Search found 11943 matches

by Rodc
Sun Feb 07, 2016 11:57 am
Forum: Investing - Theory, News & General
Topic: Otar Retirement Myth - overfitting, methods flaw
Replies: 8
Views: 793

Re: Otar Retirement Myth - overfitting, methods flaw

Funny, I was thinking about something similar this morning: the idea that P/E10 predicts 40% of the variance in returns over the next 20 years. But when one fits a model to data almost always one fits the model to some combination of signal and measurement noise. And thus the model almost never does...
by Rodc
Sat Feb 06, 2016 7:46 pm
Forum: Personal Finance (Not Investing)
Topic: Should You Work Longer ?
Replies: 10
Views: 1348

Re: Should Your Work Longer ?

Together, they worked an additional 4,000 hours to enjoy a benefit of $5,760. So their benefit comes to $1.44 an hour, before income taxes. In the 15 percent tax bracket, the net spendable benefit would be $1.22 an hour. Can you say small beer? Of course, the benefit is for the rest of their lives,...
by Rodc
Sat Feb 06, 2016 5:18 pm
Forum: Investing - Theory, News & General
Topic: Is there a rule of thumb for 50/50 Total Stock/Total Bond
Replies: 22
Views: 2275

Re: Is there a rule of thumb for 50/50 Total Stock/Total Bond

Be very careful about salesmen bearing annuities! A simple single payment immediate annuity can possibly be helpful if your savings are marginal. You most likely do not want a variable annuity due to their high cost, hidden fees and such. But tread carefully. One thing is you may do better to wait o...
by Rodc
Sat Feb 06, 2016 4:52 pm
Forum: Personal Finance (Not Investing)
Topic: What growth rate would you use?
Replies: 75
Views: 3473

Re: What growth rate would you use?

Remember, you need to use prudent pessimism in planning. It would be very dangerous to plan on getting the historic average return for stocks. I disagree. I have 26 years until I'll need retirement, and figure that the average performance for the next 26 years will probably be similar as the averag...
by Rodc
Sat Feb 06, 2016 2:42 pm
Forum: Personal Finance (Not Investing)
Topic: Accelerating financial independence by living with father-in-law?
Replies: 19
Views: 1729

Re: Accelerating financial independence by living with father-in-law?

Unclear this is a financial win. May reduce life time pay. May lose out on owning a home which for many turns into a valuable store of money. Kids have to live in a cluttered environment with some old set in their ways grandpa. Less independence for you and wife. Less privacy for your family. Very l...
by Rodc
Sat Feb 06, 2016 2:36 pm
Forum: Personal Finance (Not Investing)
Topic: How Long Until Financial Independence?
Replies: 11
Views: 1432

Re: How Long Until Financial Independence?

I think this is a very difficult question to answer as you are predicting your expenses out many decades. No one in 1970 was predicting that medical would be so expensive in 40 years. No one in 1970 was predicting how much internet access or cell phones might cost in 40 years. You do not know if you...
by Rodc
Sat Feb 06, 2016 2:31 pm
Forum: Personal Finance (Not Investing)
Topic: What growth rate would you use?
Replies: 75
Views: 3473

Re: What growth rate would you use?

Remember, you need to use prudent pessimism in planning. It would be very dangerous to plan on getting the historic average return for stocks. I disagree. I have 26 years until I'll need retirement, and figure that the average performance for the next 26 years will probably be similar as the averag...
by Rodc
Sat Feb 06, 2016 1:55 pm
Forum: Personal Finance (Not Investing)
Topic: What growth rate would you use?
Replies: 75
Views: 3473

Re: What growth rate would you use?

To those of you conservatively estimating stocks at 30-years-3%-real, I wonder if you truly believe that, FWIW: there is a difference between setting up a plan so that it will work with low returns and forecasting that is what will happen. I would also point out that we really only have good data f...
by Rodc
Sat Feb 06, 2016 12:12 pm
Forum: Personal Finance (Not Investing)
Topic: What growth rate would you use?
Replies: 75
Views: 3473

Re: What growth rate would you use?

Rodc, In your opinion, what would you consider as a moderately pessimistic number? Real or nominal? KlangFool Bonds 0% real and stocks 3-4% real for a pessimistic scenario, but not worst case. No magic in those numbers. For my 60/40 porfolio I use 5% nominal, with a long term inflation expectation ...
by Rodc
Sat Feb 06, 2016 11:58 am
Forum: Investing - Theory, News & General
Topic: Reporter doing story on expense drop when kids go off to college
Replies: 27
Views: 2494

Re: Reporter doing story on expense drop when kids go off to college

Huh? Expenses have gone way up! Supplying a vehicle, insurance and gas. Rent, Meal plan or money for food. Incidentals like books, dating, parties, etc...... Greek life. Attending college sports. And on and on...... Tuition is just the tip of the iceberg and my son is the titanic! Lol.... That was ...
by Rodc
Sat Feb 06, 2016 11:39 am
Forum: Personal Finance (Not Investing)
Topic: What growth rate would you use?
Replies: 75
Views: 3473

Re: What growth rate would you use?

3%, hoping to be happily surprised. Ask me tomorrow and I might say 2% or 5% or...? As this thread shows there are lots of ways to get to something like this. I am in the camp that one should use a moderately pessimistic early planning number. Too pessimistic risks forgoing too much consumption ear...
by Rodc
Sat Feb 06, 2016 10:03 am
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

And showing them the bottom 5% of MCS results is a good way to do that IMO. In other words, battles are won in the preparatory phase, not on the battlefield itself. Hi Larry, As I have heard in general, not specific to investing (I think it was a General talking about battle plans), the value is no...
by Rodc
Sat Feb 06, 2016 9:49 am
Forum: Personal Finance (Not Investing)
Topic: What Percentage Raise to Expect for a Small Promotion?
Replies: 11
Views: 985

Re: What Percentage Raise to Expect for a Small Promotion?

All things considered, I'd be fine more than fine with receiving a 6-10% combined promotion/merit raise. I'm wondering, though, if I should push back at all if they only "offer" me a 3-5% promotion/merit raise? And if they reject my boss's promotion request, should I still try to lobby/ne...
by Rodc
Sat Feb 06, 2016 9:39 am
Forum: Investing - Theory, News & General
Topic: Is there a rule of thumb for 50/50 Total Stock/Total Bond
Replies: 22
Views: 2275

Re: Is there a rule of thumb for 50/50 Total Stock/Total Bond

Toons wrote:FYI :happy

"An Historical Look at a 50/50 Portfolio"

http://awealthofcommonsense.com/a-histo ... portfolio/



Just keep in mind this uses long-term U.S. treasury bonds which almost no one uses in real life as their sole bond holding.
by Rodc
Sat Feb 06, 2016 9:26 am
Forum: Investing - Theory, News & General
Topic: Is there a rule of thumb for 50/50 Total Stock/Total Bond
Replies: 22
Views: 2275

Re: Is there a rule of thumb for 50/50 Total Stock/Total Bond

If you are looking for a WAG to do a back of the envelop projection you might use three more or less reasonable scenarios: moderately pessimistic, about average and moderately optimistic. I think the first two are most useful because you want a plan that will work ok in the moderately pessimistic ca...
by Rodc
Fri Feb 05, 2016 3:38 pm
Forum: Personal Finance (Not Investing)
Topic: What Percentage Raise to Expect for a Small Promotion?
Replies: 11
Views: 985

Re: What Percentage Raise to Expect for a Small Promotion?

Might be worth asking your boss. Different companies might be different. But a small promotion will likely come with a small pay raise. Not likely zero and not likely huge. Maybe something like an annual raise. And whenever the annual raises come out you should get one of those as well. What this do...
by Rodc
Fri Feb 05, 2016 3:09 pm
Forum: Personal Consumer Issues
Topic: Sibling's destination wedding?
Replies: 95
Views: 4944

Re: Sibling's destination wedding?

For the posters expressing negative opinions about destination weddings, keep in mind that weddings can be expensive and stressful. Sometimes destination weddings can alleviate all of that in one shot. It is very likely the couple does not want everyone to attend and has no expectation that everyon...
by Rodc
Fri Feb 05, 2016 2:50 pm
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

The key is to understand well, really well, the limit of one's analysis and to not give in to siren song of mathematical/numerical precision That is certainly true. Unfortunately the limits of Monte Carlo simulations are such that in general they are not all that useful in this context, IMHO. FWIW:...
by Rodc
Fri Feb 05, 2016 11:58 am
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

Rod I think most people would say that events like the oil embargo of 73-74, the Asian Contagion of 1998, the events around 911 and the financial crisis were all "black swans"--highly significant events that were basically not forecasted. Now that doesn't mean we could not have a much big...
by Rodc
Fri Feb 05, 2016 8:26 am
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

Right. If I have some reason to believe I have a particular distribution, say Gaussian for fun, and I have 100 samples I can fit a curve to those samples and use that curve to generate 10,000 samples some of which will be outside the range of what I measured. Just to expand a bit. If in this case I...
by Rodc
Thu Feb 04, 2016 8:19 pm
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

What do you do? Think hard and make up a number If I am just going to make up numbers I don't need a Monte Carlo simulation. This is simply garbage in, garbage out. I might as well just guess an outcome vs taking a wild guess at the input and running it through some software to get a transformed gu...
by Rodc
Thu Feb 04, 2016 7:22 pm
Forum: Investing - Theory, News & General
Topic: Take the Verb Tense Pledge!
Replies: 69
Views: 3732

Re: Take the Verb Tense Pledge!

crynwr wrote:I can affirm my current intention to be careful about tenses.

A current affirmation, though sincere, provides no guarantee of future results. :wink:

Cryn


Me too. :)
by Rodc
Thu Feb 04, 2016 7:18 pm
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

The short answer is not really. The longer answer is that you can use whatever distribution you want in designing a MC sim, but it would be unusual to use a very "fat tail". Black swans are the things you don't anticipate and you don't include in your model things your can't anticipate. I...
by Rodc
Thu Feb 04, 2016 6:45 pm
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

Does the MC sim take into account "black swan" events -- or is that actually the same as what people refer to as a "fat tail"? I seem to recall Taleb dissing MC simulations, but I don't remember his reasons. The short answer is not really. The longer answer is that you can use w...
by Rodc
Thu Feb 04, 2016 6:44 pm
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

And finally the three largest drops in the last 45 years, all about 50% or more are all in the "normal" distribution, in the left tail of that log normal distribution How does that square with 2008 being a black swan? 2008 seems like just a normal (pun intended!) event in the general sche...
by Rodc
Thu Feb 04, 2016 4:53 pm
Forum: Personal Consumer Issues
Topic: Do you pay for exercise?
Replies: 207
Views: 10524

Re: Do you pay for exercise?

I don't find cardio machines that useful. I think most people, myself included, just can't use cardio machines without getting dreadfully bored. If I'm doing cardio, I want to at least be moving somewhere. Running and cycling are great ways to explore your town/neighborhood. There's a reason home t...
by Rodc
Thu Feb 04, 2016 12:24 pm
Forum: Investing - Theory, News & General
Topic: Reporter doing story on expense drop when kids go off to college
Replies: 27
Views: 2494

Re: Reporter doing story on expense drop when kids go off to college

It may in fact be a net gain to have them eat in a school cafeteria. Will just have to see. I would rephrase that differently based on experience: It may be a net-gain only giving them enough money to eat in a school cafeteria. If they hate the school food, they won't eat there, but that does not m...
by Rodc
Thu Feb 04, 2016 11:25 am
Forum: Investing - Theory, News & General
Topic: Reporter doing story on expense drop when kids go off to college
Replies: 27
Views: 2494

Re: Reporter doing story on expense drop when kids go off to college

I think it might depend on how prepared you are for you kid going to college and if your kid get's a "work-study job." If you have been putting a significant amount of money in a 529 for many years and are no longer doing this but actually using the money to pay for college it might actua...
by Rodc
Thu Feb 04, 2016 11:14 am
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

Does the MC sim take into account "black swan" events -- or is that actually the same as what people refer to as a "fat tail"? I seem to recall Taleb dissing MC simulations, but I don't remember his reasons. The short answer is not really. The longer answer is that you can use w...
by Rodc
Thu Feb 04, 2016 7:39 am
Forum: Investing - Theory, News & General
Topic: Reporter doing story on expense drop when kids go off to college
Replies: 27
Views: 2494

Re: Reporter doing story on expense drop when kids go off to college

Is it possible she's looking for how the parents' costs at home dropped once kid away at uni? That would be my guess. With tuition, room and board our expenses as a family in total went way up. The only way the question makes sense is the costs at home. When my sister went to college my parents cla...
by Rodc
Thu Feb 04, 2016 7:31 am
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

Well we'll have to disagree. IMO you "guys" are the ones misusing the information. Any financial economist knows that when a forecast is made it's not a "deterministic" forecast--a single number that they know the market will return. It's just the mean of a wide potential disper...
by Rodc
Wed Feb 03, 2016 7:09 am
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

Well we'll have to disagree. IMO you "guys" are the ones misusing the information. Any financial economist knows that when a forecast is made it's not a "deterministic" forecast--a single number that they know the market will return. It's just the mean of a wide potential disper...
by Rodc
Tue Feb 02, 2016 8:00 pm
Forum: Investing - Theory, News & General
Topic: Charles Ellis' suggested portfolios by age
Replies: 53
Views: 4035

Re: Charles Ellis' suggested portfolios by age

Every now and then I wonder if Bogleheads as a group are a bit too conservative.


Previous polls showed BH to hold rather more stocks than 100-age%, as an example, so not sure of the basis for this assertion.
by Rodc
Tue Feb 02, 2016 7:46 pm
Forum: Personal Finance (Not Investing)
Topic: Nearing retirement but annual contribution still very significant
Replies: 40
Views: 3256

Re: Nearing retirement but annual contribution still very significant

I am not in that boat. I have a pension (coming). My wife has a pension (coming) I have SS (coming). And I have a substantial 410K, though more modest than some on BH. If we wait for 65 for pensions and 70 for SS we maximize income and roughly speaking if I worked until 65 my pension and my 401K eac...
by Rodc
Tue Feb 02, 2016 6:58 pm
Forum: Personal Consumer Issues
Topic: Unwinding day old terrible car deal for mother-in-law
Replies: 186
Views: 15696

Re: Unwinding day old terrible car deal for mother-in-law

Don't co-sign. I did once and learned that payments were not being made at one point after I got a letter from the lender. :oops: Unless you have a way to know if each payment is on time do not sign. As someone noted better to just buy her the car and have her pay you. Or, have a lawyer review the c...
by Rodc
Mon Feb 01, 2016 9:16 am
Forum: Personal Consumer Issues
Topic: Unwinding day old terrible car deal for mother-in-law
Replies: 186
Views: 15696

Re: Unwinding day old terrible car deal for mother-in-law

You might just be buying your first new car. I know this is not ideal, but you might not get to ideal. You could take the new car, refi the car, sell her old car and give/sell her one of your current cars so she has better transportation, or she keeps hers and you sell her one of yours. Or you just ...
by Rodc
Mon Feb 01, 2016 9:02 am
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

Edge Where do you get the idea that it creates any sense of certainty? Exactly the opposite is the case. IMI you are just misusing the information Larry I am with Homer and Edge on this one. When someone like GMO puts out forecasts to the 10th of a percent with no error bars, by all scientific stan...
by Rodc
Sat Jan 30, 2016 12:49 pm
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

There is unlikely to be much agreement in this thread on the usefulness of various statistical models because the disagreement is not over the models themselves, but the philosophy of the posters. I myself am in the camp that generally sees things like CAPE as essentially useless. Am I going to eve...
by Rodc
Sat Jan 30, 2016 9:08 am
Forum: Investing - Theory, News & General
Topic: The failure of valuation predictions
Replies: 121
Views: 7305

Re: The failure of valuation predictions

"Nobody knows nothing" is both grammatically and philosophically anti-thought .. It's this fatalistic, binary thinking that's only good for the lottery industry and people selling you extended warranties While clearly not correct, I think the main benefit is behavioral. The vast majority ...
by Rodc
Thu Jan 28, 2016 8:49 pm
Forum: Investing - Theory, News & General
Topic: Age in Bonds - Stock Exposure Peaks at 60
Replies: 12
Views: 1798

Re: Age in Bonds - Stock Exposure Peaks at 60

Just thought I would bump this up as I thought it was interesting and someone might see it a second time around.
by Rodc
Thu Jan 28, 2016 8:39 pm
Forum: Investing - Theory, News & General
Topic: Hold risk constant or hold return constant?
Replies: 132
Views: 6399

Re: Hold risk constant or hold return constant?

I posted the link to the article as evidence the topic is still debatable, not as the final word on the matter, although it certainly calls into question claims of volatility predicting volatility more than a month out. But my view is that the findings of Fama, French, and Mandelbrot back in the 19...
by Rodc
Thu Jan 28, 2016 8:33 pm
Forum: Investing - Theory, News & General
Topic: Explain Profit, Profit Growth, & Stock Price
Replies: 3
Views: 260

Re: Explain Profit, Profit Growth, & Stock Price

I'm guessing the answer is related to the fact that stock price is based on expectations and how much investors are wiling to pay for expected growth in the future. In a perfect rational static world one would pay based on an assessment of the future income stream discounted at some rate (dollar in...
by Rodc
Thu Jan 28, 2016 8:06 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing, another study
Replies: 94
Views: 7346

Re: Rebalancing, another study

Rox, Very interesting. A few ideas come to mind.. 1) First I was rather surprised the returns alone could keep this as steady as it does. But then I thought about it and in any given year this portfolio might return about 5% on average from the bond half and maybe 4% from dividends rounding off mayb...
by Rodc
Thu Jan 28, 2016 12:24 pm
Forum: Personal Consumer Issues
Topic: Most efficient way to improve my writing ability?
Replies: 56
Views: 2579

Re: Most efficient way to improve my writing ability?

Wow - the Bogleheads come though yet again. Thank you all very much. There are some terrific suggestions thus far that I will definitely be following up on. I just wanted to quickly chime back in with a couple additional specifics since I was asked: The program is a Master's in Health Administratio...
by Rodc
Thu Jan 28, 2016 12:12 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing, another study
Replies: 94
Views: 7346

Re: Rebalancing, another study

Thus if you're doing income placement and still have 3% drift then there is probably some good momentum happening in the market, which is usually a good time to rebalance. That is an interesting observation. One issue though is that income placement works far better early when new money tends to do...
by Rodc
Thu Jan 28, 2016 11:54 am
Forum: Personal Consumer Issues
Topic: Do you pay for exercise?
Replies: 207
Views: 10524

Re: Do you pay for exercise?

Exactly, I'm not talking about getting shredded down to 4% bodyfat. Most people just want to look lean and in shape, 12-15% (for men) is achievable by almost anyone. People assume it's their genetics when they workout hard several days a week and don't see results. In reality 90% of the fat loss is...
by Rodc
Thu Jan 28, 2016 10:02 am
Forum: Personal Consumer Issues
Topic: Most efficient way to improve my writing ability?
Replies: 56
Views: 2579

Re: Most efficient way to improve my writing ability?

Just to add to the above, is there someone where you work, say a technical writer or someone in publications, who would be willing to work with you? Volunteer to write reports, memos or whatever comes up at work, and have this person critique and offer suggestions. Take a class at the local communit...
by Rodc
Wed Jan 27, 2016 2:54 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing, another study
Replies: 94
Views: 7346

Re: Rebalancing, another study

1. If you wait to rebalance until your drift trigger hits 3%, you'll get better returns than rebalancing at 2% or 1% drift. Why is #1 true? Can you have too much of a good thing? You would need to get the data and look at what happened day by day for 2%, 4% etc. Very likely this precise value is dr...
by Rodc
Tue Jan 26, 2016 9:01 pm
Forum: Investing - Theory, News & General
Topic: Any reason not to invest in a Vanguard fund that rebalances?
Replies: 41
Views: 2899

Re: Any reason not to invest in a Vanguard fund that rebalances?

The all in one LifeStrategy and target retirement are perfect funds. Perfect, without flaw, and Jack Bogle is a genius for creating Vanguard which lead to this all in one fund of perfection. There has never been a good argument against it, and I await the day that I hear one. I think the general fe...
by Rodc
Tue Jan 26, 2016 7:55 pm
Forum: Investing - Theory, News & General
Topic: Hold risk constant or hold return constant?
Replies: 132
Views: 6399

Re: Hold risk constant or hold return constant?

I think the answer to the OP's question depends partly on stage of life, as well as total portfolio value as related to lifestyle demands and psychological makeup. For a retiree with just enough money to last without significant loss of desired lifestyle, controlling risk is more important. For a y...

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