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NiceUnparticularMan

Gort wrote:Oops, hope I didn't kill the discussion?!? It was very informative.

I've been busy for work reasons, so I think it was my fault!

NiceUnparticularMan

Maybe the people I'm friends with don't represent average people at all. After all, I'm not selecting thousands of random friends. But it seems, at least to me, that very few people pay enough attention to their portfolios to make MLA a widespread investing effect. I'm not saying that it wouldn't b...

NiceUnparticularMan

Well, this has been interesting. I'm the one who requested that NUM start this thread and it seems appropriate to comment although I usually like to stay out of theory discussions. Just as I started to post this morning, I found that livesoft had actually beat me to it by finally asking "do you hav...

NiceUnparticularMan

Furthermore, perhaps the only way to know if one is hurting or fooling themselves is to keep accurate track of their portfolio performance and compare it to a few all-in-one (AOI) fund performances. I certainly do this myself. [...] I think if you take this message of not looking. Then it is like S...

NiceUnparticularMan

Another sample of one. I am convinced that setting and maintaining our asset allocation has cost us financially and it definitely caused me anguish. I have rewritten investment policy statements multiple times and decided on the last go around to let our allocation go where ever it will go. No more...

NiceUnparticularMan

I haven't looked into those fees, but as we have been discussing here, the costs of MLA can be quite high. Just going to a less-risky asset allocation is going to cost you a significant amount of expected return, and it still might not work. Then actual departures can cost people arbitrarily high a...

NiceUnparticularMan

... Generally all this really is about trying to measure how frequently the investor has to make decisions. Automatic contributions, automatic withdrawals, automatic rebalancing, and such isn't requiring decisions on the investor's part. Rebalancing for yourself, though, or managing your own glide ...

NiceUnparticularMan

My Pet Peeve is that White Coat Investor should have stated "Bonds Don't Go in Roth accounts" instead of "Bonds Go in Taxable!" I'm not sure I agree. Depending on your long-term plans, you might also prefer bonds in taxable over bonds in a traditional 401K/IRA (including because of possible future ...

NiceUnparticularMan

These are long term numbers for a range of allocations (it is what I used to estimate the cost of moving from 75/25 to 60/40 was about 0.6% annually). Of course we don't know what will happen over the next X years, but this seems like a reasonable way of doing a broad-brush estimate: https://person...

NiceUnparticularMan

But there have been a few cases where I've suggested using a moderate cost target fund when it was clear the poster couldn't or wouldn't use the lower cost funds effectively. That's my point in a nutshell. If we take this body of research seriously, an LELR process should be the default, meaning it...

NiceUnparticularMan

Is it wise to suggest that someone use a target fund with an ER of .76% when they have a perfectly good 500 index at .07%? Probably. You'd first have to look at all the accounts and funds they would need to simulate the same glide path as my proposal over their entire lifetime of investing. The ave...

NiceUnparticularMan

I haven't looked into those fees, but as we have been discussing here, the costs of MLA can be quite high. Just going to a less-risky asset allocation is going to cost you a significant amount of expected return, and it still might not work. Then actual departures can cost people arbitrarily high a...

NiceUnparticularMan

And it is pretty easy to quibble with a self-reported sample size of one. Again, I'm not trying to dissuade your from continuing your experiment on yourself, but when thinking about how to advise others, I would suggest your ongoing experiment is not exactly of the same quality. Of course, I comple...

NiceUnparticularMan

And seriously, without meaning to be snarky--where is your 14-year panel study in favor of RBD? I am about 6 years into it, so at least 8 years to go. :) And it is pretty easy to quibble with a self-reported sample size of one. Again, I'm not trying to dissuade your from continuing your experiment ...

NiceUnparticularMan

Regarding the study: Dutch investors might indeed have a different perspective than US investors. The Netherlands has one of the most well-funded pension systems in the world. Until recently, most residents who had worked steadily throughout their working age lifetimes could expect close to 70% of ...

NiceUnparticularMan

I strongly believe a Japanese investor would have been better served by yearly or semi yearly or even once or twice rebalancing out of the most appreciated assets into more diversified holdings. Just an aside, but if you imagine a Japanese investor with a diversified portfolio of global stocks and ...

NiceUnparticularMan

Was just catching up on this thread today. A few thoughts: It's clear that the word "rebalancing" in the paper has caused a lot of consternation. Since this word has a very specific definition to us that is not what the authors were saying, I think we should substitute "decision point" when reading...

NiceUnparticularMan

And I'll throw one more thing out there: I think my RBD strategy is precisely a strategy to avoid myopic loss aversion. That may be your purpose, but the question is whether it actually works, or instead perhaps makes things worse. I don't want to get down in the weeds on any one rebalancing strate...

NiceUnparticularMan

The whole manuscript that you linked has lots of things that one can quibble with. You can always quibble with experimental design. But we have to be honest with ourselves--do these quibbles actually matter? Or are they rationalizations for not re-thinking what we are doing? A study comes out sayin...

NiceUnparticularMan

I think my errors have already cost me a lot more than 0.6% per year. Due to the sheer cash drag for 6 years in the taxable account from 2007-2013, where I invested for about five minutes in late 2008 to early 2009 and broke even to make nothing, and then invested nothing in the taxable account, Va...

NiceUnparticularMan

This myopic loss aversion can be subtle to the degree that you're fooled into thinking you've become inured or immune to seeing balance fluctuations, especially in this benign market climate. Yet you may be making less than optimal decisions because of the fear of losing money, exacerbated by frequ...

NiceUnparticularMan

The question in the survey was not "How often do you rebalance?" The question was "How often do you change your stock portfolio by buying or selling shares without the need for cash?" That's right, but in the paper they called that rebalancing because rebalancing is the most common form of that pra...

NiceUnparticularMan

I don't know how, if at all, my personal experience necessarily relates to the research. I'm a sample of one. It is very consistent with the findings of this and other studies. Again, I'd suggest your takeaway should be that you are normal, and as a normal investor you might want to follow their de...

NiceUnparticularMan

And of course folks who are adding money every month or quarter do both evaluate (according to the definition in the article) and rebalancing (according to the definition in the article). I don't think that would necessarily be true if they had just set up automatic contributions from paychecks or ...

NiceUnparticularMan

I did not read the entire paper, but I also am unsure of the definition of rebalancing. If I need cash, for example, I can extract it from my portfolio without changing the asset allocation. I can simply remove the appropriate percentages from each asset to keep the portfolio composition the same. ...

NiceUnparticularMan

However, here on this forum reblancing is supposed to mean making sales and/or purchases in such a way as to return an asset allocation to a fixed target if it has drifted away. That is in fact the standard definition of rebalancing. It is commonly recommended not just here but in many places. This...

NiceUnparticularMan

Those are very different things, c) is a good thing to do to control risk and doing that every year or two is not a bad idea in my opinion. On the other hand a) is performance chasing which most condemn, and b) is panicking in a crash, which most counsel against. (c) may be financially justifiable,...

NiceUnparticularMan

If actively trading positions to outguess the market counts as rebalancing, then I don't feel as if anyone on this site has ever encouraged me to rebalance. That would just be a subset of rebalancing, not all of rebalancing, and again I think it is quite likely most of the people in these rebalanci...

NiceUnparticularMan

... What's needed are better studies of how to help people discover what their risk tolerance really is, and better studies of how various trajectories and fluctuations of wealth during retirement correlate with feeling secure and happy. Interesting. For some time I've been searching for such studi...

NiceUnparticularMan

You have been using the terms "often" and "common" to describe advice given here on performance evaluation and rebalancing. I think that more often and more commonly the advice here is to not frequently evaluate portfolio performance or performance of particular investments. I think that more often...

NiceUnparticularMan

Keep in mind that the study defined rebalancing very broadly. The question is "How often do you change your stock portfolio by buying or selling shares without the need for cash?" so, for instance, switching back and forth between Apple stock and Google stock depending on which one you think will d...

NiceUnparticularMan

By the way, I would suggest it is virtually impossible to be a regular here without counting as an HE investor. Again, it is intended to be a broad category, and just what you would pick up in these conversations almost surely counts. If you weekly see a finance page online, same deal. If you just h...

NiceUnparticularMan

I think that your observations about the advice given here are incorrect. As a starting point, I think a lot of different advice is given here. What I am concerned about is common advice, but not the only advice. So when you say "we" below, "we" is really a diverse group of people who do different ...

NiceUnparticularMan

Question: If someone was maxed out on all their tax advantage accounts and still wanted to invest. Would they invest in Tax Managed index fund or REIT index fund?? Vanguard of course.What would be a better investment. Someone that it didn't matter if they had REITS. The investment would be 10% or m...

NiceUnparticularMan

knpstr wrote:
NiceUnparticularMan wrote:You don't have to quote me at all.
I am aware of that.

Again, it is the part you just omitted that I am not sure you are aware of.

NiceUnparticularMan

You can also withdraw contributions from 529s for non-qualified expenses without penalties. The trick is the accounting is proportional. You can somewhat ameilorate that problem by opening up multiple accounts over time, planning to withdraw from the oldest ones first. Are you saying that I could w...

NiceUnparticularMan

Things can happen... Yes, I'd say they can. Ah yes, the misleading editing of quotes again! Or, as you would edit it: yes, quotes! Misleading? No. I'd agree with what you said, things can happen to disrupt planned WR . So why not quote that part of what I said? Further, I'd say a near infinite amou...

NiceUnparticularMan

The lines of reasoning we use to actually build our asset allocations is generally speaking, 100% stocks will outperform 1. 99% stock 1% bonds, 2. 80% stock, 20% bonds 3. 60% stock 40% bonds It should. After all the 100% stock portfolio takes on more risk. I'm just going to note again if you model ...

NiceUnparticularMan

If I wanted 15% bonds, I can look at something like the 2050 but it's at 10% bonds. Would there be any negative to selecting that as well as putting an extra, say, 3% into Vanguard Total Bond Market II Index Fund Investor Shares, or Vanguard Total International Bond Index Fund Investor Shares? Or s...

NiceUnparticularMan

Oddly enough, people who have done poorly on their stock picks tend not to brag in the lunch room. People who have picked some winners and some losers tend to talk more about their winners. The bottom line is you really shouldn't talk to the dart-throwing monkeys about how they are doing. They are n...

NiceUnparticularMan

That is a good point. As an aside, though, not rebalancing into stocks can be an ISP legitimate plan. Larry Swedroe has even suggested that concept here and there. It remains to be see how many people suddenly discovered that option at that particular time. Sure, but that's part of the problem, rig...

NiceUnparticularMan

Agree. I don't think "willingness" was ever meant to be an individual's actual risk tolerance, but rather a reference to risk tolerance. That's pretty much how Larry Swedroe has used it in his blog on willingness to take risk. New investors and young investors with little or no market experience ma...

NiceUnparticularMan

I have come to think more and more that "willingness" to take risk is less about what one thinks one can tolerate than about what one is willing to agree to in advance that one will tolerate, having arrived by various means at how much risk one should take. There is a subtle difference between bein...

NiceUnparticularMan

I would not blindly apply the paper's results to most Bogleheads. Nor would I. Their recommendation is in terms of default rules, and I think that is the prudent way to see the issue. Being a LELR investor should be the default approach. If after careful consideration you think you are an exception...

NiceUnparticularMan

I'm referring to first helping investors determine their individual tolerance for risk, helping them know themselves in this regard; possibly a process developed by psychologists to gain insight into one's investing nature. I don't know what form it would take or even if it's possible, but it could...

NiceUnparticularMan

I also think recent interest rate movements in countries that successfully issued bonds with negative nominal yields may corroborate NiceUnparticularMan's position. Rising rates have wiped out substantial principal in many of these bonds, and rates didn't rise that much: https://www.forbes.com/site...

NiceUnparticularMan

If you are really OK losing 20%, all bonds seems too conservative to me. Yes, but at the absolute worse. What do you suggest? LifeStrategy Income is only 20% or so stocks, and predictably lost less than 20% in 2008. Target Income is only 30% stocks, and also lost less than 20% in 2008. I'd probably...

NiceUnparticularMan

Short-term rates are low. People want to know if there is a special solution to this problem. There is not.

NiceUnparticularMan

knpstr wrote:
NiceUnparticularMan wrote:Things can happen...
Yes, I'd say they can.

Ah yes, the misleading editing of quotes again!

Or, as you would edit it:

yes, quotes!

NiceUnparticularMan

C'mon now! You know the general consensus amongst bogleheads is to not consider your emergency fund/cash reserve as apart of your portfolio. I think it can make some sense to distinguish funds you might use to supplement contributions from funds you consider untouchable except for withdrawals. But ...

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