Search found 1038 matches

by Quark
Mon Mar 06, 2017 2:38 pm
Forum: Investing - Theory, News & General
Topic: Forecasting inflation
Replies: 6
Views: 1174

Re: Forecasting inflation

jebmke wrote:The article is behind the paywall.
[Content behind paywall article removed by admin LadyGeek]
by Quark
Mon Mar 06, 2017 2:10 pm
Forum: Investing - Theory, News & General
Topic: Forecasting inflation
Replies: 6
Views: 1174

Forecasting inflation

A WSJ article cites a new paper for the proposition that "Everything the Market Thinks About Inflation Might Be Wrong. How much money a central bank prints may be less important to inflation than commodity prices".

The article includes: "the last several years of extraordinary monetary policy have shaken a theory that had held sway for decades in financial markets: American economist Milton Friedman’s view that inflation is ultimately a function of how much money a central bank prints."

Given the importance of inflation for planning (future expenses, bond pricing, etc.), this seems of some interest.

I don't believe the WSJ article in paywalled, at least, it wasn't for me.
by Quark
Sun Mar 05, 2017 8:16 pm
Forum: Investing - Theory, News & General
Topic: Bond yields, from 1714
Replies: 20
Views: 3541

Bond yields, from 1714

Image
by Quark
Sun Mar 05, 2017 7:07 am
Forum: Investing - Theory, News & General
Topic: Find moats by looking at market concentration?
Replies: 7
Views: 1346

Re: Find moats by looking at market concentration?

The more I try to understand index investing the more I realize that I do not understand it. Let's say you bought Total Stock Market - given how much winner take all increasingly dominates then are you in effect investing in a moat strategy? How much do those little companies matter? How much does it matter that you bought them relatively small (in an index fund) before they took off? IOW do you really buy the haystack and does it matter? I am just not overweighted to a moat strategy, but that is what I am doing while a political off topic comment gets deleted All else being equal, index investing wins because it's lower cost. If you have the same returns as everyone else, but lower costs, you're going to come out ahead. To do better, you ...
by Quark
Sun Mar 05, 2017 6:12 am
Forum: Investing - Theory, News & General
Topic: Find moats by looking at market concentration?
Replies: 7
Views: 1346

Re: Find moats by looking at market concentration?

While there can be edge cases or various degrees of fuzziness, markets are usually pretty well defined. A lot of companies operate in one or a small number of industries. SEC regulations require companies to list competitors, which can also help. There are likely a lot more clearly defined companies, such as American Airlines, than complex companies, such as Google. Even Google is primarily an advertising company, which uses a lot of technology.
by Quark
Sun Mar 05, 2017 5:39 am
Forum: Investing - Theory, News & General
Topic: Find moats by looking at market concentration?
Replies: 7
Views: 1346

Find moats by looking at market concentration?

Warren Buffett famously suggested buying businesses with strong economic moats, that is, the ability to maintain competitive advantages over their competitors in order to protect their long-term profits and market share from competing firms. An recent article in the WSJ suggests a trend towards companies in many industries having larger market shares and the consequent market power helps them fend off competition and also to reduce labor and other costs. As a result, more profits for these companies. The article suggests a strategy for taking advantage of this. Why might it be easier now for winners to take all? Prof. Michaely suggests two theories. Declining enforcement of antitrust rules has led to bigger mergers, less competition and hig...
by Quark
Fri Mar 03, 2017 2:17 pm
Forum: Investing - Theory, News & General
Topic: BND flat today despite interest rate announcement
Replies: 22
Views: 4577

Re: BND flat today despite interest rate announcement

The market estimate of the chances of a rate hike are barely changed from yesterday. http://www.cmegroup.com/trading/interes ... -fomc.html I therefore would not expect interest rates to move much.

Fed announcement days are typically rather volatile. You can often see markets move as the chair answers questions during the post-announcement press conference. Sometimes markets end up changing a noticeable amount by the end of the day, sometimes not.

There are other things going in the world besides the odds of a Fed move.
by Quark
Fri Mar 03, 2017 2:00 pm
Forum: Personal Finance (Not Investing)
Topic: Actual physical ATM access internationally, and then changing notes
Replies: 26
Views: 2876

Re: Actual physical ATM access internationally, and then changing notes

am wrote:Who sets exchange rates? Would seem it would be set by the market? Also, are the ATM refunds for chase automatic as statement credit?
The market sets exchange rates, but the exchange rate you get from an ATM is set by the bank or the network, so the rate you get may differ from the market rate. It's the same for credit cards.
by Quark
Fri Mar 03, 2017 1:30 pm
Forum: Personal Investments
Topic: Maximizing and Utilizing Dividends during Retirement Years
Replies: 52
Views: 4870

Re: Maximizing and Utilizing Dividends during Retirement Years

livesoft wrote:Retirees didn't have to sell any equities during the 50% downturn. Indeed, they rebalanced by buying more equities at that time.
In addition, consider the difference among (1) spend dividends, (2) reinvest dividends, then sell shares to raise the same amount of money and (3) no dividends paid, but sell shares to raise the same amount of money. What's the value of your stake in the company immediately before and immediately after?
by Quark
Fri Mar 03, 2017 1:24 pm
Forum: Personal Investments
Topic: Maximizing and Utilizing Dividends during Retirement Years
Replies: 52
Views: 4870

Re: Maximizing and Utilizing Dividends during Retirement Years

livesoft wrote:
knpstr wrote:
livesoft wrote:Dividends? Who needs them or wants them? I prefer tax-free income instead.
If your dividends are qualified are they not "tax free" at the 15% bracket anyhow?
That is true, but too much of a good thing bumps one up out of the 15% bracket and takes up space that could be used for Roth conversions. LTCG offset by losses don't even show up as income, so I think that's better for me. Maybe we can call that the "total non-return" approach?
In addition, they may be taxable at the state level.
by Quark
Fri Mar 03, 2017 1:14 pm
Forum: Personal Finance (Not Investing)
Topic: Actual physical ATM access internationally, and then changing notes
Replies: 26
Views: 2876

Re: Actual physical ATM access internationally, and then changing notes

am wrote:Are there any other banks other than scwab that have transaction free atms for international?
Citi, Chase, BankDirect. You should look at exchange rates, not just fees. I consistently get a better exchange rate on Citi than Chase.

I've never had an ATM in Europe not take my Citi card (or Chase, but I've stopped using it).
by Quark
Fri Mar 03, 2017 8:01 am
Forum: Personal Finance (Not Investing)
Topic: Actual physical ATM access internationally, and then changing notes
Replies: 26
Views: 2876

Re: Actual physical ATM access internationally, and then changing notes

I was in Rome and Florence a couple of weeks ago and had no problems with ATMs. I never used an ATM inside a bank. The only bills I ever got were 20s and 50s. With careful selection of amounts to withdraw, you could easily avoid 50s if you want (or, at least, I could).

Once or twice in Rome an ATM would have a fee or want to charge my bank in dollars (i.e., a forex markup). I'd just use another ATM.

We travel a fair amount in Europe and have never had a problem with ATMs.
by Quark
Thu Mar 02, 2017 1:10 pm
Forum: Investing - Theory, News & General
Topic: What degree of stock market decline would tempt you to deviate from your AA?
Replies: 87
Views: 9502

Re: What degree of stock market decline would tempt you to deviate from your AA?

...What does this imply? That your risk tolerance, and therefore proper asset allocation, steadily decreases/becomes more conservative as you lose money. Rather than the rigid, mysterious cutoff of "Plan B", which again neither book nor wiki nor quotesheet has instructed us on, this implies that when the stock market plummets, your risk tolerance changes proportionally and therefore you should sell during a crash , or at least not rebalance into stocks as much as you would if you maintained a static AA. Where is this explored? Nowhere. Who admits it? Nobody. Hence the muttering and handwaving that "Plan B" is out there somewhere, but don't worry we don't have to think about it until the world is ending. As if THAT time ...
by Quark
Thu Mar 02, 2017 10:57 am
Forum: Investing - Theory, News & General
Topic: What degree of stock market decline would tempt you to deviate from your AA?
Replies: 87
Views: 9502

Re: What degree of stock market decline would tempt you to deviate from your AA?

Artsdoctor wrote:We all talk about holding on and recovering our losses. And that's usually true. But when you're 85, it's not like you can simply say, "I'm sure there will be a recovery over the next decade and I'll recover eventually."
It's common to think that the main risk of equities is psychological and that if you can just maintain your nerve you will be rewarded. There's also the economic risk, such as not having enough money for necessary expenses.
by Quark
Thu Mar 02, 2017 10:54 am
Forum: Investing - Theory, News & General
Topic: What degree of stock market decline would tempt you to deviate from your AA?
Replies: 87
Views: 9502

Re: What degree of stock market decline would tempt you to deviate from your AA?

midareff wrote:+1 agreed.. 69 here and don't see re-balancing from bonds to equities as much of an opportunity for a good thing anymore. OTOH, if the drop was 40% than VFINX (aka S&P 500) would be yielding north of 3% for dividends. I suppose the dividend aristocrats would be north of 4%. There might be some opportunities in the ashes, would have to look around and see.
A risk is that whatever caused such a large drop, for example, a bad economy, would also hurt corporate profits and dividends.
by Quark
Thu Mar 02, 2017 8:50 am
Forum: Investing - Theory, News & General
Topic: What degree of stock market decline would tempt you to deviate from your AA?
Replies: 87
Views: 9502

Re: What degree of stock market decline would tempt you to deviate from your AA?

It might be instructive to read some of the posts from 2008-9. Even diehard stay-the-course advocates advised:
Determine the minimum portfolio "you need going forward." If your portfolio declines to that bare minimum, you should get out of stocks entirely.

A retiree who cannot afford to lose, should not be investing in stocks.
See, for example, viewtopic.php?t=31706 and viewtopic.php?p=315984#p315984
by Quark
Thu Mar 02, 2017 5:44 am
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 307
Views: 32864

Re: Extreme Valuations, and why you should reconsider

It seems clear that all of the models discussed, including CAPE and history, have severe flaws. However, the question isn't whether they are right or wrong, the question is whether they are useful.

You need some way to decide on a savings rate, allocation and withdrawal rate. If you don't go with the best, albeit highly flawed and not very reliable, method, how do you make these decisions?

For that matter how do you decide to make a mid-course correction? How do you know if something is a blip, which can be safely ignored, or part of a continuing issue, requiring a major change?
by Quark
Wed Mar 01, 2017 2:41 pm
Forum: Personal Finance (Not Investing)
Topic: modeling expected healthcare costs with Medicare
Replies: 37
Views: 3182

Re: modeling expected healthcare costs with Medicare

Modeling is especially difficult given the political issues surrounding Medicare, and healthcare in general. A note of caution on Medicare Advantage - one main reason it's less expensive is that it's subsidized by the Federal government (14% in 2009). The ACA is reducing these subsidies. http://kff.org/medicare/fact-sheet/medicare-advantage/ or https://www.google.com/search?q=medicare+advantage+subsidy I'm not sure one can do better than estimating based on current costs, then having a plan if costs rise significantly. As I said in my original post my current model does estimate all the way out based on current costs (plus) but that doesn't seem fully reasonable since I stand to benefit from Medicare starting in a decade... I want my expec...
by Quark
Wed Mar 01, 2017 1:45 pm
Forum: Personal Finance (Not Investing)
Topic: modeling expected healthcare costs with Medicare
Replies: 37
Views: 3182

Re: modeling expected healthcare costs with Medicare

Modeling is especially difficult given the political issues surrounding Medicare, and healthcare in general. A note of caution on Medicare Advantage - one main reason it's less expensive is that it's subsidized by the Federal government (14% in 2009). The ACA is reducing these subsidies. http://kff.org/medicare/fact-sheet/medicare-advantage/ or https://www.google.com/search?q=medicare+advantage+subsidy I'm not sure one can do better than estimating based on current costs, then having a plan if costs rise significantly. As I said in my original post my current model does estimate all the way out based on current costs (plus) but that doesn't seem fully reasonable since I stand to benefit from Medicare starting in a decade... I want my expec...
by Quark
Wed Mar 01, 2017 1:17 pm
Forum: Personal Finance (Not Investing)
Topic: modeling expected healthcare costs with Medicare
Replies: 37
Views: 3182

Re: modeling expected healthcare costs with Medicare

Modeling is especially difficult given the political issues surrounding Medicare, and healthcare in general. A note of caution on Medicare Advantage - one main reason it's less expensive is that it's subsidized by the Federal government (14% in 2009) . The ACA is reducing these subsidies. http://kff.org/medicare/fact-sheet/medicare-advantage/ or https://www.google.com/search?q=medicare+advantage+subsidy I'm not sure one can do better than estimating based on current costs, then having a plan if costs rise significantly. I am neither an "actuary" not any other type that can make an independent evaluation of this contention, but there are other (credible in my opinion) views that this purported "subsidy" is overstated. In...
by Quark
Wed Mar 01, 2017 12:05 pm
Forum: Personal Consumer Issues
Topic: Climate and happiness revisited
Replies: 111
Views: 11753

Re: Climate and happiness revisited

I like it when temperatures are in the fifties, provided the wind is low and it's not raining. Great weather for outdoor activities.
by Quark
Wed Mar 01, 2017 11:41 am
Forum: Personal Finance (Not Investing)
Topic: Question for Retired Members--life mistakes
Replies: 74
Views: 15233

Re: Question for Retired Members--life mistakes

livesoft wrote:I'm retired. We just did the usual stuff that everybody does:

When we got married, we used Vanguard MM Prime for our savings along with those 12% CDs in our IRAs. We invested the entire gross salary of the highest paid spouse in Vanguard funds for many years and paid taxes and living expenses from the lower paid spouse's salary. Didn't own but one car and didn't own a house. Waited until our late 30s to have kids and house.
Our definitions of "usual" and "everybody" appear to diverge.
by Quark
Wed Mar 01, 2017 11:32 am
Forum: Investing - Theory, News & General
Topic: Mom & Pop investors piling in. Bad Sign/Good sign?
Replies: 36
Views: 8902

Re: Mom & Pop investors piling in. Bad Sign/Good sign?

telemark wrote:
... if the year-to-date pace is sustained.
That's a pretty big if, though. Is there a group of particularly sleepy small investors who will wake up nine months from now, notice that we have a new president, and decide to get into the market?
If the seedling to five year pace of tree growth of trees is sustained, trees would reach the sky.

One of the more famous dictums in economics is Herbert Stein's law: "If something cannot go on forever, it will stop".
by Quark
Wed Mar 01, 2017 11:26 am
Forum: Investing - Theory, News & General
Topic: How to Rebalance with Rate Hikes Looming
Replies: 49
Views: 12115

Re: How to Rebalance with Rate Hikes Looming

Yesterday, the odds of a Fed rate hike were 35%. Today the odds are 71%. What they'll be tomorrow, let alone when the Fed meets in two weeks, are anyone's guess. http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html Treasury yields are up today, which limits one's ability to profit from the increased odds. Investing based on your or the market's projections of Fed action, the future of interest rates or other general economic matters may not be the wisest course. Weird. I don't see you exact numbers but the gist is there. These numbers are based on futures trading. Do they change in real time? The weird is that the probability changed so much. The futures are lable march, april ... Did some just expire today and we are on a...
by Quark
Wed Mar 01, 2017 11:16 am
Forum: Personal Investments
Topic: Possibly Financially Independent and Feeling Miserable
Replies: 154
Views: 26070

Re: Possibly Financially Independent and Feeling Miserable

It can take a while to accept that you have enough, especially if you feel that you are on the edge of enough or that a market move or spending increase can cause problems (which either means you don't have enough or you worry too much).

Do you want to continue working or are you eager to stop as soon as possible? If you're contemplating stopping, then any uncertainty about having enough can cause anxiety. Before hitting your target, you didn't have any decision to make about continuing to work, which means no issues around making an important decision.
by Quark
Wed Mar 01, 2017 10:32 am
Forum: Investing - Theory, News & General
Topic: How to Rebalance with Rate Hikes Looming
Replies: 49
Views: 12115

Re: How to Rebalance with Rate Hikes Looming

Yesterday, the odds of a Fed rate hike were 35%. Today the odds are 71%. What they'll be tomorrow, let alone when the Fed meets in two weeks, are anyone's guess. http://www.cmegroup.com/trading/interes ... -fomc.html Treasury yields are up today, which limits one's ability to profit from the increased odds.

Investing based on your or the market's projections of Fed action, the future of interest rates or other general economic matters may not be the wisest course.
by Quark
Wed Mar 01, 2017 10:23 am
Forum: Personal Finance (Not Investing)
Topic: modeling expected healthcare costs with Medicare
Replies: 37
Views: 3182

Re: modeling expected healthcare costs with Medicare

Modeling is especially difficult given the political issues surrounding Medicare, and healthcare in general.

A note of caution on Medicare Advantage - one main reason it's less expensive is that it's subsidized by the Federal government (14% in 2009). The ACA is reducing these subsidies. http://kff.org/medicare/fact-sheet/medicare-advantage/ or https://www.google.com/search?q=medicar ... ge+subsidy

I'm not sure one can do better than estimating based on current costs, then having a plan if costs rise significantly.
by Quark
Wed Mar 01, 2017 5:54 am
Forum: Personal Investments
Topic: Vanguard Lousy Customer Service
Replies: 88
Views: 12961

Re: Vanguard: THE WORST BROKERAGE. Stay away

Its unbelievable. It continues to point to inept management in caring about its own clients.The fact that so many threads are showing up with this poor customer service are amazing and sad. But is there a larger problem we are unearthing? One has to wonder if there is some sort of unknown scam, or some sort of failure happening in vanguard operations. Is this an indicator of a larger problem? How can we find out? What is the next step to investigate this? How do we know if these problems indicate some larger issue? No. It points to the fact that no business is perfect. Individual stories are compelling. It doesn't take many stories to convince us of a larger trend, even if broad survey data contradicts the implications of those stories. He...
by Quark
Wed Mar 01, 2017 5:38 am
Forum: Personal Investments
Topic: Vanguard Lousy Customer Service
Replies: 88
Views: 12961

Re: Vanguard: THE WORST BROKERAGE. Stay away

Vanguard has over 20 million investors. It got top marks from Consumer Reports. It came in second in JD Power's survey of consumer satisfaction, losing to Schwab but beating Fidelity, TR Price, etc.

No business gets every interaction right, especially no business with 20 million customers. While it's horrible to be the victim of bad mistakes, it's wrong to believe your experience is necessarily common, let alone universal. People tend to post on message boards when things go wrong, not when things to normally, which can skew one's perceptions. As the saying goes, the plural of anecdote is not data, no matter how compelling individual stories may be.

You have our sympathies.
by Quark
Mon Feb 27, 2017 11:46 am
Forum: Investing - Theory, News & General
Topic: Extreme Valuations, and why you should reconsider
Replies: 307
Views: 32864

Re: Extreme Valuations, and why you should reconsider

A problem is that it would be very helpful to know future returns in order to figure our need to take risk and therefore our asset allocations, but there isn't any method of estimating future returns that is sufficiently reliable. Even the methods that have been the most reliable, such as p/e or CAPE, have error bands of around plus or minus 8 percentage points, which is huge. So you need estimates of returns to determine asset allocations, but don't have any good way to estimate returns. Is CAPE meaningfully better than using history or just ignoring the issue and using rules of thumb, such as age in bonds, perhaps adjusted by your expected withdrawal rate (someone who expects a 2% withdrawal rate wouldn't need as much equity as someone wh...
by Quark
Mon Feb 27, 2017 10:53 am
Forum: Investing - Theory, News & General
Topic: How reliable are forward PE ratios?
Replies: 20
Views: 3790

Re: How reliable are forward PE ratios?

How would you use forward p/e ratios? What difference would it make to you if they were more or less reliable? You can get a sense of where we are compared to market history. Forward P/E's got to be about 32 just before the 2000-2002 bear market and they are about 19 today. P/E's based on actual earnings are about 25, before the 2000 crash they got to 45. The P/E ratios are higher than I like to see but we are not in the euphoria of the late 1990's. What would you or the OP do with the information - would you take any action? I don't believe valuation ratios are reliable enough for anything more than a vague sense and I believe forward ratios are significantly less reliable. The trouble for many is that they give too much weight to informa...
by Quark
Mon Feb 27, 2017 10:26 am
Forum: Investing - Theory, News & General
Topic: How reliable are forward PE ratios?
Replies: 20
Views: 3790

Re: How reliable are forward PE ratios?

How would you use forward p/e ratios? What difference would it make to you if they were more or less reliable?
by Quark
Mon Feb 27, 2017 10:19 am
Forum: Investing - Theory, News & General
Topic: How to Rebalance with Rate Hikes Looming
Replies: 49
Views: 12115

Re: How to Rebalance with Rate Hikes Looming

I disagree, I don't think traders have priced for 3 interest rate hikes, IMO believe they have priced for one, the other two may or may not happen, repricing will occur when more certainty is common. Based on the futures market the likelihood of a 50-75 bps hike at the March meeting is 73.4% and a hike of 75-100 bps hike is 26.6%. There are also predictions for later meetings. See Countdown to the FOMC http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html If I'm reading the charts correctly the probability of three +50 bps hikes in the next year is less than 50%. I rebalance when I hit my limits and buy short or intermediate bonds to keep my bond duration a little over 4 years. I believe that's a 50-75 bps target rate, not ...
by Quark
Mon Feb 27, 2017 7:34 am
Forum: Investing - Theory, News & General
Topic: "Buffett: Indexing the Best Choice for Investors Large and Small"
Replies: 16
Views: 3724

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

nisiprius wrote:...Hedge funds are subject to none of these restrictions. I don't actually know what restrictions they are subject to....
The main regulations are anti-fraud (they can't lie or mislead) and restrictions on who can invest (no public offerings and investors must be high net worth, on the theory that means sufficiently sophisticated that they don't need the usual protections).
by Quark
Sun Feb 26, 2017 8:19 pm
Forum: Investing - Theory, News & General
Topic: How to Rebalance with Rate Hikes Looming
Replies: 49
Views: 12115

Re: How to Rebalance with Rate Hikes Looming

I was hoping to see some math that would help me decide. At a rough calculation: Multiply the rate increase by the duration. Vanguard's total bond fund has a duration of around 6 years. So a 0.25% increase translates into a 1.5% loss. Then you need to add back in any interest payments you receive (yield is currently 2.42% but that's on an annual basis). If they raise rates 3 times by 0.25% then you would lose around 4.5% in principal but earn back around 3% in interest (remember you start earning more interest as rates go up; I'm too lazy to calculate what that would look like so I'm handwaving a bit when I say 3%), for a net loss (nominal) loss of something like -1.5%. I guess everyone gets to decide for themselves whether a 1.5% loss is ...
by Quark
Sun Feb 26, 2017 6:13 pm
Forum: Personal Consumer Issues
Topic: critique Italian itinerary
Replies: 34
Views: 4276

Re: critique Italian itinerary

One option to reduce your travel/hotel burden is to consider basing in Florence and then take day tours to Tuscany, Cinque de Terre, Rome, etc. We had a wonderful few days and there are excellent tour services with modern busses that are based at the main train station. Let someone else do the driving for you and enjoy the ride! The trains are excellent for the most part in Italy. Florence to Rome is 2 hours so a day trip is feasible from Florence. The train between Florence and Rome is only 1:30, making that even more attractive. Florence can be very crowded in October. About two and a half years ago, it was teeming with tourists, including too many Americans, in mid-October. We just got back and early February is much nicer in terms of c...
by Quark
Sat Feb 25, 2017 5:33 pm
Forum: Investing - Theory, News & General
Topic: How should people factor Social Security into their "magic number" with early retirement?
Replies: 76
Views: 9145

Re: How should people factor Social Security into their "magic number"

I'd subtract $20,000 (your SS income) from $75,000 (annual spending) to get $55,000, then use your multiple on the result. Multiply $55,000 by 30 for your magic number.

This assumes your SS income and annual spending estimates are both real (adjusted for inflation) numbers.

Pension streams should be treated in a similar manner, except that most don't adjust for inflation and many have credit risk. If so, amounts should be adjusted.

I'm also assuming SS and pension start at retirement. If not, further adjustment would be required.

If you're doing this 20 or more years before retirement, it's all going to be an approximation anyway.
by Quark
Thu Feb 23, 2017 5:39 am
Forum: Investing - Theory, News & General
Topic: The 100 year flood and stock market statistics
Replies: 21
Views: 3146

Re: The 100 year flood and stock market statistics

Phineas J. Whoopee wrote:Questionable quotes from PM D'israeli and dubious assertions by Taleb aside, there are correct assumptions of normal distributions, and incorrect assumptions of normal distributions. That's all there is to see here.
PJW
I'd add that almost no one has a good intuitive feel for statistics and that there are a lot of behavioral biases that come into play, such as anchoring, seeing non-existent patterns and over-confidence.
by Quark
Tue Feb 21, 2017 1:16 pm
Forum: Investing - Theory, News & General
Topic: Help with standard deviation, volatility comparing slice and dice with 3-fund portfolios
Replies: 9
Views: 1324

Re: Help with standard deviation, volatility comparing slice and dice with 3-fund portfolios

...From what I've read, the whole point of diversification is to lower volatility (as measured by standard deviation as well as things such as Sharpe and Sortino ratios).... The whole point of diversification is to minimize risk, specifically unsystematic risk. Unsystematic risk is risk that is specific to a company, industry, market, economy or country. Volatility (in its various forms) is often used as a proxy for risk, but is not the same thing as risk, at least not for most people. William Sharpe (of, among other things, the Sharpe ratio) considers risk to be the chances of not having enough money when you need it. That seems to be a better definition of risk. We live in a multi-factor world. For example, in the familiar Fama-French th...
by Quark
Tue Feb 21, 2017 6:21 am
Forum: Personal Investments
Topic: The need for bonds if I have a pension?
Replies: 65
Views: 11632

Re: The need for bonds if I have a pension?

Think of a pension as something that reduces your income needs, not as a bond equivalent. Pick an asset allocation appropriate to your remaining income needs and other circumstances.
by Quark
Sun Feb 19, 2017 6:54 am
Forum: Personal Consumer Issues
Topic: Why do you go to restaurants?
Replies: 229
Views: 27061

Re: Why do you go to restaurants?

flyingaway wrote:If you don't mind, can you give me some information about the "insanely expensive" foods (and probably the restaurants)? I thought that lobster and prime steaks are the most expensive items on most restaurants' menus.
White truffles (delicious).
by Quark
Sat Feb 18, 2017 4:31 pm
Forum: Investing - Theory, News & General
Topic: Is a 4% plus CPI withdrawal rate actually aggressive?
Replies: 232
Views: 18802

Re: Is a 4% plus CPI withdrawal rate actually aggressive?

...Given the choice between the two, I prefer using real data to simulated data. But maybe that's just me.... Real data would be very useful. Unfortunately all we have is historical data and estimates of the future. Which is better? Historical data have not done as well as valuation ratios in predicting 10 year returns. See, for example, https://personal.vanguard.com/pdf/s338.pdf In that light, which data are real? However, the error bands around predictions seem to be about plus or minus eight percentage points, which tends to obviate the differences between historical and simulated data. The size of the error bands is among the reasons one might want to be conservative rather than just expecting history to repeat or valuation ratios or m...
by Quark
Thu Feb 16, 2017 3:01 pm
Forum: Personal Finance (Not Investing)
Topic: Credit cards vs. Cash
Replies: 123
Views: 12775

Re: Credit cards vs. Cash

Experimental findings that people spend more with plastic (credit and debit) than cash are solid. Bogleheads who claim that their expenses do not depend on the method deceive themselves. It's a common thread among lay people to reject behavioral economics findings as not applicable to them. Experts, and particularly economists and psychologists, understand the universal applicability of cognitive biases and try to mitigate them. However, using cash is both impractical and has costs. If the lion's share of one's expenses is housing and travel using cash is impractical. Buying food and small items with cash would save some money but these savings are minor and somewhat compensated by credit card bonuses. Carrying cash for large purchases pos...
by Quark
Wed Feb 15, 2017 2:17 pm
Forum: Personal Finance (Not Investing)
Topic: Credit cards vs. Cash
Replies: 123
Views: 12775

Re: Credit cards vs. Cash

Experimental findings that people spend more with plastic (credit and debit) than cash are solid. Bogleheads who claim that their expenses do not depend on the method deceive themselves. It's a common thread among lay people to reject behavioral economics findings as not applicable to them. Experts, and particularly economists and psychologists, understand the universal applicability of cognitive biases and try to mitigate them. However, using cash is both impractical and has costs. If the lion's share of one's expenses is housing and travel using cash is impractical. Buying food and small items with cash would save some money but these savings are minor and somewhat compensated by credit card bonuses. Carrying cash for large purchases pos...
by Quark
Sat Feb 11, 2017 1:37 am
Forum: Personal Investments
Topic: Wow, Vanguard Flagship service is bad. Really bad.
Replies: 170
Views: 39213

Re: How can we get this message to Vanguard leadership?

Almost every company I know of has a published process to get issues raised directly with their leadership. Often an 'Office of the CEO' email address for people to use when all else fails. Many even freely share the email address of their CEO and have a team of people reading, prioritizing and forwarding mail going to this address. I think Vanguard is one of the rare public facing companies that completely hides and blocks any easy access for communicating to their executive leadership. That alone says quite a bit about how little Vanguard cares for customer service. They don't want the feedback, so they make it impossible for us to get it to them. Even as a Flagship Select customer, I have no ability to jump directly to their leadership ...
by Quark
Fri Feb 10, 2017 10:51 am
Forum: Personal Investments
Topic: Wow, Vanguard Flagship service is bad. Really bad.
Replies: 170
Views: 39213

Re: Vanguard Select???

TheGreyingDuke wrote:I think the Flagship Select is a recently created classification, in the past year or so.
It's only been a published classification recently. They've had a level above flagship for many years. Qualification moved from $5mm to $10mm and then back to $5mm. The earliest reference I've seen on this board was a post from a number of years ago when someone found a Vanguard help wanted ad that included a brief description of the service. I wonder if they have a higher level for a much higher level of assets.

As always, people post about customer service when they have a problem. People rarely post to report that they did not have a problem, other than in response to problem threads.
by Quark
Wed Feb 08, 2017 2:01 pm
Forum: Personal Finance (Not Investing)
Topic: Do you account for likely life expectancy in retirement?
Replies: 63
Views: 7635

Re: Do you account for likely life expectancy in retirement?

That is the rub. The age I am assuming is longer than the average life expectancy but it is not something like 99. The spend over 25 years is 17% less than that over 30 years so we aren't talking round error. Which would make you feel worse, being dead when you could have spent more or being rather old and not having enough money? Then I should plan for 120? The odds of living to 120 approximate zero. Given the uncertainty surrounding just about any interesting investing question, it's a good idea to think about the consequences of the unexpected. You should also consider the relevant odds, to the extent knowable. A common example is withdrawal rates. You might plan on 4% inflation adjusted, but should have alternatives if your investments...
by Quark
Mon Feb 06, 2017 11:53 am
Forum: Investing - Theory, News & General
Topic: How the Bogle Model Beats the Yale Model
Replies: 28
Views: 5885

Re: How the Bogle Model Beats the Yale Model

I've long wondered why people who realize they can't pick winning investments believe they can pick winning money managers. Because historically Yale has. They were early into alternative assets, and they picked good managers. Duplicating Yale is, conversely, likely extremely difficult to do. Duplicating Yale may be easier if you have many billions to invest, a talented team with a long track record, access to investments unavailable to almost anyone else and effectively an infinite time horizon. Even if you have all that, duplicating Yale is likely extremely difficult to do. If you don't, it's purely a matter of luck, with the odds heavily against you. I should be able to run the 100m in under 10 seconds. After all, Usain Bolt did in it i...
by Quark
Mon Feb 06, 2017 11:00 am
Forum: Personal Finance (Not Investing)
Topic: Don't go to the ER shortly before midnight
Replies: 6
Views: 2980

Don't go to the ER shortly before midnight

Here's a story about someone billed for two days' worth of emergency room treatment because the short amount of treatment he received spanned midnight. http://www.vox.com/policy-and-politics/ ... ll-bandage

I hope this helps someone else avoid a similar situation.