Search found 138 matches

by jbolden1517
Fri Jul 21, 2017 6:50 am
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

Many indices are float adjusted: http://www.indexologyblog.com/2013/07/30/inside-the-sp-500-float-adjustment/ If the float adjustment cancels out the effects that you mention, then indexing is not affected by float manipulation. I think if float manipulation became a big problem index providers cou...
by jbolden1517
Fri Jul 21, 2017 6:01 am
Forum: Investing - Theory, News & General
Topic: Dividend Misunderstandings & Only Spend Return
Replies: 122
Views: 8086

Re: Dividend Misunderstandings & Only Spend Return

I only read what you had written next to each article and didn't actually read the actual article, but from what you have written, you are showing the dividend component of total return to hold some very strong, desirable charecterestics. This does not however mean dividend paying companies/funds a...
by jbolden1517
Fri Jul 21, 2017 5:49 am
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

Companies in the SP500 with high P/E ratios use cap weighted index funds as a cheap source of financing because via. float manipulation. 1 sentence 23 words. I haven't read the whole thread ... do you have a specific company as an example? Savita Subramanian (the original article) didn't name any c...
by jbolden1517
Fri Jul 21, 2017 5:28 am
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

- Who are these third parties, and why would they buy the shares and hold them? if it is a subsidiary it will have to be a transparent process requiring approval by two boards. Certainly possible, but again transparent and open to public discovery. First off yes you got it. And yes this is open to ...
by jbolden1517
Fri Jul 21, 2017 4:57 am
Forum: Investing - Help with Personal Investments
Topic: Thoughts on individual dividend investing?
Replies: 80
Views: 5035

Re: Thoughts on individual dividend investing?

Why is tracking error something an investor has to endure? I understand the rationale for a pension fund manager or mutual fund manager but why should an investor care about tracking error? Good conversation. Because for an individual holding a reasonable Portfolio, staying the course is one of the...
by jbolden1517
Thu Jul 20, 2017 8:23 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

Stocks on 5x leverage are a very high returning asset. This is false. The long-run return of levering up 5x on stocks is "you lose all your money". Which is geometric return not arithmetic return. I agree with your sentiment but it wasn't what the post I was responding to was talking abou...
by jbolden1517
Thu Jul 20, 2017 7:57 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

Now to definitions- Float manipulation, as I understand it in general usage, is action taken by a company to restrict the availability of shares in the market, intended to drive the stock price higher by creating an artificial shortage. The term applies in either direction on actual float as contra...
by jbolden1517
Thu Jul 20, 2017 6:00 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

Does there exist a fund that's "Total Stock Market, less the S&P 500?" Other poster was right about VEXMX. There is also an ETF version of that. Just to add to that in case you work in federal government those Wilshire 4500 funds are one of the best buys in the federal retirement list...
by jbolden1517
Thu Jul 20, 2017 5:45 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

I tried to read this and gave up. I do not think it is a deficiency in my comprehension or ability to reason. It would be very interesting and I would be very attentive if you could distill your argument(s) into two comprehensible and terse paragraphs written in clear English. Buckminster Fuller wa...
by jbolden1517
Thu Jul 20, 2017 5:32 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

would classify the boglehead 3 fund as a global growth Portfolio; whereas you are describing more of a risk-parity Portfolio. Two very different things. I think the general consensus on this forum is that if the volatility bothers you, then just save 20%-50% more than you need through a combination...
by jbolden1517
Thu Jul 20, 2017 6:37 am
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

jbolden1517 , I expect many Bogleheads might be open to your arguments, but part of the reason you are getting so much blowback here on this Forum — dedicated to passive, index investing — is that you are making some extraordinary claims: 1) Quoting unpublished, proprietary reports (from Bank of Am...
by jbolden1517
Wed Jul 19, 2017 11:14 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

aegis965 wrote:CSM?


I like the idea of the fund. The fund holds a lot in futures and futures have weird effects from contango. This is a fund you have to watch carefully because it could start to bleed. The bet I think was meant to be 10 years and forget about it.
by jbolden1517
Wed Jul 19, 2017 11:10 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

Got it. EPS, DLN and FNDX I was sorta' expecting to see some small company value, based on your TSM thread comments... This thread is all about cap weighting. That thread was more about different asset classes. For this thread I wanted to pick a portfolio holding a rather mainstream version of the ...
by jbolden1517
Wed Jul 19, 2017 10:31 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

I don't know why you keep referring to VPACX as an SP500 fund. VPACX is an analogy. Japan is a wonderful example of a market where indexing was a disastrous investment strategy. Part of the argument here is that indexing can never be a bad strategy. You are guaranteed to get market return and beat ...
by jbolden1517
Wed Jul 19, 2017 9:58 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

I don't know why you keep referring to VPACX as an SP500 fund. VPACX is an analogy. Japan is a wonderful example of a market where indexing was a disastrous investment strategy. Part of the argument here is that indexing can never be a bad strategy. You are guaranteed to get market return and beat ...
by jbolden1517
Wed Jul 19, 2017 9:15 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

What solution, then, is proposed? Buying low cost active funds? If it's a problem, but retail investors can't do anything about it, why does it matter? What should retail investors do? (Not saying I agree that this is a problem - just pointing out that if it is a problem, there seems to be little t...
by jbolden1517
Wed Jul 19, 2017 9:08 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

The issue isn't so much your thesis as your insistence that index funds have a poor performance when they consistently outperform active funds after fees. Do they? Then what happened with VPACX? When did I say index funds have poor performance? I said growth stocks have poor performance. You told t...
by jbolden1517
Wed Jul 19, 2017 8:21 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

What about potential for arbitrage? If there was truly a way to get a huge, high risk-adjusted total return above the index, active money would flood in and arbitrage away the potential alpha until it wasn't worth it. That's what's happening. Your problem is you are used to thinking of index mutual...
by jbolden1517
Wed Jul 19, 2017 7:35 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

For example, say that a company, XYZ corp, had a share price of $100/share and 1,000,000 shares outstanding. It has a market cap of $100,000,000. Assume that in this hypothetical market, we have Index Fund V, which is the only index fund and holds 10% of the economy's money - so it has 10% of XYZ c...
by jbolden1517
Wed Jul 19, 2017 7:25 pm
Forum: Investing - Help with Personal Investments
Topic: Schwab's Modern Approach to Asset Allocation - Comments
Replies: 27
Views: 2148

Re: Schwab's Modern Approach to Asset Allocation - Comments

This is similar to what Personal Capital recommends. Their approach is not marketing fluff! It is right out of Modern Portfolio Theory. It is not about getting ahead or falling behind. It is about diversification. You have been falling behind the last decade by holding international investments in ...
by jbolden1517
Wed Jul 19, 2017 6:38 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

First, I think that one needs to be clear what happens with selling new shares and increasing market cap. Companies only get more capital from indexers by having a legitimately higher market cap. (At least for float-adjusted cap-weighted indices). If a company dumps out new shares, they decrease th...
by jbolden1517
Wed Jul 19, 2017 5:33 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

Funny I'm not hearing the defense of VPACX. Why didn't your theory pan out in this case?
by jbolden1517
Wed Jul 19, 2017 5:32 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

2pedals wrote:What would be a better way to attract investors than to consistently beat the S&P 500 and/or the TSM?


Advertising and getting in 401Ks, worked. Also to beat the SP500 and TSM by a lot during bull years or on most 3 year cycles.
by jbolden1517
Wed Jul 19, 2017 5:30 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

NGE? For a beginner investor to reduce risk? You cannot possibly be serious. No NGE was suggested for you. I'm rejecting the little game you all keep playing of constantly changing the goal post. You want simple, SIP. You want to build your own portfolio then know what you are doing. And yes that m...
by jbolden1517
Wed Jul 19, 2017 5:15 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

To disprove William Sharpe’s thesis in the OP (that the holdings of active managers, in aggregate, must be market cap-weighted), one would need to show that the float manipulators are a large and significant enough force to impact the overall valuation of the total market. The numbers presented by ...
by jbolden1517
Wed Jul 19, 2017 5:11 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

More importantly these are the early signs of how the market is responding to indexing. As index and passive become dominant forces and not just another market participants other market participants have to react to it. My thesis is that there is a problem in SP500 high P/E stocks, not the market i...
by jbolden1517
Wed Jul 19, 2017 6:13 am
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

Given that we are talking about TOTAL/ market cap weighted stock index funds not individual stocks or very narrow niche index, what matters is the aggregate. An investment strategy can bleed at particular points. 90% bonds + 10% betting black on roulette does worse than pure bonds because roulette ...
by jbolden1517
Tue Jul 18, 2017 10:51 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

If this is so easy and predictable why can't most professionals fund managers beat the TSM consistently? Well first off you are cherrypicking a bit here. Most mutual funds invested in Asia (or Japan) crushed VPACX. But the deeper answer is because they get paid based on assets under management not ...
by jbolden1517
Tue Jul 18, 2017 10:41 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

I see your point on cash. Fair enough. I think you are under-rating bonds. Certainly, anyone who held BND during '08-09 was glad that they did. With interest rates low in recent years they have performed more like cash, but that is a historical anomaly. Historical bond returns are certainly better ...
by jbolden1517
Tue Jul 18, 2017 8:41 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

I don't see how bonds would be considered "dilution". The example is shares of a stock being diluted when more shares of the same stock are being issued. Allocating bonds in a portfolio mitigates the risk of a stock market collapse because it is an entirely different asset class that is a...
by jbolden1517
Tue Jul 18, 2017 7:50 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

I dunno, I'm just a regular guy who likes to go by the commonly understood definitions of English words. Mitigate seems like just as good of a word as dilute in this context. But then again, I am no investment genius. Dictionary: dilute -- the action of making something weaker in force, content, or...
by jbolden1517
Tue Jul 18, 2017 6:18 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

jbolden1517 You have an interesting theory (or more accurately, you say the big banks have this theory), but the facts don't seem to line up. For your theory to be correct, we should be seeing 1) Significant increase in share count of S&P500 companies as the mechanism by which this valuation di...
by jbolden1517
Tue Jul 18, 2017 5:05 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

The generation of young investors today coming from Tradeking, OptionsHouse, Tastytrade. .. who want a simpler portfolio are going to be coming from a place where they are used to splicing assets into constituent risks and pricing those risks. If you are going to be able to defend TSM to millennial...
by jbolden1517
Tue Jul 18, 2017 6:59 am
Forum: Investing - Theory, News & General
Topic: Is the Total US Stock Market too concentrated?
Replies: 51
Views: 3668

Re: Is the Total US Stock Market too concentrated?

Regardless of the exact phrasing used in the list, should this really add up to 2000 shares of the stock out there, all of which count toward total stock market? It seems clear to me that should only count as 1000. This does not require treating derivatives like they don't exist -- only to include ...
by jbolden1517
Tue Jul 18, 2017 6:16 am
Forum: Investing - Help with Personal Investments
Topic: Thoughts on individual dividend investing?
Replies: 80
Views: 5035

Re: Thoughts on individual dividend investing?

Does anyone think an investment in a set of dividend stocks would have less volatility than an S&P500 investment? What about the volatility of a dividend-focused ETF or regular fund compared to the S&P500? Would such an investment be more stable if used for income? It doesn't have to be mor...
by jbolden1517
Tue Jul 18, 2017 5:38 am
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

The number of shares is not some material thing, it has to be evaluated (and is) in context of the whole assets-liabilities. We routinely have share buyback and share dilutions. They don't change the total market cap of a company, they simply change the % of each company a share entitles you to.. Y...
by jbolden1517
Mon Jul 17, 2017 9:58 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

Since the original article was from BofA let's use them as an example. Can you provide any links the original Bank of America and JPMorgan studies that you referenced upthread? Sounds like they'd be interesting and insightful reads. Thanks. I wish I could. Its proprietary. Author of the BofA report...
by jbolden1517
Mon Jul 17, 2017 9:47 pm
Forum: Investing - Help with Personal Investments
Topic: Thoughts on individual dividend investing?
Replies: 80
Views: 5035

Re: Thoughts on individual dividend investing?

The main point was that dividend yield is much more stable than capital gains and grows with inflation. Income oriented investors want a stable real return. Which means income oriented investors can safely hold a higher percentage of equity in low P/D stocks. For someone pulling money out of a port...
by jbolden1517
Mon Jul 17, 2017 9:36 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

The idea of control investors who can hold stock , add stock and destroy stock is something I need to wrap my mind around — and if they have a sufficiently large impact on market pricing, understand exactly how they violate William Sharpe’s model of the cap-weighted total market in the OP. You give...
by jbolden1517
Mon Jul 17, 2017 9:24 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

^^^ Thank you for taking the time to reply in detail. You’ve raised several concepts that are new to me, and I’d like to think these over and research them in a little more depth. To this end, if they’re available online and not proprietary, are you able to link to the Bank of America and JP Morgan...
by jbolden1517
Mon Jul 17, 2017 8:26 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

And your answer will be what? That Jack Bogle said so? jbolden1517: I wish I had listened to Jack Bogle earlier. I would be far richer today. Best wishes. Taylor I wish I'd listened to Steve Jobs. I'd be extraordinarily rich. :) But I do understand the point lots of people lost a lot of money in fe...
by jbolden1517
Mon Jul 17, 2017 7:34 pm
Forum: Investing - Theory, News & General
Topic: What we know about robo advisors
Replies: 10
Views: 1223

Re: What we know about robo advisors

LadyGeek wrote:This thread is now in the Investing - Theory, News & General forum (robo-adviser).

jbolden1517 - I can't believe we don't have this in the wiki, which is where content like this belongs.


I agree. Feel free to steal from this thread. I can't edit the wiki.
by jbolden1517
Mon Jul 17, 2017 7:18 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Distort Market Valuations?
Replies: 66
Views: 3594

Re: Do Index Funds Distort Market Valuations?

It is much easier to work out the CAPM theory by excluding investors who have different objectives than passive minority shareholders whose sole source of aggregate value is the discounted value of future dividends. It worked well when indexing was just another form of passive minority shareholding...
by jbolden1517
Mon Jul 17, 2017 6:39 pm
Forum: Investing - Theory, News & General
Topic: What we know about robo advisors
Replies: 10
Views: 1223

Re: What we know about robo advisors

Hedgeable's downside risk protection looks interesting, but there really doesn't seem to be enough data to say whether it works (as we need bear market to test it). These are the past two forum discussions I've found on it: https://www.bogleheads.org/forum/viewtopic.php?t=177094 https://www.boglehe...
by jbolden1517
Mon Jul 17, 2017 6:24 pm
Forum: Investing - Help with Personal Investments
Topic: Thoughts on individual dividend investing?
Replies: 80
Views: 5035

Re: Thoughts on individual dividend investing?

I'll leave this by saying that you should thoroughly investigate the data to back up your claim of a premium for dividend-paying stocks. What you may be seeing is a hidden "value" effect, which can better be explained by factor-style theory rather than just dividends I have no problem agr...
by jbolden1517
Mon Jul 17, 2017 6:07 pm
Forum: Investing - Theory, News & General
Topic: Is the Total US Stock Market too concentrated?
Replies: 51
Views: 3668

Re: Is the Total US Stock Market too concentrated?

I don't see anything subtle here. One side of the option is X. The other side is -X. Both sides care about the price (unless they''re hedged). The zero is the aggregate. It seems plain to me. So just to clarify you are saying that Alan isn't holding "money" in some generic sense. He's hol...
by jbolden1517
Mon Jul 17, 2017 5:52 pm
Forum: Investing - Theory, News & General
Topic: Is the Total US Stock Market too concentrated?
Replies: 51
Views: 3668

Re: Is the Total US Stock Market too concentrated?

mptfan wrote:
jbolden1517 wrote:Its like the joke about a spherical horse on a frictionless planet.

That's a classic!
:confused


Quite true. Not sure what you are confused about. Unless you don't know the joke: https://en.wikipedia.org/wiki/Spherical_cow
by jbolden1517
Mon Jul 17, 2017 5:30 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

Really, seems like the opposite...lots of johnny come latelys with all kinds of nutty ideas, so much so that it seems like the message is kind of getting lost. The place is called bogleheads , after all. This is supposed to be a place where the ordinary shmo can learn how to get a fair shake....kee...
by jbolden1517
Mon Jul 17, 2017 5:26 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

Yes that is what I mean though I'd also include international value in the core of the mix. Large cap growth (or funds heavily weighted towards it like TSM) is fine as a diversifier but shouldn't be the core. I don't understand. You would have TSM as the core fund and build others around it? Or you...
by jbolden1517
Mon Jul 17, 2017 5:17 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Total Stock Market Index
Replies: 101
Views: 8182

Re: Vanguard Total Stock Market Index

Exactly. I would argue that time is the ultimate diversifier, much more so than picking different sectors or funds. If you hold the total stock market over a long period of time under numerous conditions and circumstances, history says you are bound to get good overall returns. I think you may want...

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