Search found 51 matches

by diyfp
Sat Oct 10, 2020 1:43 pm
Forum: Personal Finance (Not Investing)
Topic: Life Insurance and Living Trust
Replies: 4
Views: 276

Life Insurance and Living Trust

Hello kind Bogleheads, My friend's mother recently passed away at 66. She had a living trust and also a life insurance policy naming my friend and his brother as beneficiaries. My friend has been advised to open a bank account under the living trust and put the life insurance money there. Ostensibly...
by diyfp
Tue Oct 04, 2016 10:52 am
Forum: Investing - Theory, News & General
Topic: International Small (VSS/VFSVX) Underperforms ALL Active Funds
Replies: 26
Views: 7432

Re: International Small (VSS/VFSVX) Underperforms ALL Active Funds

It is true that VSS has a lot more in emerging markets (14%) than the Foreign Small/Mid Blend category average (3%). Also quite a bit of cash (7.5%!). :oops: Let's look at ranking (by NAV) for other International Small Index funds that don't have emerging markets then. SCHC (overweights Canada) 3-ye...
by diyfp
Mon Oct 03, 2016 11:37 pm
Forum: Investing - Theory, News & General
Topic: International Small (VSS/VFSVX) Underperforms ALL Active Funds
Replies: 26
Views: 7432

International Small (VSS/VFSVX) Underperforms ALL Active Funds

How is this possible?!? :oops:

From Morningstar's performance tab for VSS:

Rank in Category (Price):
3 years: 80
5 years: 100 :shock:

Rank in Category (NAV):
3 years: 100
5 years: 100 :oops:

Is this the one area of the market where active management makes sense? Or am I missing something?
by diyfp
Tue May 10, 2016 4:28 pm
Forum: Personal Investments
Topic: Should I hold on to my Apple stock?
Replies: 76
Views: 10508

Re: Should I hold on to my Apple stock?

...there is a very small chance, but extremely high expected return possibility with an individual stock that does not exist, at all, with an index fund. So that additional unsystemic risk is actually compensated to some extent, just not by very much because what you get for your money is also a ve...
by diyfp
Tue May 10, 2016 2:49 pm
Forum: Personal Investments
Topic: Should I hold on to my Apple stock?
Replies: 76
Views: 10508

Re: Should I hold on to my Apple stock?

... many stocks will do better than the market average. Is this true? Do you have any numbers to support this? I thought most of the markets return is actually explained by a minority of the stocks i.e. the large majority of stocks do worse than the market average and a few high fliers are responsi...
by diyfp
Tue May 10, 2016 12:48 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 5 — What’s a Thing Worth?
Replies: 11
Views: 3587

Re: Classic Bernstein 5 — What’s a Thing Worth?

Anyone know of any data that shows this (value doing better in high interest rate environments)?

I vaguely remember looking for correlation between HML and the risk-free rate (Fama-French data) and not finding much of one...
by diyfp
Mon May 09, 2016 8:22 pm
Forum: Personal Investments
Topic: Capturing the Small Cap Premium
Replies: 52
Views: 7263

Re: Capturing the Small Cap Premium

pkcrafter wrote: Are you going to, or can you, hold for 7 years while your supercharged portfolio underperforms the total market? I guarantee you it's going to seem like a very long time. This is why the premium continues to exist.

Paul
Therein lies the rub. Will I be able to hold on? Let's hope so. :D
by diyfp
Mon May 09, 2016 8:15 pm
Forum: Personal Investments
Topic: Capturing the Small Cap Premium
Replies: 52
Views: 7263

Re: The best portfolio ?

...if you concentrate in any part of the market you are reducing risk-adjusted return compared to owning the market. Taking extra uncompensated risk via additional concentration, lowering diversification, is suboptimal. I agree. Concentration and lack of diversification are probably not good. Which...
by diyfp
Mon May 09, 2016 6:00 pm
Forum: Personal Investments
Topic: Capturing the Small Cap Premium
Replies: 52
Views: 7263

Re: The best portfolio ?

To be pedantic, is it probable that small-caps will produce higher returns than large-caps, but they are also considerably riskier. If markets are efficient, the increased return will not be sufficient to compensate for the increased risk you are taking. Not sure this makes sense to me. In an effic...
by diyfp
Mon May 09, 2016 2:58 pm
Forum: Personal Investments
Topic: Capturing the Small Cap Premium
Replies: 52
Views: 7263

Re: Capturing the Small Cap Premium

Usually people mean and pay attention to cumulative performance. It looks like you're just referencing the sign of consecutive yearly returns. . there can be very long periods of underperformance of smaller cap stocks. Fair enough. Let's look at cumulative performance then. Here are rolling 17-year...
by diyfp
Sun May 08, 2016 11:44 pm
Forum: Personal Investments
Topic: Capturing the Small Cap Premium
Replies: 52
Views: 7263

Re: Capturing the Small Cap Premium

Robert T wrote:.
there can be very long periods of underperformance of smaller cap stocks.
When I look at the French-Fama SMB data, the longest period of underperformance is 7 years (1951-1957). 1950 and 1958 SMB is positive.

Is 7 years really considered a 'very long period'?
by diyfp
Sat May 07, 2016 2:17 am
Forum: Investing - Theory, News & General
Topic: a math question
Replies: 6
Views: 1252

Re: a math question

CFM300 is right.

In ~ 844.13 years you'll only have 1 cent left... :oops:

So not forever.
by diyfp
Sat May 07, 2016 2:11 am
Forum: Investing - Theory, News & General
Topic: a math question
Replies: 6
Views: 1252

Re: a math question

Forever. :D

As long as you withdraw a fixed fraction of the remainder that is less than 100%, and your annual return is greater than -100% you and your heirs and their heirs can keep withdrawing forever. :twisted:
by diyfp
Sat May 07, 2016 1:49 am
Forum: Investing - Theory, News & General
Topic: The high price of low volatility funds by Jason Zweig
Replies: 3
Views: 1153

Re: The high price of low volatility funds by Jason Zweig

From the link: "Decades of data indicate that low-volatility stocks have outperformed the rest of the market by an average of about 1 percentage point annually at roughly 30% less risk, says Nardin Baker, an investment strategist for Guggenheim Partners Asset Management." So we have beta, ...
by diyfp
Sat May 07, 2016 1:20 am
Forum: Investing - Theory, News & General
Topic: P/E ratio of the S&P 500
Replies: 23
Views: 4479

Re: P/E ratio of the S&P 500

Based on this metric (comparison to Moody BAA yield), when was the last time that the S&P 500 was at or below fair value?
by diyfp
Thu May 05, 2016 12:11 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 2 — Choosing Portfolio Bond Duration
Replies: 42
Views: 9334

Re: Classic Bernstein 2 — Choosing Portfolio Bond Duration

This may be obvious to some but why exactly are long-term treasuries so volatile?

We can see from the graph (and the data) that they're so volatile that adding stocks to a 100% LTT portfolio actually REDUCES volatility!
by diyfp
Wed May 04, 2016 11:31 pm
Forum: Investing - Theory, News & General
Topic: International Value ETFs: EFV vs FNDF
Replies: 15
Views: 3261

Re: International Value ETFs: EFV vs FNDF

Good catch on making sure to compare the same period and the lack of significance of the value loading lack_ey.

FNDC has a negative value loading over the same period in_reality...
by diyfp
Wed May 04, 2016 11:23 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 2 — Choosing Portfolio Bond Duration
Replies: 42
Views: 9334

Re: Classic Bernstein 2 — Choosing Portfolio Bond Duration

Based on this, why are most Bogleheads in the Total Bond Index instead of the Intermediate Bond Index?
by diyfp
Wed May 04, 2016 7:14 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 2 — Choosing Portfolio Bond Duration
Replies: 42
Views: 9334

Re: Classic Bernstein 2 — Choosing Portfolio Bond Duration

More reinforcement to stick with intermediate Treasuries and avoid long-term issues. Though of course if you update the data through the last 15-20 years of long-term Treasury outperformance, that changes things at least in magnitude. Just a note: If Bogleheads with an analytical bent are so inspir...
by diyfp
Tue May 03, 2016 8:35 pm
Forum: Investing - Theory, News & General
Topic: International Value ETFs: EFV vs FNDF
Replies: 15
Views: 3261

Re: International Value ETFs: EFV vs FNDF

The other thing is that EFV has a higher dividend yield than FNDF, so if it's for a taxable account, FNDF is probably the better choice. I had not considered the dividend yield. Thanks for pointing that out since it will be in a taxable account. It is impossible to know which will "perform&quo...
by diyfp
Tue May 03, 2016 5:11 pm
Forum: Investing - Theory, News & General
Topic: International Value ETFs: EFV vs FNDF
Replies: 15
Views: 3261

Re: International Value ETFs: EFV vs FNDF

I think a reasonable way to approach this decision would be the following: 1. Assume a value premium, say 1% over the next 30 years. 2. Calculate what fraction of the value premium EFV should capture based on it's valuey-ness = X % 3. Calculate what fraction of the value premium FNDF should capture ...
by diyfp
Tue May 03, 2016 4:36 pm
Forum: Investing - Theory, News & General
Topic: International Value ETFs: EFV vs FNDF
Replies: 15
Views: 3261

International Value ETFs: EFV vs FNDF

Hi people, I'm looking at adding an International Value ETF to my portfolio (~10% of total). Any opinions on EFV vs FNDF? EFV is slightly more expensive (0.40%) than FNDF (0.32%). EFV is a little more valuey than FNDF on Morningstar. Portfolio Visualizer shows them to be about the same as far as per...
by diyfp
Mon May 02, 2016 12:24 pm
Forum: Investing - Theory, News & General
Topic: Index Investing Makes Markets and Economies More Efficient
Replies: 10
Views: 1914

Re: Index Investing Makes Markets and Economies More Efficient

I really like how Philosophical Economics explains in this post that indexing does NOT distort valuations as some claim.
by diyfp
Mon May 02, 2016 12:09 pm
Forum: Investing - Theory, News & General
Topic: "Save $52,000 on Financial Advice" Forbes
Replies: 103
Views: 15290

Re: "Save $52,000 on Financial Advice" Forbes

If you’re managing your own investments, there’s a good chance you’re earning much less than you could be, according to research by DALBAR, a financial services market research firm. Its 2014 Quantitative Analysis of Investor Behavior found that the average investor has underperformed the S&P 5...
by diyfp
Mon May 02, 2016 12:55 am
Forum: Investing - Theory, News & General
Topic: Fundamental Indexing Is The Better Way To Value Tilt?
Replies: 72
Views: 8558

Re: Fundamental Indexing Is The Better Way To Value Tilt?

. The inclusion of growth stocks in the fundamental index leads to a positive rebalancing return IMO (see link below) which I think partly explains the non-negative alphas in the Fama-French three factor analysis. With inclusion of growth stocks, the value load of a Fundamental index will be lower ...
by diyfp
Sat Apr 30, 2016 8:20 pm
Forum: Investing - Theory, News & General
Topic: For those of you who immediately sell employee stock from ESPP…
Replies: 18
Views: 5828

Re: For those of you who immediately sell employee stock from ESPP…

If you sell immediately you have to pay short-term cap gains right?

I would guess one would at least wait a year and a day to pay the more favorable long-term cap gains no?
by diyfp
Sat Apr 30, 2016 7:56 pm
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 1 — Asset Allocation and Time Horizon
Replies: 47
Views: 11617

Re: Classic Bernstein — Asset Allocation and Time Horizon

staythecourse wrote:...but if someone (ahem Simplegift) would be kind enough to post the bullet points at the end of that chapter I think it will shine some light on this discussion.
Here you go. :beer

Image
by diyfp
Sat Apr 30, 2016 4:09 am
Forum: Investing - Theory, News & General
Topic: "Save $52,000 on Financial Advice" Forbes
Replies: 103
Views: 15290

Re: Gems from Allan Roth, CPA,

LeeMKE: Thank you for your link. Allan Roth, CFA, CPA, is a Boglehead and one of the most knowledgeable advisers in the business. All of us benefit from Allan's crusade to bring ethics and low-cost into the investor marketplace. These are "Gems" from Allan's book: "How a Second Grade...
by diyfp
Sat Apr 30, 2016 1:10 am
Forum: Investing - Theory, News & General
Topic: Classic Bernstein 1 — Asset Allocation and Time Horizon
Replies: 47
Views: 11617

Re: Classic Bernstein — Asset Allocation and Time Horizon

A few interpretations of his results: a) Over short periods, one’s mix of assets matters a great deal, but become less important over long time periods. I haven't read the book but based just on these two graphs, I would say the exact opposite. Over short periods (the left graph) there doesn't seem...
by diyfp
Fri Apr 29, 2016 10:01 pm
Forum: Investing - Theory, News & General
Topic: International Value ETFs (EFV, PXF, FNDE, etc): Taxable or Tax-Advantaged?
Replies: 2
Views: 624

International Value ETFs (EFV, PXF, FNDE, etc): Taxable or Tax-Advantaged?

Hi people, I'm considering adding international value ETFs to my portfolio. Should I put them in taxable or tax-sheltered? On the one hand, being value ETFs, they will probably have a lot of dividends which would be taxed at 15% in a taxable account. On the other hand, putting them in tax-sheltered ...
by diyfp
Mon Apr 18, 2016 10:00 pm
Forum: Personal Finance (Not Investing)
Topic: HELP! HR Doesn't Believe in Index Funds for 401k
Replies: 64
Views: 8081

Re: HELP! HR Doesn't Believe in Index Funds for 401k

Thanks for the advice and the data everyone (especially Taylor for the exhaustive list of expert quotes!). It seems like most people here don't believe that drowning the HR rep in data will make them budge so I will try the diplomatic approach (thank you for taking the time to respond to my email; p...
by diyfp
Sat Apr 16, 2016 8:57 pm
Forum: Personal Finance (Not Investing)
Topic: HELP! HR Doesn't Believe in Index Funds for 401k
Replies: 64
Views: 8081

Re: HELP! HR Doesn't Believe in Index Funds for 401k

Do you have some kind of stable value fund, and what rate does it pay? Not quite sure what a stable value fund is but it appears that we do have one. It says: Stable Value /Guaranteed Income Fund Net Crediting Rate (Annualized): 1.7%; The crediting rate is subject to change, but will never be less ...
by diyfp
Sat Apr 16, 2016 8:51 pm
Forum: Personal Finance (Not Investing)
Topic: HELP! HR Doesn't Believe in Index Funds for 401k
Replies: 64
Views: 8081

Re: HELP! HR Doesn't Believe in Index Funds for 401k

Look at Artisan Partners Fund, Small Cap Value. For 1, 3, and 10 years I see it underperforming both the small cap value benchmark assigned by Morningstar and VBR (Vanguard's Small Cap Value). Ask them how they claim it is outperforming. Here are the comparisons sent by Prudential for the Mid Cap G...
by diyfp
Sat Apr 16, 2016 8:34 pm
Forum: Personal Finance (Not Investing)
Topic: HELP! HR Doesn't Believe in Index Funds for 401k
Replies: 64
Views: 8081

Re: HELP! HR Doesn't Believe in Index Funds for 401k

What category benchmarks are they using? Something funny is going on here I think. These are the benchmarks for the funds in the 401k: Barclays US Agg Bond TR USD BofAML US HY Master II TR USD Russell 1000 Value TR USD Russell 1000 TR USD Russell 1000 Growth TR USD Russell Mid Cap TR USD Russell Mi...
by diyfp
Sat Apr 16, 2016 7:49 pm
Forum: Personal Finance (Not Investing)
Topic: HELP! HR Doesn't Believe in Index Funds for 401k
Replies: 64
Views: 8081

HELP! HR Doesn't Believe in Index Funds for 401k

Hi everyone, The 401k at my company has 1 index fund (the Dryden S&P 500 Index Fund - ER 0.35%) with all other funds being actively-managed funds (ER ~ 1%). The 401k has ~ 1200 participants and $65 million in assets. I emailed HR asking why we only have one index fund despite all the evidence th...
by diyfp
Mon Mar 14, 2016 9:04 pm
Forum: Investing - Theory, News & General
Topic: RAFI Has Beaten DFA and Vanguard (3% annually!) Since 2009 on an Absolute and Risk-Adjusted Basis. HOW?!?
Replies: 33
Views: 5324

Re: RAFI Has Beaten DFA and Vanguard (3% annually!) Since 2009 on an Absolute and Risk-Adjusted Basis. HOW?!?

So it looks there are 3 theories for how RAFI had higher returns with lower volatility over this period than Vanguard and DFA. 1. Small/Value That Schwab Fundamental fund loads on small and value and doesn't have negative momentum. The small/value theory doesn't seem to hold much water based on Morn...
by diyfp
Mon Mar 14, 2016 4:02 am
Forum: Investing - Theory, News & General
Topic: RAFI Has Beaten DFA and Vanguard (3% annually!) Since 2009 on an Absolute and Risk-Adjusted Basis. HOW?!?
Replies: 33
Views: 5324

Re: RAFI Has Beaten DFA and Vanguard (3% annually!) Since 2009 on an Absolute and Risk-Adjusted Basis. HOW?!?

Yes, the three funds all follow different indices.

My question was whether factor analysis could explain the performance difference between the 3 since 2009.

Especially between RAFI and Vanguard.
by diyfp
Mon Mar 14, 2016 3:45 am
Forum: Investing - Theory, News & General
Topic: RAFI Has Beaten DFA and Vanguard (3% annually!) Since 2009 on an Absolute and Risk-Adjusted Basis. HOW?!?
Replies: 33
Views: 5324

Re: RAFI Has Beaten DFA and Vanguard (3% annually!) Since 2009 on an Absolute and Risk-Adjusted Basis. HOW?!?

David Jay wrote:What is RAFI?

In your link, what does RAFI have to do with Schwab?
RAFI makes the index that the Schwab fund SFILX follows.

RAFI is Research Affiliates Fundamental Index.
by diyfp
Mon Mar 14, 2016 3:12 am
Forum: Investing - Theory, News & General
Topic: RAFI Has Beaten DFA and Vanguard (3% annually!) Since 2009 on an Absolute and Risk-Adjusted Basis. HOW?!?
Replies: 33
Views: 5324

RAFI Has Beaten DFA and Vanguard (3% annually!) Since 2009 on an Absolute and Risk-Adjusted Basis. HOW?!?

Hi everyone. As I mentioned in my first post to this forum, I'm considering splitting my international holdings 50/50 between Vanguard and RAFI. While doing my research, I found that since 2009, RAFI's International Small Index has beaten Vanguard's International Small Index by 3% annually and with ...
by diyfp
Fri Mar 11, 2016 1:55 pm
Forum: Investing - Theory, News & General
Topic: The Elusive Rebalancing Bonus, An Analysis
Replies: 104
Views: 12950

Re: The Elusive Rebalancing Bonus, An Analysis

Interesting analysis Frans. Thank you for sharing it. Does it make a difference say in the LCS/SGS case where returns are similar if one rebalances using new contributions vs rebalancing by selling what's gone up? My calculations on my portfolio returns show that at least for the next 10 to 15 years...
by diyfp
Thu Mar 10, 2016 3:25 pm
Forum: Personal Finance (Not Investing)
Topic: How Are Investment Gains Treated in Divorce?
Replies: 9
Views: 1609

How Are Investment Gains Treated in Divorce?

Say the day before getting married I have $100,000 in mutual funds. I get married and for five years am so happy in my marriage that I forget to put any more money in the investment account. At the end of the five years, I unfortunately get divorced. I look at my investment account and now it's wort...
by diyfp
Thu Mar 10, 2016 12:33 am
Forum: Investing - Theory, News & General
Topic: How Much of 10-, 15-, 20-year Stock Returns is Explained by Fundamentals (sales, cash flow, book value, dividend)?
Replies: 18
Views: 1920

Re: How Much of Long-Term Stock Returns is Explained by Fundamentals?

A lot of the long term returns come down to the er of the funds. Needless to say 1 fund has the lowest er cost. The more funds you add the higher the er costs. The er can literally cost you thousand's of dollars over a long period of time. Yeah, that IS one aspect of fundamental indexing that bothe...
by diyfp
Thu Mar 10, 2016 12:22 am
Forum: Investing - Theory, News & General
Topic: How Much of 10-, 15-, 20-year Stock Returns is Explained by Fundamentals (sales, cash flow, book value, dividend)?
Replies: 18
Views: 1920

Re: How Much of Long-Term Stock Returns is Explained by Fundamentals?

A) Long-term returns are mostly explained by fundamentals. Long-term returns will eventually converge with fundamentals, but fundamentals (such as a companies debt level, market-share, and cash-flow) change over time. Investing only on present-day fundamentals is silly. Forecasting them out twenty ...
by diyfp
Wed Mar 09, 2016 11:43 pm
Forum: Investing - Theory, News & General
Topic: How Much of 10-, 15-, 20-year Stock Returns is Explained by Fundamentals (sales, cash flow, book value, dividend)?
Replies: 18
Views: 1920

Re: How Much of Long-Term Stock Returns is Explained by Fundamentals?

1) What makes something count as "fundamental" is that it drives the long-term returns. So the answer is 100%, but also it is tautological. I should have been more clear about what I meant when I said fundamentals. I'm referring to the four numbers used in weighting the fundamental index:...
by diyfp
Wed Mar 09, 2016 11:33 pm
Forum: Investing - Theory, News & General
Topic: How Much of 10-, 15-, 20-year Stock Returns is Explained by Fundamentals (sales, cash flow, book value, dividend)?
Replies: 18
Views: 1920

Re: How Much of Long-Term Stock Returns is Explained by Fundamentals?

"Fundamentals" can be defined in an infinite number of ways, with varying complexity, varying look-back periods, varying look-forward periods, and a bunch of other variables. By fundamentals, I'm just referring to the four measures used in the weighting: sales, cash flow, book value and d...
by diyfp
Wed Mar 09, 2016 11:23 pm
Forum: Investing - Theory, News & General
Topic: How Much of 10-, 15-, 20-year Stock Returns is Explained by Fundamentals (sales, cash flow, book value, dividend)?
Replies: 18
Views: 1920

Re: How Much of Long-Term Stock Returns is Explained by Fundamentals?

When you split your holdings, the previous group will immediately do better than the new combination for a while. Such is life. Hehehe... Good ole Murphy eh? :wink: In the stock market, there are no steady premiums. Each comes and goes. Not sure I agree with you on this one. In the last 100 years, ...
by diyfp
Wed Mar 09, 2016 11:07 pm
Forum: Investing - Theory, News & General
Topic: How Much of 10-, 15-, 20-year Stock Returns is Explained by Fundamentals (sales, cash flow, book value, dividend)?
Replies: 18
Views: 1920

Re: How Much of Long-Term Stock Returns is Explained by Fundamentals?

So back to your question, even if you know how much fundamentals account for stock success, you'd have to research how using a five year view of fundamentals does. You also need to remove market fundamentals from the equation as RAFI methodology doesn't address it. Good point on the five years. I a...
by diyfp
Wed Mar 09, 2016 10:56 pm
Forum: Investing - Theory, News & General
Topic: How Much of 10-, 15-, 20-year Stock Returns is Explained by Fundamentals (sales, cash flow, book value, dividend)?
Replies: 18
Views: 1920

Re: How Much of Long-Term Stock Returns is Explained by Fundamentals?

Well, let's look at Exxon which those Schwab funds overweight more than traditional value indexes do. How are it's fundamentals today? Well, what do you mean by fundamentals? It's valuations are cheap especially compared to the five year average that RAFI uses to calculate their fundamental weighti...
by diyfp
Wed Mar 09, 2016 10:24 pm
Forum: Investing - Theory, News & General
Topic: How Much of 10-, 15-, 20-year Stock Returns is Explained by Fundamentals (sales, cash flow, book value, dividend)?
Replies: 18
Views: 1920

Re: How Much of Long-Term Stock Returns is Explained by Fundamentals?

Thanks to all who replied! A little bit more background on myself. I only really started investing a little over a year ago (all Vanguard index funds except for my 401k which doesn't have any but that's material for another thread...). Also, I only found out about fundamental indexing about a week a...