Search found 148 matches

by Jack56
Fri Mar 22, 2024 10:55 am
Forum: Investing - Theory, News & General
Topic: Active fund for international equity allocation?
Replies: 34
Views: 2609

Re: Active fund for international equity allocation?

From a financial point of view, overweighting/underweighting any market means you think you know more about the valuation of that market than the market does. That is highly unlikely. So some people say Japan should be overweighed. Japan has lots of things going for it and the market is inexpensive compared to the S&P - but Japan has lots of issues like bad demographics, bad corporate governance, lots of low quality companies that justify low valuations, a paucity of high quality companies like Microsoft or Nvidia or JPMorgan Chase or Amazon. The point is what would I possibly know about Japanese stock market valuations that someone living in Japan would not know, that someone whose full time job is analyzing Japanese companies would no...
by Jack56
Wed Mar 20, 2024 9:24 am
Forum: Investing - Theory, News & General
Topic: Is active mutual fund’s capital gain always a bad thing?
Replies: 28
Views: 2330

Re: Is active mutual fund’s capital gain always a bad thing?

Unless you think your manager has a crystal ball and can see the future, returning your capital to you so it is taxable & when he not you decides is not a good idea.
by Jack56
Wed Mar 06, 2024 1:45 pm
Forum: Investing - Theory, News & General
Topic: can indexes have low PE and low return for a long time?
Replies: 41
Views: 3997

Re: can indexes have low PE and low return for a long time?

The data series for stock returns is too limited to know if mean reversion exists - finance is not physics. Basic finance theory says that diversification across asset classes and markets is the way to go since the future is unpredictable.
by Jack56
Tue Mar 05, 2024 3:31 pm
Forum: Personal Investments
Topic: Where to cap 529 contributions?
Replies: 64
Views: 5039

Re: Where to cap 529 contributions?

There is no good answer to this question since you do not know where your kids will go to school, what the costs will be, what the rate of inflation will be and what the market will return on your investments. I ended up with a lot of excess money in the plan because the kid ended up being charged very little for his university education and the market was generous. I suppose that is better than coming up short.
by Jack56
Mon Mar 04, 2024 3:04 pm
Forum: Investing - Theory, News & General
Topic: Emerging Markets Stocks have been a complete disaster
Replies: 175
Views: 17701

Re: Emerging Markets Stocks have been a complete disaster

EM was a bet that did not pay off because investors did not understand that rule of law underpins all valuations and the bulk of EM are not rule of law countries. The investable world is the Anglosphere, western Europe, Israel in the middle east, Japan, Korea and a few others. Most of the rest of the world is not investable since you are at risk that your assets will be confiscated. Though of course you can be lucky if you get in and out at the right times.
by Jack56
Sat Mar 02, 2024 1:59 pm
Forum: Investing - Theory, News & General
Topic: 60-days dividend rule (December Purchase)
Replies: 4
Views: 687

Re: 60-days dividend rule (December Purchase)

The issue is whether the dividends are qualified for the fund not for you so your holding period for the fund is irrelevant.
by Jack56
Wed Jan 10, 2024 4:41 pm
Forum: Investing - Theory, News & General
Topic: should I leave VWO out of my brokerage
Replies: 17
Views: 2544

Re: should I leave VWO out of my brokerage

Seems to me that there is no reason to overweight any part of the market unless you have knowledge greater than the market about that sector so in recent years I just buy Vanguard's Total World and forget about trying to outsmart the market.
by Jack56
Mon Jan 08, 2024 12:42 pm
Forum: Investing - Theory, News & General
Topic: WSJ runs math on future returns from current highs
Replies: 80
Views: 12547

Re: WSJ runs math on future returns from current highs

If WSJ writers had the ability to predict the future they would be managing money for big bucks not giving advice for free or next to nothing. The fact is that no one has the ability to predict the future so the best strategy is to ignore the pundits, decide on an asset allocation strategy and stay the course.
by Jack56
Mon Dec 18, 2023 3:06 pm
Forum: Personal Finance (Not Investing)
Topic: Anyone Make a Major Career Change in Their Forties?
Replies: 95
Views: 24518

Re: Anyone Make a Major Career Change in Their Forties?

I did. It worked out well for me. But it could have worked out badly because a part of the reason it worked out well was serendipity. I don't think it is possible to give general advice on this question. Probably the best way to go about it would be to talk to someone, better yet multiple people, who did the same thing - moved from what you are doing currently to what you aspire to do. How risky it is will depend on the security of your current position, your financial obligations, your savings and the likelihood that the future will work out the way you want. I would be careful.
by Jack56
Tue Dec 05, 2023 1:07 pm
Forum: Investing - Theory, News & General
Topic: Forbes and Closed end Funds
Replies: 3
Views: 558

Re: Forbes and Closed end Funds

CE funds typically use leverage to produce their yields and a portion of the yield is often a return of principal. Their expense ratios tend to be quite high so over time the only one who will make money will be the promoter. Forbes perhaps often features the product because ignorant investors don't understand how the yields are generated and think they are getting a hot stock tip -- rather than really bad advice. Yields that are higher than treasuries indicate risk and a lot of yield means a lot of risk.
by Jack56
Wed Nov 08, 2023 2:47 pm
Forum: Investing - Theory, News & General
Topic: Is investing the best way to hedge against the risk of my job being replaced by AI?
Replies: 22
Views: 2785

Re: Is investing the best way to hedge against the risk of my job being replaced by AI?

A lot probably depends on your age. If you are young, probably the best strategy is to invest in your human capital by learning skills that are unlikely to be replaced by AI in your working life. If you are retired AI doesn't matter. If you are in the middle i would probably lean towards improving your skills.
by Jack56
Sat Oct 28, 2023 12:13 pm
Forum: Investing - Theory, News & General
Topic: Frec - Low Cost (0.10%) S&P500 Direct Indexing Startup
Replies: 30
Views: 5493

Re: Frec - Low Cost (0.10%) S&P500 Direct Indexing Startup

The 3bps figure as Vanguard "making money" (assuming "making money" means profits) doesn't make sense since Vanguard has costs like employees, infrastructure, and so on. Vanguard is also mutually owned so if anyone is "making money" from Vanguard's fees it is its investors who effectively own the company.
by Jack56
Mon Oct 23, 2023 6:08 pm
Forum: Investing - Theory, News & General
Topic: 5 yr TIPS vs 5 yr Note
Replies: 28
Views: 3653

Re: 5 yr TIPS vs 5 yr Note

The market has to think that the returns on the two instruments will be the same otherwise there is a free lunch (arbitrage opportunity) to buy one and short the other and make a a fully risk free return. I think about TIPS as an insurance product, safety (the preservation of purchasing power) in the event there is unexpected inflation. If you want to lock in a nominal return buy the nominal bond and if you want to protect yourself against unexpected inflation at the possible cost of a lower return buy the TIPS.
by Jack56
Thu Oct 05, 2023 4:59 pm
Forum: Investing - Theory, News & General
Topic: Is there a way to tell what risk of default is priced into bonds?
Replies: 4
Views: 799

Re: Is there a way to tell what risk of default is priced into bonds?

It is hard to see why the US government would default since it could just inflate the money supply and repay the debt with inflated dollars -- sovereign defaults typically occur when a government borrows in a foreign currency, something the US government does not do. The risk of repaying debt with inflated dollars is reflected in what the government has to pay to borrow. Perhaps one of the reasons for the higher interest rates is the market's view of increased risk that the government will inflate away the debt.
by Jack56
Sun Sep 17, 2023 11:51 am
Forum: Investing - Theory, News & General
Topic: Private Equity Groups and Total Stock Market
Replies: 46
Views: 4806

Re: Private Equity Groups and Total Stock Market

Lots of PE companies are publicly traded and if you hold the market index you will hold them and participate in any possible outperformance. If you believe that PE will outperform the market, dubious in my opinion, you can overweight that segment by buying individual PE managers -- their fees and hence the manager's revenues will have a performance elelement. There may even be an ETF devoted to them.
by Jack56
Fri Sep 01, 2023 4:54 pm
Forum: Investing - Theory, News & General
Topic: The Most Popular Portfolio In The World
Replies: 29
Views: 5035

Re: The Most Popular Portfolio In The World

The number of "hits" three words gets on the internet proves what?

And as someone earlier pointed out, other word combinations receive even more "hits" -- therefor what?
by Jack56
Tue Aug 29, 2023 6:21 pm
Forum: Investing - Theory, News & General
Topic: submit ?s: Dr. Bernstein on 'The Four Pillars of Investing'
Replies: 30
Views: 6302

Re: submit ?s: Dr. Bernstein on 'The Four Pillars of Investing'

Regarding bonds: Assuming taxes are not an issue, does Dr Bernstein prefer to hold TIPs to nominal Treasuries and at which durations & why Would Dr. Bernstein purchase to hold TIPs and nominal treasuries of the same duration? E.g., hold both five year TIPS and 5 year nominal treasuries? Dr. Bernstein has said I believe that bonds are essentially insurance in a portfolio and that one should look for upside in equity. Regarding treasuries, Is there a real yield or a nominal yield that Dr. Bernstein would purchase treasuries for their upside? And if he would/wouldn't why? Dr Bernstein said that he had purchased a 30 year TIPS. Did he do so primarily because of the (small) chance he would see it redeemed or that it would provide insurance a...
by Jack56
Sun Aug 27, 2023 3:57 pm
Forum: Investing - Theory, News & General
Topic: Thoughts on real estate as the 4th fund
Replies: 46
Views: 7126

Re: Thoughts on real estate as the 4th fund

Finance theory tells us that real estate should over time perform better/have more risk than bonds and perform worse/have less risk than stocks since real estate is essentially a contractual right to a series of payments (rent) over a fixed period (like a bond) with a residual interest in the asset (like equity). You are not getting the pure upside/downside of equity nor the pure right to the contractual payment of interest like a bond. Over short periods of time real estate may perform differently from stocks or bonds and therefor give diversification to a portfolio. My guess is that over long periods of time real estate probably offers nothing to a portfolio that a mixture of bonds and stocks will not give -- since there is no reason for ...
by Jack56
Thu Aug 24, 2023 6:04 pm
Forum: Investing - Theory, News & General
Topic: DIY Index Investing
Replies: 28
Views: 3528

Re: DIY Index Investing

Seems to me like a waste of time given that Vanguard will do it for 3bps. Your own index will necessarily be stock selection and over time will drift from the market index. Picking which of the 500 should be among your 100 seems like a lot of work. Daily rebalancing of 100 stocks would be close to a full time job. Given your job, if you think your are overweight in large cap you could just buy a small cap, foreign, etc., index. The index fund harvests tax loses and offsets them against gains, which is a big reason you don't typically pay cap gains. You could always just sell the index at a loss and buy a different one if in fact the index were down.
by Jack56
Wed Aug 23, 2023 8:04 pm
Forum: Investing - Theory, News & General
Topic: Benjamin Graham and Index Investing
Replies: 6
Views: 1116

Re: Benjamin Graham and Index Investing

In the 1973 edition of The Intelligent Investor Graham said that he doubted that his techniques of analysis worked any longer given the greater efficiency in the markets. I don't think index funds existed at that point.
by Jack56
Mon Aug 21, 2023 9:36 pm
Forum: Investing - Theory, News & General
Topic: By taking cues from European market can you improve US market performance?
Replies: 5
Views: 968

Re: By taking cues from European market can you improve US market performance?

"Note Japanese Market leads both of them."

Or is behind both of them, depending on how you want to look at it.
by Jack56
Sun Aug 20, 2023 2:00 pm
Forum: Investing - Theory, News & General
Topic: How much gold should you hold in your portfolio?
Replies: 195
Views: 18215

Re: How much gold should you hold in your portfolio?

I have never seen a clear argument in favor of holding gold. Some people say that gold is a good hedge against inflation but the data seem to show that for long periods of time it isn't. There are also now available many derivative products that can hedge against inflation if that is the goal. Also there is a cost of holding physical gold and an opportunity cost given that gold does not produce income. Some people like gold for a doomsday scenario. I question that -- in a doomsday scenario how are you going to protect physical gold? and the assumption is that someone will give you things you need to live like food and shelter in return for gold since gold in and of itself has no intrinsic value. That is a big assumption.
by Jack56
Sun Aug 13, 2023 8:15 am
Forum: Investing - Theory, News & General
Topic: Why not liquidate all assets and buy tbills @5.5%?
Replies: 116
Views: 14018

Re: Why not liquidate all assets and buy tbills @5.5%?

The problem with this strategy is you don't know what future inflation will be so you don't know the value of the coupons you will receive and you don't know what you will be able to reinvest the proceeds in when they mature. Though if you know you have a life expectancy of say two years, it is probably a good strategy.
by Jack56
Sat Aug 05, 2023 7:29 am
Forum: Investing - Theory, News & General
Topic: Who's stocking up on 20Y treasuries?
Replies: 43
Views: 8041

Re: Who's stocking up on 20Y treasuries?

Not me. Future inflation is unpredictable and long treasuries have not been a good predictor of inflation.
by Jack56
Sat Jul 22, 2023 4:37 pm
Forum: Investing - Theory, News & General
Topic: Courage Required - William Bernstein
Replies: 57
Views: 8723

Re: Courage Required - William Bernstein

Given that ten year Treasuries at that time were yielding around 10% and would hit around 14% a couple of years later there were good reasons not to be in the market. It happened that the Fed made a strong and successful effort to bring down inflation that lead to the stock market boom of the 80s but it did not have to play out that way. A different political culture might lead to a different result. If one stayed the course in Japan circa 1990 or in Russia in 2020 the results would have been dismal. So it is far from clear the conclusion one should draw -- unless one is of the belief that in the long run (i.e. one's life) things always turn out for the best.
by Jack56
Sat Jul 22, 2023 4:21 pm
Forum: Investing - Theory, News & General
Topic: How am I supposed to interpret this chart? NY Federal Reserve predicting a recession
Replies: 27
Views: 2685

Re: How am I supposed to interpret this chart? NY Federal Reserve predicting a recession

The collective wisdom about whether there will be a recession is already priced into the market since the information in the report is public and known so acting on it one way or another after the information is already in the market is unlikely to produce a positive result. On the other hand you could be lucky or unlucky depending on the decision you make -- but that is just luck. So the best strategy is to ignore these sorts of things since it is unlikely that paying attention to them will improve your investment returns.
by Jack56
Sat Jul 15, 2023 9:30 am
Forum: Investing - Theory, News & General
Topic: How active are Dimensional Funds?
Replies: 32
Views: 4073

Re: How active are Dimensional Funds?

Seems to me the issue is not what the prospectus gives the manager the right to do but what the manager does since prospectuses often give wide latitude that is not used. Maybe the next interview with Aventis or DFA this could be asked.
by Jack56
Sun Jul 09, 2023 3:12 pm
Forum: Investing - Theory, News & General
Topic: The risk of stock and investment horizon
Replies: 113
Views: 10680

Re: The risk of stock and investment horizon

Risk increases with time. The opposite view is something called time diversification. There are lots of articles out there that explain the fallacy of time diversification.
by Jack56
Sun Jul 09, 2023 3:09 pm
Forum: Investing - Theory, News & General
Topic: Why does Warren Buffett recommend ...
Replies: 102
Views: 12342

Re: Why does Warren Buffett recommend ...

Most of WB's wealth is not in a few stocks but is tied up in BH which is a very large conglomerate that over say the last 20 years seems to perform similarly to the S&P. Many years ago the bulk of the asset value of BH was in publicly traded stocks but now it is is operating companies.
by Jack56
Sun Jul 09, 2023 3:05 pm
Forum: Investing - Theory, News & General
Topic: Are Closed Ended Funds a good investment?
Replies: 11
Views: 1380

Re: Are Closed Ended Funds a good investment?

I would keep away. The management fees tend to be quite high, certainly compared to Vanguard, and the discount can increase and remain at a much higher level for many years.
by Jack56
Tue Jul 04, 2023 6:28 pm
Forum: Investing - Theory, News & General
Topic: Help me understand AQR funds
Replies: 9
Views: 1381

Re: Help me understand AQR funds

The performance of funds over short periods of time, say less than a few market cycles or less than say 15 years is not meaningful since you can't distinguish randomness from skill. The AQR funds tend to emphasize what they call factors -- which AQR thinks will generate outperform over time. There are arguments in favor of the AQR approach but no one knows for sure. My opinion is that a general low fee market index like Vanguard's total market or even the S&P will outperform the AQR funds over time but we will only know in retrospect.
by Jack56
Tue Jul 04, 2023 5:19 pm
Forum: Investing - Theory, News & General
Topic: Why do small cap stocks pay higher dividends than the S&P 500
Replies: 15
Views: 1581

Re: Why do small cap stocks pay higher dividends than the S&P 500

You are comparing apples and oranges. Small cap value is heavy on low growth businesses that pay out much of their earnings because they don't have sufficient attractive opportunities to reinvest. The S&P is heavy on growth -- businesses with opportunities to reinvest earnings and compound at high rates.
by Jack56
Sun Jul 02, 2023 11:41 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein's new book available [Four Pillars of Investing]
Replies: 114
Views: 25724

Re: Bill Bernstein's new book available

I have always found Dr. Bernstein's books helpful notwithstanding that I have professional asset management credentials and have managed assets professionally for many years. I have found that he has the ability to help investors put into practice abstract concepts so I will be buying his book when it comes out notwithstanding that I read the previous edition. Seems to me if I learn one thing & there is a reasonable possibility of that it is worth the expense and time.
by Jack56
Sun Jul 02, 2023 10:54 am
Forum: Personal Investments
Topic: Do ETF Bid-ask spreads matter?
Replies: 28
Views: 3448

Re: Do ETF Bid-ask spreads matter?

Spreads are costs and like any cost they should be minimized. If you are buying something with a large spread, say more than a couple of pennies you probably shouldn't be buying it.
by Jack56
Sat Jul 01, 2023 7:06 am
Forum: Investing - Theory, News & General
Topic: Backtesting: How much in long term treasuries?
Replies: 108
Views: 9799

Re: Backtesting: How much in long term treasuries?

I don't put anything in long term treasuries. IMO they are primarily for institutions like insurance companies that need to match long term liabilities and assets. For individuals they expose you to almost certain negative returns given inflation and taxes.
by Jack56
Sat Jun 03, 2023 7:48 am
Forum: Investing - Theory, News & General
Topic: Why are no REIT funds attempting to proxy the real estate market?
Replies: 43
Views: 3849

Re: Why are no REIT funds attempting to proxy the real estate market?

There are lots of REITs out there that just do residential if that is where you want to be but returns on residential contrary to popular belief tend to be low - low risk, low return.
by Jack56
Sat May 13, 2023 12:01 pm
Forum: Investing - Theory, News & General
Topic: Where to get up-to-date developed markets to emerging markets allocations?
Replies: 6
Views: 976

Re: Where to get up-to-date developed markets to emerging markets allocations?

If you buy Vanguard Total World, Vanguard will make these adjustments for you and you needn't pay attention
by Jack56
Mon May 08, 2023 8:35 am
Forum: Investing - Theory, News & General
Topic: Corporate preferreds vs bonds
Replies: 38
Views: 2940

Re: Corporate preferreds vs bonds

Preferred shares are more risky than debt and less risky than equity/offer a higher expected return than debt and a lower return than equity. You have to assume like most things in the financial markets they are priced properly so you are getting what you pay for. In general preferreds are for corporations that qualify for the corporate dividend exclusion not individuals.
by Jack56
Wed Apr 19, 2023 10:55 am
Forum: Investing - Theory, News & General
Topic: Floating Rate Notes Versus Cash
Replies: 16
Views: 1674

Re: Floating Rate Notes Versus Cash

I think the poster is right that FRNs are a good substitute for cash in a mm fund - especially now when short rates are higher than longer rates.
by Jack56
Tue Apr 18, 2023 4:01 am
Forum: Investing - Theory, News & General
Topic: Fundrise - Real Estate
Replies: 161
Views: 26575

Re: Fundrise - Real Estate

There are common points of complaint -- that when the investor tries to withdraw his money he is unable to and that what he eventually receives is not what he thought the investment was worth. This likely means that the valuations are inaccurate in that they do not reflect what an investor will receive in a liquidation. If you try to withdraw your money from a Vanguard ETF you can do so within a matter of seconds and what you will be paid is what the market says your investment is worth. With non-exchange traded real estate you are hoping that the valuation is accurate and that when you liquidate your investment you will receive what the promoter says it is worth. Sounds like a very bad idea -- from the investor's perspective.
by Jack56
Wed Apr 12, 2023 7:42 am
Forum: Investing - Theory, News & General
Topic: International Exposure: 100% EM?
Replies: 203
Views: 13226

Re: International Exposure: 100% EM?

Lots of the comments on Bogleheads argue that favoring this or that market segment will lead to higher risk adjusted returns. Unfortunately there is no accepted theory in finance that overweighting this or that market segment will accomplish anything other than increasing your risk exposure. Whatever facts or information you think you have, e.g., that China is or is not a good place to put your money, the market also has and has already priced into the stock price.
by Jack56
Wed Apr 12, 2023 7:35 am
Forum: Investing - Theory, News & General
Topic: Prioritizing Investments in light of Inflation & I Bonds
Replies: 26
Views: 3083

Re: Prioritizing Investments in light of Inflation & I Bonds

I bonds don't really store wealth in real terms because for most people you will be taxed on the appreciation when they come due -- and at ordinary income rates. So in fact I bonds guarantee that you will under perform inflation. They are more an insurance product to protect, though not completely, against unexpected inflation.
by Jack56
Sat Mar 25, 2023 7:26 pm
Forum: Investing - Theory, News & General
Topic: Bernstein on TIPS and T-bills
Replies: 171
Views: 26850

Re: Bernstein on TIPS and T-bills

Would be interesting if Dr. Bernstein explained how he sized the position & why otherwise it is hard to understand its significance in his portfolio-- is it 3% of assets? 3% of bonds? Something else and if so why? Do you size your bond portfolio tenors based on longevity tables and if not why not?

thanks
john
by Jack56
Tue Mar 07, 2023 7:49 pm
Forum: Investing - Theory, News & General
Topic: How long does TreasuryDirect take to convert paper I bonds?
Replies: 137
Views: 51011

Re: How long does TreasuryDirect take to convert paper I bonds?

I had them convert a number of paper bonds maybe five years ago and it took many months for them to complete it, I don't remember exactly how many. There is nothing you can do about it once they acknowledge receipt.
by Jack56
Mon Feb 13, 2023 12:46 pm
Forum: Investing - Theory, News & General
Topic: Worldwide version of NTSX on the way [RSSB new global return stacking ETF]
Replies: 60
Views: 10396

Re: Worldwide version of NTSX on the way

Besides generating fees for the manager dont see the point of this product since you could create it yourself with low fee Vanguard products and leverage if you thought leverage was a good idea.
by Jack56
Sat Feb 11, 2023 2:50 pm
Forum: Investing - Theory, News & General
Topic: International does not trade during your day
Replies: 38
Views: 3298

Re: International does not trade during your day

Domestic prices of securities predominantly traded in international markets may move because of what happened while US markets were closed and what may happen when foreign markets open. So news in the US markets may affect prices in foreign markets and vice versa.
by Jack56
Mon Jan 30, 2023 8:21 am
Forum: Investing - Theory, News & General
Topic: NRIA.NET - Real Estate Private Placement - 16% return
Replies: 34
Views: 38915

Re: NRIA.NET - Real Estate Private Placement - 16% return

Sounds like a scam. Surprised Bogleheads would publish this.
by Jack56
Sun Jan 29, 2023 9:03 am
Forum: Investing - Theory, News & General
Topic: could chatgpt lead to a world where picking individual stocks outperforms index funds?
Replies: 210
Views: 19330

Re: could chatgpt lead to a world where picking individual stocks outperforms index funds?

This theory doesn't make sense. If some generally available AI could outperform the market then everyone would use it and who would be on the other end of the trade? One could imagine proprietary AI outperforming but that is probably what Renaissance and others already use.
by Jack56
Thu Jan 26, 2023 9:28 pm
Forum: Investing - Theory, News & General
Topic: Vanguard site problems
Replies: 51
Views: 6084

Re: Vanguard site problems

Vanguard seems to be in the process of bringing in a new interface. What I have seen looks quite good.