Search found 2150 matches

by alex_686
Thu Aug 17, 2017 10:06 am
Forum: Investing - Help with Personal Investments
Topic: Bond Home Bias vs whatever else
Replies: 5
Views: 430

Re: Bond Home Bias vs whatever else

I would not have my credit risk w the Argentine government. I would diversify across global bond markets, hedged into USD and perhaps also EUR. Maybe even some chf ie Swiss. You talk about globally diversifying, what about people that say that's not a good idea and that one should invest close to h...
by alex_686
Thu Aug 17, 2017 9:08 am
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2190

Re: Why do we (passive index investors) invest at market weight?

Ok. But do I understand correctly that shares outstanding is a constant (more or less)? And if that is true, the formula for market weight is market capitalization of one company divided by that of all companies added together. The denominator is either a constant (total sum of money to invest in t...
by alex_686
Wed Aug 16, 2017 9:21 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2190

Re: Why do we (passive index investors) invest at market weight?

Thus, EMH is really determining price * # of shares = market weight? No - strictly speaking on a abstract theoretical basis EMH simply says that the market price is the correct price. It does not comment on the market weight. Logically it follows that the individual market weight of companies is th...
by alex_686
Wed Aug 16, 2017 9:10 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2190

Re: Why do we (passive index investors) invest at market weight?

I am sorry that I confused you in the other thread. Question #1 - What price should Apple be? EMH says $160. Question #2 - What weight should Apple have in my domestic portfolio? 4%. The reason why is a bit more complex. Harry Markowitz first asked the question with Modern Portfolio Theory. Black-Li...
by alex_686
Wed Aug 16, 2017 7:33 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3156

Re: REIT

I took the liberty of bolding text to highlight two sentences. I realize that this article is talking about prices of individual shares, and I am specifically extending the meaning to prices of an individual stock market sector (REITs). One - according to the weak form of EMH, future share prices h...
by alex_686
Wed Aug 16, 2017 6:26 pm
Forum: Investing - Theory, News & General
Topic: XIRR - Non-reinvested dividends
Replies: 35
Views: 2722

Re: XIRR - Non-reinvested dividends

Whoa! This is just wrong. "Total Annualized Return" is the "Internal Rate of Return". And further their value depends only on the cash flows, not on the formula or functions used to compute them. We've now come full circle. That's what I thought in the past. Your examples of different reinvestment ...
by alex_686
Wed Aug 16, 2017 6:10 pm
Forum: Investing - Help with Personal Investments
Topic: NEW at investing, looking for advice (35K)
Replies: 5
Views: 369

Re: NEW at investing, looking for advice (35K)

What are you goals and risk tolerance? With those we should be able to give good advice. The generic advice would be to open a Roth and max out your contribution. If things get sticky one can always withdraw your contribution. Figure out what your size your emergency fund / grub stake should be and ...
by alex_686
Wed Aug 16, 2017 2:22 pm
Forum: Investing - Theory, News & General
Topic: Dumb, basic question about market-cap weighted funds?
Replies: 35
Views: 1816

Re: Dumb, basic question about market-cap weighted funds?

But it just seems like the desire to insulate oneself a bit from the price fluctuations by focusing on good value dividend stocks is not consistent with the low-cost passive market-cap weighted index strategy that dominates today, but maybe I just don't know the funds well enough to say. The cheape...
by alex_686
Wed Aug 16, 2017 11:45 am
Forum: Investing - Theory, News & General
Topic: Dumb, basic question about market-cap weighted funds?
Replies: 35
Views: 1816

Re: Dumb, basic question about market-cap weighted funds?

Best estimation is not anywhere near the same as 'correct' value. I don't argue that it is not the best estimation - I would assert it is still going to be wrong because what it is estimating is inherently unknowable. This isn't like independently aggregating multiple experts estimates of where a s...
by alex_686
Wed Aug 16, 2017 10:59 am
Forum: Investing - Theory, News & General
Topic: Dumb, basic question about market-cap weighted funds?
Replies: 35
Views: 1816

Re: Dumb, basic question about market-cap weighted funds?

So it sounds like the real "problem" you might both agree is solved by indexing is the cognitive bias of illusory superiority (the fact that most people believe that they are above average). The mistaken belief you can pick stocks better than the average of everyone else's stock picks. While this i...
by alex_686
Wed Aug 16, 2017 10:34 am
Forum: Investing - Theory, News & General
Topic: Dumb, basic question about market-cap weighted funds?
Replies: 35
Views: 1816

Re: Dumb, basic question about market-cap weighted funds?

It sounds to me like at least some people here don't believe there is any reasonable way to assess the value of an individual stock at a given moment in time. Is that part of the Bogleheads philosophy, that value cannot be measured or is irrelevant? This is how I took avalpert's replies, which made...
by alex_686
Mon Aug 14, 2017 9:59 pm
Forum: Investing - Help with Personal Investments
Topic: Which Audible book for Mom to convince her to get away from Raymond James
Replies: 19
Views: 1763

Re: Which Audible book for Mom to convince her to get away from Raymond James

The Wolf of Wall Street by Jordan Belfort. The film adaption is pretty good. Then point out that her broker is not nearly as good as Mr. Belfort.

On a more serious note, I will be watching this tread for a good easy book to recommend.
by alex_686
Mon Aug 14, 2017 8:07 pm
Forum: Investing - Help with Personal Investments
Topic: Question about market timing the current market
Replies: 27
Views: 1337

Re: Question about market timing the current market

He is at 50/50, and he said he didn't know why I was at 85/15 when it is inevitable the market will crash. ... "mathematically, how could it not work in this case?" Can you tell us why he thinks that? The most common reasons given are 1. the length of bull run or 2. the high P/E ratios. Sadly neith...
by alex_686
Mon Aug 14, 2017 8:01 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3156

Re: REIT

I should get to that chapter this week and will look. I guess you have to decide what percent of portfolio you want the REITs and then backtest to see if it made a big difference. Be careful on backtesting. They offer less than than one might think. A good example is the market crash of 2008 and RE...
by alex_686
Mon Aug 14, 2017 7:55 pm
Forum: Investing - Help with Personal Investments
Topic: Question about market timing the current market
Replies: 27
Views: 1337

Re: Question about market timing the current market

He is at 50/50, and he said he didn't know why I was at 85/15 when it is inevitable the market will crash. ... "mathematically, how could it not work in this case?" Can you tell us why he thinks that? The most common reasons given are 1. the length of bull run or 2. the high P/E ratios. Sadly neith...
by alex_686
Mon Aug 14, 2017 7:49 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3156

Re: REIT

Another thing to note is that reits were not included in major indices initially, so there could have been benefit to adding them in a portfolio. I don't think that is right. IIRC REITs have been part of the S&P 500 for the last 30 years. This past year also included a huge milestone for REITs. The...
by alex_686
Mon Aug 14, 2017 4:23 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3156

Re: REIT

Where does someone go to figure out the percent of us weight of any asset?? That is a good question with no clear cut answer. What belongs where tends to subjective. Is Amazon a tech company, retail, or a bit of both? S&P's data service and MSCI's Global Industry Classification Standard (GICS) are ...
by alex_686
Mon Aug 14, 2017 2:58 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3156

Re: REIT

I am trying to understand this term overweight. Someone posted an example overweight internationals would be more than 50% since us/intenational is 50/50. So, what would be overweight in REIT. For US equity the neutral weight is 3%. I have seen many studies which suggest a 10% to 20% REIT holdings ...
by alex_686
Mon Aug 14, 2017 2:43 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3156

Re: REIT

Some backtesting I now understand how REITs have low corrlation with stock funds as SP500. But same risk. I understand some tilt toward REITs. I thought this was a good idea until I someone stated they have a lot of money in REITS. It called there home. So, now I am thinking I own my house no mortg...
by alex_686
Mon Aug 14, 2017 1:54 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3156

Re: REIT

Thank you for your replies. You have answered my question, which was basically "Is there something inherently different with an REIT fund than with any other stock fund." The answer I see from your responses is no, there is no difference. I will take the opposite side, there is something inherently...
by alex_686
Mon Aug 14, 2017 1:11 pm
Forum: Investing - Theory, News & General
Topic: Fed unloading bonds?
Replies: 17
Views: 2043

Re: Fed unloading bonds?

I would second Tom T's link. I posted a few in that thread. A note. The Fed fought the chaos of the 2008 market crash with "Quantitative Easing" (QE) by buying bonds which depressed the yield. Pretty simple supply and demand stuff. Now the the Fed is letting the yields raise to a more normal natural...
by alex_686
Fri Aug 11, 2017 11:59 pm
Forum: Investing - Theory, News & General
Topic: Real P/E of ETF's and Mutual Funds - are the published ones misleading
Replies: 26
Views: 1344

Re: Real P/E of ETF's and Mutual Funds - are the published ones misleading

They will be removed if there are "ongoing conditions" in violation of the admission criteria. Not sure how long they need to be ongoing before they get removed. I don't know of any companies that have been removed for this reason. IIRC, there are companies that have had negative earnings for over ...
by alex_686
Fri Aug 11, 2017 11:42 pm
Forum: Investing - Theory, News & General
Topic: Real P/E of ETF's and Mutual Funds - are the published ones misleading
Replies: 26
Views: 1344

Re: Real P/E of ETF's and Mutual Funds - are the published ones misleading

Keep in mind that the S&P 500 index does not include companies that don't have positive earnings, companies that report negative earnings get cycled out of the index, although it isn't instant so there are a few stragglers. In this case it might make sense to remove companies with negative earnings...
by alex_686
Fri Aug 11, 2017 11:36 pm
Forum: Investing - Theory, News & General
Topic: Real P/E of ETF's and Mutual Funds - are the published ones misleading
Replies: 26
Views: 1344

Re: Real P/E of ETF's and Mutual Funds - are the published ones misleading

Wondering if you know where to find this simple weighted arithmetic mean P/E ( both historical and foreword looking) for the total stock index., tot international and sp500. Thx. This is going to be a tough hunt. You might get lucky with the S&P 500. Lots of different people do things with that one...
by alex_686
Fri Aug 11, 2017 5:03 pm
Forum: Investing - Theory, News & General
Topic: Real P/E of ETF's and Mutual Funds - are the published ones misleading
Replies: 26
Views: 1344

Re: Real P/E of ETF's and Mutual Funds - are the published ones misleading

I am assuming that Mutual Funds have the same issue and given that mutual fund companies have an incentive to make their funds look attractive and there seems to be no SEC mandate around how to aggregate earnings, funds must be biasing their earnings estimates to appear attractive. Wondering if Bog...
by alex_686
Thu Aug 10, 2017 2:24 pm
Forum: Investing - Theory, News & General
Topic: Are Index Funds Evil?
Replies: 30
Views: 3563

Re: Are Index Funds Evil?

There seems to be an underlying assumption that companies operate their business with the mom and pop shareholders' interest in mind. It's more likely they operate to financially engineer for maximum executive compensation. No executive in an industry is going to willingly stand by let his rival be...
by alex_686
Wed Aug 09, 2017 10:32 pm
Forum: Investing - Theory, News & General
Topic: What determines the shape of the yield curve?
Replies: 43
Views: 2767

Re: What determines the shape of the yield curve?

If there's a term premium, is there a way to estimate it? Maybe the interest rate futures market combines expectations of rates and a term premium together? If strictly looking at expected interest rates, say the 3 year Treasury should yield 1.5% because that's what you would earn over the time per...
by alex_686
Wed Aug 09, 2017 3:59 pm
Forum: Investing - Theory, News & General
Topic: Transfer Agents vs Brokerage
Replies: 2
Views: 251

Re: Transfer Agents vs Brokerage

- Does anyone maintain paper certificates anymore? - Is there a danger in consolidating holdings across two brokerage accounts? The benefit would seem to be greatly simplified performance tracking and tax reporting. As somebody who has worked with physical certificates, please get rid of them. At o...
by alex_686
Wed Aug 09, 2017 3:09 pm
Forum: Personal Finance (Not Investing)
Topic: Save to buy home on cash
Replies: 17
Views: 1337

Re: Save to buy home on cash

(I suspect the answer won't be a total market index because of the time horizon). Well, maybe. First, count me as another person who would not pay cash for a house. It is hard to square in risk adjusted returns for most people. Second, you only have a single portfolio - one for your retirement, hou...
by alex_686
Wed Aug 09, 2017 3:01 pm
Forum: Investing - Theory, News & General
Topic: Are Index Funds Evil?
Replies: 30
Views: 3563

Re: Are Index Funds Evil?

A thumbs up to the article. A note to those who back test, market structures change. In the 70s large conglomerates reigned, and management had the upper hand over investors. In the 80s came modern portfolio theory and leveraged buy outs facilitated by junk bonds. Now narrowly focused companies reig...
by alex_686
Wed Aug 09, 2017 1:08 pm
Forum: Investing - Theory, News & General
Topic: What determines the shape of the yield curve?
Replies: 43
Views: 2767

Re: What determines the shape of the yield curve?

In total, this bond will make 61 payments: one $1,000 payment 30 years from now, and sixty $14.25 payments every six months starting in six months from now, the last of which will happen at the same time as the $1,000 payment. Bond convention says this bond will make 60 payments, the 60th payment b...
by alex_686
Wed Aug 09, 2017 1:07 pm
Forum: Investing - Theory, News & General
Topic: What determines the shape of the yield curve?
Replies: 43
Views: 2767

Re: What determines the shape of the yield curve?

OK. But I am making my buy/sell decision on the market depth data from my broker not the constant maturity data. (Actually I look at two brokers JIC.) I only use the constant maturity yield curve to help determine what maturity to buy not how much I am willing to pay. It's good that you bring up th...
by alex_686
Wed Aug 09, 2017 12:53 pm
Forum: Investing - Theory, News & General
Topic: 40 / 30 / 30. Any good ?
Replies: 12
Views: 1722

Re: 40 / 30 / 30. Any good ?

It is in line with other profiles on the board. I overweight REITs. I think such a high level of TIPS is only for the risk adverse. I don't like gold or precious metals. They are not economically productive assets. If you buy a ounce of gold today you will have a ounce of gold in 10 years, ignoring ...
by alex_686
Wed Aug 09, 2017 12:19 pm
Forum: Investing - Theory, News & General
Topic: What determines the shape of the yield curve?
Replies: 43
Views: 2767

Re: What determines the shape of the yield curve?

I'm not trying to argue for one theory or another, just wondering why there's no benefit to plotting a theoretical yield curve based on interest rate futures, and comparing it to the actual yield curve plotted from YTM of Treasuries that are trading today. Has this been tried and the two curves lin...
by alex_686
Tue Aug 08, 2017 4:16 pm
Forum: Investing - Theory, News & General
Topic: What determines the shape of the yield curve?
Replies: 43
Views: 2767

Re: What determines the shape of the yield curve?

If there's market segmentation and at some maturities buyers need to own bonds they consider overpriced, then couldn't the futures market imply a higher interest rate for those maturities by a rational market theory? First, I think you mean low interest rate. Expensive for a buyer mean that they ha...
by alex_686
Tue Aug 08, 2017 12:18 pm
Forum: Investing - Theory, News & General
Topic: What determines the shape of the yield curve?
Replies: 43
Views: 2767

Re: What determines the shape of the yield curve?

Would it help to draw the actual yield curve on top of the implied yield curve based on the futures market for rates? No. The actual yield curve and forward rates should, in theory, be exactly the same. In practice they are pretty much the same. Heck, under some methodologies they actually used the...
by alex_686
Tue Aug 08, 2017 10:07 am
Forum: Investing - Theory, News & General
Topic: What determines the shape of the yield curve?
Replies: 43
Views: 2767

Re: What determines the shape of the yield curve?

2 chip in my 2 cents, if you can figure this out conclusively you will earn yourself a Noble prize. As you can tell from this thread there are 2 main camps. There is ample evidence for both. The first is market segmentation. Rates are driven by supply and demand, each market having a unique duration...
by alex_686
Tue Aug 08, 2017 8:25 am
Forum: Investing - Theory, News & General
Topic: The Only Thing Wrong with Active Management is the Fees - Bloomberg Article
Replies: 26
Views: 2900

Re: The Only Thing Wrong with Active Management is the Fees - Bloomberg Article

In which case it was a poorly chosen index to benchmark against. But of course that is why I said the 'market' average - of course if you include returns from outside whatever you are averaging then the average doesn't matter. I will have to disagree with you. What is the chance that a portfolio ma...
by alex_686
Mon Aug 07, 2017 4:23 pm
Forum: Investing - Theory, News & General
Topic: Any insights - Who ultimately sells Calls to Insurance Companies?
Replies: 9
Views: 1008

Re: Any insights - Who ultimately sells Calls to Insurance Companies?

So who sells the puts to the banks hedging their calls through put-call parity? To the OP's original question, does it matter? It is off the books. For your question, off hand I would say investment banks or hedge funds. Or you can reverse the processes and use short puts and long calls to get back...
by alex_686
Mon Aug 07, 2017 1:03 pm
Forum: Investing - Theory, News & General
Topic: Any insights - Who ultimately sells Calls to Insurance Companies?
Replies: 9
Views: 1008

Re: Any insights - Who ultimately sells Calls to Insurance Companies?

Covered calls are also a thing. Basically it's owning the underlying stock and writing call contracts against it. You sell off the gains from strong bull markets in exchange for reduced exposure to bear markets and arguably better risk-adjusted returns. The problem with covered calls is that there ...
by alex_686
Mon Aug 07, 2017 12:01 pm
Forum: Investing - Theory, News & General
Topic: The Only Thing Wrong with Active Management is the Fees - Bloomberg Article
Replies: 26
Views: 2900

Re: The Only Thing Wrong with Active Management is the Fees - Bloomberg Article

If all those dollars being invested by active mutual fund managers are beating the market average equal dollars must be underperforming it somewhere - who do they propose are managing those dollars and why can't they keep up with the mutual fund managers? I don't understand this argument. Yes, for ...
by alex_686
Sun Aug 06, 2017 1:31 pm
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5590

Re: What am I missing? [Ultra-short bond vs Prime MM]

The market's forecast is based on the Treasury futures market. I would be very surprised if all futures traders were using some kind of of binary choice of what the Fed will do when. The futures market is only basing its decision on what the rate will be at the end of period. Whether is gets there ...
by alex_686
Sat Aug 05, 2017 6:00 pm
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5590

Re: What am I missing? [Ultra-short bond vs Prime MM]

I just started investing outside of my 401k this year and I have a slight loss in BND over that time. Shouldn't I just throw it in a money market instead of watching it slowly go down? Look, the thrust of this tread is that one should not wait for the Fed to raise rates. The expected rate increases...
by alex_686
Sat Aug 05, 2017 3:59 pm
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5590

Re: What am I missing? [Ultra-short bond vs Prime MM]

The market believes that the Fed will raise rates 4 times. With that belief we can apply the No Arbitrage Principle and use Forward Returns to ensure that the market efficiently represents those views. When it comes to short term rates, historically the market is very good with with. alex_686, I wa...
by alex_686
Sat Aug 05, 2017 7:21 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5590

Re: What am I missing? [Ultra-short bond vs Prime MM]

Because bonds when bonds are downgraded funds often sell them, particularly if they drop below BBB- (investment grade) the actual holdings of defaulted bonds by most funds are small. A note on this. The default rate between BBB (lowest investment grade) and BB (highest junk grade) is almost the sam...
by alex_686
Thu Aug 03, 2017 1:03 pm
Forum: Investing - Help with Personal Investments
Topic: Help with Bond Math
Replies: 7
Views: 829

Re: Help with Bond Math

I think he was using the 5 year average most bond funds try to have. I also think the presenter was trying to reduce the fear that bond yields get destroyed in a rising interest rate environment. He also wanted to point out that bonds are a good hedge against inflation, etc. What I cannot wrap my h...
by alex_686
Thu Aug 03, 2017 9:18 am
Forum: Investing - Theory, News & General
Topic: Emerging Markets, not Emerging Market Indexes
Replies: 21
Views: 1652

Re: Emerging Markets, not Emerging Market Indexes

I would suggest it has more to do with how those local brick and mortars raise capital in emerging markets as compared to developed markets - I think you'll find they are much less likely to use public equity markets. I've done a decent amount of debt investing (more for development assistance than...
by alex_686
Wed Aug 02, 2017 9:49 pm
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5590

Re: What am I missing? [Ultra-short bond vs Prime MM]

... with 4% junk and unrated, yields 1.91%. Do you know if it is junk or unrated? To simply things and save space most mutual funds combine the 2 spaces. Junk is Junk. Unrated is different. There are lots of cases where a high quality entity just does not to bother paying for a rating for a short t...
by alex_686
Wed Aug 02, 2017 7:30 pm
Forum: Personal Finance (Not Investing)
Topic: Commercial property as part of your portfolio anyone?
Replies: 4
Views: 449

Re: Commercial property as part of your portfolio anyone?

Yes, but 2 notes. First, the point of a AA is to create a efficient portfolio to meet your goals. Direct real estate's market value will always be a estimate and the asset is illiquid. I would discount the property value by 20% when building an allocation. Second, owning commercial property is a job...
by alex_686
Wed Aug 02, 2017 3:55 pm
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5590

Re: What am I missing? [Ultra-short bond vs Prime MM]

Also I note that Alan Greenspan is stating that he believes we are in a "bond bubble", that the bond market is a much greater worry to him than the stock moarket. If current pricing of bonds is "efficient", ie changes factored in , etc, and following precise models such as those...