Search found 113 matches

by MNS CA
Thu Dec 29, 2022 2:15 pm
Forum: Investing - Theory, News & General
Topic: Shiller Enhanced CAPE - what is the downside?
Replies: 9
Views: 1354

Re: Shiller Enhanced CAPE - what is the downside?

Based on its factor loadings, DSEEX is similar to 100% S&P500 but with bond credit risk in addition. So it is more similar to S&P500/short-term corporate bonds/T-bills = 100/100/-100 than a leveraged by on VTI. DSEEX underperforms VFINX/VCSH/CASHX=100/100/-100 . The construction is somewhat opaque, but this seems consistent with what I can gather from the website. I think it invests in four of the eleven S&P 500 sectors based primarily on valuations via swaps then invests the collateral in short-term bonds, especially corporate bonds. Interestingly, based on the backtest DSEEX was outperforming the factor-matched portfolio of VFINX (SP500) and VCSH (short-term corporate bonds), but then was badly positioned for the coronavirus ...
by MNS CA
Thu Dec 29, 2022 2:13 pm
Forum: Investing - Theory, News & General
Topic: Shiller Enhanced CAPE - what is the downside?
Replies: 9
Views: 1354

Re: Shiller Enhanced CAPE - what is the downside?

I'm a firm believer in a pure indexing strategy but was speaking with a friend the other day who is a staunch believer in DoubleLine Shiller Enhanced CAPE (DSEEX). While I couldn't imagine paying a 0.56% expense ratio, I am also impressed with the fund's performance historically. I'm trying to get a sense for what (if anything) I'm missing that is a big downside with this fund other than the expense ratio. Is it just a higher-risk, high reward type of investment due to the higher beta and implied leverage through its swap arrangement? Would love to hear everyone's thoughts. I was a big fan of CAPD, the barclays ETN that was similar but performed better. There's a doubleline ETF now, CAPE with a slightly higher expense ratio than the mutual...
by MNS CA
Thu Dec 29, 2022 2:03 pm
Forum: Investing - Theory, News & General
Topic: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash
Replies: 128
Views: 17628

Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

JoMoney wrote: Mon May 02, 2022 9:01 pm Maybe it should be called "The NCAA® Portfolio", I just noticed that Invesco proudly proclaims QQQ as "The Official ETF of the NCAA®, Invesco QQQ ETF (QQQ) gives you access to Nasdaq companies changing the world – and the future of sports – with a single investment."
:D 🏀

I also noticed QQQ has an expense ratio more than five times that of the fund Warren Buffett suggested :mrgreen:
Assuming the future is like the past, you'll get higher long term returns but more volatility. Returns might not be higher on a risk adjusted basis. I'd use QQQM though. Lower expense ratio, albeit higher bid ask spread.
by MNS CA
Thu Dec 29, 2022 1:50 pm
Forum: Personal Investments
Topic: Any ways to minimize capital gain taxes?
Replies: 22
Views: 2984

Re: Any ways to minimize capital gain taxes?

I have a taxable brokerage account with most of the individual tech stocks. There are winners and losers in the portfolio. With lots of talk about recession on the horizon and the Nasdaq continuously dropping, I am thinking of liquidating the majority of positions, which would generate long team capital gains of 200K+. Are there any strategies that I can use before liquidating so that I am not paying the capital gain tax, for example, opening a corporation, transferring my portfolio there and liquidating, and so on? Any suggestions or help from experts would be appreciated. My marginal tax rate is  Federal: 22% State: 7%. If there are no options available, then based on my earned income, I will end up paying 15% Federal + 3.8% net investme...
by MNS CA
Thu Dec 29, 2022 1:46 pm
Forum: Personal Investments
Topic: Tracking and simulating returns *with* dividend reinvestment and tax drag
Replies: 0
Views: 184

Tracking and simulating returns *with* dividend reinvestment and tax drag

My investments are divided fairly evenly between taxable and non-taxable accounts--roughly 41% in retirement / HSA / 529s and 59% in taxable accounts. I'd guess my tilt toward taxable accounts is likely to grow over time or at least remain the same, given my finances. Because of this issue--that I have a lot of my portfolio in taxable accounts and this is likely to grow over time--I'm very conscious of trying to maximize the value of my tax free accounts and minimize taxes in my taxable accounts. I'm looking for a website or tool that will let me compare quickly the returns *including dividend reinvestment*, for different ETFs, stocks, mutual funds, etc. I want total returns assuming reinvestment, not just price appreciation. And I want to ...
by MNS CA
Mon Aug 01, 2022 7:19 pm
Forum: Personal Investments
Topic: Best Advice for Utah My529 allocation
Replies: 35
Views: 3771

Re: Best Advice for Utah My529 allocation

Hi everyone! I’ve been an avid member and have hid in the background for a long time because I’m not nearly as educated as all of you are when it comes to investing and strategies and best practices. So this is the reason why I came out of the shadows. I really need help. I am a single father of a 5 year old boy. I am 40 years old now and when I got out of college when I was 22/23 I was on the hook for $100k in student loans. Well let’s just say I do not and will do my absolute best to not have my son be in any kind of debt or nothing over $10k for Instance. I just would feel like a failure and did not protect him from uncontrollable debt. I’m firm on this. However I have a loooong road in front of me. I started when he turned like 3 1/2 a...
by MNS CA
Mon Aug 01, 2022 7:01 pm
Forum: Investing - Theory, News & General
Topic: NY Real Estate vs. The Stock Market
Replies: 39
Views: 6795

Re: NY Real Estate vs. The Stock Market

The answer depends on the annual return on each, compounded over many years, and taking into account any leverage that you used and the cost of that leverage, as well as the tax implications of each and any transaction costs. This graphic shows the stock market (with or without dividends) vs. the NY high-tier home market. https://fred.stlouisfed.org/graph/?g=SnE2 https://fred.stlouisfed.org/graph/fredgraph.png?g=SnE2 Under the simple pre-tax, pre-leverage analysis, without imputed rental income, the stock market wins. For real estate, though, you want to add in the imputed rental income each year. In nice areas in NY, that might be an extra 2% to 3% or so per year, tax free. Then you have to subtract out the property taxes, which in NY are ...
by MNS CA
Thu May 05, 2022 10:22 pm
Forum: Investing - Theory, News & General
Topic: Shorting high-fee index ETFs, long low cost index ETFs
Replies: 9
Views: 909

Re: Shorting high-fee index ETFs, long low cost index ETFs

senex wrote: Wed May 04, 2022 4:06 pm When selling short, you need to borrow the shares.

a) it often costs money to borrow, which can cost more than the "expense drag" you are capturing
b) borrows can often be recalled without your permission, which can force you to buy shares on whatever day your borrows are yanked
Thanks. I've investigated further and a lot of the terrible high fee ETFs are illiquid and the borrowing and trading costs would be too high to execute on the strategy.
by MNS CA
Wed May 04, 2022 4:02 pm
Forum: Investing - Theory, News & General
Topic: Shorting high-fee index ETFs, long low cost index ETFs
Replies: 9
Views: 909

Shorting high-fee index ETFs, long low cost index ETFs

Here's a quick question: the academic literature on investing says active management usually loses to passive management because of costs and expenses.

Why can't I short sell a bunch of very high fee ETFs that basically are closet indexers, and go long ETFs that have low fees and are openly indexers, and thereby make money because the ETFs with the high fees and expense ratios will aways trail the good funds with low fees?

Is the problem volatility and buy-in risk? Are the transactions costs of this strategy too high relative to the potential gains? Or could this work?
by MNS CA
Wed Jul 14, 2021 1:21 pm
Forum: Personal Investments
Topic: Barclays Schiller CAPE ETN
Replies: 21
Views: 3553

Re: Barclays Schiller CAPE ETN

DCChak wrote: Wed Jul 07, 2021 5:46 pm DSENX looks more costly, and has performed worse, than CAPE. Would love to find a better alternative.
Agreed. If you have enough money invested, you can get the lower cost shares, DSEEX. But it's still worse than CAPE. If anyone has a better alternative, let me know!
by MNS CA
Wed Jul 14, 2021 1:19 pm
Forum: Personal Investments
Topic: Barclays Schiller CAPE ETN
Replies: 21
Views: 3553

Re: Barclays Schiller CAPE ETN

DCChak wrote: Wed Jul 07, 2021 7:13 am I have purchased CAPE ETN shares, and note the Oct 12 2022 maturity date. If I don't sell prior to that date, what happens to my investment? Is it automatically cashed out, and paid back to me If so, I assume that would be a taxable event, correct? Is there a rollover option that allows me to keep the funds invested?
I think you're correct. You get cashed out, and it's taxable. I hold it in a tax free account for that reason. I would love if there was a rollover option.
by MNS CA
Wed May 19, 2021 9:51 pm
Forum: Personal Consumer Issues
Topic: $7500 tax credit on EV purchase
Replies: 27
Views: 4395

Re: $7500 tax credit on EV purchase

I am thinking about putting $100 down on a VW ID.4 EV reservation. The actual delivery would not be until late summer. I have two questions regarding the $7500 Fed. tax credit. First, must the credit be taken in the same year as the purchase or can one carry over a portion of the credit to the following tax year. The second question somewhat connected to the first question relates to quarterly tax payments already made in the year of purchase. For example, if my tax liability is $7500 and I have already made a quarterly payment of $2000 would I only be able to use $5500 of the Electric vehicle tax rebate? dcb Which cars are still eligible for the $7,500 credit? Any word on it being renewed for Teslas? Is it only available if its new or can...
by MNS CA
Wed May 19, 2021 4:17 pm
Forum: Personal Investments
Topic: How to go about selling stocks to buy an index fund?
Replies: 10
Views: 1562

Re: How to go about selling stocks to buy an index fund?

chris319 wrote: Thu May 13, 2021 2:54 am Keep in mind that you can only deduct $3,000 in capital losses per tax year, be they long- or short-term. The remainder will be carried over to future tax years.

Read up on tax-loss harvesting (TLH).
You can only deduct 3,000 against ordinary income per year, with carry forward. You can use an unlimited amount of capital losses to offset capital gains in any given year.
by MNS CA
Wed May 19, 2021 4:12 pm
Forum: Investing - Theory, News & General
Topic: Margin Loans, Portfolio Loans, and tax deferral
Replies: 4
Views: 943

Re: Margin Loans, Portfolio Loans, and tax deferral

Interactive Brokers margin loan is almost certainly going to be your best bet as far as margin goes. They're known for being the cheapest across the board. I haven't heard of margin loans not being able to be used against mutual funds, but you can probably verify with IB directly. You definitely can use margin on ETFs. I'm not entirely sure what a portfolio loan is, unless you're referring to Reg T margin vs. Portfolio margin? Personally I have about 1.2x equity exposure in my IB account using margin. Thanks, that's helpful. Some possibly stupid questions: What's the difference between Reg T margin and Portfolio margin? by 1.2x equity exposure, do you mean for example that you put $1,000,000 in the account in cash and then borrow another $...
by MNS CA
Tue May 11, 2021 5:05 pm
Forum: Investing - Theory, News & General
Topic: Margin Loans, Portfolio Loans, and tax deferral
Replies: 4
Views: 943

Margin Loans, Portfolio Loans, and tax deferral

What is the difference between Margin loans and Portfolio loans? Is it true that margin loans cannot be used against mutual funds but portfolio loans can? The lowest rate I've seen on a margin loan is Interactive Brokers (SOFR / LIBOR + 1.5% spread or less with higher balances). Has anyone seen lower rates / better terms elsewhere? Has anyone found a bank that will allow borrowing on a *fixed rate* long term against a stock portfolio, on attractive terms? I've had some investment gains in my taxable account and I'm thinking about ways of taking cash out to buy a house or condo without triggering gains, minimize taxes, etc. Also potentially thinking of using a little bit of leverage (per Ayres & Nalebuff lifecycle investing). And since m...
by MNS CA
Tue May 11, 2021 4:27 pm
Forum: Personal Investments
Topic: How to go about selling stocks to buy an index fund?
Replies: 10
Views: 1562

Re: How to go about selling stocks to buy an index fund?

I have been holding (most) of my stocks for over a year so the gains should be taxed at the capital gains rate. After learing more about investing in general over the past few months I've decided to sell all of my stocks and use those funds to buy primarily VTI in my Vanguard taxable brokerage account. Is there any strategy for selling my stocks are should I simply do it all at once? The market is down today so my stocks are down although I would also be buying VTI at a discount..so in my mind it would balance out in a way if I simply sold today. I would be careful unless you can realize losses. You want to defer gains and realize losses to minimize taxes and you also want diversification. You'll need VTI to perform better than your stock ...
by MNS CA
Wed Jul 22, 2020 2:09 pm
Forum: Investing - Theory, News & General
Topic: Total Stock (US and Intl): Fidelity ZERO vs Vanguard
Replies: 66
Views: 8339

Re: Total Stock (US and Intl): Fidelity ZERO vs Vanguard

So to clarify, you're saying that FZROX will distribute capital gains later this year, but hasn't yet done so, so morningstar may be under-reporting what the tax cost ratio will be for FZROX on an annual basis? So FZROX has higher pre-tax and after-tax returns and lower expense ratios. it seems to dominate Vanguard. Am I missing something? Believe it distributes capital gains annually, that would impact its post-tax performance on a year by year basis. :beer FZROX distributed a small capital gain on 12/14 and 12/28 2018, but none so far in 2019. It distributes them in December. Update: I have confirmed based on Mornigstar tax cost ratios that Vanguard's S&P 500 index fund and total market are both more tax efficient than FZROX. The dif...
by MNS CA
Sat Sep 07, 2019 2:07 pm
Forum: Investing - Theory, News & General
Topic: Total Stock (US and Intl): Fidelity ZERO vs Vanguard
Replies: 66
Views: 8339

Re: Total Stock (US and Intl): Fidelity ZERO vs Vanguard

So to clarify, you're saying that FZROX will distribute capital gains later this year, but hasn't yet done so, so morningstar may be under-reporting what the tax cost ratio will be for FZROX on an annual basis?
pokebowl wrote: Sat Sep 07, 2019 9:03 am
MNS CA wrote: Sat Sep 07, 2019 7:30 am
So FZROX has higher pre-tax and after-tax returns and lower expense ratios. it seems to dominate Vanguard. Am I missing something?
Believe it distributes capital gains annually, that would impact its post-tax performance on a year by year basis. :beer
by MNS CA
Sat Sep 07, 2019 2:04 pm
Forum: Investing - Theory, News & General
Topic: Total Stock (US and Intl): Fidelity ZERO vs Vanguard
Replies: 66
Views: 8339

Re: Total Stock (US and Intl): Fidelity ZERO vs Vanguard

If I'm doing my math right, I believe FZROX is ahead by 0.13% on an after-tax basis. 1.01%-0.88% = 0.13%. That's actually a bigger difference than the difference in expense ratios. A lot of it seems to be coming from the greater tax efficiency. On a pre-tax basis, they're basically the same. I agree there's a relatively short history, but whether you look at 1YR, YTD, 6-Mos, 3-Mos, or 1-Mo, FZROX always comes out ahead on after-tax returns (see below). Does anyone have any idea from the prospectus or other information what FZROX might be doing to be so tax efficient and whether this is likely to be sustainable over the long run? (08/31/2019) Pretax Return 1-Mo 3-Mo 6-Mo YTD 1-Yr 3-Yr 5-Yr 10-Yr 15-Yr Since Inception FZROX -1.99 6.47 4.96 18...
by MNS CA
Sat Sep 07, 2019 1:53 pm
Forum: Investing - Theory, News & General
Topic: Total Stock (US and Intl): Fidelity ZERO vs Vanguard
Replies: 66
Views: 8339

Re: Total Stock (US and Intl): Fidelity ZERO vs Vanguard

What would be the problem with leaving the money in Fidelity and never transferring it to another brokerage? Fidelity doesn't charge account maintenance fees, so you could easily keep a Fidelity account + accounts at whatever other brokerage(s) you want. I keep accounts at Fidelity, Vanguard and one other brokerage. Quicken makes it pretty easy to keep track of everything. So FZROX has higher pre-tax and after-tax returns and lower expense ratios. it seems to dominate Vanguard. Am I missing something? Probably the fact that FZROX cannot be held anywhere except at Fidelity. Anyone holding FZROX in a taxable account at Fidelity would have to sell it (and likely trigger a capital gain) before the account could be transferred away from Fidelity...
by MNS CA
Sat Sep 07, 2019 7:30 am
Forum: Investing - Theory, News & General
Topic: Total Stock (US and Intl): Fidelity ZERO vs Vanguard
Replies: 66
Views: 8339

Re: Total Stock (US and Intl): Fidelity ZERO vs Vanguard

Looking only at the U.S. total market funds, I believe that Fidelity FZROX has consistently outperformed Vanguard VTSAX on an aftertax basis, according to M-orningstar. Over the last year, its 1.01 vs. 0.88
http://performance.morningstar.com/fund ... ture=en-US

So FZROX has higher pre-tax and after-tax returns and lower expense ratios. it seems to dominate Vanguard. Am I missing something?
newpup wrote: Wed Jul 17, 2019 12:45 pm
Pick your brokerage and then pick your fund (except that no one should prefer FZROX in a taxable account).
Could someone please explain this parenthetical? Is FZROX significantly less tax efficient than VTSAX?
by MNS CA
Tue Aug 06, 2019 2:14 pm
Forum: Investing - Theory, News & General
Topic: New and Improved CAPE is Higher!
Replies: 33
Views: 4090

Re: New and Improved CAPE is Higher!

But the historical CAPE becomes higher too. And it looks like there is a greater difference in the older data, which would effectively mean the current CAPE is lower than we think: Though many CAPE users seem to think it's a good idea, I don't compare CAPE with it's history, as then you are implicitly assuming there's some reason why things should mean-revert. I prefer to just use it as an absolute measure, 1/36.15 implies 2.8% expected real return. I don't think that can be right. This logic of divide by 1 over CAPE to get expected returns would mean that you could never expect negative returns. So if CAPE was 1000 you'd still expect a return of 0.001% instead of losing money because you massively overpaid for earnings. I'd rather look at...
by MNS CA
Fri Feb 22, 2019 5:32 pm
Forum: Personal Investments
Topic: Barclays Schiller CAPE ETN
Replies: 21
Views: 3553

Re: Barclays Schiller CAPE ETN

Some things to consider if you're thinking of buying into the above funds . . . please feel free to correct me if I'm wrong here . . . by using derivatives, the managers are leveraging their equity exposure. This is fine and dandy in generally upward moving markets, like the past 5 years, but, in a big correction or longer down market, the losses will be exaggerated. The theory is that the bond exposure will mitigate the drops but it's unclear how much. I can't tell what the strategy on the bond side is in DSEEX. I know Gundlach gets a lot of press but his performance over the past 5 years hasn't been that noteworthy (DBTLX is no PIMIX). DSEEX keeps a fair bit in cash, which will cause some drag but I guess it has to in case there are marg...
by MNS CA
Thu Nov 29, 2018 8:16 pm
Forum: Personal Investments
Topic: Should international funds / ETFs go in a taxable account or tax-free retirement?
Replies: 6
Views: 1053

Re: Should international funds / ETFs go in a taxable account or tax-free retirement?

mhalley wrote: Thu Nov 29, 2018 8:14 pm Taxable due to the foreign tax credit.
Thanks. Can you explain?
by MNS CA
Thu Nov 29, 2018 8:11 pm
Forum: Personal Investments
Topic: Should international funds / ETFs go in a taxable account or tax-free retirement?
Replies: 6
Views: 1053

Should international funds / ETFs go in a taxable account or tax-free retirement?

I like that international equity mutual funds and ETFs are volatile because of currency fluctuations. This volatility facilitates more frequent tax loss harvesting, switching between slightly different international funds. But international funds pay more dividends, so there is more taxable income every year. I'm accumulating, not selling, so I'd rather zero dividends all else being equal.

Where should international funds / ETFs go? A taxable account or in a retirement account only so I can reinvest dividends and pay no taxes on them until retirement?

Thanks!
by MNS CA
Sat Nov 03, 2018 7:46 am
Forum: Investing - Theory, News & General
Topic: When do YOU pull the trigger for TLH? [Tax Loss Harvesting]
Replies: 53
Views: 5248

Re: When do YOU pull the trigger for TLH? [Tax Loss Harvesting]

indexonlyplease wrote: Thu Nov 01, 2018 5:07 pm with the market being so great for the last 9 years where are these loses coming from. Someone with the 3 fund are seeing that many loses to TLH. Also, with most here I believe investing in work and the 401k in the growing phase, that many people have 18k in 401k plus 5k in Roth and then more to invest in taxable account. I would then ask what is your debt.
If you've bought in 2018, especially in January or August, you probably have losses as of October.
by MNS CA
Sat Nov 03, 2018 7:33 am
Forum: Investing - Theory, News & General
Topic: no dividends in index funds!
Replies: 95
Views: 12347

Re: no dividends in index funds!

barnaclebob wrote: Fri Nov 02, 2018 9:04 am Dividends are just something that makes you feel good, its not free money. Total return is all that matters. You can get the same result from selling shares if you need the cash.
Actually, dividends are worse than selling shares because you end up paying more in taxes. No recovery of basis with dividends. Plus you can't control the timing of taxes the way you can when you sell.

I'd like to find an index fund that pays no dividends to hold in a taxable account. Any suggestions?
by MNS CA
Fri Oct 05, 2018 8:10 pm
Forum: Personal Finance (Not Investing)
Topic: Need advice re Sell or Keep house
Replies: 19
Views: 1632

Re: Need advice re Sell or Keep house

Sell it. Being a landlord is a great way to get equity like returns for a lot more work than investing in the stock market.
by MNS CA
Fri Sep 07, 2018 6:48 pm
Forum: Personal Finance (Not Investing)
Topic: How Big of a Mortgage Should We Get?
Replies: 41
Views: 3554

Re: How Big of a Mortgage Should We Get?

Just pay cash and be done with it. You can always take out a loan (or line of credit) off the house anytime you'd like if you start to get uncomfortable and need cash. You'll rebuild your savings & taxable investments backup in no time. Isn't a line of credit only off your principal of your loan? The bank has the deed already, you are just renting from the bank until you have the deed in hand. A mortgage is usually to buy a property. If you already have the deed will a bank issue a low interest loan? I was under the impression the bank would only offer you personal loans at that point, which have high interest rates, and reserve their mortgage product for home purchases. No. You can get a HELOC, you're just putting your house up to sec...
by MNS CA
Fri Sep 07, 2018 6:40 pm
Forum: Personal Finance (Not Investing)
Topic: How Big of a Mortgage Should We Get?
Replies: 41
Views: 3554

Re: How Big of a Mortgage Should We Get?

My wife and I have been saving for awhile, and are finally in the position to buy a house. We are trying to decide (1) Whether to buy the house for all cash (2) If we get a mortgage, what kind to get (15 or 30 year), and (3) How much to put down (more than 20%?). We could pay all cash by using savings and liquidating some taxable investment accounts. This is very appealing psychologically because (1) We would own the house outright and (2) we would sell off a lot of equities when the market is historically high. One argument against this is that we are young and have a long investment horizon. Another argument is that it would leave emergency funds low (~10k for me), albeit not for very long. In order to preserve taxable investment account...
by MNS CA
Fri Sep 07, 2018 6:29 pm
Forum: Personal Finance (Not Investing)
Topic: new homes being built next door, effect on value of my home?
Replies: 20
Views: 2567

Re: new homes being built next door, effect on value of my home?

chevca wrote: Fri Sep 07, 2018 6:23 pm
F150HD wrote: Fri Sep 07, 2018 6:10 pm Now they're dividing the lot in two and plan is to build 2 new homes on it...this Fall/Winter/upcoming Spring.

How will this affect the value of my 100+ year old home?
Someone may very likely to the same thing to your old house... tear it down and build new. Find out who the builder is next to you, let them know you may sell next year, and ask for an offer. They may make it worth your while.
That's a great idea. In fact, if the builder can assemble a larger contiguous plot, they might be able to build something more valuable.
by MNS CA
Fri Sep 07, 2018 6:28 pm
Forum: Personal Finance (Not Investing)
Topic: new homes being built next door, effect on value of my home?
Replies: 20
Views: 2567

Re: new homes being built next door, effect on value of my home?

They tore down an old home next door on a double lot, someone bought the lot....its been sitting for a few years. We're talking city lots, each 1/3 of an acre or so, if that. not a new 'development' in the suburbs. Now they're dividing the lot in two and plan is to build 2 new homes on it...this Fall/Winter/upcoming Spring. How will this affect the value of my 100+ year old home? I expect the effect to be net positive, but as I have been looking to sell my home and move next summer , am I better off waiting for them to be built and piggyback on any benefits? ...or does it not really matter? or would moving before they are built be better for some reason? (if I can swing it) Is there a downside to having 2 brand new homes next to my older (...
by MNS CA
Tue Aug 07, 2018 11:02 pm
Forum: Investing - Theory, News & General
Topic: "Don't Obsess About Expense Ratios"
Replies: 240
Views: 29251

Re: "Don't Obsess About Expense Ratios"

I don't need customer service. I do everything online, and it's very easy to use Vanguard to do what I do. On the rare occasion that I've needed to contact Vanguard's staff for some reason, they've been fine. That is my experience as well. I have never called VG or Fidelity in over 20 years of account ownership. I once walked into a Fidelity Office. Don’t exactly recall why. I suspect they both will generally offer acceptable service if I need it. My gut feel is that these new funds are a gimmick. The Johnsons still want to make money when I invest money with Fidelity. I am okay with that, but I credit Vanguard with driving the costs down and will keep the bulk of our investments there. No point in paying capital gains to switch and no poi...
by MNS CA
Sun Aug 05, 2018 9:02 pm
Forum: Personal Finance (Not Investing)
Topic: What prevents residential real estate buyers from colluding to bring down prices?
Replies: 32
Views: 3673

Re: What prevents residential real estate buyers from colluding to bring down prices?

What prevents collusion? The desire of buyers to OWN a given piece of property. We sold a mid-century home 4 months ago in Southern California. The market was red hot, and there was a feeding frenzy among potential buyers. One couple went FAR above asking price because they were bound and determined to be the new owners. Congratulations! It sounds like you picked a great time to sell! As you said, your buyers probably could have come in about $100K lower and still gotten the house if they'd found a way to work together with other buyers. I think you're right that part of what's driving price escalation is an irrational belief by some buyers that property is unique and irreplaceable instead of essentially a fungible asset with extremely hig...
by MNS CA
Sun Aug 05, 2018 7:06 pm
Forum: Personal Finance (Not Investing)
Topic: What prevents residential real estate buyers from colluding to bring down prices?
Replies: 32
Views: 3673

Re: What prevents residential real estate buyers from colluding to bring down prices?

What stops potential buyers from finding each other and agreeing not to bid against each other, with the designated buyer paying the other potential buyers a small fee for waiting ? Potential buyers = this includes renters, investors (locals, out-of-towners including overseas), current homeowners looking to upgrade, etc. Each buyer has different motivations to buy and different appetite for collusion. Designated buyer = who gets to decide this? Small fee for waiting = how much? Is this commensurate with each potential would-be-buyer's opportunity cost? You'd have to have some kind of rule-based system (such as based on seniority) or an internal auction in which money only changes hands if the designated buyer actually wins the property. Yo...
by MNS CA
Sun Aug 05, 2018 6:45 pm
Forum: Personal Finance (Not Investing)
Topic: What prevents residential real estate buyers from colluding to bring down prices?
Replies: 32
Views: 3673

Re: What prevents residential real estate buyers from colluding to bring down prices?

How could such potential buyers find each other - and this would need to be almost all such potential buyers?? It could work in a small town or small community where people know each other or have connections because of religion, employer, industry, education, family, friends, etc. Or it could work with a larger group if you had something like Zillow or Trulia, but with a forum function for each property on the market (or condo or coop building) so that potential buyers could communicate with each other. Or you could have a buy side real estate agency that only represented buyers and offered this coordination option, which agencies that also represented sellers could never offer because it would upset sellers too much. Presumably something...
by MNS CA
Sun Aug 05, 2018 6:41 pm
Forum: Personal Finance (Not Investing)
Topic: What prevents residential real estate buyers from colluding to bring down prices?
Replies: 32
Views: 3673

Re: What prevents residential real estate buyers from colluding to bring down prices?

Carefreeap wrote: Sun Aug 05, 2018 6:28 pm
Depends. In CA and many other states most buyers are represented by buyer's agents who are contractually working for the fiduciary interest of the buyer.
In theory. In practice, buyer's agents get paid more if:
1) The sales price is higher
2) More transactions close quicker.

They basically egg buyers on to bid more to make sure they "win" the auction by overpaying (the winner's curse). And buyer's agents try to avoid finding out negative information about a property that would make a buyer less likely to buy it.

Patiently waiting for a good deal is in buyers' interests, but it's not in the interests of buyer's agents working on commission and only getting paid for deals that close.
by MNS CA
Sun Aug 05, 2018 6:26 pm
Forum: Personal Finance (Not Investing)
Topic: What prevents residential real estate buyers from colluding to bring down prices?
Replies: 32
Views: 3673

Re: What prevents residential real estate buyers from colluding to bring down prices?

47Percent wrote: Sun Aug 05, 2018 5:38 pm The problem is the incentive to break the pact is too great. The first who skips out will get the house. If you can come up with a way to enforce and punish that behavior, you can become the slum lord or a real-estate mogul depending on the zip code.
You'd need some kind of contract with liquidated damages for violations. The damages would have to be sufficiently high to deter anyone from breaking the pact. It would be easy to verify pact violations, since real estate ownership records are public.

Someone could try to use LLCs or other entities, but unless they are never going to visit the property once they buy it, it should be possible to identify pact violations.
by MNS CA
Sun Aug 05, 2018 5:33 pm
Forum: Personal Finance (Not Investing)
Topic: What prevents residential real estate buyers from colluding to bring down prices?
Replies: 32
Views: 3673

Re: What prevents residential real estate buyers from colluding to bring down prices?

Seems like it would be much easier for sellers to collude. There are a limited number, and they are easier to identify. Ensuring collective action between an unknown and uncapped number of unidentified potential buyers, with the game-theoretic incentive to defect, seems tricky. Indeed. And real estate agents represent sellers, so their are intermediaries to help them coordinate. Or if it's a new development, there's one company that is the developer who acts on behalf of a larger group of investors, so the "sellers" are already "colluding" (or at least coordinating). Nevertheless, you do see consumers groups and labor unions in other contexts. You even see tenants right groups pushing for rent control. But not much cons...
by MNS CA
Sun Aug 05, 2018 4:37 pm
Forum: Personal Finance (Not Investing)
Topic: What prevents residential real estate buyers from colluding to bring down prices?
Replies: 32
Views: 3673

What prevents residential real estate buyers from colluding to bring down prices?

In a residential real estate context, there are often only a handful of potential buyers. People who are renting in the area before they buy (i.e., most experienced buyers) have no real urgent need to buy, and another acceptable home will come on the market within a few weeks or at most months. But people who are selling often *do* have an urgent need to sell. What stops potential buyers from finding each other and agreeing not to bid against each other, with the designated buyer paying the other potential buyers a small fee for waiting? This seems far more cost effective than bidding up the price by hundreds of thousands of dollars. Are there laws against this? Is the problem simply that there's no website to facilitate this and help poten...
by MNS CA
Sat Aug 04, 2018 5:59 pm
Forum: Personal Consumer Issues
Topic: Gated communities pros and cons? (Atlanta or anywhere.)
Replies: 67
Views: 6605

Re: Gated communities pros and cons? (Atlanta or anywhere.)

rgs92 wrote: Thu Aug 02, 2018 11:49 am We are thinking about moving to the Atlanta area (northern suburbs) and wanted to know the pros and cons of living in a gated community.
1. Is it really safer in terms of crime (burglaries or home invasions)?
2. Is it inconvenient or annoying for any reason (deliveries, etc.)?
3. Is it worthwhile in the Atlanta northern suburbs (Alpharetta, Dunwoody, Sandy Springs, Johns Creek and environs?)
Thank you.

(This is not specifically about Atlanta, but also about living in gated single-family housing development in general. Thank you.)
Gated communities typically are not much safer than similarly priced neighborhoods, but they *feel* safer and are more likely to retain value.
by MNS CA
Sat Aug 04, 2018 5:43 pm
Forum: Personal Investments
Topic: Leaving Job - What to do with 401k?
Replies: 23
Views: 2498

Re: Leaving Job - What to do with 401k?

DeepW wrote: Thu Aug 02, 2018 11:45 pm
Inception Date 10/10/2016 0.02%
RT L&G RUSSELL 2000 Stock Investments
Inception Date 12/27/2016 0.01%
RT L&G S&P 500 DC A Stock Investments
Inception Date 10/10/2016 0.01%
VANG TOT BD MKT ADM Bond Investments
Inception Date 12/11/1986 0.05%
The funds above look good. 0.01% is a great expense ratio. Check the index funds in your old 401K. Probably more expensive.

With Vanguard, you sometimes pay a bit extra for more tax-efficient mutual funds, which you don't need in a tax-free account.
by MNS CA
Sat Aug 04, 2018 5:21 pm
Forum: Personal Investments
Topic: $100k Liquid, 21, no college education
Replies: 25
Views: 2966

Re: $100k Liquid, 21, no college education

Hi all, I started my own business in high school and deferred college. The business is profitable and I have retained majority stake throughout its 4-5 years of operation, and I receive a dividend of around $70K - $120K a year depending on its performance yearly. [Link removed by admin LadyGeek] I've wasted some money over the past few years mostly due to financial negligence, but still managed to save around $100,000. I don't have any debt and wanted to know the best way to invest. I'm primarily debating between investing back into the business for further growth, or investing in more personal financial products. Thank you, Go to college. https://trends.collegeboard.org/education-pays https://www.bls.gov/emp/chart-unemployment-earnings-ed...
by MNS CA
Wed Aug 01, 2018 7:28 pm
Forum: Investing - Theory, News & General
Topic: Value vs. Growth & Taxes
Replies: 15
Views: 1816

Re: Value vs. Growth & Taxes

Artsdoctor wrote: Tue Jul 31, 2018 5:02 pm
Be careful how you interpret the data: "historically, value stocks outperform growth stock" will need to be qualified. Are you talking about after-tax returns or not?

Value stocks will generally throw off more dividends than growth stocks, some will be qualified and some will not. Depending on an investor's marginal tax rate, the after-tax return of value stocks may not be superior. This is often not considered when old adages are reiterated.
I'm talking about pre-tax returns. Since I can load up on value in a tax-free / tax deferred account and keep growth or the index in taxable.
by MNS CA
Tue Jul 31, 2018 2:55 pm
Forum: Investing - Theory, News & General
Topic: Do you tilt value?
Replies: 12
Views: 1477

Do you tilt value?

Fama and French argue that value stocks outperform growth stocks over the long run based on a historical analysis. But for more than the last decade, growth has outperformed value (i.e., VUG vs VTV) (Nasdaq vs. S&P or Dow). ( https://finance.yahoo.com/chart/VTV#eyJTWSI6W1siVlRWIixudWxsLDAsMF0sWyJTV1RTWCIsIiM3MmQzZmYiLDIsMF0sWyJWVUciLCIjZmY4MGM1IiwyLDBdXSwiVFMiOlsxLCJ3ZWVrIixudWxsLFsiYWxsIiwxLG51bGxdXSwiVVMiOlswLDEsMF0sIkNTIjpbImxpbmUiLCJsaW5lYXIiLDEuMTYzODM2MTYzODM2MTYzOCxudWxsLG51bGwsIiMwMDgxZjIiXSwiU1QiOnsidm9sIHVuZHIiOnsidHlwZSI6InZvbCB1bmRyIiwiaW5wdXRzIjp7ImlkIjoidm9sIHVuZHIiLCJkaXNwbGF5Ijoidm9sIHVuZHIifSwib3V0cHV0cyI6eyJVcCBWb2x1bWUiOiIjMDBiMDYxIiwiRG93biBWb2x1bWUiOiIjRkYzMzNBIn0sInBhbmVsIjoiY2hhcnQiLCJwYXJhbWV0ZXJzIjp7ImhlaWdodFBl...
by MNS CA
Tue Jul 31, 2018 2:50 pm
Forum: Investing - Theory, News & General
Topic: Value vs. Growth & Taxes
Replies: 15
Views: 1816

Re: Value vs. Growth & Taxes

No. People chase growth stocks because of human nature; they are pigs and greedy! . . . Value purchasers believe in paying less than fair value for assets, since the price is already depressed because the market expects dismal performance. Do people still believe in the value premium? I.e., do they still believe that value stocks will outperform growth stocks over the long run? Since 2008 or 2004, Growth stocks have outperformed ( https://finance.yahoo.com/chart/VTV#eyJTWSI6W1siVlRWIixudWxsLDAsMF0sWyJTV1RTWCIsIiM3MmQzZmYiLDIsMF0sWyJWVUciLCIjZmY4MGM1IiwyLDBdXSwiVFMiOlsxLCJ3ZWVrIixudWxsLFsiYWxsIiwxLG51bGxdXSwiVVMiOlswLDEsMF0sIkNTIjpbImxpbmUiLCJsaW5lYXIiLDEuMTYzODM2MTYzODM2MTYzOCxudWxsLG51bGwsIiMwMDgxZjIiXSwiU1QiOnsidm9sIHVuZHIiOnsidHlwZSI6In...
by MNS CA
Tue Jul 31, 2018 2:45 pm
Forum: Investing - Theory, News & General
Topic: Value vs. Growth & Taxes
Replies: 15
Views: 1816

Re: Value vs. Growth & Taxes

Not particularly plausible. The Vanguard value index fund admiral shares only pays about 70 bp/yr more in dividends than the total market index fund admiral shares. The tax drag is then in the range of 7-10 bp/year, which would not be a statistically significant excess return in a backtest of value stocks if that were the finding. According to Morningstar VTV (Vanguard Value) has a tax cost ratio of 0.61 (61 bps) and VUG (Vanguard Growth) has a tax cost ratio of .33 (33 bps). Total market (VTI) is .47 (47 bps). So its about a 14 bps savings by putting growth in taxable and value in tax-free/tax deferred. Expense ratios and trading costs presumably eat some of that up, though at least at first. So maybe .10 (10bps difference) is a reasonabl...
by MNS CA
Mon Jul 30, 2018 6:27 pm
Forum: Investing - Theory, News & General
Topic: Value vs. Growth & Taxes
Replies: 15
Views: 1816

Value vs. Growth & Taxes

I've heard that historically value stocks outperform growth stocks (Fama & French).

Here's a question--could this be explained by the higher tax cost of holding value stocks? Value stocks tend to pay dividends, thus there is an annual personal tax bill. Growth stocks tend not to pay dividends (or to pay fewer), thus there is a lower tax cost ratio and more tax deferral.

If most investible assets are in taxable accounts, could it be that those folks chase growth stocks to keep tax costs low, which bids up growth stocks and makes them a poorer investment?

While value stocks only make sense to hold in tax free or tax deferred accounts (because of annual taxation of dividends), so they stay cheaper.

Does this sound plausible?
by MNS CA
Fri Feb 09, 2018 6:20 pm
Forum: Investing - Theory, News & General
Topic: Does Shiller PE imply negative returns?
Replies: 57
Views: 5523

Re: Does Shiller PE imply negative returns?

Shiller's CAPE was first published in 1988. The idea was that higher CAPE values had historically led to lower ( but never implied negative ) returns for the following ten year period. Why couldn't implied returns be negative over a 10 year period (or 8 year period) if CAPE got high enough? Presumably returns could be lower than cash in a CD or high yield savings account if returns got low enough? Presumably, a high enough CAPE might imply returns that could be assumed to be lower than cash, but who knows what cash (T-bills) will yield over the next 10 years with certainty? It is impossible for CAPE to get 'high enough' to directly imply returns below zero going forward. Take a look at Shiller's chart of the PE (not cyclically adjusted) ra...
by MNS CA
Fri Feb 09, 2018 6:17 pm
Forum: Investing - Theory, News & General
Topic: Does Shiller PE imply negative returns?
Replies: 57
Views: 5523

Re: Does Shiller PE imply negative returns?

Shiller's CAPE was first published in 1988. The idea was that higher CAPE values had historically led to lower ( but never implied negative ) returns for the following ten year period. Why couldn't implied returns be negative over a 10 year period (or 8 year period) if CAPE got high enough? Presumably returns could be lower than cash in a CD or high yield savings account if returns got low enough? as you see above, they ended up being lower than cash from the mid-late 90s. I don't know, however, that anyone has either predicted or more importantly proved that a CAPE of any particular value is associated with any particular return. I use CAPE by recalling that CAPEs in the highest decile have ten year returns in the lowest decile - and that...