Search found 1803 matches

by alex_686
Wed Jun 21, 2017 9:05 pm
Forum: Investing - Theory, News & General
Topic: Replacing bonds with actively managed real estate
Replies: 19
Views: 1315

Re: Replacing bonds with actively managed real estate

Has the real estate crash been so long ago that we now say real estate is as safe as bonds? I personally don't think lightening strikes twice, so I don't think the next bubble will be from real estate. Direct holdings of real estate should not replace bonds in one's asset allocation. It is like say...
by alex_686
Wed Jun 21, 2017 7:19 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Intermediate Term Treasury (VFITX) - Actively Managed
Replies: 41
Views: 2010

Re: Vanguard Intermediate Term Treasury (VFITX) - Actively Managed

I always thought of the liquidity issue backwards. It is the other way around. Two big reasons are: "Reconstituteablity" of the index: People constantly trade into and out of the fund. Funds want to easily buy and sell to match. Pricing: Liquid securities trade frequently (by definition) ...
by alex_686
Wed Jun 21, 2017 6:46 pm
Forum: Investing - Help with Personal Investments
Topic: REIT in a taxable account
Replies: 17
Views: 1794

Re: REIT in a taxable account

I can think of no benefits to owning a reit in a taxable account. I don't think it is that bad. REITs do offer good diversification and decent returns. The problem is tax drag and tax complexity. You almost expect to file a extension because the individual REITs will be so long in issuing tax infor...
by alex_686
Wed Jun 21, 2017 5:51 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Intermediate Term Treasury (VFITX) - Actively Managed
Replies: 41
Views: 2010

Re: Vanguard Intermediate Term Treasury (VFITX) - Actively Managed

I was being facetious. I can think of no good reason for active management for this fund, and yes the idea that some Treasuries will outperform is ridiculous. I can think of a score. Most bond indexes only cover 10% of the most actively bonds, if you are willing to take a little liquidity risk you ...
by alex_686
Wed Jun 21, 2017 5:00 pm
Forum: Investing - Theory, News & General
Topic: Vanguard risk tolerance survey blunder.
Replies: 41
Views: 3872

Re: Vanguard risk tolerance survey blunder.

I haven't seen a risk tolerance survey that wasn't deeply flawed. The best that can be said about them is that if you've never invested in securities before and are used to bank accounts, it at least rubs your nose into the idea that there could be losses and the ballpark sizes your losses could be...
by alex_686
Wed Jun 21, 2017 3:55 pm
Forum: Investing - Theory, News & General
Topic: Argentina issuing 100-year bond.
Replies: 46
Views: 4323

Re: Argentina issuing 100-year bond.

No it's aimed at international investors AFAIK. Argentines (middle class ones) keep apartments in Miami (or Toronto) and money in American or Uruguayan (or perhaps Panamanian) bank accounts. *They* have too much exposure to the Argentine government as it is. I don't find this argument convincing. I...
by alex_686
Wed Jun 21, 2017 3:32 pm
Forum: Investing - Theory, News & General
Topic: Vanguard risk tolerance survey blunder.
Replies: 41
Views: 3872

Re: Vanguard risk tolerance survey blunder.

I already said that. But the question is obviously deeply flawed. It is not flawed - It is exactly right. The flaw is that you assume that investors will weight gains the same as losses. This is not true for both logical and behavioral reasons. For a logical reason, take a person who has retired an...
by alex_686
Wed Jun 21, 2017 3:09 pm
Forum: Personal Finance (Not Investing)
Topic: Siblings in disagreement over mom's house.
Replies: 241
Views: 15885

Re: Siblings in disagreement over mom's house.

An inanimate object is not going to "keep a family together". Foolish assumption on the part of those who have that belief. eh. It depends. I know a family where the grandparents left a nice little lake cabin to their 4 children. There was some friction - mainly around the proper use and ...
by alex_686
Wed Jun 21, 2017 2:50 pm
Forum: Investing - Help with Personal Investments
Topic: What does it mean when people say certain funds are tax inefficient?
Replies: 18
Views: 1507

Re: What does it mean when people say certain funds are tax inefficient?

First and foremost, always focus on your "Total Return". That is what matters. Some funds generate most of their TR via capital gains and dividends - these have favorable tax considerations. Bond funds generate most of their TR via Income, which does not. REITs are worse. This is known as ...
by alex_686
Wed Jun 21, 2017 2:28 pm
Forum: Investing - Theory, News & General
Topic: Argentina issuing 100-year bond.
Replies: 46
Views: 4323

Re: Argentina issuing 100-year bond.

I can't believe anyone (person, corporate, pension, etc) in his right mind would buy this debt with a 100 year duration and yielding less than 8%. I think it should be more like 18%. But this is the world we live in. There are trillions of dollars chasing yield, even low grade yield like this. Mayb...
by alex_686
Tue Jun 20, 2017 1:26 pm
Forum: Investing - Help with Personal Investments
Topic: Please Help Me Understand These Bond Funds
Replies: 4
Views: 551

Re: Please Help Me Understand These Bond Funds

One is not better then the other - just different. What factors and risks do you want to be exposed to? Total Bond holds stocks which mature everywhere between next year to 10 years. It has a average duration of 6 years Long Term holds longer term bonds, It has a longer duration of 15 years and that...
by alex_686
Mon Jun 19, 2017 9:02 pm
Forum: Investing - Help with Personal Investments
Topic: Need to find Loaded Index Funds
Replies: 64
Views: 3420

Re: Need to find Loaded Index Funds

I do not know the specific FINRA regulations that the firm is adhearing to, but the main reasoning behind it is they need to monitor for insider trading. Again, I don't know FINRA's exact stance, but it is an internal policy that I fought hard against before moving my families accounts. I offered t...
by alex_686
Mon Jun 19, 2017 6:21 pm
Forum: Investing - Theory, News & General
Topic: is offering this [Vanguard] website feature feasible?
Replies: 29
Views: 1888

Re: is offering this [Vanguard] website feature feasible?

I can think of a couple of non trivial reasons. ETFs constantly report their holdings. Active managers want to keep their trading strategy a secret and can delay reporting their holdings from between 30 to 60 days. How do you reconcile this? Figuring out holdings is harder than you think. Stocks can...
by alex_686
Mon Jun 19, 2017 1:58 pm
Forum: Personal Finance (Not Investing)
Topic: Bonus, in bitcoin
Replies: 21
Views: 1821

Re: Bonus, in bitcoin

Just wondering how this is handled by companies and by the IRS. If nothing else I would imagine that this would be a red flag on a tax return, shady or not, legal or illegal. Not a red flag, but a yellow. Employees gets lots of non-cash compensation. Gift cards and stock options are the most common...
by alex_686
Mon Jun 19, 2017 1:09 pm
Forum: Personal Finance (Not Investing)
Topic: Bonus, in bitcoin
Replies: 21
Views: 1821

Re: Bonus, in bitcoin

Unless she's in an industry that deals with cyrpocurrency,this is crazy shady. Agreed. What is going on here? Be very suspicious. It might be shady or it might be suspicious, but Crit has said this is legit. Crazy suspiciously shady does not automatically mean it is illegal. In my opinion the reaso...
by alex_686
Mon Jun 19, 2017 12:35 pm
Forum: Personal Finance (Not Investing)
Topic: Bonus, in bitcoin
Replies: 21
Views: 1821

Re: Bonus, in bitcoin

crit wrote:So Company will have to report it in USD on the W2.


Will or should? I would double check that your W2 actually has the value of the bitcoin recorded properly. There is a correlation between people who use bitcoins and tax dodging.
by alex_686
Mon Jun 19, 2017 10:52 am
Forum: Investing - Theory, News & General
Topic: If everybody indexed, the only word you could use is chaos, catastrophe
Replies: 66
Views: 8056

Re: If everybody indexed, the only word you could use is chaos, catastrophe

This is indisputable (except by people that deny math and facts, of which I sadly know several). So why do pension funds and endowments (which collectively are the market) continually try to beat it? 3 reasons. 1. Arrogance and Stupidity Enough said on this point. 2. Why do you think they don't bea...
by alex_686
Thu Jun 15, 2017 8:25 pm
Forum: Investing - Help with Personal Investments
Topic: Accumulating Physical vs Accumulating Synthetic ETF
Replies: 4
Views: 405

Re: Accumulating Physical vs Accumulating Synthetic ETF

If an ETF uses optimized sampling where they own maybe 10% of the thousands of shares involved in a world index, wouldn't the risk of tracking error be quite high? Yes, but they couldn't get away with that in the US. The SEC has rules on marketing and if you market your fund as a index fund (like h...
by alex_686
Thu Jun 15, 2017 7:37 pm
Forum: Investing - Theory, News & General
Topic: Federal Funds Rate and Treasuries Prices
Replies: 7
Views: 613

Re: Federal Funds Rate and Treasuries Prices

What does the interest rate that banks burrow at have anything to do with the interest rate of short term treasuries? I just want to understand the cause and effect and how it works. They are close substitutes to each other. The easiest example are banks. By law, they have to hold high quality shor...
by alex_686
Thu Jun 15, 2017 7:19 pm
Forum: Investing - Help with Personal Investments
Topic: Is my pension a Fixed asset?
Replies: 22
Views: 1417

Re: Is my pension a Fixed asset?

I am going to deliberately muddy the waters, when you noodle on this I think it would behoove you to consider the likelihood of actually being able to collect on the promised pension benefit. I don't think this actually muddies the water. The simple answer is to give the pension a haircut. Calculat...
by alex_686
Thu Jun 15, 2017 7:15 pm
Forum: Investing - Theory, News & General
Topic: International without the currency risk
Replies: 5
Views: 451

Re: International without the currency risk

Hedging isn't free, you are guaranteed to pay the costs of hedging. Currency risks go both ways, if the dollar gets weaker you wouldn't want to be hedged. Hedging is basically free. Look up "Futures Arbitrage" or "Zero Cost Collar". The market for hedging this type of risk is so...
by alex_686
Thu Jun 15, 2017 4:50 pm
Forum: Investing - Help with Personal Investments
Topic: Is my pension a Fixed asset?
Replies: 22
Views: 1417

Re: Is my pension a Fixed asset?

This is frequently discussed. Probably the balance of the viewpoint here is that a pension is income and not an asset. It seems particularly forced to compute a pension as an asset in order to eventually compute some sort of translation of assets back into an ability to supply an income in retireme...
by alex_686
Thu Jun 15, 2017 3:08 pm
Forum: Investing - Theory, News & General
Topic: When you purchase shares, where does the money go?
Replies: 19
Views: 1491

Re: When you purchase shares, where does the money go?

For some companies the biggest issuance of new stock is via employee stock options, 401(k) matching contribution, so something along this vein. Issuing new stock this way is very cheap to do. No underwriting fees, filling fees are minimal, etc.
by alex_686
Thu Jun 15, 2017 11:59 am
Forum: Investing - Help with Personal Investments
Topic: Confused about Buying during Bear Market - Lost and Confused
Replies: 3
Views: 436

Re: Confused about Buying during Bear Market - Lost and Confused

If today happens to be the day that I re balance my portfolio with extra income instead of moving bonds over vice versa what would be the amount to buy. I think this is what is tripping you up. You set up your Asset Allocation with tolerance bands. When you breach those bands you rebalance back. Ma...
by alex_686
Thu Jun 15, 2017 11:41 am
Forum: Investing - Theory, News & General
Topic: International without the currency risk
Replies: 5
Views: 451

Re: International without the currency risk

Hedging isn't free, you are guaranteed to pay the costs of hedging. Currency risks go both ways, if the dollar gets weaker you wouldn't want to be hedged. Hedging is basically free. Look up "Futures Arbitrage" or "Zero Cost Collar". The market for hedging this type of risk is so...
by alex_686
Thu Jun 15, 2017 11:19 am
Forum: Investing - Help with Personal Investments
Topic: Tax Efficient Boglehead Wiki Page Question
Replies: 25
Views: 1535

Re: Tax Efficient Boglehead Wiki Page Question

The simple answer to pick one, any fund. Maybe the fund that you expect to preform the least well but from the list given I would assume approximately similar returns. So darts at a board. The more complex answer would be to dig into the annual reports of each of the funds. Funds have to disclose th...
by alex_686
Thu Jun 15, 2017 10:30 am
Forum: Personal Finance (Not Investing)
Topic: Shouldn't one's "number" be indexed to the current PE ratio?
Replies: 22
Views: 1780

Re: Shouldn't one's "number" be indexed to the current PE ratio?

I understand the PV idea with a concrete FC. BUT how does one back real liabilities when they span over a number of years? The easy way is to input the cash flows into a spreadsheet and solve. Microsoft Excel's XNPV formula is good at handling irregular cash flows. However, it assumes a flat yield ...
by alex_686
Thu Jun 15, 2017 8:58 am
Forum: Investing - Theory, News & General
Topic: Favorite Active Funds?
Replies: 22
Views: 2298

Re: Two links

I no longer try to beat the market using past performance to select managed funds with higher costs, managers that leave, and less tax-efficiency. I am a bit kinder towards actively managed fund. The question that Taylor is asking is why do you think a manager can beat the index? It is a good quest...
by alex_686
Wed Jun 14, 2017 9:48 pm
Forum: Investing - Help with Personal Investments
Topic: Practical Application of Investment Horizon
Replies: 5
Views: 322

Re: Practical Application of Investment Horizon

The pragmatic answer to your question is that any time horizon that is more than 10 years should be treated as 10 years. My 10 year stock forecasts are more accurate than my 1 year or 20 year forecasts. There are 50 year bonds out there but there are a host of problems. They don't trade, you face a ...
by alex_686
Wed Jun 14, 2017 3:23 pm
Forum: Personal Finance (Not Investing)
Topic: Am I calculating correctly
Replies: 11
Views: 624

Re: Am I calculating correctly

Ok, I was reading about passive income and dividends were mentioned as one example of that along with rental income etc. Should rental income be considered income for such calculation purposes ? There are dozens of "Do Dividends Matter?" threads on Bogglehheads. For you, it does not matte...
by alex_686
Wed Jun 14, 2017 2:25 pm
Forum: Personal Finance (Not Investing)
Topic: Am I calculating correctly
Replies: 11
Views: 624

Re: Am I calculating correctly

I don't think so. You should be able to get a net cash flow into your savings accounts. Bank savings, 401(k), Roth contributions, whatever. This is what you should be focusing on. Second, you should adopt thhe "Total Return" approach. Dividends, capital apperication (realized or unrealized...
by alex_686
Wed Jun 14, 2017 1:58 pm
Forum: Investing - Theory, News & General
Topic: Question: Rising stock prices and dividend yield
Replies: 1
Views: 233

Re: Question: Rising stock prices and dividend yield

Technically, the value of a stock is the Future Free Cash Flow to Equity. Dividends is one of the simple classic examples of FCFE. So points to you there. What you are suggesting is called the "Gordon Growth Model", where you hold many variables constant. Technically speaking it is not the...
by alex_686
Tue Jun 13, 2017 1:20 pm
Forum: Personal Finance (Not Investing)
Topic: Who takes financial chances and why is this forum so financially conservative?
Replies: 139
Views: 11808

Re: Who takes financial chances and why is this forum so financially conservative?

Maybe it's just me, but it seems like this forum is getting more financially conservative. This is my take. Bogleheads push a simple generic strategy. Index funds, static asset allocation, don't risk more than you can lose. The Toyota Corolla of investing. Not sexy, but lots of value which is hard ...
by alex_686
Tue Jun 13, 2017 1:09 pm
Forum: Investing - Help with Personal Investments
Topic: UTMA Question
Replies: 4
Views: 198

Re: UTMA Question

No. It was the child's account before they reached the age of control, it is theirs after the age of control. All that is changing is control. This is not a taxable or reportable event. Some places just re-title the account. Other places's systems can't re-title accounts so a new account needs to be...
by alex_686
Mon Jun 12, 2017 8:27 pm
Forum: Personal Consumer Issues
Topic: learning Arabic
Replies: 19
Views: 1582

Re: learning Arabic

If you are in the Mid-west, or willing to fly here, I have heard great things about Concordia Language summer camp. It is total immersion. Now, the context has always been on the more popular langues - Spanish, French, etc. I know one guy who raved about the Japaneses program. Anima fan. Can't say a...
by alex_686
Mon Jun 12, 2017 8:15 pm
Forum: Investing - Theory, News & General
Topic: Present US equity risk premium
Replies: 4
Views: 588

Re: Present US equity risk premium

I'm not an expert, but I was under the impression that the risk-free rate is based on short-term, guaranteed investments (i.e. short-term treasuries or insured CD's), which would be about 1.25% nominal. Not for Equity Risk Premium. The question it posses is this: What extra return do you need to in...
by alex_686
Mon Jun 12, 2017 4:33 pm
Forum: Investing - Help with Personal Investments
Topic: Using Market Cap to approximate Fundamental or equity weighting
Replies: 21
Views: 935

Re: Using Market Cap to approximate Fundamental or equity weighting

I would think that a hot stock that becomes overpriced would become a smaller part of a fundamental index. This assumes all the data received is correct. I do see your point. I can see the logic behind the theory. I am less impressed with in in practice. 1 more thoughts. On price to book there is a...
by alex_686
Mon Jun 12, 2017 3:39 pm
Forum: Investing - Help with Personal Investments
Topic: Using Market Cap to approximate Fundamental or equity weighting
Replies: 21
Views: 935

Re: Using Market Cap to approximate Fundamental or equity weighting

So a stock like Tesla would have a much smaller composition in a fundamental index as opposed to cap weighted? Maybe. Or maybe higher. There a dozens of different fundamental indexes out there. Why wouldn't a fundamental index better avoid overpriced stocks? To flip your question around, why would ...
by alex_686
Mon Jun 12, 2017 2:50 pm
Forum: Investing - Help with Personal Investments
Topic: Using Market Cap to approximate Fundamental or equity weighting
Replies: 21
Views: 935

Re: Using Market Cap to approximate Fundamental or equity weighting

What is the difference between a fundamental index and tilting toward value? Well, let us start off with the difference between market cap and fundamental index. Question - how much Apple should one hold? With market cap indexes you use free float market cap. With S&P you get 3.7%. With a funda...
by alex_686
Mon Jun 12, 2017 1:09 pm
Forum: Investing - Help with Personal Investments
Topic: Annual returns for mutual funds for retirement in 25 years?
Replies: 18
Views: 1670

Re: Annual returns for mutual funds for retirement in 25 years?

Trying to decide how variable everything is the next ten years, the ten years after that, and the ten years after that is pretty tricky. I will slightly disagree with you. I personally think 10 year forecasts lie in the sweet spot. Economic crisis, bubbles, and irrational behavior make short term f...
by alex_686
Mon Jun 12, 2017 12:58 pm
Forum: Investing - Help with Personal Investments
Topic: Using Market Cap to approximate Fundamental or equity weighting
Replies: 21
Views: 935

Re: Using Market Cap to approximate Fundamental or equity weighting

There are different methodologies in creating indexes. I fear it makes little sense to mix them up. Each methodology measures something different. Its like baking a cake, where you are given grams for flour but you decided to use cups. The conversions are going to be half baked. Specifically on the ...
by alex_686
Mon Jun 12, 2017 8:49 am
Forum: Investing - Theory, News & General
Topic: Are cap weighted indexes superior to float adjusted methodology
Replies: 7
Views: 717

Re: Are cap weighted indexes superior to float adjusted methodology

I have not yet listen to the podcast. That being said, I strongly think that float adjusted methodology is superior to cap weighted and I am don't think this is a concern. The S&P 500 index was started in the 1950s. Calculating the cap weighted index was pretty hard back then without computers. ...
by alex_686
Sun Jun 11, 2017 10:54 pm
Forum: Investing - Help with Personal Investments
Topic: Annual returns for mutual funds for retirement in 25 years?
Replies: 18
Views: 1670

Re: Annual returns for mutual funds for retirement in 25 years?

Past returns don't predict future returns alas. There is no mean, there is reversion to the mean. One of the best predictors out there, with a explanatory power of about 30%, is Shiller's 10 year CAPE. It suggests stocks will return around 3% real over the next 10 years. So, below average. For 25 ye...
by alex_686
Sun Jun 11, 2017 9:09 pm
Forum: Investing - Theory, News & General
Topic: Dividend ETF
Replies: 13
Views: 1115

Re: Dividend ETF

A. Someone has said that in today's low interest environment that High Dividend fund might be sort of a proxy for bonds. B. I know that in a significant bear market that it will drop just like stocks, not bonds. Statement B shows why Statement A is wrong. I just went to the Vanguard Website and did...
by alex_686
Sun Jun 11, 2017 8:17 pm
Forum: Investing - Theory, News & General
Topic: Add TIPS and High Yield Corporate Bonds To Your Portfolio?
Replies: 16
Views: 1392

Re: Add TIPS and High Yield Corporate Bonds To Your Portfolio?

I am all for this and encourage others to follow. The factors that drive bonds tend to more pure than that of stocks. The difference between value and growth can be fuzzy, the difference between TIPS, government bonds, and corporate bonds are clear. How much tilt should one give TIPS is fuzzy even i...
by alex_686
Fri Jun 09, 2017 2:06 pm
Forum: Investing - Theory, News & General
Topic: Why does S&P PE ratio matter
Replies: 30
Views: 1470

Re: Why does S&P PE ratio matter

2. It may not be perfect, but what is the downside of over weighting countries with low CAPE? They could go bust, but do the ones that do well make up for it? The downside of over weighting countries with low CAPE is that P/E does not tell you if a country is over / under valued. A low CAPE could m...
by alex_686
Fri Jun 09, 2017 11:01 am
Forum: Investing - Help with Personal Investments
Topic: Am I too conservative?
Replies: 19
Views: 1690

Re: Am I too conservative?

Do you have the need , the willingness , and the ability to take risk? If the answer to any of the three is "no" or "I am not sure", then you are not being too conservative. I will second this. Determine your goals and your risk tolerance before building your Asset Allocation. T...
by alex_686
Fri Jun 09, 2017 10:49 am
Forum: Investing - Theory, News & General
Topic: Why does S&P PE ratio matter
Replies: 30
Views: 1470

Re: Why does S&P PE ratio matter

The long-term average PE ratio is just a random number. There is no reason why the long-term PE ratio has settled around 15-16. It is just that over the last century or so, investors have, on average, payed about 15-16 times the markets annual earnings. There is no reason why this average could not...
by alex_686
Wed Jun 07, 2017 12:49 pm
Forum: Investing - Help with Personal Investments
Topic: Would You Sell Berkshire?
Replies: 17
Views: 1311

Re: Would You Sell Berkshire?

This is what you should do. Take out a clean sheet of paper. Write out your IPS. Start out with your goals, risk tolerance, and market expectations. Then develop your Asset Allocation. You AA should tell you how much BRK you should hold. How much you hold today is irreverent. That is a example of St...
by alex_686
Wed Jun 07, 2017 12:43 pm
Forum: Investing - Help with Personal Investments
Topic: Asset Allocation and Portfolio Question (and other related questions from beginner)
Replies: 12
Views: 647

Re: Asset Allocation and Portfolio Question (and other related questions from beginner)

1. I currently max out my 401K contribution in connection with my first paycheck in January. Is this advisable or is it best to spread it evenly throughout the year for dollar cost averaging? The rational choice is to max out your 401k as soon as possible. There is no logic or math for delaying con...

Go to advanced search