right. One said July 2010 cape said 4% returns but it has been 14. Actually, if you look at the data I keep posting - the data forecasts the NEXT 10 year AVERAGE annual return. The model in July 2010 showed any new money invested then would return somewh...
by HomerJ
Thu Feb 23, 2017 12:57 am
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 9921

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

Sorry, I don't understand what you are saying... A 6% or 7% bag is plenty... We don't need the 9% or 10% bag to repeat. When the 9% or 10% bag was working, you could pull 6% or 7% a year... When you start with a 4% withdrawal, you'll be just fine if the 21st century is "only" pulling from...
by HomerJ
Wed Feb 22, 2017 11:45 pm
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 9921

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

I mean, I get it, there are some people on this forum who talk like they're Scrooge McDuck and don't want to spend anything. And I've argued against perceived conservative attitudes too. I just don't think it's prudent to advise a soon-to-be retiree that they can assume stocks will return 10% real ...
by HomerJ
Wed Feb 22, 2017 11:34 pm
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 9921

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

Here you go... As a preview of the findings, we estimate that a 40% stock allocation and a 30-year planning horizon would support a 2.1% sustainable initial spending rate, provided one is willing to accept a 10% chance for failure [with a volatile investment portfolio, there is no such thing as a g...
by HomerJ
Wed Feb 22, 2017 11:30 pm
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 9921

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

I sure wish one of the 2.X% people would come out of the woodwork, I mean everything I've seen from the likes of Wade Pfau et al doesn't go any lower than 3%, and I'm even saying 3% on the lowest end based on risk tolerance... In "Low Bond Yields and Safe Portfolio Withdrawal Rates" Finke...
by HomerJ
Wed Feb 22, 2017 11:10 pm
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 9921

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

I mean, I get it, there are some people on this forum who talk like they're Scrooge McDuck and don't want to spend anything. And I've argued against perceived conservative attitudes too. I just don't think it's prudent to advise a soon-to-be retiree that they can assume stocks will return 10% real ...
by HomerJ
Wed Feb 22, 2017 10:41 pm
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 9921

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

Another issue is that there is a price to be paid for pessimism in this matter in the form of saving more and/or delaying retirement longer than potentially necessary or realistic. Seems like a good number of people here hit 25x expenses at 50, so working an extra 5 years for some extra safety is n...
by HomerJ
Wed Feb 22, 2017 10:25 pm
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 9921

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

I'm seeing a rather interesting and disquieting trend on BH where people think that a 4% plus CPI withdrawal rate is somehow aggressive. But the last 140 years of data do not support this mentality. On average, a retiree could actually have a 6.5% plus CPI WR and never run out of money. However, we...
by HomerJ
Wed Feb 22, 2017 5:08 pm
Forum: Personal Finance (Not Investing)
Topic: BH thoughts on Time shares
Replies: 112
Views: 6523

Re: BH thoughts on Time shares

Are these good to attend for "free" tickets to shows and to buy or are they ripoffs? Never ever buy one. But for free stuff, sometimes it's worth going to the presentation. If you get two free tickets to a high-priced show in Vegas, maybe worthwhile to sit through 2 boring hours. It will ...
by HomerJ
Wed Feb 22, 2017 5:02 pm
Forum: Personal Finance (Not Investing)
Topic: BH thoughts on Time shares
Replies: 112
Views: 6523

Re: BH thoughts on Time shares

We consider the value very reasonable for the annual maintenance and trade fees. How much have they gone up over 15 years? My wife owned a timeshare before I met her, and within 10 years, the annual fees steadily increased until they cost more than just renting a place for a week. And of course, th...
by HomerJ
Wed Feb 22, 2017 2:17 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

FWIW, in January 2000 the CAPE 10 was forecasting a real return to US stocks of 2.3%, it has been 3%. I'd say that was a very good prediction. Larry FYI, in June 2010, the CAPE 10 was forecasting a real return to US stocks of 4.5%, it has been 14% nominal (so that's what? 12%-13% real?). I'd say th...
by HomerJ
Wed Feb 22, 2017 1:52 pm
Forum: Personal Consumer Issues
Topic: Getting the snip: Should it be me or my partner?
Replies: 13
Views: 1450

Re: Getting the snip: Should it be me or my partner?

sunny_socal wrote:IBTL!

Between man/woman, I would vote man. It's cheap, quick and easy. Leave work early on a Friday, have it done, have your partner drive you home, be back at work on Monday.


And you get a ton of sympathy all weekend long. :)
by HomerJ
Tue Feb 21, 2017 6:13 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

lack_ey wrote:CAPE is a statistic*, not a model.


I stand corrected, thank you.

Your problem is presumably with some models using CAPE to forecast future returns


Yes.
by HomerJ
Tue Feb 21, 2017 6:12 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

All I know is... If you have a model (CAPE) that was built on 70 years of data, and then for the next 25 years straight the data doesn't match the model, I don't think it's unreasonable to wonder if the model is no longer accurate. If maybe, just maybe, there are more variables involved that weren'...
by HomerJ
Tue Feb 21, 2017 5:27 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

All I know is... If you have a model (CAPE) that was built on 70 years of data, and then for the next 25 years straight the data doesn't match the model, I don't think it's unreasonable to wonder if the model is no longer accurate. If maybe, just maybe, there are more variables involved that weren't...
by HomerJ
Tue Feb 21, 2017 3:50 pm
Forum: Personal Consumer Issues
Topic: Why do you go to restaurants?
Replies: 229
Views: 14825

Re: Why do you go to restaurants?

Restaurant style steak: Cast iron skillet. Season with kosher salt and fresh ground black pepper, sear the meat in some high quality oil 1-2 minutes on each side. Put cast iron skillet with steak in it in the oven at 425 for another 2-3 minutes. Remove from oven, put a dab of butter on the steak. D...
by HomerJ
Tue Feb 21, 2017 12:46 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

I have a hard time understanding these types of posts. The reason you set an AA and a glide path is to manage risk. As you get older you're going to be more conservative. Anyone closing in on retirement by definition will already have a more conservative AA. And the reason you rebalance is to "...
by HomerJ
Tue Feb 21, 2017 12:43 pm
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 215
Views: 12900

Re: Extreme Valuations, and why you should reconsider

I don't follow Hussman's funds which have to compete with a benchmark, so they don't reflect his actual holdings. My point is I DID participate in the 8 year bull with 60% stocks...and last month decided I've made enough money staying the course that it was time to take some off the table. All you ...
by HomerJ
Tue Feb 21, 2017 12:35 pm
Forum: Investing - Help with Personal Investments
Topic: 20% bonds: why bother at 48?
Replies: 131
Views: 6360

Re: 20% bonds: why bother at 48?

I don't know why people insist so strongly on 20% bonds, though, based on some notion of bear market performance and maybe a rebalancing bonus, implying that the expected return differential with 100% stocks is minuscule or even negative. That's not how it works over most periods of time—if the fut...
by HomerJ
Tue Feb 21, 2017 11:33 am
Forum: Investing - Help with Personal Investments
Topic: 20% bonds: why bother at 48?
Replies: 131
Views: 6360

Re: 20% bonds: why bother at 48?

The personal spreadsheets I have run all use very low SWR (way below 1% because I am a cautious person) so maybe that is different. That makes all the difference in the world. At less that 1% withdrawal rate you don't need to worry about sequence of return risk. But most people are nowhere near tha...
by HomerJ
Mon Feb 20, 2017 5:03 pm
Forum: Investing - Help with Personal Investments
Topic: 20% bonds: why bother at 48?
Replies: 131
Views: 6360

Re: 20% bonds: why bother at 48?

The part I find puzzling is this discussion of "sequence of returns risk". People assume that at the worst time, suddenly stocks will lose 50% and stay there. So apparently it is unwise to sell stocks during the downturn for living expenses and somehow a small portion of bonds will carry ...
by HomerJ
Mon Feb 20, 2017 5:01 pm
Forum: Investing - Help with Personal Investments
Topic: 20% bonds: why bother at 48?
Replies: 131
Views: 6360

Re: 20% bonds: why bother at 48?

One last point, the assumption that bonds are no use if equities have lost massively is false. That sounds more like a excuse for people who want to load up on 100% equities when market are in a frenzy, just like reccently. In most scenarios, safe bonds protect against downside from massive equity ...

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