Search found 1156 matches

by Random Walker
Sun Aug 28, 2016 3:29 pm
Forum: Investing - Theory, News & General
Topic: Leverage Success Stories
Replies: 32
Views: 2219

Re: Leverage Success Stories

This intrigues me. As is probably mentioned in the above referenced thread, when looking at different stock/bond combinations, it is at least theoretically more efficient to lever the combination with the highest sharpe ratio than to increase the % equity in an effort to increase expected returns. G...
by Random Walker
Wed Aug 24, 2016 9:44 am
Forum: Investing - Theory, News & General
Topic: "How to Tell if Your Retirement Nest Egg Is Big Enough"
Replies: 55
Views: 10639

Re: "How to Tell if Your Retirement Nest Egg Is Big Enough"

I'd like to make a plug here for Monte Carlo analysis. It's an outstanding way to get a sense of where one is, likely outcomes, and the tremendous dispersion of outcomes. Obviously the inputs matter tremendously, but it is possible to make reasonable assumptions. When I did this exercise, I was surp...
by Random Walker
Mon Aug 15, 2016 8:42 pm
Forum: Investing - Theory, News & General
Topic: Bogleheads: Asset-Allocation and Rebalancing
Replies: 74
Views: 5633

Re: Bogleheads: Asset-Allocation and Rebalancing

Malabargold, When I was younger I was 100% equities as well. As I've aged and learned, I would not recommend 100% to anyone. Now I know you mentioned 95%, but that's close enough. Even if you can stomach 50% loss, this is why I would not recommend 100% stocks. If the market tanks, you want some dry ...
by Random Walker
Mon Aug 15, 2016 8:21 pm
Forum: Investing - Theory, News & General
Topic: Positive Aspect Of Currency Risk?
Replies: 16
Views: 848

Re: Positive Aspect Of Currency Risk?

Value thinker, I guess you very well could look at currency risk as uncompensated risk. But that is only if you look at in isolation. The right way to look at an asset class or in this case a potential return driver, is how it affects a portfolio on the whole. A volatile asset class with low correla...
by Random Walker
Mon Aug 15, 2016 2:15 pm
Forum: Investing - Theory, News & General
Topic: Bogleheads: Asset-Allocation and Rebalancing
Replies: 74
Views: 5633

Re: Bogleheads: Asset-Allocation and Rebalancing

Akblizzard,
You are rebalancing, just doing it with new money. That's the most efficient way to do it if you are in that position.

Dave
by Random Walker
Mon Aug 15, 2016 1:59 pm
Forum: Investing - Theory, News & General
Topic: Positive Aspect Of Currency Risk?
Replies: 16
Views: 848

Re: Positive Aspect Of Currency Risk?

Currency risk is way beyond my knowledge level, but heck I'm not going to let that stop me from commenting. Currency risk can go both ways, and if you expose yourself to it you are probably exposing yourself to additional diversification benefit, assuming you rebalance. In the long run currency effe...
by Random Walker
Sun Aug 14, 2016 4:59 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing while being mindful of gains
Replies: 9
Views: 927

Re: Rebalancing while being mindful of gains

Livesoft, Good question. I took advantage of the market tanking in 2007-2008, to liquidate all my DIY VG holdings and take a huge TLH opportunity. That is when I switched to an advisor who put everything in DFA funds. Basically the market has been all up since 2009. They have performed TLH only once...
by Random Walker
Sun Aug 14, 2016 3:55 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing while being mindful of gains
Replies: 9
Views: 927

Re: Rebalancing while being mindful of gains

This is why I believe aggressive tax loss harvesting is so huge during the accumulation phase. Those accumulated losses can offset the capital gains experienced during decumulation in retirement. The Arnott papers cited on this site show about a 0.5-0.7% increase in annualized returns with aggressiv...
by Random Walker
Sat Aug 13, 2016 4:29 pm
Forum: Investing - Theory, News & General
Topic: Bogleheads: Asset-Allocation and Rebalancing
Replies: 74
Views: 5633

Re: Bogleheads: Asset-Allocation and Rebalancing

Sandman62, I think the classic behavioral finance literature says that the pain of a given loss is twice as great as the happiness derived from an equal sized gain. I think it also states that as one looks at individuals of increasing net worth, the 2:1 ratio goes up from there! And I agree with you...
by Random Walker
Sat Aug 13, 2016 12:53 pm
Forum: Investing - Theory, News & General
Topic: Bogleheads: Asset-Allocation and Rebalancing
Replies: 74
Views: 5633

Re: Bogleheads: Asset-Allocation and Rebalancing

Hi Sandman 62, Sounds like you are in a great position with your two pensions. I've seen Monte Carlo analysis for my own portfolio (another advantage of an advisor) and have been surprised at how little the likelihood of success changes between 70/30 and 50/50. Given today's low interest environment...
by Random Walker
Sat Aug 13, 2016 11:55 am
Forum: Investing - Theory, News & General
Topic: Confession~ I timed the market today
Replies: 31
Views: 3347

Re: Confession~ I timed the market today

Leonard, I actually chose an advisor because I put a lot of thought into my investments. The more I learned, the more I thought I'd likely benefit from an advisor. The more informed I am as a client, the happier I'll be and the happier a good advisor will be. For those of us (me) who perhaps think t...
by Random Walker
Sat Aug 13, 2016 11:07 am
Forum: Investing - Theory, News & General
Topic: Confession~ I timed the market today
Replies: 31
Views: 3347

Re: Confession~ I timed the market today

I sort of did as well today :-). But there is a huge difference between tactical asset allocation and sort of opportunistically making long term adjustments to the asset allocation in the face of changing life circumstances. Those circumstances include aging, change in risk appetite, change in need ...
by Random Walker
Thu Aug 11, 2016 1:45 pm
Forum: Investing - Theory, News & General
Topic: Anyone looking at changing AA in presence of Current Valuations?
Replies: 71
Views: 3313

Re: Anyone looking at changing AA in presence of Current Valuations?

Nedsaid, You described my thoughts well. There seem to be times when the modest expected returns don't seem worthy of the risk. As Larry has said previously, the expected return is only the mean with a wide dispersion. Moreover, within that dispersion the good outcomes are modestly good and some of ...
by Random Walker
Thu Aug 11, 2016 10:58 am
Forum: Investing - Theory, News & General
Topic: Anyone looking at changing AA in presence of Current Valuations?
Replies: 71
Views: 3313

Re: Anyone looking at changing AA in presence of Current Valuations?

Yes, my original post was not about TAA, I'm talking about IPS changes that reflect changes in goals, circumstances, ability, willingness, need for risk.

Dave
by Random Walker
Thu Aug 11, 2016 10:56 am
Forum: Investing - Theory, News & General
Topic: Anyone looking at changing AA in presence of Current Valuations?
Replies: 71
Views: 3313

Re: Anyone looking at changing AA in presence of Current Valuations?

Taylor, I'm the hugest of believers in stay the course, but even Bogle says "age in bonds" which implies making changes as we progress through life. We age and circumstances change. Circumstances include where we are financially compared to our goals and this is affected by past performanc...
by Random Walker
Thu Aug 11, 2016 8:33 am
Forum: Investing - Theory, News & General
Topic: Anyone looking at changing AA in presence of Current Valuations?
Replies: 71
Views: 3313

Anyone looking at changing AA in presence of Current Valuations?

Is anyone looking at changing their stock bond mix in the face of current market highs and generous P/E. I can see people going both ways. On the one hand, take some profit, future expected lower returns not worth the risk, so cool off the AA. On the other hand, future expected returns lower, may ne...
by Random Walker
Mon Aug 08, 2016 2:41 pm
Forum: Investing - Theory, News & General
Topic: Articles that have provoked thought and reflection
Replies: 21
Views: 2531

Re: Articles that have provoked thought and reflection

Roger Gibson on Multi Asset Class Investing. What matters is the portfolio as a whole. Mhow an asset class contributes to a portfolio depends on expected returns, volatility, correlations. This short paper basically summarizes a whole book by the author. http://www.amcham-shanghai.org/amchamportal/I...
by Random Walker
Thu Aug 04, 2016 7:24 pm
Forum: Investing - Theory, News & General
Topic: A costly mistake made by both investors and advisors
Replies: 240
Views: 17488

Re: A costly mistake made by both investors and advisors

Somebody really famous (Benjamin Graham?) said in the short run the market is a voting machine and in the long run its a weighing machine. That is very true! In the short run psychology can dominate and anything can happen. In the long run prices will be driven by dividend yield, earnings growth, an...
by Random Walker
Thu Aug 04, 2016 1:50 pm
Forum: Investing - Theory, News & General
Topic: Avoid International?
Replies: 99
Views: 7905

Re: Avoid International?

Drkathryn, I think your reasoning is a bit upside down. Here's my logic. Diversification is always important. That being said, if you had to pick long term versus short term, I would say that diversification is more important for the short term. In the long run, the performance of a given single ass...
by Random Walker
Thu Aug 04, 2016 9:50 am
Forum: Investing - Theory, News & General
Topic: Avoid International?
Replies: 99
Views: 7905

Re: Avoid International?

The goal is to create an efficient portfolio by diversifying. And one can diversify geographically, across risk factors, across other drivers of returns. Lower correlations with other portfolio components are more desirable. The contribution of a potential new asset class to a portfolio depends on e...
by Random Walker
Sun Jul 31, 2016 12:54 pm
Forum: Investing - Theory, News & General
Topic: Factor Tilt Expected Returns and Required Holding Periods
Replies: 5
Views: 439

Re: Factor Tilt Expected Returns and Required Holding Periods

Larry, I think I've read that your favorite time period for evaluating factors is as long as possible. Of course what may be more relevant to us now is the behavior of these factors after they become widely known and investable. It seems clear to me there is an obvious tradeoff between the length of...
by Random Walker
Sun Jul 31, 2016 10:26 am
Forum: Investing - Theory, News & General
Topic: Factor Tilt Expected Returns and Required Holding Periods
Replies: 5
Views: 439

Re: Factor Tilt Expected Returns and Required Holding Periods

I think it is most meaningful to look at the behavior of multi factor portfolios versus perhaps 3 fund total market portfolio. What matters is the portfolio as a whole, not necessarily one fund versus another.

Dave
by Random Walker
Sat Jul 30, 2016 8:00 pm
Forum: Investing - Theory, News & General
Topic: The quality premium, risk or behavioral based, a deep look
Replies: 16
Views: 1001

Re: The quality premium, risk or behavioral based, a deep look

Larry, I think I remember reading an Asness essay called something like "Quality, the other side of value". My take away (which could be totally off base!) was something like this. A company could have a high Low P/B because it's truly risky as an investment or because it's simply not very...
by Random Walker
Fri Jul 22, 2016 8:09 pm
Forum: Investing - Theory, News & General
Topic: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?
Replies: 49
Views: 2533

Re: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?

Hi Lack_ey,
Where do you fall in the Kool aid spectrum? I've evolved from a pure total markets all VG guy proud of lowest ER to a slicer/dicer, and on to an outright factor junkie.

Dave
by Random Walker
Thu Jul 21, 2016 2:01 pm
Forum: Investing - Theory, News & General
Topic: Another look at corporate bonds
Replies: 209
Views: 12719

Re: Another look at corporate bonds

Oops, looks like I'd better go read lack_ey's prior post. For that matter, I should have read Larry's article first! :-)

Dave
by Random Walker
Thu Jul 21, 2016 1:59 pm
Forum: Investing - Theory, News & General
Topic: Another look at corporate bonds
Replies: 209
Views: 12719

Re: Another look at corporate bonds

Kevin, Great informative post above. Your post doesn't say it explicitly, but I'm guessing that the correlations between investment grade corporate and equity and high yield and equity increased at the wrong times. I bet the worst year draw down for high yield was also in a real bad equity year. The...
by Random Walker
Tue Jul 19, 2016 10:37 am
Forum: Investing - Theory, News & General
Topic: Stock Valuations — Is the U.S. Market Now the Global Growth Index?
Replies: 28
Views: 2414

Re: Stock Valuations — Is the U.S. Market Now the Global Growth Index?

Vwgrrc, EM comprises 25% of my Int allocation. I think that approximates the global weights as well. To be clear, I don't consider myself market timing. This is a likely once in a lifetime AA adjustment that I'm making as life circumstance has changed, I've gained experience regarding risk tolerance...
by Random Walker
Mon Jul 18, 2016 11:09 pm
Forum: Investing - Theory, News & General
Topic: Stock Valuations — Is the U.S. Market Now the Global Growth Index?
Replies: 28
Views: 2414

Re: Stock Valuations — Is the U.S. Market Now the Global Growth Index?

I agree with the OP that this difference in valuations is worth taking note of. I'm not much of a market timer, but given the fact that the worldwide market cap is about 50% US and 50% International, and the fact that most of us underweight international relative to the world market cap in our portf...
by Random Walker
Thu Jul 14, 2016 10:20 pm
Forum: Investing - Theory, News & General
Topic: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?
Replies: 49
Views: 2533

Re: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?

The goal is to generate returns through factors other than market beta in the presence of leverage. For QSPIX the factors are value, momentum, carry, defensive.

Dave
by Random Walker
Thu Jul 14, 2016 10:00 pm
Forum: Investing - Theory, News & General
Topic: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?
Replies: 49
Views: 2533

Re: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?

Gor,
Eager to hear how those readings influence your thoughts on the long/short funds. It's not how a fund behaves in isolation as much as it is how it affects portfolio behavior.



Dave
by Random Walker
Wed Jul 13, 2016 11:01 pm
Forum: Investing - Theory, News & General
Topic: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?
Replies: 49
Views: 2533

Re: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?

GOR, I'm now going to speak more generally about the philosophy that led me to make a small allocation to such an expensive fund. All that matters is the behavior of the portfolio as a whole. Portfolio volatility is a killer. If one invests in a single fund and loses 50%, he has to then make 100% to...
by Random Walker
Wed Jul 13, 2016 10:37 pm
Forum: Investing - Theory, News & General
Topic: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?
Replies: 49
Views: 2533

Re: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?

GOR, QSPIX and QSPRX I think are likely just different share classes of the same fund. I arrived at 6% sort of backwards. I have 10% allocated to alternative stuff. Of that stuff, 2.5% is US REITs and 1.5% Int REITs. That leaves 6% for QSPIX. The cost is high, so I wanted to keep the allocation mode...
by Random Walker
Wed Jul 13, 2016 8:27 pm
Forum: Investing - Theory, News & General
Topic: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?
Replies: 49
Views: 2533

Re: What is the purpose of a Long/Short Equity Fund fund like AQR QLERX?

I think I can give you a bit of an answer, although I am not specifically familiar with QLERX. The academic literature has identified a number of factors as drivers of equity returns. Some are risk factors, some are persistent behavioral anomalies that don't seem to be arbitraged away, some are a co...
by Random Walker
Mon Jul 11, 2016 8:23 am
Forum: Investing - Theory, News & General
Topic: How Much To Tilt To Small Value?
Replies: 48
Views: 4722

Re: How Much To Tilt To Small Value?

When choosing to tilt to small value, at least part of the purpose should be to diversify across independent risk factors. Thus one wants a fund with heavy factor loadings so that one exposes themselves to small and value with relatively less increased exposure to the market factor. Some funds do th...
by Random Walker
Fri Jul 08, 2016 6:49 pm
Forum: Investing - Theory, News & General
Topic: S+P 500 is not very diversified
Replies: 77
Views: 5605

Re: S+P 500 is not very diversified

Yes my comments are different from OP. I'm looking from a portfolio efficiency viewpoint with the OP's potential portfolio being exclusively S&P 500. Just pointing out that there are at least several ways to view diversification.

Dave
by Random Walker
Fri Jul 08, 2016 6:00 pm
Forum: Investing - Theory, News & General
Topic: S+P 500 is not very diversified
Replies: 77
Views: 5605

Re: S+P 500 is not very diversified

I agree with azanon, It's worse than proposed by the OP. S&P 500 is effectively a large growth index. It is not diversified across risk factors / sources of return: size, value, geography. But is an excellent starting point or foundation for a portfolio. Extremely cheap source of exposure to bet...
by Random Walker
Mon Jul 04, 2016 2:05 pm
Forum: Investing - Theory, News & General
Topic: Devil's Advocate for not significantly changing my International Allocation
Replies: 39
Views: 3149

Re: Devil's Advocate for not significantly changing my International Allocation

Mr wheelerdealer, One more thought. Everyone on this board discusses tilting towards value because total market indices are effectively growth indices. At this time investing in US can be considered more growth and international more value. Being a US (growth) investor could be a rational choice. Gr...
by Random Walker
Sun Jul 03, 2016 8:39 pm
Forum: Investing - Theory, News & General
Topic: Devil's Advocate for not significantly changing my International Allocation
Replies: 39
Views: 3149

Re: Devil's Advocate for not significantly changing my International Allocation

Mr wheelerdealer, Yes the foreign stocks are cheaper for a reason. But your response indicates to me that you are looking at asset classes, in this case international, in isolation. What matters is how an asset class mixes with the rest of the portfolio. How an asset class contributes to a portfolio...
by Random Walker
Sun Jul 03, 2016 1:54 pm
Forum: Investing - Theory, News & General
Topic: Devil's Advocate for not significantly changing my International Allocation
Replies: 39
Views: 3149

Re: Devil's Advocate for not significantly changing my International Allocation

Mr wheelerdealer, All your concerns regarding international exposure are already priced into the values of the equities. The market prices risk. For all the reasons you describe, valuations may be lower and thus expected returns higher than in the US. Currently the P/E ratio of US market substantial...
by Random Walker
Sat Jul 02, 2016 9:35 am
Forum: Investing - Theory, News & General
Topic: Bond Diversification w/ Slice & Dice
Replies: 11
Views: 1275

Re: Bond Diversification w/ Slice & Dice

The best way to minimize correlation with equities is to keep quality high and term short. As far as taxes, seems to me one either chooses treasuries in tax deferred or highest quality munis in taxable.

Dave
by Random Walker
Tue Jun 28, 2016 3:49 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting
Replies: 5
Views: 426

Re: Tax Loss Harvesting

The big benefit of TLH is that you use the losses to offset the gains when you liquidate the taxable savings far down the road. You end up delaying a tax and effectively getting an interest free loan from the government. The 3K offset to ordinary income in the current year is nice too.

Dave
by Random Walker
Mon Jun 27, 2016 8:52 am
Forum: Investing - Theory, News & General
Topic: Bond Diversification w/ Slice & Dice
Replies: 11
Views: 1275

Re: Bond Diversification w/ Slice & Dice

Probably not too much Boglehead info on slicing and dicing bonds. As someone above said, moving away from high quality short increases risk. Most Bogleheads I think believe in taking the risk on the equity side and using bonds for risk dampening volatility.

Dave
by Random Walker
Sat Jun 18, 2016 4:10 pm
Forum: Investing - Theory, News & General
Topic: For long-term investing, why is diversification a good thing?
Replies: 24
Views: 2174

Re: For long-term investing, why is diversification a good thing?

1. Long run irrelevant if can't survive short run

2. More efficient portfolio diversified across geography and sources of return more likely to have compounded return closer to average annual return of portfolio components; less likely to be killed by volatility.

Dave
by Random Walker
Fri Jun 17, 2016 1:14 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 10 — Economic Growth and Stock Dilution
Replies: 17
Views: 1566

Re: Classic Bernstein 10 — Economic Growth & Stock Prices

People seem to overpay for growth, whether it's at the individual stock level or at the country level.

Dave
by Random Walker
Sun Jun 12, 2016 10:12 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Literature
Replies: 6
Views: 506

Re: Tax Loss Harvesting Literature

Look up a couple papers written by Belkin and Arnott. I think conclusion is that TLH done right can add 0.5-0.7% per year. Here's one of them.

https://www.firstquadrant.com/system/fi ... vestor.pdf

Dave
by Random Walker
Sat Jun 11, 2016 10:06 am
Forum: Investing - Theory, News & General
Topic: Any thoughts on this? [Why advisors don't like target funds]
Replies: 29
Views: 4363

Re: Any thoughts on this? [Why advisors don't like target funds]

NM Jack, I completely agree with your concerns over market timing. My point is that while no one can time the market, each one of us is the expert on timing our own lives. Knowing all the relevant life factors, financial goals, health, changes to expected retirement, changes to wants and needs, etc,...
by Random Walker
Sat Jun 11, 2016 9:54 am
Forum: Investing - Theory, News & General
Topic: Time horizons and investor discipline i
Replies: 7
Views: 806

Re: Time horizons and investor discipline i

Thanks for a great article Larry, and looking forward to your new book. Seems to me that it is meaningful to look at both longer and shorter time periods. While long time periods dating back to the 1960's helps establish the persistence of factors, what matters to us now is whether they persist afte...
by Random Walker
Wed Jun 08, 2016 8:03 am
Forum: Investing - Theory, News & General
Topic: Unnecessary risk for the sake of unnecessary diversification
Replies: 54
Views: 3982

Re: Unnecessary risk for the sake of unnecessary diversification

If you're totally content with high quality bonds alone, hard to argue with that! But, I think a small dose of stocks added to an all bond portfolio would increase portfolio efficiency a lot! Look up writings by William Bernstein or Larry Swedroe where they look at different stock bond combinations....
by Random Walker
Fri Jun 03, 2016 5:39 pm
Forum: Investing - Theory, News & General
Topic: "6 Reasons The Rich Should Pay-Off Their Mortgage"
Replies: 76
Views: 9924

Re: "6 Reasons The Rich Should Pay-Off Their Mortgage"

For me, there was a huge benefit I discovered after I did it. I found that having a paid off mortgage helped add psychological strength and conviction to stick to my fairly aggressive AA.

Dave
by Random Walker
Tue May 31, 2016 12:30 pm
Forum: Investing - Theory, News & General
Topic: This Bull Seems to be Getting Pretty Long In the Tooth
Replies: 76
Views: 7376

Re: This Bull Seems to be Getting Pretty Long In the Tooth

Vitaflow, There's an excellent book called Value Averaging by Michael Edelson that pretty much describes what you are describing. It is oriented towards allocating a lump sum, but I think it can be adapted to accumulation phase as well. William Bernstein is a big fan of the author and the book. Dave

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