Search found 729 matches

by ThrustVectoring
Wed May 22, 2019 1:54 pm
Forum: Investing - Theory, News & General
Topic: Why not non traded REIT such as yield tree?
Replies: 25
Views: 1642

Re: Why not non traded REIT such as yield tree?

Okay, yield tree has been blasting advertisements on my computers and iphones and youtube videos. As a general rule, any investment that gets aggressively pushed at you through paid channels (salespeople, advertising, commission-based "advisers", etc) is a poor choice to invest in. Before fees, the...
by ThrustVectoring
Wed May 22, 2019 1:16 pm
Forum: Investing - Theory, News & General
Topic: just a general comment about "too conservative" investors here
Replies: 139
Views: 11811

Re: just a general comment about "too conservative" investors here

So one of the under-appreciated things about optimization in general is that when you're near a maximum, the landscape is pretty flat. Small changes make relatively little difference. If you're not taking "enough" risk, or having "too little" international equity, or have less than 5% of your assets...
by ThrustVectoring
Wed May 22, 2019 1:03 pm
Forum: Investing - Theory, News & General
Topic: Any option traders?
Replies: 40
Views: 2494

Re: Any option traders?

You're example isn't really a naked put because it's secured by the cash from bond. Naked put usually implies no cash backing the contract that requires you to buy the stock potentially. A covered Call and owning stock is like a cash secured put. Not a naked put. It's naked put writing as opposed t...
by ThrustVectoring
Tue May 21, 2019 12:20 pm
Forum: Investing - Theory, News & General
Topic: Delaying social security = harming nest egg?
Replies: 71
Views: 5335

Re: Delaying social security = harming nest egg?

Delaying social security is equivalent to annuitizing a portion of your retirement fund. This has the effect of decreasing your expected inheritance if you die before the actuarial tables predict, and increasing your expected inheritance if you live longer. Overall, this really depends on how health...
by ThrustVectoring
Fri May 17, 2019 3:49 pm
Forum: Investing - Theory, News & General
Topic: Bonds beyond Total Bond Market - Anyone ?
Replies: 47
Views: 3434

Re: Bonds beyond Total Bond Market - Anyone ?

Just had a portfolio review with a firm and they recommend "diversification" of Total Bond Market with TIPS, Floats, High Yield, etc.... A "portfolio review" is an euphemistic term for a sales pitch, usually. They get paid when they convince you to move investments into their products or use some p...
by ThrustVectoring
Thu May 16, 2019 2:44 pm
Forum: Investing - Theory, News & General
Topic: We’ve won the game...but how do we stop playing?
Replies: 76
Views: 8016

Re: We’ve won the game...but how do we stop playing?

Does your grandmother intend to leave significant amounts of money to charity? If so, donating appreciated securities to a donor-advised fund or directly to charities can be a fantastic way to manage exposure while achieving charitable goals. Alternatively, you can just manually market-cap weight th...
by ThrustVectoring
Tue May 14, 2019 2:02 pm
Forum: Investing - Theory, News & General
Topic: Should one diversify into annuities and not bonds?
Replies: 18
Views: 1944

Re: Should one diversify into annuities and not bonds?

There's two big factors for annuities that you missed: 1. The mortality credits means that these contracts do not benefit your heirs or any charities in your estate. You might care a lot about this, and if so annuities are a poor choice. 2. Annuity contracts and their proceeds are often afforded bet...
by ThrustVectoring
Sun May 12, 2019 10:54 am
Forum: Investing - Theory, News & General
Topic: Asset Location
Replies: 11
Views: 1357

Re: Asset Location

If you do have a taxable account (many do not), do not despair about having to sell in taxable to get needed money. Have an emergency fund. If your needs exceed the emergency fund, sell stocks in taxable and then sell bonds and buy stocks in tax-deferred accounts. That way, you are actually selling...
by ThrustVectoring
Fri May 10, 2019 6:09 pm
Forum: Investing - Theory, News & General
Topic: Any conservative young investors?
Replies: 68
Views: 6293

Re: Any conservative young investors?

28 living in a medium-high COL area. I'm currently at 80/20 but I have been sorely tempted to just go all-in with one of Vanguard's balanced funds at 60/40. My reasoning is that I don't necessarily need to take the risk. I have a 60% savings rate on a mid-six-figure income and based on historical r...
by ThrustVectoring
Fri May 10, 2019 1:51 pm
Forum: Investing - Theory, News & General
Topic: Put 100% of Equities in Roth and Taxable?
Replies: 17
Views: 1087

Re: Put 100% of Equities in Roth and Taxable?

Taxable being 100% equities is completely sensible. From a practical perspective, gains are easier to access before age 59.5 from your tax-deferred account, since you can do a Roth conversion of the gains followed by a tax-free withdrawal 5 years later. So if early retirement is a possibility, putti...
by ThrustVectoring
Fri May 10, 2019 12:06 pm
Forum: Investing - Theory, News & General
Topic: Any conservative young investors?
Replies: 68
Views: 6293

Re: Any conservative young investors?

When I was younger, I didn't invest in stocks at all. I focused on getting rid of consumer debt and student loans, and saving up enough of a cash buffer that it and private disability insurance would secure my daily life. Only then did I start putting money into stocks, and at that point 100% of my ...
by ThrustVectoring
Wed May 08, 2019 1:22 pm
Forum: Investing - Theory, News & General
Topic: 100% Equities AA
Replies: 13
Views: 1745

Re: 100% Equities AA

Equity percentage has much more to do with how long your investment timeframe is rather than specific current market conditions. It has to do with the tension between maximizing your long-term growth through risk-taking, and ensuring that your investment plan is likely to meet your needs. Any analys...
by ThrustVectoring
Fri May 03, 2019 1:49 pm
Forum: Investing - Theory, News & General
Topic: Yields of Treasury Zeros vs. Treasuries
Replies: 3
Views: 482

Re: Yields of Treasury Zeros vs. Treasuries

Treasury STRIPs are a much less liquid market than the outright bonds, so it's likely that the price includes some embedded costs etc. It's hard for arbitrageurs to generate that STRIP in order to sell them into the market (since you have to buy a lot of treasuries and strip out the coupons, then yo...
by ThrustVectoring
Wed May 01, 2019 5:57 pm
Forum: Investing - Theory, News & General
Topic: A sane and healthy financial life?
Replies: 29
Views: 2472

Re: A sane and healthy financial life?

I have come to the realization I am not well prepared to understand and quantify how much I might need in retirement. Most people spend roughly the same amount in retirement as beforehand. Usually it actually goes down a bit, since they no longer need to incur expenses related to maintaining their ...
by ThrustVectoring
Sat Apr 27, 2019 2:16 am
Forum: Investing - Theory, News & General
Topic: Why won't Vanguard drop VTI & VOO expense to 0.03?
Replies: 65
Views: 8378

Re: Why won't Vanguard drop VTI & VOO expense to 0.03?

Vanguard recently dropped the expense ratio for these funds to 0.03%, by the way.
by ThrustVectoring
Fri Apr 26, 2019 11:56 am
Forum: Investing - Theory, News & General
Topic: 1Q 2019 GDP Growth Strong at 3.2%
Replies: 14
Views: 1331

Re: 1Q 2019 GDP Growth Strong at 3.2%

Most individual investors do way better if they ignore news and market information and simply invest based on their personal financial situation. Does it have a material impact on your personal expected cash flows? If not, ignore it 100% and just stick to your plan. The market is going to give us wh...
by ThrustVectoring
Mon Apr 22, 2019 4:46 pm
Forum: Investing - Theory, News & General
Topic: Re-Examining an assumption: 45% bonds in retirement?
Replies: 95
Views: 11007

Re: Re-Examining an assumption: 45% bonds in retirement?

The point of buying bonds isn't for their return, it's for their price stability. If bonds have a lower return, that's no reason to increase your risk tolerance and go from 55% stock to 75%. If anything, if you expect different future interest rate environments, it's an argument to hold different bo...
by ThrustVectoring
Mon Apr 22, 2019 2:26 pm
Forum: Investing - Theory, News & General
Topic: Avoid taxable transactions by not using automatic dividend reinvestment?
Replies: 13
Views: 1707

Re: Avoid taxable transactions by not using automatic dividend reinvestment?

This avoids creating extra lots with different taxable basis for later reporting of capital gains.
by ThrustVectoring
Sat Apr 20, 2019 12:56 pm
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzle: Findings from a Recent Survey
Replies: 37
Views: 3001

Re: The Annuity Puzzle: Findings from a Recent Survey

I was planning to use my RMDs as my "annuity," but the quote I get on $100,000 SPIA exceeds that or is very close for me at age 70. Very tempting. What would I use 100k in IRA money for otherwise? Is it safer from creditors as an annuity? Creditor protection is very state-specific. Usually, though,...
by ThrustVectoring
Wed Apr 17, 2019 12:15 pm
Forum: Investing - Theory, News & General
Topic: Wade Pfau & Reverse Mortgages
Replies: 6
Views: 578

Re: Wade Pfau & Reverse Mortgages

Reverse mortgages and SPIAs are definitely a thing for when you'd otherwise not have enough money for your retirement. If you can afford it, it's far better to hold a standard portfolio sized for post-SS spending and then do liability matching for the gap between retirement date and social security ...
by ThrustVectoring
Wed Apr 17, 2019 12:04 pm
Forum: Investing - Theory, News & General
Topic: Junk bonds undervalued due to boglehead popularity?
Replies: 51
Views: 4681

Re: Junk bonds undervalued due to boglehead popularity?

Classic Bogleheads take their risk on the equity side and use investment grade bonds as ballast. OTOH, using an asset class such as junk bonds helps by using the free lunch of diversification. Yes. Excluding an asset class (or significant market segment) does not seem to be consistent with broad di...
by ThrustVectoring
Wed Apr 17, 2019 11:59 am
Forum: Investing - Theory, News & General
Topic: Junk bonds undervalued due to boglehead popularity?
Replies: 51
Views: 4681

Re: Junk bonds undervalued due to boglehead popularity?

It shouldn't matter whether Bogleheads or investors as a whole are biased against junk bonds. As long as sufficient capital exists to purchase them with an appropriate spread, they can be accurately priced. If the spread grew too large, for example, hedge funds could purchase large numbers of junk ...
by ThrustVectoring
Tue Apr 16, 2019 1:59 pm
Forum: Investing - Theory, News & General
Topic: Understanding using treasury futures for leverage to implement risk parity
Replies: 120
Views: 7383

Re: Understanding using treasury futures for leverage to implement risk parity

This thread is more relevant than HEDGEFUNDIE's because user Rob Bertram uses treasury futures whereas HEDGEFUNDIE uses leveraged ETFs. A lot of good info in here. Should I use margin to buy a balanced fund? If you want to maintain a continuous roll on your futures and not try to time the market, I...
by ThrustVectoring
Tue Apr 16, 2019 11:55 am
Forum: Investing - Theory, News & General
Topic: Why does the stock market go up in the long term?
Replies: 62
Views: 4612

Re: Why does the stock market go up in the long term?

For the stock market to always go up over the long term, that would seem to suggest that stocks are perpetually outperforming expectations, which doesn’t seem to make sense. Stocks do tend outperform expectations. The problem is that you don't know which stocks will outperform expectations, and by ...
by ThrustVectoring
Tue Apr 16, 2019 11:50 am
Forum: Investing - Theory, News & General
Topic: Interest rates vs. inflation
Replies: 4
Views: 572

Re: Interest rates vs. inflation

Roughly speaking, the market expects both real and nominal bonds to have the same yield. The 30-year treasury is currently yielding 2.96. The 30-year TIPS is currently yielding 0.99 + inflation adjustments. So the current market expectation is that inflation will average 1.97% over the next thirty y...
by ThrustVectoring
Mon Apr 15, 2019 1:56 pm
Forum: Investing - Theory, News & General
Topic: What is your one favorite fixed income for retirement?
Replies: 46
Views: 5924

Re: What is your one favorite fixed income for retirement?

The exact fixed income product you use doesn't matter all that much - how you take risk on the equity side is far more important, because equities are so much riskier in general. You still want to minimize costs, though. I'm currently leaning towards individual TIPS bonds, due to costs (zero through...
by ThrustVectoring
Mon Apr 15, 2019 1:48 pm
Forum: Investing - Theory, News & General
Topic: Home equity as % of AA
Replies: 41
Views: 2973

Re: Home equity as % of AA

*with a non recourse mortgage the equity value actually is relevant, a small quibble with your earlier statement that it's not. Equity isn't relevant to the extent the lender could come after assets other than house at negative equity on the mortgage. Home equity is only relevant since it determine...
by ThrustVectoring
Mon Apr 15, 2019 12:28 pm
Forum: Investing - Theory, News & General
Topic: Help me test / align this slightly alternate take
Replies: 4
Views: 490

Re: Help me test / align this slightly alternate take

I think the long-term growth of equity investment dwarfs the tax advantages of US Savings Bonds and the like. Definitely agree that human capital and personal financial behavior is incredibly important, though. I'd also throw in having an adequate emergency fund - not only can it deal with otherwise...
by ThrustVectoring
Mon Apr 15, 2019 12:11 pm
Forum: Investing - Theory, News & General
Topic: Home equity as % of AA
Replies: 41
Views: 2973

Re: Home equity as % of AA

There's two separate parts of home ownership that I think should be talked about separately. There's the consumption aspect, which is the cash flows involved in owning a house, and the asset part, which is the actual exposure to real estate price volatility. As far as consumption goes, you should e...
by ThrustVectoring
Mon Apr 15, 2019 2:26 am
Forum: Investing - Theory, News & General
Topic: Understanding using treasury futures for leverage to implement risk parity
Replies: 120
Views: 7383

Re: Understanding using treasury futures for leverage to implement risk parity

Questions: - Is 2 5 year treasury futures contracts essentially identical to 1 10 year treasury futures contract? Can this portfolio be implemented at 1/2 the size then, using 2 micro S&P500 futures and 1 5 year contract? Not quite. The "10-year" is the name of the futures contract because the maxi...
by ThrustVectoring
Mon Apr 15, 2019 2:04 am
Forum: Investing - Theory, News & General
Topic: Home equity as % of AA
Replies: 41
Views: 2973

Re: Home equity as % of AA

There's two separate parts of home ownership that I think should be talked about separately. There's the consumption aspect, which is the cash flows involved in owning a house, and the asset part, which is the actual exposure to real estate price volatility. As far as consumption goes, you should es...
by ThrustVectoring
Sun Apr 14, 2019 8:59 pm
Forum: Investing - Theory, News & General
Topic: What TIPS yield is equivalent to 4% SWR but guarantees 30 year portfolio survival?
Replies: 30
Views: 2888

Re: What TIPS yield is equivalent to 4% SWR but guarantees 30 year portfolio survival?

It's more complicated. You're spending down the portfolio over time, so thirty years from now you'll only get the interest in the last year's worth of TIPS bonds, not on the entire starting portfolio. The math also depends on how much of the yield is from the coupon versus a premium/discount to par....
by ThrustVectoring
Fri Apr 12, 2019 2:19 pm
Forum: Investing - Theory, News & General
Topic: Indexing on leverage?
Replies: 31
Views: 1798

Re: Indexing on leverage?

What you need is a 30-40 year fixed rate loan. You can get fixed rate loans backed by your stock holdings. For example, here's a 12 year 4.75% fixed rate loan: https://www.firsttechfed.com/Loans/Personal-Loans/Secured-Personal-Loans/Stock-Secured-Loan Taking out a fixed rate loan is technically equ...
by ThrustVectoring
Thu Apr 11, 2019 5:17 pm
Forum: Investing - Theory, News & General
Topic: Indexing on leverage?
Replies: 31
Views: 1798

Re: Indexing on leverage?

"Stocks yield more than the borrowing costs, so this has a positive expected value" isn't the whole story. If you maintain a fixed leverage ratio, the more leverage you use, the more you need to do buy-high/sell-low trading. If you have a $10k stake in $20k of stock, and it goes up by 10%, you wind ...
by ThrustVectoring
Thu Apr 11, 2019 5:02 pm
Forum: Investing - Theory, News & General
Topic: Junk bonds undervalued due to boglehead popularity?
Replies: 51
Views: 4681

Re: Junk bonds undervalued due to boglehead popularity?

There's an investing strategy that hedge funds can use when they believe that junk bonds are undervalued. It's called capital structure arbitrage: buy the junk bond and take a short position in the stock (either short stock + buy call option if the implied volatility is high, or buy put options if t...
by ThrustVectoring
Wed Apr 10, 2019 3:16 pm
Forum: Investing - Theory, News & General
Topic: M1 Finance Portfolio Review
Replies: 3
Views: 376

Re: M1 Finance Portfolio Review

All dividends do is move money from the companies you're invested in to your cash account while incurring taxes. It's pointless to optimize for them. The M1 Finance portfolio you "should" have is Vanguard's total market ETFs: 60% VTI / 40% VXUS for the equity portion, and whatever fixed income produ...
by ThrustVectoring
Wed Apr 10, 2019 3:12 pm
Forum: Investing - Theory, News & General
Topic: Baby boomer vicious cycle crash
Replies: 63
Views: 5591

Re: Baby boomer vicious cycle crash

Converting demographic data into stock market predictions is entirely quixotic, IMHO. The only overall takeaway you can get is that the amount of goods and work produced and consumed has to equal out. Retirees are consumers and not producers, so a higher ratio between retirees and workers means some...
by ThrustVectoring
Wed Apr 10, 2019 3:04 pm
Forum: Investing - Theory, News & General
Topic: Did I read this correctly? SS and your AA
Replies: 36
Views: 4066

Re: Did I read this correctly? SS and your AA

So I will assert that the correct answer is to convert your Social Security is a pseudo bond-like asset and retirement expenses into a pseudo liability using Net Present Value calculations. On the other hand, there are plenty of response like this: That logic is rubbish. Real annuities should be mo...
by ThrustVectoring
Wed Apr 10, 2019 5:11 am
Forum: Investing - Theory, News & General
Topic: Socially Responsible [Investing]
Replies: 58
Views: 3694

Re: Socially Responsible

Why should socially responsible companies be expected to do worse? I doubt there could be much data showing that. Even if some funds do worse, it is hard to say if it was because of such a vaguely defined factor. I think in general, ethical companies are better-managed than unethical ones, and may ...
by ThrustVectoring
Wed Apr 10, 2019 5:04 am
Forum: Investing - Theory, News & General
Topic: Leveraged TIPS?
Replies: 15
Views: 982

Re: Leveraged TIPS?

TIPS do not have inflation risk. Two five-year TIPS will have "twice" the inflation adjustment as one ten-year TIPS only if you have twice as much money (or thereabouts) to invest. Can you elaborate? A fully funded TIPS position have a net inflation risk of zero - the inflation adjustment exactly o...
by ThrustVectoring
Tue Apr 09, 2019 7:38 pm
Forum: Investing - Theory, News & General
Topic: Leveraged TIPS?
Replies: 15
Views: 982

Re: Leveraged TIPS?

TIPS do not have inflation risk. Two five-year TIPS will have "twice" the inflation adjustment as one ten-year TIPS only if you have twice as much money (or thereabouts) to invest. Can you elaborate? A fully funded TIPS position have a net inflation risk of zero - the inflation adjustment exactly o...
by ThrustVectoring
Tue Apr 09, 2019 6:56 pm
Forum: Investing - Theory, News & General
Topic: Leveraged TIPS?
Replies: 15
Views: 982

Re: Leveraged TIPS?

Best way to do this is by using long dated TIPS like LTPZ. Theoretically you can lever up easily 10 times in Portfolio Margin account at Interactive Brokers. But the margin rates costs more than the expected return of TIPs For nominal treasuries, the difference between levering up short-term bonds ...
by ThrustVectoring
Tue Apr 09, 2019 3:03 pm
Forum: Investing - Theory, News & General
Topic: Leveraged TIPS?
Replies: 15
Views: 982

Re: Leveraged TIPS?

As a retail investor, you likely can't get leverage costs low enough to expect to make money. If you have a family office with the right regulatory approval and trading permissions then you can lever up in the repo market, but that's the sort of thing that needs like $100M+ in assets to handle. If y...
by ThrustVectoring
Tue Apr 09, 2019 2:56 pm
Forum: Investing - Theory, News & General
Topic: Did I read this correctly? SS and your AA
Replies: 36
Views: 4066

Re: Did I read this correctly? SS and your AA

That logic is rubbish. Real annuities should be modeled as a reduction in expenses. If you're retiring before claiming social security, model the missing gap as an additional fixed expense that you need to save for. Just look at the cash flows as it becomes obvious. A person with $100k of expenses n...
by ThrustVectoring
Tue Apr 09, 2019 2:28 pm
Forum: Investing - Theory, News & General
Topic: ST TIPS
Replies: 8
Views: 838

Re: ST TIPS

I think short term tips are the closest approximation to the risk-free investment of portfolio theory that is available from any real investment. Adding ST Tips to a portfolio of risky assets then is a good way to dilute the overall portfolio risk to whatever level is wanted. Cash securities are th...
by ThrustVectoring
Mon Apr 08, 2019 11:19 pm
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1460

Re: Should I place bonds in my IRA or Roth IRA

Well, yes, if you discount for the tax cost of the Roth contribution. But that's not what we are discussing. OP isn't asking where to contribute, but rather how to allocate the dollars already in the accounts. If you expect equities to grow more than bonds, fill up the Roth with equities first. You...
by ThrustVectoring
Mon Apr 08, 2019 10:25 pm
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1460

Re: Should I place bonds in my IRA or Roth IRA

Well, yes, if you discount for the tax cost of the Roth contribution. But that's not what we are discussing. OP isn't asking where to contribute, but rather how to allocate the dollars already in the accounts. If you expect equities to grow more than bonds, fill up the Roth with equities first. You...
by ThrustVectoring
Mon Apr 08, 2019 9:56 pm
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1460

Re: Should I place bonds in my IRA or Roth IRA

I'm having trouble following your two posts on this thread. First, you suggest to get the highest expected return, have no bonds. OP wants bonds. Bonds are a given. Then, the question is optional placement. Saying, "place your bonds nowhere" is unhelpful. "Bonds nowhere" is a proof by contradiction...
by ThrustVectoring
Mon Apr 08, 2019 9:06 pm
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1460

Re: Should I place bonds in my IRA or Roth IRA

I'm having trouble following your two posts on this thread. First, you suggest to get the highest expected return, have no bonds. OP wants bonds. Bonds are a given. Then, the question is optional placement. Saying, "place your bonds nowhere" is unhelpful. "Bonds nowhere" is a proof by contradiction...
by ThrustVectoring
Mon Apr 08, 2019 8:46 pm
Forum: Investing - Theory, News & General
Topic: Cash-out refinance and buy a SPIA vs. reverse mortgage?
Replies: 31
Views: 1610

Re: Cash-out refinance and buy a SPIA vs. reverse mortgage?

When my wife and I were about 80, we mortgaged our home and purchased two Single Premium Immediate Annuities (SPIAs). With the added income during our lives assured, we were able to give our children most of the equity in our home while we were still alive and when they needed the money most. Note ...