Search found 1041 matches

by Random Walker
Tue Jan 12, 2016 10:21 pm
Forum: Investing - Theory, News & General
Topic: Small value underperformance, DFA
Replies: 106
Views: 7306

Re: Small value underperformance, DFA

Volatility is a portfolio killer; it takes a 100% return to make up for a 50% portfolio loss. The compounded portfolio return always falls short of the weighted average return of the portfolio components due to volatility. By dampening portfolio volatility one brings the compounded return closer to ...
by Random Walker
Sat Jan 02, 2016 6:17 pm
Forum: Investing - Theory, News & General
Topic: frustrating to keep investing in international/EM
Replies: 110
Views: 7983

Re: frustrating to keep investing in international/EM

"Stay the course" is very sound advice. BUT!!! There are a handful of occasions in ones investing lifetime where the course should or may change. We've had a huge bull market over the last 6 years and we've all become 6 years older. It's a good time for an individual to reflect on his pers...
by Random Walker
Sat Jan 02, 2016 5:48 pm
Forum: Investing - Theory, News & General
Topic: Lump Sum vs Dollar Cost Averaging
Replies: 9
Views: 761

Re: Lump Sum vs Dollar Cost Averaging

The expected return for equities is always positive, albeit sometimes smaller than others. That being said, the academic answer is lump sum as early as possible. If you really have conviction in your chosen AA, I think that is especially true.

Dave
by Random Walker
Sat Jan 02, 2016 5:43 pm
Forum: Investing - Theory, News & General
Topic: frustrating to keep investing in international/EM
Replies: 110
Views: 7983

Re: frustrating to keep investing in international/EM

I'm a huge believer in chemical equilibrium, Econ 101 perfect competition, and efficient markets. Many people say a good starting point for an efficient portfolio is the world market cap weighting, which is roughly 50% US /50% International (and 25% international in emerging markets). Most of us by ...
by Random Walker
Sun Dec 27, 2015 10:40 am
Forum: Investing - Theory, News & General
Topic: Retiring in a bull market
Replies: 10
Views: 1613

Re: Retiring in a bull market

I'm 53 and recently had a Monte Carlo analysis done. Was really surprised at the lack of sensitivity to changes in the stock bond mix. Maybe good time change the AA or at least spend down to new AA by withdrawing from the equity side. A lot depends on an individual's end of life goal: leave as big a...
by Random Walker
Sun Dec 27, 2015 9:41 am
Forum: Investing - Theory, News & General
Topic: Retiring in a bull market
Replies: 10
Views: 1613

Re: Retiring in a bull market

It has really worked well for you! Have you made your asset allocation less risky since then or stayed with the same stock/bond mix since then?

Dave
by Random Walker
Sat Dec 26, 2015 1:43 pm
Forum: Investing - Theory, News & General
Topic: Tracking Net Worth, insightful and motivating
Replies: 45
Views: 4086

Re: Tracking Net Worth, insightful and motivating

I think it's good to track net worth. It's a true measure of where you really stand, and I think it can help strengthen the fortitude to stick to one's asset allocation in the liquid investment realm.

Dave
by Random Walker
Thu Dec 24, 2015 11:29 am
Forum: Investing - Theory, News & General
Topic: Final Part of Perfect Storm series,
Replies: 18
Views: 1754

Re: Final Part of Perfect Storm series,

In the article Larry comments that use of Monte Carlo simulation could be very productive. I have done this with my financial advisor and found the results quite surprising and enlightening. First of all, a good Monte Carlo simulation will look at the likelihood of different end points: say age 85 w...
by Random Walker
Tue Dec 22, 2015 11:27 am
Forum: Investing - Theory, News & General
Topic: Let Tax Tail Wag the Asset Allocation Dog?
Replies: 23
Views: 2073

Re: Let Tax Tail Wag the Asset Allocation Dog?

Thanks Grabiner,
That's pretty much the way I've been looking at it.

Dave
by Random Walker
Fri Dec 18, 2015 2:44 pm
Forum: Investing - Theory, News & General
Topic: When Commodities Prices Fall Do Expected Returns Rise?
Replies: 2
Views: 238

When Commodities Prices Fall Do Expected Returns Rise?

So, got to admit, I've violated the rule about investing in only things one understands. I got enamored with the lack of correlation of CCFs. They've tanked in the last couple of years. So when equities go down, expected return rises. Is the same true for CCFs? My understanding is that there are thr...
by Random Walker
Fri Dec 18, 2015 11:10 am
Forum: Investing - Theory, News & General
Topic: Let Tax Tail Wag the Asset Allocation Dog?
Replies: 23
Views: 2073

Re: Let Tax Tail Wag the Asset Allocation Dog?

Larry, Just as tax loss harvesting is an interest free loan from the government, is delaying capital gains tax effectively the same thing? Is it profitable to delay capital gains as much as possible or does it end up being a wash, pay now or pay later? I realize we can't anticipate what the market w...
by Random Walker
Fri Dec 18, 2015 11:06 am
Forum: Investing - Theory, News & General
Topic: A perfect storm for investors
Replies: 90
Views: 11557

Re: A perfect storm for investors

This is related to my earlier post on taking chips off the table / cooling off the asset allocation. On the one hand, I appreciate that one would need to increase equity allocation to compensate for lower expected returns. On the other hand, it seems the increased risk is simply not worth it for the...
by Random Walker
Thu Dec 17, 2015 11:06 am
Forum: Investing - Theory, News & General
Topic: Let Tax Tail Wag the Asset Allocation Dog?
Replies: 23
Views: 2073

Re: Let Tax Tail Wag the Asset Allocation Dog?

Not much tax advantaged space, approximately 15% of the portfolio. I'm currently 70/30 and thinking of moving to 60/40 or 50/50. Ive had a Monte Carlo analysis performed, and the results are surprisingly similar with 70/30 and 50/50.

Dave
by Random Walker
Wed Dec 16, 2015 3:07 pm
Forum: Investing - Theory, News & General
Topic: Let Tax Tail Wag the Asset Allocation Dog?
Replies: 23
Views: 2073

Re: Let Tax Tail Wag the Asset Allocation Dog?

Gclancer, Good point. But I figure it could take couple to a few years to rebalance with new additions. Market could do drastic stuff in that time frame. Long dog, Yes I would say that with age and maturity I've gotten more realistic about future financial possibilities and goals, so my "need&q...
by Random Walker
Wed Dec 16, 2015 2:45 pm
Forum: Investing - Theory, News & General
Topic: Let Tax Tail Wag the Asset Allocation Dog?
Replies: 23
Views: 2073

Let Tax Tail Wag the Asset Allocation Dog?

We've had a 6 year bull market, and I'm pondering cooling off my asset allocation even though I'm still in accumulation phase. Of course that means paying capital gains now rather than delaying them to the future. Just curious to hear others thoughts regarding a substantial tax hit for the sake of t...
by Random Walker
Wed Dec 16, 2015 1:36 pm
Forum: Personal Consumer Issues
Topic: WSJ - Cancel and Invest Subscription Fee in S&P500 or Read Daily - Which is a Better Investment?
Replies: 43
Views: 3094

Re: WSJ - Cancel and Invest Subscription Fee in S&P500 or Read Daily - Which is a Better Investment?

No brainier! Buy the WSJ. I'm indifferent as to whether you read the front page news or the financial pages, but the Opinion section is an invaluable resource for clear thinking regarding current events. Just my opinionated 2 cents :-)

Dave
by Random Walker
Fri Nov 27, 2015 5:42 pm
Forum: Investing - Theory, News & General
Topic: Collateralized Commodity Futures Funds
Replies: 33
Views: 2221

Re: Collateralized Commodity Futures Funds

You can check the monthly oil futures price.

Dave
by Random Walker
Wed Nov 25, 2015 8:48 am
Forum: Investing - Theory, News & General
Topic: Slicing, Dicing, Tilting, Factoring, etc-ing -- my take
Replies: 100
Views: 8070

Re: Slicing, Dicing, Tilting, Factoring, etc-ing -- my take

I have posted these before. These two short articles are the most succinct essays I've read displaying the power of diversifying across as many sources of return as possible. The first is called Effective Diversification in a 3 Factor World by Larry Swedroe and the second is called The Rewards of Mu...
by Random Walker
Tue Nov 24, 2015 3:33 pm
Forum: Investing - Theory, News & General
Topic: Does being a Boglehead make you want a career in finance?
Replies: 43
Views: 5071

Re: Does being a Boglehead make you want a career in finance?

Yes. I've become fascinated by efficient markets and investing. I'm a physician treating cancer patients. And even for these people, finances seem to be their biggest concern. I think an informed, ethical, financial advisor with a lot of common sense can do a tremendous amount of good for many peopl...
by Random Walker
Sat Nov 21, 2015 11:32 pm
Forum: Investing - Theory, News & General
Topic: framework for risk averse investors
Replies: 20
Views: 1893

Re: framework for risk averse investors

Sawhorse,
I like that addition you made to the table. Really emphasizes the decreased marginal benefit to increasing stock allocation to portfolios that are already pretty equity rich.

Dave
by Random Walker
Sat Nov 21, 2015 8:48 pm
Forum: Investing - Theory, News & General
Topic: Slicing, Dicing, Tilting, Factoring, etc-ing -- my take
Replies: 100
Views: 8070

Re: Slicing, Dicing, Tilting, Factoring, etc-ing -- my take

Bertilak, Pretty sure you know this already, but it's worth repeating. I'm quite confident that the collection of factors you describe ( market, size, value, momentum, profitability) explain something close to 95% of a portfolio's returns. So additional factors won't have a lot of effect on investor...
by Random Walker
Sat Nov 21, 2015 8:03 pm
Forum: Investing - Theory, News & General
Topic: Slicing, Dicing, Tilting, Factoring, etc-ing -- my take
Replies: 100
Views: 8070

Re: Slicing, Dicing, Tilting, Factoring, etc-ing -- my take

... And, DFA is NOT doing what Buffet is doing. DFA's "value" is nothing like the "value" Buffet is looking for. I appreciate that Buffet's margin of safety concept is different from anything involved in the DFA screens. But I believe there is more similarity between DFA and Buf...
by Random Walker
Wed Nov 18, 2015 6:21 pm
Forum: Investing - Theory, News & General
Topic: Cheap Factor Exposure
Replies: 9
Views: 970

Re: Cheap Factor Exposure

Yes, what Larry said is what I meant :-) I think it doesn't show up in your sample portfolios because they are all 100% equity. But when start to incorporate bonds, you can get same exposure to small and value with less exposure to market factor when using smaller small and more valuey value funds. ...
by Random Walker
Wed Nov 18, 2015 4:58 pm
Forum: Investing - Theory, News & General
Topic: Cheap Factor Exposure
Replies: 9
Views: 970

Re: Cheap Factor Exposure

Owning more of a less valuey value fund to get a given factor tilt does expose the portfolio to greater market risk than if one has a more valuey value fund. The less valuey fund may be cheaper, but the portfolio perhaps a bit less efficient: tradeoffs.

Dave
by Random Walker
Sun Nov 15, 2015 6:49 pm
Forum: Investing - Theory, News & General
Topic: Low beta, low volatility
Replies: 28
Views: 2081

Re: Low beta, low volatility

What does low beta mean here? My impression is that most people mean low volatility relative to the market. But upon looking for a formal definition of beta, I see that Beta= (Asset class' correlation to market)(volatility of asset) / volatility of overall market So beta is a measure of an asset Cla...
by Random Walker
Wed Nov 11, 2015 9:55 pm
Forum: Investing - Theory, News & General
Topic: Valuations and market timing, and the current CAPE 10
Replies: 60
Views: 5002

Re: Valuations and market timing, and the current CAPE 10

Most of us under weight international in our portfolios relative to its roughly 50% weighting in the global marketplace. Perhaps these current lower valuations and higher future expected returns present an opportunity for some to reallocate their portfolios closer to the global market. In fact, give...
by Random Walker
Sun Nov 08, 2015 10:12 pm
Forum: Investing - Theory, News & General
Topic: framework for risk averse investors
Replies: 20
Views: 1893

Re: framework for risk averse investors

Equity Exposure……. Max loss 20%…………………………………5% 30%……………………………….10% 40%……………………………….15% 50%……………………………….20% 60%……………………………….25% 70%……………………………….30% 80%……………………………… 35% 90%……………………………… 40% 100%……………………… …… 50% Data provided by Author Larry Swedroe on Morningstar’s ‘Bogleheads Unite’ Forum I copied thi...
by Random Walker
Sat Nov 07, 2015 3:32 pm
Forum: Investing - Theory, News & General
Topic: John Bogle looking at stock valuations?
Replies: 48
Views: 4245

Re: John Bogle looking at stock valuations?

It's ironic,
If the future has decreased future expected returns for equities, we should actually increase our equity allocations to achieve our goals.

Dave
by Random Walker
Thu Nov 05, 2015 2:31 pm
Forum: Investing - Theory, News & General
Topic: Sequence of Returns
Replies: 23
Views: 2323

Re: Sequence of Returns

This also displays the rationale for multi asset class investing: diversifying across as many sources of returns / risk factors as possible. Multiple weakly correlated asset classes will bring the portfolio annualized return closer to the components average annual return by minimizing portfolio vola...
by Random Walker
Sat Oct 31, 2015 8:31 pm
Forum: Investing - Theory, News & General
Topic: Shifting international towards small + emerging
Replies: 59
Views: 3658

Re: Shifting international towards small + emerging

Nirav, I disagree that most poeprtfolio returns "converge" and the only difference is volatility. Portfolio volatility is hugely significant and a huge drag on portfolio returns. Dampening portfolio volatility with non correlated asset classes brings the annualized portfolio return (compou...
by Random Walker
Sat Oct 31, 2015 3:54 pm
Forum: Investing - Theory, News & General
Topic: Shifting international towards small + emerging
Replies: 59
Views: 3658

Re: Shifting international towards small + emerging

I like your proposed changes. I think it will improve portfolio efficiency. International small and EM have higher expected returns than international market and lower correlations to US market. And I think shifting to international small value instead of international small would be even better. In...
by Random Walker
Tue Oct 27, 2015 10:18 am
Forum: Investing - Theory, News & General
Topic: AAII 2015 Investor Conference
Replies: 14
Views: 1369

Re: AAII 2015 Investor Conference

Just looked up the conference. Appears to be sold out. Anyone know if it's REALLY sold out or if a guy can straggle in and see a lecture or two? Thanks,

Dave
by Random Walker
Sun Oct 25, 2015 6:34 pm
Forum: Investing - Theory, News & General
Topic: How much International Exposure?
Replies: 56
Views: 5204

Re: How much International Exposure?

Jalbert, I don't think it makes sense to decrease allocation to international as one nears retirement. Currency effects are essentially random I think. I think makes more sense to keep the % allocation of equity subclasses to the overall equity allocation constant and simply decrease the overall equ...
by Random Walker
Sun Oct 25, 2015 2:43 pm
Forum: Investing - Theory, News & General
Topic: How much International Exposure?
Replies: 56
Views: 5204

Re: How much International Exposure?

I think a good starting point is to think 50% of equities international and modify from there. I think 50-60% is about the market weight of international in the global market. As far as modifying, I would start with the thought that most of us earn US dollars and will be spending US dollars in retir...
by Random Walker
Fri Oct 23, 2015 5:19 pm
Forum: Investing - Theory, News & General
Topic: QSPIX Nightmare - Closed Off to Retail Investors
Replies: 129
Views: 14395

Re: QSPIX Nightmare - Closed Off to Retail Investors

When did this start? I have QSPNX in Fidelity 401K and best I can tell contributions were made to it last week.

Dave
by Random Walker
Mon Oct 12, 2015 1:41 pm
Forum: Investing - Theory, News & General
Topic: Bloomberg TV interview this morning at 940 Eastern
Replies: 3
Views: 520

Re: Bloomberg TV interview this morning at 940 Eastern

Saw the interview this morning. Larry called in by phone in support of passive management. They had live on screen in person a handsome guy in a nice suit supporting active management. If I were the fellow supporting active management, I'd be embarrassed. There is simply no way to contradict the coh...
by Random Walker
Sun Oct 11, 2015 8:17 pm
Forum: Investing - Theory, News & General
Topic: Most wildly volatile fund you know of
Replies: 30
Views: 2269

Re: Most wildly volatile fund you know of

Hi Tamales, I knew I had seen an excellent table by Larry Swedroe regarding % stocks in asset allocation versus maximal tolerable loss. I found a copy of it on the Canadian couch potato site. Here's the link. It's in one of Larryy's books as well, perhaps the Right Financial Plan book. Maximal toler...
by Random Walker
Sun Oct 11, 2015 7:14 pm
Forum: Investing - Theory, News & General
Topic: Good Quote Explaining Incorporation of Profitability into Value
Replies: 1
Views: 236

Good Quote Explaining Incorporation of Profitability into Value

"By cleaning up valuation ratios to identify which firms have low (high) B/P because they are more (less) profitable rather than less (more) risky, profitability helps identify the riskiest (highest expected return) assets from an efficient markets perspective." I found this quote in an ar...
by Random Walker
Fri Oct 09, 2015 9:15 am
Forum: Investing - Theory, News & General
Topic: Most wildly volatile fund you know of
Replies: 30
Views: 2269

Re: Most wildly volatile fund you know of

Hi Tamales, I'm curious what you are trying to show your friend. Are you just displaying what volatility of the markets can look like? Are you displaying the painful effect of volatility making annualized returns less than average annual returns? Are you displaying how the addition of a non or negat...
by Random Walker
Thu Oct 08, 2015 9:38 am
Forum: Investing - Theory, News & General
Topic: Equity Glide Paths — Bogleheads versus Target Funds
Replies: 42
Views: 2877

Re: Equity Glide Paths — Bogleheads versus Target Funds

Just my 2 cents. There is so little we have control of in investing. Some of the few things we can control are our goals, our appetite for risk, our AA, and ability to stick to AA. That being said, I think most Bogleheads should not have a straight line glide path. I think there are times after long...
by Random Walker
Tue Sep 29, 2015 10:32 pm
Forum: Investing - Theory, News & General
Topic: Collateralized Commodity Futures Funds
Replies: 33
Views: 2221

Re: Collateralized Commodity Futures Funds

Ha :-) I got 3% QSPIX and 3% DFA CCF fund. Not sure that these small allocations do much numbers wise. But I've convinced myself that I have a seriously diversified portfolio, so that I am maybe a bit less inclined to make changes when things go bad. Also these allocations provide immense entertainm...
by Random Walker
Wed Sep 23, 2015 9:47 am
Forum: Investing - Theory, News & General
Topic: Optimizing value strategies
Replies: 12
Views: 1277

Re: Optimizing value strategies

Hi Larry,
Why is DFA sticking to using only B/P when it appears multiple value metrics is superior? Does superior tax management with the single metric override the before tax benefit of multiple metrics? Thanks,

Dave
by Random Walker
Tue Sep 22, 2015 11:05 am
Forum: Investing - Theory, News & General
Topic: Actively managed tax-managed funds, do they deliver
Replies: 11
Views: 1045

Re: Actively managed tax-managed funds, do they deliver

Anyone have a feel for the benefits of tax management in the passive small and value world? Thanks,

Dave
by Random Walker
Tue Sep 22, 2015 10:48 am
Forum: Investing - Theory, News & General
Topic: Reducing Risk with Negatively Correlated Assets?
Replies: 87
Views: 4646

Re: Reducing Risk with Negatively Correlated Assets?

The only real risk reducer is high quality short term fixed income or TIPs. When things head south correlations tend toward 1. But weakly or negatively correlated asset classes can smooth the ride and improve portfolio efficiency: get the annualized return closer to the average annual return. I've w...
by Random Walker
Mon Sep 21, 2015 3:20 pm
Forum: Investing - Theory, News & General
Topic: QSPIX - thoughts on interesting fund
Replies: 1078
Views: 117691

Re: QSPIX - thoughts on interesting fund

"And the public should not be deceived into assuming that investing in QSPIX is consistent with the Bogleheads principles." "Deceived" is too strong a word. Boglehead is a forum dedicated to passive investing. Of course Bogle's "Cost Matters Hypothesis" is fundamental ...
by Random Walker
Mon Sep 21, 2015 2:26 pm
Forum: Investing - Theory, News & General
Topic: Actively managed tax-managed funds, do they deliver
Replies: 11
Views: 1045

Re: Actively managed tax-managed funds, do they deliver

Hi Larry, thanks for the article. I think the natural question to ask on this board is how much is tax management worth in the realm of passive funds, especially in the relatively tax inefficient worlds of small caps and value. For example DFA US Core 2 versus TA US Core 2 or DFA TM Targeted Value v...
by Random Walker
Sat Sep 19, 2015 9:09 am
Forum: Investing - Theory, News & General
Topic: Convince me on Small-Value Premium
Replies: 54
Views: 2912

Re: Convince me on Small-Value Premium

Gray fox,
Good point. i would expect that the expected premia for small and market are always positive but their size varies. I believe trying to time the premia based on relative valuations would be a losers game.

Dave
by Random Walker
Fri Sep 18, 2015 3:59 pm
Forum: Investing - Theory, News & General
Topic: Convince me on Small-Value Premium
Replies: 54
Views: 2912

Re: Convince me on Small-Value Premium

Someone, either Robert Merton or Robert Miller I think, won a Nobel prize for showing that the expected return on an investment is equal to it's cost of capital. That intuitively makes sense to me. That being said, if you were lending money, would you charge the same interest rate to Exxon as you wo...
by Random Walker
Sat Sep 12, 2015 8:28 pm
Forum: Investing - Theory, News & General
Topic: GMO WhitePaper: Sequence Risk and Drag on Retirement Wealth
Replies: 34
Views: 2912

Re: GMO WhitePaper: Sequence Risk and Drag on Retirement Wealth

I think these concepts are important. As individual investors there is not a lot we can control. One thing we can control is our asset allocation. I think that we all would agree that we should get less aggressive as we get closer to retirement. But there are many ways to cool off the portfolio over...
by Random Walker
Wed Sep 09, 2015 8:09 pm
Forum: Investing - Theory, News & General
Topic: Anybody questioning use of an advisor at this volatile time?
Replies: 28
Views: 3540

Re: Anybody questioning use of an advisor at this volatile time?

Part of larger group. Long distance, have a phone call once every few months and meet face to face once a year when he comes to town. I don't see distance as any problem at all

Dave

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