Search found 296 matches

by ThrustVectoring
Sun Jan 21, 2018 12:10 pm
Forum: Investing - Theory, News & General
Topic: AA is much harder than I thought...
Replies: 45
Views: 4815

Re: AA is much harder than I thought...

Sounds like you really want to be 100% equities. You're early in your accumulation, so what's going to matter is savings rate and how well you can take advantage of bull markets. If you have a good exit plan for when to start buying bonds to stabilize your portfolio, I'd say drop the bond portion an...
by ThrustVectoring
Fri Jan 19, 2018 8:44 pm
Forum: Investing - Theory, News & General
Topic: How do Bogleheads reconcile efficient markets theory with Bitcoin?
Replies: 45
Views: 2189

Re: How do Bogleheads reconcile efficient markets theory with Bitcoin?

Cryptocurrency in general is a Keynesian beauty contest where every picture is blank.

Good luck making a speculative buck there. Combined with being less well regulated than penny stocks, I've decided against having any crypto position.
by ThrustVectoring
Mon Jan 15, 2018 9:14 pm
Forum: Investing - Help with Personal Investments
Topic: Changing Vanguard 3 Fund Portfolio to 2 fund portfolio?
Replies: 9
Views: 1250

Re: Changing Vanguard 3 Fund Portfolio to 2 fund portfolio?

Investors should expect a 50% decline (or more) in stocks during a bear market. One benefit of bonds in an investment portfolio is having a pool of funds available to rebalance into stocks. This was invaluable during the financial crisis. If there are no bonds available, one must rely on contributi...
by ThrustVectoring
Sat Jan 13, 2018 10:47 pm
Forum: Investing - Theory, News & General
Topic: When the Fed stops what do you do?
Replies: 17
Views: 2348

Re: When the Fed stops what do you do?

When the Fed funds rate reaches 3% and allowing for a slight flattening of the yield curve from today, 30-year Treasuries will be somewhere north of 4%. Knowing that a 4% SWR will be more than sufficient to live on (so leaving extra room for taxes and inflation), does it not make sense to move all ...
by ThrustVectoring
Sat Jan 13, 2018 10:43 pm
Forum: Investing - Theory, News & General
Topic: What should I own on the bond side ???
Replies: 11
Views: 1625

Re: What should I own on the bond side ???

I-bonds are a fantastic choice, though there are purchase amount limits, so it may not cover the full gap. But anyhow, your position is probably better off if you buy $10k of I-bonds.
by ThrustVectoring
Fri Jan 12, 2018 2:13 pm
Forum: Investing - Theory, News & General
Topic: Individual investors, possible structural advantages
Replies: 10
Views: 713

Re: Individual investors, possible structural advantages

Individual investors also get financing terms that generally aren't available for institutional investors - home mortgages. The prepayment and refinancing options are excellent and very competitively priced.
by ThrustVectoring
Fri Jan 12, 2018 12:59 am
Forum: Investing - Theory, News & General
Topic: Why Buy Bonds If You Have A Mortgage?
Replies: 187
Views: 17469

Re: Why Buy Bonds If You Have A Mortgage?

I don't hold bonds in a taxable account, nor should most people, unless they are munis, which have a low yield, nor do I intend to borrow against my home. I also hold Total Bond Index, which is medium duration not long duration. Actually, it can be optimal to hold bonds in taxable accounts. See her...
by ThrustVectoring
Thu Jan 11, 2018 11:43 pm
Forum: Investing - Theory, News & General
Topic: Using 1% of portfolio to buy VIX (Volatility Index) as Hedge...
Replies: 5
Views: 755

Re: Using 1% of portfolio to buy VIX (Volatility Index) as Hedge...

VIX isn't an actual product, it's an index that measures the cost of offloading risk by buying options. When VIX is low it implies that you can relatively cheaply access risk at S&P 500 prices far away from the current market price through put and call options.
by ThrustVectoring
Thu Jan 11, 2018 9:19 pm
Forum: Investing - Theory, News & General
Topic: Why Buy Bonds If You Have A Mortgage?
Replies: 187
Views: 17469

Re: Why Buy Bonds If You Have A Mortgage?

I don't hold bonds in a taxable account, nor should most people, unless they are munis, which have a low yield, nor do I intend to borrow against my home. I also hold Total Bond Index, which is medium duration not long duration. Actually, it can be optimal to hold bonds in taxable accounts. See her...
by ThrustVectoring
Thu Jan 11, 2018 3:00 pm
Forum: Investing - Theory, News & General
Topic: Maximizing Portfolio Growth Rate - Kelly Criterion - Empirical Market Data
Replies: 44
Views: 3000

Re: Maximizing Portfolio Growth Rate - Kelly Criterion - Empirical Market Data

For a real world situation of continuous contributions over a working lifetime, the case for leverage is actually much clearer (although it starts high and tapers off quickly), because of the outsized impact of poor portfolio performance in the end (when it it is much larger). By leveraging at the ...
by ThrustVectoring
Thu Jan 11, 2018 1:57 pm
Forum: Investing - Theory, News & General
Topic: Kodakcoin
Replies: 101
Views: 8106

Re: Kodakcoin

KODAKcoin has some serious problems. They went by-the-book, which means that it's a registered security that you can only sell to accredited investors. These sorts of investments you should never expect to be able to sell, ever - they're often held perpetually. And uhh, KODAKcoin doesn't pay any div...
by ThrustVectoring
Thu Jan 11, 2018 1:50 pm
Forum: Investing - Theory, News & General
Topic: Maximizing Portfolio Growth Rate - Kelly Criterion - Empirical Market Data
Replies: 44
Views: 3000

Re: Maximizing Portfolio Growth Rate - Kelly Criterion - Empirical Market Data

My general heuristic for these sorts of models is that they tend to be overconfident, so for safety's sake you probably want to drop like 20% of the position size they recommend. Far better to be under-levered than over, and the slope of increasing gains flattens out near the point recommended by th...
by ThrustVectoring
Wed Jan 10, 2018 4:54 pm
Forum: Investing - Theory, News & General
Topic: Corporate bonds vs. Treasuries
Replies: 52
Views: 4256

Re: Corporate bonds vs. Treasuries

If you don't need to touch your investment portfolio for the next 30 years the experts recommend a small amount of Treasuries with that high equity allocation because of the negative correlation of Treasuries with stocks in times of stress. It has nothing at all to do with selling your investments ...
by ThrustVectoring
Tue Jan 09, 2018 6:01 pm
Forum: Investing - Help with Personal Investments
Topic: An economist dismisses the idea of dollar cost averaging
Replies: 71
Views: 5381

Re: An economist dismisses the idea of dollar cost averaging

I was reading the revised version of Steven Landsburg's The Armchair Economist and found chapter 19 to be interesting. Beginning on page 237, he looks at dollar cost averaging. An excerpt: "Having money in the stock market for 10 months is like betting on the spins of 10 roulette wheels. If you dol...
by ThrustVectoring
Tue Jan 09, 2018 5:55 pm
Forum: Investing - Help with Personal Investments
Topic: adjust the ratio of stock/bond?
Replies: 10
Views: 807

Re: adjust the ratio of stock/bond?

I know it's not a good thing to time the market Don't time the market then. The relevant variables in play are: 1. How old are you? 2. When do you plan on retiring? 3. What are your annual expenses? 4. What is your current retirement portfolio value? There's two different ways to measure how close ...
by ThrustVectoring
Tue Jan 09, 2018 5:29 pm
Forum: Investing - Theory, News & General
Topic: Corporate bonds vs. Treasuries
Replies: 52
Views: 4256

Re: Corporate bonds vs. Treasuries

If you don't need to touch your investment portfolio for the next 30 years the experts recommend a small amount of Treasuries with that high equity allocation because of the negative correlation of Treasuries with stocks in times of stress. It has nothing at all to do with selling your investments ...
by ThrustVectoring
Tue Jan 09, 2018 4:45 pm
Forum: Investing - Theory, News & General
Topic: Corporate bonds vs. Treasuries
Replies: 52
Views: 4256

Re: Corporate bonds vs. Treasuries

With an equity dominated portfolio relatively early in the accumulation phase, you probably want zero bonds. Cash is a cheaper way to damp equity risk. Held in a highly liquid taxable account, it does a great job of handling personal finance risk. You seem to be conflating two different things - eq...
by ThrustVectoring
Tue Jan 09, 2018 4:10 pm
Forum: Investing - Theory, News & General
Topic: Corporate bonds vs. Treasuries
Replies: 52
Views: 4256

Re: Corporate bonds vs. Treasuries

Very interesting post. One more point to add. If you have an equity dominated portfolio, say 90/10, 80/20, 75/25, a case can be made for a very high or even 100% allocation to Treasuries in the bond portfolio. In that case you have considerable equity risk and also considerable upside appreciation ...
by ThrustVectoring
Tue Jan 09, 2018 3:59 pm
Forum: Investing - Theory, News & General
Topic: Long Term Bonds as Alternative Asset Class (Not Fixed Income)
Replies: 11
Views: 926

Re: Long Term Bonds as Alternative Asset Class (Not Fixed Income)

I think I'd do a 50/50 EDV (Vanguard Extended Duration)/LTPZ (PIMCO 15+ year TIPS) of the slug that's being "alt'd" if I was going to do this, though is actually prefer using DXKLX (Direxion 2x Bull Monthly 7-10 year Treasury) and LTPZ in a 1:2 ratio. Either gives you some diversifications on the s...
by ThrustVectoring
Tue Jan 09, 2018 3:52 pm
Forum: Investing - Theory, News & General
Topic: Corporate bonds vs. Treasuries
Replies: 52
Views: 4256

Re: Corporate bonds vs. Treasuries

Very interesting post. One more point to add. If you have an equity dominated portfolio, say 90/10, 80/20, 75/25, a case can be made for a very high or even 100% allocation to Treasuries in the bond portfolio. In that case you have considerable equity risk and also considerable upside appreciation ...
by ThrustVectoring
Mon Jan 08, 2018 2:10 pm
Forum: Investing - Help with Personal Investments
Topic: Smallest % worth Allocating in your Portfolio
Replies: 30
Views: 1991

Re: Smallest % worth Allocating in your Portfolio

20%, IMO. I'm kind of a simplicity hardliner, though.
by ThrustVectoring
Sun Jan 07, 2018 4:33 pm
Forum: Investing - Theory, News & General
Topic: Talk me out of a 60/40 AA
Replies: 76
Views: 8145

Re: Talk me out of a 60/40 AA

But doesn't this just become the justification for a 90/10 portfolio (which by the way is what Vanguard's tool recommends for me at my age, and what their target retirement fund allocation is)? There's no way of knowing if/when I'm going to need the money. Life makes that part interesting. Just to ...
by ThrustVectoring
Sat Jan 06, 2018 2:11 pm
Forum: Investing - Theory, News & General
Topic: Talk me out of a 60/40 AA
Replies: 76
Views: 8145

Re: Talk me out of a 60/40 AA

There is a nonzero chance that bonds (or safe equivalents like CDs, TIPS or savings) will outperform stocks over a long period. E.g. like what happened in Japan or because of the effects of an aging workforce/global warming or after a war/natural disaster. Japan is an anomaly caused by terrible cen...
by ThrustVectoring
Sat Jan 06, 2018 12:21 am
Forum: Investing - Theory, News & General
Topic: "Can I Really Retire at 40?" What to Tell Clients
Replies: 53
Views: 7759

Re: "Can I Really Retire at 40?" What to Tell Clients

What clients should be told is that you should adjust as you go. Yeah. If you have workable plans for contingencies, that's what matters for making things work out. "Save more money" is simply one of many plans that sort out contingencies. Moving to a less expensive area, downsizing your house, cut...
by ThrustVectoring
Fri Jan 05, 2018 9:02 pm
Forum: Investing - Theory, News & General
Topic: Talk me out of a 60/40 AA
Replies: 76
Views: 8145

Re: Talk me out of a 60/40 AA

I think you are simply underestimating the impact of a 1% increase in CAGR over a 30-40 year period. Yes, the characterization of the drawdowns as huge and the return differences as negligible is a distortion in thinking. Yup. People think about risks wrongly. A fifty percent drawdown does not matt...
by ThrustVectoring
Fri Jan 05, 2018 8:40 pm
Forum: Investing - Theory, News & General
Topic: Conceptually: *Why* does the Yield Curve invert?
Replies: 27
Views: 2547

Re: Conceptually: *Why* does the Yield Curve invert?

It's because the market expects future short-term rates to go down. That's the short story. If you ignore credit risk and talk about the treasury yield curve, you can guess that most strategies are about as attractive as any other. In typical market conditions, short-term rates are expected to stay ...
by ThrustVectoring
Fri Jan 05, 2018 1:11 am
Forum: Investing - Help with Personal Investments
Topic: Which 3 fund portfolio to use?
Replies: 4
Views: 1025

Re: Which 3 fund portfolio to use?

Hi, I am a beginning investor with the frsutration that all my money is sitting in the bank. I have been considering different 3 fund portfolios. i started off with different choices from the link here: https://www.bogleheads.org/wiki/Three-fund_portfolio#Other_than_Vanguard.2C_Boglehead-style I ha...
by ThrustVectoring
Wed Jan 03, 2018 5:44 pm
Forum: Investing - Help with Personal Investments
Topic: Is this a bug in the law, in TurboTax, or in me? (re: excess IRA contributions)?
Replies: 18
Views: 873

Re: Is this a bug in TurboTax (re: excess IRA contributions)?

It sounds like TurboTax is incorrectly treating a Roth conversion as a withdrawal of the over-contribution.
by ThrustVectoring
Wed Jan 03, 2018 2:21 pm
Forum: Investing - Help with Personal Investments
Topic: Suddenly my mortgage doesn't seem that great
Replies: 66
Views: 10627

Re: Suddenly my mortgage doesn't seem that great

There may still be some benefit to itemizing state returns even if you take standard deduction on federal. My strategy is to bunch every other year, and itemize both federal and state in 2019 by shifting property taxes to 2019 as much as possible. I prefer property taxes instead of state taxes sinc...
by ThrustVectoring
Wed Jan 03, 2018 3:24 am
Forum: Investing - Help with Personal Investments
Topic: Dividends
Replies: 40
Views: 4008

Re: Dividends

My taxable investment workflow handles dividends without automatic reinvestment. I get paid twice a month, so whenever my paycheck hits I check the overall balance. If it's over $X, I transfer the remainder to my brokerage account. Then I look at my asset allocation and make purchases to bring it to...
by ThrustVectoring
Sat Dec 30, 2017 8:54 am
Forum: Investing - Help with Personal Investments
Topic: Changing from 60-40 to 40-60 investment ratio, general strategy
Replies: 15
Views: 1242

Re: Changing from 60-40 to 40-60 investment ratio, general strategy

You have enough money saved and low enough expenses that literally anything works. You'd be fine with 100% equities if the market behaves worse than it did in the great depression. What are your goals with the savings? Inheritance for children? Donations to charitable causes? Travel, vacations, and ...
by ThrustVectoring
Tue Dec 26, 2017 4:00 pm
Forum: Investing - Help with Personal Investments
Topic: how to "know" what asset allocation is right? (crypto windfall)
Replies: 39
Views: 4929

Re: how to "know" what asset allocation is right? (crypto windfall)

There are tons of asset allocations that would work well, depending on your short and long-term goals. That's the big advantage of having way more money than you need. Like, if you put your entire fortune into VTSAX/VTIAX and turn off dividend reinvestment, it'll throw off enough money in dividends ...
by ThrustVectoring
Tue Dec 26, 2017 3:45 pm
Forum: Investing - Help with Personal Investments
Topic: Should I preserve parents’ risky portfolio? Or “disobey” them?
Replies: 74
Views: 4947

Re: Should I preserve parents’ risky portfolio? Or “disobey” them?

At age 80 93% stocks is mainly only at risk of delivering huge wealth to the heirs. A previous poster asked the question about objectives re leaving a legacy. However, if one wanted to be more comfortable about volatility one could sell all the individual stocks, including Apple and buy a three fun...
by ThrustVectoring
Sun Dec 24, 2017 12:45 pm
Forum: Investing - Help with Personal Investments
Topic: Are Roth IRAs overrated?
Replies: 77
Views: 7294

Re: Are Roth IRAs overrated?

Roth accounts are primarily useful through conversions - it's a tax-exempt-on-withdrawal way to cease deferring taxes on income in the year that you want to realize it. Not being subject to RMDs is another huge bonus.
by ThrustVectoring
Sat Dec 23, 2017 7:50 pm
Forum: Investing - Help with Personal Investments
Topic: Do you have trouble standing firm on your asset allocation?
Replies: 45
Views: 3749

Re: Do you have trouble standing firm on your asset allocation?

The biggest change-of-course I made was deciding to net out my taxable VTSAX investment and student loan positions. Other than that I've been pretty comfortably rolling with 100% equities.
by ThrustVectoring
Sat Dec 23, 2017 4:28 pm
Forum: Investing - Help with Personal Investments
Topic: Stop Contributing to 401(k)??
Replies: 39
Views: 4325

Re: Stop Contributing to 401(k)??

Do you have anything that could be converted from tax-deferred to Roth? At the very least, you're better off making a $1k tax-deferred contribution and $1k Roth conversion than a simple $1k taxable investment. Your current-year taxable income is the same, and you pay no taxes on the Roth investment,...
by ThrustVectoring
Thu Dec 21, 2017 3:38 pm
Forum: Investing - Help with Personal Investments
Topic: Dave Ramsey Style Vanguard Portfolio?
Replies: 51
Views: 3853

Re: Dave Ramsey Style Vanguard Portfolio?

Dave Ramsey's investing advice is vastly inferior to his debt reduction angles. Do debt reduction with Dave Ramsey, and investing with Bogleheads. Just remembered a previous Dave Ramsey post where someone replied : When net worth less than zero listen to Dave Ramsey When net worth greater then zero...
by ThrustVectoring
Wed Dec 20, 2017 5:11 pm
Forum: Investing - Help with Personal Investments
Topic: Keeping Emergency Fund in CD
Replies: 5
Views: 675

Re: Keeping Emergency Fund in CD

Liquidity is important for an emergency fund, not return. If you've got a $10k emergency fund and get an extra percent over ten years, that's only $1000, which doesn't matter all that much. Past that, it doesn't really matter how the money is held. Ally's no-penalty 11 month CDs are a solid choice f...
by ThrustVectoring
Tue Dec 19, 2017 8:58 pm
Forum: Investing - Help with Personal Investments
Topic: 100% equity folks- holding any cash/bonds now?
Replies: 38
Views: 2720

Re: 100% equity folks- holding any cash/bonds now?

I'm 100% equity still, but the portfolio value is well below 1 year of expenses so I'm not at all worried about losses.
by ThrustVectoring
Tue Dec 19, 2017 2:38 pm
Forum: Investing - Help with Personal Investments
Topic: How long to hold 80/20 asset allocation
Replies: 34
Views: 3690

Re: How long to hold 80/20 asset allocation

Depending on how you look at it, I have a much more aggressive AA than let on in my earlier post of 75/25 at mid-30s. My retirement accounts during all my 30s and maybe even late 20s has been higher than I own on my mortgage + car. So in essence, I'm leveraged. As such, while I do have some bonds, ...
by ThrustVectoring
Mon Dec 18, 2017 8:43 pm
Forum: Investing - Help with Personal Investments
Topic: How long to hold 80/20 asset allocation
Replies: 34
Views: 3690

Re: How long to hold 80/20 asset allocation

I'll be the contrarian. I think 80/20 is too aggressive for a 30 year old. I realize that's not standard fare in this forum. Personally, I don't think 2008 was an adequate test of fortitude in a downturn. Yes, 2008 was a steep decline, but it was much too short of duration. I'm retired at age 60 an...
by ThrustVectoring
Sun Dec 17, 2017 5:19 am
Forum: Investing - Help with Personal Investments
Topic: too much $ in my company of work?
Replies: 51
Views: 4133

Re: too much $ in my company of work?

Look at IBM's stock price history leading up to their 1993 mass layoff as a cautionary tale, and then sell off company stock as soon as you can do so without forfeiting significant incentives.
by ThrustVectoring
Fri Dec 15, 2017 6:12 pm
Forum: Investing - Help with Personal Investments
Topic: 28 Years Old: In the current market, what % into bonds?
Replies: 56
Views: 3646

Re: 28 Years Old: In the current market, what % into bonds?

You plan on working at least another 32 years before retirement, right? If you have the emotional stability for it, the money you contribute now should be 100% stocks. The primary risk you face right now isn't a market correction, since most of your retirement savings are from future income. Rather,...
by ThrustVectoring
Fri Dec 15, 2017 5:47 pm
Forum: Investing - Help with Personal Investments
Topic: 401k to VG tIRA and lose Roth back door
Replies: 6
Views: 407

Re: 401k to VG tIRA and lose Roth back door

How old are you, and how long do you expect to stay at your current employer? The younger you are, the more valuable the Roth IRA contributions are. Also, how often can you roll the IRA into the 401k and the 401k into the IRA? I suspect that the best plan may be to: 1. Roll the 401k into the tIRA at...
by ThrustVectoring
Fri Dec 15, 2017 1:36 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard not letting me convert $5500 tira to backdoor roth?
Replies: 8
Views: 1133

Re: Vanguard not letting me convert $5500 tira to backdoor roth?

I also had to wait a week or so to have the "convert to Roth" button work. I just tried every day until it did.
by ThrustVectoring
Fri Dec 01, 2017 4:44 pm
Forum: Investing - Help with Personal Investments
Topic: Should I include cash set aside for home purchase when computing asset allocation
Replies: 20
Views: 832

Re: Should I include cash set aside for home purchase when computing asset allocation

The point of having an asset allocation is to turn "I have $X now and am contributing $Y/month" into "I have the best chance of having enough money later to fulfill my goals". Each of your goals contributes independently to your asset allocation - retirement in 10 years means needing bonds, risk of ...
by ThrustVectoring
Thu Nov 30, 2017 2:03 am
Forum: Investing - Help with Personal Investments
Topic: Invest or pay off mortgage?
Replies: 77
Views: 6464

Re: Invest or pay off mortgage?

grabiner wrote:
Wed Nov 29, 2017 10:39 pm
A 3-year bond yielding 3.375% is a better investment than a 25-year bond yielding 3.375%.
Or to think of it in the original mortgage terms, the option to continue borrowing money at 3.375% is more valuable if it's 25 years from now rather than 3.
by ThrustVectoring
Wed Nov 29, 2017 9:10 pm
Forum: Investing - Help with Personal Investments
Topic: Invest or pay off mortgage?
Replies: 77
Views: 6464

Re: Invest or pay off mortgage?

Interest paid is based on outstanding mortgage balance, doesn’t matter if he has a 10/15/20/25/30 year term. Well, the option value of a fixed rate mortgage is significantly higher when there's more term remaining. There's a difference between 15 year and 30 year rates for a reason - if rates rise ...
by ThrustVectoring
Tue Nov 28, 2017 12:28 pm
Forum: Investing - Help with Personal Investments
Topic: Edited Question: In-Retirement - Need Portfolio Evaluation etc
Replies: 62
Views: 3370

Re: In-Retirement: Move 401k & SEP-IRA to MM, then to Index Funds via dollar cost averaging?

I would not suggest a 60/40 AA, it isn't necessary, in fact a bit risky and does not fit friend's comfort zone. Perhaps 40/60? If there is a market crash in the next year or two it might lower total available assets by 15-20% with 40/60 AA and I think she can handle that if she opts for SS at 67 an...