Search found 1192 matches

by pdavi21
Thu Sep 26, 2019 3:24 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

This last post you've made indicates you would believe that stocks are less risky for an investor with an ultra long horizon because the high return would better fund future liabilities. The risk would essentially be related to the reciprocal of risk adjusted return. I said nothing about stocks and...
by pdavi21
Thu Sep 26, 2019 2:37 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

Moreso, "interest rate risk" is also not a risk that is only associated with an investment as it depends on liabilities that a variable, financially unfavorable, and mostly optional as well. Risk is NEVER associated only with an investment asset or liability, and is always associated with the way i...
by pdavi21
Thu Sep 26, 2019 1:50 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

Moreso, "interest rate risk" is also not a risk that is only associated with an investment as it depends on liabilities that a variable, financially unfavorable, and mostly optional as well. Risk is NEVER associated only with an investment asset or liability, and is always associated with the way i...
by pdavi21
Thu Sep 26, 2019 10:04 am
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

Specifically, I would like to hear how a bond's ability to cover a future expense is a function risk only and not a function of return. I'd like to hear that too: maybe you can find someone who thinks this and ask them? If return does not directly (EDIT: "inversely") affect risk. and Return directl...
by pdavi21
Thu Sep 26, 2019 1:18 am
Forum: Investing - Theory, News & General
Topic: A Simple Market Timing Strategy That Works?
Replies: 19
Views: 2274

Re: A Simple Market Timing Strategy That Works?

If you eliminate all optional spending, it is impossible to use this market timing strategy. Since eliminating all optional spending is a better strategy, I would say this market timing strategy does not work.
by pdavi21
Thu Sep 26, 2019 12:50 am
Forum: Investing - Theory, News & General
Topic: S&P 500 vs completion index: equally arbitrary?
Replies: 8
Views: 956

Re: S&P 500 vs completion index: equally arbitrary?

Yes. Except that the S&P 500 represents about 83% of the US market while the extended market represents 17% of the US market (may have changed recently). If the SP beats or loses to the market by 1%, the extended market will lose or beat by 5%. The returns and volatility of the S&P 500 can be expect...
by pdavi21
Wed Sep 25, 2019 11:03 pm
Forum: Investing - Theory, News & General
Topic: Buy Low, Sell High... Define High
Replies: 10
Views: 1100

Re: Buy Low, Sell High... Define High

According to Mirriam-Webster

"intoxicated by or as if by a drug or alcohol (eg. high on cocaine)"

On your question just sell everything you need to get where you want your portfolio to be. You can do it slowly, if you want to, to minimize regret.
by pdavi21
Wed Sep 25, 2019 5:20 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

1) It is not a household liability if the household dies (see example). If the household knows they will die before retirement, it's true they have no liability and therefore no need to accumulate assets with which to fund any liabilities: no need to save for retirement at all. On the flip side, an...
by pdavi21
Wed Sep 25, 2019 5:17 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

^ pdavi - all I can say is that we seem to be talking about two completely different things. I’m talking about liabilities as represented by income needed in retirement to fund living expenses. You seem to be talking about liabilities as investments that a business would make - e.g., building a fac...
by pdavi21
Wed Sep 25, 2019 4:32 pm
Forum: Investing - Theory, News & General
Topic: Actively-managed bond funds
Replies: 21
Views: 1819

Re: Actively-managed bond funds

If passive bond investors are matching their index, and active investors are beating it, who is losing? You need to consider that, even if 99% of active managers beat the index, there is still that 1% loser that lost 100x of what the average 99%er made. An index is not the same as a category averag...
by pdavi21
Wed Sep 25, 2019 4:28 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

You missed the main point of my post. Because the living expenses are not an investment, they are not related to investment risk. A shortfall due to not meeting one's living expenses is not a loss of capital invested. The capital invested still experienced a gain (at least nominally). To prove this...
by pdavi21
Wed Sep 25, 2019 4:08 pm
Forum: Investing - Theory, News & General
Topic: What is the highest "safe" withdrawal rate for a 15 year period?
Replies: 44
Views: 3622

Re: What is the highest "safe" withdrawal rate for a 15 year period?

100% / 15 = 6.67% is really conservative. 100% TIPS yielding 0%. EDIT: Also, I agree to disagree in advance, but getting health insurance should not be a foregone conclusion. It depends on your risk in relation to your premiums and pool risk and premiums. Remember that safe withdrawal rates can fail...
by pdavi21
Wed Sep 25, 2019 3:44 pm
Forum: Investing - Theory, News & General
Topic: The Zeno's Paradox of investing: the buy-and-hold arrow that flies without moving
Replies: 31
Views: 2954

Re: The Zeno's Paradox of investing: the buy-and-hold arrow that flies without moving

I do agree that this is a logical fallacy that exists in some factor investing literature. However, the fallacy is more related to the notion of "buy and hold" investor. There is no such thing as buy and hold. If you buy one investment today and hold it for 50 years, it doesn't stop that investment ...
by pdavi21
Wed Sep 25, 2019 3:20 pm
Forum: Investing - Theory, News & General
Topic: Actively-managed bond funds
Replies: 21
Views: 1819

Re: Actively-managed bond funds

If passive bond investors are matching their index, and active investors are beating it, who is losing?

You need to consider that, even if 99% of active managers beat the index, there is still that 1% loser that lost 100x of what the average 99%er made.
by pdavi21
Wed Sep 25, 2019 2:38 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

That's only typically used in business when future liabilities are known and represent investment. ... An individual investor's future liabilities are unknown and mostly go down the drain. I'll repeat what I said above: just because one's future liabilities are not fixed, does not invalidate the pu...
by pdavi21
Sat Sep 21, 2019 2:20 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

Your second model is more related to risk adjusted return than risk. A good test is to scrutinize T-Bills under the model. If they have no risk, but your model shows they have risk, either they have risk or the model is broken. I agree with your post, but I believe an incorrect definition of risk (...
by pdavi21
Fri Sep 20, 2019 5:32 pm
Forum: Investing - Theory, News & General
Topic: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash
Replies: 20
Views: 2123

Re: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash

That got us talking about the fact that this fund follows world capitalizations, and therefore would have been buying more Japanese securities as that market rose to bubble heights in the late 1980s, only to crash in the early 1990s. Because it's an index fund, it wouldn't have bought more Japanese...
by pdavi21
Fri Sep 20, 2019 4:42 pm
Forum: Personal Investments
Topic: Mega Backdoor Roth vs. Taxable - Guideline?
Replies: 21
Views: 1056

Re: Mega Backdoor Roth vs. Taxable - Guideline?

I have been lower in taxable my whole life. I was only able to MBR 2 times because of changing jobs. I am glad I did (MBR) and wish I still could now. Huge benefits of (too much) MBR over taxable: 1. Incentive to work longer and spend less 2. More creditor protections (depends on how big it gets) 3....
by pdavi21
Fri Sep 20, 2019 4:15 pm
Forum: Investing - Theory, News & General
Topic: Interest Rate Risk: Two Views
Replies: 126
Views: 8839

Re: Interest Rate Risk: Two Views

Your second model is more related to risk adjusted return than risk. A good test is to scrutinize T-Bills under the model. If they have no risk, but your model shows they have risk, either they have risk or the model is broken. I agree with your post, but I believe an incorrect definition of risk (t...
by pdavi21
Fri Sep 20, 2019 2:52 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Individual Stock Investing Increases Risk
Replies: 105
Views: 6145

Re: Larry Swedroe: Individual Stock Investing Increases Risk

"the market doesn’t compensate investors for risk that can be diversified away." "the best performing 811 firms (just 1.33% of the total) accounted for all net global wealth creation." Would putting 100% of your stock allocation in 1-7%[by market cap] of the market constitute a "risk that cannot be ...
by pdavi21
Thu Sep 19, 2019 9:36 pm
Forum: Investing - Theory, News & General
Topic: Market/Limit Orders
Replies: 39
Views: 2291

Re: Market/Limit Orders

I prefer the market order for all my trades because I have decided that the biggest risk is my behavior. When a limit doesn't execute immediately, it means you lost (at least over those seconds).
by pdavi21
Thu Sep 19, 2019 6:46 pm
Forum: Investing - Theory, News & General
Topic: Factor loadings
Replies: 10
Views: 645

Re: Factor loadings

Also is there a good tool to determine factor loads of a fund? It looks like portfolio Visualizer has one, is this what most use? There is a tool called MSCI FaCS. ETF.com displays it automatically for some funds. One problem with these tools is that they tend to make arbitrary separations (i.e. co...
by pdavi21
Thu Sep 19, 2019 6:24 pm
Forum: Investing - Theory, News & General
Topic: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash
Replies: 20
Views: 2123

Re: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash

If it had existed, the market would've performed differently, but... Credit Suisse's year book estimates the following real geometric average returns (USD) from 1900-2018: World Equity: 5.0%, Annual STDEV = 17.4% Japan: 4.1%, Annual STDEV = 29.3% USA: 6.4%, Annual STDEV = 19.9% World Bonds: 1.9%, An...
by pdavi21
Thu Sep 19, 2019 3:07 pm
Forum: Investing - Theory, News & General
Topic: What happens to reinvested dividends' missing money?
Replies: 11
Views: 1106

Re: What happens to reinvested dividends' missing money?

It can be pretty large (as a percentage). You can check your cost basis information to see who won (you or the the other guy).
by pdavi21
Thu Sep 19, 2019 2:46 pm
Forum: Investing - Theory, News & General
Topic: How factor in pension with savings goal?
Replies: 16
Views: 1256

Re: How factor in pension with savings goal?

The 4% rule is overly conservative because it has a 95% confidence, and not conservative enough because it is based on the past instead of the future. If you wish to follow the 4% rule and spend 100k per year (rising with inflation), and your wife's pension will have COLAs that match inflation, your...
by pdavi21
Thu Sep 19, 2019 2:02 pm
Forum: Investing - Theory, News & General
Topic: Oil price going to a $100-- time to change your asset allocation??
Replies: 86
Views: 8590

Re: Oil price going to a $100-- time to change your asset allocation??

Still potentially nothing with retaliation because it doesn't guarantee a global market crash. The gulf war (I'd imagine) took a similar amount of oil off the market (as a Saudi-Iran war would), but US stocks did pretty well that decade. I cannot parse that sentence? Can you rephrase it? The invasi...
by pdavi21
Wed Sep 18, 2019 6:16 pm
Forum: Investing - Theory, News & General
Topic: Why do long term treasuries diversify an equity/treasury portfolio
Replies: 23
Views: 1664

Re: Why do long term treasuries diversify an equity/treasury portfolio

If diversification benefit requires picking an arbitrary time interval, over which to calculate volatility, it is not useful.

Especially with LTT, which should be relatively less volatile when using longer time intervals to calculate volatility.
by pdavi21
Wed Sep 18, 2019 11:47 am
Forum: Investing - Theory, News & General
Topic: Why do long term treasuries diversify an equity/treasury portfolio
Replies: 23
Views: 1664

Re: Why do long term treasuries diversify an equity/treasury portfolio

Not worth arguing. I will just wait for the future. My longterm US treasury position in my portfolio is larger than yours anyway, so I'd love to be proven that that potential outcome does not happen over my lifetime. I didn't mean both LTT and stocks falling 50%, even though I can see why it sounded...
by pdavi21
Wed Sep 18, 2019 11:36 am
Forum: Investing - Theory, News & General
Topic: Oil price going to a $100-- time to change your asset allocation??
Replies: 86
Views: 8590

Re: Oil price going to a $100-- time to change your asset allocation??

Oil price may go to $100, but the Saudi Drone strikes knocked out ~5% of global production for "weeks" according to the Saudi government. They have ... EDIT: UPDATE: South Korea said Mohammed Bin Salman said this: "two-thirds of the facilities have been restored and that production will be put back...
by pdavi21
Wed Sep 18, 2019 11:24 am
Forum: Investing - Theory, News & General
Topic: Why do long term treasuries diversify an equity/treasury portfolio
Replies: 23
Views: 1664

Re: Why do long term treasuries diversify an equity/treasury portfolio

Worst drawdown of the bond allocation in an 80/20 stock/bond portfolio is just about completely irrelevant. The more relevant drawdown data if you have to consult drawdown would be the data for the whole portfolio at 100/0 compared to 80/20 (or whatever). I doubt a person investing at 80% stocks is...
by pdavi21
Wed Sep 18, 2019 11:14 am
Forum: Investing - Theory, News & General
Topic: Why do long term treasuries diversify an equity/treasury portfolio
Replies: 23
Views: 1664

Re: Why do long term treasuries diversify an equity/treasury portfolio

The negative correlation with stocks isn't reliable and depends on selective backtesting. Even if that were true, it's not actually relevant: the diversification benefits of long-term Treasuries don't depend on correlations being negative, only on them being less than +1. The worst drawdown for LTT...
by pdavi21
Wed Sep 18, 2019 11:10 am
Forum: Investing - Theory, News & General
Topic: Is there a Global Bond Index Fund?
Replies: 6
Views: 569

Re: Is there a Global Bond Index Fund?

No. There are also not really any government/corporate only, duration specific, etc. Global/INTL bond funds with low expense ratios. The best course of action, in my opinion, would be to hold BNDW or BNDX + a US bond fund that meets your requirements. This doesn't help, but if the person is young, i...
by pdavi21
Wed Sep 18, 2019 10:48 am
Forum: Investing - Theory, News & General
Topic: Is avoiding negative bond yields market timing?
Replies: 38
Views: 3380

Re: Is avoiding negative bond yields market timing?

It's not market timing. It's slicing and dicing. Most bonds operate on a somewhat level playing field because Dutch (they're the lowest aren't they?) investors can buy US bonds if they desire.
by pdavi21
Wed Sep 18, 2019 10:02 am
Forum: Investing - Theory, News & General
Topic: Why do long term treasuries diversify an equity/treasury portfolio
Replies: 23
Views: 1664

Re: Why do long term treasuries diversify an equity/treasury portfolio

They don't. LTT (and other risky bonds) are used for two reasons: 1. They have no corporate bonds (which behave more similarly to stocks). 2. They are longer term and riskier than short term bonds. So investors with a long term horizon who see no value in corporate bonds could use LTT if they don't ...
by pdavi21
Tue Sep 17, 2019 3:15 pm
Forum: Investing - Theory, News & General
Topic: Is the 60/40 portfolio allocation strategy being killed?
Replies: 142
Views: 15500

Re: Is the 60/40 portfolio allocation strategy being killed?

"The bonds should perform well when the stocks run into difficulty, and vice versa."

No. That strategy was never alive. There have been numerous times when stocks and bonds have risen and fallen together.
by pdavi21
Tue Sep 17, 2019 3:02 pm
Forum: Investing - Theory, News & General
Topic: Are TIPS really a good inflation hedge? Pros and Cons
Replies: 149
Views: 11095

Re: Are TIPS really a good inflation hedge? Pros and Cons

Which assets other than nominal bonds need an "inflation hedge"?
by pdavi21
Tue Sep 17, 2019 2:41 pm
Forum: Investing - Theory, News & General
Topic: Should I buy separate corporate and treasure bond instead of total bond?
Replies: 6
Views: 943

Re: Should I buy separate corporate and treasure bond instead of total bond?

"I am 35. I temporarily live in California with state tax around 9% for 1 year then I plan to move to Texas." -Problem solved. EDIT: If you are not 100% certain you will be moving, or there is a chance you will move back, splitting may be worth it. You may want to look into more tax efficient option...
by pdavi21
Tue Sep 17, 2019 2:11 pm
Forum: Investing - Theory, News & General
Topic: Index Funds Bubble? [Michael Burry article]
Replies: 242
Views: 27711

Re: Index Funds Bubble? [Michael Burry article]

I've been thinking about indexing and it's implications on the market. Please correct me if I'm way off base, but I have been considering the indexing "bubble" as more of a potential plateau (lower risk/lower return). It seems as though, the more investors favor passive investing, the more constant...
by pdavi21
Tue Sep 17, 2019 1:28 pm
Forum: Investing - Theory, News & General
Topic: Index Funds Bubble? [Michael Burry article]
Replies: 242
Views: 27711

Re: Index Funds Bubble? [Michael Burry article]

I've been thinking about indexing and it's implications on the market. Please correct me if I'm way off base, but I have been considering the indexing "bubble" as more of a potential plateau (lower risk/lower return). It seems as though, the more investors favor passive investing, the more constant ...
by pdavi21
Tue Sep 17, 2019 1:00 pm
Forum: Investing - Theory, News & General
Topic: Don't confuse strategy with outcome:
Replies: 94
Views: 5934

Re: Don't confuse strategy with outcome:

A good use of this phrase would be arguing with someone who got rich on Bitcoin. A person could say, "I told you Bitcoin was the future, I made 10x my money." Then another person could reply, "Don't confuse strategy with outcome." The first person could then say, "You are just jealous; that's what l...
by pdavi21
Tue Sep 17, 2019 12:24 pm
Forum: Investing - Theory, News & General
Topic: Oil price going to a $100-- time to change your asset allocation??
Replies: 86
Views: 8590

Re: Oil price going to a $100-- time to change your asset allocation??

Oil price may go to $100, but the Saudi Drone strikes knocked out ~5% of global production for "weeks" according to the Saudi government. They have the reserves to cover the gap for 1-2 months. Donald Trump has tweeted that the US is going to tap the Strategic Petroleum Reserve as well. Also, the wo...
by pdavi21
Fri Sep 13, 2019 11:55 am
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 330
Views: 37776

Re: Small Cap Value Heads Rejoice!

YRT70 wrote:
Fri Sep 13, 2019 11:44 am
Here's another chart. Just happens to start in 1999 because that's the inception of VTMGX. If you know a Vanguard INT fund that's been around longer let me know, I can use that one instead.
VGTSX (Total INTL ex-US Investor Shares) Inception 1996
by pdavi21
Thu Sep 12, 2019 3:20 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 621
Views: 43899

Re: Lifecycle Investing - Leveraging when young

If 1 occurs, constant leverage will always outperform. Here's the key part though: I'm OK with that one. Lifecycle Investment is not about making the most profitable portfolio; it is about minimizing risk for me personally. So I am perfectly ok leaving gains on the table that could be realized by t...
by pdavi21
Thu Sep 12, 2019 2:56 pm
Forum: Investing - Theory, News & General
Topic: Explaining the Demise of Value Investing
Replies: 318
Views: 17688

Re: Explaining the Demise of Value Investing

The key to small and value outperformance and volatility over the TSM in Fama and French is partially due to the fact that the "small" and "value" groups were smaller than the other groups by market cap. The group that currently represents 2% of the market can beat the market by ~50% if the other 9...
by pdavi21
Thu Sep 12, 2019 10:53 am
Forum: Investing - Theory, News & General
Topic: Explaining the Demise of Value Investing
Replies: 318
Views: 17688

Re: Explaining the Demise of Value Investing

If all submarkets had the same efficiency as the total market than 50 people holding 2% of the stock market each would receive the same risk adjusted return as 50 people holding TSM. In reality, the people with the best diversified 2% slices would expect the highest risk adjusted return (some submar...
by pdavi21
Thu Sep 12, 2019 10:04 am
Forum: Investing - Theory, News & General
Topic: Explaining the Demise of Value Investing
Replies: 318
Views: 17688

Re: Explaining the Demise of Value Investing

The key to small and value outperformance and volatility over the TSM in Fama and French is partially due to the fact that the "small" and "value" groups were smaller than the other groups by market cap. The group that currently represents 2% of the market can beat the market by ~50% if the other 99...
by pdavi21
Wed Sep 11, 2019 8:39 pm
Forum: Investing - Theory, News & General
Topic: ESG index fund composition subjectivity
Replies: 5
Views: 519

Re: ESG index fund composition subjectivity

Nestle got African babies hooked on baby formula. Not sure if people are still mad about that or not though. I wouldn't say that Bogleheads dislike ESG funds. I would more say many believe they are less than optimal because they are slightly actively managed. Really they probably are pretty close to...
by pdavi21
Wed Sep 11, 2019 8:19 pm
Forum: Investing - Theory, News & General
Topic: Can Traditional IRA or 401K dollars remain completely tax free?
Replies: 19
Views: 1554

Re: Can Traditional IRA or 401K dollars remain completely tax free?

Yes. There is a minimum amount of trad for everyone. Statistically, a person is very likely to pay less marginal tax at some point in their life in the future. Contributing trad now and converting to ROTH at that time (if/when it comes) is advantageous. Conversions from ROTH to traditional also are ...
by pdavi21
Wed Sep 11, 2019 5:34 pm
Forum: Investing - Theory, News & General
Topic: Day Trading for a Living?
Replies: 44
Views: 4056

Re: Day Trading for a Living?

Articles like this are misleading. The overwhelming majority lose, but this is overkill. I actually know a day trading millionaire, and I bet some of you all do too.
by pdavi21
Wed Sep 11, 2019 12:05 pm
Forum: Investing - Theory, News & General
Topic: Tell me again why nav and spread isn’t a big deal for etfs
Replies: 18
Views: 1331

Re: Tell me again why nav and spread isn’t a big deal for etfs

If the NAV premium is larger than usual, buying the fund could be advantageous. If it is lower than usual, converting the mutual fund to an ETF could be advantageous. One fund that comes to mind is VFSVX/VSS. There is a guy on here who would arbitrage the NAV premium (which had been relatively predi...