Search found 296 matches

by need403bhelp
Thu Aug 17, 2017 9:12 pm
Forum: Investing - Theory, News & General
Topic: Help with my understanding of bond funds & efficient market hypothesis
Replies: 15
Views: 1008

Re: Help with my understanding of bond funds & efficient market hypothesis

I understand that the bond market is very very efficient. I could see this occurring in two ways: 1. People still bid a certain price that is not necessarily the "present value" price calculated via http://www.free-online-calculator-use.com/bond-value-calculator.html and negotiate with a seller. 2....
by need403bhelp
Thu Aug 17, 2017 7:46 pm
Forum: Personal Finance (Not Investing)
Topic: Billing 99212 for rx refill?
Replies: 38
Views: 2669

Re: Billing 99212 for rx refill?

I thought the code was 99441 but I could be wrong since I don't bill for refills. It takes time to refill a Rx. Pull the chart, review the chart, authorizing the refill, calling or faxing the pharmacy (sometimes multiple times to push it through). A billable patient visit could be performed in this...
by need403bhelp
Thu Aug 17, 2017 6:47 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

Mostly though I think you got your question answered. Thank you so much for your thoughtful and thorough response. I did read it all, and tried to understand it. But the big picture you captured even better - I am much more satisfied in my understanding of market weight and why it is used by variou...
by need403bhelp
Thu Aug 17, 2017 5:55 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

Ok. But do I understand correctly that shares outstanding is a constant (more or less)? Market capitalization of a company = share price * shares outstanding If shares outstanding is a constant, and some magic formula ("EMH") determines share price, then that magic formula is also determining marke...
by need403bhelp
Thu Aug 17, 2017 3:17 pm
Forum: Investing - Theory, News & General
Topic: Help with my understanding of bond funds & efficient market hypothesis
Replies: 15
Views: 1008

Re: Help with my understanding of bond funds & efficient market hypothesis

Thank you for your clarification. I guess when I said "interest rates" I actually meant the Federal Funds Rate, as my understanding is that when THOSE rates rise, bonds react. But I suppose there are other reasons for the rates (yields) on bonds that make up the referenced fund to go up or down. If...
by need403bhelp
Thu Aug 17, 2017 1:52 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

My summary of the latest part of Jack's response (in a concrete form): 1. X is a market capitalization weighted index. Y is an index that owns all companies but weights by something else. 2. Let's say that Y consistently over-performs X for some period of time. 3. As investors see Y over-performing...
by need403bhelp
Thu Aug 17, 2017 1:26 pm
Forum: Investing - Theory, News & General
Topic: Help with my understanding of bond funds & efficient market hypothesis
Replies: 15
Views: 1008

Re: Help with my understanding of bond funds & efficient market hypothesis

Portfolio theory would suggest that if you have a special low-risk option for say 3.25% (with a premium over T-bills at let's say 3% or lower) and a bond index fund has a yield of 3.5%, you don't switch to the bond index fund. Even supposing you want higher than 3.25% from fixed income, you're bett...
by need403bhelp
Thu Aug 17, 2017 1:15 pm
Forum: Investing - Theory, News & General
Topic: Help with my understanding of bond funds & efficient market hypothesis
Replies: 15
Views: 1008

Re: Help with my understanding of bond funds & efficient market hypothesis

Re your sanity check - You'll note that the $Y stays the same between the two calculations - that is how they are related. $Y = $X * (1.04)^8.3 $Z * (1.05)^8.3 = $Y Whoops, sorry, I misread $Y at the end for $X. Or wasn't paying attention, really. In any case, you need to adjust for when the paymen...
by need403bhelp
Thu Aug 17, 2017 12:12 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

If you know the market well, then real estate investments will bring big dividends in comparison with any other investments. Agree completely. My point is that, at least for me, investing in real estate directly based on an (inefficient) real estate market is not the same as over-weighing publicly ...
by need403bhelp
Thu Aug 17, 2017 12:01 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

I thought it had to do with EMH but now, per https://www.bogleheads.org/forum/viewtopic.php?f=1&t=225627&p=3495612#p3495564 , I am confused, and realize that I actually probably have no idea. I am looking for the simplest answer - what would Bogle say? First, I'll note that a number of passive inve...
by need403bhelp
Thu Aug 17, 2017 10:18 am
Forum: Investing - Theory, News & General
Topic: Help with my understanding of bond funds & efficient market hypothesis
Replies: 15
Views: 1008

Re: Help with my understanding of bond funds & efficient market hypothesis

2nd example - please help me with my understanding Two investment options: FRATE - guaranteed principal, guaranteed 3% annual interest INTFUND - diversified fund of 8342 bonds, ~65% in government bonds, average effective maturity 8.3 years, SEC yield B%, where B fluctuates based on the market FRATE...
by need403bhelp
Thu Aug 17, 2017 10:08 am
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

Ok. But do I understand correctly that shares outstanding is a constant (more or less)? And if that is true, the formula for market weight is market capitalization of one company divided by that of all companies added together. The denominator is either a constant (total sum of money to invest in t...
by need403bhelp
Thu Aug 17, 2017 9:42 am
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

Newbie here but I think this Vanguard research paper gives a light of insight into your question: https://personal.vanguard.com/pdf/s287.pdf Executive summary . Within the investment community, a small (but vocal) segment has criticized the use of indexes constructed according to the traditional me...
by need403bhelp
Thu Aug 17, 2017 9:34 am
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

Jack answers that question at 58:45. https://www.youtube.com/watch?v=6Qg959oYCxU&t=934s Thanks. For me his answer starts at 12:20, and the video ends at 58:45. My summary of the latest part of Jack's response (in a concrete form): 1. X is a market capitalization weighted index. Y is an index that o...
by need403bhelp
Wed Aug 16, 2017 9:25 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

Thus, EMH is really determining price * # of shares = market weight? No - strictly speaking on a abstract theoretical basis EMH simply says that the market price is the correct price. It does not comment on the market weight. Logically it follows that the individual market weight of companies is th...
by need403bhelp
Wed Aug 16, 2017 9:06 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

In other words, what does the PRICE of the stock you own (which EMH talks about) have to do with the PROPORTION of that stock that makes up your portfolio? In ideal terms, market cap-weighted indexes automatically reflect the consensus of all global investors’ estimates of each company's relative v...
by need403bhelp
Wed Aug 16, 2017 8:57 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

I thought it had to do with EMH but now, per https://www.bogleheads.org/forum/viewtopic.php?f=1&t=225627&p=3495612#p3495564 , I am confused, and realize that I actually probably have no idea. I am looking for the simplest answer - what would Bogle say? First, I'll note that a number of passive inve...
by need403bhelp
Wed Aug 16, 2017 8:46 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

Instead of searching for the needle in the haystack... Own the haystack (that's Bogle). Cap weighting is the haystack - it is owning the market in its current percentages. Any other weighting / selection criteria is claiming that you know more than the person on the other side of the trade. Thank y...
by need403bhelp
Wed Aug 16, 2017 8:46 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Re: Why do we (passive index investors) invest at market weight?

It isn't necessary to believe in EMH to justify investing in cap-weighted indexes — but it makes it easier to do so, in my view. What EMH (strong version) tells us is that all relevant information is continuously being incorporated into stock prices through daily market trading, which is then refle...
by need403bhelp
Wed Aug 16, 2017 8:40 pm
Forum: Investing - Theory, News & General
Topic: Help with my understanding of bond funds & efficient market hypothesis
Replies: 15
Views: 1008

Re: Help with my understanding of bond funds & efficient market hypothesis

There are a lot of people on here that know more about bonds than me, but I think it is more nuanced than what you are stating when it comes to a fund. For an individual bond what you say is roughly correct. In a rising rate environment a bond has to be sold at a discount so that the purchaser ends...
by need403bhelp
Wed Aug 16, 2017 8:21 pm
Forum: Investing - Theory, News & General
Topic: Help with my understanding of bond funds & efficient market hypothesis
Replies: 15
Views: 1008

Re: Help with my understanding of bond funds & efficient market hypothesis

Criterion to switch to INTFUND: if B% > 3% AND willing to hold for 8.3 years (average effective maturity), then move 100% FRATE into INTFUND That is reasonable but not strictly a superior strategy, unlike the first example. You could readily make less money in INTFUND for any holding period, be it ...
by need403bhelp
Wed Aug 16, 2017 8:08 pm
Forum: Investing - Theory, News & General
Topic: Why do we (passive index investors) invest at market weight?
Replies: 34
Views: 2075

Why do we (passive index investors) invest at market weight?

I thought it had to do with EMH but now, per viewtopic.php?f=1&t=225627&p=3495612#p3495564 , I am confused, and realize that I actually probably have no idea.

I am looking for the simplest answer - what would Bogle say?
by need403bhelp
Wed Aug 16, 2017 8:04 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

I took the liberty of bolding text to highlight two sentences. I realize that this article is talking about prices of individual shares, and I am specifically extending the meaning to prices of an individual stock market sector (REITs). One - according to the weak form of EMH, future share prices h...
by need403bhelp
Wed Aug 16, 2017 7:09 pm
Forum: Investing - Theory, News & General
Topic: Help with my understanding of bond funds & efficient market hypothesis
Replies: 15
Views: 1008

Help with my understanding of bond funds & efficient market hypothesis

I am trying to understand bond funds better in order to be able to make a precise IPS criterion for when to switch from a fully liquid TIAA Traditional to VBTIX. To make things simple & to check my understanding of bond funds (vs. individual bonds, as I'm pretty sure that what I said is true if you ...
by need403bhelp
Tue Aug 15, 2017 8:34 pm
Forum: Investing - Help with Personal Investments
Topic: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?
Replies: 8
Views: 309

Re: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?

Technically, the rebalancing would be done by exchanging out of Traditional into another TIAA-CREF fund within the government qualified 457 (probably TCIEX, as it is more cost efficient than the analogous 403b Fidelity funds). At the same time, I would buy VBTLX in the 403b (with Fidelity) and sell...
by need403bhelp
Tue Aug 15, 2017 8:25 pm
Forum: Investing - Help with Personal Investments
Topic: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?
Replies: 8
Views: 309

Re: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?

However, if, in the future, I look and the 30 year US treasury rate is now greater than Traditional's yield (or guaranteed yield, not sure which one to use), I sell traditional and buy VBTLX. Does that sound reasonable? Thanks! No, not really. The comparison would have to use VBTLX's current yield,...
by need403bhelp
Tue Aug 15, 2017 8:18 pm
Forum: Investing - Help with Personal Investments
Topic: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?
Replies: 8
Views: 309

Re: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?

However, if, in the future, I look and the 30 year US treasury rate is now greater than Traditional's yield (or guaranteed yield, not sure which one to use), I sell traditional and buy VBTLX. Does that sound reasonable? Thanks! No, not really. The comparison would have to use VBTLX's current yield,...
by need403bhelp
Tue Aug 15, 2017 7:33 pm
Forum: Investing - Help with Personal Investments
Topic: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?
Replies: 8
Views: 309

Re: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?

Bogle's writing suggested using the current yield as an estimate of forward looking 10 year average annualized return. That is not a bad idea for a diversified bond index, such as the Total Bond Market Index (VBTLX). Its current yield is 2.36%, which results in a worse estimate compared to your TIA...
by need403bhelp
Tue Aug 15, 2017 6:17 pm
Forum: Investing - Help with Personal Investments
Topic: For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?
Replies: 8
Views: 309

For IPS: transition TIAA Traditional to VBTIX - look at 30 year US treasury rate?

100% of our fixed income is allocated to the fully liquid, guaranteed-at-3% TIAA Traditional GSRA. Currently, our IPS' statement about when to transition from TIAA Traditional to VBTIX is fuzzy. Reading Bogle's Common Sense on Investing, I ran into ( bold added for emphasis): Fortunately, however, t...
by need403bhelp
Tue Aug 15, 2017 4:58 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

I think I almost understand what you are stating. So TSM market weights all assets in the fund. So, if someone would overweigh/tilt any asset they believe that asset will have better returns in the future. So they are taking a tilt because of backtesting tell them to overweigh the asset. Question: ...
by need403bhelp
Tue Aug 15, 2017 3:41 pm
Forum: Investing - Help with Personal Investments
Topic: Bitcoin
Replies: 115
Views: 6442

Re: Bitcoin

Interesting... I did not realize that the amount of bitcoins that will ever be created is fixed (at least until the next fork :P) That's a valid point. After all, you could download the bitcoin source code, and fork it as much as you want. Many altcoins were created just like that! For example, Eth...
by need403bhelp
Tue Aug 15, 2017 3:12 pm
Forum: Investing - Help with Personal Investments
Topic: Bitcoin
Replies: 115
Views: 6442

Re: Bitcoin

Isn't inflation reasonably well-correlated with the increase in money supply? See: https://en.wikipedia.org/wiki/Monetary_inflation So the counter-argument goes like this: fiat currency is inherently inflationary, whereas bitcoin is not. Money supply increases, gold supply increases. Inflation incr...
by need403bhelp
Tue Aug 15, 2017 12:30 pm
Forum: Investing - Help with Personal Investments
Topic: Bitcoin
Replies: 115
Views: 6442

Re: Bitcoin

The gold comparison is interesting because my perception is that gold has always had an uneasy relationship with Boglehead philosophy. Its value is undeniable, but it doesn't fit cleanly into the belief system as do other assets or investing principles. Discussions like this may be a reflection of ...
by need403bhelp
Tue Aug 15, 2017 11:57 am
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

Fair enough to your point that my initial point was not precise. I will clarify. What I was trying to say in my initial quote was that, initially, if an investor chose to invest in "the market" (S&P 500 at the time), they would have owned only a small portion of the available REITs. To me, in this ...
by need403bhelp
Tue Aug 15, 2017 11:08 am
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

I like this paragraph from Wikipedia's article on the Efficient-market hypothesis (EMH) to explain why I don't believe in over-weighing REITs above their market weight in the total stock market in the long-term (20-30+ year horizon): https://en.wikipedia.org/wiki/Efficient-market_hypothesis#Weak-for...
by need403bhelp
Tue Aug 15, 2017 8:14 am
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

Another thing to note is that reits were not included in major indices initially, so there could have been benefit to adding them in a portfolio. I don't think that is right. IIRC REITs have been part of the S&P 500 for the last 30 years. I don't have a good reference off the top of my head, but wh...
by need403bhelp
Mon Aug 14, 2017 9:39 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

Another thing to note is that reits were not included in major indices initially, so there could have been benefit to adding them in a portfolio. I don't think that is right. IIRC REITs have been part of the S&P 500 for the last 30 years. I don't have a good reference off the top of my head, but wh...
by need403bhelp
Mon Aug 14, 2017 9:32 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

I understood that really easy. I believe it was Bill Berstein in a recent post stated he does not own REIT. I think he stated he owns enough. I believe maybe he was talking about his house. The interesting part is most of the portfolios I see have REITS. I am reading Random Walk Down Wall street no...
by need403bhelp
Mon Aug 14, 2017 9:28 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

Thank you for your replies. You have answered my question, which was basically "Is there something inherently different with an REIT fund than with any other stock fund." The answer I see from your responses is no, there is no difference. Actually, they are different from other stock funds (dependi...
by need403bhelp
Mon Aug 14, 2017 7:28 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

Thank you for your replies. You have answered my question, which was basically "Is there something inherently different with an REIT fund than with any other stock fund." The answer I see from your responses is no, there is no difference. Actually, they are different from other stock funds (dependi...
by need403bhelp
Mon Aug 14, 2017 7:23 pm
Forum: Investing - Help with Personal Investments
Topic: REIT
Replies: 52
Views: 3121

Re: REIT

I am trying to understand this term overweight. Someone posted an example overweight internationals would be more than 50% since us/intenational is 50/50. So, what would be overweight in REIT. For US equity the neutral weight is 3%. I have seen many studies which suggest a 10% to 20% REIT holdings ...
by need403bhelp
Mon Aug 14, 2017 6:57 pm
Forum: Investing - Help with Personal Investments
Topic: Bitcoin
Replies: 115
Views: 6442

Re: Bitcoin

Here's the bitcoin chart since 2011. Over 88,000% return. The charts are all strongly in the green for similar 2-year returns, 1-year, 6-month, 30-day, 7-day, and 1-day. We can't say that bitcoin won't plummet tomorrow, and I realize that past performance can't predict future results. Nevertheless,...
by need403bhelp
Sun Aug 13, 2017 8:04 pm
Forum: Investing - Help with Personal Investments
Topic: Physician & Real Estate investor seeks advice
Replies: 49
Views: 4196

Re: Physician & Real Estate investor seeks advice

This conversation seems to have gotten somewhat adversarial. I am a physician also, and have no personal experience with real estate investments. My simple understanding of the difference between investing directly in real estate and passive indexing: - income in real estate investing depends on luc...
by need403bhelp
Sun Aug 13, 2017 4:29 pm
Forum: Investing - Theory, News & General
Topic: The Core Four
Replies: 318
Views: 182865

Re: over-weighting REITs

Taylor Larimore wrote:
Sun Aug 13, 2017 4:18 pm
need403bhelp:
What do you think of the following as a justification for our IPS for why we are NOT over-weighing REITs above market weight:
Your "justification" is better than mine.

Best wishes.
Taylor
Taylor:

Thank you so much for your thoughts and very humble reply.
by need403bhelp
Sun Aug 13, 2017 11:03 am
Forum: Investing - Theory, News & General
Topic: The Core Four
Replies: 318
Views: 182865

Re: Adding funds to total market index funds?

Bogleheads: REIT's are very tax inefficient and use-up room in tax-advantaged accounts where REITs belong. Homeowners already own significant real estate. In my opinion, the benefit of adding small funds (and complexity) to a mix of total market index funds which already own the market weight in a ...
by need403bhelp
Sat Aug 12, 2017 10:42 am
Forum: Investing - Theory, News & General
Topic: The Core Four
Replies: 318
Views: 182865

Re: The Core Four

As noted in the above wiki link: Rick stresses that the exact allocation percentages aren't important, to the nearest 5% is fine.[4] which is the advice we give to investors asking about asset allocation percentages. (Here's info from 2010: Percentages of REITs present in Vanguard index funds ) Que...
by need403bhelp
Sat Aug 12, 2017 10:39 am
Forum: Investing - Theory, News & General
Topic: The Core Four
Replies: 318
Views: 182865

Re: The Core Four

I assume that, in 2007, when Rick Ferri wrote the original post in this thread with the outline of the portfolio, TSM has fewer or ?no REITs. No. TSM did include a small percentage of REIT back then as well. Some people believe that adding extra of certain sectors (such as REIT) might give the port...
by need403bhelp
Sat Aug 12, 2017 9:43 am
Forum: Investing - Theory, News & General
Topic: The Core Four
Replies: 318
Views: 182865

Re: The Core Four

As noted in the above wiki link: Rick stresses that the exact allocation percentages aren't important, to the nearest 5% is fine.[4] which is the advice we give to investors asking about asset allocation percentages. (Here's info from 2010: Percentages of REITs present in Vanguard index funds ) Mak...
by need403bhelp
Sat Aug 12, 2017 8:42 am
Forum: Investing - Theory, News & General
Topic: The Core Four
Replies: 318
Views: 182865

Re: The Core Four

Thank you, willthrill81, abuss368, and retiredjg for your helpful comments. Thank you, LadyGeek, for the helpful Wiki link. One final, somewhat nitpicky, question. I realize that Vanguard's Total Stock Market (TSM) fund now includes ~3.4% REITs. I assume that, in 2007, when Rick Ferri wrote the orig...
by need403bhelp
Fri Aug 11, 2017 8:52 pm
Forum: Investing - Theory, News & General
Topic: The Core Four
Replies: 318
Views: 182865

Re: The Core Four

Thank you, all, for a great thread! I am thinking of adding a 10% of equities allocation to REITs in my 3 fund portfolio as per Rick Ferri's "All About Asset Allocation," 2nd edition and Burton Malkiel's "A Random Walk Down Wall Street," 11th edition. Both mention that, historically, (a) REITs have ...