Search found 1826 matches

by Random Walker
Fri Aug 18, 2017 6:58 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Bigbonds, I recommend you read Larry's short essay Effective Diversification in a 3 Factor World. The link is higher up in this thread. It's only 3 pages. I believe it's 3 of the most productive investing pages I've ever read. Moreover, I think it will help make Larry's integrity clear to you and ma...
by Random Walker
Fri Aug 18, 2017 6:27 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

He charges $0.00 for his advice on the forum, which has shaped many a factor-tilted portfolio, using open-access funds (with no fees back to his firm) to obtain the factor exposure. Totally agree! I would add that I believe Larry's philosophy has been completely consistent throughout the roughly 20...
by Random Walker
Fri Aug 18, 2017 6:07 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Bigbonds, Doubt strongly Larry is saying he is right and Buffett is wrong. I would think as long as the investor is informed and knowledgeable, it's more of a preference difference. Like I said, see Larry's book titled Think, Act, & Invest Like Warren Buffett. Writing a book with that title has to b...
by Random Walker
Fri Aug 18, 2017 4:52 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Puddles, I think volatility is always significant. I agree with you on aggressive asset allocations for young people. They can improve portfolio efficiency with several less than perfectly correlated aggressive asset classes rather than the volatility of just one aggressive asset class. Even the mos...
by Random Walker
Fri Aug 18, 2017 1:40 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Puddles the duck,
I think smoothing volatilitynis a huge deal. It brings the geometric return of the portfolio closer to the average annual return of the portfolio components. We can only eat geometric returns. Minimizing volatility translates into real money.

Dave
by Random Walker
Thu Aug 17, 2017 11:21 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Bigbonds, I actually do believe I see and understand your point of view. I'm equally sure you don't understand mine. I was an ardent TSM Boglehead proud of ultra low expense ratios for almost a decade. As I learned more, I came to view diversification in a different way: diversification across types...
by Random Walker
Thu Aug 17, 2017 11:13 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Psteinx, I agree with you. I think one should take two portfolios for comparison, both with the same forward looking expected returns. Use CAPE10 and/or discount dividend model to create market expected return. Use conservative estimates for factor premia, and use similar bonds of equivalent credit ...
by Random Walker
Thu Aug 17, 2017 10:37 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Also, if you want a track record, please tell me which of the above mentioned options I gave would be used. All three would have advantages and disadvantages. None of them are particularly meaningful because you are truly asking for apples versus oranges comparison. Perhaps you would be interested i...
by Random Walker
Thu Aug 17, 2017 10:33 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

There is no track record to compare. Larry does not run a single fund. He is a member of an advisory firm that chooses from a variety of other people's funds to create portfolios customized for each individual. In one sense Larry's advice is very special and in another sense it's not at all special....
by Random Walker
Thu Aug 17, 2017 9:59 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Bigbonds, Also, I looked up Buffet's bet. It is against hedge funds. It's basically a passive versus very active and very expensive bet. A portfolio of passive factor focused funds would not qualify for the bet. With passive funds you get the performance of the factors you're exposed to minus costs,...
by Random Walker
Thu Aug 17, 2017 9:26 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Bigbonds, You honestly don't get it. Passive investing is about taking what the markets give us, minus fees. The S&P 500 is basically a large cap fund. There is no magic to any portfolio Larry's firm would create for a client. The portfolio just has a different collection of risks and return drivers...
by Random Walker
Thu Aug 17, 2017 5:19 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Bigbonds, You're missing the point big time. There really aren't any specific "Larry results" to be shown. He is a member of a full service financial advisory firm. They create portfolios customized to the needs and desires of individual clients. Now that being said, their firm has a very sound and ...
by Random Walker
Thu Aug 17, 2017 9:32 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Dcabler,
We can extrapolate way beyond your point! We can avoid tracking error by not comparing our portfolios to the S&P or a pure Boglehead 3 fund portfolio. We can avoid unhappiness by not comparing our lives to our perception of other people's lives.

Dave
by Random Walker
Wed Aug 16, 2017 9:11 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Cliff, Actually, your specific question is a bit beyond me. There are specific statistical techniques to determine factor loadings on different portfolios. I'm not sure that would be helpful anyways. THE BEST PORTFOLIO IS THE ONE YOU WILL STICK WITH! There are many variables involved: your willingne...
by Random Walker
Wed Aug 16, 2017 3:22 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Triceratop,
Guess that's pretty much what I was thinking :-)

Dave
by Random Walker
Wed Aug 16, 2017 3:21 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Hi Indexonlyplease, Yes, my portfolio could be considered slice and dice. The first and important asset allocation decision to make is the basic stock/bond split. I think anyone who has more than perhaps 20% equities in their portfolio will find that the majority of the risk in their portfolio is do...
by Random Walker
Wed Aug 16, 2017 2:25 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

WARNING! For those of you who are staunch TSMers, if you find this article convincing and start considering delving more into international and EM, international small, international small value, emerging small and value, you are actually taking your first dip into the world of Factor investing. Sur...
by Random Walker
Wed Aug 16, 2017 1:49 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

I think what Simplegift points out is actually standard procedure. When crises hit, the correlations of risky assets head towards 1. When markets start to recover, the correlations start to decrease. The long term averages we look at incorporate both "normal" times and crises.

Dave
by Random Walker
Wed Aug 16, 2017 11:37 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Re: Larry Swedroe: World Isn't Flat-Invest Accordingly

Garlandwhizzer, I totally agree. When I think of home country bias, I always imagine a Japanese investor starting out his investing career in the 1980's. His home country bias would have been painful. Markets are efficient. No reason to believe our investment in hamburgers is different from a Norweg...
by Random Walker
Wed Aug 16, 2017 10:43 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: World Isn't Flat-Invest Accordingly
Replies: 69
Views: 5366

Larry Swedroe: World Isn't Flat-Invest Accordingly

http://www.etf.com/sections/index-investor-corner/swedroe-world-isnt-flat-invest-accordingly Great article on the benefits of international diversification. While it may be true that correlations between US and International are on the increase in the large multinational company realm, the benefits ...
by Random Walker
Tue Aug 15, 2017 8:10 pm
Forum: Investing - Theory, News & General
Topic: Dumb, basic question about market-cap weighted funds?
Replies: 35
Views: 1805

Re: Dumb, basic question about market-cap weighted funds?

Avalpert I'm sure is right. But no one adds a growth tilt to TSM type portfolios. For all practical purposes TSM and S&P500 are virtually interchangeable and both correlate very highly with large growth, although TSM by definition has 0 (as opposed to negative) loading on value factor. Historically ...
by Random Walker
Tue Aug 15, 2017 8:04 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Hazards Of Individual Stocks
Replies: 3
Views: 1171

Re: Larry Swedroe: Hazards Of Individual Stocks

Thought I'd give this thread a bump. This is a very basic and important Boglehead tenet.

Dave
by Random Walker
Tue Aug 15, 2017 3:00 pm
Forum: Investing - Theory, News & General
Topic: Dumb, basic question about market-cap weighted funds?
Replies: 35
Views: 1805

Re: Dumb, basic question about market-cap weighted funds?

I don't think your question is dumb at all. People here on this forum have argued in the past that the S&P 500 is indeed effectively a large growth index for the reasons you mention. I agree. The index tends to be dominated by the companies with higher P/E ratios. These growth companies are safer in...
by Random Walker
Mon Aug 14, 2017 10:58 am
Forum: Investing - Theory, News & General
Topic: What a Low Return Outlook Means for Your Retirement?
Replies: 42
Views: 4934

Re: What a Low Return Outlook Means for Your Retirement?

I think this is a very important subject. Recent generous returns result in higher valuations, which means lower future expected returns. I recently started a thread on Murphy's Law Of Retirement. People see their portfolios swell as a result of a bull market. They decide they have enough to retire ...
by Random Walker
Mon Aug 14, 2017 9:29 am
Forum: Investing - Theory, News & General
Topic: It's easy to have an investment plan until you get punched in the face
Replies: 53
Views: 6469

Re: It's easy to have an investment plan until you get punched in the face

Top99%, You and I must be about the same age. I see a lot of experience and wisdom in your comment above. Sticking to the plan when young, not much savings relative to future earnings, and in accumulation phase, is one thing. I imagine sticking to plan when older, savings probably greater than futur...
by Random Walker
Mon Aug 14, 2017 7:42 am
Forum: Investing - Theory, News & General
Topic: It's easy to have an investment plan until you get punched in the face
Replies: 53
Views: 6469

Re: It's easy to have an investment plan until you get punched in the face

North Texas Cajun, im referencing Lussier's book, Successful Investing Is A Process pages 179-180. He simply has a graph labeled Equity weight and Equity volatility. He doesn't specifically name SD or time frame. You seem to be making the argument that the risk of stocks decreases with time. Certain...
by Random Walker
Mon Aug 14, 2017 12:15 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Hazards Of Individual Stocks
Replies: 3
Views: 1171

Larry Swedroe: Hazards Of Individual Stocks

http://www.etf.com/sections/index-investor-corner/swedroe-hazards-individual-stocks In this article, Larry shows how important it is to invest in widely diversified funds rather than individual stocks. He shows that the only way to experience market returns is to invest in an index of the representa...
by Random Walker
Sun Aug 13, 2017 9:36 pm
Forum: Investing - Theory, News & General
Topic: It's easy to have an investment plan until you get punched in the face
Replies: 53
Views: 6469

Re: It's easy to have an investment plan until you get punched in the face

Remommyc,
I'm similar to you. As retirement approaches I've gon from 80/20 to 47/33/20 stocks/bonds/alternatives. It's important for us to realize that a typical 60/40 portfolio still has about 90%'of its risk on the equity side.

Dave
by Random Walker
Sun Aug 13, 2017 9:33 pm
Forum: Investing - Theory, News & General
Topic: It's easy to have an investment plan until you get punched in the face
Replies: 53
Views: 6469

Re: It's easy to have an investment plan until you get punched in the face

I think this brings up the huge behavioral issues involved with asset allocation. An individual needs a strong intuitive belief in his AA to stick with it. For me, the key is maximum diversification across factors / sources of return. There will always be some part of the portfolio zigging and anoth...
by Random Walker
Sun Aug 13, 2017 9:30 am
Forum: Personal Finance (Not Investing)
Topic: One more year [to retire]
Replies: 23
Views: 2484

Re: One more year

I find that as I get older, the variety of things I can do other than work (mostly athletic) seems to be declining. I'm very curious what people intend to do in retirement. When I was 20 I thought retirement would be awesome. Now I'm wary of it.

Dave
by Random Walker
Sat Aug 12, 2017 9:19 pm
Forum: Investing - Theory, News & General
Topic: The Mathematics of Retirement Investing
Replies: 123
Views: 13305

Re: The Mathematics of Retirement Investing

North Texas Cajun, I think it's fair to say overall bonds uncorrelated to stocks. Now, the longer the duration and the lower the credit quality, the more equity like characteristics the bonds will have. I'm sure the correlation between stocks and treasuries does change over time, BUT there is a stro...
by Random Walker
Sat Aug 12, 2017 7:28 pm
Forum: Investing - Theory, News & General
Topic: The Mathematics of Retirement Investing
Replies: 123
Views: 13305

Re: The Mathematics of Retirement Investing

I assumed MCS was random walk. I didn't know it was possible to model anything else. My own naive intuition makes me think it would be very hard to beat the assumption of random yearly returns with a Mean, SD, and a strong appreciation of financial history and its many fat tails. I think assuming ra...
by Random Walker
Sat Aug 12, 2017 5:14 pm
Forum: Investing - Theory, News & General
Topic: The Mathematics of Retirement Investing
Replies: 123
Views: 13305

Re: The Mathematics of Retirement Investing

I'll peek at Kitce's article. Of course when valuations change, expected returns change as well. Over time, one can run repeat simulations over time as assumptions (including future expected returns based on current valuations) change.

Dave
by Random Walker
Sat Aug 12, 2017 5:11 pm
Forum: Investing - Theory, News & General
Topic: The Mathematics of Retirement Investing
Replies: 123
Views: 13305

Re: The Mathematics of Retirement Investing

North Texas, doesn't mean reversion for equities argue for the use of a realistic mean? The MCS simulations incorporate historical standard deviations into the calculations. Yes the simulations make no effort to predict sequence of returns including momentum and reversion to mean, but to me those se...
by Random Walker
Sat Aug 12, 2017 4:34 pm
Forum: Investing - Theory, News & General
Topic: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?
Replies: 27
Views: 2419

Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

This can be a fuzzy issue because it is very rational to make AA changes sometimes when personal circumstances change or new investment opportunities become available. The way I view it is that the investment policy statement is an anchor. The default is always to stick to the plan. When not sure wh...
by Random Walker
Sat Aug 12, 2017 4:18 pm
Forum: Investing - Theory, News & General
Topic: The Mathematics of Retirement Investing
Replies: 123
Views: 13305

Re: The Mathematics of Retirement Investing

I've looked at Monte Carlo simulations for myself using numbers similar to what longinvest uses: 5.5% for equities and 1.5% for bonds. I've been impressed by the tremendous sensitivity of the results to changes in spending and the relative lack of sensitivity of results to changes in asset allocatio...
by Random Walker
Fri Aug 11, 2017 9:55 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Active Even Fails Institutions
Replies: 0
Views: 268

Larry Swedroe: Active Even Fails Institutions

http://www.etf.com/sections/index-investor-corner/swedroe-active-even-fails-institutions This article is definitely right up the Boglehead alley. Starts off with Bogle's CMH - Cost Matters Hypothesis. Big institutions pay much lower fees than you or I would for top level active management. Even with...
by Random Walker
Fri Aug 11, 2017 9:42 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Diversification Benefits of Time Series Momentum
Replies: 9
Views: 1024

Re: Larry Swedroe: Diversification Benefits of Time Series Momentum

Rattlenap,
I agree that low cost passive 60/40 is a great starting point. But I do think it's important to realize about 90% of the portfolio risk is on the equity side. And if it's a TSM type portfolio, all that risk is in a single factor, market beta.

Dave
by Random Walker
Fri Aug 11, 2017 8:37 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Diversification Benefits of Time Series Momentum
Replies: 9
Views: 1024

Re: Larry Swedroe: Diversification Benefits of Time Series Momentum

Another one of my favorite quotes, Bernstein I think, is "diversification is always working, whether you want it to or not" :-). When everything is tanking together and just one small position in a diversifier manages to go the other direction, perhaps that helps the investor stand his ground. TS Mo...
by Random Walker
Fri Aug 11, 2017 12:21 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Diversification Benefits of Time Series Momentum
Replies: 9
Views: 1024

Re: Larry Swedroe: Diversification Benefits of Time Series Momentum

LC, Reasonable point. Only response I have is that after a person has seen the passive light and basically gotten the stock - bond split right for him, improvements to the portfolio are incremental: small shifts toward some efficient frontier in the northwest corner. Every portfolio addition either ...
by Random Walker
Thu Aug 10, 2017 8:52 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Diversification Benefits of Time Series Momentum
Replies: 9
Views: 1024

Larry Swedroe: Diversification Benefits of Time Series Momentum

https://blog.alphaarchitect.com/2017/08/10/diversification-benefits-time-series-momentum/#gs.IwZb5CE Larry summarizes multiple papers showing the potential positive portfolio effects of an allocation to TS Momentum. TS Momentum is basically uncorrelated to a typical 60/40 portfolio, and has a tenden...
by Random Walker
Wed Aug 09, 2017 4:52 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Beyond Efficient Markets
Replies: 13
Views: 1348

Larry Swedroe: Beyond Efficient Markets

http://www.etf.com/sections/index-investor-corner/swedroe-beyond-efficient-markets Larry reviews work by Andrew Lo and a book by him. Lo describes "Adaptive Markets". Markets are not perfectly efficient, but they evolve over time to be increasingly efficient. Just as described in Larry's book The In...
by Random Walker
Wed Aug 09, 2017 2:18 pm
Forum: Investing - Theory, News & General
Topic: Another Great Post from AQR's Cliff Asness
Replies: 5
Views: 1426

Re: Another Great Post from AQR's Cliff Asness

Agree, a great post by Asness. My take away is that all the factors (including market beta) have left tails, so makes best sense to diversify widely across factors. Also, best if an investor can avoid concern about tracking error. Lastly, all that matters is the portfolio as a whole.

Dave
by Random Walker
Tue Aug 08, 2017 4:55 pm
Forum: Investing - Theory, News & General
Topic: Swedroe: Volatility As A Strategy
Replies: 56
Views: 4626

Re: Swedroe: Volatility As A Strategy

Jbolden1517, I think I understand your point about diversification and dilution. Is it fair to say that you would consider diversification of equities as adding another investment with equity like expected returns but low, non, negative correlation to equities? And dilution as adding in safer bonds ...
by Random Walker
Tue Aug 08, 2017 12:57 pm
Forum: Investing - Theory, News & General
Topic: Swedroe: Volatility As A Strategy
Replies: 56
Views: 4626

Re: Swedroe: Volatility As A Strategy

Einstein said something to the effect "Everything should be made as simple as possible, but not simpler". I agree that in general complexity in investing is something to be wary of. I also agree that we can get very far Investing simply and cheaply with a TSM approach. The very best diversifier of e...
by Random Walker
Mon Aug 07, 2017 10:22 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Active Falls Short With Bonds Too
Replies: 13
Views: 2111

Re: Larry Swedroe: Active Falls Short With Bonds Too

I do find the information interesting. The more I learn about bonds (especially munis) the more complex and opaque they appear. Thus the more I learn, the more potential I expect to see for someone to take advantage of inefficiencies. But apparently the bond market is way too efficient for active ma...
by Random Walker
Mon Aug 07, 2017 12:01 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Active Falls Short With Bonds Too
Replies: 13
Views: 2111

Larry Swedroe: Active Falls Short With Bonds Too

http://www.etf.com/sections/index-inves ... -bonds-too

No surprise to Bogleheads; active management is the loser's game in the bond market as well.

Dave
by Random Walker
Sat Aug 05, 2017 12:04 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Fundamentals v. Price
Replies: 4
Views: 561

Re: Larry Swedroe: Fundamentals v. Price

I'm a factor junkie and have put my faith in persistent human behavior and the data supporting Momentum. I have to admit though, that now seeing Momentum take different forms or get tweeked makes me a bit nervous.

Dave
by Random Walker
Sat Aug 05, 2017 10:57 am
Forum: Investing - Theory, News & General
Topic: Are value stocks safer or more risky?
Replies: 49
Views: 3741

Re: Are value stocks safer or more risky?

Valuethinker, Agree with you on the leverage-borrowing from insurance. Knpster, Everyone "likes" growth companies. That's why they tend to be over priced and have lower future expected returns. That being said, I agree with you-sort of perplexes me. But my understanding is that Buffet's alpha is all...
by Random Walker
Sat Aug 05, 2017 10:38 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Fundamentals v. Price
Replies: 4
Views: 561

Larry Swedroe: Fundamentals v. Price

http://www.etf.com/sections/index-investor-corner/swedroe-fundamentals-vs-price In this article Larry first reviews Momentum investing based on price, describes another form of Momentum based on fundamentals, and looks at how they do relative to each other and how Momentum works when they are combin...