Search found 620 matches

by ThrustVectoring
Wed Jan 16, 2019 7:42 am
Forum: Investing - Theory, News & General
Topic: When would you stop being a Boglehead?
Replies: 95
Views: 7391

Re: When would you stop being a Boglehead?

At a high enough level of net worth, it's worth owning the individual stocks composing the S&P 500 instead of an index fund. Both for cutting out a couple basis points of expenses, and for the flexibility of donating appreciated securities to a donor advised fund and rebuying them with new cash at a...
by ThrustVectoring
Wed Jan 16, 2019 7:36 am
Forum: Investing - Theory, News & General
Topic: What do futures really leverage exposure to?
Replies: 27
Views: 1643

Re: What do futures really leverage exposure to?

Not sure that works tho? An oil industry worker's salary probably won't track upward movement in oil prices, leaving nothing to counter the loss on the futures contract (similar story for the trucker when oil prices drop). Right, put options are a better choice here (if possible, struck just above ...
by ThrustVectoring
Tue Jan 15, 2019 4:03 pm
Forum: Investing - Theory, News & General
Topic: What do futures really leverage exposure to?
Replies: 27
Views: 1643

Re: What do futures really leverage exposure to?

Second, futures have higher leverage. Margin has leverage between 2x and 4x. Futures have leverage of 20x to 50x. Third, futures are very usefully in hedging and transforming a portfolio. This is where the graduate level books come into play. Don't think about futures as a individual security, thin...
by ThrustVectoring
Sun Jan 13, 2019 9:44 pm
Forum: Investing - Theory, News & General
Topic: How to avoid temptation to buy hot stocks or bitcoin?
Replies: 63
Views: 4248

Re: How to avoid temptation to buy hot stocks or bitcoin?

Make investing something that happens automatically, so you just don't think about it. Set things up once so that your paycheck gets divided into 401(k) deferrals, direct deposit into a checking account for bills and spending, and any additional investment in an IRA and/or brokerage account at Vangu...
by ThrustVectoring
Sun Jan 13, 2019 2:45 am
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 64
Views: 4334

Re: Are REITs better to purchase when interest rates are high or low?

Any easily knowable effect of interest rates on REITs will be baked into the price, so it doesn't/shouldn't matter. Generally speaking, though, earlier prices tend to be better than later.
by ThrustVectoring
Thu Jan 10, 2019 3:45 pm
Forum: Investing - Theory, News & General
Topic: Should I take $70K LTCG at 0% tax rate or transfer $70K from IRA to Roth @ 12%?
Replies: 21
Views: 1575

Re: Should I take $70K LTCG at 0% tax rate or transfer $70K from IRA to Roth @ 12%?

Roth conversions are probably better. Long-term capital gains are often taxed at 0% anyhow if the money winds up getting donated to charity or left to heirs at death. Tax-deferred accounts only have the charity exemption, otherwise withdrawals are ordinary income for the heir.
by ThrustVectoring
Wed Jan 09, 2019 10:17 pm
Forum: Investing - Theory, News & General
Topic: Talk me out of a 60/40 AA
Replies: 103
Views: 14482

Re: Talk me out of a 60/40 AA

My answer to the question would be no. It does not make sense to do so. However, people do it all the time due to lack of other options. However, instead of making a decision to go further out on the curve, I think it makes more sense to stick with the most efficient allocation and then apply lever...
by ThrustVectoring
Wed Jan 09, 2019 6:29 pm
Forum: Investing - Theory, News & General
Topic: Portfolio of Leveraged Exchange Traded Funds
Replies: 33
Views: 1755

Re: Portfolio of Leveraged Exchange Traded Funds

Leverage is leverage , and levered ETFs aren't the cheapest source of leverage. ... A daily, or even monthly, double return ETF is nothing like borrowing to buy an index ETF. Leverage is not all the same. PJW I'm well aware of the buy high / sell low effect of periodic rebalancing of short or lever...
by ThrustVectoring
Wed Jan 09, 2019 5:19 pm
Forum: Investing - Theory, News & General
Topic: Portfolio of Leveraged Exchange Traded Funds
Replies: 33
Views: 1755

Re: Portfolio of Leveraged Exchange Traded Funds

Leverage is leverage, and levered ETFs aren't the cheapest source of leverage. Treasury futures are. There's a small advantage to the levered ETFs due to convexity - as the stock market declines, the daily rebalance will reduce your position automatically, limiting extreme downside losses to no more...
by ThrustVectoring
Wed Jan 09, 2019 2:53 pm
Forum: Investing - Theory, News & General
Topic: Talk me out of a 60/40 AA
Replies: 103
Views: 14482

Re: Talk me out of a 60/40 AA

My answer to the question would be no. It does not make sense to do so. However, people do it all the time due to lack of other options. However, instead of making a decision to go further out on the curve, I think it makes more sense to stick with the most efficient allocation and then apply lever...
by ThrustVectoring
Wed Jan 09, 2019 2:28 pm
Forum: Investing - Theory, News & General
Topic: Safe withdrawal rate at 38 years old
Replies: 95
Views: 7422

Re: Safe withdrawal rate at 38 years old

A big personal factor that people don't take into account is how much your minimum non-discretionary spending is, compared with your discretionary spending. Safe withdrawal rate calculations tend to assume that you're pulling out non-discretionary spending only. 35 or 40 times your non-discretionary...
by ThrustVectoring
Wed Jan 09, 2019 2:14 pm
Forum: Investing - Theory, News & General
Topic: Talk me out of a 60/40 AA
Replies: 103
Views: 14482

Re: Talk me out of a 60/40 AA

This is what I'm missing - increasing the stock AA from 60/40 to 80/20 has less than a 1% increase in CAGR in every 10+ year period I've looked at. You have to shorten the window to < 5 years before I've found a meaningful increase in CAGR. But even then does a 2% increase in CAGR justify a > 20% d...
by ThrustVectoring
Thu Jan 03, 2019 7:51 pm
Forum: Investing - Theory, News & General
Topic: 20-Year Backtest Challenge
Replies: 33
Views: 1284

Re: 20-Year Backtest Challenge

... I'm talking about correlations, not returns. Clearly the Long Treasuries are there to meet the drawdown requirement. Maybe, but it could just as easily been cash/T-bills over a different time period. No, HEDGEFUNDIE is right. I actually tried alternatives, but I really needed the Long-Ts for th...
by ThrustVectoring
Thu Jan 03, 2019 6:47 pm
Forum: Investing - Theory, News & General
Topic: 20-Year Backtest Challenge
Replies: 33
Views: 1284

Re: 20-Year Backtest Challenge

If we're allowing leverage, then adding levered short-term treasuries and shorting cash can boost the returns of a "standard" 60% VTSAX / 40% VTIAX portfolio significantly. It understates the real-world cost of leverage (via treasury futures contracts) by something like ten to fifty basis points, wh...
by ThrustVectoring
Thu Jan 03, 2019 3:30 pm
Forum: Investing - Theory, News & General
Topic: Traditional 401K vs Roth 401k
Replies: 60
Views: 3564

Re: Traditional 401K vs Roth 401k

Traditional is better for almost everybody. The exception is people who have extremely low incomes. And it's not really about future tax laws...traditional is simply just better for a lot of reasons. The only thing Roth is good for is if you owe like 0% tax now. If you're very likely to get a massi...
by ThrustVectoring
Thu Jan 03, 2019 3:22 pm
Forum: Investing - Theory, News & General
Topic: Vanguard To Liquidate Convertible Securities Fund
Replies: 24
Views: 1785

Re: Vanguard To Liquidate Convertible Securities Fund

On the other hand, Buffet has access to cheap leverage and regularly uses it to spruce up returns. Individual investors tend to not do this, so using lower risk/return assets will simply lower their returns regardless of how attractive they are on a risk-adjusted basis. I don't think that has much ...
by ThrustVectoring
Thu Jan 03, 2019 1:58 pm
Forum: Investing - Theory, News & General
Topic: Vanguard To Liquidate Convertible Securities Fund
Replies: 24
Views: 1785

Re: Vanguard To Liquidate Convertible Securities Fund

If investors should own the market portfolio, why should convertibles or preferred stocks be excluded from that? I don't see why common stocks and corporate bonds are inherently superior to convertibles or preferred stocks. There have been times when convertible securities have been very profitable...
by ThrustVectoring
Wed Jan 02, 2019 9:59 pm
Forum: Investing - Theory, News & General
Topic: BRK.B in 2019
Replies: 16
Views: 1806

Re: BRK.B in 2019

Same thing I think about every stock's value and long-term prospects: I dunno lol ¯\(°_o)/¯

Current market price is at least vaguely reasonable, and if there's a better way to do things then some team of math PhDs at a hedge fund is going to be able to out-guess me and essentially pick my pocket.
by ThrustVectoring
Wed Jan 02, 2019 8:59 pm
Forum: Investing - Theory, News & General
Topic: What do you think of this advice?
Replies: 62
Views: 4222

Re: What do you think of this advice?

What should I do during a stock market crash? Nothing. Absolutely nothing. Statistically, this is the best way to manage your investments - put what you can afford to never see again into stock market index funds, and then do literally nothing with it. There was a study I read of a while back which...
by ThrustVectoring
Wed Jan 02, 2019 2:10 am
Forum: Investing - Theory, News & General
Topic: Buy ETF with IRA contribution on first trading day?
Replies: 8
Views: 561

Re: Buy ETF with IRA contribution on first trading day?

In expectation, a day will honestly make absolutely zero difference. You've really got better things to worry about. Back of envelope math: assume VTSAX earns 7% per year, so a day's delay is worth $6000 * 7% / 365 = $1.15 If you pack a lunch one more day per year that'll make a bigger difference. ...
by ThrustVectoring
Tue Jan 01, 2019 11:10 pm
Forum: Investing - Theory, News & General
Topic: Buy ETF with IRA contribution on first trading day?
Replies: 8
Views: 561

Re: Buy ETF with IRA contribution on first trading day?

In expectation, a day will honestly make absolutely zero difference. You've really got better things to worry about.

Back of envelope math: assume VTSAX earns 7% per year, so a day's delay is worth $6000 * 7% / 365 = $1.15

If you pack a lunch one more day per year that'll make a bigger difference.
by ThrustVectoring
Mon Dec 31, 2018 10:02 pm
Forum: Investing - Theory, News & General
Topic: Will you contribute the max to your IRA and then invest it all in equities for the first market day of the new year?
Replies: 159
Views: 7747

Re: Will you contribute the max to your IRA and then invest it all in equities for the first market day of the new year?

Nope. Never do that. I usually invest it on the first big drop of the year that goes below the 12/31 value. There are very few years when the stock market doesn't go below the 12/31 value, so my investment that year almost always outperforms the total return for the year. Picking up nickles in fron...
by ThrustVectoring
Mon Dec 31, 2018 8:26 pm
Forum: Investing - Theory, News & General
Topic: Other Portfolios that aren't 3 fund
Replies: 55
Views: 6552

Re: Other Portfolios that aren't 3 fund

Total stock + total international stock makes way too much sense to me to justify mucking about with things there. Fixed income, on the other hand, has much more interesting options. Total Bond market works, sure, but I don't think it's necessarily the right call for individual investors. For stocks...
by ThrustVectoring
Mon Dec 31, 2018 5:50 pm
Forum: Investing - Theory, News & General
Topic: Risks of secondary muni bonds?
Replies: 15
Views: 643

Re: Risks of secondary muni bonds?

In order for prices to move together, the arbitrage trade has to be working properly. Here, the arbitrage play is to borrow cash, buy the muni bond, and sell treasury futures to get an approximate DV01 of zero. It's not fully arbitraged since they're still exposed to the credit risk of the lender, b...
by ThrustVectoring
Mon Dec 31, 2018 5:14 pm
Forum: Investing - Theory, News & General
Topic: Tips breakevens and illiquidity premia
Replies: 75
Views: 4937

Re: Tips breakevens and illiquidity premia

To amplify my line of reasoning. I don’t have much insight about near term inflation- say in the next 5-10 years. But longer term, which is why I look at the 20x10 period or 2028-2048, i’m Betting that the fed will deliver on its 2% target for pce. And again CPI tends to run about 25 bps higher tha...
by ThrustVectoring
Sat Dec 29, 2018 2:55 pm
Forum: Investing - Theory, News & General
Topic: Annuities objectively considered
Replies: 111
Views: 7297

Re: Annuities objectively considered

There's one annuity product that's worth buying, and that's a single premium immediate annuity. And that's only because it gets around the ban on tontines. With SPIAs, 100% of the money put into the system gets turned into income that retirees can (and should) spend. Standard investments have the pr...
by ThrustVectoring
Thu Dec 27, 2018 2:23 pm
Forum: Investing - Theory, News & General
Topic: 100% stocks vs 80% just to rebalance? (Edit: Inside retirement accounts)
Replies: 24
Views: 2508

Re: 100% stocks vs 80% just to rebalance? (Edit: Inside retirement accounts)

if this is not the appropriate way to evaluate this hypothesis, what is? The appropriate way to evaluate the relative merits of a "rebalancing bonus" versus a heavier allocation to risky assets is through the Kelley Criterion. This is the asset allocation where the "buy low, sell high" effect of ha...
by ThrustVectoring
Wed Dec 26, 2018 6:18 pm
Forum: Investing - Theory, News & General
Topic: 100% stocks vs 80% just to rebalance? (Edit: Inside retirement accounts)
Replies: 24
Views: 2508

Re: 100% stocks vs 80% just to rebalance? (Edit: Inside retirement accounts)

if this is not the appropriate way to evaluate this hypothesis, what is? The appropriate way to evaluate the relative merits of a "rebalancing bonus" versus a heavier allocation to risky assets is through the Kelley Criterion. This is the asset allocation where the "buy low, sell high" effect of ha...
by ThrustVectoring
Fri Dec 21, 2018 2:21 pm
Forum: Investing - Theory, News & General
Topic: "Step investing" vs. AA
Replies: 14
Views: 646

Re: "Step investing" vs. AA

This advice assumes stable employment, which is not my situation (I am 37, self-employed with a volatile/unreliable income stream). Yeah, you need to take care of a lot of short term liquidity and stability needs before going heavy on stock investment. My fits-on-a-notecard advice is "when you're y...
by ThrustVectoring
Thu Dec 20, 2018 12:37 pm
Forum: Investing - Theory, News & General
Topic: Pay off mortgage in higher interest rate environment
Replies: 9
Views: 1242

Re: Pay off mortgage in higher interest rate environment

Owing money on a mortgage is equivalent to shorting a bond and taking out a call option to cover your position. Paying more than the mortgage minimum is exercising the option. The embedded option starts fairly deep in the money, but loses out as interest rates rise and profiting off paying the mortg...
by ThrustVectoring
Tue Dec 18, 2018 6:03 pm
Forum: Investing - Theory, News & General
Topic: I feel cheated, saved too much in 401K vs cash.
Replies: 74
Views: 10068

Re: I feel cheated, saved too much in 401K vs cash.

dknightd wrote:
Tue Dec 18, 2018 6:00 pm
As long as you retire after 59.5 tax deferred is the way to go.
You can access money from a tax deferred account prior to age 59.5 without paying a penalty. It's simply significantly more awkward than after full retirement age. 72(t) withdrawals and Roth conversion ladders are the options, IIRC.
by ThrustVectoring
Tue Dec 18, 2018 5:57 pm
Forum: Investing - Theory, News & General
Topic: Investing in bonds while you still have a mortgage
Replies: 26
Views: 2524

Re: Investing in bonds while you still have a mortgage

In general I think you're right. A mortgage (or any fixed rate debt) is really just a bond. Literally, investors buy consumer mortgages which end up in our bond portfolios. It's an asset if you're the lender and a debt if you're the borrower, but a bond is a bond. Therefore investing in bonds and p...
by ThrustVectoring
Tue Dec 18, 2018 1:23 pm
Forum: Investing - Theory, News & General
Topic: VMVFX (Global Minimum Volatility) as core equity holding. Your opinion?
Replies: 128
Views: 7366

Re: VMVFX (Global Minimum Volatility) as core equity holding. Your opinion?

I have been watching this fund for a while and started adding it to my portfolio since last year. It has been doing very well since inception. Now I'm seriously considering using this fund as my core equity holding instead of US/foreign (currently 64/36). I have read many discussions about this fun...
by ThrustVectoring
Tue Dec 18, 2018 3:13 am
Forum: Investing - Theory, News & General
Topic: VMVFX (Global Minimum Volatility) as core equity holding. Your opinion?
Replies: 128
Views: 7366

Re: VMVFX (Global Minimum Volatility) as core equity holding. Your opinion?

I have been watching this fund for a while and started adding it to my portfolio since last year. It has been doing very well since inception. Now I'm seriously considering using this fund as my core equity holding instead of US/foreign (currently 64/36). I have read many discussions about this fun...
by ThrustVectoring
Mon Dec 17, 2018 4:44 pm
Forum: Investing - Theory, News & General
Topic: "Vectors"
Replies: 13
Views: 1407

Re: "Vectors"

The observation about returns gains/losses is a nice consequence of a more general result. total return = R = ( 1 + x ) (1 - y) where x,y are positive and the first term is a “gain” and the second term is a “loss”. 1) For a given x/y the return is independent of the order because multiplication is ...
by ThrustVectoring
Sat Dec 15, 2018 11:50 pm
Forum: Investing - Theory, News & General
Topic: "Vectors"
Replies: 13
Views: 1407

Re: "Vectors"

While accumulating assets, there is no "sequence of returns risk". It doesn't matter in what order losses and gains occur, the final balance will be the same. That's just wrong as a simple matter of math. If you put in a fixed schedule of money, it is far better to suffer early losses and late gain...
by ThrustVectoring
Fri Dec 14, 2018 1:55 pm
Forum: Investing - Theory, News & General
Topic: [Robinhood to offer 3% cash management program, not a bank account]
Replies: 160
Views: 10663

Re: [Robinhood to launch 3% interest bearing accounts, but is not a bank]

Nuestroro wrote:
Fri Dec 14, 2018 1:43 pm
How is this not a violation of Glass-Steagall, specifically 12 USC 378?
They're not offering the interest bearing account directly as their own offering. They are adding functionality to their web and phone applications to integrate with a partner bank who is offering those accounts.
by ThrustVectoring
Fri Dec 14, 2018 1:51 pm
Forum: Investing - Theory, News & General
Topic: [Robinhood to offer 3% cash management program, not a bank account]
Replies: 160
Views: 10663

Re: 3% Interest on checking and savings account - Robinhood

I posted a longer reply in another thread, but in short, this is not a bank account nor does it have FDIC insurance. The product will invest your money in short-term, highly safe securities (US treasuries) to obtain 3%. Where would they be finding short-term highly safe securities (US treasuries) p...
by ThrustVectoring
Wed Dec 12, 2018 5:29 pm
Forum: Investing - Theory, News & General
Topic: VMVFX (Global Minimum Volatility) as core equity holding. Your opinion?
Replies: 128
Views: 7366

Re: VMVFX (Global Minimum Volatility) as core equity holding. Your opinion?

Defensive stocks have done quite well over the decades. Depending on the time period, I believe the absolute returns are usually on par (and often better) than the broader market, and of course with lower volatility and drawdowns. The big outstanding question I have is how much I can trust that his...
by ThrustVectoring
Wed Dec 12, 2018 3:42 pm
Forum: Investing - Theory, News & General
Topic: VMVFX (Global Minimum Volatility) as core equity holding. Your opinion?
Replies: 128
Views: 7366

Re: VMVFX (Global Minimum Volatility) as core equity holding. Your opinion?

The concept of a "Bet Against Beta" factor implies that owning more of a low-volatility fund ought to out-perform at the same level of risk. The short explanation is that a lot of investors are unwilling or unable to use leverage, so they have to overbid on high risk / high reward assets in order to...
by ThrustVectoring
Wed Dec 12, 2018 1:53 pm
Forum: Investing - Theory, News & General
Topic: Our mentor [Jack Bogle] advises to "buy bonds" for protection in current market
Replies: 61
Views: 6093

Re: Our mentor advises to "buy bonds" for protection in current market

I'm honestly far more worried about an extended bull market that permanently destroys my purchasing power with respect to productive assets. The big risks to long-term investors have been more biased towards missing out on bull markets than getting hit by bear markets, particularly in the post-WW2 e...
by ThrustVectoring
Wed Dec 12, 2018 1:12 pm
Forum: Investing - Help with Personal Investments
Topic: Portfolio for a military lifer, too conservative?!?
Replies: 27
Views: 2641

Re: Portfolio Review!!! Thanks.

Thanks for the input TV. I probably could live off the military pension alone, I think that's why I have sort of slow rolled the retirement savings. I always put away a little but not nearly as much as I should have. With that said, I would prefer not to have to be super frugal when I finally retir...
by ThrustVectoring
Tue Dec 11, 2018 8:22 pm
Forum: Investing - Help with Personal Investments
Topic: Portfolio for a military lifer, too conservative?!?
Replies: 27
Views: 2641

Re: Portfolio Review!!! Thanks.

I'd increase your retirement account contributions (her Roth IRA, TSP) before making taxable investments. So if you spend $X per month, increase your paycheck deduction until your paycheck no longer covers that $X, and keep it up until your $7k extra cash savings is all used up. And on an ongoing ba...
by ThrustVectoring
Tue Dec 11, 2018 3:34 pm
Forum: Investing - Theory, News & General
Topic: Could a brokerage 'cheat' its own mutual fund investors during TLH?
Replies: 7
Views: 578

Re: Could a brokerage 'cheat' its own mutual fund investors during TLH?

Mark-to-market pricing of mutual funds is subject to both routine and spot audits. They could "cheat" mutual fund investors through manipulating it, but they would be caught by the SEC and fined or shut down, so this process basically happens honestly.
by ThrustVectoring
Tue Dec 11, 2018 1:55 pm
Forum: Investing - Theory, News & General
Topic: Do long-term bonds belong in one's portfolio?
Replies: 235
Views: 13185

Re: Do long-term bonds belong in one's portfolio?

For those who say to just hold more stocks, it's not good enough. Just looking at PV's EF, last 40 years using LT in a 60/40 porfolio improves IT for 1% (same risk) What about holding the same amount of stocks and more bonds of a shorter duration? Leverage is extraordinarily cheap in the highly liq...
by ThrustVectoring
Tue Dec 11, 2018 1:35 pm
Forum: Investing - Theory, News & General
Topic: Low need to take risk - decrease allocation to stocks?
Replies: 42
Views: 3221

Re: Low need to take risk - decrease allocation to stocks?

I have the same question as ge1. What are boglehead suggestions when several inheritances over the years (and a recent one the biggest at 7 figures) on top of my already carefully saved retirement assets have dramatically dropped my need for a lot of stocks. I'm 72, widowed long ago and no heirs ex...
by ThrustVectoring
Mon Dec 10, 2018 8:22 pm
Forum: Investing - Theory, News & General
Topic: Do long-term bonds belong in one's portfolio?
Replies: 235
Views: 13185

Re: Do long-term bonds belong in one's portfolio?

Given what I know of the treasury futures market, I feel like I have to be missing something for long-term bonds to make any sort of sense over levering up short-term bonds. Maybe convexity? Let's compare investment options for $100k in the 10-year cash bond vs the 2-year treasury futures contract....
by ThrustVectoring
Mon Dec 10, 2018 4:01 pm
Forum: Investing - Theory, News & General
Topic: Do long-term bonds belong in one's portfolio?
Replies: 235
Views: 13185

Re: Do long-term bonds belong in one's portfolio?

Yield spreads do matter, that is the bottomline. When yield curve is indicating narrow spreads between LT and IT, it doesn't pay to go long, and in fact the spread between ST and IT makes IT at the sweetspot of the yield curve. Back in the days Larry Swedroe used to advocate this point, and I agree...
by ThrustVectoring
Mon Dec 10, 2018 3:52 pm
Forum: Investing - Theory, News & General
Topic: Low need to take risk - decrease allocation to stocks?
Replies: 42
Views: 3221

Re: Low need to take risk - decrease allocation to stocks?

Portfolio size in nominal terms isn't particularly informative without a rough estimate of annual expenses. If you're not considering retirement until at least $4m, I'm going to assume you have 3/4ths of your annual expenses covered at a 4% withdrawal rate (so roughly 19 years of expenses saved). An...
by ThrustVectoring
Mon Dec 10, 2018 3:38 pm
Forum: Investing - Theory, News & General
Topic: Do long-term bonds belong in one's portfolio?
Replies: 235
Views: 13185

Re: Do long-term bonds belong in one's portfolio?

Given what I know of the treasury futures market, I feel like I have to be missing something for long-term bonds to make any sort of sense over levering up short-term bonds. Maybe convexity? Let's compare investment options for $100k in the 10-year cash bond vs the 2-year treasury futures contract. ...