Search found 658 matches

by rmelvey
Thu Dec 01, 2016 1:20 pm
Forum: Investing - Theory, News & General
Topic: Why is NAASDAQ getting hammered?
Replies: 10
Views: 1186

Re: Why is NAASDAQ getting hammered?

People pay up for high growth stocks when the economy is sluggish because growth is hard to come by. When the economy is improving, growth is much easier to come by and people aren't willing to pay high P/E multiples for growth. Right now, people are positioning their portfolios for a higher growth ...
by rmelvey
Thu Dec 01, 2016 11:45 am
Forum: Personal Consumer Issues
Topic: another New York rental question
Replies: 39
Views: 2187

Re: another New York rental question

At $2K per month her best bet is to have a roommate and hire a monthly cleaner. She could live in a nice building with a doorman and walk to work. Unfortunately she won't find a great solo living option at that price point in Manhattan.
by rmelvey
Thu Dec 01, 2016 11:37 am
Forum: Investing - Help with Personal Investments
Topic: Aren't rising rates good for bond funds?
Replies: 14
Views: 1074

Re: Aren't rising rates good for bond funds?

Yes you are on the right track. If the duration of your assets is shorter than the duration of your liabilies then you benefit from rising rates. I think people get tripped up because the liability (future spending needs) is rarely calculated and measured against their assets. Most people only look ...
by rmelvey
Thu Dec 01, 2016 11:34 am
Forum: Personal Finance (Not Investing)
Topic: 30 Yr Treasury Bonds - Why should't I do this?
Replies: 5
Views: 579

Re: 30 Yr Treasury Bonds - Why should't I do this?

I think holding some 30 year treasuries for income can make sense, but I wouldn't go more than 50% of your portfolio. Holding some stocks along with 30 year treasuries will actually be less risky than going 100% 30 year treasuries. The stock dividends will bounce around a bit more, but they should b...
by rmelvey
Thu Dec 01, 2016 11:07 am
Forum: Personal Finance (Not Investing)
Topic: Feeling like you've "made it"
Replies: 98
Views: 8556

Re: Feeling like you've "made it"

I am 25 and going through a similar issue. My assets have reached the point where they around 1x my annual income, which is enough to feel the ups and downs, but not nearly enough to fuel any extended time out of work. I think the best way to think about it when you are still young is that even if r...
by rmelvey
Thu Nov 17, 2016 3:01 pm
Forum: Investing - Help with Personal Investments
Topic: Is it worth it to harvest taxable a/c to shift earnings to 401k
Replies: 13
Views: 794

Re: Is it worth it to harvest taxable a/c to shift earnings to 401k

I think it makes sense. The only reason it wouldn't is if you needed to make a large purchase before retirement (such as a new house or college). But even then, you could strategize ways to get the money out of the TA accounts (roth contributions, 401k borrow).
by rmelvey
Fri Nov 11, 2016 12:04 pm
Forum: Personal Consumer Issues
Topic: What kind of apartment can $1k get you in your city?
Replies: 80
Views: 6314

Re: What kind of apartment can $1k get you in your city?

NYC. You could get a room share in an old apartment in an undesirable neighborhood :|
by rmelvey
Mon Nov 07, 2016 11:10 am
Forum: Personal Consumer Issues
Topic: Amazon Echo
Replies: 53
Views: 5619

Re: Amazon Echo

I love it. My favorite features include using it as a timer when I'm cooking, playing music, and turning my lights on and off.
by rmelvey
Wed Nov 02, 2016 7:10 am
Forum: Personal Finance (Not Investing)
Topic: Considering Buying Condo in NYC
Replies: 18
Views: 2425

Re: Considering Buying Condo in NYC

After you have purchased the condo will you have enough monthly cash flow to max out the 401k? I live in NYC and one reason I don't consider buying is because I value maxing out the 401k due to the high taxes we enjoy living here...
by rmelvey
Mon Oct 31, 2016 3:36 pm
Forum: Investing - Theory, News & General
Topic: Using long bonds vs. intermediate in 401K?
Replies: 15
Views: 999

Re: Using long bonds vs. intermediate in 401K?

At 70/30 I think going long duration can make sense. Your portfolio is still dominated by equity risk. But just try to stay the course when interest rates get choppy. Holding long bonds is harder emotionally than holding stocks because the consensus is usually that rates will go higher (even though ...
by rmelvey
Wed Oct 26, 2016 1:06 pm
Forum: Investing - Help with Personal Investments
Topic: BND instead of a saving account
Replies: 7
Views: 1061

Re: BND instead of a saving account

You can get savings accounts that yield 1%. I think a combination of savings accounts and muni bonds makes more sense than BND in a taxable account. With that said, your rationale for not investing doesn't make much sense to me. Stocks won't become any less risky 6 months from now, so if they appear...
by rmelvey
Wed Oct 19, 2016 3:28 pm
Forum: Personal Finance (Not Investing)
Topic: Why have a formal budget?
Replies: 106
Views: 10136

Re: Why have a formal budget?

My income is VERY lumpy and heavily dependent on stock prices. I need a budget to forecast my cash balances. Most months I am drawing down on cash, but I get two large bonuses each year that tops it off. If i didn't budget I wouldn't know how much I could safely spend.
by rmelvey
Tue Oct 18, 2016 8:25 am
Forum: Investing - Theory, News & General
Topic: Another reason to look at International
Replies: 7
Views: 1648

Re: Another reason to look at International

The US economy could survive a slowdown in global trade better than most other developed nations. We have a more diversified economy and trade accounts for a lower share of our GDP than many others. I don't think leaning into international stocks would be the right way to play this (not that I would...
by rmelvey
Tue Sep 06, 2016 8:39 am
Forum: Investing - Help with Personal Investments
Topic: Asset allocation for a 10 year account
Replies: 4
Views: 477

Re: Asset allocation for a 10 year account

One easy way to gut check your allocation is to compare it to the vanguard target retirement funds. Right now the vanguard 2025 fund is 66% stocks and 34% bonds.
by rmelvey
Thu Sep 01, 2016 1:10 pm
Forum: Investing - Help with Personal Investments
Topic: Take the loss and exit market?
Replies: 22
Views: 3012

Re: Take the loss and exit market?

I would stay in and keep buying (that's what I do). But I also do not get worried about 1% drops. Maybe you should stick with savings accounts and CDs. With stocks you have to be ready to hold through 50% (sometimes more!) declines. I don't think they match your risk tolerance.
by rmelvey
Mon Aug 29, 2016 4:19 pm
Forum: Personal Consumer Issues
Topic: Frugality regret: What thing do you regret not spending on?
Replies: 176
Views: 33734

Re: Frugality regret: What thing do you regret not spending on?

I regret not getting a better apartment when i first moved to NYC. I shared an apartment with 5 other people and the apartment was a complete disaster. I had to give people a pep talk before they came to see where I lived. In hindsight I should have just bit the bullet and gotten a normal place.
by rmelvey
Wed Aug 24, 2016 9:34 am
Forum: Personal Finance (Not Investing)
Topic: NYC Living Options
Replies: 37
Views: 2832

Re: NYC Living Options

Don't buy a car. If you really hate the subway just use Uber or yellow cabs. You can certainly find something much cheaper than $3.5-$4K. I live in a 2BR apartment in chinatown for $2,500 and have a roommate so I pay $1,275. Try to keep in mind that you will be meeting and hanging out with people ou...
by rmelvey
Tue Aug 23, 2016 2:23 pm
Forum: Personal Consumer Issues
Topic: Get rich quick?
Replies: 52
Views: 9265

Re: Get rich quick?

Putting up a small amount of margin for S&P futures should do the trick. You will likely lose everything if you keep at it though.
by rmelvey
Fri Aug 12, 2016 7:06 pm
Forum: Investing - Theory, News & General
Topic: Anyone else noticing the economy improving?
Replies: 78
Views: 4655

Re: Anyone else noticing the economy improving?

I live in NYC which is in boom mode right now. I also work in the e-commerce field which is seeing huge growth. If anything, people in NYC are worried about the economy being too hot and pricing out longer term residents.
by rmelvey
Wed Aug 10, 2016 11:43 am
Forum: Investing - Theory, News & General
Topic: Why are bonds taxed more than stocks?
Replies: 29
Views: 3690

Re: Why are bonds taxed more than stocks?

Because the wealthy earn more of their income from stocks :twisted:
by rmelvey
Wed Aug 10, 2016 6:13 am
Forum: Investing - Help with Personal Investments
Topic: Going short to negate going long [socially responsible investing]
Replies: 59
Views: 3368

Re: Going short to negate going long

It might be cheaper and more effective to just buy index funds and donate a little extra each year to an environmentally focused charity.You will drive yourself crazy trying to fit your morals into the markets. I don't like the idea of going short a sector because shorting has extra expenses associa...
by rmelvey
Tue Aug 09, 2016 11:32 am
Forum: Investing - Theory, News & General
Topic: Vanguard - why don't I 'feel' good about them?
Replies: 36
Views: 3714

Re: Vanguard - why don't I 'feel' good about them?

I really enjoy using Fidelity for my taxable account. It's nice to have a different ETF provider for taxable than tax advantaged because it makes it easier to harvest losses while avoiding the wash sale rule. I also like that my taxable account has all of the features of a checking account!
by rmelvey
Sat Aug 06, 2016 7:50 am
Forum: Investing - Theory, News & General
Topic: Margin investing - how risky is it really?
Replies: 33
Views: 2417

Re: Margin investing - how risky is it really?

I don't know how you would correctly calculate the percentages but using margin would really mess up your asset allocation especially if you count the margin loan as a negative bond. I hold derivatives in my retirement account and calculate my asset allocation using notional values (for futures con...
by rmelvey
Fri Aug 05, 2016 10:21 am
Forum: Investing - Theory, News & General
Topic: Margin investing - how risky is it really?
Replies: 33
Views: 2417

Re: Margin investing - how risky is it really?

Another thing to consider is that if you open a margin account your shares can be lent to other investor's and your dividends will no longer be qualified ... Are you saying that merely having a margin account (without borrowing on it) means that dividends paid in that account are not qualified divi...
by rmelvey
Thu Aug 04, 2016 11:44 am
Forum: Investing - Theory, News & General
Topic: Margin investing - how risky is it really?
Replies: 33
Views: 2417

Re: Margin investing - how risky is it really?

Another thing to consider is that if you open a margin account your shares can be lent to other investor's and your dividends will no longer be qualified...
by rmelvey
Wed Aug 03, 2016 11:11 am
Forum: Investing - Help with Personal Investments
Topic: Any renters just focused on maxing out retirement accounts?
Replies: 13
Views: 2042

Re: Any renters just focused on maxing out retirement accounts?

Same boat.

Live in NYC and am maxing out 401k, roth, hsa. I couldn't max out these account if I purchased an apartment, and the tax savings from the 401k are so huge because taxes here are high.

I don't plan on buying property in NYC...
by rmelvey
Wed Jul 27, 2016 11:25 am
Forum: Personal Finance (Not Investing)
Topic: Any retirees here who have been life-long renters?
Replies: 140
Views: 10711

Re: Any retirees here who have been life-long renters?

I am renting right now and I am able to max out my 401k, roth ira, and HSA accounts. If I wanted to purchase a home I would no longer be able to do that because of the down payment as well as higher monthly payments. Since I am in NYC the tax savings from that are substantial. I also like that I can...
by rmelvey
Wed Jul 20, 2016 12:55 pm
Forum: Investing - Theory, News & General
Topic: Why does a massive company like Coca Cola or Johnson Johnson need money from investors?
Replies: 25
Views: 2734

Re: Why does a massive company like Coca Cola or Johnson Johnson need money from investors?

They don't need it and they don't take it. Both of those companies distribute cash to their stockholders in the form of dividends and stock buy backs.
by rmelvey
Tue Jul 12, 2016 4:10 pm
Forum: Investing - Theory, News & General
Topic: Just as hard to lose to the market as to beat it?
Replies: 53
Views: 4080

Re: Just as hard to lose to the market as to beat it?

Buy 100 different funds with 2% expense ratios. That's an easy way to underperform.

As far as selecting securities, that is a lot more difficult. Because if you could easily find what would underperform then you could earn a free lunch as a short seller. That is not very likely...
by rmelvey
Sun Jul 03, 2016 10:04 am
Forum: Investing - Help with Personal Investments
Topic: Long term investing for grandkids
Replies: 10
Views: 425

Re: Long term investing for grandkids

I think equities make sense for a perpetual time horizon, because they are a (risky) perpetuity. However, I think if you want a portfolio that will stand up to the test of time, nothing is more timeless than a Total Market index.
by rmelvey
Fri Jul 01, 2016 10:59 am
Forum: Investing - Help with Personal Investments
Topic: how to reflect paying off mortgage in AA?
Replies: 38
Views: 1897

Re: how to reflect paying off mortgage in AA?

I think including the mortgage AND the home value can make sense. Ignoring the mortgage can lead to some less than rational behavior such as borrowing at 3.5% on your mortgage and buying Treasuries at 1.5%. Outside of liquidity requirements this is a money losing trade! This example omits the value...
by rmelvey
Fri Jul 01, 2016 10:25 am
Forum: Investing - Help with Personal Investments
Topic: how to reflect paying off mortgage in AA?
Replies: 38
Views: 1897

Re: how to reflect paying off mortgage in AA?

I think including the mortgage AND the home value can make sense. Ignoring the mortgage can lead to some less than rational behavior such as borrowing at 3.5% on your mortgage and buying Treasuries at 1.5%. Outside of liquidity requirements this is a money losing trade!
by rmelvey
Thu Jun 30, 2016 4:58 pm
Forum: Investing - Help with Personal Investments
Topic: Getting rid of international funds
Replies: 83
Views: 7155

Re: Getting rid of international funds

US investors can get away with just holding US equities and CDs. It really is that simple. I wouldn't recommend the same for investor's in smaller countries.
by rmelvey
Thu Jun 30, 2016 4:12 pm
Forum: Investing - Theory, News & General
Topic: Equities = musical chairs?
Replies: 93
Views: 4300

Re: Equities = musical chairs?

Equities have no maturity date, so yes there is no guarantee that you will get all of your principal back at a certain date. They are a perpetuity. It is the stream of dividends that give them their value. If you are only spending the dividends the musical chair aspect of them goes away.
by rmelvey
Wed Jun 29, 2016 3:57 pm
Forum: Investing - Theory, News & General
Topic: I think Buffett got this wrong
Replies: 87
Views: 5277

Re: I think Buffett got this wrong

I'm sitting here trying to make a decision. Do I go with the original poster's ideas or do I go with Buffet's ideas? H-m-m-m. Allowing for the fact that past performance is no guarantee of future results, I still think I'm sticking with Warren. Can't blame anyone for going with Buffett over me. Obv...
by rmelvey
Wed Jun 29, 2016 3:32 pm
Forum: Investing - Theory, News & General
Topic: I think Buffett got this wrong
Replies: 87
Views: 5277

Re: I think Buffett got this wrong

Run your data for 30 year treasuries. If you get the same result than something with your analysis is probably off. When bond prices drop their expected return goes up. That is a mathematical fact. Buffett is making a similar comparison with equities. Keep in mind that equities have a duration of ar...
by rmelvey
Wed Jun 29, 2016 3:15 pm
Forum: Investing - Theory, News & General
Topic: I think Buffett got this wrong
Replies: 87
Views: 5277

Re: I think Buffett got this wrong

While this might not be exactly what Buffet is referring to, volatility is the friend of an accumulator and the enemy of someone in distribution mode. They are two sides of the same coin.
by rmelvey
Wed Jun 22, 2016 10:14 am
Forum: Investing - Help with Personal Investments
Topic: 100k+ with 2 year window, how to invest?
Replies: 16
Views: 1080

Re: 100k+ with 2 year window, how to invest?

Personally, I would do 80% bonds and 20% stocks. Yes, there is a risk of losing money but it is a very conservative allocation. I am not a fan of cash except for month to month living expenses. CDs are good too, but I don't like the lack of liquidity for taxable accounts. They make more sense for me...
by rmelvey
Tue Jun 21, 2016 8:02 pm
Forum: Investing - Theory, News & General
Topic: Buying the style box in columns, not rows
Replies: 7
Views: 714

Re: Buying the style box in columns, not rows

A major reason to bucket by rows instead of columns is due to bid/ask spreads. If you are an active trader you want to stick mostly with large cap stocks due to lower costs of trading. While not important to a buy and hold boglehead, this factor is very important for other investors.
by rmelvey
Tue Jun 21, 2016 2:21 pm
Forum: Investing - Theory, News & General
Topic: Pfau: Why Bond Funds Don't Belong in Retirement Portfolios
Replies: 138
Views: 18698

Re: Pfau: Why Bond Funds Don't Belong in Retirement Portfolios

This just replaces higher yielding parts of TBM (corporates and GNMAs) with a SPIA. Such a change is consistent with the findings by Pfau in the article referenced at the start of this thread. I would guess this change reduces both market risk and longevity risk, with no increase in inflation risk....
by rmelvey
Tue Jun 21, 2016 11:05 am
Forum: Investing - Theory, News & General
Topic: Dividend and Buyback Yields, S&P 500, 1982-2015
Replies: 86
Views: 5755

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

Technically the buy back yield is part of the dividend per share growth rate. So, even if earnings never grew again, the dividend per share would grow at the rate of the buy back yield.

I found the chart encouraging. Thanks for posting! 8-)
by rmelvey
Fri Jun 17, 2016 10:10 am
Forum: Investing - Theory, News & General
Topic: What's the ideal safe retirement net worth target?
Replies: 162
Views: 18038

Re: What's the ideal safe retirement net worth target?

Of course it all depends on expenses, but if retiring at 60 I would say that $2M is a good target. You can live an above average life style with limited risk of running out of money.
by rmelvey
Thu Jun 16, 2016 4:44 pm
Forum: Investing - Theory, News & General
Topic: Bogle says "You don't need bonds ?"
Replies: 68
Views: 8908

Re: Bogle says "You don't need bonds ?"

Why stop at 100% stocks. Why not 110% (or any other number > 100%) by borrowing to invest in equities? By going to 100%, you have already posited that you have the intestinal fortitude of steel, so why not even higher? *this post brought to you tongue-in-cheek, but I don't think it is a straw man's...
by rmelvey
Wed Jun 15, 2016 9:24 am
Forum: Investing - Theory, News & General
Topic: How do we know that some with 100% stocks will act differently than someone with 50% stocks in a bear market?
Replies: 41
Views: 2391

Re: How do we know that some with 100% stocks will act differently than someone with 50% stocks in a bear market?

A lot of the 100% stock advocates are too focused on the behavioral aspect. Sometimes you HAVE to sell, even if you know it is at depressed prices. If you lose your job and need to dip into your portfolio during a recession then you will be happy to have the bonds.
by rmelvey
Tue Jun 14, 2016 4:31 pm
Forum: Investing - Theory, News & General
Topic: Why am I so intrigued with the All Weather Portfolio
Replies: 6
Views: 1635

Re: Why am I so intrigued with the All Weather Portfolio

All Weather Portfolios typically have a larger than normal allocation to commodities/gold. Dramatic rate increases are usually spurred by inflationary pressures, where the commodities gold position would skyrocket mitigating the capital loss from the long bonds. Holding a large position in long dura...
by rmelvey
Mon Jun 13, 2016 4:52 pm
Forum: Investing - Help with Personal Investments
Topic: Choosing a bond fund and expanding international exposure
Replies: 14
Views: 1379

Re: Choosing a bond fund and expanding international exposure

All, I've done a good deal more reading on asset allocation, so I'd like to bounce this proposed allocation off of you good folks: 40% domestic equity blend (VTI) 15% small cap blend (VB) 20% ex-US blend (VXUS) 10% EM blend (VVO) 15% BND Admittedly, this is a good deal more complicated than the thr...
by rmelvey
Mon Jun 13, 2016 3:49 pm
Forum: Investing - Help with Personal Investments
Topic: I need some help to understand why I should invest in bonds at such a young age
Replies: 235
Views: 14782

Re: I need some help to understand why I should invest in bonds at such a young age

I have about 2 years of emergency fund which I do not count in my AA but maybe I should. This happens way too often on these "100%" stock threads. We usually find out towards the end that no one is actually proposing 100% stock, but a mixture of stocks and cash. Cash is just short duratio...
by rmelvey
Mon Jun 13, 2016 2:07 pm
Forum: Investing - Help with Personal Investments
Topic: I need some help to understand why I should invest in bonds at such a young age
Replies: 235
Views: 14782

Re: I need some help to understand why I should invest in bonds at such a young age

hmmm I am 13% in the Total Bond and now this thread makes me want to go 100% stock. I am 31 years old. I agree with what Kevin M laid out, there's no practical difference between 87/13 and 100/0 if the market drops 50% you'd lose 43.5% instead of 50%. Is that really going to make the difference bet...
by rmelvey
Mon Jun 13, 2016 12:58 pm
Forum: Investing - Theory, News & General
Topic: What is the lower bound for 10 year government bond yields?
Replies: 19
Views: 1679

Re: What is the lower bound for 10 year government bond yields?

The floor is the cost of hoarding physical bank notes. I suspect this should limit negative rates to around -0.75%. If governments did away with physical currency than there would be no limit to how negative they could go :twisted:
by rmelvey
Mon Jun 13, 2016 8:31 am
Forum: Personal Finance (Not Investing)
Topic: Live the Good Life Today vs Save For a Better Life Tomorrow
Replies: 84
Views: 8001

Re: Live the Good Life Today vs Save For a Better Life Tomorrow

You are assuming that the paycheck to paycheck person gets to consume more in their life. That may be true in the example you laid out, but I personally invest so that I can consume more in the future. You can also buy a SPIA when you retire in order to die penniless but consume the most amount.

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