Search found 227 matches

by privatefarmer
Wed May 24, 2017 1:29 am
Forum: Investing - Theory, News & General
Topic: Are risk factors just ways to take on additional risk?
Replies: 27
Views: 989

Re: Are risk factors just ways to take on additional risk?

... The number of people who actually invest 100% in RZV (or equivalent) remains quite small. And even that is all way short of the hypothetical portfolios which use long-minus-short constructions . . . . By definition small caps only make up roughly 10% of the market, a narrower range like small-v...
by privatefarmer
Wed May 24, 2017 12:05 am
Forum: Investing - Theory, News & General
Topic: Are risk factors just ways to take on additional risk?
Replies: 27
Views: 989

Re: Are risk factors just ways to take on additional risk?

I prefer to "slice" my portfolio into different equity classes that have had slightly lower correlation to eachother over the years. I know past doesn't predict future, but I figure if I have 5-10 "slices" (ie REITS, small value, energy, consumer staples, EM, int small, etc) that...
by privatefarmer
Tue May 23, 2017 11:59 pm
Forum: Investing - Theory, News & General
Topic: Are risk factors just ways to take on additional risk?
Replies: 27
Views: 989

Re: Are risk factors just ways to take on additional risk?

but at the end of the day, the long-term (ie 30+ year return) of equities are going to be solely driven by growth in earnings/dividends. Regardless if a company is considered "small" or "value", if it is not more profitable than the average S/P 500 company over the next X number ...
by privatefarmer
Sun May 21, 2017 9:47 pm
Forum: Investing - Theory, News & General
Topic: Value vs Equal vs Other Weighing
Replies: 13
Views: 738

Re: Value vs Equal vs Other Weighing

...However, it bugs my mind that a pro-cyclical portfolio such as that (meaning it gives more weight to the assets that go up in price, less weight to those that go down in price) is the best portfolio... Well, this is basically a mindset and a framing issue, but unfortunately this particular frami...
by privatefarmer
Sat May 20, 2017 7:25 am
Forum: Investing - Theory, News & General
Topic: "Stocks, Bonds and Future Returns" by Prof. Jeremy Siegel
Replies: 65
Views: 5170

Re: "Stocks, Bonds and Future Returns" by Prof. Jeremy Siegel

These long-term graphs are indeed enlightening. Thank you, Taylor, for sharing! I especially find the 50-year bear market in bills from 1931-1981 sobering. In bonds, negative real return 1941-1981. Bonds may be good for volatility reduction, but don't count on them for income! So does he use global...
by privatefarmer
Fri May 19, 2017 11:26 pm
Forum: Investing - Theory, News & General
Topic: "Stocks, Bonds and Future Returns" by Prof. Jeremy Siegel
Replies: 65
Views: 5170

Re: "Stocks, Bonds and Future Returns" by Prof. Jeremy Siegel

So does he use global stock return data to come up w/ the 6.7% real return since 1802 or is that just US data? From what I've read on other sources, the global real return going back as far as we can is only 5%... 6.7% real since 1802, if that is based on global markets, sounds too good to be true...
by privatefarmer
Sat Apr 29, 2017 4:55 pm
Forum: Investing - Theory, News & General
Topic: So what's the theory behind this active vs Passive report
Replies: 15
Views: 1345

Re: So what's the theory behind this active vs Passive report

Before fees, active and passive for the general public ally available stock market must give the same result, on average. This is just plain arithmetic. The spread of results or that for any specific investor may be different, but in aggregate, they are both in the same market, so the average must ...
by privatefarmer
Sat Apr 15, 2017 6:20 pm
Forum: Investing - Theory, News & General
Topic: Is it necessary to diversify across Factors?
Replies: 123
Views: 6854

Re: Is it necessary to diversify across Factors?

Ironically, holding a total market index fund does give you diversity to all the various "factors". Value? Yup. Momentum? Yup. Small? Yup. You own everything. To me, this argument is no different than owning specific sectors. You can backtest and see that certain characteristics (factors) ...
by privatefarmer
Sat Mar 25, 2017 5:33 am
Forum: Investing - Theory, News & General
Topic: Use Debt Instead Of Cash/Fixed Income In Asset Allocation?
Replies: 15
Views: 1725

Re: Use Debt Instead Of Cash/Fixed Income In Asset Allocation?

The stock market can go into significant drawdowns, such that matching assets to liabilities with stocks can be problematic on occasion. For cash/fixed income, this is less of an issue. With time, the drawdown risk of stocks decreases more than the drawdown risk of cash/fixed income decreases. At a...
by privatefarmer
Sat Mar 25, 2017 5:27 am
Forum: Investing - Theory, News & General
Topic: Use Debt Instead Of Cash/Fixed Income In Asset Allocation?
Replies: 15
Views: 1725

Re: Use Debt Instead Of Cash/Fixed Income In Asset Allocation?

The stock market can go into significant drawdowns, such that matching assets to liabilities with stocks can be problematic on occasion. For cash/fixed income, this is less of an issue. With time, the drawdown risk of stocks decreases more than the drawdown risk of cash/fixed income decreases. At a...
by privatefarmer
Thu Mar 16, 2017 1:19 am
Forum: Investing - Theory, News & General
Topic: How much international stock? A suggestion.
Replies: 187
Views: 25927

Re: How much international stock? A suggestion.

As of this date in 2016, the market has decided that 46 cents of every dollar is invested in companies not domiciled in the United States. If your international equity allocation is anything other than that global market weight, you are tilting. You are betting that you know something that the glob...
by privatefarmer
Wed Mar 15, 2017 5:58 am
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...

Anyhow, at the end of the day the companies themselves that grow their profits the most will earn their investors the most money. I don't see why a small company would grow their earnings faster than a large company - that is pure speculation IMO. Well that is simple, it is always easier to have a ...
by privatefarmer
Tue Mar 14, 2017 11:52 pm
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...

I recall Bogle arguing something along the lines that active management fails not because they are trying to pick certain securities but because of the excess fees/taxes over passive investing. I view factor investing in this way now. It may not fail because factors are non-existent over a time fram...
by privatefarmer
Tue Mar 14, 2017 11:48 pm
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...

Even if the small, value, and small value premiums drop by a third, which some academic research suggests might be the case going forward, many believe that there are still likely to be long-term premiums in those asset classes, including myself. Ok, lets run with that. The SCV premium is supposed ...
by privatefarmer
Mon Mar 13, 2017 7:11 am
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...

He does mention the 15 year returns. Odd he doesn't mention the 3,5, or 10 year returns in which Small and Value have trailed TSM (weirdly that seems to coincide with when 'factors' got really popular in the retail space). But then again, he is an advisor with books and advice to sell. Not so odd. ...
by privatefarmer
Mon Mar 13, 2017 2:55 am
Forum: Investing - Theory, News & General
Topic: A look at the small cap premium
Replies: 58
Views: 5941

Re: A look at the small cap premium

. Here are the CRSP1 to 10 index returns for the past 85.5 years as reflected in the Bridgeway annual report. Annualized return (%) listed by decile. Declie 1 is largest cap, decile 10 is smallest cap. 85.5 years to June 30, 2015 Decile.....Annualized return 1 = 9.33% 2 = 10.60% 3 = 11.00% 4 = 11.1...
by privatefarmer
Mon Mar 13, 2017 2:30 am
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...A

Because country-specific risk can be diversified away. but can't small-cap risk be diversified away? what is the difference between owning numerous emerging market countries and owning numerous small cap companies? either case you are diversifying away the risk of either a single country or a singl...
by privatefarmer
Mon Mar 13, 2017 2:27 am
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...

One other thing that I am trying to better understand is that over long periods of time (decades) it is earnings growth that solely drives an investor's return. That the behavioral aspect of stock pricing eventually is a zero-sum game. For example, if small stocks are deemed riskier then their P/E s...
by privatefarmer
Mon Mar 13, 2017 2:20 am
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...

This article is absurd. If "every" investor should tilt to Small or Value, how is there supposed to be a premium? How many tilters until it capsizes? How many tilters to equities before the equity premium disappears? How concerned are you about that happening? good question. perhaps it is...
by privatefarmer
Sun Mar 12, 2017 11:57 pm
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...

This article is absurd. If "every" investor should tilt to Small or Value, how is there supposed to be a premium? How many tilters until it capsizes? How many tilters to equities before the equity premium disappears? How concerned are you about that happening? good question. perhaps it is...
by privatefarmer
Sun Mar 12, 2017 11:46 pm
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...A

Because country-specific risk can be diversified away. but can't small-cap risk be diversified away? what is the difference between owning numerous emerging market countries and owning numerous small cap companies? either case you are diversifying away the risk of either a single country or a singl...
by privatefarmer
Sun Mar 12, 2017 12:48 pm
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...A

IMO, if the average Joe can easily put his/her money into VBR vs VTI, for example, and leave it there for decades, can we really expect that one will do substantially better than the other? The average Joe can easily put his/her money into BND vs VTI and leave it there for decades - can we really e...
by privatefarmer
Sun Mar 12, 2017 12:45 pm
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...A

IMO, if the average Joe can easily put his/her money into VBR vs VTI, for example, and leave it there for decades, can we really expect that one will do substantially better than the other? The average Joe can easily put his/her money into BND vs VTI and leave it there for decades - can we really e...
by privatefarmer
Sun Mar 12, 2017 9:27 am
Forum: Investing - Theory, News & General
Topic: 3 fund or 2? No international
Replies: 21
Views: 1805

Re: 3 fund or 2? No international

"In any event, you need two factors for an international fund to beat the U.S. First, you need international markets to fare better than the U.S. Second, you need the dollar to fall against foreign currencies. In other words, you're adding currency risk to the already considerable risk of inve...
by privatefarmer
Sun Mar 12, 2017 9:26 am
Forum: Investing - Theory, News & General
Topic: 3 fund or 2? No international
Replies: 21
Views: 1805

Re: 3 fund or 2? No international

"In any event, you need two factors for an international fund to beat the U.S. First, you need international markets to fare better than the U.S. Second, you need the dollar to fall against foreign currencies. In other words, you're adding currency risk to the already considerable risk of inve...
by privatefarmer
Sun Mar 12, 2017 9:25 am
Forum: Investing - Theory, News & General
Topic: 3 fund or 2? No international
Replies: 21
Views: 1805

Re: 3 fund or 2? No international

"In any event, you need two factors for an international fund to beat the U.S. First, you need international markets to fare better than the U.S. Second, you need the dollar to fall against foreign currencies. In other words, you're adding currency risk to the already considerable risk of inve...
by privatefarmer
Sun Mar 12, 2017 2:14 am
Forum: Investing - Theory, News & General
Topic: Merriman article: 12 things every investor should know...
Replies: 43
Views: 5389

Re: Merriman article: 12 things every investor should know...

Not much new for Bogleheads, but it's always nice to point to some things that many here enjoy reading. It is interesting to see that tucked down toward the end of the list, Merriman seems to side with the (not insignificant) minority of BH's that believe in tilting toward small cap and/or value. T...
by privatefarmer
Sun Mar 12, 2017 1:50 am
Forum: Investing - Theory, News & General
Topic: Asset Placement Turned Upside Down, Bonds in Taxable?
Replies: 51
Views: 4117

Re: Asset Placement Turned Upside Down, Bonds in Taxable?

what are bonds??

100% equities 100% of the time. Math is math.
by privatefarmer
Sun Mar 12, 2017 1:48 am
Forum: Investing - Theory, News & General
Topic: 3 fund or 2? No international
Replies: 21
Views: 1805

Re: 3 fund or 2? No international

if your time frame is >10 years, can you honestly predict which will do better domestic vs international? I would argue absolutely not. The world was a COMPLETELY different place 10 years ago (we were getting ready to enter great recession). So for me, my horizon is 35 years to retirement (hopefully...
by privatefarmer
Thu Mar 02, 2017 5:48 am
Forum: Investing - Theory, News & General
Topic: investable factors vs acadamic factors
Replies: 11
Views: 818

Re: investable factors vs acadamic factors

If the risk factors have risk based explanations, then they should persist, even in an efficient market, should they not? they should. And don't get me wrong, I tilt to small/value strongly. But one could argue that putting your money into VBR vs VTI, for example, really is not that much riskier. T...
by privatefarmer
Thu Mar 02, 2017 3:56 am
Forum: Investing - Theory, News & General
Topic: DFA becoming too big?
Replies: 10
Views: 964

Re: DFA becoming too big?

Over this period since 2004-01-26, note that small cap core beat small cap value according to a quick check of French library 2x3 (size x value) data I looked at, and mid cap value I think was pretty fine. iShares Russell Mid-Cap Value (IWS) and iShares S&P Mid-Cap 400 Value (IJJ) beat Vanguard...
by privatefarmer
Thu Mar 02, 2017 3:47 am
Forum: Investing - Theory, News & General
Topic: investable factors vs acadamic factors
Replies: 11
Views: 818

investable factors vs acadamic factors

I have a concern, apologize if it's been covered already, it seems to me that "factor investing" was only available to the mass public via index funds at the earliest in the late 80's, DFA didn't even come on board until the early 90s. w/ their small value fund. So we have all this data go...
by privatefarmer
Thu Mar 02, 2017 1:22 am
Forum: Investing - Theory, News & General
Topic: Why has growth beaten value recently?
Replies: 33
Views: 4180

Re: Why has growth beaten value recently?

Achemist Bizarre? So here is simple question Which group of stocks is more riskY Those with higher SD of earnings and dividends as well as have more operating leverage and more financial leverage (more debt) or companies with the opposite traits? Obviously it's rhetorical. And just as obviously the...
by privatefarmer
Thu Mar 02, 2017 1:05 am
Forum: Investing - Theory, News & General
Topic: DFA becoming too big?
Replies: 10
Views: 964

DFA becoming too big?

Looking at returns of DFSVX (small value) vs VBR (small value), since 2004 (VBRs inception), vanguard has slightly outperformed... VBR is less valuey and less small but the small/value "premium" has been in effect over this time period (just compare them both to S/P 500 over same time peri...
by privatefarmer
Mon Feb 27, 2017 1:37 am
Forum: Investing - Theory, News & General
Topic: "Buffett: Indexing the Best Choice for Investors Large and Small"
Replies: 16
Views: 2643

Re: "Buffett: Indexing the Best Choice for Investors Large and Small"

I apologize if this is a stupid question - did the hedge funds that ran against s/p use small cap value tilts? Or were they all large blend hedge funds?

If they were allowed to use small value tilts, does this prove that smart beta is a scam?
by privatefarmer
Wed Feb 22, 2017 3:53 pm
Forum: Investing - Help with Personal Investments
Topic: calculating the taxes of foreign etfs
Replies: 2
Views: 155

calculating the taxes of foreign etfs

hello, I am trying to roughly quantify the benefit of holding international ETFs like VWO and VSS in a taxable account vs a retirement account. Last year, I received a $140 tax credit due to the foreign taxes paid. I held roughly 90k in international ETFs last year, so the $140 = 0.0016% of the 90k....
by privatefarmer
Tue Feb 14, 2017 9:49 am
Forum: Investing - Theory, News & General
Topic: Valuation does not matter (may be)
Replies: 55
Views: 4218

Re: Valuation does not matter (may be)

the article says valuation changes certainly make up large part of near-term returns (~33%), and it says : But over longer periods, the impact of valuations starts to approach zero as shorter-term fluctuations offset each other. Inflation and dividend yield together drive 70%+ of 30-year returns on ...
by privatefarmer
Fri Feb 03, 2017 11:49 pm
Forum: Investing - Theory, News & General
Topic: The Final, Definitive Thread on Brokerage Transfer Bonuses
Replies: 378
Views: 47193

Re: The Final, Definitive Thread on Brokerage Transfer Bonuses

I have a roth IRA and was wondering if one were to transfer it back and forth between multiple firms, would it became problematic trying to determine what funds were contributions and what funds were gains? if one were to retire early, for instance, I would think it might be difficult to determine w...
by privatefarmer
Fri Feb 03, 2017 11:30 pm
Forum: Investing - Theory, News & General
Topic: It appears Fiduciary changes may not happen after all.
Replies: 84
Views: 6573

Re: It appears Fiduciary changes may not happen after all.

I manage my own affairs and could care less about this. I manage my own affairs as well. However, if you are employed and have a 401K, this may affect you. I have had some pretty terrible 401K's in the past. Some charged loads. Some have only really high expenses. My wife has a really great one wit...
by privatefarmer
Fri Feb 03, 2017 11:28 pm
Forum: Investing - Theory, News & General
Topic: It appears Fiduciary changes may not happen after all.
Replies: 84
Views: 6573

Re: It appears Fiduciary changes may not happen after all.

I manage my own affairs and could care less about this. I manage my own affairs as well. However, if you are employed and have a 401K, this may affect you. I have had some pretty terrible 401K's in the past. Some charged loads. Some have only really high expenses. My wife has a really great one wit...
by privatefarmer
Fri Feb 03, 2017 11:24 pm
Forum: Investing - Theory, News & General
Topic: It appears Fiduciary changes may not happen after all.
Replies: 84
Views: 6573

Re: It appears Fiduciary changes may not happen after all.

I manage my own affairs and could care less about this. well you may have family who will or have already been ripped off by a "financial advisor". obviously anyone reading this forum will not be dumb enough to invest in an indexed annuity or whole life product but we probably all have fr...
by privatefarmer
Wed Feb 01, 2017 7:10 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 10523

Re: Risk tolerance when you meet your number

Big John, I really am right behind you :-) I had envisioned a 60/40 retirement for the duration as well, but am cooling off the AA more than I had anticipated Dave I'm nowhere close to retirement so don't have a tooth in this fight. But to play devils advocate, i have heard on many financial shows ...
by privatefarmer
Mon Jan 30, 2017 10:11 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 10523

Re: Risk tolerance when you meet your number

Our approach is one that says we could do about the most conservative thing and be OK, but that the thrust of investing sites is that the market goes up over the long haul. We have a "stop loss" percentage that would result in us having enough if the market went down to that point. We are...
by privatefarmer
Mon Jan 30, 2017 8:18 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 10523

Re: Risk tolerance when you meet your number1

privatefarmer, Why does anybody hold any bonds then? Clearly, the market does see some advantages in holding bonds. After all, bonds make up about half the global market portfolio. That simulation on portfoliovisualizer is confusing. It is using VARIABLE withdrawal rates not fixed. If you want fixe...
by privatefarmer
Mon Jan 30, 2017 8:14 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 10523

Re: Risk tolerance when you meet your number1

privatefarmer, Why does anybody hold any bonds then? Clearly, the market does see some advantages in holding bonds. After all, bonds make up about half the global market portfolio. That simulation on portfoliovisualizer is confusing. It is using VARIABLE withdrawal rates not fixed. If you want fixe...
by privatefarmer
Mon Jan 30, 2017 7:38 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 10523

Re: Risk tolerance when you meet your number1

The 100% equities portfolio continues to grow, in the vast majority of cases, even as you are withdrawing. privatefarmer, Look at the probability of success when you withdraw 4 percent a year and hold 100% in BONDS. Still convinced 100% equity is the only way to go? Yes. If you change it to 100% st...
by privatefarmer
Mon Jan 30, 2017 7:31 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 10523

Re: Risk tolerance when you meet your number1

The 100% equities portfolio continues to grow, in the vast majority of cases, even as you are withdrawing. privatefarmer, Look at the probability of success when you withdraw 4 percent a year and hold 100% in BONDS. Still convinced 100% equity is the only way to go? Yes. If you change it to 100% st...
by privatefarmer
Mon Jan 30, 2017 6:28 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 10523

Re: Risk tolerance when you meet your number1

I guess I just don't understand the rational behind most people's thinking here. We know to be true : 1) historically, across the global economy over as long a period of time that we can trace, equities outperform fixed income because of their higher volatility/risk 2) even if you are retired, or h...

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