Search found 1998 matches

by Simplegift
Tue May 03, 2016 12:47 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein — Asset Allocation and Time Horizon
Replies: 46
Views: 4591

Re: Classic Bernstein — Asset Allocation and Time Horizon

Those graphs plot return vs volatility, not vs percent stocks, or composition of the stock portfolios. So all one can make of the graphs is that the short term showed little correlation between volatility and return, while the longer term revealed high correlation between them. That, alone, does no...
by Simplegift
Mon May 02, 2016 1:36 pm
Forum: Investing - Theory, News & General
Topic: Index Investing Makes Markets and Economies More Efficient
Replies: 7
Views: 631

Re: Index Investing Makes Markets and Economies More Efficient

Good article. The conclusions by Philosophical Economics are nearly the same as those by Fama and French from 2009. Question: If a growing percentage of market participants pursued passive investment strategies, at what point would market efficiency break down? Is this a practical concern? The answe...
by Simplegift
Sun May 01, 2016 10:21 pm
Forum: Investing - Theory, News & General
Topic: Efficient frontier? "Indexing" and valuation distortions
Replies: 32
Views: 1840

Re: Efficient frontier? "Indexing" and valuation distortions

Why does any of this make any sense at all? None of these valuation-based market timing posts make any sense at all. Especially to Bogleheads. That's why the author feels compelled to sprinkle his posts with quotes and appeals to authority from various experts (Bogle, Swedroe, Shiller, Graham, etc....
by Simplegift
Sun May 01, 2016 1:09 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein — Asset Allocation and Time Horizon
Replies: 46
Views: 4591

Re: Classic Bernstein — Asset Allocation and Time Horizon

^^^ Superb analysis and visual presentation, Tyler. Thank you for sharing it. Since we can’t know in advance exactly which asset classes and factor premiums will be the ones that outperform in the decades ahead, your summary advice is also excellent: An investor who chooses a more consistent portfol...
by Simplegift
Sun May 01, 2016 7:53 am
Forum: Investing - Theory, News & General
Topic: The long term volatility of value stocks vs the market
Replies: 26
Views: 1999

Re: The long term volatility of value stocks vs the market

Yes, I think there's an insoluble problem with trying to decide what historical span of years should "count." Long before the time period gets long enough for the statistical sampling to settle down, you are talking about a span of years in which you can't possibly believe you are looking...
by Simplegift
Sat Apr 30, 2016 10:53 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein — Asset Allocation and Time Horizon
Replies: 46
Views: 4591

Re: Classic Bernstein — Asset Allocation and Time Horizon

Thanks all for your feedback. There appears to be sufficient interest in a “Classic Bernstein” series of Forum posts and, as time allows in the year ahead, I’ll try to be equal to the responsibility — we’ll see how it develops. A repeat request: If any Boglehead happens to recall a specific insight ...
by Simplegift
Sat Apr 30, 2016 6:00 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein — Asset Allocation and Time Horizon
Replies: 46
Views: 4591

Re: Classic Bernstein — Asset Allocation and Time Horizon

^^^ You’ve stated the case so well, bertilak , that I wish your explanation was in the original post! Thank you. In his text accompanying the two charts, Mr. Bernstein isn't entirely explicit about their meaning — so there's some room for interpretation, which makes for a good discussion and learnin...
by Simplegift
Sat Apr 30, 2016 1:38 pm
Forum: Investing - Theory, News & General
Topic: Efficient frontier? "Indexing" and valuation distortions
Replies: 32
Views: 1840

Re: Efficient frontier? "Indexing" and valuation distortions

The index managers by nature are valuation- agnostic and continue to buy more AAPL as periodic 401-K and other investment dollars come pouring into Vanguard. AAPL is in the index, and thus true "price discovery" --in the originally conceived sense --is no longer possible. This comment doe...
by Simplegift
Sat Apr 30, 2016 8:17 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein — Asset Allocation and Time Horizon
Replies: 46
Views: 4591

Re: Classic Bernstein — Asset Allocation and Time Horizon

Upon reflection, it seems there might be a couple of less-direct inferences that can be drawn from Mr. Bernstein’s two charts in the OP: a) Since the best performing asset classes (or factors) can’t be known in advance, it’s impossible to specify exactly what the best asset allocation will be in the...
by Simplegift
Sat Apr 30, 2016 1:31 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein — Asset Allocation and Time Horizon
Replies: 46
Views: 4591

Re: Classic Bernstein — Asset Allocation and Time Horizon

A few interpretations of his results: a) Over short periods, one’s mix of assets matters a great deal, but become less important over long time periods. I haven't read the book but based just on these two graphs, I would say the exact opposite. I believe Mr. Bernstein's point is that in the short-t...
by Simplegift
Sat Apr 30, 2016 12:38 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein — Asset Allocation and Time Horizon
Replies: 46
Views: 4591

Re: Classic Bernstein — Asset Allocation and Time Horizon

b) Over long time periods, the stock-to-bond ratio of one’s portfolio determines nearly all the return/risk, while the specific equity classes within the portfolio matter very little (as long as they're somewhat diversified). Your thoughts? The theory would suggest so as the largest differences in ...
by Simplegift
Fri Apr 29, 2016 8:35 pm
Forum: Investing - Theory, News & General
Topic: Is Coffeehouse Portfolio Not Preferred by BHs?
Replies: 54
Views: 5305

Re: Is Coffeehouse Portfolio Not Preferred by BHs?

I am not sure why no one ever talks about the important inferences of these two charts, but they are potent in proving specific % don't really matter over the long run. Thanks, staythecourse. Actually, your original post in this thread reminded me that there might be several other topics and insigh...
by Simplegift
Fri Apr 29, 2016 6:34 pm
Forum: Investing - Theory, News & General
Topic: McKinsey report on diminishing returns
Replies: 91
Views: 5676

Re: McKinsey report on diminishing returns

Interesting link but see also Another Bull$%^* McKinsey Prediction . It’s understandable that many financial types like Barry Ritholtz are leery of forecasts, as these folks deal every day with so many facile and failed predictions, from the modest to the preposterous. Plus, as professional money m...
by Simplegift
Fri Apr 29, 2016 4:24 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein — Asset Allocation and Time Horizon
Replies: 46
Views: 4591

Classic Bernstein — Asset Allocation and Time Horizon

PREFACE: This is the first in a possible series of posts over the next few months highlighting William Bernstein’s classic investing and portfolio insights from the 1990's and early 2000's. Many new Bogleheads on the Forum today have never been exposed to his early work, including his digital journ...
by Simplegift
Thu Apr 28, 2016 1:29 pm
Forum: Investing - Theory, News & General
Topic: McKinsey report on diminishing returns
Replies: 91
Views: 5676

Re: McKinsey report on diminishing returns

It occurs to me that many folks who have been investing and accumulating over the last 30+ years don't really appreciate how exceptional their asset returns have been, especially on the bond side — over 6% real return on bonds since 1980! (chart below). For added perspective on the lower returns exp...
by Simplegift
Thu Apr 28, 2016 1:00 pm
Forum: Investing - Theory, News & General
Topic: Triangulating
Replies: 5
Views: 890

Re: Triangulating

Most of the debates seems to be a matter of which "way" is incrementally better in the long or short term. When I first started following this board I realized that where I was at financially and where I though I was going were not matters of debates on the board about what was incrementa...
by Simplegift
Thu Apr 28, 2016 10:59 am
Forum: Investing - Theory, News & General
Topic: McKinsey report on diminishing returns
Replies: 91
Views: 5676

Re: McKinsey report on diminishing returns

One way to assess and check on the experts' opinion is to look at what the market is currently forecasting: • Earnings Yield of S&P 500 (reciprocal of P/E, or 100/26.32): 3.8% • Yield of 20-year TIPS Bond: 0.6% It seems the experts, plus the consensus of all the market participants on the planet...
by Simplegift
Thu Apr 28, 2016 9:33 am
Forum: Investing - Theory, News & General
Topic: McKinsey report on diminishing returns
Replies: 91
Views: 5676

Re: McKinsey report on diminishing returns

Whenever I have seen predictions about the markets over my investing life of over 30 years, they are most often completely wrong... Sure, it's smart to be skeptical about projections of future returns. However, it makes a big difference whether they are coming from some yahoo selling a book or news...
by Simplegift
Thu Apr 28, 2016 8:40 am
Forum: Investing - Theory, News & General
Topic: McKinsey report on diminishing returns
Replies: 91
Views: 5676

Re: McKinsey report on diminishing returns

Excellent report, thanks for posting it, Robert T. For financial planning, it seems prudent for investors, whether in the accumulation stage or the retirement stage, to use the slow-growth scenario (in orange below) — about 4.5% real return for stocks and 0% real return for bonds. There actually see...
by Simplegift
Wed Apr 27, 2016 1:10 pm
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Re: Why Are Real Interest Rates So Low Worldwide?

We might just chug along like this for some years more without any further policy adjustments until time works its magic. Eventually those newly created jobs in this recovery will start increasing aggregate demand and the money multiplier. This makes good sense, Garland. I would even extend your ob...
by Simplegift
Wed Apr 27, 2016 8:39 am
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Re: Why Are Real Interest Rates So Low Worldwide?

Most retirees will NOT stay the course in a persistent low-yield environment, and will move away from low-income bonds, for better or worse. Same thing applies to accumulators, actually. Hence most savers. Agree, this is a huge concern in a low interest rate environment that lasts for decades. Pers...
by Simplegift
Tue Apr 26, 2016 7:14 pm
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Re: Why Are Real Interest Rates So Low Worldwide?

Top line growth for companies is anemic, and the impetus for expansion is moribund in many sectors. I think these are the reasons for low rates. No one who would be creditworthy wants to borrow. Right. And on the other side of the demand/supply equation for global capital, savings worldwide have in...
by Simplegift
Tue Apr 26, 2016 12:20 pm
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Re: Why Are Real Interest Rates So Low Worldwide?

One observation I've had is that ZIRP screams to people, ''maximize your human capital'' because returns on financial capital are so low. This results in a natural tendency to want to invest in yourself, find creative opportunities to make money, and work harder and longer, because the relative ret...
by Simplegift
Mon Apr 25, 2016 8:25 pm
Forum: Investing - Theory, News & General
Topic: Is Coffeehouse Portfolio Not Preferred by BHs?
Replies: 54
Views: 5305

Re: Is Coffeehouse Portfolio Not Preferred by BHs?

Don't mean to bump my own thread, but does anyone know if this chart is published online? I find these types of analysis fascinating. It also helps calm the "what if I don't invest in this fund and then it outperforms by 0.1% and then I'll spend the next 10 years wondering if I should buy into...
by Simplegift
Mon Apr 25, 2016 4:00 pm
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Re: Why Are Real Interest Rates So Low Worldwide?

One other point that hasn’t been touched upon: The world’s 65 and older population is set to grow dramatically in the decades ahead (green in chart below) — with two substantial effects on global investment and savings, and thus future interest rates: 1) As more folks retire, their labor participati...
by Simplegift
Mon Apr 25, 2016 7:13 am
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Re: Why Are Real Interest Rates So Low Worldwide?

We think the global saving schedule has shifted out in recent decades due to demographic forces, higher inequality and to a lesser extent the glut of precautionary saving by emerging markets. Meanwhile, desired levels of investment have fallen as a result of the falling relative price of capital, l...
by Simplegift
Sun Apr 24, 2016 9:37 pm
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Re: Why Are Real Interest Rates So Low Worldwide?

For a look at the really big picture and how low current interest rates really are today, compared with historical rates: http://i.imgur.com/gKQipGy.png Source: Business Insider Plus, just for fun, this chart is based on a truly epic list of reference sources: Sources: Homer and Sylla (1991), Heim a...
by Simplegift
Sun Apr 24, 2016 6:49 pm
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Re: Why Are Real Interest Rates So Low Worldwide?

Anytime someone is "setting" a rate or "fixing" LIBOR, that is not the market rate. That is a central bank artificailly-low manipulated rate. It's true that central banks have great influence over short-term interest rates — but intermediate and longer-term real rates are determ...
by Simplegift
Sun Apr 24, 2016 5:51 pm
Forum: Investing - Theory, News & General
Topic: Why Are Real Interest Rates So Low Worldwide?
Replies: 82
Views: 7199

Why Are Real Interest Rates So Low Worldwide?

For anyone wondering why real interest rates are so low today, all around the globe — and are expected to remain low in the medium to long term — the Bank of England has recently published an excellent white paper on this subject: Secular Drivers of the Global Real Interest Rate . While this paper i...
by Simplegift
Sun Apr 24, 2016 2:10 pm
Forum: Investing - Theory, News & General
Topic: Arnott's Echoes of 1999: The Tech Bubble and the "Asian Flu"
Replies: 8
Views: 1061

Re: Arnott's Echoes of 1999: The Tech Bubble and the "Asian Flu"

^^^ Appreciate your kind words, Garland. Though I find it takes a lot of time to research and post on original topics, after a six-month absence, it’s much easier and less time-consuming to recycle an old previous post or two. :wink:
by Simplegift
Sun Apr 24, 2016 12:51 pm
Forum: Investing - Theory, News & General
Topic: A different look at the Shiller CAPE 10
Replies: 29
Views: 2414

Re: A different look at the Shiller CAPE 10

From Larry’s article: In finance, it’s generally best to look at the longest data series available, thereby minimizing the risk of data mining. However, there are several reasons why using a 136-year average for the CAPE 10 will lead to a false conclusion that the market is overvalued. Hear, hear! O...
by Simplegift
Sun Apr 24, 2016 11:36 am
Forum: Investing - Theory, News & General
Topic: Arnott's Echoes of 1999: The Tech Bubble and the "Asian Flu"
Replies: 8
Views: 1061

Re: Arnold's Echoes of 1999: The Tech Bubble and the "Asian Flu"

It’s also worth adding that, for U.S.-only index investors, their exposure to emerging markets is quite low — much lower than might be expected from U.S. multinationals and other U.S. companies with operations and sales overseas. http://i.imgur.com/x0lcC0E.jpg Source: Business Insider
by Simplegift
Sun Apr 24, 2016 10:28 am
Forum: Investing - Theory, News & General
Topic: Arnott's Echoes of 1999: The Tech Bubble and the "Asian Flu"
Replies: 8
Views: 1061

Re: Arnold's Echoes of 1999: The Tech Bubble and the "Asian Flu"

In this macro story, there is a lot of money to be made within the EMs, but also by selling goods to them. I think the companies doing the latter are a safer (less volatile) bet. Good point — but for index investors, it’s difficult to get significant exposure to companies selling to emerging market...
by Simplegift
Fri Apr 22, 2016 8:48 am
Forum: Investing - Theory, News & General
Topic: A Fresh Look at Local Bias in Investing
Replies: 15
Views: 1346

Re: A Fresh Look at Local Bias in Investing

There is an important game theory / psychological loss aversion aspect to this as well. This is a novel argument and it makes a lot of sense. Interestingly, there also appears to be a cultural dimension to equity home bias that’s somewhat different from country to country. As the number of stock ma...
by Simplegift
Thu Apr 21, 2016 11:14 pm
Forum: Investing - Theory, News & General
Topic: A Fresh Look at Local Bias in Investing
Replies: 15
Views: 1346

Re: A Fresh Look at Local Bias in Investing

Interesting raw data but it's not clear to me how one can draw any conclusion on a local bias. Good point. It’s hard to tell how much of the regional overweight might be due to employee stock option plans. However, there’s quite a bit of evidence that the region of the nation (and the world) where ...
by Simplegift
Thu Apr 21, 2016 7:59 pm
Forum: Investing - Theory, News & General
Topic: A Fresh Look at Local Bias in Investing
Replies: 15
Views: 1346

Re: A Fresh Look at Local Bias in Investing

For some additional clarity, this is the methodology that JPMorgan indicates it used in the U.S. regional analysis in the OP (from the footnotes to the chart): “Investor allocation by region is based on data collected by Openfolio. Average sector allocations at the national level are determined by l...
by Simplegift
Thu Apr 21, 2016 5:12 pm
Forum: Investing - Theory, News & General
Topic: A Fresh Look at Local Bias in Investing
Replies: 15
Views: 1346

A Fresh Look at Local Bias in Investing

Most of us are familiar with the research on “home country bias” in equity allocations worldwide (if not, see Vanguard's white paper here ). Even institutional investors around the globe, who presumably are well-versed in the potential benefits of broad diversification and market-capitalization stra...
by Simplegift
Sun Oct 25, 2015 10:39 am
Forum: Investing - Theory, News & General
Topic: Will China Save the World Economy?
Replies: 11
Views: 960

Re: Will China Save the World Economy?

That pie chart does not add to 100% ? Oops! It looks like they got the relative proportions about right, but they may have mislabeled the numbers. Here's another one from the IMF that covers approximately the same ground. Thanks for the catch. http://i.imgur.com/mqHqHqV.png Source: Yahoo Finance
by Simplegift
Sun Oct 25, 2015 7:12 am
Forum: Investing - Theory, News & General
Topic: Will China Save the World Economy?
Replies: 11
Views: 960

Re: Will China Save the World Economy?

Some may feel that the world economy does not need to be saved, as the United States is still growing strongly and is currently making such a large contribution to annual global GDP growth: http://i.imgur.com/tnfNop9.png Source: KraneShares While true, the U.S. economy's share of total world GDP has...
by Simplegift
Sat Oct 24, 2015 8:28 pm
Forum: Investing - Theory, News & General
Topic: Will China Save the World Economy?
Replies: 11
Views: 960

Will China Save the World Economy?

The financial markets and press have been rattled of late by the slowdown of GDP growth in China. This post makes the case that all of this tumult obscures perhaps the most important financial story of our lifetimes: the transition of China's economy from one driven by exports and investment to one ...
by Simplegift
Fri Oct 23, 2015 4:12 pm
Forum: Investing - Theory, News & General
Topic: "Bogle: Tough Decade Ahead for Equity Investors"
Replies: 135
Views: 15026

Re: "Bogle: Tough Decade Ahead for Equity Investors"

For financial planning purposes, I use the following, and would like criticisms. Methodology 1: S&P div yield of 2%. 2% + 1.5% avg GDP growth + 0.75 % adj. for share buybacks = 4.25% Methodology 2: CAPE of 26. 1/26 = 3.8% x 1.075 (to adjust for average lag of 5 years) = 4.08% Average of 1 and 2...
by Simplegift
Fri Oct 23, 2015 12:02 pm
Forum: Investing - Theory, News & General
Topic: "Bogle: Tough Decade Ahead for Equity Investors"
Replies: 135
Views: 15026

Re: "Bogle: Tough Decade Ahead for Equity Investors"

Doesn't this methodology understate expected returns since it makes no adjustment for buybacks, etc. Yes, this is a good point. Since share buybacks were legally prohibited prior to 1982, stock dividend data before that year is not really comparable to dividend data afterwards. In Mr. Illmanen's de...
by Simplegift
Thu Oct 22, 2015 5:42 pm
Forum: Investing - Theory, News & General
Topic: "Bogle: Tough Decade Ahead for Equity Investors"
Replies: 135
Views: 15026

Re: "Bogle: Tough Decade Ahead for Equity Investors"

That chart shows expected 10-year returns below 4% (sometimes lower than 3%) from 1992-2005. We have the 10 year results from those years, and the predictions were mostly wrong (1999-2009 and 2000-2010 were indeed terrible decades, going from peak to bottom like that). Right. Certainly these simple...
by Simplegift
Thu Oct 22, 2015 3:58 pm
Forum: Investing - Theory, News & General
Topic: Expected Risk/Return for 3 fund portfolio?
Replies: 29
Views: 2516

Re: Expected Risk/Return for 3 fund portfolio?

We've never been able to predict what sort of innovative technology will improve future productivity. Believing that we won't find new more productive ways to utilize the resources on this planet (and maybe even other planets in the future) is the gloom and doom sayers " This time is different...
by Simplegift
Thu Oct 22, 2015 1:32 pm
Forum: Investing - Theory, News & General
Topic: "Bogle: Tough Decade Ahead for Equity Investors"
Replies: 135
Views: 15026

Re: "Bogle: Tough Decade Ahead for Equity Investors"

I suppose stuff like this is interesting but really, what the future does is out of our control, it will do whatever it is going to do. And prognostications, even by Mr. Bogle, are all suspect. I think this is the "noise" we are advised to tune out. I agree that it's just "noise"...
by Simplegift
Thu Oct 22, 2015 12:20 pm
Forum: Investing - Theory, News & General
Topic: Strategies for socially responsible investing
Replies: 19
Views: 1103

Re: Strategies for socially responsible investing

^^^ Yes. The chart below illustrates the dilemma faced by many investors considering SRI funds. Does it do more good to forego the increased returns of standard index funds (due to higher SRI fund fees, sector allocation differences, etc.) — or to donate the appreciated difference to the highly-effe...
by Simplegift
Thu Oct 22, 2015 11:26 am
Forum: Investing - Theory, News & General
Topic: Strategies for socially responsible investing
Replies: 19
Views: 1103

Re: Strategies for socially responsible investing

The fundamental question for us has been: How do we best direct and manage our assets for social change? The solution we've come up with in retirement is to donate appreciated index fund shares through a Vanguard donor advised fund — plus invest our time and energy in volunteer work for the causes w...
by Simplegift
Thu Oct 22, 2015 9:51 am
Forum: Investing - Theory, News & General
Topic: "Bogle: Tough Decade Ahead for Equity Investors"
Replies: 135
Views: 15026

Re: "Bogle: Tough Decade Ahead for Equity Investors"

For some historical perspective on Mr. Bogle's current asset return forecast, Antti Illmanen (who literally wrote the book, Expected Returns ), has shown expected portfolio returns since 1900 (chart below) — using mostly the same simple methodology as Mr. Bogle. Due to the current high valuations of...
by Simplegift
Thu Oct 22, 2015 7:44 am
Forum: Investing - Theory, News & General
Topic: Expected Risk/Return for 3 fund portfolio?
Replies: 29
Views: 2516

Re: Expected Risk/Return for 3 fund portfolio?

Just to point out that most of the expert commentary in recent years about a "low return future" has not simply been capricious. The two engines of economic growth that drove the high stock and bond returns of the 20th century — increasing global population and productivity growth — are no...

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