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Jebediah

Great comments, thank you. I hadn't thought of the bond spreads, and I think individual bonds ("special offers just for you") are part of this broker's schtick. I like tfb's suggestion, a CPA audit from the statements.

Jebediah

I am trying to convince a family member (FM) to leave her Morgan Stanley "advisor". FM has stuck around for the usual reasons: the advisor is a nice person, always available, etc. Of course, FM has no idea what they've been paying in fees. I've convinced them to ask for an accounting of th...

Jebediah

I haven't read the whole thread, but QLERX has a .7 correlation to VT (world stock), so it is not the alternative fund you want.

Jebediah

I wonder if I can set my TDI on fire and still sell it back to them at the summer '15 KBB value.

Jebediah

My TDI drives like a dream (for now) but the damn sunroof wont stop rattling so they can have it back.

Jebediah

Do half the bogleheads not know the difference between real and nominal? Someone should do a poll...

Jebediah

P2P lending is the answer. You'll get very few defaults at a 5% return target.

Jebediah

I think it is extremely difficult to evaluate p2p lending as an investment until it is seen how it performs during an economic downturn. My intuition is that the currently available returns don't justify the downside risk. Haven't run any numbers to back this up, but I'd imagine default rates would...

Jebediah

It's not really a good question, because it totally depends on how much money you have. If you're 40 and have 100K, then sure why not go 100% stocks. If you're 40 and have $5 million, then you could reasonably consider 0% stocks.

Jebediah

Jan 2000 - Jan 2016

SPY returned 86%
Large Value returned 225%
Small Value returned 379%

Jebediah

Don't add your SS, and don't subtract your future taxes. Call it a wash.

Jebediah

REITs have a minor diversification benefit, as any sector fund would. I have a more conspiratorial take on why REITs became a "thing". I think the false narratives of "REITs approximate actual real estate investment" and "your home is a consumption item, not an investment&qu...

Jebediah

. It also illustrates for investors, the general case against holding high-yielding bonds in a small-cap value tilted portfolio, so as to avoid holding the same companies on the stock side as the bond side of a portfolio. When risks show up - the negative outcomes can be very large, particularly fo...

Jebediah

Cheap is better than expensive, but either way EM is not a very compelling equity diversifier. It has a low Sharpe ratio and relatively high correlation to developed market equities. The better equity diversifier is a well-managed, low-duration, mildly-leveraged credit CEF. Better Sharpe, low correl...

Jebediah

People whom are tempted to play backtesting timing games on PortfolioVisualizer need to realize that these results, while fun for the euphoric wealth hallucinations they induce, are meaningless and totally data mined. Why? Because if you just tweak any of the input parameters slightly, the output va...

Jebediah

If it's down, you're supposed to buy more (rebalance), not sell it. Nobody can offer "timing" advice for interest rates. If you're tempted to even think about timing interest rates, then you probably have no business owning bonds, instead try CDs. Except for this particular bond fund, whic...

Jebediah

I have sent my brother a big box of Omaha steaks every year for his birthday. They had excellent service and my brother raved about them but I never tried them for myself. This year when I sent him his box, I ordered a few for myself. I thought they were horrible compared to the ones I get at the l...

Jebediah

That's helpful, thank you. I do not have any other earned income. So then, you're saying that I can make a Roth i401k contribution comprising my entire business profit (8K - 1/2 SE) and additionally contribute another $5500 to my Roth IRA? This makes me wonder…could I declare interest from CDs in my...

Jebediah

As a sole proprietor/independent contractor, I'll have an earned income of about 8K in 2015. I have a large % of investments in taxable, thus I want to contribute as much as possible to my i401k and/or Roth. What is the maximum I can contribute to my solo 401k? Is it 8K (employee) plus $1600 (employ...

Jebediah

tibbitts wrote:
Moving some of the funds to a Roth, particularly if you can stay in the 0% bracket, wouldn't hurt.

What 0% bracket? Isn't the lowest bracket 10% ?

Jebediah

Thanks for the replies. Consider this idea officially crushed. A 2% spread is pushing a year's worth of interest-- outrageous.

Jebediah

It is a bit cumbersome to re-balance with CDs (whether brokered or retail). I'd keep a modicum in a liquid bond fund or ETF for this reason. Although I prefer retail CDs, nothing wrong with brokered if held to maturity and rolled at that time. If you have the patience, a longish ladder will perform...

Jebediah

Just go for it. Nothing wrong with your idea except if there is a strong chance that you will need to cash in all those CDs before they mature. You can tell me yourself what might happen if interest rates go up. Suppose in 2 years, I can buy a 5-year CD that pays me 4% interest. How much would I be...

Jebediah

If you're planning to sell those CDs, you'll give up most of your yield bonus through spreads. Brokered CDs are best thought of as a buy-and-hold-until-maturity instrument. So, if one was doing a 10 year ladder that would be one thing; if one really just want bonds in the 7 to 10 year range, I'd pe...

Jebediah

In my fixed income allocation I'm aiming for zero credit risk and 7-10 years term risk. I could buy IEF, the 7-10 year treasury fund. That would be convenient. But the yield spread between 7 and 10 year treasuries is currently 1.93 to 2.20 %. Brokered CDs have a 7 to 10 year yield spread of 2.54 to ...

Jebediah

Gundlach is wrong most of the time. He has no idea what the long bond "wants".

Jebediah

Bulky $500 smartphones and their $100 a month "contracts" are good for teenagers who snapchat their kissy faces to each other during class. Compact $30 flip-phones, contract-free, $20 a month, are good for adults who need a simple way to talk and text. Use your computer for calendar and ad...

Jebediah

3% sounds high. GMO/Grantham are forecasting -2% real for US stocks over the next 7 years...and they have an excellent track record with these forecasts. Do you have evidence of their "excellent track record"? Let's say, 2010 to present? L. GMO makes 7-10 year forecasts, not short term. S...

Jebediah

3% sounds high. GMO/Grantham are forecasting -2% real for US stocks over the next 7 years...and they have an excellent track record with these forecasts.

Jebediah

I'm always surprised to see people holding a portfolio with an expected real return of -1 to 1%. That basically means you have to save everything you hope to spend later in retirement. I'd rather see my portfolio do some of the heavy lifting, so I've decided to take some risk with it. So far, that ...

Jebediah

HomerJ wrote:
Maverick3320 wrote:From personal experience, my returns have been around 11% over the last few years.

But the economy has been growing.

What happens when the next crash happens, and millions of people lose their jobs?

11%
11%
11%
11%
-80%

You're talking about the stock market, right?

Jebediah

Isn't this the noise we should be tuning out? How is the ramblings of a random blogger actionable or relevant?

Jebediah

Contrary to what is asserted often on this board, DFA access does not have to be expensive at all .... Sorry, maybe I missed something. What's the inexpensive way to access DFA? 1. Hire advisor 2. Only let them manage funds for the equity side of your portfolio 3. get set up with BOSVX/DWUSX 4. use...

Jebediah

As you can see from this heat map, there are many periods in which US stocks have returned zip for over two decades. So, it wouldn't be extraordinary for that to happen over the next 2-3 decades. Plan accordingly. I'm not buying it. The chart includes an incredibly vague disclaimer "Includes d...

Jebediah

If you believe the QSPIX will will be nearly uncorrelated with stocks and bonds going forward it is useful as a hedge... You need more than low correlation to make something "useful." There are many things that have low correlation. For example, actual currency--money under the mattress--...

Jebediah

But with momentum, what I am saying is that--for three real-world mutual-fund implementations of "momentum," I did not even see the higher return. You are right, current momentum offerings (AQR, iShares) have implementation problems- negative alphas and negative value loadings. I wouldn't...

Jebediah

As someone else said on this or earlier thread, it's more like multiplicity than conceptual complication. They are using simple instruments (no options AFAIK, just futures, cash stocks and other simple cash underlyings). It's true there are pretty many (factors, markets) but that also cuts against ...

Jebediah

Nisi,

Your charts are often interesting if a bit cherry picked. I wonder what you make of this chart. This is small value VS S&P500 starting in 1993-- right after Fama and French published their 1992 paper.

Jebediah

Remember that from a fund managers point of view, the objective is not to get clients the highest possible return. Their objective is to increase their own income. The fund manager (can be one person, or multiple people) has their own assets. To the extent that the idea is so good that can provide ...

Jebediah

I've no idea what'll actually happen, but I do know two things:

1) expected returns on US stocks are very low (some say zero) for the next 10 years.
2) global is more diversified than local.

Jebediah

Consider VG Tax-managed small cap.

Jebediah

Twins Fan wrote:... I'm not going for optimum returns, or worried about having the highest preforming asset class, or whatever is cool at the time to have 5% of one's portfolio in. I will take good returns and be just fine with it...

What about BAD returns? Fine with that? If so, you're all set!

Jebediah

There is too much not to like about REITS - very high vol - low expected return (from here) - more or less moves in step with stocks - tax inefficient, takes up your IRA space Hard to fathom owning REITs at these levels. Think about it: a levered basket of real estate yielding 3%? Would you buy a r...

Jebediah

There is too much not to like about REITS - very high vol - low expected return (from here) - more or less moves in step with stocks - tax inefficient, takes up your IRA space Hard to fathom owning REITs at these levels. Think about it: a levered basket of real estate yielding 3%? Would you buy a re...

Jebediah

dbr wrote:The Rick Ferri 30 year forecast lists REITS as an asset class at 7% return and 19% standard deviation of return.

Where does he get this? The yield at the time of the forecast was 3%. Shouldn't the expected return be 3%?

Jebediah

say EM underperforms for 15 years. How shocked will you be? Usually when people think they ought to overweight EM it's because they imagine it's some kind of free ticket to better returns. If you really need more risk then you're better off looking into using margin or levered ETFs, not a portfolio ...

Jebediah

simplify the allocation. VOO, VWO, and VPL are unnecessary. Put the entire 401k into the Ex-US fund. Then split the Roth between VTI, VSS, and VB in whatever proportion you fancy.

Jebediah

Ability to take risk... Low. Don't have enough money/time to weather large or sustained losses. Need to take risk... Low. You have just enough to get by without it. Willingness to take risk... Low - medium. You are afraid of drawdowns. Plus the fact that stocks are very expensive...makes me wonder w...

Jebediah

If you went 100% 30 year TIPS ladder you could draw 60K (real) plus the coupons every year for the next 70 years and still have 800K (real) left. Coupons will fluctuate, but right now at about 40K/yr. So that's about 100K real a year (plus or minus), pre-tax, for life. I only point this out because ...

Jebediah

Curious, why not at least 80% in 30 year TIPS? Are your goals to increase wealth or preserve capital?

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