Search found 87 matches

by Yordle
Sun Jun 04, 2017 11:00 pm
Forum: Investing - Theory, News & General
Topic: VTSAX/VFIAX Forecasting Assumptions for 13-22 Year Time Horizon
Replies: 9
Views: 1871

Re: VTSAX/VFIAX Forecasting Assumptions for 13-22 Year Time Horizon

Be aware that stock SDs become narrower with time more than you would expect by the effect of time (due to the mean reverting nature of stocks). For 20 year time spans I'd suggest looking at your problem probabilistically. Using data from 1970 onwards (the start at which I can get international stoc...
by Yordle
Sat Jun 03, 2017 12:18 am
Forum: Investing - Theory, News & General
Topic: Making an app for Bogleheads, need advice
Replies: 46
Views: 7164

Re: Making an app for Bogleheads, need advice

Nice app! Very clean. I'm another bogle app developer. My app is called InvestLogic and is also only available for iOS (android development is a @#$!). link: https://itunes.apple.com/us/app/investlogic/id1139644388?ls=1&mt=8 It does a bit of what you're trying to do, but, rather than a portfolio com...
by Yordle
Sun May 28, 2017 9:46 am
Forum: Investing - Theory, News & General
Topic: Mathematically-rigorous, yet comprehensive (assuming little prior investing knowledge), books?
Replies: 28
Views: 2237

Re: Mathematically-rigorous, yet comprehensive (assuming little prior investing knowledge), books?

Coming from a math background, I wrote a very short online introductory treatise. Biggest reason for doing so is I didn't really like the way risk was being explained. I did not like that most sources equated ANNUAL standard deviation with risk and left it at that (without explaining that stocks are...
by Yordle
Sun Mar 26, 2017 3:12 pm
Forum: Investing - Theory, News & General
Topic: How to intelligently choose AA - Montecarlo?
Replies: 30
Views: 3756

Re: How to intelligently choose AA - Montecarlo?

You need to be careful with Monte-Carlo simulations. It DOES NOT take into account that stocks have been mean reverting historically. So you CANNOT use yearly SDs and run a simulation. You're better off running simulations over all potential historical timespans for the timespan (10-year, 30-year et...
by Yordle
Sat Jan 21, 2017 1:14 am
Forum: Investing - Help with Personal Investments
Topic: Investing for House with Uncertain Timeline
Replies: 9
Views: 1179

Re: Investing for House with Uncertain Timeline

I have done a formal analysis of this problem based on bond and stock data from 1926-2015. 35% stocks, 65% bonds (short-term maturity) wins for most 5 year timespans. 45% stocks, 55% bonds for 10 year timespans. You can check out the the simulations here (click on "What if you need your money in a f...
by Yordle
Fri Jan 13, 2017 9:51 am
Forum: Investing - Help with Personal Investments
Topic: Short term savings
Replies: 3
Views: 598

Re: Short term savings

If your timespan is 5-years, a 65/35 bond/stock mix utilizing a short term bond fund is not a bad idea. (see here).

If it's closer to 2 years... high interest bank saving's account.
by Yordle
Tue Jan 10, 2017 8:55 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Conclusions that I have made from this analysis of stock and bond data over the past 90 years is that around a 80% Stock, 20% Bond portfolio minimizes failure rates at 4% and 5% yearly withdrawal rate (constant, inflation adjusted, proportion of original investment). Furthermore, worst case scenari...
by Yordle
Fri Dec 30, 2016 11:21 pm
Forum: Investing - Theory, News & General
Topic: If you only have 20% in bonds...
Replies: 42
Views: 8348

Re: If you only have 20% in bonds...

History argues for short/intermediate bonds. It's not about long term return. It's about negative correlation when equities tank. Think in days not in in 90 years. If you are not going to buy stocks when the market is crashing don't use long Treasuries even with a very high equity position. Does th...
by Yordle
Fri Dec 30, 2016 2:54 pm
Forum: Investing - Theory, News & General
Topic: If you only have 20% in bonds...
Replies: 42
Views: 8348

Re: If you only have 20% in bonds...

I understand there is some evidence that the best overall bond choice for a high stock portfolio would be long term treasuries. The risk is not large compared to what is already involved in the stocks Yep. (And because we may get another Lehman - not TIPS.) The argument here is that you are taking ...
by Yordle
Fri Dec 30, 2016 12:17 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

It may be OK in some situations and some time frames to come, but there will be times when it won't be OK. For the majority of retirees, 100% equity is certainly not safe, if for no other reason than most retirees emotionally cannot tolerate the volatility and other real risks of not having enough ...
by Yordle
Fri Dec 30, 2016 12:04 am
Forum: Investing - Theory, News & General
Topic: Bond Allocation if you don't care about Volatility
Replies: 26
Views: 1911

Re: Bond Allocation if you don't care about Volatility

Second the above. If you can handle, psychologically, a crash, and need your money in 20+ years... no reason to be in bonds. As for buying on leverage... that freaks my out psychologically... but logically, you could make the argument for it. HOWEVER, this logic will hold only if borrowing interest ...
by Yordle
Thu Dec 29, 2016 7:20 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Yordle, can you please clarify your chart in your original post http://investlogic.ca/retire_calc.html I used 5 years, 0 bonds, and 5% withdrawal rate . Here's the results from your page: Plain English: After adjusting for inflation, if you were to invest $5,000 in 100% Stocks and 0% Bonds, withdra...
by Yordle
Thu Dec 29, 2016 1:07 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Thanks for the informative thread, and the very cool interactive simulator. I'm trying to figure out why your results are so different from Jim Otar's (Unveiling the Retirement Myth, 2009) regarding optimal asset allocation, as your models occur for me as similar. It's not online, nothing I can lin...
by Yordle
Wed Dec 28, 2016 9:36 pm
Forum: Investing - Theory, News & General
Topic: If you only have 20% in bonds...
Replies: 42
Views: 8348

Re: If you only have 20% in bonds...

I understand there is some evidence that the best overall bond choice for a high stock portfolio would be long term treasuries. The risk is not large compared to what is already involved in the stocks. Otherwise there probably isn't anything there to worry about one way or the other. Oh, corporates...
by Yordle
Mon Dec 26, 2016 10:37 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Also, as an independent check, if you run the data set in FireCalc for overlapping thirty year periods and compare the end point wealth for a stock portfolio compared to a bond portfolio, the range of outcomes for stocks is huge compared to that for bonds. Is it not more a case however that the wor...
by Yordle
Sat Dec 24, 2016 7:12 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

John Norstad: The Fallacy of Time Diversification. Be sure to see the chart at the bottom of the page. http://www.norstad.org/finance/risk-and-time.html#fallacy Paul I think the author might be guilty of what he is trying to disprove: logical fallacy. He's using a random walk model of S&P returns. ...
by Yordle
Sat Dec 24, 2016 11:21 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: Jason Zweig on Bonds

These are my own statistics. Of course you should trust this faceless internet user. But if you don't, here is my methodology: 1. Raw data is monthly total returns of S&P 500 and 5-Year US Gov Treasuries from 1926-2015. So, to look at some of this stock and bond data I went to Firecalc which has a ...
by Yordle
Sat Dec 24, 2016 10:51 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Thanks for the informative thread, and the very cool interactive simulator. I'm trying to figure out why your results are so different from Jim Otar's (Unveiling the Retirement Myth, 2009) regarding optimal asset allocation, as your models occur for me as similar. It's not online, nothing I can lin...
by Yordle
Fri Dec 23, 2016 7:31 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

My one concern for this particular data is that bond returns have this huge growth to a 1981 peak followed by an equally huge decline. This results in a high average and especially a high SD for bond returns in this period. I would be cautious that bond variability is being exaggerated here. I beli...
by Yordle
Fri Dec 23, 2016 3:07 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Yes, but make sure we are not looking at the fallacy of time diversification. The annualized average annual return of any investment shrinks with time period without mean reversion. In the case of normal distributions it shrinks by the squareroot of the number of periods. On the other hand the grow...
by Yordle
Fri Dec 23, 2016 3:03 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Thanks for the informative thread, and the very cool interactive simulator. I'm trying to figure out why your results are so different from Jim Otar's (Unveiling the Retirement Myth, 2009) regarding optimal asset allocation, as your models occur for me as similar. It's not online, nothing I can lin...
by Yordle
Fri Dec 23, 2016 2:40 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Thanks I think it is extraordinary that the result could be what you calculated. There isn't an obvious to me blunder in what you describe. I guess it will take more thinking about. It is a bit weird. But stocks are mean-reverting, and average returns therefore become very tight over long timespans...
by Yordle
Fri Dec 23, 2016 2:27 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: Jason Zweig on Bonds

Yes, a lot of people continue to point out what bonds do and don't cushion. However, your characterization is still somewhat incomplete. It is true that stocks on average do go up more than bonds, which, so to speak, wipes out risk of ending up with a loss of money. However, the end result in terms...
by Yordle
Fri Dec 23, 2016 1:24 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: Jason Zweig on Bonds

Yes, a lot of people continue to point out what bonds do and don't cushion. However, your characterization is still somewhat incomplete. It is true that stocks on average do go up more than bonds, which, so to speak, wipes out risk of ending up with a loss of money. However, the end result in terms...
by Yordle
Thu Dec 22, 2016 10:09 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: Jason Zweig on Bonds

Yordle: I don't have Jason Zweig's book, Your Money and Your Brain , but I do have his Little Book of Safe Money. These are passages: Why Buy Bonds? Historically, bonds have tended to zig when stocks have zagged--thus providing a cushion for the bond-crunching roller-coaster of the stock market. Du...
by Yordle
Thu Dec 22, 2016 4:45 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

For a "good, logical basis" for higher bond allocations based on neuroscience, have you read Jason Zweig's book on neuroscience and investing, Your Money & Your Brain? I got the pdf. Please help me find the chapter you reference. I cannot find a discussion on why more bonds (ie >20%) are more benef...
by Yordle
Thu Dec 22, 2016 2:36 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Dunno if there's much more to say. Except... is there any way to petition that the boggle wiki be somehow updated to reflect that "age in bonds" is not entirely evidence based? Or inputing this valid alternative view point? I don't see that the wiki says or implies that "age in bonds" is evidence b...
by Yordle
Wed Dec 21, 2016 11:22 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

The driving analogy was expected but it is a false equivalence imo. Actually the probability of dying is 1 once you are born the question is when and how and you have included only a single factor, i.e driving. There are others and if we include all then asymtotically the probability will tend to b...
by Yordle
Wed Dec 21, 2016 10:39 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

I believe the argument for not being 100% in stocks post retirement has been discussed in this forum using Nikkei Index since 6/1/89, the retirement date, as an example. By 1993 one would roughly have 50 cents to a dollar remaining - withdrawals + dividends. And by 2003, about 30 cents to a dollar ...
by Yordle
Wed Dec 21, 2016 9:21 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

It seems a recurring theme is that, although some agree with the logic of an equity heavy retirement portfolio, a preventing factor is the psychologic turmoil and fear that a crash would bring. This is a cognitive fallacy, so maybe a mind experiment will help. Yordle, you're answering a concern abo...
by Yordle
Wed Dec 21, 2016 8:17 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

It seems a recurring theme is that, although some agree with the logic of an equity heavy retirement portfolio, a preventing factor is the psychologic turmoil and fear that a crash would bring. This is a cognitive fallacy, so maybe a mind experiment will help. Imagine three options for putting your ...
by Yordle
Tue Dec 20, 2016 8:58 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: Reply to rapporteur

...can look back and see this as a blip. But I can tell you that I was pretty scared. I knew that market history suggested that the market would rebound after the crisis, it always had before. But it was not a sure thing. We could have had a financial system collapse and a second Great Depression a...
by Yordle
Mon Dec 19, 2016 8:19 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Hear hear rapporteur! A better rebuttal than I was planning. My point on the mutual funds can't be wrong argument: Institutional dogma is entrenched and is hard to change. As are entrenched personal beliefs... These two can cause a nasty feedback loop: Who's gonna by a retirement fund that has no bo...
by Yordle
Mon Dec 19, 2016 9:06 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

...The past is all we have. I'd argue making predictions on the past makes a lot more sense than "trying" to predict the future based on... based on what? It's not the best, but it's all we have!... No, the past is not all we have. For example, Vanguard looked at various methods of forecasting retu...
by Yordle
Mon Dec 19, 2016 12:51 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

The final nail on the coffin is this weird definition of 'risk' as short-term volatility, and those silly ratios dividing returns by standard-deviation and so on. William Sharpe was a brilliant mathematician, but man, he did a lot of damage here by making many people believe that risks in real-life...
by Yordle
Sun Dec 18, 2016 11:18 pm
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

Re: The Argument for More Stocks in Retirement

Thanks everyone for the healthy discussion! Some comments: My two cents. This retiree (71) is not anticipating a "constant" annual withdrawal rate. For many the withdrawal rate will be greater in early retirement when more physically and mentally active, declining in later retirement when less activ...
by Yordle
Sun Dec 18, 2016 10:06 am
Forum: Investing - Theory, News & General
Topic: The Argument for More Stocks in Retirement
Replies: 166
Views: 16103

The Argument for More Stocks in Retirement

Hi All, In this thread , I began discussing my opinion on the optimum portfolio into retirement. In particular, I introduced my contention that a majority stock portfolio into retirement "wins" historically. To further discuss this topic, and to buttress my argument, I've made an interactive chart t...
by Yordle
Wed Dec 07, 2016 8:51 am
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Allocation before and after retirement?

More awesome charts (now with annual rebalancing): (I actually tried doing some of those Monte Carlo things myself earlier.... to see if I could make a chart to show you.... to prove my point. But I couldn't get the monte carlo simulations to line up with my per-conceieved notions!) When you ran th...
by Yordle
Tue Dec 06, 2016 12:26 am
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Allocation before and after retirement?

More awesome charts (now with annual rebalancing): 40k (inflation adjusted) taken out at start of each year from initial balance of 1 million (ie. 4%) http://www.lrdatabase.com/stuff/40w.png 50k each year (ie. 5%) http://www.lrdatabase.com/stuff/50w.png Whats interesting is, if you want to minimize ...
by Yordle
Sun Dec 04, 2016 9:07 pm
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Allocation before and after retirement?

To better illustrate my point I have graphed all possible scenarios for 100% stocks and 60/40 stock/bond mix with a 4% withdrawal rate. The investor starts with 1 million and withdraws 40k per year. Data is inflation adjusted and includes about 721 possible 30-year timespans from 1926-2015 (its so m...
by Yordle
Sat Dec 03, 2016 11:01 am
Forum: Investing - Help with Personal Investments
Topic: investment personal decision
Replies: 16
Views: 3346

Re: investment personal decision

Hello Yordle, you told me to go with the bonds as per below, but I opened an account in Fidelity and I couldn't find it as an option, which would be the similar in Fidelity? thanks For bonds (if you do choose bonds) I'd go VSCSX. It looks like FJRLX is the closest thing to VSCSX... but you're it's ...
by Yordle
Fri Dec 02, 2016 9:17 pm
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Aloocation before and after retirement?

http://www.lrdatabase.com/stuff/crash.png Please remember the great depression Return % Year Start Value Year Stock ITT 50/50 100% Stocks 100% Bonds 50%/50% 1929 -8.9 7.5 -0.7 $1,000,000 $1,000,000 $1,000,000 1930 -22.0 6.1 -8.0 $865,309 $1,020,815 $943,062 1931 -43.0 0.4 -21.3 $635,907 $1,032,779 ...
by Yordle
Thu Dec 01, 2016 10:51 am
Forum: Investing - Help with Personal Investments
Topic: The new normal: 2%, 3%?
Replies: 72
Views: 6032

Re: The new normal: 2%, 3%?

I have never posted a reply on this forum, only questions, so I am by far not an expert. But I've been using this tool: https://www.portfoliovisualizer.com/monte-carlo-simulation Nice tool! Thank you edan! :beer I'd note the inaccuracy of that site: it assumes returns are random events and does not...
by Yordle
Tue Nov 29, 2016 8:54 am
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Allocation before and after retirement?

Past performance does not indicate future performance. You can backtest all you wish. 2008 is not the worst case that can happen. Just because a bigger or longer crash has not occurred recently, that does not mean it cannot happen. You may be comfortable with a high risk level, and it may work out ...
by Yordle
Mon Nov 28, 2016 10:33 pm
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Aloocation before and after retirement?

The problem with your reasoning is that retirees don't make withdrawals every 30 years. They withdraw each year, perhaps monthly to pay bills. We have had two bear markets in recent memory where stocks went down 50% or more, 2000-2002 and 2008-2009. Do investment grade bonds drop by 50% during shor...
by Yordle
Mon Nov 28, 2016 8:29 am
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Aloocation before and after retirement?

The problem with your reasoning is that retirees don't make withdrawals every 30 years. They withdraw each year, perhaps monthly to pay bills. We have had two bear markets in recent memory where stocks went down 50% or more, 2000-2002 and 2008-2009. Do investment grade bonds drop by 50% during shor...
by Yordle
Sun Nov 27, 2016 10:43 pm
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Aloocation before and after retirement?

We don't know exactly how bonds will perform in the future but we know they are much less volatile than stocks Bonds are not always less volatile than stocks. Due to the mean-reverting nature of stocks, over 30 year timespans, stocks (S&P 500) are LESS VOLATILE than bonds (5-year treasuries). These...
by Yordle
Sun Nov 27, 2016 1:09 pm
Forum: Investing - Help with Personal Investments
Topic: 100% Equity Portfolio for 20 year old
Replies: 17
Views: 2578

Re: 100% Equity Portfolio for 20 year old

100% equity makes a lot of sense for someone his age. Unless he's planning on using most of the money in <20 years (like for a house)... one could then argue a bit of bonds might be of benefit. As for the specific funds. A few comments: 1. Your choice of overweighting small-cap and emerging markets....
by Yordle
Sun Nov 27, 2016 12:46 pm
Forum: Investing - Theory, News & General
Topic: What was your Asset Allocation before and after retirement?
Replies: 91
Views: 12468

Re: What was your Asset Aloocation before and after retirement?

I would recommend seeing the lady with the crystal ball and "future test" your portfolio and see if it will hold up. :D Being a little smart alecky here, but the basic point is that markets have no obligation to repeat past history. Bear markets happen in Canada as they do in the United States. You...
by Yordle
Sat Nov 26, 2016 2:59 pm
Forum: Investing - Help with Personal Investments
Topic: Saving for home downpayment
Replies: 23
Views: 4916

Re: Saving for home downpayment

I totally misread that you still had a mortgage! I would pay down the mortgage with 80% of your available cash while its still around and do 20-30% in stocks. I think this is probably the route I will go. House will go for sale in 2.5 years, we should be buying a new home in 6.5 years. So probably ...