Search found 4807 matches

by ogd
Fri Feb 23, 2018 6:57 pm
Forum: Investing - Help with Personal Investments
Topic: Still lose with bonds even at duration
Replies: 23
Views: 2328

Re: Still lose with bonds even at duration

The point is, unless someone has a crystal ball that tell them exactly when rates are going to rise and when they will stop rising, there is no way to stay out of bonds and into stable value / CDs without risking either losing additional bond returns, or accepting lower returns in a rising rate env...
by ogd
Thu Feb 22, 2018 11:28 am
Forum: Investing - Help with Personal Investments
Topic: Still lose with bonds even at duration
Replies: 23
Views: 2328

Re: Still lose with bonds even at duration

Current: $115,995 @ 2.91% compounded over 6 years: $138,094, interest paid: $18,678, taxes: $6,164, Net: $131,930 Net loss: $1,225 over 6 years Hi stocknoob4111 -- as I was mentioning in another thread, you need to be a little patient when it comes to SEC yield. Since it's a 30-day average, it's in...
by ogd
Wed Feb 21, 2018 7:01 pm
Forum: Investing - Help with Personal Investments
Topic: Muni Bond market
Replies: 29
Views: 2653

Re: Muni Bond market

It is $500k. See this blog from Larry’s coauthor and coworker. http://buckinghamadvisor.com/deciding-between-individual-bonds-and-bond-funds-jared-kizer-042413/ Second the thanks for posting this. DanL, continuing what I was saying above: these advisors (well-trusted around here compared to the nor...
by ogd
Wed Feb 21, 2018 12:57 am
Forum: Investing - Help with Personal Investments
Topic: Muni Bond market
Replies: 29
Views: 2653

Re: Muni Bond market

DanL -- here are some words from author and past forum contributor Rick Ferri: I managed several hundred million dollars in municipal bond portfolios for many years. Not any more. My choice now is a low-cost Vanguard tax-exempt fund. The costs is very low, the fund has overnight liquidity, and the p...
by ogd
Wed Feb 21, 2018 12:31 am
Forum: Investing - Theory, News & General
Topic: Why investors shouldn’t panic over falling bond prices
Replies: 36
Views: 6276

Re: Why investors shouldn’t panic over falling bond prices

Should I be comparing the APR of a CD to the equivalent average annual returns on the bonds (in this case 2.02% for 1yr)? Use SEC yield for funds. The other numbers are backward looking, like it would be to say "last year I made 2.5% in a 1 year CD at X Bank" -- well, that was then and I need to lo...
by ogd
Wed Feb 21, 2018 12:01 am
Forum: Investing - Theory, News & General
Topic: Why investors shouldn’t panic over falling bond prices
Replies: 36
Views: 6276

Re: Why investors shouldn’t panic over falling bond prices

So you guys are saying now would not be a good time to buy bonds to rebalance? What should we do if our AA is off-balance? Leave it for now? Go ahead and rebalance - that's why you have an AA. You should in fact feel better now buying bonds at 2.65% (@5 years) than a year ago at 1.9%, when none of ...
by ogd
Fri Feb 16, 2018 2:49 am
Forum: Investing - Help with Personal Investments
Topic: Why not just do CDs and skip bonds?
Replies: 37
Views: 6997

Re: Why not just do CDs and skip bonds?

How are bond funds easier to manage? Is there a document somewhere that explains how to manage the duration on these funds in the withdrawal stage or close to it, and how to manage rebalancing when you have a bunch of bond funds with different durations? It's easier to manage because I don't have a...
by ogd
Fri Feb 16, 2018 12:03 am
Forum: Investing - Help with Personal Investments
Topic: Why not just do CDs and skip bonds?
Replies: 37
Views: 6997

Re: Why not just do CDs and skip bonds?

I should add -- you don't know this will happen. We're not talking about Fed overnight rates, but the yields of 5 year bonds (or 10, or so on), and those are set by bond market participants with wisdom, political connections and advanced degrees, who don't like to lose money. You're saying that you...
by ogd
Thu Feb 15, 2018 11:06 pm
Forum: Investing - Help with Personal Investments
Topic: Why not just do CDs and skip bonds?
Replies: 37
Views: 6997

Re: Why not just do CDs and skip bonds?

CDs are a great alternative. Better than bond funds of similar duration and yield because with a bond fund if yields keep rising you may need to wait almost double the duration to get your principal back with the interest based on the original yield. Can you explain that? Why almost double? I thoug...
by ogd
Wed Feb 07, 2018 11:28 pm
Forum: Investing - Theory, News & General
Topic: Spread between taxable and tax-exempt bond yields returning to normal
Replies: 1
Views: 344

Re: Spread between taxable and tax-exempt bond yields returning to normal

So why is this? Possible reasons are Fed policy returning to a more typical situation (short term interest rates not pegged to zero, with quantitative easing to boot), a change in the risk of munis (but is the state pension situation really any better now?), the liquidity premium, or relative issua...
by ogd
Sat Feb 03, 2018 7:26 am
Forum: Investing - Help with Personal Investments
Topic: Bonds - Am I missing something
Replies: 84
Views: 5712

Re: Bonds - Am I missing something

Forgot to include I was only looking at last 5 years - hence the “have been” VBTLX over the last 5 years sure has looked like a roller coaster of a ride I think you're doing this wrong, like eyeballing the volatility from one line at a time. Either read the numbers to see how big the fluctuations r...
by ogd
Sat Feb 03, 2018 7:14 am
Forum: Investing - Help with Personal Investments
Topic: Bonds - Am I missing something
Replies: 84
Views: 5712

Re: Bonds - Am I missing something

well VBTLX dropped another 0.3% today and I am looking at the yield at it's stuck at 2.69% for the last 3 0.25-0.3% declines in value, I thought yield was supposed to keep going up when NAV drops? These bond funds make no sense to me. I bought VBTLX at 10.69 when the yield was 2.55%, so now the pri...
by ogd
Fri Jan 26, 2018 8:16 pm
Forum: Investing - Help with Personal Investments
Topic: VBLTX (Vanguard Long-Term Bond Index Fund)
Replies: 13
Views: 1314

Re: VBLTX (Vanguard Long-Term Bond Index Fund)

The long term bond currently has a lot of interest rate risk built-in. A rough rule of thumb is to hold a bond fund for a period that is two times its duration. The holding period for a long term bond fund is currently 48 years (perhaps too long). The recommended holding period for the Total Bond M...
by ogd
Fri Jan 26, 2018 7:46 pm
Forum: Investing - Help with Personal Investments
Topic: VBLTX (Vanguard Long-Term Bond Index Fund)
Replies: 13
Views: 1314

Re: VBLTX (Vanguard Long-Term Bond Index Fund)

The long term bond currently has a lot of interest rate risk built-in. A rough rule of thumb is to hold a bond fund for a period that is two times its duration. The holding period for a long term bond fund is currently 48 years (perhaps too long). The recommended holding period for the Total Bond M...
by ogd
Fri Jan 26, 2018 1:47 am
Forum: Investing - Theory, News & General
Topic: Personal psychology of bonds: funds vs individual
Replies: 3
Views: 607

Re: Personal psychology of bonds: funds vs individual

Is this just "mental accounting", or are these really different animals? It's mostly mental accounting. The individual bonds are 1) riskier by virtue of being undiversified than an equivalent rating bond fund, 2) harder to manage, 3) illiquid -- and the time may come where it would really be best t...
by ogd
Fri Jan 26, 2018 12:39 am
Forum: Investing - Help with Personal Investments
Topic: Ready to give up on bond fund, Lost 2.25% past 6 months
Replies: 85
Views: 10722

Re: Ready to give up on bond fund, Lost 2.25% past 6 months

Thanks for your clear reply - that makes sense. My real question is to compare holding-to-maturity strategy, vs. holding a constant-maturity bond fund. OK - so sell the closer-to-maturity for a loss, and buy another slightly longer-term bond - as you say, with a higher yield (for duration risk). No...
by ogd
Wed Jan 17, 2018 11:20 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Market
Replies: 30
Views: 2418

Re: Bond Market

20% loss in a week happens all the time in stocks? That doesn't seem right -- do you even remember a weekly loss that large in stocks? Technically, I said that "-20% happens all the time" and that it might be called a bad week, not necessarily those two combined. But you've made me curious. Found a...
by ogd
Wed Jan 17, 2018 4:55 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Market
Replies: 30
Views: 2418

Re: Bond Market

And on the plus side, it leaves you with 7%-yielding bonds and the possibility to buy more going forward, not a bad place to be. I was of belief that yields would take a considerable time to catch up with changes since they have to work their way through the fund? Say hypothetically interest rates ...
by ogd
Wed Jan 17, 2018 3:32 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Market
Replies: 30
Views: 2418

Re: Bond Market

I think it's not only Schiff, a lot of the press is reporting about an imminent bond market meltdown. I think it's reasonable to understand what the consequences are for those of us who have a good chunk in bond funds. The very purpose of owning bonds is to mitigate equity risk so to think that bon...
by ogd
Thu Nov 23, 2017 1:36 pm
Forum: Investing - Theory, News & General
Topic: Is holding bonds now dangerous?
Replies: 162
Views: 18821

Re: Is holding bonds now dangerous?

Let me just add that the behavior of bond yields / prices in this decade has thoroughly convinced me that nobody knows anything about the future of bonds, or at least nobody I could pick out from the crowd ahead of time, which is functionally equivalent. The more sensational the proposition, the les...
by ogd
Thu Nov 23, 2017 1:24 pm
Forum: Investing - Theory, News & General
Topic: Is holding bonds now dangerous?
Replies: 162
Views: 18821

Re: Is holding bonds now dangerous?

It is an undeniable fact that the price of a long-dated bond decreases as interest rates rise. There is absolutely no question about this, it's finance 101. However if you have a portfolio of bonds, or a bond fund, or ladder, or a mix of maturities, yields, and counterparties (i.e. corporate and go...
by ogd
Wed May 17, 2017 7:58 pm
Forum: Investing - Theory, News & General
Topic: The Case for Dividend Stocks in Retirement (article)
Replies: 92
Views: 11476

Re: The Case for Dividend Stocks in Retirement (article)

I back tested three portfolios without reinvesting dividends. The portfolio with only total stock market and bond market, certainly appreciates the most in value, but adding dividend fund component to your equity position certainly generates more income and also seems to reduce risk. (See 2002 and ...
by ogd
Tue Apr 11, 2017 2:10 pm
Forum: Investing - Theory, News & General
Topic: "Did Declining rates actually matter"
Replies: 26
Views: 2365

Re: "Did Declining rates actually matter"

Of course this all relies on rates moving in a completely linear fashion over time. And we're totally ignoring convexity. But it isn't a horrible approximation. Other functions (i.e. rate vs time) can be reasoned about similarly, even with calculus if you're feeling fancy. The question you're askin...
by ogd
Tue Apr 11, 2017 1:11 pm
Forum: Investing - Theory, News & General
Topic: SEC yield vs. distribution yield - Vanguard muni funds / ETFs
Replies: 3
Views: 603

Re: SEC yield vs. distribution yield - Vanguard muni funds / ETFs

I guess I'm just surprised that two funds with similar duration from the same company would have such different portfolios, but I guess I shouldn't be surprised since VTEB is tied to a muni fund index while VWIUX has no such constraints. One big reason is that VTEB is much newer, so it doesn't have...
by ogd
Wed Mar 22, 2017 11:46 am
Forum: Investing - Theory, News & General
Topic: VWIUX SEC vs Distribution yield [Vanguard Int-Term Tax-Exempt]
Replies: 29
Views: 3013

Re: VWIUX SEC vs Distribution yield [Vanguard Int-Term Tax-Exempt]

My advisor's response; they see a flattening yield curve and a ladder will be more nimble and provide more flexibility to adjust duration and target strategic maturities along the yield curve. In a scenario like this, having a bond fund like VWIUX that targets a duration of ~5 years, can’t engage i...
by ogd
Mon Mar 20, 2017 7:35 pm
Forum: Investing - Help with Personal Investments
Topic: Bonds Exchange in Taxable Account
Replies: 12
Views: 865

Re: Bonds Exchange in Taxable Account

Please share your feedback and suggest alternatives too if I'm way off. You should probably stay put. Switching from munis to taxable bonds and back should be a decision based solely on tax situation. If you want to shorten duration, you can do it in the muni space, with a Short or Limited fund or ...
by ogd
Sun Mar 19, 2017 4:23 pm
Forum: Investing - Help with Personal Investments
Topic: Schwab vs Vanguard
Replies: 71
Views: 18637

Re: Schwab vs Vanguard

Schwab is nice and cheap, but only on Vanguard will you find the Admiral index funds free, which are nicer to use than ETFs. Was just browsing and reading these threads - What do you mean -- Admiral index funds free - ? I meant without trading fees, not counting the ERs which are the same as the ET...
by ogd
Thu Mar 16, 2017 5:10 pm
Forum: Investing - Help with Personal Investments
Topic: Help with picking bond MFs
Replies: 5
Views: 615

Re: Help with picking bond MFs

Here is my quick version: 1) If you have room in a tax-advantaged account (possibly by selling stocks), use VBTLX there. 2) If taxable account and your tax rate is 25% or below, use VBTLX in a taxable account (rationale: in lower tax brackets, munis are not generally worth it since other buyers payi...
by ogd
Wed Mar 15, 2017 9:40 pm
Forum: Investing - Theory, News & General
Topic: VWIUX SEC vs Distribution yield [Vanguard Int-Term Tax-Exempt]
Replies: 29
Views: 3013

Re: VWIUX SEC vs Distribution yield [Vanguard Int-Term Tax-Exempt]

Now I am moving some funds out of equities into bonds and the question has come up again. Do I buy more VWIUX or build a ladder of individual bonds. Which got me once again debating with my advisor which is more relevant, distribution yield or SEC yield. He claims that the distribution yield is hig...
by ogd
Fri Jan 27, 2017 6:42 pm
Forum: Investing - Theory, News & General
Topic: The market knows, except for mutual funds
Replies: 39
Views: 3937

Re: The market knows, except for mutual funds

My theory is that when something adversely effects the price of a stock that's especially popular in low-turnover mutual funds, you can beat the market. The mutual funds will slowly rid themselves of it after you've sold short. It's a hypothesis not a theory. I would guess selecting against such st...
by ogd
Fri Jan 27, 2017 6:35 pm
Forum: Investing - Help with Personal Investments
Topic: Growth Versus Income Investing - Master Limited Partnerships for Young, High Earners
Replies: 4
Views: 517

Re: Growth Versus Income Investing - Master Limited Partnerships for Young, High Earners

It's a terrible idea. You don't need this income, so by taking it from your portfolio before you put it back you're only paying taxes unnecessarily. Even if you did need it (that is, you'd invest and reinvest nothing back to your portfolio), it would still be better off to take it as sales -- if you...
by ogd
Sun Jan 08, 2017 7:58 pm
Forum: Investing - Theory, News & General
Topic: "Yield surge: Remember the real role of bonds"
Replies: 50
Views: 7251

Re: "Yield surge: Remember the real role of bonds"

So to earn 2% over 10 years you would buy a bond now when you can instead get at least 1% in an online savings account with immediate access to your money with no loss in principal? Its foolishness. The 10 year might be a little rich still, but consider the intermediate bonds that we typically reco...
by ogd
Sun Jan 08, 2017 6:53 pm
Forum: Investing - Theory, News & General
Topic: "Yield surge: Remember the real role of bonds"
Replies: 50
Views: 7251

Re: "Yield surge: Remember the real role of bonds"

RAchip wrote:Again, just lay out the math if anyone knows how? 10yr $1000 tbond with 2% coupon. Rates double to 4%, what would the value of the tbond be at year 2?
$863.8, see my message above.

You can use the PRICE function in Excel or an online bond calculator.
by ogd
Sun Jan 08, 2017 2:59 pm
Forum: Investing - Theory, News & General
Topic: "Yield surge: Remember the real role of bonds"
Replies: 50
Views: 7251

Re: "Yield surge: Remember the real role of bonds"

Can anyone actually do the math? Let me simplify it. If i buy a 10 yr $1000 tbond with a 2% coupon and rates rise such that 10yr tbond buyers want a 4% yield in 2 years (not a ridiculous scenario right now) what will the market value of my tbond be at year 2? (hint -- it will be a lot more than a 1...
by ogd
Sat Jan 07, 2017 3:28 pm
Forum: Investing - Theory, News & General
Topic: A few very basic investing theory questions that have bugged me lately
Replies: 49
Views: 5637

Re: A few very basic investing theory questions that have bugged me lately

You're missing my point. If Google has billions of dollars but my share doesn't actually entitle me to any of that, then what does it matter? Saying Google share is worth more than another company because they have lots of cash even though I can't have any of it is not different than saying Aaron R...
by ogd
Sat Jan 07, 2017 2:38 pm
Forum: Investing - Theory, News & General
Topic: A few very basic investing theory questions that have bugged me lately
Replies: 49
Views: 5637

Re: A few very basic investing theory questions that have bugged me lately

2. What is it about a stock that gives it an intrinsic value? I understand the benefit if a stock is dividend paying, say like Johnson and Johnson or P&G. But why does a stock like Berkshire Hathaway have value? A few things: I get that it's fractional ownership in a company but why is owning part ...
by ogd
Wed Jan 04, 2017 5:56 pm
Forum: Investing - Theory, News & General
Topic: Bernstein on Bonds...wow
Replies: 31
Views: 5169

Re: Bernstein on Bonds...wow

In practice, how does this problem present itself to the ETF investor? Is it as a substantial bid-ask spread? Or does the ETF show a premium as to the NAV? Wouldn't either of those show up in the reported statistics for the ETF's historical bid/ask spread or discount/premium? The ETF would show a d...
by ogd
Wed Jan 04, 2017 5:01 pm
Forum: Investing - Theory, News & General
Topic: Bernstein on Bonds...wow
Replies: 31
Views: 5169

Re: Bernstein on Bonds...wow

It seems to me that with ETFs, the liquidity problem follows the people who cash out. With mutual funds, the liquidity problem sticks to the people who don't panic and cash out. I'm not sure why we shouldn't prefer the vehicle that punishes the panicked traders. Well, that would be reasonable excep...
by ogd
Wed Jan 04, 2017 4:38 pm
Forum: Investing - Help with Personal Investments
Topic: Using a money market fund to reduce duration
Replies: 9
Views: 1189

Re: Using a money market fund to reduce duration

Can I view my money market in this way, helping to reduce the duration for the bonds as a whole, or am I fooling myself? Yes, I would say that's very reasonable. Please forget single state risk for this discussion. But we shouldn't, particularly when it's NJ. One of the favorite gambits of the same...
by ogd
Tue Jan 03, 2017 8:12 pm
Forum: Investing - Theory, News & General
Topic: Why Mix Asset Classes in a Single Fund?
Replies: 20
Views: 1898

Re: Why Mix Asset Classes in a Single Fund?

D'oh! Yes, you're right. Let's try this again. Using the same time period, PortfolioVisualizer is showing me that $10,000 grew to $167,123 and $192,920 in VFINX and VEXMX, respectively. So, if we wanted to end up with, say, $800,000 in VFINX and $200,000 in VEXMX today, then in 1988 we've had had t...
by ogd
Tue Jan 03, 2017 7:18 pm
Forum: Investing - Theory, News & General
Topic: Why Mix Asset Classes in a Single Fund?
Replies: 20
Views: 1898

Re: Why Mix Asset Classes in a Single Fund?

Why not keep assets classes separate within a single diversified portfolio? Why hold long and short term bonds or large and small cap stocks in the same fund? Isn't that like being forced to eat stew every day for the rest of your life instead of being able to have steak on Sunday and mashed potato...
by ogd
Tue Jan 03, 2017 7:09 pm
Forum: Investing - Theory, News & General
Topic: Why Mix Asset Classes in a Single Fund?
Replies: 20
Views: 1898

Re: Why Mix Asset Classes in a Single Fund?

Despite presumed trading costs, a portfolio of 80% Vanguard 500 Index Fund* and 20% Vanguard Extended Market Index Fund (which tracks the S&P 500 completion index), rebalanced monthly, actually had a slightly higher return than the Vanguard Total Stock Market Index Fund. This is generally not surpr...
by ogd
Fri Dec 30, 2016 6:42 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 11501

Re: 100% TIPS and 0% in Nominal Bonds?

If instrument B is a TIPS, than instrument A simply does not exist. This is a cold, hard, fact (excluding I bonds for sake of discussion). "A" might not exist, but I can still use it in an argument ("thought experiment" as I was saying). If TIPS used for a 5 year horizon have more interest rate ris...
by ogd
Fri Dec 30, 2016 6:16 pm
Forum: Investing - Help with Personal Investments
Topic: Transferring everything from Betterment to Vanguard, considering 100% VTSAX
Replies: 13
Views: 2136

Re: Transferring everything from Betterment to Vanguard, considering 100% VTSAX

We have $250k total to invest, and if our income stays the same then we'll have about $75k a year to contribute across accounts. I'm not interested with bonds for the moment; I feel like $75k of new additions per year would have a nice smoothing effect in a down market, as opposed to rebalancing fr...
by ogd
Fri Dec 30, 2016 5:45 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 11501

Re: 100% TIPS and 0% in Nominal Bonds?

Common folk?! You do understand that I am not a salesman and have been talking about my personal situation and my family, right?? Yes, of course. It was not meant to be insulting. We are here on an investment website in a Theory thread debating on the interest rate risk of TIPS. We are not ordinary...
by ogd
Fri Dec 30, 2016 5:15 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 11501

Re: 100% TIPS and 0% in Nominal Bonds?

I think this is very common language for my family or others who need to understand this. Investor language is anything but common.... (see above ) Well, your common folk might be baffled to see that their zero risk money that they might have asked you to help invest are unavailable to them in an e...
by ogd
Fri Dec 30, 2016 4:49 pm
Forum: Investing - Theory, News & General
Topic: What's up with VBMFX? [Vanguard Total Bond Market]
Replies: 33
Views: 7063

Re: What's up with VBMFX? [Vanguard Total Bond Market]

The posts so far refers to monies already in Total Bond. How does new money (dollar cost averaged) alter the equation? Does DCA into total bond somewhat mitigate interest rate risk, and help stabilize NAV? Yes and no. Yes because the position in part TBM, part cash for a while reduces the duration ...
by ogd
Fri Dec 30, 2016 4:41 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 11501

Re: 100% TIPS and 0% in Nominal Bonds?

There was a time when I would have agreed with all you have said, but as you get closer to retirement or already are in retirement, your most important goal is reliable income. You are no longer in the business of optimizing your total return, but looking for ways to make the money you have saved l...
by ogd
Fri Dec 30, 2016 3:50 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 11501

Re: 100% TIPS and 0% in Nominal Bonds?

ogd - while all of your points appear quite accurate and useful in the broader discussion, they are irrelevant to the scenario that I described (i.e. held to maturity without concern for lost opportunity). Firechief: I am disputing the very framing you described, specifically the "without concern f...
by ogd
Fri Dec 30, 2016 2:29 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 11501

Re: 100% TIPS and 0% in Nominal Bonds?

Just to clarify, I am totally disregarding potential default by the US government. Other than that, I will challenge you (or any other readers) to point out how a TIPS ladder (held to maturity) creates any risk. I do not consider "lost opportunity" to be a risk. You may not, but "interest rate risk...