Search found 1774 matches

by jalbert
Fri Mar 24, 2017 1:22 pm
Forum: Investing - Theory, News & General
Topic: REITs vs Rental Property
Replies: 5
Views: 983

Re: REITs vs Rental Property

I think it is also useful to separate out the tax differences and passive investment vs active business aspect and just look at it from the perspective of asset class differences. TIAA-CREF is now recommending its participants invest in both their real estate fund (directly held real estate) and the...
by jalbert
Thu Mar 23, 2017 9:17 pm
Forum: Investing - Theory, News & General
Topic: Blog on emerging Markets, and investors underweighting them
Replies: 63
Views: 3535

Re: Blog on emerging Markets, and investors underweighting them

Fourth, EM funds don't have that high a concentration of country risk, but it's interesting that is typically raised by the same people who overweight US massively (:-)) That is also a great point. Quite amusing when thinking about it. Well said. I assume we aren't suggesting that the concentration...
by jalbert
Thu Mar 23, 2017 4:52 pm
Forum: Investing - Theory, News & General
Topic: Blog on emerging Markets, and investors underweighting them
Replies: 63
Views: 3535

Re: Blog on emerging Markets, and investors underweighting them

I find that older investors want no part of EM and that an international large-cap developed markets fund is the furthest that they will venture. Would being old enough to have hypothetically invested $10,000 (with reinvestment of distributions) in VEIEX, the Vanguard emerging markets index fund, a...
by jalbert
Wed Mar 22, 2017 2:06 am
Forum: Investing - Help with Personal Investments
Topic: I am in US equities and cash. Am I an idiot?
Replies: 43
Views: 4745

Re: I am in US equities and cash. Am I an idiot?

1. China - a lot of debt and a rapidly aging population 2. Germany - Unable to hold together the European Union by itself 3. Japan - Rapidly aging population, high debt, high expenses, major companies have offshored 4. The rest of Europe - Seems to have adopted socialism which in my opinion stifles...
by jalbert
Mon Mar 20, 2017 5:03 pm
Forum: Investing - Theory, News & General
Topic: an in depth look at gold
Replies: 73
Views: 4085

Re: an in depth look at gold

We still have 40+ years of gold data in the U.S. since the gold standard was abandoned. Some period of unknown length right after the gold standard was abandoned is still biased by havjng recently been on the gold standard. If you are looking at the effect on 40-year returns, one 40-year period is ...
by jalbert
Mon Mar 20, 2017 3:15 pm
Forum: Investing - Theory, News & General
Topic: an in depth look at gold
Replies: 73
Views: 4085

Re: an in depth look at gold

I am not a big fan of MC studies, but I know that many are. Because of the US and other countries going on and off the gold standard several times in the last 150 years, historical data is fairly biased and unreliable. There are significant limitations of Monte Carlo simulations as well, not the le...
by jalbert
Mon Mar 20, 2017 1:31 pm
Forum: Investing - Theory, News & General
Topic: Investing in - WATER - thoughts
Replies: 57
Views: 3524

Re: Investing in - WATER - thoughts

Water consumption in the US in 2010 was: 397,000 acre-feet/yr, let's call it 400,000. Water volume of Lake Superior: 2900 cubic miles. That is approximately 9.8 billion acre-feet, let's call it 10B. Disregarding the fact that water rights for Lake Superior are shared with Canada, it has enough fres...
by jalbert
Mon Mar 20, 2017 1:22 am
Forum: Investing - Theory, News & General
Topic: an in depth look at gold
Replies: 73
Views: 4085

Re: an in depth look at gold

While it's real value over long periods of time isn't likely to go up, it still has had investment value when it comes to smoothing out returns sufficiently to increase SWRs beyond stock and bond only portfolios, at least for the last ~40 years. One of the Trinity studies looked at the effect of ad...
by jalbert
Sat Mar 18, 2017 6:46 pm
Forum: Investing - Theory, News & General
Topic: 15% International Small-Cap vs 30% Total International
Replies: 47
Views: 3270

Re: 15% International Small-Cap vs 30% Total International

I don't think your backtest is a good one; US Stocks outperformed International Stocks over that period, so less international of any kind would help you. But you're right about lower correlations helping your risk-adjusted returns. Let's try a backtest that is actually more fair (Portfolio 3 here ...
by jalbert
Sat Mar 18, 2017 6:31 pm
Forum: Investing - Help with Personal Investments
Topic: I am in US equities and cash. Am I an idiot?
Replies: 43
Views: 4745

Re: I am in US equities and cash. Am I an idiot?

One of the ironic reasons of not making large changes even with the overlap is I do not want to incur large capital gains taxes.

This is a typical situation in taxable space. One thing you can do is direct all distributions to the fund(s) you wish to increase in allocation.
by jalbert
Sat Mar 18, 2017 12:25 am
Forum: Investing - Help with Personal Investments
Topic: I am in US equities and cash. Am I an idiot?
Replies: 43
Views: 4745

Re: I am in US equities and cash. Am I an idiot?

Thank you to the poster who indicated I may be over-allocated is Health Care due to the 500 index and Primecap. And due to vtclx and vtsax. It is not hurting you to own vfiax, vtclx, and vtsax together, but vtclx corresponds to roughly 90% of the largest holdings of vtsax, and vfiax corresponds to ...
by jalbert
Fri Mar 17, 2017 9:23 pm
Forum: Investing - Theory, News & General
Topic: How do international ETFs work if they are open during US hours but international markets aren't?
Replies: 23
Views: 1631

Re: How do international ETFs work if they are open during US hours but international markets aren't?

Major European markets have trading hours with substantial overlap with NY. Canadian and Latin American markets obviously do as well. Asian and African markets, and Australia and New Zealand markets have trading time windows that do not overlap with NY (with some possible exceptions due to extended ...
by jalbert
Thu Mar 16, 2017 12:41 pm
Forum: Investing - Help with Personal Investments
Topic: I am in US equities and cash. Am I an idiot?
Replies: 43
Views: 4745

Re: I am in US equities and cash. Am I an idiot?

The most important question is whether 80% stock is a suitable allocation. Second would be: what is a suitable stock portfolio? For instance, when establishing your allocation to the healthcare sector, were you aware that the Primecap fund is 25% healthcare stocks, and the S&P500 is 14% healthca...
by jalbert
Thu Mar 16, 2017 1:01 am
Forum: Investing - Theory, News & General
Topic: Vang Tot Stock Mkt Index Composition
Replies: 17
Views: 1588

Re: Vang Tot Stock Mkt Index Composition

If it is easy to get the ETF but there is substantial friction to getting the mutual fund, then you probably just want to go with the ETF. On the other hand, years into the future it will hopefully have too much embedded gain to be moved easily (although an in-kind transfer would still likely be pos...
by jalbert
Thu Mar 16, 2017 12:40 am
Forum: Personal Finance (Not Investing)
Topic: How do Bogleheads handle allowance?
Replies: 38
Views: 2836

Re: How do Bogleheads handle allowance?

Was there a typo in the son's age (2 1/2)?
by jalbert
Wed Mar 15, 2017 10:35 pm
Forum: Investing - Theory, News & General
Topic: Who has the cheapest funds? It’s more complicated than you think
Replies: 27
Views: 2604

Re: Who has the cheapest funds? It’s more complicated than you think

I follow what you're saying. I still don't see that the amount that a fund doesn't track the index is a bad thing. While there have been some visible misses on index tracking by a large index fund due to investments not tracking the index (BND by Vanguard and EEM by ishares come to mind), almost al...
by jalbert
Wed Mar 15, 2017 12:22 am
Forum: Investing - Theory, News & General
Topic: DALBAR report methodological flaws - Prof. Pfau
Replies: 29
Views: 2324

Re: DALBAR report methodological flaws - Prof. Pfau

DALBAR also looks at individual funds and not investor portfolios. If an investor has a 401K and IRA as an example, and a stock index fund is cheaper in the 401K and bond fund cheaper in the IRA, then the investor likely allocates accordingly. Now suppose the 401K fund options change, so that the sa...
by jalbert
Tue Mar 14, 2017 11:55 pm
Forum: Investing - Theory, News & General
Topic: Who has the cheapest funds? It’s more complicated than you think
Replies: 27
Views: 2604

Re: Marketwatch: who has the cheapest funds? It's complicated

any thoughts on factoring tracking error with ER? My view is that if you have tracking error info then that is what matters, and ER is irrelevant. Expenses not accounted for in ER are a drag on tracking ability so they still show up there. Tracking error still does not account for how much securiti...
by jalbert
Mon Mar 13, 2017 10:03 pm
Forum: Investing - Theory, News & General
Topic: Total International vs Developed Markets: a straightforward question
Replies: 21
Views: 1801

Re: Total International vs Developed Markets: a straightforward question

OK let me throw in another three cents. What is the difference between domestic large cap and foreign developed large cap? Different sector weightings would be one significant difference. Comparing a total market developed market non-US fund, VEA, to a total market US fund like VTI: VTI is about 18...
by jalbert
Mon Mar 13, 2017 4:41 pm
Forum: Investing - Theory, News & General
Topic: Total International vs Developed Markets: a straightforward question
Replies: 21
Views: 1801

Re: Total International vs Developed Markets: a straightforward question

The total int'l fund likely will have larger transaction costs due to the higher costs associated with EM stocks, so the cost difference is likely greater than 2bp/yr. However, both costs are still low enough that the decision should be made according to which of these asset classes you prefer to ho...
by jalbert
Mon Mar 13, 2017 12:26 pm
Forum: Investing - Theory, News & General
Topic: Vang Tot Stock Mkt Index Composition
Replies: 17
Views: 1588

Re: Vang Tot Stock Mkt Index Composition

Is total stock market ideal for taxable brokerage accounts? From what I have seen, it is one of the best overall funds for taxable. Yes. It also is a mistake to hold separate value and growth funds when you want the combined market portfolio. When stocks move from the value piece to the growth piec...
by jalbert
Mon Mar 13, 2017 4:15 am
Forum: Investing - Theory, News & General
Topic: Vang Tot Stock Mkt Index Composition
Replies: 17
Views: 1588

Re: Vang Tot Stock Mkt Index Composition

You are correct that the vanguard mid-cap index funds in question track CRSP indices, but I still claim that the midcap funds are redundant, and that the so-called small-cap index fund is a small and midcap fund that achieves market completion for the large cap index fund. CRSP has a very unusual ta...
by jalbert
Mon Mar 13, 2017 2:55 am
Forum: Investing - Theory, News & General
Topic: Vang Tot Stock Mkt Index Composition
Replies: 17
Views: 1588

Re: Vang Tot Stock Mkt Index Composition

Thr mid-cap indices would not be part of configuration. Those large cap funds track CRSP indices and the so-called small-cap funds track indices that contain small and mid caps and achieve market completion for the large-cap indices. Thus, the small-cap index fund is a market completion index fund f...
by jalbert
Sun Mar 12, 2017 12:19 am
Forum: Investing - Help with Personal Investments
Topic: Vanguard Yubikey-only option?
Replies: 33
Views: 2448

Re: Vanguard Yubikey-only option?

Many financial service providers, including Vanguard get the security engineering of authentication wrong. If you cannot disable SMS 2-factor codes, then adding a Yubikey actually reduces the authentication security, albeit very minimally. That's because it just adds another point of attack to what ...
by jalbert
Sat Mar 11, 2017 11:55 pm
Forum: Investing - Theory, News & General
Topic: Getting deeper small-cap value exposure in taxable is almost free
Replies: 24
Views: 2495

Re: Getting deeper small-cap value exposure in taxable is almost free

VIOV had a 42% turnover rate last year. Not sure you can count on it not having capital gain distributions in the future.
by jalbert
Tue Mar 07, 2017 11:53 pm
Forum: Investing - Help with Personal Investments
Topic: Moving EF Away from LifeStrategy Funds
Replies: 14
Views: 1161

Re: Moving EF Away from LifeStrategy Funds

To be honest, I think that VWINX beats the pants off of VSCGX in terms of both volatility (lower) and returns (higher). Wellesley Income has a very low non-US equity position, vs VSCGX which has 40% of equities in non-US holdings. There is no guarantee the outperformance of VWINX will continue, as ...
by jalbert
Tue Mar 07, 2017 12:58 am
Forum: Investing - Theory, News & General
Topic: Bond yields, from 1714
Replies: 20
Views: 2227

Re: Bond yields, from 1714

The once-in-a-millenia sharp rise from 1930 to 1980 is still only about 30 basis points of yield increase per year. For a treasury bond fund with a 5-6 year duration that's still less of a price drop in a year than a year's interest even at current yields. Inflation was the issue.
by jalbert
Mon Mar 06, 2017 9:46 pm
Forum: Investing - Help with Personal Investments
Topic: Making sure I don't screw up Mega Backdoor Roth
Replies: 19
Views: 1577

Re: Making sure I don't screw up Mega Backdoor Roth

I would not want to be doing monthly rollovers between institutions. These require alot of attention and due diligence to ensure everything happens correctly. I think you are better off doing in-plan Roth conversions within the 401K. If you want the funds in a Roth IRA, do 1 rollover per year at mos...
by jalbert
Sun Mar 05, 2017 3:07 pm
Forum: Investing - Help with Personal Investments
Topic: Bid-Ask Spread
Replies: 11
Views: 405

Re: Bid-Ask Spread

Any deviation of the bid-ask spread from its recent historical average on the day of purchase would pale in comparison to daily fluctuations in share price. If you are concerned about the issue, use limit orders to control purchase price, and don't worry about distinguishing between the effects of i...
by jalbert
Sun Mar 05, 2017 3:40 am
Forum: Investing - Theory, News & General
Topic: What degree of stock market decline would tempt you to deviate from your AA?
Replies: 87
Views: 5741

Re: What degree of stock market decline would tempt you to deviate from your AA?

The All World Crashes by 50% and now yields 4% (probably, as dividends don't usually change that much) so I'm still getting the same 40k.

Dividends can be reduced significantly in a bear market.
by jalbert
Sat Mar 04, 2017 4:01 pm
Forum: Investing - Theory, News & General
Topic: Why not hedge using futures?
Replies: 54
Views: 3550

Re: Why not hedge using futures?

In the 1980's, a dynamic hedging method called portfolio insurance was used pervasively. It involved buying and selling of S&P500 futures contracts. On Oct. 19, 1987 everyone was selling and liquidity dried up in the futures market, resulting in a spectacular market crash.
by jalbert
Fri Mar 03, 2017 4:30 pm
Forum: Investing - Help with Personal Investments
Topic: Ever dip your feet into individual stocks?
Replies: 63
Views: 3230

Re: Ever dip your feet into individual stocks?

The problems are more severe than just the question of picking the right stocks. You are taking uncompensated unsystematic risk.

It is much better to take risks for which you are compensated.
by jalbert
Fri Mar 03, 2017 1:37 am
Forum: Investing - Help with Personal Investments
Topic: Why would I buy Bonds now?
Replies: 18
Views: 3596

Re: Why would I buy Bonds now?

Bonds have term risk, i.e. the risk that interest rates rise, and prices fall. However, they mitigate reinvestment risk, i.e rates falling and having to reinvest at the lower rate. Cash has no term risk, but considerable reinvestment risk. Long bonds have minimal reinvestment risk but considerable t...
by jalbert
Thu Mar 02, 2017 8:17 pm
Forum: Investing - Help with Personal Investments
Topic: 40 year old Investing for the 1st time - How am I doing?
Replies: 22
Views: 1746

Re: 40 year old Investing for the 1st time - How am I doing?

One detail is that, while VSIAX is called a small-cap value index, it is really a small and midcap value index, so it is not necessary to hold a midcap value index, and doing so just complicates the allocation.
by jalbert
Thu Mar 02, 2017 12:52 pm
Forum: Investing - Theory, News & General
Topic: claim: stock/bond allocation should be independent of investment horizon
Replies: 56
Views: 4399

Re: claim: stock/bond allocation should be independent of investment horizon

For whatever reasons in this financial context, "random walk" is consistently used to mean something much more narrow, stemming from papers in the '60s. They generally mean that there's independence, and... actually, you know what, I'd have to check all the old papers to make sure my unde...
by jalbert
Wed Mar 01, 2017 11:56 pm
Forum: Investing - Theory, News & General
Topic: claim: stock/bond allocation should be independent of investment horizon
Replies: 56
Views: 4399

Re: claim: stock/bond allocation should be independent of investment horizon

Stocks being a random walk does not mean that they have they have the same probability of increasing after, say, a 50% drop, as they had before the drop. A random walk for a stock price or return is just a Markov chain. Based on new information/events and current state, there are probabilities of mo...
by jalbert
Tue Feb 28, 2017 5:34 pm
Forum: Investing - Theory, News & General
Topic: American funds article - active vs indexing argument
Replies: 4
Views: 872

Re: American funds article - active vs indexing argument

American Funds products are fine if you can get them without a front-end load (often as high as 5.75% off the top), and can figure out the appropriate benchmark on your own.
by jalbert
Tue Feb 28, 2017 3:52 pm
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

That's not a fair comparison, though. Since 1993 equities and bonds have had different low-correlation growth rates during different time intervals, so comparing a blended allocation to one or the other pure allocation is not meaningful. Of course the inclusion of 27% equities increases the CAGR of...
by jalbert
Tue Feb 28, 2017 2:45 pm
Forum: Personal Consumer Issues
Topic: Warning & Advice Requested
Replies: 19
Views: 1188

Re: Warning & Advice Requested

I think Venmo was just fulfilling their reporting requirements under the Bank Secrecy Act:

https://www.ffiec.gov/bsa_aml_infobase/ ... LM_015.htm
by jalbert
Mon Feb 27, 2017 6:34 pm
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

How does raising the equity position while lowering corporate bonds and raising treasuries produce less overall risk? Over the period in question, when equities declined, treasuries appreciated while corporates declined. Treasuries thus diversified equity risk, but corporates did not, leading to th...
by jalbert
Mon Feb 27, 2017 1:10 am
Forum: Investing - Help with Personal Investments
Topic: VFIJX - GNMA Admiral - SEC Yield jumped?
Replies: 16
Views: 1004

Re: VFIJX - GNMA Admiral - SEC Yield jumped?

GNMAs are very complex to model. The convexity is actually a random variable, not a deterministic behavior, particularly as rates rise. When rates rise, three properties of GNMAs are favorable to the investor: 1. prepayment risk from refis is reduced 2. prepayments that do occur (home sales, refis, ...
by jalbert
Mon Feb 27, 2017 12:39 am
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

Over this period or any other, comparing directly to VTSMX+VFITX doesn't really answer the question about whether it would help. One way to frame the question is that if choosing an allocation to equities and nominal bonds, does limiting the bond portfolio to treasuries enable a larger allocation t...
by jalbert
Sun Feb 26, 2017 6:29 pm
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

Of course the inclusion of 27% equities increases the CAGR of VTSMX+VFITX, while the mix of equities and bonds provided downside protection. The point was that over the last 20 years anyway (which may be highly biased and not generalizable) the substitution of 27% equities and 72% treasuries for co...
by jalbert
Sun Feb 26, 2017 5:58 pm
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

The problem here is that this comparison doesn't explore the relationship between VFICX and the VTSMX+VFITX combination. Of course two largely uncorrelated assets when mixed can produce a better Sharpe ratio than a single other asset. The point was that if bonds are held to diversify the risk of eq...
by jalbert
Sat Feb 25, 2017 7:46 pm
Forum: Investing - Theory, News & General
Topic: Buffett Annual Letter 2016 [Jack Bogle is a hero]
Replies: 69
Views: 5504

Re: Buffett Annual Letter 2016 [Jack Bogle is a hero]

Agreed, but the bet isn't over. If the fund of funds is fully hedged and the S&P500 drops 50% this year, Mr. Buffett could still lose the bet. Of course, I wouldn't bet on that happening.
by jalbert
Sat Feb 25, 2017 5:59 pm
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

Risk is about what could happen, not what you think will happen. When a risk has materialized in the past, it certainly is a legitimate risk. Events of 2008 show that corporate bonds may not always be a useful diversifier of equity risk. More worrisome for including credit in a long-term asset alloc...
by jalbert
Fri Feb 24, 2017 5:35 pm
Forum: Personal Finance (Not Investing)
Topic: BH thoughts on Time shares
Replies: 123
Views: 7890

Re: BH thoughts on Time shares

It is likely a monthly maintenance fee which looks fair and reasonable for monthly maintenance cost until you realize it needs to be multiplied by 52 and not 12 to annualize it, Of course I was incorrect there. You need to multiply a monthly maintenance fee for a 1-week timeshare by 624 (52x12) to ...
by jalbert
Fri Feb 24, 2017 5:23 pm
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

It still seems strange to me that an investor would decide about the long term asset allocation solely on what happened in a period of one year or less (e.g. 2008) instead of using longer periods of performance for such an evaluation. I don't think investors do that. The point of looking at 2008 is...
by jalbert
Fri Feb 24, 2017 2:09 am
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

I don't know why there isn't enough emphasis in discussions in this forum on total return and duration when intermediate bond funds are being compared but most of the talk is about 2008! I think that is because many investors hold bonds to offset the risk in equities. A bond fund that is down 14% d...
by jalbert
Wed Feb 22, 2017 8:50 pm
Forum: Investing - Help with Personal Investments
Topic: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]
Replies: 49
Views: 4823

Re: VBILX vs VBTLX [Vanguard Intermediate-Term vs. Total Bond]

Between 6/1/2008 and 11/1/2008, total returns per Morningstar for VBTLX, VBILX, and VFIDX were: vbtlx: -2.9% vbilx: -7% vfidx: -12.64% vfidx, the corporate bond fund was hit hard just when stocks were crashing, and the higher corporate bond exposure of vbilx led to a significantly larger drawdown th...

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