Search found 1074 matches

by Ron Scott
Sun Nov 04, 2018 8:19 pm
Forum: Investing - Theory, News & General
Topic: Question on the 4% withdrawal rule
Replies: 66
Views: 5321

Re: Question on the 4% withdrawal rule

At the OP: A major problem with the 4% rule is if the worst markets do not occur, the retiree will die with far more unspent than he/she started with for retirement. At heyyou and OP: This is an incredibly false and misleading statement for the very simple reason that we DO NOT KNOW what "the worst markets" will be during your retirement! How could anyone possibly make such a statement today about events that HAVE NOT EVEN HAPPENED?? I believe he meant the worst markets compared to those in U.S. history (e.g. Great Depression, 1970s' stagflation, etc.). There were some really bad sequences of returns in the past. The future could certainly be worse than the past, but it seems unlikely that the sequence of returns you personally e...
by Ron Scott
Sun Nov 04, 2018 6:29 pm
Forum: Investing - Theory, News & General
Topic: Question on the 4% withdrawal rule
Replies: 66
Views: 5321

Re: Question on the 4% withdrawal rule

heyyou wrote: Sun Nov 04, 2018 5:21 pm At the OP:
A major problem with the 4% rule is if the worst markets do not occur, the retiree will die with far more unspent than he/she started with for retirement.
At heyyou and OP:

This is an incredibly false and misleading statement for the very simple reason that we DO NOT KNOW what "the worst markets" will be during your retirement!

How could anyone possibly make such a statement today about events that HAVE NOT EVEN HAPPENED??
by Ron Scott
Sun Nov 04, 2018 12:34 pm
Forum: Personal Finance (Not Investing)
Topic: Teaching kids there is an ample amount of money
Replies: 108
Views: 10447

Re: Teaching kids there is ample amount of money

I'm wondering how high net worth families teach their children about money. I think I'll tell my kids that we are blessed / fortunate to not have to worry about money but we are also resourceful and don't buy a bigger house or fancier cars (or more toys) just because we can. To me that seems more truthful and could lead to better outcomes if the kids inherit a large sum when we pass on That's fine unless you actually do buy the bigger house, the vacation home, Porsche(s), boat, luxury travel, etc. Everything's relative. If you have $25m and live like you only have $15, you still have an issue. IMO what kids need to understand includes the following: 1. Your Net Worth has nothing to do with your personal worth. We are not better or worse th...
by Ron Scott
Sun Nov 04, 2018 11:58 am
Forum: Investing - Theory, News & General
Topic: Best way to guesstimate returns of lifestrategy funds?
Replies: 19
Views: 1176

Re: Best way to guesstimate returns of lifestrategy funds?

Hi All, Is there a decent way to guesstimate the forward looking returns of the lifestrategy funds? Right now, the only thing I know how to do is to use Simba's backtesting spreadsheet to calculate the total return by weighting the individual components (TSM, TBM, etc.) Is there a better way? Thanks! That works but it is going to give you some type of average historical performance. It is hard to know if you are going to be getting average, above average, or below average performance going forward. I understand, but I know of no better way to predict what will happen in (long-term) future than by looking at the (long-term) past . (And, before someone trots out that past-performance does not predict future-performance, I'd like to disclose ...
by Ron Scott
Sun Nov 04, 2018 10:42 am
Forum: Investing - Theory, News & General
Topic: Question on the 4% withdrawal rule
Replies: 66
Views: 5321

Re: Question on the 4% withdrawal rule

I have a quick question on the 4% rule. From what I understand this rule states that one can withdraw 4% of the portfolio in the first year of retirement and then increase 4% by inflation and that the portfolio would last your lifetime. The question I have is. Say I start with one million and say inflation is small like 2%. I can take out 40K year 1 and then increase by 2% next year and so on. But let us say the market has a great 5 year run and doubles and some more (wishful thinking) and the amount of portfolio increases to say two million (after even what I withdrew over the 5 years). At that stage can my withdrawal be readjusted to 4% of 2 million (80K) or will it stay at 40K adjusted for the 5 year inflation (which will be way below 8...
by Ron Scott
Sun Nov 04, 2018 5:26 am
Forum: Personal Investments
Topic: Close to the Bull Trap phase of the market cycle
Replies: 32
Views: 3565

Re: Close to the Bull Trap phase of the market cycle

neuroawesom wrote: Sat Nov 03, 2018 1:50 am I am thinking of converting my portfolio into Cash and put in CDs/savings and wait for correction.
Well, you just missed selling and buying into a market correction in the past couple weeks. How are you going to do better next time?
by Ron Scott
Sun Nov 04, 2018 5:11 am
Forum: Investing - Theory, News & General
Topic: Buffett Repurchases More Than $900 Million of Stock: is the stock market overpriced?
Replies: 10
Views: 3141

Re: Buffett Repurchases More Than $900 Million of Stock: is the stock market overpriced?

steve321 wrote: Sun Nov 04, 2018 3:11 am Found this:
https://www.wsj.com/articles/warren-buf ... 1541248428
does it mean that everything in the US (apart perhaps from Berkshire) is overpriced since Buffett could not find any investment ideas?
I think Buffett would rather buy other businesses. Price isn’t his only criterion but it’s a noticeable one. It does not mean the entire market is overvalued but he doesn’t see a lot of sale prices either.
by Ron Scott
Sun Nov 04, 2018 4:59 am
Forum: Investing - Theory, News & General
Topic: [WSJ: The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing]
Replies: 74
Views: 11088

Re: [WSJ: The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing]

I don't understand the why those who don't agree with the FIRE movement (most of whom have a dog in that belief system: ie: Suze), need imply a psychological problem. Live and let live the way I want to live in the face of consumerism is the basic FIRE premise. Why the need to pathologize? I don’t think it’s pathological to FIRE but it isn’t an inspired solution either. Some who find themselves disenchanted with their jobs become attracted to FIRE as a cure instead of engaging in the potentially more productive search for personally satisfying work. The whole headtrip about consumerism being unhealthy and frugality as godly must seem like a crappy consolation prize for those who would appreciate a more rewarding career but do not seek or f...
by Ron Scott
Sun Nov 04, 2018 3:29 am
Forum: Investing - Theory, News & General
Topic: [WSJ: The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing]
Replies: 74
Views: 11088

Re: [WSJ: The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing]

I don't understand the why those who don't agree with the FIRE movement (most of whom have a dog in that belief system: ie: Suze), need imply a psychological problem. Live and let live the way I want to live in the face of consumerism is the basic FIRE premise. Why the need to pathologize? I don’t think it’s pathological to FIRE but it isn’t an inspired solution either. Some who find themselves disenchanted with their jobs become attracted to FIRE as a cure instead of engaging in the potentially more productive search for personally satisfying work. The whole headtrip about consumerism being unhealthy and frugality as godly must seem like a crappy consolation prize for those who would appreciate a more rewarding career but do not seek or f...
by Ron Scott
Sun Nov 04, 2018 1:55 am
Forum: Investing - Theory, News & General
Topic: [WSJ: The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing]
Replies: 74
Views: 11088

Re: [WSJ: The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing]

It makes me sad these people are focused SO much on retirement like it’s the holy grail. They say they wouldn’t do anything differently if they had more money but I don’t believe that. Like if you’d won the lottery you’d still only drink $5 bottles of wine ($5 bottles mentioned in the article)? No, I disagree with your sentiment. Once you've sunk time into your career, you need to keep at it for the money whether you like it or not.Some people are treated badly at work for no fault of their own. Some people's careers didn't materialize into anything enjoyable. It is very difficult to build knowledge, skills and experience and somehow gain the credibility to practice your trade at a high level. Even at a youngish age like 35, if you wanted ...
by Ron Scott
Sat Nov 03, 2018 3:58 pm
Forum: Investing - Theory, News & General
Topic: [WSJ: The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing]
Replies: 74
Views: 11088

Re: WSJ FIRE

A quote from the article say is all for me: Brandon Ganch, 36, who retired from his job as a software engineer in 2016, said his frugality became an obsession and he stressed over small purchases by his wife. He often got upset when visitors took long hot showers at his former Vermont home or his wife ordered a “$15 main course instead of a $10 sandwich” at a restaurant. “It wasn’t healthy,” said Mr. Ganch. I plan on retiring in my mid-40's but there's no way I'd take it ridiculous lengths like that to retire a couple years earlier. Writers tend to pick the really successful bloggers or the extreme-frugality addicts for these articles. Those people garner more interest than regular people who just live like they earn $50k instead of $100k ...
by Ron Scott
Sat Nov 03, 2018 3:46 pm
Forum: Personal Finance (Not Investing)
Topic: What FIRE says to me [Financial Independence, Retire Early]
Replies: 10
Views: 1685

What FIRE says to me [Financial Independence, Retire Early]

I could have retired at 45 instead of 61 and I'm glad I did not. The second half of my career was much more challenging and rewarding in every way. I literally couldn't sleep well at night because of exciting opportunities I was working on during the day. (Sometimes I'd be sending emails out when I had to get up to go to the bathroom for god's sake!) So when I hear FIRE I recoil, especially when those planning early retirement are hard-working, well-educated professionals with the potential to contribute for many years. What do I take from this? First and foremost-- certainly the most important issue , it's a real wake up call to employers that focusing on creating exciting and rewarding jobs should be a priority. It is disheartening to see...
by Ron Scott
Sat Nov 03, 2018 3:08 pm
Forum: Investing - Theory, News & General
Topic: [WSJ: The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing]
Replies: 74
Views: 11088

Re: WSJ FIRE

A quote from the article say is all for me:

Brandon Ganch, 36, who retired from his job as a software engineer in 2016, said his frugality became an obsession and he stressed over small purchases by his wife. He often got upset when visitors took long hot showers at his former Vermont home or his wife ordered a “$15 main course instead of a $10 sandwich” at a restaurant.

“It wasn’t healthy,” said Mr. Ganch.
by Ron Scott
Sat Nov 03, 2018 3:00 pm
Forum: Personal Investments
Topic: Where should I be financially at 39?
Replies: 42
Views: 6850

Re: Where should I be financially at 39?

It is too low. I am conservative and think 30X expenses in savings is a good number for someone retiring around 63-66. The more the better... 30X expenses is a crazy goal for most people (it would support your current lifestyle indefinitely with no SS, given the just over 3% withdrawal rate). That 4% SWR is for a safe 30-year retirement without SS . There is nothing to back your fantastical assertions. Neither of us is able to predict future investment return rates to know today whether the 4% "rule" will suffice in mid-21st century America. And no "expert" here can either. All we can do is prepare. Retirees who spend a relatively low % of assets for living expenses, can live with relatively low returns, and who will no...
by Ron Scott
Sat Nov 03, 2018 11:16 am
Forum: Personal Investments
Topic: Tax-efficient fund placement
Replies: 9
Views: 1739

Re: Tax-efficient fund placement

"All things being equal" having taxable bonds in the tax deferred IRA is a standard strategy, and using muni funds in taxable if you need more bonds for your desired allocation. Stocks--held for cap gains purposes--in taxable.

Some people keep a portion of their stock holdings in IRAs fo rebalancing purposes.

Some people keep stocks in their Roths for a variety of reasons, including considering leaving it all to the kids.

There are good reasons to deviate from the standard approach, but the standard needs to be considered. Just don't let the tax plan supercede your overall investment strategy.
by Ron Scott
Sat Nov 03, 2018 10:08 am
Forum: Investing - Theory, News & General
Topic: WSJ: Sometimes, It’s Bonds For the Long Run
Replies: 72
Views: 8815

Re: WSJ: Sometimes, It’s Bonds For the Long Run

Well, with a 50% Equities and a 50% Bond portfolio, I figure I'm covered no matter what. :D That is Bogle's portfolio too and he complains that half the time he thinks he's underweighted in stocks and half the time he thinks he's overweighted. You know, for a forum that stresses "past is not a predictor of the future", it does seem that many folks are not convinced.... just saying! :D Predicting future market returns is too important to people for them to come to terms with the fact that they cannot. Some people become angry when you tell them their Firecalc and Monte Carlo sims don't work for the future. (How are we supposed to retire then? We might as well just end it all! The past contained the depression and world wars: how c...
by Ron Scott
Sat Nov 03, 2018 9:53 am
Forum: Investing - Theory, News & General
Topic: WSJ: Sometimes, It’s Bonds For the Long Run
Replies: 72
Views: 8815

Re: Questioning the Dogma of "Stocks for the Long Run"

AlohaJoe wrote: Sat Nov 03, 2018 9:37 am Past performance is no guarantee of future results doesn't mean "you can't learn anything from the past".
The question for most is not "can you learn from the past?". it is: Can you predict market returns in the future for a specific 30- or 40-year retirement period? The weighty concerns are specific, not general.

What most people really want to know is if they can rely statistical analyses of historical market return data to put a range around their expected market returns in retirement with enough confidence to bet their financial lives on. And the answer is no.
by Ron Scott
Sat Nov 03, 2018 8:05 am
Forum: Personal Investments
Topic: Strategies for investing w/large annual capital gains
Replies: 8
Views: 1659

Re: Strategies for investing w/large annual capital gains

I rode the same train as you for many years before retiring. Beat the market by leaps and bounds and loved every minute. Give them 200% and enjoy the ride. I made the mistake of wasting my time with an advisor and never took any advice. Left them for VG and am fine now. It doesn’t make a difference if you end up with $10M or 25, investing is investing. Keep the bulk of it in some form of 2-fund and you’ll be fine. My recommendation is to first get a GOOD tax accountant who will work with you as much as you need. Fidelity or VG should give you enough free time with an advisor that you shouldn’t need to hire one. But make sure you study the basic stuff yourself and never just hand it over to advisors and accountants. Question them constantly ...
by Ron Scott
Sat Nov 03, 2018 5:05 am
Forum: Investing - Theory, News & General
Topic: "Individual investors should have access to Private Equity"
Replies: 46
Views: 4808

Re: "Individual investors should have access to Private Equity"

Not understanding. Why should the government tell me who I should be doing business with? The government does not tell you who you can do business with. It requires companies seeking money from the general public to share certain informations and abide by certain rules which are enforced by the SEC. Some investments can avoid those rules, but then they can only sell to qualified (or accredited) investors, which I believe requires either $200K (300K joint) income or 1 million net worth. These investments are usually called private equity to contrast them with the public market, the S&P 500 for example. Private equity might be a single wind turbine in a small wind farm (an example that a relative who is a qualified investor actually did ...
by Ron Scott
Fri Nov 02, 2018 5:34 pm
Forum: Personal Investments
Topic: Easy retirement income method.
Replies: 20
Views: 4403

Re: Easy retirement income method.

It seems one of the biggest risks of a probability SWR strategy is sequence of return. The problem arises when you are forced to sell stocks or bonds at a loss (market crashed, interest rates are rising). My idea is to set up my accounts to sweep all dividends and interest into my cash account. If I'm 80/20 stock\bonds (I also plan on an SPIA for additional income), and dividends pay around 2.5% and bonds pay 1%, can't I safely generate about 2% of income without ever selling anything? If I do need additional income, I'd only be selling above and beyond what I got from dividends and bond yields. I realize by not re-investing I'm sacrificing long term growth but what are the other downsides to doing this? I've never heard anyone suggest it....
by Ron Scott
Fri Nov 02, 2018 5:03 pm
Forum: Investing - Theory, News & General
Topic: "Individual investors should have access to Private Equity"
Replies: 46
Views: 4808

Re: "Individual investors should have access to Private Equity"

Not understanding. Why should the government tell me who I should be doing business with? The government does not tell you who you can do business with. It requires companies seeking money from the general public to share certain informations and abide by certain rules which are enforced by the SEC. Some investments can avoid those rules, but then they can only sell to qualified (or accredited) investors, which I believe requires either $200K (300K joint) income or 1 million net worth. These investments are usually called private equity to contrast them with the public market, the S&P 500 for example. Private equity might be a single wind turbine in a small wind farm (an example that a relative who is a qualified investor actually did ...
by Ron Scott
Fri Nov 02, 2018 4:13 pm
Forum: Investing - Theory, News & General
Topic: "Individual investors should have access to Private Equity"
Replies: 46
Views: 4808

Re: "Individual investors should have access to Private Equity"

Not understanding.

Why should the government tell me who I should be doing business with?
by Ron Scott
Fri Nov 02, 2018 2:05 pm
Forum: Personal Investments
Topic: Where should I be financially at 39?
Replies: 42
Views: 6850

Re: Where should I be financially at 39?

I believe 25X expenses is a poor guide. It assumes that your portfolio only produces income equal to inflation for 25 years and doesn't give a yearly guide. I think the following guide is more useful, it indicates how much your retirement portfolio should be in reference to your age and your gross income as you progress through life if you want to have the same standard of living when you retire. 30 yo 1X 35 2x 40 3x 45 4x 50 6x 55 8x 60 10x 65 12x (some would say 14) This essentially tells you where you should be if you want to retire at your current standard of living. It is low in the 30s and 40s when people are having kids and buying houses but you better double you portfolio between 50 and 65 (but income from the portfolio is helping ...
by Ron Scott
Fri Nov 02, 2018 1:16 pm
Forum: Personal Investments
Topic: Where should I be financially at 39?
Replies: 42
Views: 6850

Re: Where should I be financially at 39?

Break down long term goals into short term actionable steps. .... to include the following ... every day ... until it is a behavioral habit. 0. Focus on earning as well as saving and investing. Without the first nothing happens. 1. Minimize expenses 2. Avoid debt 3. Maximize income 4. Invest in your professional and personal education, training, and earning power. (do this creatively and always) 5. Diversify your income stream 6. Avoid personal and financial "Black Swans" and be prepared for the inevitable ones. 7. Surround yourself with those with similar goals and integrity. 8. Nurture a passion for work and fun doing #0-8 above without waver and you might far exceed what a spreadsheet can predict. ( Become an active long term ...
by Ron Scott
Fri Nov 02, 2018 12:56 pm
Forum: Personal Investments
Topic: Dollar Cost Averaging at age 70+?
Replies: 5
Views: 662

Re: Dollar Cost Averaging at age 70+?

Silk McCue wrote: Fri Nov 02, 2018 12:38 pm There is no reason not to invest the excess funds in the market. Considering that you could live into your 90's the future you will appreciate it. The investing has to be done consistent with your investing plan and risk tolerance for which 100% S&P may be just fine given your overall financial position. You will need to judge that.

Cheers
+1

...and no reason not to DCA instead of lump sum in. DCA can be done slowly too.
by Ron Scott
Fri Nov 02, 2018 12:26 pm
Forum: Investing - Theory, News & General
Topic: What is an "advanced" investor?
Replies: 34
Views: 3145

Re: What is an "advanced" investor?

garlandwhizzer wrote: Fri Nov 02, 2018 10:56 am
staythecourse wrote:
To me an advanced investor means one knows enough to know that most stuff doesn't matter beyond the basics. The great thing about this website is the unbelievable depth of knowledge that folks present from their personal knowledge of their careers/ educational backgrounds all from the point of view from a boglehead perspective. This is basically a one stop shop for ANY decision making that needs to be done in life. Hard to find that!
1+

I agree with both these points. This website is IMO an invaluable resource for those who wish to learn about and understand investing. All points of view are expressed and well represented.

Garland Whizzer
+2

I'm an advanced beer drinker: The local IPA or a Bud is perfect.
by Ron Scott
Fri Nov 02, 2018 9:31 am
Forum: Investing - Theory, News & General
Topic: What is an "advanced" investor?
Replies: 34
Views: 3145

What is an "advanced" investor?

In a recent post, someone commented that a particular website was helpful for both BEGINNER AND ADVANCED INVESTORS.

What is an "advanced investor"?
by Ron Scott
Fri Nov 02, 2018 8:47 am
Forum: Investing - Theory, News & General
Topic: Apple's share plummeting: should we 'kick out the largest stock' as Rob Arnott suggests?
Replies: 40
Views: 2821

Re: Apple's share plummeting: should we 'kick out the largest stock' as Rob Arnott suggests?

linenfort wrote: Fri Nov 02, 2018 8:33 am
Ron Scott wrote: Fri Nov 02, 2018 8:15 am
linenfort wrote: Fri Nov 02, 2018 7:38 am No, Steve. Just buy more Apple shares.
I don't think it works that way...
You don’t think what works what way?
An investment strategy based on trading individual stocks.

See the wiki for more info. An investment strategy using low-cost index funds typically works better.
by Ron Scott
Fri Nov 02, 2018 8:21 am
Forum: Investing - Theory, News & General
Topic: Core-4 Investing is LIVE! It really is this time!
Replies: 141
Views: 17804

Re: Core-4 Investing

Silk McCue wrote: Fri Nov 02, 2018 8:17 am
Ron Scott wrote: Fri Nov 02, 2018 7:53 am And now we have Rick Ferri’s thesis.
Did you know that Rick Ferri has been a member since 2007 and his portfolio's are among the many that are discussed and utilized here?

Did you know that he was the co-editor of the Boglehead's Guide to Investing?

Did you know that he is the host of the new Bogleheads Guide to Investing podcast that was just recently started?

I did know those things. Got the book and listened to each podcast...like 'em too.

Your point?
by Ron Scott
Fri Nov 02, 2018 8:15 am
Forum: Investing - Theory, News & General
Topic: Apple's share plummeting: should we 'kick out the largest stock' as Rob Arnott suggests?
Replies: 40
Views: 2821

Re: Apple's share plummeting: should we 'kick out the largest stock' as Rob Arnott suggests?

linenfort wrote: Fri Nov 02, 2018 7:38 am No, Steve. Just buy more Apple shares.
I don't think it works that way...
by Ron Scott
Fri Nov 02, 2018 7:53 am
Forum: Investing - Theory, News & General
Topic: Core-4 Investing is LIVE! It really is this time!
Replies: 141
Views: 17804

Core-4 Investing

I don’t think something like core 4 is overly complex but it’ll be fun to see where we’re headed.

The original Boglehead, John C., is a 2-fund kinda guy. Most forum members seem to lean toward a separate 3-fund with international (stocks, but not bonds). There always seems to be a thread about Larry Swedlow portfolios on the forums. And now we have Rick Ferri’s thesis.

Don’t get me wrong. If bogleheads.org evolves into a place to advertise/promote a variety of competing approaches to investment including commercial services I’m perfectly fine with that. I have no role in the bogleheads company and it’s not for me to disagree with their business model. It’s just different.

Viva la difference?
by Ron Scott
Thu Nov 01, 2018 3:55 pm
Forum: Investing - Theory, News & General
Topic: Quantifying loss due to rebalancing and market timing
Replies: 18
Views: 1637

Re: Quantifying loss due to rebalancing and market timing

By tracking inflows over time they do get periodic investing behaviors and they’re not looking at a single fund. And apples-and-oranges is EXACTLY that they end up concluding. The funds’ reported returns are the apples and our returns the oranges. It’s actually a well done study with results that should not surprise BHers. If you time the market or engage in the psychological arithmetic we call rebalancing, you typically underperform. Such is life... So, you are saying that an investor that dutifully contributes monthly, with no selling whatsoever, and ends up under-performing the single fund that he is invested in, simply because he is investing in a bull market, must be doing something wrong? Please read posts and any relevant attachment...
by Ron Scott
Thu Nov 01, 2018 8:47 am
Forum: Investing - Theory, News & General
Topic: Quantifying loss due to rebalancing and market timing
Replies: 18
Views: 1637

Re: Quantifying loss due to rebalancing and market timing

Neither. This is not a simple computer game like people here play with to guess their futures. And it’s obviously not limited to contributions. What makes the gap real is investor behavior—including withdrawals due to market timing, spending, rebalancing etc. Morningstar looks at cash inflows and outflows and calculates investor returns for 1, 3, 5, and 10-year periods. They compare active and passive investor returns to the actual reported fund returns and measure the gap between actual and fund results. There is a tendency for us to talk about actual returns as being equal to the fund’s returns less fees and taxes. Maybe we get into lump sum vs. DCA. That is naive. Here’s a summary article and the Morningstar methodology. https://www.nyt...
by Ron Scott
Thu Nov 01, 2018 7:39 am
Forum: Investing - Theory, News & General
Topic: Quantifying loss due to rebalancing and market timing
Replies: 18
Views: 1637

Re: Quantifying loss due to rebalancing and market timing

I thought most of you decry market timing and simply assume that rebalancing does not boost long-term returns. Change of heart out there? No, but one must compare apples to apples, even if an apples to oranges comparison supports the preferred position. Seems to me the annual Morningstar Return Gap study is pretty straightforward. So you think timing purchases and sales of a fund and regular rebalancing leads to better returns that the overall long-term performance of an underlying index fund? What exactly do you think Morningstar gets wrong in its ongoing work? I didn't read the study. Perhaps you can tell us how the study handled periodic contributions or whether the study only looked at a lump sum deposited in January 2006 (or would tha...
by Ron Scott
Wed Oct 31, 2018 8:55 am
Forum: Investing - Theory, News & General
Topic: Quantifying loss due to rebalancing and market timing
Replies: 18
Views: 1637

Re: Quantifying loss due to rebalancing and market timing

rkhusky wrote: Wed Oct 31, 2018 8:45 am
Ron Scott wrote: Wed Oct 31, 2018 8:23 am I thought most of you decry market timing and simply assume that rebalancing does not boost long-term returns.

Change of heart out there?
No, but one must compare apples to apples, even if an apples to oranges comparison supports the preferred position.
Seems to me the annual Morningstar Return Gap study is pretty straightforward.

So you think timing purchases and sales of a fund and regular rebalancing leads to better returns that the overall long-term performance of an underlying index fund?

What exactly do you think Morningstar gets wrong in its ongoing work?
by Ron Scott
Wed Oct 31, 2018 8:23 am
Forum: Investing - Theory, News & General
Topic: Quantifying loss due to rebalancing and market timing
Replies: 18
Views: 1637

Re: Quantifying loss due to rebalancing and market timing

Y'all a tough crowd, for what I thought was a interesting effort by Morningstar to actually quantify what BHers already believed.

I thought most of you decry market timing and simply assume that rebalancing does not boost long-term returns.

Change of heart out there?
by Ron Scott
Wed Oct 31, 2018 5:43 am
Forum: Investing - Theory, News & General
Topic: Quantifying loss due to rebalancing and market timing
Replies: 18
Views: 1637

Quantifying loss due to rebalancing and market timing

In relatively volatile times we are reminded of Morningstar’s Return Gap studies: We don’t enjoy the full returns our funds provide... The average investor has lagged behind the average fund for the past 10 years. The reason is that, in aggregate, investors’ timing is not very good. Over the 10 years ended 2016, the average U.S. investor in diversified equity funds enjoyed a 4.36% return, even though the average diversified equity fund returned 5.15%. That’s a fair amount to give up. In fixed income, the gap was nearly as large, and that’s painful because the returns are much smaller. In bondland, we found the average investor received a 2.99% return, versus 3.72% for the average bond fund. Combining all funds, we come up with a return for ...
by Ron Scott
Wed Oct 31, 2018 4:26 am
Forum: Personal Investments
Topic: VWELX, VTSMX [Vanguard Wellington, Total Stock Market]
Replies: 7
Views: 2335

Re: VWELX, VTSMX [Vanguard Wellington, Total Stock Market]

^ This ^

Fans of this 100-stock + bonds fund usually appear here when it is mentioned but you’re better off with true passive diversification in total stock and total bond funds.
by Ron Scott
Tue Oct 30, 2018 6:37 pm
Forum: Investing - Theory, News & General
Topic: Best Investing/Personal Finance Books?
Replies: 14
Views: 2691

Re: Best Investing/Personal Finance Books?

bck63 wrote: Tue Oct 30, 2018 5:39 am I just finished The Boglehead's Guide to Investing, and it's probably the only book I need, but does anyone have any other book recommendations for investing or personal finance?
Why not hear it directly from the horse's mouth?

https://www.amazon.com/Little-Book-Comm ... ittle+book
by Ron Scott
Tue Oct 30, 2018 10:14 am
Forum: Personal Investments
Topic: Changing Asset Allocation Based On Market Forecasts - Market Timing?
Replies: 7
Views: 975

Re: Changing Asset Allocation Based On Market Forecasts - Market Timing?

https://www.morningstar.com/videos/888358/building-a-portfolio-for-a-lowreturn-world.html The following is from an interview with Fran Kinniry of Vanguard; "I think sometimes market forecasting gets a negative connotation, but there's really only a couple of ways you can do this. You can use history, and that would be agnostic to initial conditions. You would ignore what yields are, ignore what valuations are, and do a Monte Carlo off of that. That I would say is very problematic... What we do in the Vanguard Capital Markets Model is we take in the key initial conditions--on equities, they tend to be valuations, such as price to earnings valuations; on bonds, they tend to be yields--and then, we form a distribution to give people expe...
by Ron Scott
Tue Oct 30, 2018 8:30 am
Forum: Personal Finance (Not Investing)
Topic: Calculating ROI for PhD
Replies: 86
Views: 6555

Re: Calculating ROI for PhD

Unless you have an automatic increase in total comp for completing an advanced degree or can get a job with high pay that requires a PhD, there is no good way to do this at the individual level, and aggregated stats are so confounded with other variables they are all but useless for predicting comp at the individual level. Don't bother with this assessment.

I have a PhD, completed by the time I was about 30, and I can tell you my experience: If you work hard, demonstrate an ability to handle increased responsibilities, and typically raise your hand when input is required, the PhD will make you stand out among peers. But it will not guarantee you anything.
by Ron Scott
Tue Oct 30, 2018 8:22 am
Forum: Personal Investments
Topic: Spreading the Risk - World Stock versus S&P 500?
Replies: 11
Views: 2568

Re: Spreading the Risk - World Stock versus S&P 500?

SmilerUK wrote: Tue Oct 30, 2018 8:13 am
You asked what's the logic?

My logic is that the US has always been the stronger and more stable market. Certainly more than the UK or even global markets.

So I'm trying to spread the risk.
Good thinking!
by Ron Scott
Tue Oct 30, 2018 7:01 am
Forum: Non-US Investing
Topic: Critique my Investment Policy Statement
Replies: 9
Views: 1264

Re: Critique my Investment Policy Statement

I’m glad you’re thinking about so many issues and starting so early in life. Keep thinking! Some thoughts for you... 1. Don’t assume a specific return, like 8% in equities. Assume returns will be low and be pleasantly surprised if they turn out better. Y 2. As you save for your future, become financially robust with respect to market volatility. Your lifestyle and portfolio combine to form a system that is either robust or fragile to down markets: Retirees who need to spend a relatively high % of assets for living expenses, rely on higher returns from equities, and who may need to sell equities at a low to fund living expenses are relativity fragile to market volatility. Those who spend a relatively low % of assets for living expenses, can ...
by Ron Scott
Mon Oct 29, 2018 10:44 pm
Forum: Investing - Theory, News & General
Topic: Anyone else feel giddy every time VXUS gets creamed? [Vanguard Total International]
Replies: 69
Views: 8466

Re: Anyone else feel giddy every time VXUS gets creamed?

denovo wrote: Mon Oct 29, 2018 9:52 pm
hdas wrote: Mon Oct 29, 2018 3:29 pm This is apt to describe the sentiment of this thread

Image

+1
+2

I don’t count on stock market returns for retirement spending but I believe the US will outpace international in the long term. I side with Bogle here.
by Ron Scott
Mon Oct 29, 2018 10:36 pm
Forum: Investing - Theory, News & General
Topic: "The long term...."
Replies: 10
Views: 1774

Re: "The long term...."

Equities in a truly ROBUST portfolio will sit for 15-20 years without being needed for spending.
by Ron Scott
Mon Oct 29, 2018 5:28 pm
Forum: Personal Investments
Topic: inherited IRA
Replies: 14
Views: 1619

Re: inherited IRA

curmudgeon is essentially correct, but what do you mean "they put me in 84.9% in stocks and 6.3 % in bonds"?

When you told them you are concerned about investing at this time they just did it anyway or talked you into it?
by Ron Scott
Mon Oct 29, 2018 4:58 pm
Forum: Investing - Theory, News & General
Topic: Is the growing national debt a reason to diversify with international?
Replies: 33
Views: 4043

Re: Is the growing national debt a reason to diversify with international?

Is the growing national debt a reason to diversify with international?

No. The debt characteristics don't help matters but you can stay the course with a 2-fund without FOMO on international.
by Ron Scott
Mon Oct 29, 2018 12:35 pm
Forum: Personal Investments
Topic: Just starting out at 39 yrs old.
Replies: 37
Views: 5921

Re: Just starting out at 39 yrs old.

If you keep saving you should be fine. Stay on these boards and read the wiki here. Get your husband involved too. You will learn, trust me. Also, here are 2 excellent books, and no, you don't need someone to tell you where to put your money. Financial advisors who invest for you make it sound more difficult than it is and often give bad advice because they get commissions on your investments. Steer clear. The investing part is actually very straightforward. https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/1118921283?keywords=bogleheads+guide&qid=1540834185&sr=8-1&ref=sr_1_1 https://www.amazon.com/Bogleheads-Guide-Retirement-Planning/dp/0470455578?keywords=bogleheads+guide&qid=1540834338&sr=8-3&re...
by Ron Scott
Mon Oct 29, 2018 11:36 am
Forum: Personal Finance (Not Investing)
Topic: Shopping strategy?
Replies: 9
Views: 993

Re: Shopping strategy?

shell921 wrote: Mon Oct 29, 2018 9:41 am I'm a woman and I HATE returning stuff. In fact if I buy something and it turns out I don't like it, I GIVE it away!

I have a few women friends who return stuff all the time. To me it seems an incredible waste of time and energy.
Ugh. :|
When my wife and daughter bring something home from a store, especially clothing, I take it as an indication that they are considering owning it.