Search found 2049 matches

by Simplegift
Tue May 24, 2016 1:03 pm
Forum: Investing - Theory, News & General
Topic: We should be bond fund pickers?
Replies: 16
Views: 1173

Re: We should be bond fund pickers?

Despite what alex_686 writes, I think most folks would do well to use expense ratios to help decide between two similar bond funds. Absolutely. There may be certain bond fund costs that don’t show up in the expense ratio — but there’s likely no better predictor of a bond fund’s relative performance...
by Simplegift
Tue May 24, 2016 12:37 pm
Forum: Investing - Theory, News & General
Topic: Simple question [How does "perceived" value determine stock price?]
Replies: 11
Views: 631

Re: Simple question [How does "perceived" value determine stock price?]

So from what I take from it, a stock gives you a share of a company and the price of that stock is determined by supply / demand and the perceived value of that company, although the innate value in a company (machinery, sums of cash, etc) does not directly affect the stock price, the only thing th...
by Simplegift
Mon May 23, 2016 3:06 pm
Forum: Investing - Theory, News & General
Topic: Simple question [How does "perceived" value determine stock price?]
Replies: 11
Views: 631

Re: Simple question

what innate value does a stock carry besides the arbitrary supply and demand of people purchasing it? The innate value of a stock (and other income-producing assets, such as bonds, commercial real estate, etc.) is simply the present value of its future income stream. Granted, many stocks do not hav...
by Simplegift
Mon May 23, 2016 9:59 am
Forum: Investing - Theory, News & General
Topic: The Perils of Historical Asset Returns
Replies: 19
Views: 1755

Re: The Perils of Historical Asset Returns

The big question is when the tech age ends. Does it stop with say self driving cars or do we end up machines that replace 99% of all jobs. Nobody knows. And nobody knows how that will effect society as a whole. I agree that the effect of the digital revolution on productivity growth worldwide remai...
by Simplegift
Mon May 23, 2016 8:07 am
Forum: Investing - Theory, News & General
Topic: Total market/passive investing as a self-destructive paradigm
Replies: 10
Views: 1451

Re: Total market/passive investing as a self-destructive paradigm

So, what happens if passive investing gains share...say to 75% or 80% of all investments? I believe the answer is you get massive reductions in the army and a much less efficient market. It's difficult to see how this could ever be a realistic concern in actual practice — for two reasons: 1. As mar...
by Simplegift
Sun May 22, 2016 11:32 pm
Forum: Investing - Theory, News & General
Topic: Why do we believe in the market?
Replies: 36
Views: 2940

Re: Why do we believe in the market?

We're all assuming that the market will have positive returns over the course of our lifetimes. Is that a safe assumption? The fundamental driver of any stock market's advance is the growth of earnings of its constituent companies. While the century-long growth trend of real earnings-per-share for ...
by Simplegift
Sun May 22, 2016 8:22 pm
Forum: Investing - Theory, News & General
Topic: The Perils of Historical Asset Returns
Replies: 19
Views: 1755

Re: The Perils of Historical Asset Returns

By what criteria did Robert Gordon decide the digital revolution was over in 2004, before the first iPhone and the current development of self-driving cars? A few excerpts from Mr. Gordon’s book , which may address your question: The late 1990s, when TFP growth finally revived, witnessed the marria...
by Simplegift
Sun May 22, 2016 6:40 pm
Forum: Investing - Theory, News & General
Topic: The Perils of Historical Asset Returns
Replies: 19
Views: 1755

Re: The Perils of Historical Asset Returns

Predicting the future has never been feasible. Quite true. However, if we cannot accurately predict the future, then as young investors in the asset accumulation stage and as older investors spending down assets in retirement, we need to be flexibly prepared to deal with various possible futures — ...
by Simplegift
Sun May 22, 2016 4:33 pm
Forum: Investing - Theory, News & General
Topic: The Perils of Historical Asset Returns
Replies: 19
Views: 1755

Re: The Perils of Historical Asset Returns

Seems to me that human ingenuity is such that a decline in productivity isn't a given at all. I wouldn't make assumptions in this respect. Too many technology breakthroughs in progress... An intriguing and important question. The highest productivity gains of the 20th century for the U.S. came from...
by Simplegift
Sun May 22, 2016 2:22 pm
Forum: Investing - Theory, News & General
Topic: The Perils of Historical Asset Returns
Replies: 19
Views: 1755

The Perils of Historical Asset Returns

This post is not to condemn portfolio backtesting, as valuable insights about the relative risks and relationships between assets can be derived from the exercise. Rather, it’s simply a reminder that most everything we know about the past returns of stock and bonds comes from a truly exceptional per...
by Simplegift
Sat May 21, 2016 9:26 am
Forum: Investing - Theory, News & General
Topic: Stocks, Bonds, and "Real Assets" (TIPS, REITs, Commodities)
Replies: 28
Views: 1880

Re: Stocks, Bonds, and "Real Assets" (TIPS, REITs, Commodities)

From the above – inflation protection best to worst: Value Momentum REITs Total Stock Profitability (underperformed the market when inflation was above 5%) The list above generally conforms with the findings of a Merriman study that looked at annualized asset class performances and the CPI during t...
by Simplegift
Thu May 19, 2016 1:09 am
Forum: Investing - Theory, News & General
Topic: "We don't have enough companies like Tesla"
Replies: 24
Views: 3058

Re: "We don't have enough companies like Tesla"

You might be interested in a previous Forum discussion of the Total Economy Portfolio , as suggested by Rick Ferri. The idea is to tilt one’s portfolio in favor of small-cap value stocks and REITs, to thus include parts of the U.S. economy that are under-represented in the broader market equity inde...
by Simplegift
Tue May 17, 2016 4:03 pm
Forum: Investing - Help with Personal Investments
Topic: Tracking returns
Replies: 3
Views: 341

Re: Tracking returns

What is the easiest way to track investment returns? I want to know how well I am doing each year. The XIRR function in Excel will give you the most accurate result — but if you just want a quick, seat-of-the-pants estimate, this method is offered by William Bernstein in his Four Pillars of Investi...
by Simplegift
Mon May 16, 2016 10:00 pm
Forum: Investing - Theory, News & General
Topic: Deep Risk (Bernstein): Any academic research on G Fund vs. TIPS as inflation hedge?
Replies: 28
Views: 2967

Re: Deep Risk (Bernstein): Any academic research on G Fund vs. TIPS as inflation hedge?

...has anyone run any numbers on REITs or seen any research on how good they may or may not be in an inflationary time period? This is one study that looked at the inflation sensitivity of equity REITs (among other assets) over the 1978-2011 period: Inflation and Real Estate Investments , by Case &...
by Simplegift
Mon May 16, 2016 10:12 am
Forum: Investing - Theory, News & General
Topic: Geographic breakdown of S&P 500 sales
Replies: 15
Views: 1551

Re: Geographic breakdown of S&P 500 sales

Another question is how much revenue of European firms comes from the US - think Nestle, Royal Dutch Shell, GLAXOSMITHKLINE. It was about 18% in 2014 (including all of North America, blue in chart below) — far less than the 27% of revenues they received from the emerging economies (in red). http://...
by Simplegift
Sun May 15, 2016 2:25 pm
Forum: Investing - Theory, News & General
Topic: Geographic breakdown of S&P 500 sales
Replies: 15
Views: 1551

Re: Geographic breakdown of S&P 500 sales

One of the stories I find most intriguing about US companies foreign sales and profits is how little of them come from emerging markets today (chart at left) — especially when compared to European firms, with currently over a third of their sales there (chart at right). http://i.imgur.com/mfZmx2Z.jp...
by Simplegift
Sun May 15, 2016 11:51 am
Forum: Investing - Theory, News & General
Topic: Best way to invest/plan for a bequest
Replies: 10
Views: 498

Re: Best way to invest/plan for a bequest

Rick Ferri addresses this question in his 2006 book, All About Asset Allocation : The appropriate asset allocation for a Mature Retiree may well be a combination of two asset allocations. One portion of the portfolio should be based on the income needs of the retiree, and the other based on the fina...
by Simplegift
Sat May 14, 2016 12:51 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 7 — The Great Fund Fee Mystery
Replies: 9
Views: 1269

Re: Classic Bernstein 7 — The Great Fund Fee Mystery

I was thinking about how in the short run, the distribution of a fund's return is almost random with respect to fees. E.g. in a one year period, many active funds might be very likely to beat their benchmark. But with each passing year, history has shown it gets harder and harder to overcome the dr...
by Simplegift
Sat May 14, 2016 10:15 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 7 — The Great Fund Fee Mystery
Replies: 9
Views: 1269

Re: Classic Bernstein 7 — The Great Fund Fee Mystery

(1) fund managers feel like they need to take greater risks to make up for the higher expense ratio and chase worse investments… If I had to hazard a guess, the answer to the mystery might be somewhere in his realm: fund managers taking greater risks and chasing worse investment ideas to compensate...
by Simplegift
Fri May 13, 2016 11:31 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 7 — The Great Fund Fee Mystery
Replies: 9
Views: 1269

Re: Classic Bernstein 7 — The Great Fund Fee Mystery

Just to add more details about fund turnover (which seems a logical place to look to solve this mystery). John Bogle, in his own analysis of large blend funds — where he found the return/expense regression slope was -1.80 — also proposed fund turnover as a likely explanation for the nearly 2-1 effec...
by Simplegift
Fri May 13, 2016 12:28 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 7 — The Great Fund Fee Mystery
Replies: 9
Views: 1269

Classic Bernstein 7 — The Great Fund Fee Mystery

PREFACE: This is the seventh in a series of posts highlighting the classic investing insights of William Bernstein from the 1990s and early 2000s. Many new Bogleheads have never been exposed to his early writings — and while the data sets used may seem antiquated, his portfolio concepts and novel a...
by Simplegift
Thu May 12, 2016 8:14 am
Forum: Investing - Theory, News & General
Topic: S&P 500 Total Return
Replies: 9
Views: 2690

Re: S&P 500 Total Return

If you want a calculator that will give you S&P 500 total returns (with dividends reinvested), from any starting month to any ending month, both nominal and real, you can find one at this site:

S&P 500 Returns Calculator
by Simplegift
Wed May 11, 2016 8:26 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 6 — The Value Premium and Inflation
Replies: 6
Views: 1507

Re: Classic Bernstein 6 — The Value Premium and Inflation

Just to add more current charts to this thread, updated to 2015, showing the decline in the value premium (at left), corresponding with the decline in inflation since the 1970s (at right). If Mr. Bernstein’s formulation is correct, we’re not likely to see a very robust value premium again (or any va...
by Simplegift
Tue May 10, 2016 9:03 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 6 — The Value Premium and Inflation
Replies: 6
Views: 1507

Re: Classic Bernstein 6 — The Value Premium and Inflation

Some things it makes me wonder... Just a reminder: There is much more data available today, compared with 2001 when Mr. Bernstein did his study in the OP. Interested Bogleheads with an analytical bent are encouraged to replicate any of Mr. Bernstein’s analyses — using more current data sets or alte...
by Simplegift
Tue May 10, 2016 4:22 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 5 — What’s a Thing Worth?
Replies: 10
Views: 1896

Re: Classic Bernstein 5 — What’s a Thing Worth?

Simplegift - Would you mind putting links to the first 4 posts in the original post in this thread (and subsequent threads)? I started out doing that for each post in the series, but decided it would soon become cumbersome as the number of posts in the series grew. Instead, with the efficiency of t...
by Simplegift
Tue May 10, 2016 12:25 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 6 — The Value Premium and Inflation
Replies: 6
Views: 1507

Classic Bernstein 6 — The Value Premium and Inflation

PREFACE: This is the sixth in a series of posts highlighting the classic investing insights of William Bernstein from the 1990s and early 2000s. Many new Bogleheads have never been exposed to his early writings — and while the data sets used may seem antiquated, his portfolio concepts and novel ana...
by Simplegift
Tue May 10, 2016 1:04 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 5 — What’s a Thing Worth?
Replies: 10
Views: 1896

Re: Classic Bernstein 5 — What’s a Thing Worth?

This one is based on manufactured data that is much cleaner than real-world data and the trade-offs seem obvious. At first glance, there is little to discuss. Agree that there might not be much to discuss with this post, since it involves a simple hypothetical example with made-up data. However, Mr...
by Simplegift
Tue May 10, 2016 12:56 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 5 — What’s a Thing Worth?
Replies: 10
Views: 1896

Re: Classic Bernstein 5 — What’s a Thing Worth?

Anyone know of any data that shows this (value doing better in high interest rate environments)? Actually, this is the very next topic in the Classic Bernstein series. In his analysis, Mr. Bernstein looked at the performance of value stocks in various inflation environments over the course of the 2...
by Simplegift
Mon May 09, 2016 6:53 pm
Forum: Investing - Theory, News & General
Topic: Don't stay the course
Replies: 118
Views: 16357

Re: Don't stay the course

In the interest of seeing both sides of an issue, who wants to point out what they see as valid reasons not to stay the course? The only valid reason I can think of is just for the real life experience of it — in other words, go ahead and try not staying the course for a while, and make enough mist...
by Simplegift
Mon May 09, 2016 4:41 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 5 — What’s a Thing Worth?
Replies: 10
Views: 1896

Classic Bernstein 5 — What’s a Thing Worth?

PREFACE: This is the fifth in a series of posts highlighting the classic investing insights of William Bernstein from the 1990s and early 2000s. Many new Bogleheads have never been exposed to his early writings — and while the data sets used may seem antiquated, his concepts and novel analyses are ...
by Simplegift
Sun May 08, 2016 11:10 pm
Forum: Investing - Theory, News & General
Topic: International Funds Worth it?
Replies: 52
Views: 5806

Re: International Funds Worth it?

Am I missing something? Because I am not sure why international stocks are worth it as they seem to provide very little return. By contrast, the Vanguard 500 and Mid caps provide over 10% return on average 3 years and up. http://i.imgur.com/xhJuAU5.jpg Source: Fidelity Investments
by Simplegift
Sun May 08, 2016 1:34 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 4 — Stocks Always Beat Bonds?
Replies: 14
Views: 1921

Re: Classic Bernstein 4 — Stocks Always Beat Bonds?

If the ERP is 3% versus the "risk free" one year T-bill, the TSM vs. TBM premium is likely be much lower. Good observation. Among his collection of historical ERP charts, Mr. Erb has one that illustrates the realized ERP difference between intermediate bonds and T-bills. This spread looks...
by Simplegift
Sun May 08, 2016 10:59 am
Forum: Investing - Theory, News & General
Topic: End of Golden Era for Investors...?
Replies: 58
Views: 8338

Re: End of Golden Era for Investors...?

I understand fully the futility of trying to predict the future, but in the context of using objective information to form a framework, I think reports like these can be quite helpful. Incredibly low inflation, declining interest rates, uniquely strong GDP growth, and high corporate margins combine...
by Simplegift
Sun May 08, 2016 10:46 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 4 — Stocks Always Beat Bonds?
Replies: 14
Views: 1921

Re: Classic Bernstein 4 — Stocks Always Beat Bonds?

In the 18 years since 1997 stocks only returned about 6.2% and the return on T-bills was only 2.1%, right now it stands at about a 4.1% "premium", but if we're looking at 30 year horizons as mentioned throughout the post, we've got 12 more years to go, with T-bills yielding next to nothin...
by Simplegift
Sun May 08, 2016 8:48 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 4 — Stocks Always Beat Bonds?
Replies: 14
Views: 1921

Re: Classic Bernstein 4 — Stocks Always Beat Bonds?

Overall I get a sense that investors are overconfident in equity returns for the long run...(snip)...some people act as if the probability of negative or lower-than-t-bills stock returns for a couple decades is basically zero outside of economic collapse and that the reason to hold anything other t...
by Simplegift
Sun May 08, 2016 2:56 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 4 — Stocks Always Beat Bonds?
Replies: 14
Views: 1921

Re: Classic Bernstein 4 — Stocks Always Beat Bonds?

Just a personal postscript: Obviously, no one can say for sure whether the equity risk premium (ERP) will be lower in the decades to come than it’s been in the historical past. Yet, among those researchers who ponder the equity risk premium, I don’t recall having read one who argues that the future ...
by Simplegift
Sun May 08, 2016 2:53 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 4 — Stocks Always Beat Bonds?
Replies: 14
Views: 1921

Classic Bernstein 4 — Stocks Always Beat Bonds?

PREFACE: This is the fourth in a series of posts highlighting the classic investing insights of William Bernstein from the 1990s and early 2000s. Many new Bogleheads have never been exposed to his early writings — and while the data sets used may seem antiquated, his portfolio concepts and novel an...
by Simplegift
Sat May 07, 2016 5:03 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 3 — Diversifying Portfolio Equities
Replies: 11
Views: 1640

Re: Classic Bernstein 3 — Diversifying Portfolio Equities

And I think it can open up many Bogleheads minds to looking at diversification in another very important way. The equity diversification argument for multi-factor investing is an intriguing one — and Larry’s short article is a good basic introduction. However, I wish I could be more convinced about...
by Simplegift
Sat May 07, 2016 10:25 am
Forum: Investing - Theory, News & General
Topic: P/E ratio of the S&P 500
Replies: 23
Views: 2635

Re: P/E ratio of the S&P 500

I am not aware of an theoretical reason why the market should trend towards a certain number, and the ratio has not been significantly below 15 for any appreciable amount of time since prior to 1990. Right. To just assume the automatic reversion of stock market P/Es back to a historical mean is pro...
by Simplegift
Sat May 07, 2016 5:38 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 3 — Diversifying Portfolio Equities
Replies: 11
Views: 1640

Re: Classic Bernstein 3 — Diversifying Portfolio Equities

In a PM this morning, the question was asked whether equity diversification still matters as much in today’s world, when financial markets have become more integrated and asset returns are more highly correlated. I’m not exactly sure how Mr. Bernstein might respond to this question in 2016, but in 2...
by Simplegift
Fri May 06, 2016 9:00 pm
Forum: Investing - Theory, News & General
Topic: P/E ratio of the S&P 500
Replies: 23
Views: 2635

Re: P/E ratio of the S&P 500

Nonetheless, higher numbers are somewhat ominous... One of the biggest problems with comparing current P/E values with historical values is the lack of context with inflation. P/E values are quite sensitive to prevailing and expected inflation rates (higher P/Es when inflation rates are low and vic...
by Simplegift
Fri May 06, 2016 4:38 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 3 — Diversifying Portfolio Equities
Replies: 11
Views: 1640

Re: Classic Bernstein 3 — Diversifying Portfolio Equities

I can't recommend the following short Roger Gibson read on the rewards of multi asset class investing highly enough. Thanks, Dave. Gibson’s short primer provides another perspective on equity diversification and is a good addition to this thread. I was most struck by his chart below, showing fiftee...
by Simplegift
Fri May 06, 2016 10:24 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 3 — Diversifying Portfolio Equities
Replies: 11
Views: 1640

Classic Bernstein 3 — Diversifying Portfolio Equities

PREFACE: This is the third in a series of posts highlighting the classic investing insights of William Bernstein from the 1990s and early 2000s. Many new Bogleheads have never been exposed to his early writings — and while the data sets used may seem antiquated, his portfolio concepts and novel ana...
by Simplegift
Fri May 06, 2016 8:39 am
Forum: Investing - Theory, News & General
Topic: Retirees: Who's not changing their AA, ever?
Replies: 46
Views: 3822

Re: Retirees: Who's not changing their AA, ever?

I'm 66 and retired for 5 years and have no plans to change my 50/50 asset allocation. We’re also at 50% stocks/50% bonds, in our late 60s, and have been in retirement for about 5 years — plus we plan to keep the 50/50 allocation to the end. There’s something about the simplicity and balance of the ...
by Simplegift
Thu May 05, 2016 11:32 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 2 — Choosing Portfolio Bond Duration
Replies: 41
Views: 5244

Re: Classic Bernstein 2 — Choosing Portfolio Bond Duration

A government bond is not risk-less; it is default-less. The law of supply and demand also applies to investment-grade corporate and government bonds. If investors perceive corporate bonds as riskier, they'll demand higher yields/coupons, which will reduce the duration of longer corporate bonds rela...
by Simplegift
Thu May 05, 2016 6:46 am
Forum: Investing - Theory, News & General
Topic: Your age in bonds minus ten? Not according to Vanguard
Replies: 93
Views: 7973

Re: Your age in bonds minus ten? Not according to Vanguard

Many of the stock-heavy older investors are not investing for their own retirement; they have enough to retire on already, and are investing with an appropriate allocation for their children and grandchildren. (In several surveys, this has come up in the comments.) This make good sense, David, and ...
by Simplegift
Wed May 04, 2016 9:36 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 2 — Choosing Portfolio Bond Duration
Replies: 41
Views: 5244

Re: Classic Bernstein 2 — Choosing Portfolio Bond Duration

From Portfolio Visualizer (1972-2015). All portfolios rebalanced annually. Thanks so much, diyfp , for generating the data, which I’ve charted below: http://i.imgur.com/jaXVRjC.jpg These look very consistent with Mr. Bernstein’s curves for the earlier time periods. With high volatility portfolios (...
by Simplegift
Wed May 04, 2016 7:22 pm
Forum: Investing - Theory, News & General
Topic: Your age in bonds minus ten? Not according to Vanguard
Replies: 93
Views: 7973

Re: Your age in bonds minus ten? Not according to Vanguard

I'm curious as to what the general consensus here is in terms of stock/bond asset allocation based on age/expected age at retirement. My sense is that Bogleheads are fairly conservative: many suggest "your age in bonds" or, less conservatively, "your age in bonds minus 10." Ther...
by Simplegift
Wed May 04, 2016 1:20 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 2 — Choosing Portfolio Bond Duration
Replies: 41
Views: 5244

Re: Classic Bernstein 2 — Choosing Portfolio Bond Duration

More reinforcement to stick with intermediate Treasuries and avoid long-term issues. Though of course if you update the data through the last 15-20 years of long-term Treasury outperformance, that changes things at least in magnitude. Just a note: If Bogleheads with an analytical bent are so inspir...
by Simplegift
Wed May 04, 2016 12:25 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 2 — Choosing Portfolio Bond Duration
Replies: 41
Views: 5244

Classic Bernstein 2 — Choosing Portfolio Bond Duration

PREFACE: This is the second in a series of posts over the next few months highlighting the classic portfolio design and investing insights of William Bernstein from the 1990s and early 2000s. Many new Bogleheads on the Forum today have never been exposed to his early writings — and while the data s...

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