Search found 14004 matches

by larryswedroe
Fri Jul 29, 2016 3:37 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Ninegrams Exactly right, as I explain in The Only Guide You'll Ever Need to the Right Financial Plan, the more options you have (such as working longer, spending less, moving to lower cost of living area, downsizing, whatever) the more risk of failure you can accept. But you better be sure you are a...
by larryswedroe
Fri Jul 29, 2016 2:01 pm
Forum: Investing - Theory, News & General
Topic: The Value of Low Volatility
Replies: 52
Views: 4979

Re: The Value of Low Volatility

Dancer FWIW, IMO since we don't know which factors will deliver premiums in the future the most prudent strategy is hyperdiversification if you will. Diversify across many which have shown persistence, pervasiveness, robustness, implementable (survive costs) and intuitive. Low vol has met all those ...
by larryswedroe
Fri Jul 29, 2016 1:57 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

here's a thought that might be helpful thinking about the issue. Today using our highly tilted strategy which is globally diversified (so significantly higher returns to international) and has about 2.5% or so higher expected return than the US market (about .3 loading on size/value) you get about a...
by larryswedroe
Fri Jul 29, 2016 1:19 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Homer, I'm sorry but you are definitely incorrect. It would NOT WORK. If you want to ignore facts so they fit your preconceived notions that's fine. I can tell you having run the data that you are wrong. Nothing more to say as obviously doesn't matter what facts people present
Larry
by larryswedroe
Fri Jul 29, 2016 12:39 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Rahulk You are correct to look at the REAL return but not correct in your conclusion Historically stocks got 7% real, now best estimates are around 4% real, so 3% lower. And bonds got 2%+ real and now say 0 or more likely negative So if 4% worked in past and both stock and bond returns are both 2% o...
by larryswedroe
Fri Jul 29, 2016 12:06 pm
Forum: Investing - Theory, News & General
Topic: The Value of Low Volatility
Replies: 52
Views: 4979

Re: The Value of Low Volatility

Phil
thanks for sharing, nice to know when you are respected, especially by other professionals.

Best wishes
Larry
by larryswedroe
Fri Jul 29, 2016 9:35 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Rod Like you I didn't agree with Pfau's conclusions in his co-authored paper with Kitces. In fact we analyzed it and showed them where we thought they were wrong, let alone in basically ignoring the psychological issues of a rising glide path. But that doesn't mean I'll throw the baby out with the b...
by larryswedroe
Fri Jul 29, 2016 9:32 am
Forum: Investing - Theory, News & General
Topic: The quality premium, risk or behavioral based, a deep look
Replies: 8
Views: 292

Re: The quality premium, risk or behavioral based, a deep look

NMJack Just think how many believe active investing is the winning strategy, stock picking/timing? Most think that growth stocks with higher rate of earnings growth should have higher returns than value stocks as another example. It's the failure of our education system and lack of willingness to in...
by larryswedroe
Fri Jul 29, 2016 8:52 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

BTW- Advisor Perspectives is publishing on 8/2 a new piece I wrote that is highly related to this subject. So stay tuned. I will provide link when it appears
Larry
by larryswedroe
Fri Jul 29, 2016 8:48 am
Forum: Investing - Theory, News & General
Topic: The quality premium, risk or behavioral based, a deep look
Replies: 8
Views: 292

Re: The quality premium, risk or behavioral based, a deep look

coach
My pleasure, if you found that helpful think you should really enjoy Wise Investing Made Simple and the sequel. I use simple stories related to sports, cooking, history, mythology, etc to make difficult concepts easy to understand
Best wishes
Larry
by larryswedroe
Fri Jul 29, 2016 8:31 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Rod
True, but perhaps it's an indictment in the other direction, especially in light of it's not him or even industry but also the academics who agree on 3% or so being the new 4%
Larry
by larryswedroe
Fri Jul 29, 2016 8:30 am
Forum: Investing - Theory, News & General
Topic: The quality premium, risk or behavioral based, a deep look
Replies: 8
Views: 292

Re: The quality premium, risk or behavioral based, a deep look

Coach In case you weren't making a joke. It should be surprising because it's completely counterintuitive if you understand the simple fact that risk and expected returns should be related. So if you have two companies and one is more profitable, has lower debt, more stable earnings, etc, when you a...
by larryswedroe
Fri Jul 29, 2016 8:13 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Homer Take the 1% expense assumption and drop it all the way to say 20bp. That would have left a withdrawal rate of just 3.6%, not 4%. Now we have much lower expected returns, both for stocks and bonds. With expected stock returns now lower by about 0.5% and bond returns now lower by about 1% and ta...
by larryswedroe
Fri Jul 29, 2016 8:02 am
Forum: Investing - Theory, News & General
Topic: The quality premium, risk or behavioral based, a deep look
Replies: 8
Views: 292

The quality premium, risk or behavioral based, a deep look

http://www.etf.com/sections/index-investor-corner/swedroe-getting-cause-quality?nopaging=1 Note behavioral anomalies can persist long after publication due to structural impediments (limits to arbitrage) and behaviors that don't change. MOM is the best example. Hope you find it helpful Larry
by larryswedroe
Thu Jul 28, 2016 8:13 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Re the M* article, remember that while the article assumed 1% expenses, one still has some fund expenses, but more importantly as I noted they optimistically used an assumption that real rates would rise to historic means, which would have meant about a 1.5% increase in real rates, AND we now have s...
by larryswedroe
Thu Jul 28, 2016 7:26 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Just did a quick check, 4 years ago the CAPE 10 gave you expected return that is about 0.5% HIGHER than today's does in US (assuming no RTM of valuations). And bond yields were more than 1% HIGHER. Now M* found at the time a 2.8% SWR was more appropriate, or equivalent of the 4%. Today it has to be ...
by larryswedroe
Thu Jul 28, 2016 4:54 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Homer I give up, You are just plain wrong in your whole analysis. Don't know what else to say. And yes I am very specifically saying, as did Morningstar, when valuations were lower and bond yields higher that 4% was too high. And they assumed RTM of real bond yields, which may not happen, Clearly th...
by larryswedroe
Thu Jul 28, 2016 10:41 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

I dug this supporting evidence up. It's from a Morningstar study back in 2013 when valuations were lower and bond yields higher, so would look worse today. Their findings fully support the idea that 4% is not conservative by a long shot. 50% odds of failure is not conservative. I would want to see s...
by larryswedroe
Thu Jul 28, 2016 10:24 am
Forum: Investing - Theory, News & General
Topic: The Value of Low Volatility
Replies: 52
Views: 4979

Re: The Value of Low Volatility

Phil Yes this is an issue of whether valuations are first or say third order issue when it comes to low vol. Obviously not a first order issue with MOM. But here I'm not sure and don't like the bet when valuations are so high. Especially since you don't get higher returns anyway with low vol, just l...
by larryswedroe
Thu Jul 28, 2016 10:20 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Homer, you are completely misunderstanding the issues here, perhaps my inability to explain it well but will try. disagree completely. Why do I need to estimate returns? I'm taking 4% the first few years of retirement regardless of valuations. I will be 50/50 regardless of valuations. Those are alre...
by larryswedroe
Thu Jul 28, 2016 9:10 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Homer Yes of course your nearing retirement should matter greatly in AA decision. But so MUST valuations. If you ignore them you are making a huge mistake IMO because you don't know what your NEED to take risk is, and you cannot know that without estimating returns, and valuations matter GREATLY, no...
by larryswedroe
Thu Jul 28, 2016 8:20 am
Forum: Investing - Theory, News & General
Topic: Revisiting Dr. Bernstein on REITs
Replies: 28
Views: 2766

Re: Revisiting Dr. Bernstein on REITs

Funny how confirmation bias works. The math is what it is. And in LONG TERM it is correct. It's just that higher valuations don't predict TOMORROW'S returns all that well, and in fact momentum works against that in the short term. It's no different than when I sold all but value stocks in 1998, know...
by larryswedroe
Wed Jul 27, 2016 8:39 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Squawk Correlations rise during SYSTEMIC global crises and then they revert to more "normal" correlations afterwards. Just look at US vs. international and EM since 2008 if doubt that. Also small stocks are more local, so the most important int'l diversification is to SMALL, not large, whi...
by larryswedroe
Wed Jul 27, 2016 8:07 pm
Forum: Investing - Theory, News & General
Topic: The Value of Low Volatility
Replies: 52
Views: 4979

Re: The Value of Low Volatility

freyj6, sectors such as you note are not "factors" that explain returns. So I would not use them. Having said that there are two things that matter IMO. The first is what exposure the investment has to the factors that explain almost all the variation in returns of diversified portfolios, ...
by larryswedroe
Wed Jul 27, 2016 7:53 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Forget to add that this quote is also very wrong, without question IMO There is ALWAYS a risk of a stock market crash. It doesn't matter if the chance of it occurring is higher or lower; the risk is always there. Yes the risks of a crash are always there no matter what valuations are. But the risks ...
by larryswedroe
Wed Jul 27, 2016 7:50 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

cottonseed
Not all that much because it's offset to some degree at least by the late 2007- early 09 bear market when valuations went to very low levels.
Larry
by larryswedroe
Wed Jul 27, 2016 7:47 pm
Forum: Investing - Theory, News & General
Topic: High Yield Junk Bonds
Replies: 49
Views: 3878

Re: High Yield Junk Bonds

Just met today with the folks from Black Rock and they confirmed all that I have said in their research findings. The one place where credit has been well rewarded is the fallen angels, those that get downgraded to BB, so not just buying BB, but buying the fallen angels. There is now an ETF that wil...
by larryswedroe
Wed Jul 27, 2016 6:09 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

Few things One reason for using 25 years, which was not my own personal choice but is the data I had provided which came from JP Morgan, is that it is more reflective of current regimes which include dramatically different accounting rules and other issues which would lead to higher PEs than longer ...
by larryswedroe
Wed Jul 27, 2016 8:45 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 104
Views: 5319

are the markets overvalued? Are Grantham/Hussman etal correct?

http://mutualfunds.com/domestic-stock-funds/is-the-market-overvalued/

Not in my view, highly valued meaning lower expected returns, at least in US, but not highly overvalued
by larryswedroe
Wed Jul 27, 2016 7:29 am
Forum: Investing - Theory, News & General
Topic: The Value of Low Volatility
Replies: 52
Views: 4979

Re: The Value of Low Volatility

stlutz First, low volatility never did great, it is that high volatility has done awful. In fact the middle deciles/quintiles have higher returns (though not higher risk adjusted returns) than did the lowest vol quintile Second, there are logical reasons for the low vol anomaly and limits to arb all...
by larryswedroe
Wed Jul 27, 2016 7:24 am
Forum: Investing - Theory, News & General
Topic: Another look at corporate bonds
Replies: 192
Views: 11127

Re: Another look at corporate bonds

fyi
Swensen in his book Unconventional Success
Well-informed investors avoid the no-win consequences of high-yield fixed income investing
.
Larry
by larryswedroe
Tue Jul 26, 2016 8:19 pm
Forum: Investing - Theory, News & General
Topic: The Value of Low Volatility
Replies: 52
Views: 4979

Re: The Value of Low Volatility

frey I would NOT rely on historical returns for low volatility for the two main reasons I cited, the high returns can be at least partly attributed to exposure to term and value factors, and you cannot get the big benefit it has had from TERM, and it could be big negative, and there is now negative ...
by larryswedroe
Tue Jul 26, 2016 5:03 pm
Forum: Investing - Theory, News & General
Topic: The Value of Low Volatility
Replies: 52
Views: 4979

Re: The Value of Low Volatility

trope Lottery effect is well known that retail investors especially have a strong preference for investments with distribution of returns that looks like lottery ticket, positive skew with excess kurtosis (long but thin right tail, with poor mean return). That preference and limits to arbitrage (hig...
by larryswedroe
Mon Jul 25, 2016 5:12 pm
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

Harry
My pleasure and glad to be of help
larry
by larryswedroe
Mon Jul 25, 2016 5:11 pm
Forum: Investing - Theory, News & General
Topic: LCG vs LCV over the last 23 years
Replies: 32
Views: 1792

Re: LCG vs LCV over the last 23 years

Unfortunately the Telltale chart lives on despite the obvious and big error Bogle made as he did not compare returns of the asset classes, but of ACTIVELY MANAGED funds, which doesn't tell you about the performance of the stocks, only the managers, who style drift all over the place. That error has ...
by larryswedroe
Mon Jul 25, 2016 8:19 am
Forum: Investing - Theory, News & General
Topic: LCG vs LCV over the last 23 years
Replies: 32
Views: 1792

Re: LCG vs LCV over the last 23 years

Private Sorry don't have time to read the whole thread but here are some points of interest First, stocks didn't outperform 20 year CDs for 40 years from 69-08. Did you question the ERP? All factors can be expected to experience long periods of negative performance and the failure to understand that...
by larryswedroe
Mon Jul 25, 2016 8:07 am
Forum: Investing - Theory, News & General
Topic: A look at the issues related to SRI investing, does it come at a price?
Replies: 1
Views: 217

A look at the issues related to SRI investing, does it come at a price?

http://www.etf.com/sections/index-investor-corner/swedroe-costs-socially-responsible-investing This is becoming more and more of an issue as more people focus on SRI type investing. Thus thought it important that investors be aware of all the issues. No right answer, just one right for each person,...
by larryswedroe
Sun Jul 24, 2016 7:46 pm
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

First, liability matching is a very rational approach to managing assets. Second, buckets approach is fine for while in accumulation and have known need for cash at certain intervals, like for college spending, so set up separate bucket (or IPS) and manage the assets differently. But having this buc...
by larryswedroe
Sun Jul 24, 2016 8:35 am
Forum: Investing - Theory, News & General
Topic: Another look at corporate bonds
Replies: 192
Views: 11127

Re: Another look at corporate bonds

chatbotte Quick comment One reason IMO corporate bonds are in general "overpriced" in the same way that "lottery tickets" are overpriced persistently is the fact that there are regulations on capital management for companies like insurers. So they have to hold more capital agains...
by larryswedroe
Sun Jul 24, 2016 8:30 am
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

Leif, FWIW, I was asked to review the book but could NOT recommend it. The first part of the book I thought was fine,but had major problems with the rest of the book which included all those tables. IMO there is only one right way to deal with this issue and that is to have a Plan and it should incl...
by larryswedroe
Sun Jul 24, 2016 8:25 am
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

thetimelord Make sure you really are willing to live with the fact that there's reasonably good chance in any decade that you will experience 4-6 major crisis including at least one major long term bear market and that you will actually be able to stay the course and enjoy your life. This idea of bu...
by larryswedroe
Sat Jul 23, 2016 4:35 pm
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

livesoft
No don't think it's rarity at all. Just Vanguard clients are probably less likely to sell in panic just like Bogleheads are less likely. Some likely did, but well below average I would bet
by larryswedroe
Sat Jul 23, 2016 1:37 pm
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

Michread, etarini, Moshe

Truly my pleasure, my way of giving back. Glad to be of help.
Larry
by larryswedroe
Sat Jul 23, 2016 7:59 am
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

First, re the nitpicking on the original research, yes he looked at all different allocations but the very low equity allocations didn't work as well, so yes you needed to have moderate equity allocation to succeed. Second, I was VERY CLEAR about what I recommended, that one should NOT use any set i...
by larryswedroe
Fri Jul 22, 2016 4:39 pm
Forum: Investing - Theory, News & General
Topic: Mutual fund performance and fund size
Replies: 9
Views: 783

Mutual fund performance and fund size

http://mutualfunds.com/education/short-term-performance-and-mutual-fund-size/

Hope you find this helpful, looks at why larger funds tend to have worse returns as they get more aum
Larry
by larryswedroe
Fri Jul 22, 2016 2:25 pm
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

Few thoughts First our experience was that despite all the education and handholding we provide we estimated that only about 2/3 of clients rebalanced when it was recommended. So about 1/3 did not> Now I still felt good because almost all the remaining 1/3 only committed the minor "crime" ...
by larryswedroe
Fri Jul 22, 2016 9:37 am
Forum: Investing - Theory, News & General
Topic: Declining or Rising equity allocation in retirement?
Replies: 110
Views: 6726

Re: Declining or Rising equity allocation in retirement?

Nisiprius Good write up but with one BIG flaw, that study you cite (with the 3% SWR) would only show that result if you foolishly looked only at US data, a triumph of the optimists mistake of classic proportions. Try that in other countries like Japan and see what happens. And note with today's lowe...

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