Search found 406 matches

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: 135
Views: 8217

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: 12
Views: 847

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: 4361

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: 2521

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: 6561

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: 1729

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: 2037

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: 3605

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: 2018

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: 841

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: 11425

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: 935

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: 4189

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: 12536

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: 1816

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: 3445

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: 3445

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: 4981

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: 2038

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: 2038

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: 2472

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: 2571

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: 12071

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: 2571

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: 3006

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: 1157

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: 1338

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: 4565

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: 3395

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: 2575

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: 2575

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: 1413

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: 2694

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: 22527

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: 1042

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...
by ThrustVectoring
Tue May 15, 2018 11:36 pm
Forum: Investing - Theory, News & General
Topic: NRIA.NET - Real Estate Private Placement - 16% return
Replies: 11
Views: 1076

Re: NRIA.NET - Real Estate Private Placement - 16% return

How do you think they can afford to pay for the commercials you saw?

As a rough rule of thumb, the more folks try to market to me the less I'm interested in investing with them. Just stick with index funds and be happy with the returns the market provides.
by ThrustVectoring
Tue May 15, 2018 12:13 pm
Forum: Investing - Theory, News & General
Topic: Would you be willing to temporarily change your AA?
Replies: 27
Views: 1688

Re: Would you be willing to temporarily change your AA?

I don't think a percentage-based asset allocation is necessarily the best choice, just the one that is easiest to explain, follow, and offer as a product. I think something more like a emergency fund -> stocks -> bonds waterfall is better. Like, my target for a retirement portfolio is 18 years of ex...
by ThrustVectoring
Sun May 13, 2018 10:49 am
Forum: Investing - Theory, News & General
Topic: Asset allocation in Roth vs pre-tax
Replies: 19
Views: 1624

Re: Asset allocation in Roth vs pre-tax

If you have the option of a pre-tax (trad IRA, 401k) vs roth (roth IRA, roth 401k), what is the common wisdom? My thought Consider everything like a big portfolio. Allocate the assets with most retrun (REITs, SCV, ..) in Roth rest in pre-tax (step 4 in https://www.bogleheads.org/wiki/Tax-efficient_...
by ThrustVectoring
Sun May 13, 2018 2:28 am
Forum: Investing - Theory, News & General
Topic: Asset allocation in Roth vs pre-tax
Replies: 19
Views: 1624

Re: Asset allocation in Roth vs pre-tax

Allocate the assets with most retrun (REITs, SCV, ..) in Roth If you believe that they have the most return, why are you holding other assets? This always makes little sense to me. And if it's for diversification and a better risk-adjusted return, why wouldn't you have that mix in your Roth to maxi...
by ThrustVectoring
Fri May 11, 2018 11:55 am
Forum: Investing - Theory, News & General
Topic: Asset allocation in Roth vs pre-tax
Replies: 19
Views: 1624

Re: Asset allocation in Roth vs pre-tax

Allocate the assets with most retrun (REITs, SCV, ..) in Roth If you believe that they have the most return, why are you holding other assets? This always makes little sense to me. And if it's for diversification and a better risk-adjusted return, why wouldn't you have that mix in your Roth to maxi...
by ThrustVectoring
Wed May 09, 2018 1:37 pm
Forum: Investing - Help with Personal Investments
Topic: Bad(?) advice from employer retirement advisor [on per-year contribution limits]
Replies: 29
Views: 2149

Re: Bad(?) advice from employer retirement advisor [on per-year contribution limits]

You can keep going post-tax in your 401k if you have a big salary. If you are over 55, you can do catch up contributions. $55,000 is the limit for all sources to your 401k. Note that this is a per-plan limit, while the $18.5k is a per-person limit. The primary way this matters is if you have multip...
by ThrustVectoring
Wed May 09, 2018 11:40 am
Forum: Investing - Theory, News & General
Topic: Rationale for placing high expected return funds in Roth rather than tIRA
Replies: 15
Views: 1251

Re: Rationale for placing high expected return funds in Roth rather than tIRA

Putting different funds in Roth vs Taxable or Traditional based on expected returns bothers me. Like, a lot. If you expect something to have a lower return, why are you buying it at all? IMHO you should put your higher expected return funds in both Roth and tIRA, and drop the lower expected return f...
by ThrustVectoring
Sun May 06, 2018 1:44 pm
Forum: Investing - Help with Personal Investments
Topic: Currently fearful, aspiring early retiree, seeks guidance
Replies: 7
Views: 1425

Re: Currently fearful, aspiring early retiree, seeks guidance

You have the TSP, which implies you're a government employee, which implies really good job security. You can afford to be very aggressive until you have the equity portion of your portfolio at retirement. So if you want to retire with a 60% equity portfolio with 30x your annual expenses saved in to...
by ThrustVectoring
Sun May 06, 2018 1:29 pm
Forum: Investing - Help with Personal Investments
Topic: Fund/Funds for retired person who doesnt rely on the money
Replies: 12
Views: 734

Re: Fund/Funds for retired person who doesnt rely on the money

Ask him what he wants to accomplish with the money. His needs are taken care of, so does he want to spend his money down on fun activities while he's still healthy enough to enjoy them? Does he want to leave behind a large charitable contribution or inheritance? The approach taken depends entirely o...
by ThrustVectoring
Sun May 06, 2018 1:25 pm
Forum: Investing - Help with Personal Investments
Topic: Are bonds necessary/beneficial in my situation?
Replies: 21
Views: 2170

Re: Are bonds necessary/beneficial in my situation?

Honestly, it depends on how correlated you think a stock market is with a loss in your ability to make money. And at 11x cost of living in your portfolio, you should be thinking about buying bonds soon-ish anyhow. Your overall goal is something like 30x cost of living in stocks and bonds, with a sto...
by ThrustVectoring
Sun May 06, 2018 2:43 am
Forum: Investing - Theory, News & General
Topic: How do brokerages make $s on cheap index funds?
Replies: 57
Views: 5265

Re: How do brokerages make $s on cheap index funds?

The cheap index funds are at cost offerings to bring people onto the platform. Fidelity offers 401(k) plans and presumably charges either plan operators or participants for this, and they need to have cheap index funds in order to be competitive. Also there's uninvested cash balances, and they can p...
by ThrustVectoring
Sat May 05, 2018 11:21 pm
Forum: Investing - Theory, News & General
Topic: Shorting - Can Someone Explain
Replies: 32
Views: 2369

Re: Shorting - Can Someone Explain

I cannot give the pros and cons - but you can also sell short a stock that you continue to own. Doing that is much lower risk. Never done this - but perhaps others can give more details. It's called "shorting against the box" and was primarily useful as a tax avoidance strategy prior to 1997. It's ...
by ThrustVectoring
Mon Apr 30, 2018 7:03 pm
Forum: Investing - Help with Personal Investments
Topic: How do you know when you have "won the game"?
Replies: 142
Views: 15848

Re: How do you know when you have "won the game"?

I keep a very large (probably extreme) emergency fund and invest very aggressively in the markets what I do have invested, unorthodox style for most Bogleheads (active/leveraged). Leaving aside active vs passive, you're probably paying more for the leverage you're using than your emergency fund is ...
by ThrustVectoring
Mon Apr 30, 2018 5:39 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Real Estate Isn’t Special
Replies: 49
Views: 7383

Re: Larry Swedroe: Real Estate Isn’t Special

KyleAAA wrote:
Mon Apr 30, 2018 10:56 am
A nitpick: REITs are not real estate. Real Estate may very well be special, we don't know.
Real estate is definitely special, but it's the mortgage that matters, not the property. There's no better way to short long-term bonds, and long-term bonds are pretty terrible so it's a fantastic short.
by ThrustVectoring
Sun Apr 29, 2018 10:59 pm
Forum: Investing - Theory, News & General
Topic: Money market funds - under par interest rates
Replies: 15
Views: 1646

Re: Money market funds - under par interest rates

So are online savings account banks buying 10 years and offering 2% savings rates and pocketing the 1%? how do i apply to become a bank again? :D You first need to understand duration and interest rate risk. If the yield on those 10-years goes up 1% in a year, they lose 10% of their value, and the ...