Search found 421 matches

by ThrustVectoring
Mon Aug 13, 2018 4:12 pm
Forum: Investing - Theory, News & General
Topic: Should I contribute to 401k this year if retirement income will be higher?
Replies: 2
Views: 283

Re: Should I contribute to 401k this year if retirement income will be higher?

You probably want to do Roth 401k contributions if eligible, or a combination of traditional 401k contributions + Roth conversions.

Roth accounts are typically better than taxable, so using the 401k contribution space you have to contribute more to Roth accounts is the way to go.
by ThrustVectoring
Sat Aug 11, 2018 8:34 pm
Forum: Investing - Theory, News & General
Topic: (NEW) WisdomTree 90/60 U.S. Balanced Fund
Replies: 114
Views: 5823

Re: (NEW) WisdomTree 90/60 U.S. Balanced Fund

When the fund is holding treasury note or tbill futures? Is it getting interest payments on the futures that it owns? Would not getting interest payment hurt returns. Treasury futures act something like a zero coupon bond. The dividends from the underlying asset are baked into the future value. So ...
by ThrustVectoring
Sat Aug 11, 2018 1:23 pm
Forum: Investing - Theory, News & General
Topic: (NEW) WisdomTree 90/60 U.S. Balanced Fund
Replies: 114
Views: 5823

Re: (NEW) WisdomTree 90/60 U.S. Balanced Fund

From what I've read, treasury futures only require something like 3% margin, which for the 60% bonds means they've got a margin requirement of about 1.8% of total assets, meaning the fund is overcollateralized by over 5.5x before it hits a margin call. This is why it is so important that this fund ...
by ThrustVectoring
Sat Aug 11, 2018 3:53 am
Forum: Investing - Theory, News & General
Topic: (NEW) WisdomTree 90/60 U.S. Balanced Fund
Replies: 114
Views: 5823

Re: (NEW) WisdomTree 90/60 U.S. Balanced Fund

I didn't see what duration bonds they were buying with the 60% allocation. It makes a huge difference whether they're playing in the 2-year treasury futures market or the 10-year. Like, from a risk perspective, you can very roughly measure your risk limit through the margin requirements of the futur...
by ThrustVectoring
Mon Aug 06, 2018 6:39 pm
Forum: Investing - Theory, News & General
Topic: Treasury Bonds are the Only Bonds You Need
Replies: 112
Views: 11166

Re: Treasury Bonds are the Only Bonds You Need

Practical question. Currently, I invest $1k in TBM per month using Vanguard automatic investment. How do I auto-invest $1k per month in Treasury? Create an account at TreasuryDirect and set up recurring purchases with direct deposit. The instructions are on their website: https://www.treasurydirect...
by ThrustVectoring
Mon Aug 06, 2018 5:53 pm
Forum: Investing - Theory, News & General
Topic: "Don't Obsess About Expense Ratios"
Replies: 203
Views: 16714

Re: "Don't Obsess About Expense Ratios"

There's honestly a lot of slack when it comes to expense ratios and investment choice. As long as you're broadly diversified, you own enough stock, and have solidly low expense ratios, then your actual investment choices aren't particularly important. Both Vanguard, Schwab, or Fidelity are good enou...
by ThrustVectoring
Mon Aug 06, 2018 3:51 pm
Forum: Investing - Theory, News & General
Topic: Treasury Bonds are the Only Bonds You Need
Replies: 112
Views: 11166

Re: Treasury Bonds are the Only Bonds You Need

Picking a duration that is significantly shorter or longer than your investment horizon is an ACTIVE decision to make a bet on the direction of future interest rates (and in a complicated way that view investors understand). I mean on this logic, any long-term investor should be entirely in long-te...
by ThrustVectoring
Mon Aug 06, 2018 3:40 pm
Forum: Investing - Theory, News & General
Topic: Treasury Bonds are the Only Bonds You Need
Replies: 112
Views: 11166

Re: Treasury Bonds are the Only Bonds You Need

Picking a duration that is significantly shorter or longer than your investment horizon is an ACTIVE decision to make a bet on the direction of future interest rates (and in a complicated way that view investors understand). I mean on this logic, any long-term investor should be entirely in long-te...
by ThrustVectoring
Mon Aug 06, 2018 2:37 pm
Forum: Investing - Theory, News & General
Topic: Treasury Bonds are the Only Bonds You Need
Replies: 112
Views: 11166

Re: Treasury Bonds are the Only Bonds You Need

Picking a duration that is significantly shorter or longer than your investment horizon is an ACTIVE decision to make a bet on the direction of future interest rates (and in a complicated way that view investors understand). I mean on this logic, any long-term investor should be entirely in long-te...
by ThrustVectoring
Sun Aug 05, 2018 11:18 am
Forum: Investing - Theory, News & General
Topic: Will dividend spending only portfolio last forever ?
Replies: 90
Views: 5603

Re: Will dividend spending only portfolio last forever ?

Not necessarily. Generally it'll last a very long time due to the low withdrawal rate - and if your portfolio is total market index funds, that withdrawal rate will let it last forever. There are, however, some companies that will pay a great dividend for a while and then shut down, and it's extraor...
by ThrustVectoring
Tue Jul 24, 2018 1:20 pm
Forum: Investing - Theory, News & General
Topic: Confused about Treasury bills and notes
Replies: 11
Views: 1112

Re: Confused about Treasury bills and notes

...you "Enter the Purchase Amount (from 100 to 5,000,000 in $100 increments)." This is a classic example of why I refuse to use Treasury Direct. From experience. I know exactly what those instructions mean. But if I didn't, I would be thoroughly confused. TD is supposed to be a consumer site, not a...
by ThrustVectoring
Mon Jul 23, 2018 10:36 pm
Forum: Investing - Theory, News & General
Topic: Value Stocks and Margin Loans as Inflation Hedges
Replies: 12
Views: 951

Re: Value Stocks and Margin Loans as Inflation Hedges

If you want to do this in a brokerage account, shorting long term Treasuries can be thought of as borrowing long term. Given how low interest rates are right now, and the low spread between short term and long term rates, this isn't such a bad idea right now. As for buying assets that rise with inf...
by ThrustVectoring
Mon Jul 23, 2018 5:21 pm
Forum: Investing - Theory, News & General
Topic: Are socially responsible funds just another marketing ploy?
Replies: 25
Views: 2132

Re: Are socially responsible funds just another marketing ploy?

Socially responsible funds face a pretty awful dilemma. On the one hand, they could work. The only way refusing to invest in "bad" companies could work, though, is by increasing their cost of capital. By refusing to lend or buy shares from a company, it increases the price they must pay to fund new ...
by ThrustVectoring
Thu Jul 19, 2018 12:34 pm
Forum: Investing - Theory, News & General
Topic: Why is leveraging property good but leveraging stocks bad?
Replies: 206
Views: 14862

Re: Why is leveraging property good but leveraging stocks bad?

Bodie discusses a LEAPS ladder in a general way. https://poseidon01.ssrn.com/delivery.php?ID=13709806600708811607211900010801708900001802308600802810106809509407506803012300602406005509812106700710502911001704401709304609408609606912207208300211909306302000800610212100009607411200709007609602111100...
by ThrustVectoring
Thu Jul 19, 2018 12:22 pm
Forum: Investing - Theory, News & General
Topic: Why age is not how to determine risk tolerance
Replies: 17
Views: 2174

Re: Why age is not how to determine risk tolerance

B) 100/0 is a lousy AA in term of risk-adjusted return. So, it is the wrong AA at any age. You can't eat risk-adjusted return. If you're not willing to use leverage, and you're willing to wait 30 years, the 100/0 AA will wind up with a higher balance even at 5th percentile stock market returns. Unl...
by ThrustVectoring
Tue Jul 17, 2018 2:28 pm
Forum: Investing - Theory, News & General
Topic: Why is leveraging property good but leveraging stocks bad?
Replies: 206
Views: 14862

Re: Why is leveraging property good but leveraging stocks bad?

Leverage in general is good as long as you don't take too much risk. Banks have departments dedicated to making sure they don't lend to people taking too much risk, because if they do then the bank loses money. So you generally have to try pretty hard to take out too much leverage on real estate. In...
by ThrustVectoring
Tue Jul 17, 2018 2:20 pm
Forum: Investing - Theory, News & General
Topic: Why age is not how to determine risk tolerance
Replies: 17
Views: 2174

Re: Why age is not how to determine risk tolerance

B) 100/0 is a lousy AA in term of risk-adjusted return. So, it is the wrong AA at any age. You can't eat risk-adjusted return. If you're not willing to use leverage, and you're willing to wait 30 years, the 100/0 AA will wind up with a higher balance even at 5th percentile stock market returns. If ...
by ThrustVectoring
Mon Jul 09, 2018 1:55 pm
Forum: Investing - Theory, News & General
Topic: Why 3-funds and not 4-funds or even 2-funds?
Replies: 56
Views: 4607

Re: Why 3-funds and not 4-funds or even 2-funds?

I'm not a believer in the 3 fund approach. The 3 fund approach offers ample diversification in stocks, but not in bonds. I am a believer in simplicity. Those with access to a good stable value fund can use that as a fourth. Others can round out/diversify their bond allocation by adding inflation pr...
by ThrustVectoring
Sat Jul 07, 2018 3:16 pm
Forum: Personal Finance (Not Investing)
Topic: Having first child - Life Insurance question
Replies: 37
Views: 2637

Re: Having first child - Life Insurance question

You want term life insurance for both you and your wife, regardless of whether each parent is working. Definitely term life insurance - whole life is primarily for giving fat commissions to salespeople. For term, twenty or thirty years both work well. Ideally, in twenty years you've saved enough mon...
by ThrustVectoring
Sat Jul 07, 2018 3:07 pm
Forum: Investing - Theory, News & General
Topic: Jack Bogle is not a "buy&hold at any price goose", he looks at valuations, he sold his stocks in year 2000
Replies: 48
Views: 6694

Re: Jack Bogle is not a "buy&hold at any price goose", he looks at valuations, he sold his stocks in year 2000

Well, how did that decision play out...75% vs 35% stock allocation from 2000 to 2018? I am guessing, but thinking stay-the-course won. Pretty well , actually. The 75/25 portfolio finally pulled ahead in 2017. :| Let's put "Pretty well" in perspective. In order to get a 0.5% more CAGR, the investor ...
by ThrustVectoring
Tue Jul 03, 2018 2:53 pm
Forum: Investing - Theory, News & General
Topic: Are options, futures good investments?
Replies: 19
Views: 1775

Re: Are options, futures good investments?

These are tools that allow you to do absolutely stupid things as well as useful stuff. YOLOing isn't a good idea, but holding treasury futures instead of underlying bonds could be a good idea (it essentially gets you 60% long term / 40% short term capital gains treatment rather than ordinary income ...
by ThrustVectoring
Mon Jun 25, 2018 1:57 pm
Forum: Investing - Theory, News & General
Topic: How does a guaranteed income stream affect stock/bond ratio?
Replies: 21
Views: 2077

Re: How does a guaranteed income stream affect stock/bond ratio?

Treating guaranteed income (e.g., pension) as a bond equivalent seems tricky given that there isn't any principal that you can draw upon. Having $1M in bonds that pays out $30K a year in income is a lot more valuable than having $30K in income in the form of a pension. There's tricks you can pull w...
by ThrustVectoring
Sun Jun 24, 2018 10:18 am
Forum: Investing - Theory, News & General
Topic: Why won't Vanguard drop VTI & VOO expense to 0.03?
Replies: 39
Views: 3685

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

Securities lending does appear to be more lucrative in Small Caps. Have you checked VSS (Vanguard FTSE All-World ex-US Small-Cap ETF)? Last I heard anything about that fund, the securities lending revenue more than offset the 0.13% expense ratio. It's nice getting paid to hold International Small C...
by ThrustVectoring
Fri Jun 22, 2018 1:06 pm
Forum: Investing - Theory, News & General
Topic: Steep rise in "Old Age Dependency Ratio"
Replies: 15
Views: 2060

Re: Steep rise in "Old Age Dependency Ratio"

The more interesting data to better understand the economics is how much tax payer money is each person above 65 as an average, 1, and 2 SD over the last 20 some years to see the real economic impact on the society. If everyone is living longer and using their own money GREAT. If not, then we have ...
by ThrustVectoring
Fri Jun 15, 2018 11:48 am
Forum: Investing - Theory, News & General
Topic: PUTW to diversify sequence of returns
Replies: 13
Views: 856

Re: PUTW to diversify sequence of returns

Another explanation for the relative attractiveness of put-write is in terms of Bet-Against-Beta factor. Structurally, the trade has lower risk and lower return, so you'd need some kind of leverage in order to get the same absolute return. Since the market has a lot of money under leverage constrain...
by ThrustVectoring
Tue Jun 12, 2018 2:38 pm
Forum: Investing - Help with Personal Investments
Topic: Who uses the 3 fund portfolio ?
Replies: 78
Views: 12913

Re: Who uses the 3 fund portfolio ?

One fund right now for me. VTSAX. I still go back and forth on adding VTIAX or going all in for Total World, but at the moment I'm all Total US. Except...da da da...I do have an SEP IRA from an ex-employer that sits alone and is all PRIMECAP. Can't feed that IRA anymore so figure on leaving it sit ...
by ThrustVectoring
Sun Jun 10, 2018 11:41 am
Forum: Investing - Theory, News & General
Topic: Factors From Scratch
Replies: 11
Views: 961

Re: Factors From Scratch

From the conclusion: Of course, the future is far more interesting and important than the past. To what degree can we be confident that these forms of “edge” will persist? It 's impossible to say with certainty. All we can do is go off of the evidence, which in this case provides strong support for...
by ThrustVectoring
Thu Jun 07, 2018 7:10 pm
Forum: Investing - Theory, News & General
Topic: Rising Interest Rate Strategy
Replies: 35
Views: 4277

Re: Rising Interest Rate Strategy

In a rising interest rate environment where's the best place to be? Know that bonds will decrease in value with an increase in interest rate...at least in the short term. What about stocks? A couple months back when they were talking about interest rates going up I was reading in articles that this...
by ThrustVectoring
Wed Jun 06, 2018 6:58 pm
Forum: Investing - Theory, News & General
Topic: Why Edward Jones?
Replies: 76
Views: 12815

Re: Why Edward Jones?

He was ready for me, as I called him Monday and scheduled the meeting. He pulled up numerous funds, within my American Funds, that beat the index going back 20 years, AFTER EJ fees were deducted. If we go back 10 years the index funds win, but he says with interest rates rising, and for the last ye...
by ThrustVectoring
Wed Jun 06, 2018 4:19 pm
Forum: Investing - Theory, News & General
Topic: in idea with SCV and leverage..
Replies: 23
Views: 1864

Re: in idea with SCV and leverage..

Small-cap value has higher beta, if you don't have binding leverage constraints then you shouldn't invest there. It'll tend to get over-crowded by people who have leverage limits and so search for more risk per unit capital. Instead, leverage should be applied to low volatility stocks and shorter-te...
by ThrustVectoring
Wed Jun 06, 2018 9:33 am
Forum: Investing - Theory, News & General
Topic: Do bond funds lose value while CDs do not?
Replies: 31
Views: 3520

Re: Do bond funds lose value while CDs do not?

This kind of thing--we have the right to deny early withdrawal but don't worry, we won't use it--bothers me. You just don't know. I feel sure that it's there for a reason, but it's probably for a contingency they hope will not arise. The clause is likely there for risk-management reasons. The bank ...
by ThrustVectoring
Mon Jun 04, 2018 5:01 pm
Forum: Investing - Theory, News & General
Topic: Do bond funds lose value while CDs do not?
Replies: 31
Views: 3520

Re: Do bond funds lose value while CDs do not?

Like others in the thread have said, it's purely a mark-to-market thing. As an example: Suppose you have a CD that matures next year at a value of $10k. Roughly speaking, one basis point of interest rate will adjust the price you pay for this CD by $1. Say you bought it for $9,800 at an interest rat...
by ThrustVectoring
Mon Jun 04, 2018 4:15 am
Forum: Investing - Theory, News & General
Topic: Best case to convert a Bogle skeptic?
Replies: 56
Views: 5043

Re: Best case to convert a Bogle skeptic?

This one is particularly tricky because he's a former advisor - if you try to argue that advisors aren't worth the fees, he'll easily hear something like "your advice wasn't worth the fees" and get defensive. My advice: pick literally any other reason to switch things over. "It's easier for me to ma...
by ThrustVectoring
Sun Jun 03, 2018 11:48 pm
Forum: Investing - Theory, News & General
Topic: Factor Friendly Four Fund portfolio
Replies: 19
Views: 2085

Re: Factor Friendly Four Fund portfolio

Duration and junk credit ratings are equivalent to beta in bet-against-beta. If you want to be taking duration risk, the correct approach if you believe in bet-against-beta is to go long the 2-year treasury future (and optionally short the 30-year to reduce your duration risk). You're still taking ...
by ThrustVectoring
Sun Jun 03, 2018 1:11 pm
Forum: Investing - Theory, News & General
Topic: Factor Friendly Four Fund portfolio
Replies: 19
Views: 2085

Re: Factor Friendly Four Fund portfolio

When evaluating portfolios that contain bond funds, I also two considered two fixed income factors in addition to the equity factors: term risk (TRM) and credit risk (CDT). As a side note on the bond fund choices, because I generally favor a portfolio that diversifies its risk (aka volatility) expo...
by ThrustVectoring
Thu May 31, 2018 3:52 pm
Forum: Investing - Theory, News & General
Topic: Treasury yields drop, CD yields hold steady
Replies: 16
Views: 2518

Re: Treasury yields drop, CD yields hold steady

The Treasury yields dropped because of a flight to quality situation based on stuff in Italy and Spain. Yes, I think they were talking of defaulting on govt. bonds, sounds like the Venezuelan story a few weeks back. I still think two consecutive 2 year bonds or CD's are going to be better than a si...
by ThrustVectoring
Thu May 31, 2018 11:39 am
Forum: Investing - Theory, News & General
Topic: Why is risk adjusted return important?
Replies: 35
Views: 2615

Re: Why is risk adjusted return important?

That is a huge conditional statement. If one doesn't care about volatility then of course there is no reason to consider risk adjusted return. Go for the biggest possible return. Go 100% small cap value and maybe do some leverage. Why not. As someone who was essentially immune to volatility (yes, s...
by ThrustVectoring
Wed May 30, 2018 1:26 pm
Forum: Investing - Theory, News & General
Topic: To be or not to be complex, that is the question
Replies: 146
Views: 12316

Re: To be or not to be complex, that is the question

"less" time spent on managing investments can mean "more" time enjoying life. Even if you're robotically trying to maximize your net worth at age 65, there's better uses of your time. Half a percentage over the three-fund portfolio is a home run, but for a young-ish investor with $20k invested, tha...
by ThrustVectoring
Wed May 30, 2018 1:06 pm
Forum: Investing - Theory, News & General
Topic: Why is risk adjusted return important?
Replies: 35
Views: 2615

Re: Why is risk adjusted return important?

That is a huge conditional statement. If one doesn't care about volatility then of course there is no reason to consider risk adjusted return. Go for the biggest possible return. Go 100% small cap value and maybe do some leverage. Why not. As someone who was essentially immune to volatility (yes, s...
by ThrustVectoring
Tue May 29, 2018 2:14 pm
Forum: Investing - Theory, News & General
Topic: Equal weight for index fund?
Replies: 51
Views: 3132

Re: Equal weight for index fund?

... Guggenheim has done it successfully and for a low expense (.20% ER). Yes, very different with trading fees today then what it was 30+ years ago... But the ER does not include brokerage/trading expenses, and as I mentioned above, the Guggenheim fund has lagged it's benchmark by more than it's ex...
by ThrustVectoring
Tue May 29, 2018 1:48 pm
Forum: Investing - Theory, News & General
Topic: Does VOO or VTI invest in Berkshire Hathaway?
Replies: 11
Views: 1183

Re: Does VOO or VTI invest in Berkshire Hathaway?

22twain wrote:
Tue May 29, 2018 12:53 pm
BeBH65 wrote:
Tue May 29, 2018 12:26 pm
Apparantly it is the sixth biggest position in VOO see morningstar
And the seventh biggest in VTI, at 1.33%.
It really should be the seventh biggest position for both funds - VOO apparently lists Alphabet class A and class C shares as separate "positions".
by ThrustVectoring
Mon May 28, 2018 11:50 pm
Forum: Investing - Theory, News & General
Topic: Can anyone recommend Any Social Responsible fund/s?
Replies: 17
Views: 1381

Re: Can anyone recommend Any Social Responsible fund/s?

I am very skeptical of socially responsible investing funds. They're stuck with a pretty bad dilemma. If social responsibility funds do anything, they do so by making the cost of capital for "bad" companies be higher, since there are fewer buyers for their debt and equity issuances. In other words, ...
by ThrustVectoring
Mon May 28, 2018 1:29 pm
Forum: Investing - Theory, News & General
Topic: The "4% withdrawal rate"- would it apply to someone "retiring" in their 70s?
Replies: 54
Views: 4651

Re: The "4% withdrawl rate" - would it apply to someone "retiring" in their 70s?

Without knowing exact age, I checked www.immediateannuities.com and found: For 75 yo male (arbitrary state of residence selected), it would cost about $125k to get an SPIA that generated $1k/month for life, but this is without any inflation adjustment. However, SS would have that COLA. And obviousl...
by ThrustVectoring
Mon May 28, 2018 1:09 pm
Forum: Investing - Theory, News & General
Topic: "The Seven Types of Investors Who Beat The Market (And Why You Aren’t One Of Them)"
Replies: 14
Views: 3419

Re: "The Seven Types of Investors Who Beat The Market (And Why You Aren’t One Of Them)"

In a sense, we individual investors have one or two advantages though. We don’t have a board of directors to report to, or an index to beat every quarter. 2 or 3 bad years and a manager loses his job. We can take a longer term perspective and we only have to meet our goals rather than surpass a ben...
by ThrustVectoring
Thu May 24, 2018 12:08 am
Forum: Investing - Theory, News & General
Topic: New Trend: Bonds in Roth IRA
Replies: 16
Views: 2656

Re: New Trend: Bonds in Roth IRA

IMHO you don't need to hold bonds anywhere, at least if you're over a decade away from retirement. As far as risk goes, extra stocks in a tax-deferred account makes tax planning more difficult. The goal is to flatten out your tax rate through trying to realize approximately equal amounts of income ...
by ThrustVectoring
Wed May 23, 2018 12:56 pm
Forum: Investing - Theory, News & General
Topic: New Trend: Bonds in Roth IRA
Replies: 16
Views: 2656

Re: New Trend: Bonds in Roth IRA

IMHO you don't need to hold bonds anywhere, at least if you're over a decade away from retirement. As far as risk goes, extra stocks in a tax-deferred account makes tax planning more difficult. The goal is to flatten out your tax rate through trying to realize approximately equal amounts of income e...
by ThrustVectoring
Mon May 21, 2018 7:32 pm
Forum: Investing - Theory, News & General
Topic: Do bonds make sense if you are more than 10 years from retirement?
Replies: 11
Views: 1433

Re: Do bonds make sense if you are more than 10 years from retirement?

One reason it might make sense is going to the well a bit early than planned. A lot of folks have long bouts of unemployment. Even if you are really, really awesome and everyone agrees and wants to hire you, you might get too sick to work. That's an argument for having good disability insurance, no...
by ThrustVectoring
Sun May 20, 2018 4:45 am
Forum: Investing - Theory, News & General
Topic: Dividend / no dividend index funds?
Replies: 30
Views: 2763

Re: Dividend / no dividend index funds?

Berkshire Hathaway is a large multinational conglomerate rather than an index fund, but it is fairly well-diversified and is committed to paying zero dividends.
by ThrustVectoring
Sat May 19, 2018 1:22 pm
Forum: Investing - Theory, News & General
Topic: Buffett says Bonds are a terrible investment now. What should we invest in besides stocks?
Replies: 150
Views: 22969

Re: Buffett says Bonds are a terrible investment now. What should we invest in besides stocks?

I still think bond allocation should be 100% tied to one's near term cash flow needs. if you don't have near term cash flow needs, then you don't need bonds. with bonds you are paying a price for the decreased volatility. that price is not cheap. it comes in the form of decreased expected return in...
by ThrustVectoring
Wed May 16, 2018 6:29 pm
Forum: Investing - Theory, News & General
Topic: How to decide VT vs VTI?
Replies: 6
Views: 1255

Re: How to decide VT vs VTI?

VT is more diversified. However, if you use VTI and VEU separately you can choose your own allocation. You may also have more options with respect to tax lots, etc. I tend to be more slicey dicey, but for a worldwide allocation, VT is the "set it and forget it" option. I don't think there is a wron...