Search found 201 matches

by Bastiat
Sun Jan 24, 2021 10:29 am
Forum: Investing - Theory, News & General
Topic: How to understand all that's going on with GME [GameStop]
Replies: 170
Views: 23179

Re: How to understand all that's going on with GME

Where can I read more about such topics from a theory standpoint. I get the gist but some of the terms and concepts fly over my head. Is there a book, article or forum you recommend by any chance. https://uat.tastytrade.com/tt/learn/an-intro-to-the-greeks Tasty Trade has a lot of good info, videos, etc. GME has (had?) more than 70 million shares sold short (more than 100% of float, or more shares than are actually available to trade). Because shorts are selling shares they do not own, they have to borrow shares from someone else, and have to pay interest on these borrowed shares. Interest on GME shares has been as high as 45% recently, but is usually around 20%. When a short goes to close his position, he does this by buying back the share...
by Bastiat
Sat Jan 23, 2021 2:08 pm
Forum: Investing - Theory, News & General
Topic: How to understand all that's going on with GME [GameStop]
Replies: 170
Views: 23179

Re: How to understand all that's going on with GME

With that said, there does seem to be a growing camp that thinks this play is only has to do with the overextended shorts, pumping and holding to force the shorts to cover in some sort of coordinated effect. I don’t agree with this mentality nor do I think you can just identify any highly shorted stock and attempt to pull off a squeeze through a coordinated effort. Where can I read more about such topics from a theory standpoint. I get the gist but some of the terms and concepts fly over my head. Is there a book, article or forum you recommend by any chance. https://uat.tastytrade.com/tt/learn/an-intro-to-the-greeks Tasty Trade has a lot of good info, videos, etc. GME has (had?) more than 70 million shares sold short (more than 100% of flo...
by Bastiat
Sat Dec 19, 2020 8:53 am
Forum: Investing - Theory, News & General
Topic: Why do we even need a fund to track the market?
Replies: 111
Views: 8529

Re: Why do we even need a fund to track the market?

Until an index fund gets to a fairly good size in terms of asset level, achieving a sufficient economy of scale, full replication of the index is not cost effective. Transaction costs will lead to tracking error. In such situations, an optimizer is used to construct samples of the index to minimize tracking error. You would need to implement such an optimizer, and you would need data to implement and evaluate the optimizer constraints for your portfolio. The likelihood that an individual could implement this properly is fairly low, and the likelihood that they could do it in as cost-effective a manner as the major index fund providers today is virtually, if not actually nil. Other problems with this not withstanding, transaction costs at a...
by Bastiat
Sun Dec 13, 2020 7:56 am
Forum: Personal Finance (Not Investing)
Topic: Refinance Mega Thread
Replies: 12862
Views: 1277082

Re: Refinance Mega Thread

If anyone could provide some advice on our situation I'd appreciate it. I went through the steps on LenderFi and tried to reach out to "my" agent three times but all I ever get are spam messages and zero actual response. I have a rental property in SC with a loan balance of $175k @ 4% and about $600k in equity. I have a house in VA with a loan balance of $235k @ 4.65% and $275k in equity. We lived in the house in VA until the military moved us to FL and we plan on moving back when these orders are up. Currently one of our parents, who is also on the deed, is living in that house. I don't think we'd qualify for owner-occupied rates but either way I think we could achieve significant savings if we refinanced. Ideally we'd use some o...
by Bastiat
Mon Oct 12, 2020 9:59 am
Forum: Personal Finance (Not Investing)
Topic: Low taxable income year plus 529s
Replies: 6
Views: 730

Re: Low taxable income year plus 529s

My plan is to realize all of my capital gains and turn right back around and re-buy the securities to effectively reset my cost basis. There's no reason to TLH until next year right? Am I missing anything? Is there anything else I should take advantage of in this unique situation? Yes, if realizing all your long term gains would keep you in the 0% LTCG bracket, Tax Loss Harvesting any long term losses is probably not useful - unless you would prefer to do Roth conversions at 12% and you can TLH enough to make a significant difference in that amount. As for 529s, the "ensure your own retirement before worrying about your kids' college costs" argument seems appealing. See Investment Order for more on that and other general suggesti...
by Bastiat
Mon Oct 05, 2020 5:32 pm
Forum: Personal Finance (Not Investing)
Topic: Low taxable income year plus 529s
Replies: 6
Views: 730

Re: Low taxable income year plus 529s

If you're planning to tax gain harvest (sell investments at a gain and the immediately rebuy) to take advantage of the 0% long term capital gains bracket, then no, there's no reason to also tax loss harvest in the same year as the losses would just offset the gains. Better to wait until a year when you have taxable gains you want to offset or no gains and you can offset $3000 of ordinary income. If you currently contribute to traditional 401(k)/TSP or IRA accounts you might consider contributing to Roth instead. And if you currently have any existing traditional 401(k)/TSP or IRA balances you might consider doing some Roth conversions (I'm not sure if the TSP allows this, and some but not all 401(k)s do). You might understand this already,...
by Bastiat
Sun Oct 04, 2020 2:03 pm
Forum: Personal Finance (Not Investing)
Topic: Low taxable income year plus 529s
Replies: 6
Views: 730

Low taxable income year plus 529s

Much of my income this year is exempt from federal income tax because I was deployed to a combat zone. Taxable income from my job will be about $52,000. Gross income from rental properties will be $53,625, much of which will be offset. So I'm thinking we'll be under the 0% MFJ $80k threshold for capital gains, of which I've got a little over $50k in a taxable account split between mutual funds and individual stocks. Taxable income in future years will be much greater than this year. My plan is to realize all of my capital gains and turn right back around and re-buy the securities to effectively reset my cost basis. There's no reason to TLH until next year right? Am I missing anything? Is there anything else I should take advantage of in thi...
by Bastiat
Sat Sep 05, 2020 8:47 am
Forum: Investing - Theory, News & General
Topic: Did bonds really beat stocks over the last 20 years?
Replies: 34
Views: 4308

Re: Did bonds really beat stocks over the last 20 years?

It’s worth noting the the federal funds rate was around 6% in 2000 and has been pegged at 0 - with a brief exception 2018-2019 - since 2009 and will be pegged at zero for the foreseeable future. Also, the Fed has been buying treasuries and currently holds almost $4,500,000,000,000 ($4.5T) worth.

Both of these factors tend to raise bond prices and are unique to the past 20 years. Past performance is not indicative of future results.
by Bastiat
Fri Sep 04, 2020 7:53 am
Forum: Investing - Theory, News & General
Topic: El-Erian on CNBC homepage when market drops?
Replies: 41
Views: 4307

Re: El-Erian on CNBC homepage when market drops?

I haven't paid attention to him in a while but as I recall he is hardly a "perennial bear" and usually offers some decent insight. He never struck me as someone with an axe to grind, but rather someone who offers his honest opinion. Like anyone else, he's fairly likely to be wrong.
by Bastiat
Sat Aug 29, 2020 11:24 pm
Forum: Personal Investments
Topic: Questions with individual stock picking
Replies: 33
Views: 2616

Re: Questions with individual stock picking

And how well has that worked with tech companies over the last 10+ years? Most tech companies? They’ve puttered along or failed (some spectacularly). A very small number of them have done extremely well, so much so that most of the current gains of the S&P 500 are attributable to their meteoric rise. If you only remember the winners instead of how many horses started the race, you will get a very silly idea of what a ‘typical’ company’s performance should be. No, I mean has "balance sheet reading", a.k.a. fundamental analysis, been helpful for investing in tech stocks? It was for Apple. I have owned it since 2010 and it spent a fair amount of time being undervalued by the market while making gobs of money. Probably why Berksh...
by Bastiat
Thu Aug 20, 2020 1:23 pm
Forum: Personal Consumer Issues
Topic: new car purchase: any reason NOT to do 0% financing
Replies: 90
Views: 8833

Re: new car purchase: any reason NOT to do 0% financing

Is there an option not to take the financing and get thousands off the out the door price? Why would one get “thousands off” the OTD price by not financing? The dealer doesn’t care at all that you’re paying cash. Every deal they do is cash, regardless if you bring it or not. In fact, they would rather you finance. Only way cash makes any difference is if the manufacturer offers a cash discount, but it’s not that common and I’ve never seen “thousands”. Because financing costs something, please read the full thread for more details. I have read the full thread. You haven’t answered my question or addressed my points, probably because you are wrong. Financing may “cost” something, but that doesn’t mean it affects the OTD price. Being abrasive...
by Bastiat
Wed Aug 19, 2020 10:18 pm
Forum: Personal Consumer Issues
Topic: new car purchase: any reason NOT to do 0% financing
Replies: 90
Views: 8833

Re: new car purchase: any reason NOT to do 0% financing

Is there an option not to take the financing and get thousands off the out the door price? Why would one get “thousands off” the OTD price by not financing? The dealer doesn’t care at all that you’re paying cash. Every deal they do is cash, regardless if you bring it or not. In fact, they would rather you finance. Only way cash makes any difference is if the manufacturer offers a cash discount, but it’s not that common and I’ve never seen “thousands”. Because financing costs something, please read the full thread for more details. I have read the full thread. You haven’t answered my question or addressed my points, probably because you are wrong. Financing may “cost” something, but that doesn’t mean it affects the OTD price. I think it dep...
by Bastiat
Wed Aug 19, 2020 9:37 pm
Forum: Personal Consumer Issues
Topic: new car purchase: any reason NOT to do 0% financing
Replies: 90
Views: 8833

Re: new car purchase: any reason NOT to do 0% financing

Is there an option not to take the financing and get thousands off the out the door price? Why would one get “thousands off” the OTD price by not financing? The dealer doesn’t care at all that you’re paying cash. Every deal they do is cash, regardless if you bring it or not. In fact, they would rather you finance. Only way cash makes any difference is if the manufacturer offers a cash discount, but it’s not that common and I’ve never seen “thousands”. Because financing costs something, please read the full thread for more details. I have read the full thread. You haven’t answered my question or addressed my points, probably because you are wrong. Financing may “cost” something, but that doesn’t mean it affects the OTD price.
by Bastiat
Sat Aug 15, 2020 10:28 pm
Forum: Personal Consumer Issues
Topic: new car purchase: any reason NOT to do 0% financing
Replies: 90
Views: 8833

Re: new car purchase: any reason NOT to do 0% financing

"I'm no expert on new car shopping but isn't 0% 0%, no matter who is providing it? Yes, I've had a number of dealers say that "Oh that price on the Internet, that's the finance price. You have cash? It's actually $2500 more." That said, my hope/strategy is to get them to give me price, in writing (via email) for cash and THEN tell them I want the 0% financing." No. It doesn't exist. Refer to my above post. Money isn't free and finance arms of manufacturers are not in the business of operating at a loss. In fact they are a major profit engine for them. What they are doing is a simple negotiating tactic with you to hold margin. You're response to that should be: I'm not interested in what the 'internet price' or 'finance ...
by Bastiat
Sat Aug 15, 2020 10:14 pm
Forum: Personal Consumer Issues
Topic: new car purchase: any reason NOT to do 0% financing
Replies: 90
Views: 8833

Re: new car purchase: any reason NOT to do 0% financing

wootwoot wrote: Sat Aug 15, 2020 12:42 pm Is there an option not to take the financing and get thousands off the out the door price?
Why would one get “thousands off” the OTD price by not financing?

The dealer doesn’t care at all that you’re paying cash. Every deal they do is cash, regardless if you bring it or not.

In fact, they would rather you finance.

Only way cash makes any difference is if the manufacturer offers a cash discount, but it’s not that common and I’ve never seen “thousands”.
by Bastiat
Tue Aug 04, 2020 9:55 am
Forum: Personal Finance (Not Investing)
Topic: Refinancing advice please
Replies: 7
Views: 563

Re: refinance suggestion

I, for one, am confused by what you’re trying to do.

A few things:
1. Your rate is already very low.
2. Your balance is relatively low.
3. Refinancing costs money. On a balance of $83k I doubt any savings in interest you may (or may not - refi’s pay slightly higher interest) get will be offset by closing costs and/or worth your time.

You’re talking on the one hand about making larger payments and paying the loan off early and on the other about extending it “2-3 years” from this arbitrary 2023 deadline you‘ve set - which is already inside of your current mortgage life.

It sounds a lot simpler to me to just continue paying your current mortgage, paying it off any time between now and when it matures in 2027.
by Bastiat
Thu Jul 30, 2020 11:58 am
Forum: Investing - Theory, News & General
Topic: I'm not getting why all the love for gold. here's why.
Replies: 87
Views: 8895

Re: I'm not getting why all the love for gold. here's why.

Actin wrote: Wed Jul 29, 2020 9:07 pm People buying gold are romanticizing a doomsday scenario. Bottled water, canned food, and ammo, is way more valuable in the hypothetical post apocalyptic collapse or hyperinflation
This is a syllogistic fallacy.

Greece since 2010 is a good example of a non-doomsday scenario in which gold was particularly valuable in spite of severe government regulation.
by Bastiat
Sun Jan 12, 2020 11:23 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Rising Rates Increase Worries
Replies: 114
Views: 23130

Re: Larry Swedroe: Rising Rates Increase Worries

http://www.etf.com/sections/index-investor-corner/swedroe-rising-rates-increase-worries?nopaging=1 In this article Larry discusses the widely held expectation that the Fed will increase rates during the coming year. He distinguished between knowledge and information. Information held by everyone else is of no value. Bond market is extremely efficient. Larry makes the point that some investors have increased their equity allocations in the face of low interest rates. It’s worked out well for them. But judging a strategy on outcome is a mistake; an alternative history could have easily played out. One should not let interest rates dictate one’s equity allocation. At the end of the article Larry discusses how four alternative funds might fit ...
by Bastiat
Wed Jan 01, 2020 2:10 pm
Forum: Investing - Theory, News & General
Topic: Can we time the market on housing price?
Replies: 35
Views: 3282

Re: Can we time the market on housing price?

Do you know something the rest of the market participants don't? If the answer is no, I don't see how you could time the market.

I think what you describe is more akin to finding value in the RE market, which is easier than in the stock market. The reasons for this are it's by definition local and far less liquid.

In other words, you can find better value in the real estate market, but you wont have any more luck timing the market.
by Bastiat
Mon Dec 09, 2019 9:13 pm
Forum: Investing - Theory, News & General
Topic: What return is Vanguard Prime Money Market Fund returning?
Replies: 21
Views: 2248

Re: What return is Vanguard Prime Money Market Fund returning?

Jesteroftheswamp wrote: Mon Dec 09, 2019 10:45 am My Cap One MMA has dipped down the 1.50%, can Vanguard do better?
https://lmgtfy.com/?q=Vanguard+Prime+MM+yield
by Bastiat
Mon Dec 09, 2019 9:11 pm
Forum: Investing - Theory, News & General
Topic: Dave Ramsey's Millionaire Study
Replies: 102
Views: 25606

Re: Dave Ramsey's Millionaire Study

Here's my other wish: That a lot of Boglehead millionaires will participate and indicate that majority of their investments are in Index funds and that they don't use a financial adviser. Maybe that will influence Dave on his condescending thoughts about Index funds......I can only hope! 90% of our country has very little business managing their own investments, I'd be fine with his investment (read: American Funds) recs for the masses if they didn't have loads. Dave's blanket approach is good for the overwhelming majority of the populace, not for me though especially on credit cards. Dave also uses index funds in his taxable accounts, namely S&P index. I will however be amused if one of the two comma BH's calls in and tells Dave they ...
by Bastiat
Sun Dec 08, 2019 6:28 pm
Forum: Investing - Theory, News & General
Topic: December 6, 2019--Vanguard Releases 2020 Economic and Market Outlook Report
Replies: 84
Views: 7186

Re: December 6, 2019--Vanguard Releases 2020 Economic and Market Outlook Report

So in the report, they make multiple references to "new economy" vs "old economy". What's the distinction? Page 24: "The old economy is based on state- owned enterprises; low-end and heavy manufacturing industries such as textile, coal, steel, and concrete production; and real estate. The new, consumer-driven economy is led by private enterprises and based on domestic consumption, high-skill manufacturing, and service industries." I'm lost here. What are "state-owned" enterprises in the U.S. that have been driving the economy? Fannie Mae and Freddie Mac had an enormous role in the housing bust in 2007, which was the proximal cause of the financial crisis. Other GSEs (Government Sponsored Enterprises)...
by Bastiat
Sat Nov 30, 2019 10:55 pm
Forum: Personal Investments
Topic: Creative tips on best deal health insurance?
Replies: 8
Views: 905

Re: Creative tips on best deal health insurance?

The only creative tip I have is for "free" health insurance:

Join the military.
by Bastiat
Fri Aug 30, 2019 11:28 pm
Forum: Personal Finance (Not Investing)
Topic: Pay off mortgage with sale of taxable account assets?
Replies: 90
Views: 7758

Re: Pay off mortgage with sale of taxable account assets?

willthrill81 wrote: Fri Aug 30, 2019 2:18 pm
Bastiat wrote: Fri Aug 30, 2019 2:01 pm I'm not a fan of making emotional decisions with sub-optimal outcomes.
It depends entirely on what you're trying to optimize.

Some are trying to maximize their net wealth. Others are trying to minimize negative emotions. Etc. As such, what is 'optimal' for one may not be for another.
Does anyone (besides Biggie) disagree that more money is more optimal than less money?

I want to minimize negative emotions so i stuff my money in a mattress. My allocation is "optimal". Yay.
by Bastiat
Fri Aug 30, 2019 2:01 pm
Forum: Personal Finance (Not Investing)
Topic: Pay off mortgage with sale of taxable account assets?
Replies: 90
Views: 7758

Re: Pay off mortgage with sale of taxable account assets?

I'm not a fan of making emotional decisions with sub-optimal outcomes. Obviously anything can happen, but in general TSM should beat 3.65% (minus your marginal tax rate benefit) over 26 years.

Not only that but it's costing you Liquidity/options and LTCG.

Just cashflow it after you've maxed retirement accounts.
by Bastiat
Mon Jul 08, 2019 12:03 am
Forum: Investing - Theory, News & General
Topic: That's enough for me in 2019
Replies: 906
Views: 139379

Re: That's enough for me in 2019

revhappy wrote: Fri May 31, 2019 6:48 am OP must be really smiling right now :)
How many people believe markets will see a new high this year? Just one month back most people were happy predicting SPX at 3000. Now, we have no China deal and we have a trade war with Mexico.

OP, what is your target for SPX for this year? I am predicting SPX would be 2500 or lower. I am selling cash secured SPY 260 PUTs for Dec 2019 though,
Should have asked how many people believe markets will see a new high in less than three weeks. >D

This post was literally one day before the market reversed course.

A month from now we could be back to doom and gloom. Point is, no one knows.
by Bastiat
Sun Jul 07, 2019 2:41 pm
Forum: Personal Investments
Topic: G Fund Question in Retirement
Replies: 32
Views: 3432

Re: G Fund Question in Retirement

Your ultimate plan on having several years of net expenses (total expenses minus your pension and Social Security benefits) in cash — the G fund in this case — at retirement makes perfect sense. Thank you. I seem to get a lot of push back on this point. It allows you to be more aggressive with the rest of your assets to increase long-term growth. That is exactly my game plan I agree with an earlier poster that 60/40 is conservative, assuming that you are more than 10 years from retirement. Have you considered using a Lifecycle fund that is geared toward your expected retirement date? I don't like my low equities, but I think this market is too long in the tooth. I would be 70/30 otherwise, so I am not missing too much. I am within my 10 ye...
by Bastiat
Sat Jun 01, 2019 4:22 pm
Forum: Personal Investments
Topic: Portfolio advice for a military member
Replies: 15
Views: 1326

Re: Portfolio advice for a military member

I don't think selling your individual stocks is a must. Those are pretty good companies; the only one I'd probably sell is Tesla. For the others be conscious of the likely tax liability associated with selling. Are you a warrant or line officer? You're likely going to be in the 24% federal tax bracket soon and may want to think about switching to Traditional TSP. With the military retirement your income will be higher than most in your withdrawal years. I'd consider putting all of my bond allocation in the G fund as there's not a better deal out there. Given the G fund and a guaranteed military pension I take more risk in my portfolio but that's over to you. I wouldn't go any more conservative than 15% bonds for a while. If you can't max ou...
by Bastiat
Sat Jun 01, 2019 12:15 am
Forum: Personal Finance (Not Investing)
Topic: For those who earn $500k+ per year. How'd you do that?
Replies: 369
Views: 60199

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

No one has mentioned airline pilot.

A Captain on a wide-body long haul route can approach the $500k mark. $200-400k is more common. Schedule and perks aren't bad.
by Bastiat
Fri May 31, 2019 9:09 pm
Forum: Investing - Theory, News & General
Topic: AA to Bonds
Replies: 20
Views: 1717

Re: AA to Bonds

Because not everyone approaches it the way you do. Some people take a holistic view of their portfolio and don't break it down into an "I need $47,352.33 repeating per year for expenses for X years" approach.

Some people, for instance, might say: "I have X number of dollars right now. I'd like to preserve roughly 40% of that in a market collapse so my bond allocation will be Y%." Yearly expenses may not even be relevant to them. Absolute figures may not be relevant to them.

You seem like a very "ones and zeros" type of person but not everyone is like that. There is more than one right way to do some things and in financial planning one size absolutely does not fit all.
by Bastiat
Thu May 30, 2019 4:32 pm
Forum: Investing - Theory, News & General
Topic: Modeling Worst Case Scenarios & Does AA Matter When Consistently Contributing?
Replies: 16
Views: 1737

Re: Modeling Worst Case Scenarios & Does AA Matter When Consistently Contributing?

k3vb0t wrote: Thu May 30, 2019 3:31 pm The change in AA had very little impact long-term. Less than 1% on CAGR over 10 years. This has me considering going more conservative than my current 85/15 AA.
This is the only conclusion I think is off base.

Small changes in CAGR matter significantly over time. And you were looking at the worst periods in which obviously the more aggressive allocation will tend to do worse. If you looked at the best periods you'd probably see significant differences.

A 1.2% difference in CAGR over 10 years may seem small, but as we see with the $1M 2000 scenario that translates to a difference of more than 200,000 real dollars, which very few people would consider of little consequence.
by Bastiat
Sun May 05, 2019 7:05 pm
Forum: Investing - Theory, News & General
Topic: Berkshire buying stake in Amazon - my opinion
Replies: 55
Views: 10011

Re: Berkshire buying stake in Amazon - my opinion

Both Buffet and Munger in the past few days in interviews have stated that Berkshire is apt to outperform the 500 by a "bit." The elephant in the room is Buffet's age and health. I'm sure Berkshire can slightly beat the S&P, assuming Buffet stays in control. But even if he has very competent people to drive things when he's gone, how is the market going to react to him leaving the company for health reasons? My guess is a number of people liquidate their shares, since Buffet is more than just the face of Berkshire, he's the soul. Perhaps this sounds morbid, but I would expect a 20% drop should his health quickly deteriorate. I have a hard time seeing the price dropping 20% when Warren kicks the bucket. If it does that will be...
by Bastiat
Sun Apr 21, 2019 12:27 am
Forum: Investing - Theory, News & General
Topic: How and when did you do it - to get to 1 Million
Replies: 129
Views: 31434

Re: How and when did you do it - to get to 1 Million

If you are talking about net worth I did it in my mid-late 20's by investing in real estate. I got lucky with the timing and also worked really hard to get a good deal on my first property, and have been thus far successful (but not as successful) with my second. Both rentals are cashflow positive, and between the two I add >$1,000/mo to my net worth just in principal repayment, which the renters pay for.

If you're talking about liquid assets I'm not there yet, but max out retirement accounts and invest in taxable every year. My asset allocation is about 95/5. I started at age 20 in September 2007 and am more than halfway there.
by Bastiat
Sat Apr 20, 2019 2:37 pm
Forum: Investing - Theory, News & General
Topic: Thoughts on this Forbes article? "Why Most Index Funds And ETFs Are Not Good Investments"
Replies: 76
Views: 12697

Re: Thoughts on this Forbes article? "Why Most Index Funds And ETFs Are Not Good Investments"

Very large investors (think Warren Buffett) can achieve higher than average returns, not by actively picking stocks but by actively picking COMPANIES to buy and manage. Or they can achieve lower than average returns, if their management skills are less than the incumbents of the firms they acquire. In either case, that's a whole different ballgame from what's open to most of us. This is incorrect. Investors (think Warren Buffett, Peter Lynch, other Graham disciples, etc.) can beat me the market by actively picking stocks. The average fund manager, let alone investor, does not beat the market, but that doesn't mean it's not possible. Smaller investors have the advantage here; being a "very large investor" is a disadvantage . The l...
by Bastiat
Sun Mar 31, 2019 10:36 pm
Forum: Investing - Theory, News & General
Topic: I don't understand stock buybacks
Replies: 169
Views: 11427

Re: I don't understand stock buybacks

Yes, like I said, cash (an asset) goes down. Shareholder Equity (liability side) also goes down. I said that. Dividends have the same effect on the balance sheet. The whole point of a share buyback is to return value to shareholders . You can't return value while also retaining value. We're having this discussion in the context of dividends, which also return value. I thought all of this was self evident. You are making it seem as though dividends return more value to shareholders whereas buybacks merely reduce the worth of the company. This is not the case; dividends return less when accounting for taxes. Ignoring tax effects: A company that spends $1B on stock buybacks is worth $1B less immediately after the buyback. The shareholders see...
by Bastiat
Sun Mar 31, 2019 10:24 pm
Forum: Investing - Theory, News & General
Topic: I don't understand stock buybacks
Replies: 169
Views: 11427

Re: I don't understand stock buybacks

The reason stock buybacks don’t affect share price is because the company spent its cash to buy back those shares. There are fewer shares now but the company is also worth less. No, therev are fewer shares but the company is worth the same. If you got a pizza into 8 slices vs 6, do you get more pizza? The benefit is future earnings are higher on a per share basis and thus each share would be worth more. A company that spent $1B on stock buybacks is worth the same after the buyback? It’s literally worth $1B less. Are you serious? Why on earth do almost all major companies do it then? Because they like throwing money out the window? The company is not worth less according to the balance sheet. Cash goes down but shareholder equity also goes ...
by Bastiat
Sun Mar 31, 2019 10:00 pm
Forum: Investing - Theory, News & General
Topic: I don't understand stock buybacks
Replies: 169
Views: 11427

Re: I don't understand stock buybacks

“technically speaking, buy-backs don't affect the share price” Haha, then what is the purpose of buybacks? If a company trades at 17x eps and you reduce the number of shares then the eps that you multiply by 17 goes up meaning the share price should go up. If buybacks dont affect stock price then how do they benefit stockholders? The reason stock buybacks don’t affect share price is because the company spent its cash to buy back those shares. There are fewer shares now but the company is also worth less. No, therev are fewer shares but the company is worth the same. If you got a pizza into 8 slices vs 6, do you get more pizza? The benefit is future earnings are higher on a per share basis and thus each share would be worth more. A company ...
by Bastiat
Sun Mar 31, 2019 10:00 pm
Forum: Investing - Theory, News & General
Topic: I don't understand stock buybacks
Replies: 169
Views: 11427

Re: I don't understand stock buybacks

Double post.
by Bastiat
Sun Mar 31, 2019 9:33 pm
Forum: Personal Investments
Topic: TIPS, I bonds, or taxable portfolio to get from 41 to 59.5
Replies: 11
Views: 1662

TIPS, I bonds, or taxable portfolio to get from 41 to 59.5

I'm 31 and will be able to retire in 10 years with a military pension with a low end of $55,000/year in today's dollars. The pension will have inflation adjustments and includes medical benefits for my family. My wife is finishing a clinical doctorate in May and will start off with earnings potential in the low six-figures. We have a five-year-old with more likely on the way soon, which will drive her work and earnings. She has no retirement savings, but when she starts working in May we'll prioritize maxing her 401k and IRA. My question is essentially what's the best way to "bridge the gap" between my retirement around 41 and when I can start accessing retirement funds at 59.5. Obviously I will have my pension, probably rental in...
by Bastiat
Fri Mar 29, 2019 9:55 am
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 36221
Views: 4684738

Re: U.S. stocks in free fall

For all the noise on here, people "going to cash", and the consternation in the last quarter last year, it's worth pointing out that we are getting ready to close the best quarter since Q3 2009, and the best Q1 since 1998. Of course, that doesn't mean anything at all about the future. What it does mean is that nobody knows nothing: I don't remember hearing all (any?) of the prognosticators confidently foretelling that Q1 2019 was going to be excellent, besting in a single quarter (>12%) the average yearly return. We have tested the psychological level of 2800 and broken the technical resistance at 2815, so my guess would be we've got some room to run from here. Fortunately, I don't trade on my guesses or those of anyone else. Stay...
by Bastiat
Mon Mar 18, 2019 9:34 pm
Forum: Investing - Theory, News & General
Topic: Real Estate Investing Resources?
Replies: 17
Views: 2293

Re: Real Estate Investing Resources?

There is more money in real estate: The value of the US real estate market is about 50% higher than the total market cap of all US equities. can you confirm the source for the claim made above? What I see is: The toal market cap of all US equities is $30 trillion: https://www.google.com/search?client=firefox-b-1-d&q=total+market+cap+of+all+US+equities The total value of all the housing stock in the U.S. (as of 2016) is $29.6 trillion: https://www.google.com/search?client=firefox-b-1-d&q=total+market+cap+of+real+estate+in+US In order for the US real estate market to be 50% higher than the total market cap of all US equities, wouldn't the real estate market need to be worth $45 trillion dollars? Is it? Source, please. Yes, it would. ...
by Bastiat
Sun Mar 17, 2019 9:40 pm
Forum: Investing - Theory, News & General
Topic: Real Estate Investing Resources?
Replies: 17
Views: 2293

Re: Real Estate Investing Resources?

if you don't think you can do better picking your own stocks, what makes you think you can do better investing in real estate (than the market) when you have no experience doing so to date? This is a false equivalence. The real estate market is not nearly as efficient as the stock market. Buying a stock is just a bit simpler than buying a piece of real estate. Price discovery is not the same. Liquidity is not the same. Leverage and tax treatment are not the same. The emotional aspect is not the same. The geographical nature of Real Estate is not the same. A stock does not determine where one's children go to school. Etc. There is more money in real estate: The value of the US real estate market is about 50% higher than the total market cap...
by Bastiat
Sat Mar 16, 2019 11:42 pm
Forum: Investing - Theory, News & General
Topic: That's enough for me in 2019
Replies: 906
Views: 139379

Re: That's enough for me in 2019

For those interested in Market Timer's past calls:

viewtopic.php?f=10&t=60549

Shorted gold at $1,290 in September 2010. Gold peaked almost exactly a year later at nearly $2,000/oz. He exited the trade, closed his brokerage account, and put his money in savings bonds in January 2011 saying: "I'm forbidding myself from ever entering into a speculative position, as it's a quick descent into madness."

And of course this epic: viewtopic.php?f=10&t=5934

Best of luck, Market Timer. :D

I will stay the course.
by Bastiat
Sat Mar 16, 2019 3:43 pm
Forum: Investing - Theory, News & General
Topic: very concerned about stock/bond movement
Replies: 55
Views: 5649

Re: very concerned about stock/bond movement

Doc Holiday wrote: Sat Mar 16, 2019 10:05 am
Bastiat wrote: Fri Mar 15, 2019 6:50 pm
tadamsmar wrote: Fri Mar 15, 2019 6:01 pm
Hiwatter wrote: Fri Mar 15, 2019 4:56 pm ** edit, found one:

Image
Keep in mind that a 80% decline requires a 500% recovery. A 50% decline requires a 200% recovery. A 25% decline requires a 33% recovery. That's just to break even.
A 50% decline requires a 100% recovery. The other two examples are correct.
Sorry, shouldn’t an 80% drop be a 400% recovery, not 500%?
Drop%/remaining%
Yes, it should.
by Bastiat
Fri Mar 15, 2019 6:50 pm
Forum: Investing - Theory, News & General
Topic: very concerned about stock/bond movement
Replies: 55
Views: 5649

Re: very concerned about stock/bond movement

tadamsmar wrote: Fri Mar 15, 2019 6:01 pm
Hiwatter wrote: Fri Mar 15, 2019 4:56 pm ** edit, found one:

Image
Keep in mind that a 80% decline requires a 500% recovery. A 50% decline requires a 200% recovery. A 25% decline requires a 33% recovery. That's just to break even.
A 50% decline requires a 100% recovery. The other two examples are correct.
by Bastiat
Wed Mar 13, 2019 10:05 pm
Forum: Personal Investments
Topic: Should we pay down 4% loan more quickly or invest in bonds?
Replies: 42
Views: 4218

Re: Should we pay down 4% loan more quickly or invest in bonds?

I've seen a few people advocating to forego tax advantaged investing in favor of paying down the debt and just want to comment that I couldn't disagree more.

You have a finite amount of tax advantaged space available to you. Once you miss tax advantaged contributions for a year they are gone forever.

Nevermind the fact that your expected return (historically speaking) is more than double what you're paying for her debt.

Your spending is very high but your income allows you both to max out tax advantaged while also aggressively paying down the debt.
by Bastiat
Sat Mar 09, 2019 12:45 pm
Forum: Investing - Theory, News & General
Topic: Bogle "5% Gold"
Replies: 248
Views: 39297

Re: Bogle "5% Gold"

I’ve never had an emergency that used up all my e-fund (I keep 1 year’s worth of expenses in cash and short term bonds). The most expensive emergency that I’ve ever had was equivalent to 1 month’s worth of regular expenses which was dealt with using a credit card which was then paid off in full at the next billing cycle. What sort of emergency would require payment in gold? If gold is to be considered “insurance” against major catastrophe, then shouldn’t gold be part of the e fund? The kind of catastrophe like societal collapse or a revolution where you might use gold to buy your way out of the country? I have relatives who escaped the Iron Curtain using gold. One scenario in which physical gold may be useful is something like the bank wit...
by Bastiat
Sat Mar 09, 2019 11:47 am
Forum: Personal Finance (Not Investing)
Topic: Airline travel and economy: pay $$ to pick seats
Replies: 116
Views: 10127

Re: Airline travel and economy: pay $$ to pick seats

What makes it "difficult" for them to sit next to strangers?

They are teenagers. Taking a flight by themselves should not be an issue, let alone when parents are on the same flight...
by Bastiat
Sat Dec 22, 2018 10:58 am
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 36221
Views: 4684738

Re: U.S. stocks in free fall

Cash is king. We’ve been working on accumulating 10+ years of living expenses in cash reserves since 2009. It's easy to say that now that we've seen a good sized correction, but that would have cost you 17+ years of living expenses since 2009. The total return of the S&P 500 from January 2009 to yesterday is 179%, more than 10%/year. It's very interesting to see stocks fall almost into bear territory despite nearly all of the economic fundamentals being very solid. Market participants are no more prescient than individuals, so I expect that this is mostly Bogle's animal spirits. Keynes' animal spirits* So this is a what a free fall feels like? It doesn't bother me at all, even though we've lost tens of thousands of dollars from the pea...