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by Simplegift
Sun Oct 25, 2015 10:39 am
Forum: Investing - Theory, News & General
Topic: Will China Save the World Economy?
Replies: 11
Views: 905

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: 905

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: 905

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: 14216

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: 14216

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: 14216

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: 2414

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: 14216

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: 970

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: 970

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: 14216

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: 2414

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...
by Simplegift
Wed Oct 21, 2015 11:18 pm
Forum: Investing - Theory, News & General
Topic: Expected Risk/Return for 3 fund portfolio?
Replies: 29
Views: 2414

Re: Expected Risk/Return for 3 fund portfolio?

^^^ For all those suggesting that the OP and others should look to historical asset returns as a guide to future expected returns, a strong word of caution. At today's very high valuations for both stocks and bonds, it's quite unlikely that future returns will be close to historical averages. For a ...
by Simplegift
Wed Oct 21, 2015 6:01 pm
Forum: Investing - Theory, News & General
Topic: TIPS & Bonds Trajectory vs Inflation & Interest Rate
Replies: 18
Views: 1734

Re: TIPS & Bonds Trajectory vs Inflation & Interest Rate

Using the Simba numbers and the Multpl.com numbers, I assembled two charts showing the TIPS and Total-Bonds funds (VIPSX, VBMFX) trajectory against two primary indicators, first inflation, next 10-yrs treasury rate. Not sure exactly where your analysis is going, but when looking at historical bond ...
by Simplegift
Wed Oct 21, 2015 4:58 pm
Forum: Investing - Theory, News & General
Topic: Expected Risk/Return for 3 fund portfolio?
Replies: 29
Views: 2414

Re: Expected Risk/Return for 3 fund portfolio?

I don't want to be pessimistic with expected growth but I also don't want to be unrealistic with lofty goals. Sometimes the best forecasts of expected returns are also the easiest (about 5 minutes to calculate): • For stocks: The earnings yield (inverse of the P/E ratio ), or 100/25.5 = 3.9% real ....
by Simplegift
Tue Oct 20, 2015 5:56 pm
Forum: Investing - Theory, News & General
Topic: CalPERS and CA muni bonds
Replies: 4
Views: 447

Re: CalPERS and CA muni bonds

This seems unsustainable. Should I sell my CA munis? How do I determine which state munis are safe? One way to assess the relative financial soundness of various states is to look at their debt, pension and other post-employment benefit obligations as a percentage of their GDP (chart below). Califo...
by Simplegift
Tue Oct 20, 2015 12:00 pm
Forum: Investing - Theory, News & General
Topic: Dr Bernstein: Limit Muni Bond Exposure
Replies: 90
Views: 9541

Re: Dr Bernstein: Limit Muni Bond Exposure

There have been studies that decompose the muni yield spreads before and after the 2008 financial crisis — and that show a striking increase in the liquidity premium since the crisis: The Muni Bond Spread: Credit , Liquidity and Tax We find that the muni yield spread exhibits a regime change before ...
by Simplegift
Tue Oct 20, 2015 9:47 am
Forum: Investing - Theory, News & General
Topic: Asset Class Correlation Matrix? - what justifies inclusion in Portfolio?
Replies: 14
Views: 1153

Re: Asset Class Correlation Matrix ?

This online correlation matrix from Research Affiliates is about the most sophisticated I've seen for asset classes:

https://www.researchaffiliates.com/Asse ... /Risk.aspx

Be sure to click on "Show Labels" for the specific correlation numbers, both historical and forecast.
by Simplegift
Tue Oct 20, 2015 9:35 am
Forum: Investing - Theory, News & General
Topic: Dr Bernstein: Limit Muni Bond Exposure
Replies: 90
Views: 9541

Re: Dr Bernstein: Limit Muni Bond Exposure

PIMCO had a short article last year that discussed in layperson's terms the effect that the 2008 financial crisis had upon liquidity in the municipal bond market: The credit crisis eliminated a number of marginal demand providers from the market: leveraged municipal hedge funds, foreign bank municip...
by Simplegift
Mon Oct 19, 2015 7:11 pm
Forum: Investing - Theory, News & General
Topic: Could a treasury bond selloff happen?
Replies: 27
Views: 2497

Re: Could a treasury bond selloff happen?

Well, China has already been selling Treasuries, roughly $94-120 billion in August alone, depending on how you interpret the article, according to the Wall Street Journal on Oct. 7. Their selling has been going on for some months. True, but this has had much more to do with China and other emerging...
by Simplegift
Mon Oct 19, 2015 3:41 pm
Forum: Investing - Theory, News & General
Topic: Could a treasury bond selloff happen?
Replies: 27
Views: 2497

Re: Could a treasury bond selloff happen?

Looking at 2011 (chart below), it appears Treasuries did lag the general bond market a bit during the long period of political wrangling and uncertainty over the debt ceiling, but then outperformed once the debt ceiling issue was resolved — and even after Standard & Poors downgraded U.S. Treasur...
by Simplegift
Mon Oct 19, 2015 2:17 pm
Forum: Investing - Theory, News & General
Topic: Could a treasury bond selloff happen?
Replies: 27
Views: 2497

Re: Could a treasury bond selloff happen?

It's also worth keeping in mind the essential and unique role that U.S. Treasuries play in the global financial system — since they are not just limited to financing the Federal government's deficit spending: • The Treasury market underpins the U.S. dollar's status as the global reserve currency; • ...
by Simplegift
Mon Oct 19, 2015 1:20 pm
Forum: Investing - Theory, News & General
Topic: Could a treasury bond selloff happen?
Replies: 27
Views: 2497

Re: Could a treasury bond selloff happen?

First, it seems inconceivable that the U.S. would default on its Treasury obligations. Yes, perhaps we might see delayed or rescheduled payments for those securities maturing in November (a "technical default") — but the global impacts of a flat-out default on the U.S. and world economy wo...
by Simplegift
Mon Oct 19, 2015 9:46 am
Forum: Investing - Theory, News & General
Topic: Ex-US percentage for NON-US persons?
Replies: 5
Views: 444

Re: Ex-US percentage for NON-US persons?

Each individual non-U.S. investor has very different circumstances, so it's difficult to make a blanket recommendation. However, Vanguard has published a research paper with a framework and various metrics to guide this decision. Hope this helps. The Role of Home Bias in Global Asset Allocation Deci...
by Simplegift
Sun Oct 18, 2015 6:22 pm
Forum: Investing - Theory, News & General
Topic: Retirees doing 50/50
Replies: 35
Views: 4669

Re: Retirees doing 50/50

Just to add a couple of interesting, but lesser known, historical tidbits about the 50/50 portfolio that surfaced in the course of our personal research: . . . 2) From 1926-2009, the average real returns of a 50% stock/50% bond portfolio have been statistically equivalent whether the U.S. economy w...
by Simplegift
Sun Oct 18, 2015 11:55 am
Forum: Investing - Theory, News & General
Topic: Retirees doing 50/50
Replies: 35
Views: 4669

Re: Retirees doing 50/50

Just to add a couple of interesting, but lesser known, historical tidbits about the 50/50 portfolio that surfaced in the course of our personal research: 1) When safe withdrawal rates were calculated for 17 countries from 1900-2008, across various portfolio stock allocations, the 50% stock/50% bond ...
by Simplegift
Sun Oct 18, 2015 10:24 am
Forum: Investing - Theory, News & General
Topic: Retirees doing 50/50
Replies: 35
Views: 4669

Re: Retirees doing 50/50

We've had a 50% stock/50% bond portfolio every since we early-retired ten years ago, and we plan to keep it that way for the remainder of our lifetimes. Partly it's because we're very fortunate to have "enough" (with a 2.5% withdrawal rate) and are now investing mostly for our heirs and fu...
by Simplegift
Sat Oct 17, 2015 6:58 pm
Forum: Investing - Theory, News & General
Topic: Dr Bernstein: Limit Muni Bond Exposure
Replies: 90
Views: 9541

Re: Dr Bernstein: Limit Muni Bond Exposure

^^^ In a recent thread , we just happened to be looking at the performance of Vanguard's and Baird's Intermediate Muni Funds at the worst point of the financial crisis in mid-October 2008, compared to Treasuries (chart below). Their relative performances are just about what one would expect, given t...
by Simplegift
Fri Oct 16, 2015 6:27 pm
Forum: Investing - Theory, News & General
Topic: hedge funds dropping like flies
Replies: 59
Views: 6487

Re: hedge funds dropping like flies

UK active funds (investing predominantly in the UK) are well ahead on just about every measure we're commonly exposed to http://www.trustnet.com/News/614906/active-uk-funds-smash-passives-in-2015-and-all-other-time-periods/ The problem, as always, is that it's not the same active funds that are out...
by Simplegift
Fri Oct 16, 2015 9:07 am
Forum: Personal Consumer Issues
Topic: Do you prefer pulling a trailer with your car, or a car with your RV?
Replies: 50
Views: 3616

Re: Do you prefer pulling a trailer with your car, or a car with your RV?

Browser, I'm reluctant to offer any blanket recommendations of tow vehicles for particular trailers, since my experience is only with the 16' Scamp. However, as you know, the loaded weight of these trailers is always much more than the manufacturer's advertised base weight. Here is an Excel spreadsh...
by Simplegift
Fri Oct 16, 2015 8:45 am
Forum: Investing - Theory, News & General
Topic: Dr Bernstein: Limit Muni Bond Exposure
Replies: 90
Views: 9541

Re: Dr Bernstein: Limit Muni Bond Exposure

A maximum of 50% of one's bond portfolio in munis has always been Mr. Bernstein's recommendation, as best I know. Also, no more than half of one's muni allocation in single-state muni bond funds. See "Taxable Ted" in his book, The Intelligent Asset Allocator . These are the muni allocation...
by Simplegift
Thu Oct 15, 2015 9:03 pm
Forum: Personal Consumer Issues
Topic: Do you prefer pulling a trailer with your car, or a car with your RV?
Replies: 50
Views: 3616

Re: Do you prefer pulling a trailer with your car, or a car with your RV?

The price you pay (besides more money in most cases) is in weight - roughly a third more than other equivalent sized eggs. So you generally need a more serious tow vehicle for a Bigfoot vs. the other eggs. Yes, weight is the critical towing consideration, especially if the OP already owns a tow veh...
by Simplegift
Thu Oct 15, 2015 6:31 pm
Forum: Personal Consumer Issues
Topic: Do you prefer pulling a trailer with your car, or a car with your RV?
Replies: 50
Views: 3616

Re: Do you prefer pulling a trailer with your car, or a car with your RV?

Besides the three brands of fiberglass trailers already mentioned upthread — Scamp (Minnesota), Casita (Texas) and Escape (British Columbia) — there's another manufacturer in British Columbia that may be of interest: Bigfoot Fiberglass Travel Trailers What's unique about these trailers is that they ...
by Simplegift
Thu Oct 15, 2015 4:10 pm
Forum: Personal Consumer Issues
Topic: Do you prefer pulling a trailer with your car, or a car with your RV?
Replies: 50
Views: 3616

Re: Do you prefer pulling a trailer with your car, or a car with your RV?

The thing about the fiberglass ones - if one goes on the market it will likely sell in a matter of a few days so you have to know ahead of time if you want it and what you are willing to pay for it. Also, there can be a waiting list for the new ones. Right, used fiberglass trailers are in such dema...
by Simplegift
Thu Oct 15, 2015 3:14 pm
Forum: Personal Consumer Issues
Topic: Do you prefer pulling a trailer with your car, or a car with your RV?
Replies: 50
Views: 3616

Re: Do you prefer pulling a trailer with your car, or a car with your RV?

So you like the Scamp? How much dinero for a new 16'? I don't find any dealers except the manufacturer in Minnesota. Any way to get a look at one without travelling up there? Yes, most of the small fiberglass trailers — including Scamp (Minnesota) and Casita (Texas) — are only sold directly from th...
by Simplegift
Thu Oct 15, 2015 11:27 am
Forum: Personal Consumer Issues
Topic: Do you prefer pulling a trailer with your car, or a car with your RV?
Replies: 50
Views: 3616

Re: Do you prefer pulling a trailer with your car, or a car with your RV?

I like the looks of this rig: As mentioned upthread, we can highly recommend the small fiberglass travel trailers and SUV tow vehicle as providing the greatest flexibility when camping, either in remote areas or established campgrounds. The trailers are very durable and much lighter than the larger...
by Simplegift
Thu Oct 15, 2015 9:34 am
Forum: Investing - Theory, News & General
Topic: "Stocks for the Long Run? Really?
Replies: 41
Views: 7576

Re: "Stocks for the Long Run? Really?

However I keep thinking: "what about Vietnam? Burma? Bangladesh? Nigeria? Kenya? Ethiopia?". There are lots of other low wage places (albeit generally lacking the infrastructure). And of course rising prosperity means rising demand for commodities, especially in the "build phase"...
by Simplegift
Wed Oct 14, 2015 9:13 pm
Forum: Personal Consumer Issues
Topic: Do you prefer pulling a trailer with your car, or a car with your RV?
Replies: 50
Views: 3616

Re: Do you prefer pulling a trailer with your car, or a car with your RV?

I'd like to hear from recreational road warriors which they prefer and why: Pulling a travel trailer with your vehicle, or driving an RV and pulling a tow car? Most of our experience is traveling and camping in more remote Forest Service and BLM lands around the American West — and we use a small, ...
by Simplegift
Wed Oct 14, 2015 12:02 pm
Forum: Investing - Theory, News & General
Topic: 3 recent papers: [from the Social Science Research Network]
Replies: 9
Views: 1167

Re: 3 recent papers: [from the Social Science Research Network]

Here is Morningstar's current, provisional thinking on the new categorization of index funds. I don't envy their job, as there's such a diversity of strategies beyond the traditional cap-weighted indexes — it will certainly be a challenge to come up with sensible, meaningful categories. http://i.img...
by Simplegift
Wed Oct 14, 2015 9:50 am
Forum: Investing - Theory, News & General
Topic: 3 recent papers: [from the Social Science Research Network]
Replies: 9
Views: 1167

Re: 3 recent papers:

Lo, Andrew W., What Is An Index? (October 12, 2015). Available at SSRN: http://ssrn.com/abstract=2672755 Thanks for the links, Barry. It's interesting to note that Morningstar as well is now struggling with this categorization issue for indexes that fall outside the standard cap-weighted design. Mr...
by Simplegift
Tue Oct 13, 2015 8:30 am
Forum: Investing - Theory, News & General
Topic: Overdiversifying
Replies: 13
Views: 1345

Re: Overdiversifying

Thinking this over more, I believe the confusion in the OP about diversification comes down to the fundamental difference between stock picking and indexing (in this case for value stocks). If you believe you CAN identify those value stocks that will outperform beforehand (Ben Graham), then you want...
by Simplegift
Mon Oct 12, 2015 9:55 pm
Forum: Investing - Theory, News & General
Topic: Overdiversifying
Replies: 13
Views: 1345

Re: Overdiversifying

In all I have read on this forum and elsewhere is that the more diversified you are the better. Why would Graham be against "Excessive Diversification"? One can't really equate Mr. Graham's value investing style with modern value-factor index funds. These are two completely different appr...
by Simplegift
Mon Oct 12, 2015 8:25 pm
Forum: Investing - Theory, News & General
Topic: Are Low Interest Rates the New Normal?
Replies: 29
Views: 3611

Re: Are Low Interest Rates the New Normal?

My sense, as always, is that folks should stick with their well-considered investment portfolios and certainly not change the duration of their bond allocations based on any demographic trends. For financial planning, though, re-examining or re-considering one's return expectations for bonds might ...
by Simplegift
Mon Oct 12, 2015 12:09 pm
Forum: Investing - Theory, News & General
Topic: The Incredible Shrinking Value Premium?
Replies: 32
Views: 2877

Re: The Incredible Shrinking Value Premium?

And note that small value tends to do well in rising inflation, until it gets "too high" and then Fed steps in and drives real rates way up to reduce that risk, and they get crushed... Comparing grok87's small-value premium data to inflation since 1923, there appears to be a fairly strong...
by Simplegift
Mon Oct 12, 2015 10:26 am
Forum: Investing - Theory, News & General
Topic: The Incredible Shrinking Value Premium?
Replies: 32
Views: 2877

Re: The Incredible Shrinking Value Premium?

So I'm showing the returns of small cap value stocks minus the returns of large cap growth stocks 1st column is year 2nd column are the annual data 3rd column is the 20 year moving average idea that backpacker started us out looking at http://i.imgur.com/SdAgIfm.png Just posting this chart of the d...
by Simplegift
Mon Oct 12, 2015 8:54 am
Forum: Investing - Theory, News & General
Topic: Are Low Interest Rates the New Normal?
Replies: 29
Views: 3611

Re: Are Low Interest Rates the New Normal?

Thus, if you believe your demographic projections, you should buy the longest-term bonds available. Whoa, there were no investment recommendations suggested (or implied) by the argument in the OP that interest rates may not revert to historical averages any time soon. Then what's the point of the p...
by Simplegift
Sun Oct 11, 2015 1:36 pm
Forum: Investing - Help with Personal Investments
Topic: Too Many Treasuries In The Total Bond Market?
Replies: 48
Views: 3533

Re: Too Many Treasuries In The Total Bond Market?

I have heard John Bogle mention in interviews that the Total Bond Market Fund is too heavy in treasury bonds. If this is the case, then what should be the proper % for the Benchmark to be weighted in treasuries? There is no "proper" weight of Treasuries in the Aggregate Bond Index. The hi...
by Simplegift
Sun Oct 11, 2015 12:24 pm
Forum: Investing - Theory, News & General
Topic: Strong dollar and foreign investing.
Replies: 4
Views: 572

Re: Strong dollar and foreign investing.

They were talking about a strong dollar hurting US companies in foreign countries. Is this a good argument against investing only in US companies. A strong dollar cuts both ways for U.S. companies. Certainly, 1) it makes exported products more expensive and less competitive in foreign markets, and ...
by Simplegift
Sun Oct 11, 2015 11:59 am
Forum: Investing - Theory, News & General
Topic: Are Low Interest Rates the New Normal?
Replies: 29
Views: 3611

Re: Are Low Interest Rates the New Normal?

Thus, if you believe your demographic projections, you should buy the longest-term bonds available. Whoa, there were no investment recommendations suggested (or implied) by the argument in the OP that interest rates may not revert to historical averages any time soon. My sense, as always, is that f...
by Simplegift
Sun Oct 11, 2015 9:47 am
Forum: Forum Issues and Administration
Topic: [Forum running slow]
Replies: 56
Views: 4570

Re: [Forum running slow]

If it helps, this is the error message I've been getting quite often (but not always) the past few days when navigating the Forum. Fortunately, the pages nearly always load when I click on "try again."

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