Search found 373 matches

by danielc
Fri Aug 17, 2018 12:12 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Valuations Too High?
Replies: 229
Views: 14652

Re: Larry Swedroe: Valuations Too High?

Strawman or not, you failed to answer the question "why not just buy the individual stocks that have the lowest P/E ratios?" (I've known people that actually used that strategy) :annoyed I don't like answering insincere questions. (1) You know the point of diversification just as well as anyone in ...
by danielc
Sat Aug 11, 2018 7:00 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Valuations Too High?
Replies: 229
Views: 14652

Re: Larry Swedroe: Valuations Too High?

I'm confused by your post. Is your $10 to get $1 implying a P/E of 10? Are you suggesting that average earnings over the past ten years tell you how much the company will earn next year? Yes... there is a correlation between past earnings and future earnings. A lot of people in this forum take the ...
by danielc
Wed Aug 08, 2018 8:23 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Valuations Too High?
Replies: 229
Views: 14652

Re: Larry Swedroe: Valuations Too High?

Except, as HomerJ already pointed out a few posts back, it is not "averages of past performance," but typically either worst case scenario or something close. Well... using PE ratios and CAPE is not simply about averages either. If you don't trust Nobel-Prize winning economists, maybe you'll trust ...
by danielc
Wed Aug 08, 2018 12:33 am
Forum: Investing - Help with Personal Investments
Topic: Better investments than the stock market?
Replies: 13
Views: 2410

Re: Better investments than the stock market?

Hi there! Is there a better way to put your money besides investing in index funds? What alternative investment method would yield a higher return over the long term with underlying value? Here's the thing. The market is very efficient. Everybody and their dog wants to make more money with the lowe...
by danielc
Mon Aug 06, 2018 5:04 pm
Forum: Investing - Theory, News & General
Topic: "Don't Obsess About Expense Ratios"
Replies: 240
Views: 21959

Re: "Don't Obsess About Expense Ratios"

I would add that once you get to Vanguard-like expense ratios, your expenses become completely dominated by tax efficiency.
by danielc
Mon Aug 06, 2018 4:58 pm
Forum: Investing - Theory, News & General
Topic: "Age in Bonds" fails almost everyone
Replies: 217
Views: 14216

Re: "Age in Bonds" fails almost everyone

I'm all for it. Honestly, my main goal is to dislodge the stupid "age in bonds" rule from its position as received wisdom. I understand the benefit of simple rules of thumb, especially for investors who don't want complex plans, but anything that results in very young investors and retired investor...
by danielc
Mon Aug 06, 2018 4:46 pm
Forum: Investing - Theory, News & General
Topic: "Age in Bonds" fails almost everyone
Replies: 217
Views: 14216

Re: "Age in Bonds" fails almost everyone

I set out to devise an approach that was significantly more accurate without being significantly hard to remember. Eventually I settled on the following: Age 40 and under, hold 10% in fixed income Age 45 to 60, hold "age minus 18" in fixed income Age 65 and over, hold 65% in fixed income How about:...
by danielc
Sun Aug 05, 2018 2:50 am
Forum: Investing - Theory, News & General
Topic: holding bonds-why or why not?
Replies: 19
Views: 2329

Re: holding bonds-why or why not?

I’ve just started to read investment books, financial history...etc. for about half a year, and there has been one thing that I am still confused--should an average investor like me hold bonds (personally, bonds account for nearly 30% of my portfolio) or not? It appears to me there are two complete...
by danielc
Sun Jul 22, 2018 12:16 am
Forum: Investing - Help with Personal Investments
Topic: Capital One offerings 2.30% on CDs - Should I?
Replies: 18
Views: 2126

Re: Capital One offerings 2.30% on CDs - Should I?

I have money that I would like to earn a bit more interest on than what I earn in my money market account. I’m not sure when I will need this money, but I would like it to be relatively liquid (like my money market) in case I decide to buy a house in the next year or so. Capital One offers 2.30% on...
by danielc
Fri Jul 20, 2018 10:19 pm
Forum: Local Chapters and Bogleheads Community
Topic: New Hershey PA Local Chapter Established
Replies: 8
Views: 971

Re: New Hershey PA Local Chapter Established

I would like to thank you all very much! Here's to helping others reach their financial dreams! To the group: Anyone in the area interested in joining the meetings, or if you have someone who you think might be interested, please have them contact me. The more the merrier. Feel free to PM me or to ...
by danielc
Fri Jul 20, 2018 5:49 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

Duration, yes. Yields, no. You are interpolating the yield curve between cash and IT. So while you simulate all the risk, you fail to simulate the return, and then wonder why the risk-return ratio doesn't look good. For example, 60% x 1-Mo + 40% x 5-Yr has about the same duration as 2-Yr. Using tod...
by danielc
Fri Jul 20, 2018 3:43 am
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

Close enough for me: Both portfolios are 60% US Stock Market. The blue line is 16% Cash & 24% ST Treasuries. The red line is 40% ST Treasuries. Those plots are dominated by the 60% stocks; of course they look the same. If you use Portfolio Visualizer to compare 40% Cash + 60% IT against 100% ST you...
by danielc
Fri Jul 20, 2018 2:37 am
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

The prevailing theory is that cash earns the risk free rate and riskier assets earn a risk premium in excess of the risk-free rate. Cash plus IT can simulate the duration of ST. Duration, yes. Yields, no. You are interpolating the yield curve between cash and IT. So while you simulate all the risk,...
by danielc
Fri Jul 20, 2018 1:52 am
Forum: Investing - Theory, News & General
Topic: I may have understood why it's so hard to save and invest
Replies: 75
Views: 11470

Re: I may have understood why it's so hard to save and invest

averagedude wrote:
Thu Jul 19, 2018 4:45 am
Albert Einstein said that compound interest is the most powerful force in the universe.
There is no evidence that Einstein ever said anything about compound interest.
by danielc
Fri Jul 20, 2018 1:48 am
Forum: Investing - Theory, News & General
Topic: Why Take Risk on Equity Side?
Replies: 78
Views: 5893

Re: Why Take Risk on Equity Side?

Sure - that is certainly an argument that can be proposed. I am really just trying to understand the justification for the advice to "take risk on the equity side." Another potentially appealing asset class we could discuss in this context is emerging market bonds. I've read a couple of books from ...
by danielc
Fri Jul 20, 2018 1:42 am
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

ST Treasuries are not the same as cash. Specifically, a 1-year Treasury has a higher return than cash. Fair enough. Some combination of cash (1mo T-Bills) and IT Treasuries would be a better proxy for ST Treasuries. Looks like 40/60 is pretty close ( link ). Now the 40% bonds are 16% Cash and 24% I...
by danielc
Thu Jul 19, 2018 9:42 pm
Forum: Investing - Theory, News & General
Topic: Why Take Risk on Equity Side?
Replies: 78
Views: 5893

Re: Why Take Risk on Equity Side?

Those results probably have a lot to do with your dataset. Not suggesting you purposefully cherrypicked dates, but those dates happen to include a 30 year bull run for bonds which is just recently coming to a close. Why would that affect risk-adjusted return? I can see that it would boost raw retur...
by danielc
Thu Jul 19, 2018 9:41 pm
Forum: Investing - Theory, News & General
Topic: Why Take Risk on Equity Side?
Replies: 78
Views: 5893

Re: Why Take Risk on Equity Side?

I have been an advocate of "taking your risk on the equity side." However, I noticed that from 1979-2018 (the maximum time period that Portfolio Visualizer has data) the risk-adjusted return for high-yield corporate bonds in actually slightly higher than the risk-adjusted return for the US stock ma...
by danielc
Thu Jul 19, 2018 9:33 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

However, 1972-1977 are important to include since it was a bad time for longer term bonds. Cash is the closest thing to ST Treasuries, and portoflio visualizer has data for cash for the full time period, so we could compare IT Treasuries to cash ( link vs link ). IT Treasuries still come out ahead ...
by danielc
Thu Jul 19, 2018 9:29 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard 401k - VFIFX vs VFINX - How to evaluate expense ratios?
Replies: 5
Views: 513

Re: Vanguard 401k - VFIFX vs VFINX - How to evaluate expense ratios?

So in terms of a wealth building focus and being Is an acceptable strategy to move funds to the latest possible target date fund in order to keep my stock allocation high and retain the lower 0.08% expense ratio? Or is the better choice to put my 401k into VFINX despite the increase from 0.08% to 0...
by danielc
Thu Jul 19, 2018 8:52 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Ladder Managed Account
Replies: 31
Views: 1834

Re: Bond Ladder Managed Account

It's a pretty sure thing that we're going to see rising interest rates for the next year or so. I'm not sure how you know the future, but I'll take your word for it. Given that, it's a bad time to be in bond mutual funds. My Fidelity advisor is recommending that I move my bond based mutual funds to...
by danielc
Thu Jul 19, 2018 8:38 pm
Forum: Investing - Help with Personal Investments
Topic: Are ETFs Really That Safe?
Replies: 29
Views: 3876

Re: Are ETFs Really That Safe?

ETFs are normally lumped with index funds as fairly safe investments, but ETFs seem far more dangerous. Even Bogle warned about them I have never heard anyone claim that either ETFs or index funds are safe investments. Most ETFs, like most index funds, invest in stocks. Stocks are not safe. I might...
by danielc
Thu Jul 19, 2018 4:18 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

Kevin, a zero coupon bond has no coupon so all of the return is the roll down return by both of our definitions. Sorry to interject in your discussion with Kevin, but I think he has made it very clear that this is not the case. A zero coupon bond has a yield, just like a par bond. It makes perfect ...
by danielc
Thu Jul 19, 2018 12:49 pm
Forum: Personal Finance (Not Investing)
Topic: Should I get a warranty for my new glasses?
Replies: 24
Views: 1435

Re: Should I get a warranty for my new glasses?

This is a serious question, what percentage of the day do you wear your glasses? ~ 100% and at what percentages of you livelihood and pleasure activities are not available to you without glasses? The only things I can do without glasses are sleeping and taking a shower. I most definitely cannot wor...
by danielc
Thu Jul 19, 2018 11:33 am
Forum: Personal Finance (Not Investing)
Topic: Should I get a warranty for my new glasses?
Replies: 24
Views: 1435

Re: Should I get a warranty for my new glasses?

retiringwhen wrote:
Thu Jul 19, 2018 6:54 am
My advice is review if you are buying essentially throw-away glasses (and at $300/pair, they sound like it.) If so, don't buy the warranty, just plan on replacing them every 24 months or sooner.
I don't consider $300 to be "throw-away". I think it's a lot of money.
by danielc
Thu Jul 19, 2018 11:28 am
Forum: Personal Finance (Not Investing)
Topic: Should I get a warranty for my new glasses?
Replies: 24
Views: 1435

Re: Should I get a warranty for my new glasses?

student wrote:
Thu Jul 19, 2018 5:10 am
Did you get anti scratch coating? If so, I think it is durable. So it is probably not necessary to get the warranty.
Yes, I did.
by danielc
Thu Jul 19, 2018 11:23 am
Forum: Personal Finance (Not Investing)
Topic: Should I get a warranty for my new glasses?
Replies: 24
Views: 1435

Re: Should I get a warranty for my new glasses?

Costco will replace glasses within the 1st year at no charge—scratched, broken, coating coming off, etc. They’re also much cheaper than many other locations. My titanium frame glasses were 1 pair or Rx regular glasses and 1psir polarized prescription sunglasses for about $250 or so. They’re so reas...
by danielc
Thu Jul 19, 2018 1:39 am
Forum: Personal Finance (Not Investing)
Topic: Should I get a warranty for my new glasses?
Replies: 24
Views: 1435

Re: Should I get a warranty for my new glasses?

If you have enough income or liquid savings to buy replacement lenses (or have them re-ground or whatever they do to remove scratches) without significant financial pain, then don't buy the warranty. Unless you're the type who always breaks your glasses. The financial pain would be 100% emotional -...
by danielc
Thu Jul 19, 2018 1:11 am
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

unclescrooge wrote:
Thu Jul 19, 2018 12:59 am
I had an opportunity to ask Eugene Fama this question. He recommends using ST treasuries and taking risk on the equity side.
I'd love to hear more about that conversation. Any details? Reasons? Was he talking about the market right now or in general?
by danielc
Thu Jul 19, 2018 12:41 am
Forum: Personal Finance (Not Investing)
Topic: Should I get a warranty for my new glasses?
Replies: 24
Views: 1435

Should I get a warranty for my new glasses?

Hello, I generally expect that buying warranties is likely to be a waste of money. After all, if it didn't make a profit for the company, they wouldn't offer the warranty. My SO and I recently bought new pairs of glasses at around $600 (i.e. $300 per person). I was offered a warranty: Pay $30 and if...
by danielc
Thu Jul 19, 2018 12:02 am
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

Indeed. I was expecting to see a horizontal 1-yr return line between the 2-Year and 3-Year maturities. A flat 1-yr return line would have meant that you didn't lose any money by choosing the 3-Year maturity instead of the 2-Year one. I wonder why that didn't happen. But you didn't lose any money wi...
by danielc
Wed Jul 18, 2018 10:35 pm
Forum: Investing - Theory, News & General
Topic: Flatting Yield Curve - buckle up for the storm?
Replies: 27
Views: 2666

Re: Flatting Yield Curve - buckle up for the storm?

OP, A) If the stock market goes down 50% and stay down for n number of years and the person is unemployed at the same time, how long before the person is totally wiped out? B) If the stock market goes down 50% and stay down for n number of years and the person is unemployed at the same time, how lo...
by danielc
Wed Jul 18, 2018 9:10 pm
Forum: Investing - Help with Personal Investments
Topic: High Crypto Allocation
Replies: 37
Views: 3284

Re: High Crypto Allocation

I also envisioned other scenarios where bitcoin could become more relevant (other than the wide recognized super bull case). A few examples: 1) Money laundering out of China to circumvent currency controls 2) Payment system to replace hyper-inflation situations (eg. Venezuela) 3) Black market usage...
by danielc
Wed Jul 18, 2018 7:21 pm
Forum: Investing - Help with Personal Investments
Topic: High Crypto Allocation
Replies: 37
Views: 3284

Re: High Crypto Allocation

When I bought BTC back in 2014 for $500/coin, I made a calculated bet. If bitcoin turned into a widely recognized store of value and/or payment system outside of the purview of central banks and governments, it was fundamentally mis-priced compared to the market caps of gold, silver, VISA, Masterca...
by danielc
Wed Jul 18, 2018 7:11 pm
Forum: Investing - Help with Personal Investments
Topic: High Crypto Allocation
Replies: 37
Views: 3284

Re: High Crypto Allocation

My buddy has 25% of his total net worth allocated to crypto (15% of which is btc). Close to 5% of my net worth is allocated to crypto right now. He makes the argument to me that if I believe in its speculative capabilities enough to invest 5%, why not bump it up to 20%? That makes absolutely no sen...
by danielc
Wed Jul 18, 2018 4:25 pm
Forum: Investing - Theory, News & General
Topic: Classifying CDs as Bonds or Short Term assets
Replies: 12
Views: 1264

Re: Classifying CDs as Bonds or Short Term assets

jeffyscott wrote:
Wed Jul 18, 2018 1:58 pm
I am trying to avoid bond funds that hold a lot of treasuries and so our other fixed income is mostly corporate, foreign, and floating rate bonds. For these I have 2 categories: "low duration bond funds" and "other bond funds".
What's wrong with treasuries?
by danielc
Wed Jul 18, 2018 3:44 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

It appears that, to a good approximation, if the slope between the N-year yield and the (N-1)-year yield is X basis points, a " rolling down the yield curve " strategy that buys an N-year bond today and sells it next year is basically making a bet that in the next year the yields on (N-1)-year bond...
by danielc
Wed Jul 18, 2018 11:24 am
Forum: Investing - Help with Personal Investments
Topic: Anyone have experience with Redneck bank?
Replies: 13
Views: 1738

Re: Anyone have experience with Redneck bank?

When looking at options, I came across Redneck bank's Mega-money market, and at first glance it looks decent(if you can get past the redneck style website). Holy crap! They put a FLY on their website. It looked so real. If you scroll the fly doesn't move so it looks like a real fly, right on my fac...
by danielc
Wed Jul 18, 2018 10:47 am
Forum: Investing - Help with Personal Investments
Topic: How do you handle the urge to DO something?
Replies: 102
Views: 7857

Re: How do you handle the urge to DO something?

When my mind tells me that I need to act, the most effective way i've found is to click on Bogleheads. I'm back on course in a couple of minutes. That's what I do as well. My list: - Read the forum and participate. - Read another BH-like book. - Handle the treasury portion of the portfolio directly...
by danielc
Wed Jul 18, 2018 2:16 am
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

Maybe Kevin and Doc can comment on this: I was reading Kevin's thread and this post explains how the 1-year return is affected by a shift in the yield curve. It appears that, to a good approximation, if the slope between the N-year yield and the (N-1)-year yield is X basis points, a " rolling down t...
by danielc
Tue Jul 17, 2018 5:10 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

No. That's where our conflict comes from. I don't lose money because I sell the note when it drops to par. The "term premium" assumes that you keep the longer note until it matures. There is no such assumption in either my example, or Kevin's example. The calculation of a 1-year return is for a 1-y...
by danielc
Tue Jul 17, 2018 4:34 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

No argument except "but next year ... will return 5%". Hindsight is 20-20 but foresight is not. Of course. So the term premium is based on expectations about the future and those can be wrong. Agreed but you do not have to keep holding your original note. If the yield shifts up enough so that your ...
by danielc
Tue Jul 17, 2018 2:57 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

I don't get this "term premia" concept. The Fed has some "analysis is based on a five-factor, no-arbitrage term structure model." It seem they take the estimate for a 1 year note and in this case roll it ten time to get a comparison with a ten year note held to maturity. Did you see my example? I t...
by danielc
Tue Jul 17, 2018 1:15 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

I made up numbers to try to illustrate to danielc what rolling the yield curve means. Comparing a ten year projected average of a one year rolled again and again to a ten held to maturity bogles my mind. I just don't get the point. "Rolling down the yield curve" is a thing you can do when the term ...
by danielc
Mon Jul 16, 2018 11:02 pm
Forum: Investing - Theory, News & General
Topic: Classifying CDs as Bonds or Short Term assets
Replies: 12
Views: 1264

Re: Classifying CDs as Bonds or Short Term assets

I don't think that's unreasonable. With respect to investment behavior, looking at price (and thus total return) volatility, bank CDs can be cashed out at the same price over time (principal minus early withdrawal penalty) whereas brokered CDs are marketable and change in price like bonds. So while...
by danielc
Mon Jul 16, 2018 8:52 pm
Forum: Investing - Theory, News & General
Topic: Classifying CDs as Bonds or Short Term assets
Replies: 12
Views: 1264

Re: Classifying CDs as Bonds or Short Term assets

munemaker wrote:
Mon Jul 16, 2018 6:26 pm
Brokered CDs = Bonds
Bank CDs = Cash
That doesn't make any sense. Surely maturity is far more important when deciding how to classify fixed income instruments. "Cash" is short-term fixed income like money market and short-term bonds.
by danielc
Mon Jul 16, 2018 8:49 pm
Forum: Investing - Theory, News & General
Topic: Classifying CDs as Bonds or Short Term assets
Replies: 12
Views: 1264

Re: Classifying CDs as Bonds or Short Term assets

I've used Fidelity's Asset Allocation analysis tool before and was confused why their percentages for Bonds and Short Term didn't match my own spreadsheet calculations. I dug into it more today and found out that Fido calls a CD a "Bond" if maturity is more than 1 year out and it calls a CD "Short ...
by danielc
Mon Jul 16, 2018 6:18 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

No it doesn't help at all. ... Let me try an example. Let's try my example instead because the whole point of my example was to make a negative term premium. Clearly, if you pick a different example you will get a different answer. My example was: If you buy a 2-year note at 2% and next year the 1-...
by danielc
Mon Jul 16, 2018 5:19 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

If you do want to use historical data, we can calculate the historical efficient frontier using portfoliovisuslizer going back to 1977 (the limit of the data) for a high equity allocation and either ST or IT treasuries. Setting the min for stocks at 79% and max for stocks at 80% but leaving ST and ...
by danielc
Mon Jul 16, 2018 5:15 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 7644

Re: In defense of short-term treasuries

A histogram of historical values is still simulating a probability distribution that may not be the accurate distribution of future returns. I know. Side-note: Nit-pick on the definition of "histogram". A table of values is not a histogram. (but that doesn't change the validity of what you said).