Search found 834 matches

by jbolden1517
Sat Aug 26, 2017 7:16 pm
Forum: Personal Finance (Not Investing)
Topic: Why do we consider cash flow from rentals but not our own homes?
Replies: 89
Views: 6141

Re: Why do we consider cash flow from rentals but not our own homes?

The house is paid off. How are you coming up with the $1200 rent? Rent equivalent. I just took the house to be worth 150 month's rent (very ballpark but I needed some number to work with) Paid off just means you don't have a short bond position (a mortgage). You are still renting out that house to ...
by jbolden1517
Sat Aug 26, 2017 3:57 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 113
Views: 8649

Re: Do Index Funds Distort Market Valuations?

Just keep believing that Savita never wrote the article. I'm not sure how the rest of house of cards work regarding the stocks I cited. Whether you believe those stocks don't exist that Nasdaq was lying about their announced dilutions or that the financial data is wrong and they really are vastly l...
by jbolden1517
Sat Aug 26, 2017 2:34 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 113
Views: 8649

Re: Do Index Funds Distort Market Valuations?

Hope this way of thinking about the market by breaking apart TSM helps. Writing it helped me clarify my thoughts. Thanks for this discussion. It really opened my eyes. I have to read a lot more on this subject before I can make any intelligent comments, or even decide whether and to what degree I a...
by jbolden1517
Sat Aug 26, 2017 1:42 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 113
Views: 8649

Re: Do Index Funds Distort Market Valuations?

Would this show up as tracking error with the fund underperforming the index, or would the actual index underperform the market? It would cause the index to underperform the market. That's precisely what happened with VPACX which is why I keep bringing it up. In this case the Japanese government an...
by jbolden1517
Sat Aug 26, 2017 12:30 pm
Forum: Investing - Help with Personal Investments
Topic: Stocks On Sale - What do you buy?
Replies: 64
Views: 6318

Re: Stocks On Sale - What do you buy?

Modigliani And Miller showed dividends And share buybacks are equivalent c except for personal taxes. They provided a set of equations for the return on dividends vs. buybacks. The showed that an equilibrium exists between those equations if one assumes that all markets are priced perfectly relativ...
by jbolden1517
Sat Aug 26, 2017 12:15 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 113
Views: 8649

Re: Do Index Funds Distort Market Valuations?

Unfortunately, it now seems to have degenerated into just an appeal to authority — jbolden’s own, I’m afraid. Bull. The evidence for Savita's claim presented right here was random sampling of the stocks which diluted. The context here was I was claiming to have seen it. You didn't believe that. We ...
by jbolden1517
Sat Aug 26, 2017 11:13 am
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 113
Views: 8649

Re: Do Index Funds Distort Market Valuations?

BofA owns the shares (though they likely are offsetting 100% of the risk and return with the derivatives). The shares exist they are float, the float numbers are accurate. The float is being disclosed fully and accurately. BofA can in their earnings report disclose the derivative position as a liab...
by jbolden1517
Sat Aug 26, 2017 6:45 am
Forum: Investing - Theory, News & General
Topic: Dumb, basic question about market-cap weighted funds?
Replies: 57
Views: 4255

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

Thanks, JBolden, I really appreciate the encouragement. I'm a big reader and am not the least bit afraid of spreadsheets and a calculator, so I am certainly willing to learn. Are there books, resources, authors, contributors here or on Seeking Alpha, etc., that you would specifically recommend? I'v...
by jbolden1517
Sat Aug 26, 2017 5:55 am
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 113
Views: 8649

Re: Do Index Funds Distort Market Valuations?

I don't know. Essentially B of A is acting as an investment bank for the transaction and would want hefty fees. Well first off BofA is an investment bank remember they own Merrill. But this is just acting like a Bank. Holding an asset as collateral against a loan. Technically of course they have to...
by jbolden1517
Sat Aug 26, 2017 5:27 am
Forum: Investing - Help with Personal Investments
Topic: Stocks On Sale - What do you buy?
Replies: 64
Views: 6318

Re: Dividends and Risky Bonds

Taylor we aren't disagreeing on bonds entirely. There are two things that get you paid on USA bonds credit risk and duration risk. Duration risk at low interest rates (whether interest rates go up or down on treasuries) doesn't seem to correlate mostly at low interest rates, much the opposite. So hi...
by jbolden1517
Fri Aug 25, 2017 8:33 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 113
Views: 8649

Re: Do Index Funds Distort Market Valuations?

Third, Bank of America aside, the preponderance of evidence shows that index funds are a small fraction of trading volume. Vanguard trades when investors buy shares, redeem shares, or when changes are made to the indexes. Turnover in the broad indexes like US Total Market and the S&P 500 are very l...
by jbolden1517
Fri Aug 25, 2017 7:52 pm
Forum: Personal Finance (Not Investing)
Topic: Why do we consider cash flow from rentals but not our own homes?
Replies: 89
Views: 6141

Re: Why do we consider cash flow from rentals but not our own homes?

Could you do better long term by investing that money and paying rent? Possibly. It is entirely possible your home is a low returning asset. It is also possible it is an extremely high returning asset. It is going to act like any other non-diversified investment and have tons of non-systematic risk...
by jbolden1517
Fri Aug 25, 2017 7:33 pm
Forum: Investing - Theory, News & General
Topic: Charles Schwab example portfolio question
Replies: 8
Views: 857

Re: Charles Schwab example portfolio question

pushrodv8 wrote:
Fri Aug 25, 2017 4:53 pm
FWIW the Schwab Intelligent Portfolio is open to you is a rather good portfolio (my recommended robo) and would allow you to assume control at any point at the individual fund level unlike a target date fund.
by jbolden1517
Fri Aug 25, 2017 6:25 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

Market cap is interesting the only potential flag: growth is 57% value 43% norm is 50/50. Which would means growth stocks are growing their earnings extremely fast and that's being reflected in just 8 months of price changes. I'd like to know what's causing that. Synthetic float would allow those c...
by jbolden1517
Fri Aug 25, 2017 6:06 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

I did read the thread; you failed to address Dirghatamas' systemic critique of your claims. And, what you really mean is it supports what you say BofA is claiming; I haven't seen any evidence they have claimed this. I presented the stocks. If his theory is true 8 of those dilutions should not have ...
by jbolden1517
Fri Aug 25, 2017 5:38 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

Now of course Ariel funds is after investor like you. They are losing money to Blackrock, Vanguard, SSGA... But I'd like to point out the people who have been arguing this the strongest could care less about administrating your account. You have to explain that in your theory of self-deluded exagge...
by jbolden1517
Fri Aug 25, 2017 5:35 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

Indexing is a unique strategy in that it has very large capacity - a large portion of the market can index, long-term, without causing any issues. It also has strong theoretical backing (via the efficient market hypothesis). Other strategies (like, say, value tilting or momentum investing) would ca...
by jbolden1517
Fri Aug 25, 2017 4:58 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

[OT comments removed by admin LadyGeek] The belief is that Indexing is somehow a unique trading strategy and unlike the countless other examples of trading strategies that got popular and caused distortion. Yes, that is what I believe. It's almost a truism. Indexing is the only trading strategy tha...
by jbolden1517
Fri Aug 25, 2017 4:03 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

I do not think your analogy holds because there isn't that much in common between TSM/SP500 and the QQQ. The QQQ only held stocks that happened to be trading on the Nasdaq, and was overwhelming composed of tech companies; that was the entire point in the dotcom days. It wasn't diversified at all; i...
by jbolden1517
Fri Aug 25, 2017 2:30 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

There is the argument that indexing distorts the markets, buying stocks regardless of valuations. My guess is that if this was happening that the Value premium, or at least the future expected returns of Value stocks, would greatly increase. I see no evidence this is happening. Relative to growth s...
by jbolden1517
Fri Aug 25, 2017 1:42 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

QQQ as a future and as an index was very big when I started on par with SPX among retail investors. When average people talked about "indexing" they often meant QQQ not TSM or SPX. So I've personally witnessed indexes go out of fashion with retail investors. That is because at the time, QQQ was the...
by jbolden1517
Fri Aug 25, 2017 1:00 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Passive investing is a Ponzi scheme

That is only correct if there are enough active investors participating in the market. If 99 people don't care what the price is (because they are passively investing) and 1 person determines the stock is underpriced by 10%, that 1 person can do nothing to profit because 99 people don't care what h...
by jbolden1517
Fri Aug 25, 2017 12:55 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

The belief is that Indexing is somehow a unique trading strategy and unlike the countless other examples of trading strategies that got popular and caused distortion. Ummmm, isn't indexing in fact a non-trading strategy? Nope. Index funds don't get their stocks from the stock fairy. Excluding the m...
by jbolden1517
Fri Aug 25, 2017 12:45 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Passive investing is a Ponzi scheme

Another comment that I would like to make is that trading volumes on the exchanges have been going up and not down. This drives down bid/ask spreads, makes the markets more liquid, and contributes towards making the markets more efficient. One big problem, particularly for company management, is th...
by jbolden1517
Fri Aug 25, 2017 12:39 pm
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

Why? She runs a value house and manages some value funds. She has a lot of funds that trade in illiquid parts of stock markets. She sees wide spreads everyday when stocks have fallen hard. She believes in buying stocks based on their fundamentals. Indexers believe in buying stocks based on their fl...
by jbolden1517
Fri Aug 25, 2017 10:54 am
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Passive investing is a Ponzi scheme

Was there a time when most stocks were held by individual investors,not institutions and mutual funds? If memory serves household direct ownership went under 50% in 1989. I believe its still about as high as pension funds and mutual funds combined. The really big change since then is international ...
by jbolden1517
Fri Aug 25, 2017 10:32 am
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Passive investing is a Ponzi scheme

I have thought the same. If there is more distortion in the market as to what the "accurate" "value" is of the stock shouldn't active managers like that? That means they should have MORE belief that they can generate alpha? That does not seem to be true as it seems everyday a new manager is coming ...
by jbolden1517
Fri Aug 25, 2017 9:55 am
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

The problem with making this play is you are taking on tremendous market risk by holding Facebook. Most of the share price is the cost of playing the ponzi scheme not the intrinsic value of the stock. This is precisely the point. Risk is a component of price, right? To get more return you have to t...
by jbolden1517
Fri Aug 25, 2017 9:39 am
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

Heck, why would a skilled professional active stock or bond fund manager feel a need to complain about market pricing distortions or anomalies from indexing? I'd think they'd welcome them as their superior knowledge would let them exploit the "dumb money" index investors rather than continue the se...
by jbolden1517
Fri Aug 25, 2017 9:22 am
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

In the interview she did mention specific examples of where she felt the risk in indexing were particularly acute with the FANG stocks vs. stocks like Microsoft where you get the same growth at more reasonable valuations. Why doesn't she invest in FANG stocks, stay away from Microsoft, and enjoy he...
by jbolden1517
Fri Aug 25, 2017 9:09 am
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

We now have hundreds if not thousands of market professionals coming forward and saying float trading is breaking the ability of the stock market to accurately price assets either in relative or absolute terms. We have hundreds of market professionals coming forward and saying that float trading ha...
by jbolden1517
Fri Aug 25, 2017 8:10 am
Forum: Investing - Theory, News & General
Topic: Passive investing is a Ponzi scheme
Replies: 77
Views: 6059

Re: Active investing is a Ponzi scheme

That whole interview was little more than a word salad. I agree but I was astonished at the carelessness of her rhetoric. Why? She runs a value house and manages some value funds. She has a lot of funds that trade in illiquid parts of stock markets. She sees wide spreads everyday when stocks have f...
by jbolden1517
Fri Aug 25, 2017 7:40 am
Forum: Personal Finance (Not Investing)
Topic: Why do we consider cash flow from rentals but not our own homes?
Replies: 89
Views: 6141

Re: Why do we consider cash flow from rentals but not our own homes?

Am I missing something? No you are absolutely correct. Your home is part of your portfolio as a non-diversified real estate holding paying a return to you of the rent equivalent minus upkeep expenses & taxes, ... Your mortgage is a short bond position and is also part of your portfolio. Could you d...
by jbolden1517
Fri Aug 25, 2017 7:37 am
Forum: Investing - Help with Personal Investments
Topic: Schwab bid/ask spread
Replies: 6
Views: 509

Re: Schwab bid/ask spread

Schwab Index ETFs have bid/ask spreads of up to 10.8%! Is it just me, or is that crazy high? If I sell the stock after 20 years, this has the same effect as a 0.5% fee / year. If that were an expense ratio, I'd laugh and say I'd never invest in something with such high fees. First off the comment a...
by jbolden1517
Fri Aug 25, 2017 6:54 am
Forum: Investing - Help with Personal Investments
Topic: Stocks On Sale - What do you buy?
Replies: 64
Views: 6318

Re: TSM

[OT comments removed by admin LadyGeek] The DDM produces an equation still produces an equation which defines return in terms of those undermined constants, or defines intrinsic value in terms of a fixed discount rate. Nothing has changed. Everything has changed - the equation still exists but the ...
by jbolden1517
Fri Aug 25, 2017 6:08 am
Forum: Investing - Theory, News & General
Topic: Case for Investing at Peaks
Replies: 29
Views: 3732

Re: Case for Investing at Peaks

I know that the mantra here is to invest when you have $ and not try to time the market, but I'm finding it hard to invest in the current market (especially in the U.S. market) because it's so fully valued. There are parts of the USA market that aren't that fully valued. There are sectors that are ...
by jbolden1517
Thu Aug 24, 2017 10:37 pm
Forum: Investing - Help with Personal Investments
Topic: Stocks On Sale - What do you buy?
Replies: 64
Views: 6318

Re: TSM

But having trouble estimating a fact doesn't change that it is a fact. There is some fixed number of stars in the universe. I don't the number but there is some number. Come on, you are comparing not knowing a fact about the current universe with not knowing the undetermined future I'm not entirely...
by jbolden1517
Thu Aug 24, 2017 8:44 pm
Forum: Investing - Theory, News & General
Topic: Passive vs. Active Portfolio Mgt ?
Replies: 17
Views: 2024

Re: Passive vs. Active Portfolio Mgt ?

Interesting Barron's article on how the huge rise in Passive Index Investing may be changing the "Efficient Market" and might move Active Portfolio Mgt. back into vogue. Vanguard is referenced extensively so I'm curious to hear the BH's take on this article? That's an older article. But let me grab...
by jbolden1517
Thu Aug 24, 2017 8:19 pm
Forum: Investing - Theory, News & General
Topic: Unrated municipal bonds
Replies: 25
Views: 2665

Re: Unrated municipal bonds

I think if you want to capture this explicitly, passively, and systematically, the best vehicle is Van Eck's Fallen Angel ETF ANGL for the following reasons: 1. It rebalances monthly for its index, meaning it scoops up the downgrades and sends off the BBB upgrades. 2. It only has fallen angels (non...
by jbolden1517
Thu Aug 24, 2017 8:06 pm
Forum: Investing - Theory, News & General
Topic: Long-run Sharpe Ratios in an ideal world
Replies: 43
Views: 5116

Re: Long-run Sharpe Ratios in an ideal world

I would like to propose C.) The price of a stock is the best estimate of its individual future dividends (and buybacks) discounted at a rate deemed appropriate by the consensus of investors to compensate them for their perceived risk of that individual stock. Wouldn't different discount rates be us...
by jbolden1517
Thu Aug 24, 2017 7:34 pm
Forum: Investing - Theory, News & General
Topic: Long-run Sharpe Ratios in an ideal world
Replies: 43
Views: 5116

Re: Long-run Sharpe Ratios in an ideal world

I have a question about theory that I've been pondering: Assuming that the strong form of the efficient market hypothesis holds, would all diversified investments have identical Sharpe ratios (before expenses) if an investment has an infinite time horizon and no black swan events occur? (I know the...
by jbolden1517
Thu Aug 24, 2017 6:46 pm
Forum: Investing - Help with Personal Investments
Topic: Are US S&P 500 Index funds speculative investments?
Replies: 63
Views: 4691

Re: Are US S&P 500 Index funds speculative investments?

I think the bigger question they stumbling into is does valuations matter? For a passive, long only, static asset allocation holder the answer is correct which NO. You are quite mistaken. Consider three assets identical in return but selling at different prices X is a 5% bond selling at par Y is a ...
by jbolden1517
Thu Aug 24, 2017 6:41 pm
Forum: Investing - Help with Personal Investments
Topic: Stocks On Sale - What do you buy?
Replies: 64
Views: 6318

Re: TSM

It is not true that Bogleheads are anti-dividend. They are against using dividend investing to the extent it reflects a misunderstanding in how investing works. And, given the academic literature that dividends do not yield a diversifying excess return, Sorry but I'll disagree, they are rather stro...
by jbolden1517
Thu Aug 24, 2017 5:58 pm
Forum: Investing - Help with Personal Investments
Topic: Are US S&P 500 Index funds speculative investments?
Replies: 63
Views: 4691

Re: Are US S&P 500 Index funds speculative investments?

I think the bigger question they stumbling into is does valuations matter? For a passive, long only, static asset allocation holder the answer is correct which NO. You are quite mistaken. Consider three assets identical in return but selling at different prices X is a 5% bond selling at par Y is a ...
by jbolden1517
Thu Aug 24, 2017 4:52 pm
Forum: Investing - Help with Personal Investments
Topic: Stocks On Sale - What do you buy?
Replies: 64
Views: 6318

Re: TSM

I don't think I'm a dividend fiend so much as Bogleheads has developed an anti-dividend culture which forgets that the whole point of a stock is the stream of the dividends. Gross mischaracterization. There is no anti-dividend culture here (beyond tax efficiency matters). There is, however, a cultu...
by jbolden1517
Thu Aug 24, 2017 4:31 pm
Forum: Investing - Help with Personal Investments
Topic: Are US S&P 500 Index funds speculative investments?
Replies: 63
Views: 4691

Re: Are US S&P 500 Index funds speculative investments?

There is no anti-dividend crowd. But I suspect you knew that already. And then the reason there are hysterics anytime dividends are mentioned is...? If you don't want to be accused of being dividend jihadists then stop acting like the most benign comments about dividends are controversial. The divi...
by jbolden1517
Thu Aug 24, 2017 3:51 pm
Forum: Investing - Help with Personal Investments
Topic: Stocks On Sale - What do you buy?
Replies: 64
Views: 6318

Re: TSM

However let me just say that I agree with you that TSM holds 3613 diversified stocks including lots of the largest and most successful corporations in the United States. I don't agree with you on diversified and that's all it has. It has lots of the least successful companies. But that's not the pr...
by jbolden1517
Thu Aug 24, 2017 2:16 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Wait & You'll Likely Miss Out
Replies: 74
Views: 10485

Re: Larry Swedroe: Wait & You'll Likely Miss Out

Alan's fund invests in 5% bonds and his shareprice is at NAV. When you invest in Alan you compound at 5% annually Bill's fund invests in 7% bonds. When you invest with Bill you compound at 7% annually. .... Alan P/E = 20 Bill P/E = 28 Bill's fund can reinvest in more 7% bonds, but I'm not sure it's...
by jbolden1517
Thu Aug 24, 2017 9:36 am
Forum: Investing - Theory, News & General
Topic: Dumb, basic question about market-cap weighted funds?
Replies: 57
Views: 4255

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

I might just have to go hire a therapist or maybe a hypnotist to help me get over what feels like "blind" purchasing without consideration of cost, price, value, etc... I can't think of any other area of my life where I handle money that way so this is just really counter-intuitive for me. I mean, ...
by jbolden1517
Thu Aug 24, 2017 9:09 am
Forum: Investing - Help with Personal Investments
Topic: Selecting from limited 401k investment options
Replies: 8
Views: 645

Re: Selecting from limited 401k investment options

Vanguard Inflation-Protected Secs Adm Vanguard Extended Market Index Inst Vanguard Institutional Index I Vanguard Total Int. Stock Index Admiral Additionally, the 401k offers a slate of SSGA Target Retirement funds. The one with a target retirement date of 2050 has a gross expense ratio of .15% and...