Search found 535 matches

by PreserveCapital
Sat Mar 03, 2012 1:56 pm
Forum: Personal Consumer Issues
Topic: Early retirement to Florida
Replies: 177
Views: 25675

Re: Early retirement to Florida

Hello, My husband and I will never retire (artists) but the economic downturn was a "heads up". We had already sold our house (2003: proceeds in CD's through crash) and were renting but decided to do another serious cull of belongings (1/2010) and put the rest in storage (10' x 20' with room for shelves and aisles). No bills except storage ($130/mo.) and car insurance. We use a family member's addy for legal residence and travel the country and world... Its is both liberating and odd feeling by turns. Regarding your books... we need to regularly get to our art supplies, frames, winter vs summer clothes... so the arrangement of the storage unit with shelves, labeled boxes and easy to navigate aisles... meant a monthly outlay way s...
by PreserveCapital
Sat Mar 03, 2012 1:48 pm
Forum: Personal Finance (Not Investing)
Topic: Wayne Huizenga book
Replies: 13
Views: 2153

Re: Wayne Huizenga book

abuss368 wrote:2 mergers in the last week or so and the stock had a nice pop back up.

Makes you wonder.
He's a genius at what he does and has an extraordinary track record. He's is not just a passive stock picker, he is running these businesses.

If you want to invest in an individual stock you could do a lot worse than hitching your wagon to this guy's horse.
by PreserveCapital
Sat Mar 03, 2012 1:30 pm
Forum: Investing - Theory, News & General
Topic: Help me to understand this Graham quote
Replies: 13
Views: 3466

Re: Help me to understand this Graham quote

Debt to asset ratio is no greater than 1:1. Meaning that if the company had to be liquidated, in theory there are sufficient assets (as represented by book value) to entirely pay off the outstanding debt. Unless the company has negative equity, the debt-to-total-assets ratio cannot exceed 1.0. Graham's criterion - that common stock be at least 50% of capitalization - would constrain debt-to-equity to be less than 1.0, so debt-to-total-assets would be less than 0.5. Precisely. If debt to total assets exceeds 1.0, then the company has negative equity. Which is why Graham advised not to invest in such companies. Graham was searching for companies whose tangible book value exceeded their market caps for a margin of safety. He was saying not to...
by PreserveCapital
Sat Mar 03, 2012 12:58 pm
Forum: Investing - Theory, News & General
Topic: Deleted
Replies: 50
Views: 5079

Re: Do you have a portfolio "floor"? -- Yes.

“If you cannot afford to lose another penny, then you simply have no recourse but to get out of the stock market.” -- Jack Bogle This is not helpful advice from Mr. Bogle -- it's just a tautology that if you can't stay in then you have to get out. In these days when most have Social Security, it's unlikely that anyone is actually going to reach this hypothetical state of not being able to stand the loss of another penny. No floor for me. You are conflating two different things--maintaining a subsistence level of survival in retirement vs. achieving a reasonable approximation of pre-retirement standard of living. It sounds like you are pursuing a barbell strategy in that you are content with either a relatively low standard of living in ret...
by PreserveCapital
Sat Mar 03, 2012 12:15 pm
Forum: Investing - Theory, News & General
Topic: Deleted
Replies: 50
Views: 5079

Re: Do you have a portfolio "floor"?

Cash and very safe fixed income (TIPS, treasuries/index fund) are valuable not simply because they permit those inclined to do so, to rebalance in a crisis--but perhaps more importantly, because they are robust in a crisis. To paraphrase Napolean (or maybe it was Patton?): "Plans go out the window once the first cannon is fired." Or as Mike Tyson said something similar, "Everyone has a plan until they get punched in the face." What this means is if we are really planning effectively, we have to plan ahead for our possible inability to act, out of paralysis, if the crisis is bad enough. As a matter of fact we should try to plan so that a paralysis reaction is our "default" rather than--due to panic--making a bad...
by PreserveCapital
Sat Mar 03, 2012 11:38 am
Forum: Personal Investments
Topic: lump sum and dollar cost averaging
Replies: 95
Views: 13865

Re: lump sum and dollar cost averaging

i've heard elsewhere on this site that bogleheads would not dollar cost average (dca) a lump sum into an asset class. in fact, someone said that if you have to dca then your allocation for that class is too large. i don't understand the theory behind this. The theory is that when you examine historical data back to 1900, a program of 12 months DCA versus lump sum in the beginning, lump sum has higher terminal value roughly two-thirds of the time. I have two spreadsheets on my website you can examine: http://www.bobsfinancialwebsite.com/download.html#LSminusDCA And this chart provides the evidence. Click image for full size. http://www.bobsfinancialwebsite.com/misc/LumpMinusDCA1900-2010small.png Valuations matter. Lump summing into equities...
by PreserveCapital
Sat Mar 03, 2012 11:36 am
Forum: Personal Investments
Topic: lump sum and dollar cost averaging
Replies: 95
Views: 13865

Re: lump sum and dollar cost averaging

tiresias wrote:i've heard elsewhere on this site that bogleheads would not dollar cost average (dca) a lump sum into an asset class. in fact, someone said that if you have to dca then your allocation for that class is too large. i don't understand the theory behind this. i should add that during the equity downturn of 2009 i used dca to rebalance up to my desired equity allocation.

also, does the same advice against dca hold true for bonds?
If you regard cash as an asset class separate from bonds or equities--and obviously cash IS an asset class--then by just sitting in cash, you in essence HAVE lumped sum into the cash position.

So don't think in terms of equities/fixed. Think in terms of equities/fixed/cash.
by PreserveCapital
Sat Mar 03, 2012 11:23 am
Forum: Personal Investments
Topic: Is a correction coming?
Replies: 43
Views: 4347

Re: Is a correction coming?

Yes, I think there's a good chance of a correction before summer. That's just an intuition. But if that happens, I don't see why the market wouldn't recover in a year or two. I'm staying invested 96% in stock mutual funds -- as always, I'm more afraid of missing a rally than of getting hit by a sell off. Greg: If OP is in his 50's, and already has enough retirement assets, when combined with social security and any available pensions, to pretty much cover his basic needs in retirement, then a 96% equities doesn't sound optimal. Missing some of the potential upside in a long term rally is not nearly as consequential of risking potential permanent impairment of retirement capital, because the marginal utility of those extra dollars is genera...
by PreserveCapital
Sat Mar 03, 2012 10:56 am
Forum: Personal Investments
Topic: Is a correction coming?
Replies: 43
Views: 4347

Re: Is a correction coming?

Not trying to time the market but I also don't want to be silly. I am sitting on a goodly amount of cash and it seems, from looking at all of the news, that there are a lot of others doing the same thing. A number of the funds I would like to take a postion in are all trading at 52 week highs. All of this excitement in the last two months with such a low volume has me worried about jumping in. As for the Greek Crisis, when you ask your investors to take a 50% write down on the bonds they issued, that is a default. I don't care how you want to paint it. Like I said, I am not trying to time the market bu I don;t want to be stupid. Thoughts? I believe the equities markets are fair-to- fully valued and perhaps somewhat overvalued, but probably...
by PreserveCapital
Sat Mar 03, 2012 10:23 am
Forum: Personal Investments
Topic: general advice
Replies: 59
Views: 4604

Re: general advice

The best advice is to live, consumption-wise, as if you were still only making 50k. Increasing your salary 10x suddenly is great--but reversals can happen quickly, too.

After maximizing all tax-advantaged retirement investing, 401(k), SEP-IRA if you have one, or solo 401(k), you should start accumulating I bonds which I believe you can buy at the rate of 10,000 each per year.

Then pay off all debt starting at highest interest rate.

Now would be a great time to start shopping for a house if that's of interest.
by PreserveCapital
Sat Mar 03, 2012 10:17 am
Forum: Personal Finance (Not Investing)
Topic: Ingenious or Insane? Living in 2 Separate Condos, 1 Building
Replies: 57
Views: 6145

Re: Ingenious or Insane? Living in 2 Separate Condos, 1 Buil

Worst case: we sell and move out down the line. Very worst case: we do so at a loss, though I'd be surprised if there was much more down left on that front (but not bankrupt if there were).
Have you considered renting one of these foreclosure units for a year to see whether you could actually live in it with your SO, before purchasing it?

Is some realtor whispering in your ear that if you don't buy now you will "miss out" on the chance for a "great deal"? I would take that notion with a large grain of salt.
by PreserveCapital
Sat Mar 03, 2012 9:58 am
Forum: Personal Finance (Not Investing)
Topic: Ingenious or Insane? Living in 2 Separate Condos, 1 Building
Replies: 57
Views: 6145

Re: Ingenious or Insane? Living in 2 Separate Condos, 1 Buil

we are committed without the need for marriage There is no need for you to purchase real estate together either. The only reason you are really contemplating this is because your partner (according to how I read your post) refuses to consider the idea of just finding something a little better/more suitable as a rental. You either have to move to her with another city (?and buy in the new city, or will she permit you to rent another place as long as it's a new city, this part is unclear?) or buy in this city. In a lot of ways buying real estate with someone else is more of a legal commitment than getting married to them. If a marriage doesn't work out, in most places, you can get a no fault divorce pretty cheaply. But if the real estate dea...
by PreserveCapital
Sat Mar 03, 2012 9:40 am
Forum: Personal Finance (Not Investing)
Topic: Ingenious or Insane? Living in 2 Separate Condos, 1 Building
Replies: 57
Views: 6145

Re: Ingenious or Insane? Living in 2 Separate Condos, 1 Buil

Just for general information about floor plans, IME there seems to be a more or less "standard" basic "template" as to how apartments and smaller single family residences are laid out, we are talking about perhaps 900 - 1200 sq feet. This is totally generic. A common layout for a 3 brm/2 bath is the kitchen/dining room/living room "L", a hallway with a bathroom, and at the opposite end of the hallway from the "L" you've got either 2 or 3 brms with a second bath in the master bdrm or largest bdrm, sometimes it's a shower bath with no tub. Hall or entryway closet, linen closet near hall bathroom, closets in bedrooms. As far as I can tell with this kind of "standard" layout the only real differ...
by PreserveCapital
Sat Mar 03, 2012 9:10 am
Forum: Personal Finance (Not Investing)
Topic: Ingenious or Insane? Living in 2 Separate Condos, 1 Building
Replies: 57
Views: 6145

Re: Ingenious or Insane? Living in 2 Separate Condos, 1 Buil

alas, these are just the foreclosures that happen to have come up. Wow you really have tunnel vision noobinvestor, don't you? You have limited your possible options to ONLY foreclosures and ONLY in this particular building? You aren't thinking "holistically" at all. Just because you know of others who have made compromises in terms of rationalizing purchase of multiple inadequate spaces, doesn't mean you have to follow in those footsteps. Remember this: It's not a good deal just because it's a foreclosure. It's not a good deal just because it's a foreclosure. It's not a good deal just because the asking prices is WAY BELOW what the seller paid for it. I am going to make a suggestion to you that right now you are INCAPABLE of maki...
by PreserveCapital
Sat Mar 03, 2012 8:58 am
Forum: Personal Finance (Not Investing)
Topic: Ingenious or Insane? Living in 2 Separate Condos, 1 Building
Replies: 57
Views: 6145

Re: Ingenious or Insane? Living in 2 Separate Condos, 1 Buil

Is it a wild or wonderful idea to own two small condos if we're intent on living in a building where there are (and likely won't be) 2 br / 2 ba available (particularly at foreclosure prices)? My significant other and I (no kids) have been looking at the same building for a while - a great loft/warehouse structure. We've been considering 1 br/1 ba foreclosure that is 1000 SF and 100K (down from 230K, sold in 2006).Taxes/fees: about $7500/year for everything (including utilities). We were hoping a 2 br, maybe even 2 ba. Instead, something else just came up: a 1 br/ 1 ba on the floor above this unit, 800 SF, 77K list, taxes/fees about $6000/year (prev. sold for 210K also in '06). The former is a stretch (small space, very open), and the latt...
by PreserveCapital
Fri Mar 02, 2012 2:28 pm
Forum: Personal Finance (Not Investing)
Topic: Distress. [company trying to force into quitting]
Replies: 74
Views: 8253

Re: Distress.

Until you have lined up a new/better job offer, ask your supervisor how you could improve your work performance so as to make yourself more valuable as an employee.
by PreserveCapital
Fri Mar 02, 2012 2:17 pm
Forum: Investing - Theory, News & General
Topic: Help me to understand this Graham quote
Replies: 13
Views: 3466

Re: Help me to understand this Graham quote

Debt to asset ratio is no greater than 1:1.

Meaning that if the company had to be liquidated, in theory there are sufficient assets (as represented by book value) to entirely pay off the outstanding debt.
by PreserveCapital
Fri Mar 02, 2012 1:05 pm
Forum: Personal Finance (Not Investing)
Topic: Who Will Take Care Of My Wife?
Replies: 77
Views: 6239

Re: Who Will Take Care Of My Wife?

Rick Ferri's company only charge .25%.

Try contacting him privately.

Note: I am not a shill for Rick Ferri and receive nothing for mentioning this.
by PreserveCapital
Thu Mar 01, 2012 7:05 pm
Forum: Personal Consumer Issues
Topic: question about builder
Replies: 15
Views: 1355

Re: question about builder

If you tell the bank the price is 190 then you will owe the builder an additional $8000.

Good for the builder, not so good for you.
by PreserveCapital
Thu Mar 01, 2012 6:59 pm
Forum: Investing - Theory, News & General
Topic: inflation 8 percent?
Replies: 45
Views: 4515

Re: inflation 8 percent?

According to the org's website, the EPI measures items constituting 39% of total household expenditures.

They measured inflation at 7.2% but that is only on 39% of total household expenditures. They did not weight the average. .39 x 7.2 = 2.808% inflation rate if the other 61% of household expenditures not included in the EPI average zero inflation. The CPI-U of 3.1% implies: 3.1 - 2.808 = .292% of total CPI-U inflation is contributed by the 61% of expenditures not included in EPI. .292/.61 = .479% which is the implied rate of inflation of the 61% of expenditures left out of EPI, or around one half of one percent, if one assumes that EPI is consistent with CPI-U.
by PreserveCapital
Thu Mar 01, 2012 2:31 pm
Forum: Investing - Theory, News & General
Topic: inflation 8 percent?
Replies: 45
Views: 4515

Re: inflation 8 percent?

From the linked article:

The not-for-profit research group measures inflation without looking at the big, one-time purchases that can skew the numbers. That means they don't look at the price of houses, furniture, appliances, cars, or computers. Instead, AIER focuses on Americans' typical daily purchases, such as food, gasoline, child care, prescription drugs, phone and television service, and other household products.
The 8% comes from the severely flawed methodology AIER uses, as stated in the above excerpt.

It's not clear what the objective of leaving out all the "big ticket items" is meant to accomplish.

More FUD?
by PreserveCapital
Thu Mar 01, 2012 2:21 pm
Forum: Personal Finance (Not Investing)
Topic: A Rant, a lot of Emotion, and a bottom
Replies: 13
Views: 2428

Re: A Rant, a lot of Emotion, and a bottom

The problem really boils down to just to what extent is the money we are risking/investing truly "risk capital"--that is, money we could really truly afford to lose? For the vast majority of us, investing for retirement, we CAN'T really afford to lose all or even a substantial portion of our supposed "risk capital." And "lose" also means "suffer a catastrophically severe retirement account draw-down which does not materially recover in a sufficiently quick amount of time to permit us to retire in accordance with what we had planned". It might seem strange or dumb to observe other people at the bottom of a market crash pulling their money out of risky investments. It seems like they are "selling l...
by PreserveCapital
Thu Mar 01, 2012 2:03 pm
Forum: Non-US Investing
Topic: Need recommendations for a friend with a sad inheritance
Replies: 43
Views: 3888

Re: Need recommendations for a friend with a sad inheritance

Sorry if something I said offended you as that was not my intention.

Which still begs the question:

Why are you trying to persuade your friend to do something--that is, not sell the apartment--that is obviously contrary to her wishes?

If you view yourself in the role of "financial advisor"/friend or in providing guidance, then your task is to help your friend best accomplish HER objectives--not try to persuade her to do what YOU think would be "best" for her.

SHE wants to sell the apartment. So the only question is, how to 1) maximize sales price 2) minimize taxes & transaction costs 3) what to do with the proceeds.
by PreserveCapital
Thu Mar 01, 2012 1:38 pm
Forum: Personal Finance (Not Investing)
Topic: Yes, ANOTHER Social Security Question
Replies: 14
Views: 1665

Re: Yes, ANOTHER Social Security Question

sscritic wrote:I agree with nisiprius that most of the staff want to be helpful, but that doesn't mean they will always get things right. The correct strategy is the one recommended to lawyers at trial: never ask a question for which you do not already know the answer. Get your facts lined up; come back here with the facts; get references to the Code of Federal Regulations or other official social security material that answers your question; print them out; and take them with you to the meeting.

Note: if the materials show that you are not entitled, don't take them with you, tuck them in the bottom desk drawer. Maybe the staff at social security won't get things right and give you the money anyway.
Not.
by PreserveCapital
Thu Mar 01, 2012 1:31 pm
Forum: Personal Investments
Topic: Why buy bond funds now?
Replies: 66
Views: 8440

Re: Why buy bond funds now?

You know I almost hate to say it....

...but with the stock market having just gone on a 100% run up....

No matter how uncomfortable pretty much all of us probably feel with where bonds are right now....

..."Why buy bonds?" strikes me as possibly just the flip side of "Why not 100% equities?".....

which I regard as something of a "contrary indicator."

Just some food for thought....
by PreserveCapital
Thu Mar 01, 2012 1:22 pm
Forum: Non-US Investing
Topic: Need recommendations for a friend with a sad inheritance
Replies: 43
Views: 3888

Re: Need recommendations for a friend with a sad inheritance

I will be spending the day with her on Saturday
Is she your girlfriend?

You don't sound like you're too interested in giving her completely disinterested advice.
by PreserveCapital
Thu Mar 01, 2012 1:20 pm
Forum: Non-US Investing
Topic: Need recommendations for a friend with a sad inheritance
Replies: 43
Views: 3888

Re: Need recommendations for a friend with a sad inheritance

A very dear friend in her mid 30s just lost both her parents within the last 3 months and her inheritance is just clearing probate in the next week or two. In addition to a sizeable amount of cash and some pensions/insurance payouts, she also inherited the family home. Total assets are probably around US$5m: approx $3.5m is the value of the apartment alone. She has a brother who is older and who has a very well paid job and his own apartment. She lived at home with her parents as she is not married (very common here). Anyway, she doesn't want to stay in the family home and is talking about selling it and just splitting the proceeds straight down the middle. The point is that this property is in a very desirable location and will never decl...
by PreserveCapital
Thu Mar 01, 2012 1:00 pm
Forum: Investing - Theory, News & General
Topic: The Total Economy Portfolio
Replies: 161
Views: 25690

Re: The Total Economy Portfolio

Very interesting Rick. I'm curious as to why you selected small cap value and not small cap growth or just all small cap? Do small cap value stocks really reflect the non-publicly traded companies more than small cap growth companies? The working paper, Private Equity Performance: What Do We Know ? by Harris, Jenkinson and Kaplan helps answer this question. They compared the returns of a private equity fund to the returns of the S&P 500 (large-cap), Russell 3000 (broad market), Russell 2000 (small-cap), and Russell 2000 value (small-cap value) and found that small-cap value most closely approximates the returns of private equity funds. Here is what I wrote about their results, "The relative performance of both buyout and venture f...
by PreserveCapital
Thu Mar 01, 2012 12:58 pm
Forum: Investing - Theory, News & General
Topic: The Total Economy Portfolio
Replies: 161
Views: 25690

Re: The Total Economy Portfolio

Prove it. Good Lord...and would you also like a bound copy of that dissertation submitted to the university's library for archival? What degree program am I enrolled in again? Oh that's right, I'm not enrolled in any so maybe you should take the next few years to detail the proof for your dissertation or, better yet, take it to Wall Street, sweet Wall Street, where if you're right you get paid without having to waste years of your life submitting dumbed-down proofs to highly esteemed morons who have no better chance of understanding them than a hamster does of learning Shakespeare. OR you can do a literature search and we can get back to the original topic of this conversation. Just because you personally feel that a particular hypothesis ...
by PreserveCapital
Thu Mar 01, 2012 12:43 pm
Forum: Personal Investments
Topic: Bond Market Bubble?
Replies: 10
Views: 1277

Re: Bond Market Bubble?

Exactly, there's the problem, how do you NOT invest in bonds either by rebalancing or w/new money when we have just been through a 100% run up in equities?
by PreserveCapital
Thu Mar 01, 2012 12:42 pm
Forum: Investing - Theory, News & General
Topic: New article in Journal of Indexes, on magical thinking
Replies: 23
Views: 3666

Re: New article in Journal of Indexing, on magical thinking

Excellent article. I thought Future Babble by Dan Gardner was another good book on this topic. The fact that the person who "explains that most of us go through life assuming that 'we are basically right, basically all the time, about basically everything" happens to be named Schulz--with that spelling--brought to mind an old Peanuts cartoon by Charles M. Schulz--same spelling. I found an image on the Internet but I think there's a lead-up to it in which Lucy says she is human, fallible, and makes mistakes just like everyone else. Then she says: http://i41.tinypic.com/9vgw14.jpg I find it quite the puzzle to know when I am executing my plan and staying the course, and when I am "ignor[ing] evidence, even when it is compellin...
by PreserveCapital
Thu Mar 01, 2012 12:40 pm
Forum: Investing - Theory, News & General
Topic: New article in Journal of Indexes, on magical thinking
Replies: 23
Views: 3666

Re: New article in Journal of Indexing, on magical thinking

larryswedroe wrote:nisprius
I am using it and explain it clearly that loser's game is not that you cannot win, but the odds of doing so are so low that it is not prudent to try. Which is what Ellis is saying. You can win by trying to hit that great shot but the odds of doing so are so low you should not try
Best wishes
Larry
Especially when you consider that Joe Average retail investor is competing with the pros if engaged in active investing.

There is no sunday softball beer league for us amateurs to play in, we have to compete against Willie Mays and Mickey Mantle if we want to actively invest.
by PreserveCapital
Thu Mar 01, 2012 12:36 pm
Forum: Personal Investments
Topic: Bond Market Bubble?
Replies: 10
Views: 1277

Re: Bond Market Bubble?

Yes obviously bonds have done very well recently but so have stocks--which have doubled since March 2009.

If you are going to avoid bonds then you have to have quite a bit of confidence that equities still have plenty of room to run.

I don't think anyone taking an objective look at our economy would feel comfortable expressing a huge amount of confidence.
by PreserveCapital
Thu Mar 01, 2012 12:30 pm
Forum: Personal Finance (Not Investing)
Topic: A Rant, a lot of Emotion, and a bottom
Replies: 13
Views: 2428

Re: A Rant, a lot of Emotion, and a bottom

FUD strikes again. I will say however that hindsight is 20-20. If you look at a chart of historical PE ratios March 2009 arguably did not "overshoot" to the downside as much as history might have suggested could happen. I think we were at something like PE10 of 12 or something like that at the March 2009 lowpoint? (Understanding that earnings were well below trend due to the severe recession, but nevertheless....) The S&P was down as low as 8x in prior severe recessions. We will never know but it's a reasonably likely bet that various governmental interventions provided enough liquidity to the system so that didn't occur. But it didn't have to play out that way. "I hope and pray that you are wrong". Thankfully your p...
by PreserveCapital
Thu Mar 01, 2012 12:22 pm
Forum: Investing - Theory, News & General
Topic: Which Industries should I invest in ?
Replies: 18
Views: 1854

Re: Which Industries should I invest in ?

TonyK wrote:I would like to buy stocks from 5 different industries that have dividend/growth potential for the future. Not looking for a quick turn around, something to hold for 5 or more years. So far I bought MCD in the food services industry and CVX in the petroleum refining industry. Both are rated #1 in their industry from an article in CNN Money.com World's Most Admired Companies.

What other industries would you recommend ?

Thanks
Wal Mart--retail (WMT)

White Mountains--insurance (WTM)

Wells Fargo--banking/financial (WFC)
by PreserveCapital
Wed Feb 29, 2012 9:29 pm
Forum: Investing - Theory, News & General
Topic: S&P Declares Greece in Default - WSJ - 28 Feb 2012
Replies: 19
Views: 2311

Re: S&P Declares Greece in Default - WSJ - 28 Feb 2012

[off-topic comments deleted by admin alex. This forum is for investing issues, not comments on political or social dynamics.]
by PreserveCapital
Wed Feb 29, 2012 9:20 pm
Forum: Investing - Theory, News & General
Topic: The Total Economy Portfolio
Replies: 161
Views: 25690

Re: The Total Economy Portfolio

So now you're arguing that if the empirical results of a scientific investigation disagrees with what you believe ought to be "logically" false or "absolutely" true, it's appropriate to simply discard those empirical results because they must be annoying "noise"? I will repeat that the position you seem to be espousing is not rational. As a matter of fact, the history of scientific investigation is replete with counter-examples to your argument. Empirical investigation demonstrates that the Earth revolves around the Sun, not the other way 'round, despite what Aristotle though must be "absolutely and logically true." The speed of light in a vacuum is invariant, there is no ether, despite what "mu...
by PreserveCapital
Wed Feb 29, 2012 2:10 pm
Forum: Investing - Theory, News & General
Topic: What qualifies as a RBD?
Replies: 26
Views: 4524

Re: What qualifies as a RBD?

I've never seen the plan for reaping the supposed benefits (i.e. selling those assets you purchased on the theoretical cheap) of the RBD strategy spelled out.

OK I see you've answered the question, if no one else can do better than RBD is a literary device for livesoft's posting at bogleheads rather than an actionable trading strategy.
by PreserveCapital
Wed Feb 29, 2012 2:08 pm
Forum: Investing - Theory, News & General
Topic: What qualifies as a RBD?
Replies: 26
Views: 4524

Re: What qualifies as a RBD?

The RBD used by Livesoft (using him as an example, since he is the most vocal of the adherents to RBD) is not a specified percentage drop. It takes into account past volatility - I believe he uses the past 12 months to compare to, but I'm just firing from the hip here; I don't use this method (I use rebalancing bands). The methodology to define the RBD is along the lines of a drop of a particular ETF/asset class that is one of the 3-5 largest drops in the past year, possibly with some other criteria. Yes, during the RBD one is supposed to use dry powder - preferably cash, but bonds could work - to buy the cratering asset. Waiting a few days is not supposed to be part of the plan - the idea is that many of the largest single-day gains happe...
by PreserveCapital
Wed Feb 29, 2012 1:42 pm
Forum: Investing - Theory, News & General
Topic: The Total Economy Portfolio
Replies: 161
Views: 25690

Re: The Total Economy Portfolio

Far too often do scientists and engineers overlook the reality that their hypotheses are either absolutely (ie logically) false or absolutely true, in which case the findings of their empirical tests reflect nothing but noise or mistakes on behalf of the tester. So now you're arguing that if the empirical results of a scientific investigation disagrees with what you believe ought to be "logically" false or "absolutely" true, it's appropriate to simply discard those empirical results because they must be annoying "noise"? I will repeat that the position you seem to be espousing is not rational. As a matter of fact, the history of scientific investigation is replete with counter-examples to your argument. Empiri...
by PreserveCapital
Wed Feb 29, 2012 1:30 pm
Forum: Investing - Theory, News & General
Topic: The Total Economy Portfolio
Replies: 161
Views: 25690

Re: The Total Economy Portfolio

In theory, I can see this as being helpful for an investor. I'm not sure of the best way to get this exposure to privately held equity. But if this could be set up, would you see this as increasing returns, or just leveling out equity volatility by this broader diversification? I'm still exploring this concept myself and don't have all the answers, yet. That said, an economic tilt to small-value and REITs would lower the portfolio volatility because it's more diversified economically, even though it only magnifies stocks that are already trading on the market. Rebalancing among TSM, SV and REITs helps smooth TSM volatility, and that alone should lead to higher risk-adjusted returns than the TSM. A small-value tilt on its own has a higher r...
by PreserveCapital
Wed Feb 29, 2012 1:08 pm
Forum: Investing - Theory, News & General
Topic: rebalancing myths
Replies: 14
Views: 2179

Re: rebalancing myths

I once read convincing academic analyses (forgot by whom) that concluded that a stock/bond mix with rebalancing does better than one without rebalancing during a time period in which stocks are highly volatile and range-bound, but worse during a time period in which stocks move decisively to a very different level (whether that new level is higher or lower than the initial one). This is not surprising: If stocks are moving decisively then rebalancing makes you sell what's going up (in the move-up case) or buy what's going down (in the move-down case), which hurts in either case. In the range-bound highly-volatile case, you're making a nice living off of the volatility itself (and that case would be an exploitation of reversion-to-the-mean ...
by PreserveCapital
Wed Feb 29, 2012 1:00 pm
Forum: Personal Finance (Not Investing)
Topic: Beach Condo. Good or bad?
Replies: 50
Views: 14509

Re: Beach Condo. Good or bad?

About seven years ago, we bought a place in Rehoboth Beach, DE. (Ocean City, MD and the other Delaware beaches were on our radar too.) We briefly had a small mortgage but managed to pay it off years ago. THE GOOD: The condo is in a great location, and my wife, son, and I love it. It rents all summer, except for 1-2 weeks that we reserve it and 1-2 other weeks, which we give to family at the last minute when it fails to rent. The regular expenses (HOA, property taxes) are dirt cheap. THE BAD: 1. It just does not rent in the off-season. I was sure we could make some money renting it for weekends in April, May, September, October, etc., at a discount. People from the DC area should visit Rehoboth then -- the shops and restaurants are mostly o...
by PreserveCapital
Wed Feb 29, 2012 12:00 pm
Forum: Personal Consumer Issues
Topic: Early retirement to Florida
Replies: 177
Views: 25675

Re: Early retirement to Florida

Victoria, I certainly agree with your general approach of not worrying too much about economic optimization your first year. You will just be discovering what you really enjoy and learning more about yourself. Also, many people seem to have a hard time adapting to retirement and adapting to the idea of living off a portfolio with all of its ups and downs. In fact, based on my experience, people who do this successfully are a small minority. My original plan was to do the same thing as you, and maintain a home base during extended travel, but I ended up enjoying traveling and living abroad so much that I ditched my stuff upon my return from my second trip. However, I don't think this is usual or normal. And I have an extended family home ba...
by PreserveCapital
Wed Feb 29, 2012 11:58 am
Forum: Personal Consumer Issues
Topic: Early retirement to Florida
Replies: 177
Views: 25675

Re: Early retirement to Florida

deleted
by PreserveCapital
Wed Feb 29, 2012 11:47 am
Forum: Personal Consumer Issues
Topic: Car totaled, now what?
Replies: 54
Views: 4337

Re: Car totaled, now what?

Ironically moments after posting in another thread about car purchasing my wife was involved in an accident that totaled our second car. We did not have collision insurance (in retrospect a bad move, we lost money because of it). So unless we collect from the other driver's insurance (the other driver was at fault and was issued a citation) we won't get a penny. Even if we do it won't be much. So we went from having two cars costing us nothing but gas/maintenance to having to spend a significant amount for a vehicle. No way we can function long term with only one. Not with a toddler who needs to be picked up from school and two very different work schedules. And of course this is the absolute worst time to be buying a vehicle. Used prices ...
by PreserveCapital
Wed Feb 29, 2012 11:38 am
Forum: Investing - Theory, News & General
Topic: "The crisis never happened" (Dow 13000)
Replies: 47
Views: 5890

Re: "The crisis never happened" (Dow 13000)

This story is exactly the kind of thing that causes many doubters of EMH to continue doubting.

Market participants publicly aver that an arbitrary nominal numerical level on the Dow, which happens to have three trailing zeros, is somehow significant in and of itself.

If that kind of sheer numerology is not completely non-rational, I wouldn't know what is.
by PreserveCapital
Wed Feb 29, 2012 11:21 am
Forum: Investing - Theory, News & General
Topic: Dow 20,000 by end of the year!
Replies: 16
Views: 2632

Re: Dow 20,000 by end of the year!

StealthWealth wrote:I am looking forward to S&P 20,000! I forecast that we are entering a golden age of prosperity driven by technological wonders the average man has barely dreamed of. Hold on tight, new all time highs await us all!
The market has zig zagged for the past 13 years. We are pessimistic perhaps by nature but also perhaps due to some degree of recency bias.

I look at what Apple has done and realize that our economy and the world's has just a huge potential for growth and lots of people who spend their lives trying to unlock it, to the benefit of all of us.

We can get so focused on the ups and downs of our account balances and lines on a stock market chart that it's easy to lose sight of this.
by PreserveCapital
Wed Feb 29, 2012 11:14 am
Forum: Investing - Theory, News & General
Topic: Dow 20,000 by end of the year!
Replies: 16
Views: 2632

Re: Dow 20,000 by end of the year!

If this happens then I hope and pray I have the self-control to take a bunch of equities off the table and buy lots of TIPS which presumably will be disfavored in that kind of a frenzied pro-equities environment and perhaps providing a decent real rate of return.
by PreserveCapital
Wed Feb 29, 2012 10:32 am
Forum: Investing - Theory, News & General
Topic: The Total Economy Portfolio
Replies: 161
Views: 25690

Re: The Total Economy Portfolio

Testing hypotheses is not the only (or even the best) way to arrive at conclusions.
Perhaps not, but it is the most rational way.