Search found 4599 matches

by ogd
Sat Jul 16, 2016 7:06 pm
Forum: Investing - Theory, News & General
Topic: Why do people invest in Long Term Bonds now?
Replies: 44
Views: 4869

Re: Why do people invest in Long Term Bonds now?

Convexity means that the formula overestimates price changes when yields increase, but that it underestimates price changes when yields decrease. (The term comes from the fact that if you view plot bond prices as a function of yields, it will be a convex function - meaning that if you go in either ...
by ogd
Wed Jul 13, 2016 12:16 pm
Forum: Investing - Help with Personal Investments
Topic: What will happen to my bond interest payments?
Replies: 16
Views: 1011

Re: What will happen to my bond interest payments?

All above true. For a simple answer, your payments will stay the same, but the marketplace will say you are getting a higher yield because they calculate the yield based on the new NAV. Same payments divided by lower NAV equals higher yield. When it comes to yield to maturity, i.e. how much your bo...
by ogd
Mon Jul 11, 2016 6:37 pm
Forum: Investing - Theory, News & General
Topic: Long term bond performance question
Replies: 9
Views: 906

Re: Long term bond performance question

I still don't understand the bolded bit about the 1% getting paid out up front, but I can't thank you enough for the first two paragraphs. I feel like I'm finally beginning to understand bond fund prices versus bond yields versus gains and losses in the bond market. I wonder how many people are hug...
by ogd
Sun Jul 10, 2016 9:07 pm
Forum: Investing - Help with Personal Investments
Topic: Investing in Bonds in Taxable Account
Replies: 26
Views: 1767

Re: Investing in Bonds in Taxable Account

Ram: you should use current numbers instead of historical returns. This will probably help your case for bonds in taxable, but here are the other issues: Bonds of the same risk do not pay the same yield whether or not tax advantaged. If you found two funds of the same risk, you'd find something more...
by ogd
Sun Jul 10, 2016 8:39 pm
Forum: Investing - Help with Personal Investments
Topic: Investing in Bonds in Taxable Account
Replies: 26
Views: 1767

Re: Investing in Bonds in Taxable Account

http://whitecoatinvestor.com/asset-loca ... in-taxable. I recently read the above article by While Coat Investor that advises about keeping bonds in taxable account for high earners. I am in the 39% federal tax bracket. Currently all my bonds are in the tax deferred space and predominantly in Vangu...
by ogd
Sat Jul 09, 2016 10:01 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Dividend Appreciation (VDAIX) and Vanguard High Dividend Yield (VHDYX)
Replies: 20
Views: 1039

Re: Vanguard Dividend Appreciation (VDAIX) and Vanguard High Dividend Yield (VHDYX)

Dividend Appreciation is not that much more costly, unless the investment is very large. That's not what I meant by expensive. I meant the underlying shares of growth companies (and even "dividend appreciation" stocks) trade at higher valuations than value/high-dividend. This is how the m...
by ogd
Sat Jul 09, 2016 9:49 pm
Forum: Investing - Theory, News & General
Topic: Long term bond funds
Replies: 26
Views: 2250

Re: Long term bond funds

The long-term fund uses $30 worth of the old long-term bonds (trading at a heavy discount to par) to buy $30 worth of new bonds at par. The new bonds yield 6% and thus $30 of them generate $1.80 a year in coupons. The remaining $30 of old bonds pays out $1.50 and so the total is $3.30 a year Yes, t...
by ogd
Sat Jul 09, 2016 1:42 pm
Forum: Investing - Theory, News & General
Topic: Long term bond funds
Replies: 26
Views: 2250

Re: Long term bond funds

Is that what the bond funds are doing and is that considered active management? It's my understanding that for most long term bond funds the assets aren't held to maturity but are sold early, sometimes at a specified length or interval (for example 7 - 10 years). Are the bond funds deciding to buy ...
by ogd
Sat Jul 09, 2016 1:34 pm
Forum: Investing - Theory, News & General
Topic: Long term bond funds
Replies: 26
Views: 2250

Re: Long term bond funds

A long-term bond fund may sell its bonds when they become intermediate term. This could be at a significantly lower price than what the fund paid for it. When it uses that money to buy new bonds at the higher rate, it won't be able to buy as many bonds and generate as much income. If you mean "...
by ogd
Sat Jul 09, 2016 1:29 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Intermediate Term Tax Exempt - Zero Coupon Bonds
Replies: 11
Views: 1080

Re: Vanguard Intermediate Term Tax Exempt - Zero Coupon Bonds

Why would a bond fund of this type hold zero coupon bonds? How is the income from zero coupon bonds distributed? Because they bought them for well below face value, as can be seen in your excerpt. Getting $5M future for $3M present is a good amount of yield. Tax laws force them to distribute apprec...
by ogd
Sat Jul 09, 2016 1:27 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Dividend Appreciation (VDAIX) and Vanguard High Dividend Yield (VHDYX)
Replies: 20
Views: 1039

Re: Vanguard Dividend Appreciation (VDAIX) and Vanguard High Dividend Yield (VHDYX)

Dividend Appreciation tracks the Nasdaq US Dividend Achievers Select, while High Dividend Yield tracks the FTSE High Dividend Yield Index. It seems to me the first index would be better for gains at this time. The former is more growth-y ("good" companies), while the latter is more value-...
by ogd
Sat Jul 09, 2016 1:19 pm
Forum: Investing - Theory, News & General
Topic: Why do people invest in Long Term Bonds now?
Replies: 44
Views: 4869

Re: Why do people invest in Long Term Bonds now?

I is that really true? I think the log scale is important here, not the arithmetic scale. If rates halve, the price on current bonds double (all other things being equal). Rates can keep on halving for long time. Theoretically, it can go on for ever. Nope. The formula is price change = - duration t...
by ogd
Thu Jul 07, 2016 8:16 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Market Bubble
Replies: 43
Views: 3605

Re: Bond Market Bubble

However, the use case that would inflict the most pain would be if inflation really started to ramp up quickly but rates did not rise as much with it. The real return in that case could become more and more negative. Well, it's hard to believe that longer rates (that the Fed doesn't set, but the ma...
by ogd
Thu Jul 07, 2016 10:22 am
Forum: Investing - Help with Personal Investments
Topic: Dilemma: Maturity Defined Bond ETFs vs Regular Bond ETF
Replies: 6
Views: 423

Re: Dilemma: Maturity Defined Bond ETFs vs Regular Bond ETF

I would use one of the Vanguard intermediate funds plus a savings account or bank CDs. Right now I might be tempted to use only bank CDs, actually. I would not use these funds. I've always thought that liability matching is merely the illusion of control; in reality both your expenses and the amount...
by ogd
Thu Jul 07, 2016 10:13 am
Forum: Investing - Help with Personal Investments
Topic: Bond Market Bubble
Replies: 43
Views: 3605

Re: Bond Market Bubble

But, I am concerned about the bond bubble. I do not want to be guilty of attempting to time the market, but I do feel that bonds are overpriced at this time and after a 32-year bull market, Flav: you are using language that is applicable to stocks but not so much to reasonably safe bonds. Here's wh...
by ogd
Tue Jul 05, 2016 5:45 pm
Forum: Investing - Theory, News & General
Topic: Long term bond performance question
Replies: 9
Views: 906

Re: Long term bond performance question

I have been reading about bonds and learning more as I go, although so far the nitty-gritty seems more complex than stocks, especially when it comes to bond "funds" over individual bonds. But can someone explain - hopefully in simple terms - how the recent performance of Long term bonds i...
by ogd
Fri Jul 01, 2016 3:35 pm
Forum: Investing - Theory, News & General
Topic: Another argument against "price drop means stocks are on sale"
Replies: 101
Views: 5388

Re: Another argument against "price drop means stocks are on sale"

To be clear, that is NOT what we are talking about here. We are not talking about ONLY investing on RBDs. We are talking about DCA investing with rebalancing on RBDs. Numerous posts on this site show that rebalancing on RBDs does increase returns. I don't think the posts on this site show anything ...
by ogd
Fri Jul 01, 2016 1:27 pm
Forum: Investing - Theory, News & General
Topic: Another argument against "price drop means stocks are on sale"
Replies: 101
Views: 5388

Re: Another argument against "price drop means stocks are on sale"

Da5id wrote:I do start to wonder if the "RBD" discussions are comparable to "rent vs own" and "dividends vs buybacks" threads...

It's starting to seem that way, sadly. Of those, only "rent vs own" is a sound discussion.
by ogd
Fri Jul 01, 2016 1:24 pm
Forum: Investing - Theory, News & General
Topic: Another argument against "price drop means stocks are on sale"
Replies: 101
Views: 5388

Re: Another argument against "price drop means stocks are on sale"

To be clear, that is NOT what we are talking about here. We are not talking about ONLY investing on RBDs. We are talking about DCA investing with rebalancing on RBDs. Numerous posts on this site show that rebalancing on RBDs does increase returns. I don't think the posts on this site show anything ...
by ogd
Fri Jul 01, 2016 10:12 am
Forum: Investing - Theory, News & General
Topic: Another argument against "price drop means stocks are on sale"
Replies: 101
Views: 5388

Re: Another argument against "price drop means stocks are on sale"

I've argued before that a recent drop in some fund does not constitute a buying opportunity. Yet this seems to be a pervasive idea around here. It's not clear exactly what the idea means to people; to me, the idea means that we can expect better returns if we buy after recent price drops. In terms ...
by ogd
Fri Jul 01, 2016 9:45 am
Forum: Investing - Theory, News & General
Topic: How much of upcoming dividend is in stock price?
Replies: 15
Views: 1117

Re: How much of upcoming dividend is in stock price?

On a stock's ex-dividend date I can't imagine the dividend for the next quarter is already baked into the stock price. Well, one reason is it has yet to be earned. The details as to whether the money earned over the next quarter for the next dividend or the one after it etc are not important. When ...
by ogd
Thu Jun 30, 2016 6:05 pm
Forum: Investing - Theory, News & General
Topic: Wait, holding international increases risk?
Replies: 67
Views: 4582

Re: Wait, holding international increases risk?

Redid the analysis with some different data. MSCI EAFE: https://www.bogleheads.org/wiki/MSCI_EAFE_index#Index_returns S&P 500: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html Used both from 1970 (as far back as the international data goes, from that link), giving me 2...
by ogd
Thu Jun 30, 2016 1:13 pm
Forum: Investing - Theory, News & General
Topic: Equities = musical chairs?
Replies: 93
Views: 3804

Re: Equities = musical chairs?

I played it for 30 years waiting to get off the merry go round. I don't wish anyone else ill or another market crash. But I did calculate some years ago that if I had just saved my money rather than investing, I'd be at almost the exact same place financially that I'm at now, and I would not have h...
by ogd
Wed Jun 29, 2016 11:42 pm
Forum: Investing - Theory, News & General
Topic: Market behavior question
Replies: 7
Views: 507

Re: Market behavior question

Friday and Monday saw a huge selloff in the markets, mainly due to Brexit. If you're supposed to buy and hold, why does the market behave as it does?? Are Bogleheads alone in the buy and hold strategy? Why would millions of investors sell, locking in huge losses in the process. This makes absolutel...
by ogd
Fri Jun 24, 2016 2:35 pm
Forum: Investing - Help with Personal Investments
Topic: Advice - Temporarily in 100% cash positions, ready to reinvest but would like help/advice
Replies: 14
Views: 1976

Re: Advice - In 100% cash positions, ready to invest but would like help/advice

Is this AA too cavalier/bold based on what you see above? Yes, certainly. I personally recommend at least 20% bonds to anyone since the rewards of the last 20% of stocks are historically small. But more importantly, someone who has been sitting on 100% cash for any reason whatsoeve r has, in my boo...
by ogd
Thu Jun 23, 2016 2:52 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

I agree management should be free to think shares of A are a fair investment for all current shareholders. The question that management must answer is how they can best use capital for the benefit of their shareholders . It's valid for an investor to assess how management is using capital because i...
by ogd
Thu Jun 23, 2016 12:50 pm
Forum: Investing - Theory, News & General
Topic: Overcoming the Urge to Beat the Market.
Replies: 56
Views: 4868

Re: Overcoming the Urge to Beat the Market.

How did you guys overcome the urge to speculate? How did you overcome the urge to "beat" the market? How did you arrive at the point where you were okay having an "average" portfolio? I have successfully overcome the urge to shoot the basketball from beyond half court by watchin...
by ogd
Thu Jun 23, 2016 12:30 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

I see what you are saying, but don't agree that the difference is so stark so obvious as you indicate. For the remaining shareholders of A, they don't actually care where the money went as far as I can see. I understand why you'd not want to indirectly buy other shares (unless like Berkshire that i...
by ogd
Thu Jun 23, 2016 10:35 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

And that's exactly why I don't like to combine a buyback yield with dividends yield. First, we're mixing up timeframes, dividends are an immediate return, buybacks are deferred (hence mixed up in real life in a ton of other factors influencing earnings and price). You can take a buyback immediately...
by ogd
Thu Jun 23, 2016 10:24 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

Company A buys back company A shares for X dollars (and those shares are effectively destroyed, giving higher ownership to remaining holders) Company A buys company B shares for X dollars (and those shares are held, giving fractional ownership of those shares to all holders) The second case is quit...
by ogd
Wed Jun 22, 2016 9:35 pm
Forum: Investing - Help with Personal Investments
Topic: Dollar Cost Averaging And Lump Sum Investing
Replies: 17
Views: 1071

Re: Dollar Cost Averaging And Lump Sum Investing

Lets say you have S15k a year to invest. Would it work if you were take $7.5k of it and invest $625 on the fist of every month and then take the other $7.5k and put into the market say at the beginning of every year or on your birthday or even break it up quarterly? This takes the usual indecisiven...
by ogd
Wed Jun 22, 2016 1:13 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

What the chart says is most recently, in the aggregate, for every $1 dollar of gross buyback, I see $0.75 in benefit (2.1/2.8=75%). Even in a taxable account, I'd rather get the $1 as a dividend. That's all I'm saying. If it was 90% I'd prefer the buyback when looking at taxable, but the dividend i...
by ogd
Wed Jun 22, 2016 1:09 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

I would add that a dividend and a buyback of the same magnitude have the same effect on total return numbers -- they decrease the company's cash holding while increasing your $10k's (as in "growth of $10K") share of the company. Total return is with dividends reinvested. So it makes perfec...
by ogd
Wed Jun 22, 2016 12:58 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

A company would be taking shares off the table when it can buy more of them for the same number of $ but return cash to shareholders when it's shares may be "overvalued". We frequently stop reinvesting our dividends when stock prices are trading at well above average P/E ratios and purcha...
by ogd
Wed Jun 22, 2016 12:50 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

, You conveniently forget that when a company does a buyback they take from stockholders something of value. The stock surrendered does have value. And in some cases it is worth more than the cash received. The value of stock removed from stockholders needs to be netted out of any calculation of th...
by ogd
Tue Jun 21, 2016 12:43 pm
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

Dividends put money directly in the pockets of investors. Buybacks work by reducing share number and therefore (as long as profits are constant) having a positive effect on PE ratios and tending to elevate share price. But -- buybacks too put company cash in the pockets of some investors. It's actu...
by ogd
Tue Jun 21, 2016 10:03 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5110

Re: Dividend and Buyback Yields, S&P 500, 1982-2015

When people talk of stockholder yield they should state which stockholders they are referring to: selling stockholders, non-selling stockholders, or perhaps an average stockholder who sells a fraction of their shares. Each would have a different return. One simple way of computing a selling shareho...
by ogd
Tue Jun 21, 2016 1:09 am
Forum: Investing - Theory, News & General
Topic: For long-term investing, why is diversification a good thing?
Replies: 24
Views: 2133

Re: For long-term investing, why is diversification a good thing?

So if the highest percentage of investment is going to a total stock market index, isn't this really saying that, over the long run, Vanguard thinks a total stock market index fund will earn an investor more money than any other single fund? If the international fund were to earn a greater income, ...
by ogd
Tue Jun 21, 2016 12:45 am
Forum: Investing - Theory, News & General
Topic: For long-term investing, why is diversification a good thing?
Replies: 24
Views: 2133

Re: For long-term investing, why is diversification a good thing?

I have always been skeptical of the statement that idiosyncratic risk is not rewarded. All risk must be rewarded, otherwise nobody would invest in individual stocks. You shouldn't be -- this is fairly easy to prove. Consider a group A of 100 people each investing, say, $100K in a single individual ...
by ogd
Mon Jun 20, 2016 1:25 pm
Forum: Investing - Theory, News & General
Topic: Same tracker different returns
Replies: 3
Views: 263

Re: Same tracker different returns

I see no less than three different reasons: 1) Most importantly perhaps, returns are in EUR in one site, GBP in the other. So you'd need to adjust them by the GBP/EUR movement for any particular interval. 2) One fund started in 2006, another [got lucky and started] in 2009. So returns for the latter...
by ogd
Mon Jun 20, 2016 12:22 pm
Forum: Investing - Theory, News & General
Topic: Reinvesting dividends question
Replies: 6
Views: 668

Re: Reinvesting dividends question

On the other hand, when you finally sell, you will have a slightly lower cost base (1,775 lower, to be precise), so the tax up/down is more of a temporal thing, and not an outright loss. Actually, much of it is not temporary -- what's an outright loss (or rather, highly probable) is future returns ...
by ogd
Mon Jun 20, 2016 12:16 pm
Forum: Investing - Theory, News & General
Topic: Reinvesting dividends question
Replies: 6
Views: 668

Re: Reinvesting dividends question

In June, I received more than that amount in dividends. Since dividends are actually a partial liquidation of some of the value of those holdings, I was leaning towards that dividend not actually "counting" as a contribution, with the actual $1,775 contribution added in addition to the di...
by ogd
Fri Jun 17, 2016 6:59 pm
Forum: Investing - Help with Personal Investments
Topic: 401K-Choose Stock or Bond With High Fees?
Replies: 5
Views: 365

Re: 401K-Choose Stock or Bond With High Fees?

The bond fund may grow more slowly, so the overall cost may be lower over the long term. This is true in the longer term, by virtue of having less (expected) money in the 401k and more elsewhere, where everything is cheaper. But I'd say that short term growth tends to be overshadowed by contributio...
by ogd
Fri Jun 17, 2016 5:39 pm
Forum: Investing - Help with Personal Investments
Topic: ETF or Mutual Fund
Replies: 5
Views: 376

Re: EFT or Mutual Fund

I am currently using the 3 fund approach of Vanguard Total Market, Vanguard total International, and Vanguard total Bond with my portfolio, however because of my account dollar amount I am only able to invest in the admiral shares with the total market fund, as both the total bond and total interna...
by ogd
Fri Jun 17, 2016 1:30 pm
Forum: Investing - Help with Personal Investments
Topic: 401K-Choose Stock or Bond With High Fees?
Replies: 5
Views: 365

Re: 401K-Choose Stock or Bond With High Fees?

Do I still choose the bund fund here even though they already get low returns or instead apply more bond in IRA and go with their .68% Stock Market index fund in this account? It just seems .78% eats up a lot of bond returns. Thanks. It doesn't really matter. I know it might seem that .78% from low...
by ogd
Thu Jun 16, 2016 6:50 pm
Forum: Investing - Help with Personal Investments
Topic: Mutual fund or Index ETF?
Replies: 14
Views: 1088

Re: Mutual fund or Index ETF?

Also a bit offtopic from my original post. I once read about investing strictly in blue chip cash dividend stocks as a method of making additional income but have not seen it mentioned on here. Is the dividend pay out too small to be considered worth while, or does the accompanying risk of the stoc...
by ogd
Thu Jun 16, 2016 6:05 pm
Forum: Investing - Help with Personal Investments
Topic: Mutual fund or Index ETF?
Replies: 14
Views: 1088

Re: Mutual fund or Index ETF?

When looking at a fund like VBTLX (bonds), over 5 years it has been very up and down. Why would investing into this be considered safe when comparing it to VTSAX (stocks) it is a steady rise up over 5 years with small dips here and there? Is it because I should be looking at a longer term graph? Oh...
by ogd
Thu Jun 16, 2016 3:51 pm
Forum: Investing - Theory, News & General
Topic: Rationale for Dividend-seeking: Playing catch-up on opportunity lost?
Replies: 35
Views: 1387

Re: Rationale for Dividend-seeking: Playing catch-up on opportunity lost?

Now when a Boglehead wannabe (who has read much of the literature on value tilting) sees you at the office, says he's aware of the value offerings from Vanguard and has decided to invest in either the Equity Income Fund or the High Dividend Yield Index Fund rather than the Value Index Fund how do y...
by ogd
Thu Jun 16, 2016 1:28 pm
Forum: Investing - Theory, News & General
Topic: Rationale for Dividend-seeking: Playing catch-up on opportunity lost?
Replies: 35
Views: 1387

Re: Rationale for Dividend-seeking: Playing catch-up on opportunity lost?

During the existence of the Value Index Fund it has produced annualized returns of 9.12%, but the Equity Income Fund has produced annualized returns of 9.78% for the same period. With this knowledge, please explain to me why a Vanguard customer should choose to pursue the value premium by investing...
by ogd
Thu Jun 16, 2016 1:16 pm
Forum: Investing - Theory, News & General
Topic: Rationale for Dividend-seeking: Playing catch-up on opportunity lost?
Replies: 35
Views: 1387

Re: Rationale for Dividend-seeking: Playing catch-up on opportunity lost?

Year 3 4: 1 share of a company worth $151,807 per share or 15,240 shares of a company worth $9 per share So -- does this look any better to you? You still need to match a couple more decimals of return (11.11%) and scale back the return of the non-dividend payer by its higher cost, but it will come...

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