Search found 343 matches

by RAchip
Sat Aug 17, 2019 2:38 pm
Forum: Investing - Theory, News & General
Topic: Why Zero (or Negative) Interest Rates Could Someday Make Sense
Replies: 87
Views: 5731

Re: Why Zero (or Negative) Interest Rates Could Someday Make Sense

There is a reason that there is 17 trillion of negative rate debt in the world and zero of it is in the USA. We are not stupid.
by RAchip
Fri Aug 16, 2019 9:23 am
Forum: Investing - Theory, News & General
Topic: Any retired person have stocks and cash I was thinking about a 70/30
Replies: 61
Views: 4225

Re: Any retired person have stocks and cash I was thinking about a 70/30

My feeling is that bonds are silly. 70/30 stocks/cash sounds good to me. I am holding a bit more cash than that but only because im looking for a business or real estate investment.
by RAchip
Thu Aug 15, 2019 4:56 am
Forum: Investing - Theory, News & General
Topic: 30 year treasury yield drops below 2% for the first time in history
Replies: 41
Views: 5314

Re: 30 year treasury yield drops below 2% for the first time in history

I cant imagine anyone buys 30 year treasuries yielding 1.99% to actually hold for 30 years. Obviously, interest rates will go up some time in the next 30 years. I presume people buying these are just betting rates will continue to fall in the short term so they can sell these for a profit.
by RAchip
Sun Aug 11, 2019 11:40 am
Forum: Investing - Theory, News & General
Topic: If you think oil prices will drop where would you invest?
Replies: 66
Views: 3180

Re: If you think oil prices will drop where would you invest?

“Nothing is "inevitable".” Thats what the horse and buggy companies said when those pesky automobile companies started showing up. If you think electric cars will dominate, then invest in car companies (they will all go electric and the good ones will do well). Also, batteries will be huge as will ...
by RAchip
Sun Aug 11, 2019 11:14 am
Forum: Investing - Theory, News & General
Topic: If you think oil prices will drop where would you invest?
Replies: 66
Views: 3180

Re: If you think oil prices will drop where would you invest?

“Nothing is "inevitable".” Thats what the horse and buggy companies said when those pesky automobile companies started showing up. If you think electric cars will dominate, then invest in car companies (they will all go electric and the good ones will do well). Also, batteries will be huge as will t...
by RAchip
Sun Aug 11, 2019 10:52 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 162
Views: 8362

Re: Why do dividends still exist?

The point of the basic responses to the OP was that every company in the DJIA and 80+% of companies in the S&P 500 pay dividends because the vast majority of investors like them, demand them and think they create value for them. Buybacks crept into the discussion. Buybacks were invented by lawyers a...
by RAchip
Sun Aug 11, 2019 8:41 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 162
Views: 8362

Re: Why do dividends still exist?

You are confusing “worth” (or academic valuation) with market price. In scenario 1 you are assuming market price does not change (it stays at $10 per share). In scenario 2 you are assuming MARKET PRICE INCREASES to $10.5 per share. In fact, the market price in scenario 1 may well increase dramatical...
by RAchip
Sun Aug 11, 2019 7:34 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 162
Views: 8362

Re: Why do dividends still exist?

Outside of tax consequences (which make dividends look even worse), if one has a different opinion of buybacks than he/she does dividends, then the person doesn't really understand one or the other (perhaps both). This isn't to say that either is good or bad. They just have the same impact. No more...
by RAchip
Sun Aug 11, 2019 5:58 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 162
Views: 8362

Re: Why do dividends still exist?

Outside of tax consequences (which make dividends look even worse), if one has a different opinion of buybacks than he/she does dividends, then the person doesn't really understand one or the other (perhaps both). This isn't to say that either is good or bad. They just have the same impact. No more...
by RAchip
Fri Aug 09, 2019 9:39 pm
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 162
Views: 8362

Re: Why do dividends still exist?

Good thought but I’m not sure that is true. The stock could be split limitlessly. And stock held by the company would essentially be taken off the market. All these things are fluid and just require shareholder approval. If the stock is being diluted at the same time they are buying shares back, th...
by RAchip
Thu Aug 08, 2019 6:14 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 247
Views: 17892

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

“When a dividend is issued the price is permanently lowered to the exact amount of the dividend.”

This has to be the most confused ridiculous and totally false statement ever relating to dividends.
by RAchip
Wed Aug 07, 2019 8:05 pm
Forum: Investing - Theory, News & General
Topic: Why VBTLX returned 7.85% over the year with rates rising?
Replies: 18
Views: 2307

Re: Why VBTLX returned 7.85% over the year with rates rising?

There is an inverse relationship between interest rates and bond prices. When interest rates fall, bond prices rise. So if you own bonds, you want interest rates to fall because it increases the market value of your bonds.
by RAchip
Wed Aug 07, 2019 7:55 pm
Forum: Investing - Theory, News & General
Topic: Is Inflation killing my Money Market Account?
Replies: 30
Views: 3436

Re: Is Inflation killing my Money Market Account?

The inflation number doesn't necessarily apply to everyone. The price of gas has gone down, the price of tv’s has gone down (and they are better now); amazon and walmart have driven down prices of lots of staples. Also, inflation doesn't just apply to new goods. It also applies to stuff you own. If ...
by RAchip
Tue Aug 06, 2019 10:18 am
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 247
Views: 17892

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

CyclingDuo makes a convincing argument as to why dividend investing for stable income and capital appreciation is effective. Yet people here continue to fight this. All I can say is that this is a successful strategy employed by people with a lot of money.
by RAchip
Mon Aug 05, 2019 9:35 pm
Forum: Investing - Theory, News & General
Topic: Will you buy Total Bond with a negative yield?
Replies: 109
Views: 11002

Re: Will you buy Total Bond with a negative yield?

Using negative rates to encourage banks to lend does not make sense to me. Businesses only want to borrow to build more factories if they need to do so to meet demand. Negative rates decrease consumer wealth and decrease demand. Instead of having trillions of dollars of negative yielding bonds, if t...
by RAchip
Mon Aug 05, 2019 8:34 pm
Forum: Investing - Theory, News & General
Topic: Will you buy Total Bond with a negative yield?
Replies: 109
Views: 11002

Re: Will you buy Total Bond with a negative yield?

Why in the world would they lend at all? Fractional reserve banking. Lending out your own hard earned cash isn't as profitable as banking, where you can lend cash you don't have if you play by the government's rules. Any bank not playing by the rules risks losing their special privileges as a bank....
by RAchip
Mon Aug 05, 2019 7:48 pm
Forum: Investing - Theory, News & General
Topic: Will you buy Total Bond with a negative yield?
Replies: 109
Views: 11002

Re: Will you buy Total Bond with a negative yield?

“Let's say that the bank charges 1.25% to hold your money and lends the money to risk-free customers as -0.25%. That still leaves them with a 1% spread to make a profit.” Why in the world would they lend at all? If people are paying them 1.25% to “hold” their money, why then lend at -0.25%? Under th...
by RAchip
Sun Aug 04, 2019 7:48 pm
Forum: Investing - Theory, News & General
Topic: Will you buy Total Bond with a negative yield?
Replies: 109
Views: 11002

Re: Will you buy Total Bond with a negative yield?

Can someone explain to me how an economy can have persistent negative yields? If lenders have to PAY people to borrow money how do lenders stay in business? Who “sells” something for a loss as a business model? Eventually there would be no lenders and no ability for people to borrow.
by RAchip
Sun Aug 04, 2019 7:30 pm
Forum: Investing - Theory, News & General
Topic: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"
Replies: 247
Views: 17892

Re: Is this right? "if you live off dividends, a crash in stocks prices doesn't matter"

Thanks for the answers guys. The problem is dividends tend to be cut when stock prices are going down. That's what I was thinking and told my friend. He said some companies will keep paying the same dividend. In a smart-alec response, one could use a variation on Mark Twain’s analysis: Only purchas...
by RAchip
Tue Jul 30, 2019 9:03 pm
Forum: Investing - Theory, News & General
Topic: Why not aim for a HIGH YIELDING portfolio?
Replies: 60
Views: 4863

Re: Why not aim for a HIGH YIELDING portfolio?

“The price of a stock is set by the market as the aggregate PV of future cash flows from that stock.“ The market price is not “set” by a dcf valuation. The market price is the price people are willing to buy/sell for at any given time. The "price people are willing to buy/sell for" equals what the ...
by RAchip
Tue Jul 30, 2019 1:58 pm
Forum: Investing - Theory, News & General
Topic: Why not aim for a HIGH YIELDING portfolio?
Replies: 60
Views: 4863

Re: Why not aim for a HIGH YIELDING portfolio?

“The price of a stock is set by the market as the aggregate PV of future cash flows from that stock.“ The market price is not “set” by a dcf valuation. The market price is the price people are willing to buy/sell for at any given time. It fluctuates from day to day and often from trade to trade. A d...
by RAchip
Tue Jul 30, 2019 1:58 pm
Forum: Investing - Theory, News & General
Topic: Why not aim for a HIGH YIELDING portfolio?
Replies: 60
Views: 4863

Re: Why not aim for a HIGH YIELDING portfolio?

“The price of a stock is set by the market as the aggregate PV of future cash flows from that stock.“ The market price is not “set” by a dcf valuation. The market price is the price people are willing to buy/sell for at any given time. It fluctuates from day to day and often from trade to trade. A d...
by RAchip
Mon Jul 29, 2019 9:08 pm
Forum: Investing - Theory, News & General
Topic: Why not aim for a HIGH YIELDING portfolio?
Replies: 60
Views: 4863

Re: Why not aim for a HIGH YIELDING portfolio?

You can build a very reasonable common stock portfolio that yields around 4% and maybe a little more (no REIT's, MLP's or preferreds). As with all common stock, there is always downside risk but there is also a likelihood of significant upside appreciation over the long term. And there is a strong l...
by RAchip
Mon Jul 29, 2019 9:00 am
Forum: Investing - Theory, News & General
Topic: VMMXX Yield
Replies: 2
Views: 749

VMMXX Yield

VMMXX (Vanguard Prime MM) yield has fallen from near 2.5% early this year to about 2.26% now. Does this reflect that a fed rate cut is priced in or should the yield be expected to drop further if the fed cuts rates this week?
by RAchip
Mon Jul 22, 2019 8:42 pm
Forum: Investing - Theory, News & General
Topic: From ex-dividend to distrubution where is my money?
Replies: 101
Views: 5545

Re: From ex-dividend to distrubution where is my money?

The “specialist” may “adjust” the price, but there may or may not be any trades at that price. Supply and demand quickly takes over and sets the real price.

What does the “specialist” do when a company does stock buy-backs instead of paying dividends? That is cash out the door also.
by RAchip
Mon Jul 01, 2019 4:43 pm
Forum: Personal Finance (Not Investing)
Topic: Would we regret buying a 2nd home?
Replies: 90
Views: 8355

Re: Would we regret buying a 2nd home?

I have 5 homes. It is an awesome lifestyle. You just need to find a property manager or caretaker to handle the maintenance. I hate the idea of staying where other people stayed. I like to vacation at my own houses, set them up the way I like etc. If I had less money, I would still at least have 2 h...
by RAchip
Wed Jun 19, 2019 9:43 pm
Forum: Investing - Theory, News & General
Topic: Why are 1 month t-bill rates low?
Replies: 10
Views: 1191

Re: Why are 1 month t-bill rates low?

I would not characterize buying a one month t-bill as “locking money up.” Its only 30 days and its highly liquid so it can be sold prior to maturity if necessary. The interest rate is what it is because he demand is high.
by RAchip
Mon Jun 17, 2019 2:55 pm
Forum: Investing - Theory, News & General
Topic: So much for financial predictions, eh?
Replies: 46
Views: 4781

Re: So much for financial predictions, eh?

Forecasts and predictions are only reliable if you know what is going to happen.

It is pretty shocking in my opinion for the market to expect drastically lower interest rates at a time when the stock market is near all time highs and unemployment is near historic lows.
by RAchip
Mon Jun 17, 2019 2:17 pm
Forum: Personal Investments
Topic: Help me Built a Dividend Growth Investment Portfolio
Replies: 33
Views: 4392

Re: Help me Built a Dividend Growth Investment Portfolio

First, let me say that I use a total market ETF approach in my pre-tax and Roth accounts. Secondly, I use a dividend approach for my taxable account, I am in the 12% tax bracket now and for the foreseeable future so my dividends are taxed favorably . I use the DJIA. 10 of the companies are dividend...
by RAchip
Sun Jun 16, 2019 10:25 pm
Forum: Personal Investments
Topic: Help me Built a Dividend Growth Investment Portfolio
Replies: 33
Views: 4392

Re: Help me Built a Dividend Growth Investment Portfolio

A “dividend strategy” focusing on buying and holding large cap blue chip companies committed to a healthy, growing dividend is a good approach. I follow it with a large portion of my portfolio. There are plenty of companies that currently have dividend yields that are well above average. T, MO, UPS,...
by RAchip
Wed Jun 12, 2019 8:47 pm
Forum: Personal Investments
Topic: High net worth individual seeks portfolio advice
Replies: 81
Views: 9552

Re: High net worth individual seeks portfolio advice

“The situation the OP describes is so out-of-the-ordinary that it strains credulity. Income of $2M/year including $225K in interest income. Spending (presumably not including taxes) of $80K/year which might increase to $90K/year in the future. Business presumably yielding $1.8M/year; this business m...
by RAchip
Wed Jun 12, 2019 5:20 pm
Forum: Personal Investments
Topic: High net worth individual seeks portfolio advice
Replies: 81
Views: 9552

Re: High net worth individual seeks portfolio advice

I assume most of your $2mm income is coming from your business? If so, why is a business that produces that much income only worth $5-9mm? I think keeping dozens of different bank accounts to hold cash to get FDIC insurance isnt worth the trouble. Are you serious that you have “9 million in cash spr...
by RAchip
Sun Jun 09, 2019 1:55 pm
Forum: Investing - Theory, News & General
Topic: indexers buying negative interest bonds
Replies: 26
Views: 2601

Re: indexers buying negative interest bonds

“Put it in the bank: Well most of the funds won't be insured and I would guess most banks also charge to hold that much money.” So in europe are people just keeping their money in their mattress? How would banks even stay in business? Negative deposit account rates would certainly drive away deposit...
by RAchip
Thu Jun 06, 2019 9:40 pm
Forum: Investing - Theory, News & General
Topic: Why does the stock market grow faster than the economy?
Replies: 28
Views: 4283

Re: Why does the stock market grow faster than the economy?

Because the demand for stocks exceeds the supply of stocks.
by RAchip
Thu Jun 06, 2019 12:37 pm
Forum: Investing - Theory, News & General
Topic: What is the rationale for cash in your portfolio?
Replies: 36
Views: 2776

Re: What is the rationale for cash in your portfolio?

Cash in a MMF pays about 2.4% interest at this point. What would bonds pay you? Not much more and maybe less. All my IBonds pay at least 3% + inflation adjustment. Some pay more. Broken Man 1999 vanguard Prime MM pays 2.4% now. Most Vanguard short term bond funds pay less than that. Vanguard total ...
by RAchip
Thu Jun 06, 2019 11:09 am
Forum: Investing - Theory, News & General
Topic: What is the rationale for cash in your portfolio?
Replies: 36
Views: 2776

Re: What is the rationale for cash in your portfolio?

Cash in a MMF pays about 2.4% interest at this point. What would bonds pay you? Not much more and maybe less.
by RAchip
Wed Jun 05, 2019 8:58 pm
Forum: Investing - Theory, News & General
Topic: Difference between Bank Savings Account vs. Money Market
Replies: 13
Views: 1571

Re: Difference between Bank Savings Account vs. Money Market

“bank accounts are FDIC-insured, and money market mutual funds are not“ True, and you need FDIC insurance if you are putting money in an online bank. The bank could fail and you could lose everything. A MMF cant really “fail” under the new regulations. The worst case is you have a delay in getting y...
by RAchip
Wed Jun 05, 2019 11:59 am
Forum: Investing - Theory, News & General
Topic: Difference between Bank Savings Account vs. Money Market
Replies: 13
Views: 1571

Re: Difference between Bank Savings Account vs. Money Market

“They are two completely different kinds of investment.” I disagree. As a PRACTICAL matter, for someone who just wants to park $25k for a while and earn a little bit of interest there is little if any discernible difference. I have cash in the VG prime mm fund and a high yield savings account with A...
by RAchip
Wed Jun 05, 2019 6:41 am
Forum: Investing - Theory, News & General
Topic: Do Buy & Hold Index Investors "need" people to actively invest?
Replies: 26
Views: 2255

Re: Do Buy & Hold Index Investors "need" people to actively invest?

Umm, so what does the Vanguard S&P 500 index fund do when it gets new money? It gets lots of new money every day. Does it not buy the S&P 500 losers so it can outperform the S&P 500? It should buy the losers and the winners proportionally to the market. It is not the goal of an S&P 500 index fund t...
by RAchip
Tue Jun 04, 2019 5:32 pm
Forum: Investing - Theory, News & General
Topic: Do Buy & Hold Index Investors "need" people to actively invest?
Replies: 26
Views: 2255

Re: Do Buy & Hold Index Investors "need" people to actively invest?

One “problem” that may be created by too much index investing is that index funds must by shares of all companies in the index regardless of the performance of those companies. So if a company in the index is doing poorly there may be an “artificial” demand for that stock that props up its price. N...
by RAchip
Tue Jun 04, 2019 12:20 pm
Forum: Investing - Theory, News & General
Topic: Do Buy & Hold Index Investors "need" people to actively invest?
Replies: 26
Views: 2255

Re: Do Buy & Hold Index Investors "need" people to actively invest?

One “problem” that may be created by too much index investing is that index funds must by shares of all companies in the index regardless of the performance of those companies. So if a company in the index is doing poorly there may be an “artificial” demand for that stock that props up its price.
by RAchip
Mon Jun 03, 2019 7:50 pm
Forum: Investing - Theory, News & General
Topic: Do Buy & Hold Index Investors "need" people to actively invest?
Replies: 26
Views: 2255

Re: Do Buy & Hold Index Investors "need" people to actively invest?

"index investors need active investors because active investors set the prices"

Don't the index funds take their cash inflows and buy the individual stocks in their index? So isn't the index fund just one of the buyers of individual stocks that sets prices?
by RAchip
Fri May 31, 2019 6:29 pm
Forum: Personal Finance (Not Investing)
Topic: For those who earn $500k+ per year. How'd you do that?
Replies: 369
Views: 39174

Re: For those who earn $500k+ per year. How'd you do that?

I spent over $1mm on my “backyard” at my primary residence. Re-landscaped whole yard including adding large lanai (with outdoor kitchen etc), patios, lots of stone work, pond, many many trees, etc etc.
by RAchip
Fri May 31, 2019 5:15 pm
Forum: Personal Finance (Not Investing)
Topic: For those who earn $500k+ per year. How'd you do that?
Replies: 369
Views: 39174

Re: For those who earn $500k+ per year. How'd you do that?

I made a lot of money as a lawyer. Now I make around $700k per year in dividends and interest from investments. A lot of money is in ultra conservative investments and extra homes so I could re-jigger things to produce a lot more income if I wanted to.
by RAchip
Mon May 27, 2019 8:36 am
Forum: Personal Finance (Not Investing)
Topic: 4M 70K expenses would you stop?
Replies: 105
Views: 11072

Re: 4M 70K expenses would you stop?

“$60k is around the average HHI for households in the U.S.”

And the average household has zero savings and a lot of debt. If you can live on $45k including paying a 15 year mortgage, full time daycare and tuition you are literally one in a million.
by RAchip
Sun May 26, 2019 9:31 pm
Forum: Personal Finance (Not Investing)
Topic: House not selling
Replies: 138
Views: 11600

Re: House not selling

Just be patient. It will sell.
by RAchip
Sun May 26, 2019 8:54 pm
Forum: Personal Finance (Not Investing)
Topic: 4M 70K expenses would you stop?
Replies: 105
Views: 11072

Re: 4M 70K expenses would you stop?

I made the max allowable 401k contribution between 1990 and 2015 (all invested in large and medium cap stock funds) and my 401k is only worth about $1.6mm now. Fortunately, I never counted on getting rich from my 401k. Most of my net worth came from earnings far far in excess of 401k limits. The num...
by RAchip
Sun May 26, 2019 7:18 pm
Forum: Personal Finance (Not Investing)
Topic: 4M 70K expenses would you stop?
Replies: 105
Views: 11072

Re: 4M 70K expenses would you stop?

“DW and I have accumulated $3.5 million living on a budget of around $60k per year. I just retired at age 54, she'll probably stop working later this year at age 52.“ This is a truly remarkable accomplishment. Even if you AVERAGED saving $50,000 per year for 30 years (a monumental accomplishment whi...
by RAchip
Sun May 26, 2019 6:04 am
Forum: Personal Finance (Not Investing)
Topic: 4M 70K expenses would you stop?
Replies: 105
Views: 11072

Re: 4M 70K expenses would you stop?

“The Treasuries can be sold at any time, no need to hold to maturity.“ But then they would have about a $700k gain and a large tax bill far in excess of $70k. Accumulating $3.3mm (thats what they had before a paper gain on treasuries) while living a $70k lifestyle is unusual. That means they had inc...
by RAchip
Sat May 25, 2019 6:31 am
Forum: Personal Finance (Not Investing)
Topic: 4M 70K expenses would you stop?
Replies: 105
Views: 11072

Re: 4M 70K expenses would you stop?

I would like to know a little more. How is the $4mm invested? And I would like to know how 2 people living on $70k accumulated $4mm by their late 50’s. That’s easy. They’ve been reading Bogleheads forum for past 10 years. They practice LBYM, don’t have an account with Edward Jones, they took their ...