Search found 454 matches

by MrMatt2532
Tue Feb 02, 2021 1:29 pm
Forum: Investing - Theory, News & General
Topic: Gamestop and AMC as percentage of market
Replies: 15
Views: 2511

Re: Gamestop and AMC as percentage of market

17outs wrote: Tue Feb 02, 2021 1:05 pm If they were so small and its just noise why did the broad market go down at least 5% in the last week and rebound after the shenanigans have cooled? Each day that GME went up the market tumbled and the inverse happened as well. If it wasn't because of GME it was a huge coincidence.
GME is just noise in the sense that it's a tiny fraction of the market. However, the general increase in market uncertainty and decrease in market confidence related to this event should lead to a broad market drop. All else equal a more volatile/uncertain market is worth less (then again the expected return rises a bit). Just look at the volatility indicator ^VIX vs VTI. When ^VIX spikes, VTI dips. When ^VIX drops, VTI rises. Nothing new.
by MrMatt2532
Sat Apr 11, 2020 4:59 am
Forum: Personal Consumer Issues
Topic: House AC blowing too cold/hard?
Replies: 17
Views: 5287

Re: House AC blowing too cold/hard?

Open all (or more) of your vents everywhere in the house. This way the main coil will get more flow, the supply temperature will go up, and the vents that were already open will receive less flow individually.

If most of your vents are already open, then there may not be a lot you can do and your system may be oversized a bit, especially since you claim both too cold and too much flow.
by MrMatt2532
Sat Feb 08, 2020 8:28 am
Forum: Personal Consumer Issues
Topic: Whole House Humidifier Question
Replies: 14
Views: 2345

Re: Whole House Humidifier Question

The new versions of the Aprilaire humidifiers will work in fan only mode. In fact they can kick on the fan to sample the air if you don’t have the fan continuously on.

The main change here is just the humidistat and how the power is wired. The color of the humidifier is an indicator as to your version (new version grey, old version light almond). You can also check the humidistat version. The version you need is 60/62 (62 for steam type, 60 for others). You should be able to just upgrade the humidistat and be careful to note which version of the humidifier you have to get the wiring right.
by MrMatt2532
Mon Oct 21, 2019 11:01 pm
Forum: Investing - Theory, News & General
Topic: [Paul Merriman: This strategy beats a total stock market fund]
Replies: 173
Views: 19936

Re: Paul Merriman article

To echo others: I think you are reading into nothing here. Read blend wherever it says growth.

I recall some of his old material explaining his strategy simply like this: “half large, half small, half value, half growth”, but when you actually construct the thing he uses blend instead of growth.

Also, I wouldn’t assume since REITS aren’t mentioned that he dropped those from the strategy. This is a high level article, not something that spells out the strategy precisely.
by MrMatt2532
Mon Aug 12, 2019 8:07 pm
Forum: Personal Investments
Topic: What sort of fund for saving for sabbatical?
Replies: 11
Views: 1391

Re: What sort of fund for saving for sabbatical?

Sounds like it’s still pretty short term, in which case you probably shouldn’t push it too far beyond a cash equivalent.

However, maybe something like
50% Cash/Savings/money market (VMMXX)
50% Short Term Investment Grade (VFSTX)
...may be a good acceptable approach with decent upside potential and minimal downside risk.
by MrMatt2532
Sun Mar 25, 2018 8:59 am
Forum: Personal Investments
Topic: Rebalancing is profitable?
Replies: 29
Views: 5930

Re: Rebalancing is profitable?

William Bernstein analyzed this, and he demonstrates that the return of a regularly rebalanced portfolio is usually in excess of the weighted average return of the assets, which would mean the rebalancing bonus is real:
http://www.efficientfrontier.com/ef/996/rebal.htm

However, the effect is probably minor and the primary purpose of rebalancing should be to control risk. However, potentially there are some learnings about the frequency of rebalancing that may maximize chances of getting the bonus.
by MrMatt2532
Sat Oct 28, 2017 11:18 am
Forum: Personal Investments
Topic: S&P 500 -- Ten Years Thoughts?
Replies: 45
Views: 7072

Re: S&P 500 -- Ten Years Thoughts?

Anytime you are comparing a peak (~1999) to a trough (~2009) the returns will look worse than the norm. Similarly, if you compare a trough (~2009) to a peak (maybe today?) they will look better than the norm. Ideally, you should be looking at even longer term and not cherrypick the dates to paint a biased picture.

With that said, the SP500 and/or the Total Market is a great investment, however, yes it is possible to have losses even with a 10-year horizon.
by MrMatt2532
Wed Jul 12, 2017 4:29 pm
Forum: Personal Consumer Issues
Topic: Cutting the Cord: Who's Best?
Replies: 51
Views: 8698

Re: Cutting the Cord: Who's Best?

The nice thing about these services is you aren't locked in (ok maybe locked in for a month!). The a la carte model isn't truly available except for premium channels (hbo, etc.) and packages of channels (sports package, etc.). I would just list out the channels you want and buy the service that is cheapest that meets those needs: considering Sling, PSVue, and DirecTV Now. I have used them all and I haven't ever felt misled. If one provider makes more sense I switch. I've had sling, PSVue and DirecTV Now and i'm currently on DirectvNow.
by MrMatt2532
Sat Apr 08, 2017 7:11 am
Forum: Personal Investments
Topic: How to do AA based on Age, Risk, HUMAN Capital ?
Replies: 3
Views: 599

Re: How to do AA based on Age, Risk, HUMAN Capital ?

Take a look at a post I made years ago: viewtopic.php?t=109504

It didn't get much attention but I think it directly answers your question. Specifically look at the discount rate to capture bond like vs stock like jobs.

I actually have a simplified approach I use today that is more practical to use but still considers the discussed items. I can get into that if interested...

Matt
by MrMatt2532
Sat Jul 16, 2016 10:55 am
Forum: Personal Investments
Topic: 4% SWR for 30 years, what % for 15 years
Replies: 12
Views: 2589

Re: 4% SWR for 30 years, what % for 15 years

Below 25 years, I suggest just assuming 1/n for the rule. So for 15 years you get 6.67%.
by MrMatt2532
Thu Jun 30, 2016 6:16 pm
Forum: Investing - Theory, News & General
Topic: Wait, holding international increases risk?
Replies: 67
Views: 6877

Re: Wait, holding international increases risk?

I would argue a better approach would be to find the us/international mix that maximizes return per unit risk (via a sharpe or sortino ratio) as opposed to minimizing risk. Then you can add bonds to the stock mix in an amount that brings the portfolio's risk to your desired level.
by MrMatt2532
Fri Sep 25, 2015 12:58 pm
Forum: Investing - Theory, News & General
Topic: Who Believes in International Bonds and Why
Replies: 44
Views: 5240

Re: Who Believes in International Bonds and Why

Consider that bond returns can roughly be explained by two risk factors: term risk and default risk. This can give you insight as to whether or not you should be holding international bonds.

For somebody that is only interested in exposing themselves to term risk, or near zero default risk, you would own treasuries. In this case, I see no advantage to owning international bonds.

However, if you thought default risk in bonds was worth taking, it may make sense to diversity into international bonds. Here, matching stock exposure (or maybe a little bit less in international bonds) seems reasonable.

Personally, I fall into camp 1, so no international bonds for me.
by MrMatt2532
Sun Sep 20, 2015 3:16 pm
Forum: Investing - Theory, News & General
Topic: Why not use Global Market Cap %'s for Equities?
Replies: 64
Views: 6036

Re: Why not use Global Market Cap %'s for Equities?

Using concepts from modern portfolio theory, you can calculate the expected optimal international holding percentage you should use for a two asset portfolio (three including risk free asset). You need to assume various values for for US and ex-US assets. For example, using the following for real expected returns, a real risk free rate of return, the standard deviation of returns, and expected correlation between the assets: US: 4% (geometric) ex-US: 4.25% (geometric) rf = 0.25% std_US: 18% std_ex_US: 22% correlation: 80% With these assumptions, the maximum sharpe ratio occurs at 37.5% international holdings. If one assumed 60% correlation, the optimal is 42.5%. Note that these are in line with vanguard's (implied) recommendation from their...
by MrMatt2532
Thu Jun 18, 2015 7:00 am
Forum: Personal Consumer Issues
Topic: LastPass.com Breach
Replies: 155
Views: 39941

Re: LastPass.com Breach

Gemini wrote:Is there any conclusion that can be sought from all of this discussion?
The conclusion is the same as the premise: if you have a strong master password there is very little risk.

I have been a lastpass user for years and events like this just remind me why I chose the service: because it was built with the risk of being hacked, etc. in mind.
by MrMatt2532
Sun Jun 14, 2015 11:49 am
Forum: Personal Consumer Issues
Topic: Where do you keep your to do list?
Replies: 60
Views: 12200

Re: Where do you keep your to do list?

Use onenote if you are already using it. Otherwise, wunderlist or todoist would probably be perfect for your needs. Maybe try wunderlist first. Heck actually wunderlist is owned by Microsoft now so expect some future integration with some of their other products.
by MrMatt2532
Sun Apr 12, 2015 4:35 pm
Forum: Personal Investments
Topic: Invest now or wait??
Replies: 22
Views: 3852

Re: Invest now or wait??

Since the consensus is that the bull is ending and a bear is right around the corner, why don't you just short the market?!? Just kidding, please don't do that.

If the thought of investing 250k mostly in stocks doesn't sit well with you, maybe you should dial back on your portfolios risk level, maybe 20-40% bonds would be more in order.
by MrMatt2532
Sun Feb 01, 2015 1:00 pm
Forum: Personal Finance (Not Investing)
Topic: Are car loans really that bad?
Replies: 86
Views: 20562

Re: Are car loans really that bad?

I think the main reason I would avoid a car loan is for financial simplicity and to make sure I don't fall into the trap of buying more car than I would otherwise buy had I been forced to pay in cash.

Purely financially, I think it probably makes sense to get a loan at sub 2% rates for most investors if you would otherwise be getting the same car with cash anyways. Nonetheless, the value of a car is likely relatively small compared to the rest of the portfolio, so it shouldn't make a big difference either way.
by MrMatt2532
Sat Jan 31, 2015 2:02 pm
Forum: Investing - Theory, News & General
Topic: Chaos, complexity and entropy [for non-physicists]
Replies: 113
Views: 14057

Re: Chaos, complexity and entropy [for non-physicists]

One fun thing about entropy in an isolated system is that it tends to increase, but it doesn't have to. Thanks to the law of large numbers, it will effectively only increase or stay constant. Basically, what i'm saying is that all the particles in the room you are in could spontaneously go to the other side of the room leaving you in a vacuum. Don't worry though, thanks to law of large numbers, this event probably would only happen once every 10^100 lengths of the universe.
by MrMatt2532
Sat Jan 10, 2015 9:33 am
Forum: Personal Finance (Not Investing)
Topic: Purchasing a car with credit cards for cash back rewards?
Replies: 36
Views: 5936

Re: Purchasing a car with credit cards for cash back rewards

When we recently bought a car the dealer limit was $3000. However we also were able to put another $3000 on the card for the warranty (which we later canceled and got a check back in the mail), and finally we were able to put a another $500 deposit down on the card to put the car on hold/reserve (this portion was fully refundable had we not purchased). So in total about $6500 on a 2% cash back card.

When they first said the limit was only $3000 we were a little disappointed, however you may be able to do similar to what we did to put even more on the credit card.
by MrMatt2532
Sat Oct 18, 2014 8:16 am
Forum: Investing - Theory, News & General
Topic: Why do people use age instead of life expectancy?
Replies: 43
Views: 4899

Re: Why do people use age instead of life expectancy?

Probably because age has a significant negative correlation with life expectancy, just a guess :D
by MrMatt2532
Wed Oct 08, 2014 12:45 pm
Forum: Investing - Theory, News & General
Topic: Why Wouldn't You Tilt To Small Value?
Replies: 52
Views: 8211

Re: Why Wouldn't You Tilt To Small Value?

telemark wrote:
MrMatt2532 wrote: The 10 largest holdings are conglomerates that are the equivalent of many smaller businesses. They should have MUCH more weighting than your local pizza place down the street.
The top five holdings in VTSMX are

Code: Select all

Symbol % Assets YTD Return %
AAPL   2.78     25.47
XOM    1.92     -6.25
MSFT   1.52     24.94
JNJ    1.32     16.13
WFC    1.22     15.11
That's Apple, Exxon Mobil, Microsoft, Johnson & Johnson, and Wells Fargo. I'll buy Johnson & Johnson as a diversified conglomerate, not so sure about the others.
Sure, maybe not the classical definition of a conglomerate, but just look at how many smaller companies these companies buy up each year...
by MrMatt2532
Wed Oct 08, 2014 12:12 pm
Forum: Investing - Theory, News & General
Topic: Why Wouldn't You Tilt To Small Value?
Replies: 52
Views: 8211

Re: Why Wouldn't You Tilt To Small Value?

I am someone who tilts, however I would argue that the equity style box should not be used to show you are undiversified! Do you realize that how they are defining Large/Medium/Small is largely arbitrary? Market weighting is the natural starting point, no question. And just because 75% of the companies in TSM are defined as large (arbitrarily) does not mean you are undiversified. The 10 largest holdings in TSM make up 15% of the total fund. The Top 25 make up 25% of the fund. The argument for choosing TSM over the S&P fund is that TSM outperforms long term because it includes more small caps. Using this logic wouldn't you tilt even more to small cap to outperform VTI? TSM is really a mostly large cap blend fund. The 10 largest holdings...
by MrMatt2532
Wed Oct 08, 2014 11:43 am
Forum: Investing - Theory, News & General
Topic: Why Wouldn't You Tilt To Small Value?
Replies: 52
Views: 8211

Re: Why Wouldn't You Tilt To Small Value?

The three fund portfolio equity box looks something like this: ```` Value Core Growth Large`` 25 ` 25 ` 25 Medium ` 6 ` 6 ` 6 Small ``` 2 ` 2 ` 2 This has 75% large caps and is equally balanced between growth/value therefore not taking advantage of the small value premium with only 33% in value and 6% in small. It should be known that the Vanguard Target Date/Lifestrategy funds use this allocation and do not take advantage of any small value premiums. To tilt or not to tilt? That is the question! :sharebeer I am someone who tilts, however I would argue that the equity style box should not be used to show you are undiversified! Do you realize that how they are defining Large/Medium/Small is largely arbitrary? Market weighting is the natural...
by MrMatt2532
Tue Sep 30, 2014 10:54 am
Forum: Personal Investments
Topic: should participate in employer matches?
Replies: 20
Views: 2424

Re: should participate in employer matches?

Unless the expense ratios of these horrible options are anywhere close to 3%, still invest up to the match.
by MrMatt2532
Mon Sep 22, 2014 10:18 pm
Forum: Investing - Theory, News & General
Topic: Does Equity Risk Decrease over Time?
Replies: 51
Views: 4799

Re: Does Equity Risk Decrease over Time?

Very little discussion of the actual content of the article here. As far as I can tell the authors did two things. First they computed the optimum percent holding in equities as a function of investor risk aversion and investment period for normally distributed stock/bond distributions defined by mean and standard deviations. Then they computed the same thing taking into how the autocorrelation affects the stock/bond return distributions. The results were the difference between these two cases. Generally after accounting for autocorrelation it was found that an investor should take more risk for longer time periods, and less risk for very short time periods--all else equal. Interesting idea and conclusion, but after looking at the actual co...
by MrMatt2532
Sat Sep 20, 2014 11:40 am
Forum: Personal Investments
Topic: So what the benckmark SWR for a 25 year retirement?
Replies: 14
Views: 1672

Re: So what the benckmark SWR for a 25 year retirement?

So if 4% is the benchmark for planning purposes for a 30 year retirement what would be the benchmark for a 25 year retirement. I mean if you start taking SS at 67 or 70 then from that point it would seem 25 is more likely than 30. I realized that in retirement a variable withdrawal rate will be the likely implementation but for planning purposes I like to have a number. Anything under 25 years, I would say the 1/N rule applies. So for 1 year, you can obviously withdraw 100%, 10 years 10%, etc. So at 25 years, 4%. Historically, one has been able to withdraw greater than 1/N for longer time periods, such as 30 years. The 1/N rule would give 3.33%, but it turns out you can push it as high as 4%. So to sum things up, you should always be able ...
by MrMatt2532
Sat Sep 06, 2014 10:04 am
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 161
Views: 38832

Re: Let me get this straight about SCV & factor diversificat

Browser wrote:Larry - thinking about the net result of combining TSM with SCV. Seems to me that, since TSM is loaded negatively on size and value, the addition of SCV is likely to have the effect of "neutralizing" small and value risk factors - moving the net loading toward zero. The net result is that the equity portion is more purely loaded on beta alone with small and value taken out of the picture as far as their risk and risk premiums are concerned. Does this seem accurate?
Not Larry, but TSM, by definition, has no tilt and no loading, positive or negative to value or small. You might be thinking of SP500, which has a small tilt to large (i.e. negative tilt towards small), not much in the value direction either way...
by MrMatt2532
Fri Sep 05, 2014 6:08 am
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 161
Views: 38832

Re: Let me get this straight about SCV & factor diversificat

No - Fund 1 - b3 = 1 -> positive expected return Fund 2 - b3 = -1 bv = 1 -> positive if the value premium is real Fund 3 - b3 = -0.9 bv = -0.1 bs =1 -> positive if the small premium is real after account for Beta and value. If the premiums are real, you would be able to construct three funds that are independent and have positive return. Remember, there is no rule that says that you can't short things. ??? I'm not debating with you rather the premium is real or not...I'm just simply stating that the 3 funds you described (or that I described) do not have zero correlation with each other. Also, you do realize that a typical small fund has b3~=1 and bs~=0.5 or so and a typical value fund has b3~=1 and bv~=0.5 or so, right? Btw, I have no pro...
by MrMatt2532
Thu Sep 04, 2014 10:27 pm
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 161
Views: 38832

Re: Let me get this straight about SCV & factor diversificat

I'm not sure about that. What you described in your original post was how to construct three funds: 1) market fund, 2) small exposure only fund, and 3) value exposure only fund. Those three funds are not (necessarily) uncorrelated... We can define the funds as "the premium that a particular factor brings after accounting for all of the other ones". A factor that does not have above zero returns after adjusting for another factors is a pointless waste of time. Who said anything about returns not being above zero? Again: Fund 1: b3=1, bv=0, bs=0 --> positive expected return Fund 2: b3=0, bv=1, bs=0 --> positive expected return Fund 3: b3=0, bv=0, bs=1 --> positive expected return These funds all have expected positive return and ha...
by MrMatt2532
Thu Sep 04, 2014 9:41 pm
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 161
Views: 38832

Re: Let me get this straight about SCV & factor diversificat

lee1026 wrote:
I'm ok with most that you wrote, however the correlations are not zero and there is the nothing in how they are defined that would imply this. See the figure in the post by Simplegift above!
You can construct them to be zero by longing or shorting the other factors. E.g. if Value is correlated negatively against MOM, you long value in your MOM fund to make it neutral.
I'm not sure about that. What you described in your original post was how to construct three funds: 1) market fund, 2) small exposure only fund, and 3) value exposure only fund. Those three funds are not (necessarily) uncorrelated...
by MrMatt2532
Thu Sep 04, 2014 9:32 pm
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 161
Views: 38832

Re: Let me get this straight about SCV & factor diversificat

Most Bogleheads who own SCV funds do so in addition to TSM funds. Tilting like this gets you closer to an equal weight portfolio which would appear to be intuitively more diversified than the 2% Apple, 2% Exxon, etc purely cap weighted portfolio I've tilted since day one myself, however, it has nothing to do with your reasoning. Take a simple thought experiment: You have a fictitious world economy with 3 companies and each is worth 1 megabuck. By either cap weighting or equal weighting you should hold 1/3 of each company. Now, let's say one of the companies buys out one of the others. Now, what should the investor do? The cap weighted investor wouldn't have to do anything, however the equal weighted investor needs to sell part of the now l...
by MrMatt2532
Thu Sep 04, 2014 9:13 pm
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 161
Views: 38832

Re: Let me get this straight about SCV & factor diversificat

lee1026 wrote: At this point, we have 3 funds that don't correlate with each other at all (by definition!) and all of whom have large positive expected value.
I'm ok with most that you wrote, however the correlations are not zero and there is the nothing in how they are defined that would imply this. See the figure in the post by Simplegift above!
by MrMatt2532
Thu Sep 04, 2014 7:16 pm
Forum: Investing - Theory, News & General
Topic: Why is REIT only sector fund recommended in slice & dice?
Replies: 113
Views: 12753

Re: Why is REIT only sector fund recommended in slice & dice

Simplegift wrote:Beyond portfolio diversification, another reason for a separate, overweight allocation to REITs is increased inflation protection.
Yes, this is a great point. I would expect REITS would be the next best things after 1) Long term debt and 2) TIPS for inflation protection.
by MrMatt2532
Tue Aug 19, 2014 12:59 pm
Forum: Personal Investments
Topic: Why would anyone own a treasury bond fund?
Replies: 20
Views: 2605

Re: Why would anyone own a treasury bond fund?

ogd wrote:1) Because the fees are tiny even compared to the small amount of effort required.
2) Because it removes the temptation to make calls or micromanage.
3) Ask Doc.
This. You are basically paying a little bit more for a bond fund for less effort managing. Paying a little bit more for convenience is worth it to many.
by MrMatt2532
Sat Aug 02, 2014 4:46 pm
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 6986

Re: Prove adding SV will lower the risk, given the same E(r)

Thanks Matt. Some of those changed quite a lot using the monthly data. Modigliani is one I've not heard of before. Are you saying all those ratios are native calculations in Excel, or do you have some add-in tool pack? I'll have to look some of those stats up to see if I can figure out how to interpret the numbers. I gather than most of them should be judged in comparison to the other things and don't reveal much as a stand-alone number. Yes, I was a little bit surprised at some of the differences between the monthly vs yearly results. I had figured with 80 years of data it wouldn't be too different. Nonetheless, the main takeaways were the same I would say. The Modigliani metric is actually a reworking of the sharpe ratio made to be more ...
by MrMatt2532
Fri Aug 01, 2014 9:24 pm
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 6986

Re: Prove adding SV will lower the risk, given the same E(r)

MrMatt, this looks potentially interesting, and I hope you don't take offense that I can't get very far in deciphering it. Would you mind going into a bit more detail, including all the abbreviations you're using? Or maybe even better if you could post the actual spreadsheet? Also wondering, are you using annual data (I'm guessing that's all you can get in going back to the 1920's, and I feel annual rather than at least monthly will miss a lot of "risk events" both up and down) No problem. Here's a quick abbreviation list: b3 = market risk exposure, bs = small stock risk exposure, bv=value risk exposure, rf=risk free rate average=average of the returns, std=standard deviation of the returns, skew=skewness of the returns, kurt=kur...
by MrMatt2532
Fri Aug 01, 2014 11:20 am
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 6986

Re: Prove adding SV will lower the risk, given the same E(r)

I just ran a bunch of numbers using the FF data from 1927-2013. Figured it might be useful for the discussion. Generally, you can see, the data shows one could have owned a mix of small and value, decreased beta, and still achieved the same expected return as the market. I computed the sharpe ratio and a few others to assess the risk adjusted return. Omega and sortino ratio are specifically formulated to handle effects besides just return and standard deviation of returns (i.e. other features of the distribution). As you can see, the skew and kurtosis numbers are favorable for small value tilting as compared with the market. Let me know if there are any questions.

Image

edit: small fix to sortino ratio calc
by MrMatt2532
Sun Jul 20, 2014 3:52 pm
Forum: Investing - Theory, News & General
Topic: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth, etc)
Replies: 77
Views: 7671

Re: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth,

Frankly, I don't buy the "don't overcomplicate" argument here. A dollar in a roth is definitely worth more than a dollar in a traditional ira/401k. I agree that you shouldn't waste hours predicting future tax rates and guessing which bracket you are going to fall into, however, almost any correction is better than no correction.
by MrMatt2532
Sun Jul 20, 2014 3:12 pm
Forum: Investing - Theory, News & General
Topic: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth, etc)
Replies: 77
Views: 7671

Re: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth,

I didn't vote because you messed up the math a little bit. I would consider it 55% stocks, 45% bonds.
by MrMatt2532
Sun Jul 13, 2014 6:30 pm
Forum: Personal Investments
Topic: Thoughts on 100% stock allocation for 33 year old
Replies: 85
Views: 17128

Re: Thoughts on 100% stock allocation for 33 year old

I personally think it is fine for most people under 40. Consider the following: Say you are planing to retire at 65 spending around $80k per year or around $2M in financial assets. Typically, in retirement, around a 50/50 stock bond mix is held. So in this retirement scenario, you would be putting $1M in stocks, or putting $1M in high risk assets. I would argue that, if your current financial assets are less than $1M, then they should all be in stocks, as it would be no more risky than the risk you would be planning to take at retirement. Obviously you can redo the example with your own numbers and goals, but the point still holds. Also, I agree with others in that, there is a psychological factor to consider as well. If you will sell after...
by MrMatt2532
Wed Jul 02, 2014 10:48 pm
Forum: Personal Investments
Topic: Does my house count as my "real estate" for diversification?
Replies: 15
Views: 2478

Re: Does my house count as my "real estate" for diversificat

I would not count the house as "real estate" for diversification, because you aren't using it as an investment. If housing prices go up, owning your own house doesn't make you any better off, because you still live in the same house. If housing prices fall, owning your own house doesn't hurt you (unless you are underwater and need to sell), because you still have a place to live. As a continuation of this point, even if you are planning on selling in the future to buy another house, there is a strong correlation with your house value and other house values. Say prices rise by 10% over the next year, you might be thinking that you'll be able to afford a 10% larger house. Well, that future house you might buy probably also rose abo...
by MrMatt2532
Wed Jul 02, 2014 10:37 pm
Forum: Personal Finance (Not Investing)
Topic: House maintenance cost
Replies: 13
Views: 2050

Re: House maintenance cost

I use 1% of structure cost as an estimate.

For example, you could look up on zillow what the home value is, say 300k. Then lookup the "land share" for your state, https://www.lincolninst.edu/subcenters/ ... -state.asp, say 15%.
Then your structure cost is equal to 300k * (1.0 - 0.15) = 255k. So your yearly maintenance estimate would be $2550.
by MrMatt2532
Tue Jun 24, 2014 1:49 pm
Forum: Investing - Theory, News & General
Topic: An Argument for Long Term Treasury Bonds
Replies: 62
Views: 23191

Re: An Argument for Long Term Treasury Bonds

Also this is partially why many here prefer treasuries only for bond component of the portfolio. The issue with corporates is that the default risk (of bonds) is correlated with market risk (of stocks), so you don't get this nice behavior in times of trouble.
by MrMatt2532
Thu Jun 12, 2014 12:24 pm
Forum: Investing - Theory, News & General
Topic: Why is Tilting and Slice&Dice so popular in this forum?
Replies: 110
Views: 10287

Re: Why is Tilting and Slice&Dice so popular in this forum?

What ex-US SV fund do you use? With Fidelity I have only been able to find IV and IS, so I do 10% each. But I would prefer to just do 20% ISV. I use DLS for developed markets and DGS for emerging markets. They are technically small but they filter and weight by dividends which is an inherent value tilt, thus small value. I think there are a few better funds that have been released recently, but none have that much market cap and volume so they have huge bid/ask spreads that i'd like to avoid. QUESTION: Since a tilted asset's returns can be predicted from its factor loadings, isn't it redundant to own 25/25/25/25 LB/LV/SB/SV? Wouldn't 50/50 LB/SV achieve the same effect? LB/LV/SB/SV: 50% value tilt, 50% small tilt LB/SV: 50% value tilt, 50%...
by MrMatt2532
Wed Jun 11, 2014 12:26 pm
Forum: Investing - Theory, News & General
Topic: Do REITs (and slicing in general) reduce risk?
Replies: 65
Views: 5972

Re: Do REITs (and slicing in general) reduce risk?

Generally, I don't think its right to expect any random slice will reduce risk. For example, I wouldn't expect any benefit from taking the 500 companies in the SP500 and randomly separating them into two groups of 250, and then rebalancing between the two halves. However, where I do expect benefit is from exposing yourself to unique risk factors, such as exposure to small companies, or value companies, which each behave differently than the market as a whole. Similarly I would expect benefit from exposure to international companies, which will behave differently than domestic companies. Now, your question is specifically about REITS: it turns out that the 3 factor model does a poor job at explaining REIT returns, which means that REITS are ...
by MrMatt2532
Tue Jun 10, 2014 3:01 pm
Forum: Personal Investments
Topic: Emergency Fund Alternative for Young Accumulator
Replies: 15
Views: 2154

Re: Emergency Fund Alternative for Young Accumulator

I would vote no. Once your taxable account is significant, a big emergency fund doesn't matter so much and only decreases long term returns. I would still keep about 3 months in cash for liquidity purposes.
by MrMatt2532
Tue Jun 10, 2014 9:32 am
Forum: Investing - Theory, News & General
Topic: Why is Tilting and Slice&Dice so popular in this forum?
Replies: 110
Views: 10287

Re: Why is Tilting and Slice&Dice so popular in this forum?

How can you use leverage to invest more in equity? Wouldn't the interest rate on a personal loan be almost as high as the expected market returns? I guess I am leveraging to an extent because I still have student loans but I just make the min payment and max my retirement contributions. Also I don't think you need to be very risk tolerant but just have a long investment horizon. If you don't plan to touch the money for 40-50 years, then small cap value beats total market with over 99% confidence. There are a variety of ways. As far as I know, using the futures market will get you the closest to borrowing at the risk free rate. I'm not necessarily recommending this, but I'm only trying to emphasize that you can take more risk and increase e...
by MrMatt2532
Mon Jun 09, 2014 5:57 pm
Forum: Investing - Theory, News & General
Topic: investing international, why & how much
Replies: 51
Views: 6888

Re: investing international, why & how much

larryswedroe wrote:IMO the starting point should really be about 50% international, not 30%.
US now less than 50% of global equity market and small home country bias is okay due to lower costs of domestic investments and bit more tax efficiency generally
and for those with lots of labor capital it's likely US restricted and thus even more than 50% international is justified
Curious, would you suggest roughly market weights as a starting point for a non-US investor? What would you suggest for an individual who's home-country had say 10% global equity market? 10% Home country, 90% ex home country?
by MrMatt2532
Mon Jun 09, 2014 5:01 pm
Forum: Investing - Theory, News & General
Topic: Why is Tilting and Slice&Dice so popular in this forum?
Replies: 110
Views: 10287

Re: Why is Tilting and Slice&Dice so popular in this forum?

Even if you are in camp 2, can it still make sense to tilt if you have very high risk tolerance? Right, sure. I hinted at this in the first paragraph: if your only goal is to maximize expected return (or you have off the charts risk tolerance), then risk doesn't matter and you should tilt towards small value. However, I have a hard time believing that this is the case for many people. Risk must matter to some degree in most practical applications. Also, careful, if you take this argument too far (having an extremely high risk tolerance), than you should probably be using leverage to take even more risk than a 100% equity portfolio offers you. Anyways, I would argue risk should always be considered and that it's probably the single most imp...