Search found 9428 matches

by vineviz
Mon Apr 12, 2021 6:18 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

It is possible that the next 30 years will be even worse than the worst we have ever seen. That is possible. And it is always possible. These studies and proclamations always imply that’s it’s more than just a possibility though. They make it sound like a certainty. It feels like they are saying “i...
by vineviz
Mon Apr 12, 2021 4:34 pm
Forum: Personal Investments
Topic: Investing strategy with known future expense
Replies: 15
Views: 602

Re: Investing strategy with known future expense

That could work but why are you holding tips? I think there may be inflation, but I am not sure. So I tried to diversify with half TIPS and half nominal treasuries. Also, you may like to evaluate other bond solutions; how about half cash, half HY, for instance ? By HY do you mean high yield savings...
by vineviz
Mon Apr 12, 2021 4:16 pm
Forum: Investing - Theory, News & General
Topic: How to Compare Active Managed fund to Passive
Replies: 13
Views: 630

Re: How to Compare Active Managed fund to Passive

Got it - this helps. So no real good way to get to what I'm trying to figure out. Contra would have to outperform on average by a good margin to make up for its expanse vs total stock with it's lower fees. What you want to accomplish is to find a passive benchmark which corresponds to the risks bei...
by vineviz
Mon Apr 12, 2021 3:39 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

Sometimes the reason I think. If you're working hard and scrimping to put together a portfolio that will work at 4% SWR and somebody tells you it's not enough, it's a bummer. People will rationalize why the bearer of unwelcome news must be wrong, Human Nature 101 (the bearer of bad news isn't neces...
by vineviz
Mon Apr 12, 2021 3:22 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

Sometimes the reason I think. If you're working hard and scrimping to put together a portfolio that will work at 4% SWR and somebody tells you it's not enough, it's a bummer. People will rationalize why the bearer of unwelcome news must be wrong, Human Nature 101 (the bearer of bad news isn't neces...
by vineviz
Mon Apr 12, 2021 2:52 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

A 2.8 percent SWR is going to leave ALOT of money on the table for the heirs to spend. I want to be clear, because it's easy for people to talk past each other in conversations like this. The SWR isn't a choice that retirees get to make: it's a measure of the retirement income capacity a portfolio ...
by vineviz
Mon Apr 12, 2021 1:26 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

Why stop at 2.8%, do I hear 2%? The account will be larger for the heirs. All these articles do is twist certain people into pretzels, thinking they can never retire or it will never be enough. Don't take an inflation adjusted amount each year and you'll likely be just fine. Not everyone gets a rai...
by vineviz
Mon Apr 12, 2021 1:04 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

Wade Pfau has made a career out of writing articles espousing absurdly low withdrawal rates. Seriously, it's the thing he's known for. It's like he's encouraging his clients to have larger than necessary portfolios because he makes more money that way. A little like the perma-bears that way I guess...
by vineviz
Mon Apr 12, 2021 10:24 am
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

Hasn't the real yield on bonds been negative before? The realized real yield has been negative before with some regular, but the expected real yield has rarely been as low as it currently is. And we've never had a starting expected real return on bonds this low AND ALSO experienced a particularly p...
by vineviz
Mon Apr 12, 2021 9:49 am
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

For a 30 year period as the SWR methodology used, 1/30 would be 3.33% and only needing enough growth to keep up with inflation. If your expectation is -.5% real, why bother with the risk in stocks ? Remember that a SWR isn't the expectation, which would roughly be the 50th percentile outcome: it's ...
by vineviz
Sun Apr 11, 2021 8:25 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

A 4% WR has worked for 30 year retirements 99% of the time with a 75/25 portfolio. That’s 150 years of data. A 4% WR worked most of the time in the past. It might work in the future, but it is LESS likely to work in the future than it was in the past. You don’t know that. You have no idea what the ...
by vineviz
Sun Apr 11, 2021 8:22 pm
Forum: Personal Investments
Topic: AVUS vs VTI in taxable?
Replies: 3
Views: 386

Re: AVUS vs VTI in taxable?

I want to hold both funds and trying to decide which to hold in taxable versus qualified account. AVUS- Avantis Equity- 100% qualified dividends. 1.06% dividend in 2020 VTI- Total Stock Market- 96% qualified dividends 1.71% dividend in 2020 What kind of "qualified account" are we talking ...
by vineviz
Sun Apr 11, 2021 8:15 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

geerhardusvos wrote: Sun Apr 11, 2021 7:52 pm A 4% WR has worked for 30 year retirements 99% of the time with a 75/25 portfolio. That’s 150 years of data.
A 4% WR worked most of the time in the past. It might work in the future, but it is LESS likely to work in the future than it was in the past.
by vineviz
Sun Apr 11, 2021 7:24 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

The model used at ERN is much more problematic than the one used by Pfau and most other professionals. We’ve proved this wrong over and over again, vineviz.... You’re mistaken, I’m afraid. Expecting real bond yields of -1% to provide the same SWR as real bond yields of +2% is a common error, but an...
by vineviz
Sun Apr 11, 2021 2:37 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

I'm not gonna pay to read the article in the OP, but if Pfau is saying that a portfolio with 75% bonds might need a 2.8% SWR to survive 40+ years, he wouldn't actually be saying anything new since ERN ran the numbers on the actual data! The model used at ERN is much more problematic than the one us...
by vineviz
Sun Apr 11, 2021 2:11 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

So yeah, it's very reasonable to question Pfau's models. It's reasonable to wonder if he's missing some variables. And that leads one to not blindly accept his models today either. Then I wonder why we aren’t talking about models and variables instead of ad hominem arguments. What’s the problem in ...
by vineviz
Sun Apr 11, 2021 1:40 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

This is just amusing to me at this point. Didn't Bill Bengen just say the new SWR is around 5% a few months ago? Man oh man, this stuff changes on a whim! It's all just noise. Don't worry about it, no one knows what's gonna happen. Actually, Bengen and Pfau are looking at the same data and coming t...
by vineviz
Sun Apr 11, 2021 1:12 pm
Forum: Investing - Theory, News & General
Topic: VPW too aggressive?
Replies: 23
Views: 1980

Re: VPW too aggressive?

“Overly aggressive” is kind of a subjective description. But it is always the case that a higher starting withdrawal rate will correspond to a greater likelihood of needing to reduce that withdrawal rate at some point. Certainly having a good idea about how tolerable such a reduction would be is cru...
by vineviz
Sun Apr 11, 2021 1:01 pm
Forum: Investing - Theory, News & General
Topic: Another 2.8% SWR Article Quoting Wade Pfau
Replies: 140
Views: 7465

Re: Another 2.8% SWR Article Quoting Wade Pfau

I hesitate to start yet another "4% won't work" SWR thread, but I saw this WSJ article and think anything quoting Wade Pfau will be of interest to Bogleheads: https://www.wsj.com/articles/retirement-nest-egg-11617929631 "Wade Pfau, a professor at the American College of Financial Ser...
by vineviz
Sat Apr 10, 2021 8:17 pm
Forum: Investing - Theory, News & General
Topic: How P/E ratios and other multiples are grossly misused
Replies: 28
Views: 2493

Re: How P/E ratios and other multiples are grossly misused - even by professionals

Most investment professionals never do a DCF as the basis for their valuation. That's certainly not my experience. I've literally spent thousands of hours of my careers building DCF models and reviewing those done by others. I can promise you there are hundreds of DCF models for AAPl on the hard dr...
by vineviz
Sat Apr 10, 2021 3:28 pm
Forum: Investing - Theory, News & General
Topic: How P/E ratios and other multiples are grossly misused
Replies: 28
Views: 2493

Re: How P/E ratios and other multiples are grossly misused - even by professionals

There is some truth in that. However, someone investing in individual businesses has to do better in some way than the rest of the market to justify that it's worth investing in individual businesses as opposed to the market as a whole, whether that means increasing reward or decreasing risk. Which...
by vineviz
Sat Apr 10, 2021 1:03 pm
Forum: Investing - Theory, News & General
Topic: How P/E ratios and other multiples are grossly misused
Replies: 28
Views: 2493

Re: How P/E ratios and other multiples are grossly misused - even by professionals

The fact that it only takes small input errors to produce large output errors is a reflection of the reality of valuation. When people just compare industry P/Es, for example, they are effectively passing part of the buck to someone else to do the valuation. And the reason that people, even (especi...
by vineviz
Sat Apr 10, 2021 10:39 am
Forum: Investing - Theory, News & General
Topic: How P/E ratios and other multiples are grossly misused
Replies: 28
Views: 2493

Re: How P/E ratios and other multiples are grossly misused - even by professionals

The issue, however, is when people blindly assume that P/E is a useful metric -- outside of extreme cases -- for comparing companies, markets, valuations; for projecting returns; for labeling things as "cheap" or "expensive"; etc. This becomes obvious to an astute observer after...
by vineviz
Fri Apr 09, 2021 5:46 pm
Forum: Investing - Theory, News & General
Topic: Understanding asset allocation, portfolio performance, and correlation coefficients
Replies: 24
Views: 1446

Re: Understanding asset allocation, portfolio performance, and correlation coefficients

OP here. Been busy. I need more time to sort through the excellent dialogue. Looks like I asked a provocative question. I’m glad I started a spirited dialogue. All my life I’ve felt that given the choice I’d rather be provocative than right! So, let me try to restate my initial concern, and then le...
by vineviz
Fri Apr 09, 2021 2:35 pm
Forum: Investing - Theory, News & General
Topic: VT or slice/dice during accumulation stage?
Replies: 10
Views: 1083

Re: VT or slice/dice during accumulation stage?

If the goal is to "hold the global market cap of equities" then a fund like Vanguard Total World Stock ETF (VT) is the obvious, easiest, and most effective way to do it. Any supposed "reasons" to complicate things by splitting up the allocation between multiple funds will be eith...
by vineviz
Fri Apr 09, 2021 1:36 pm
Forum: Investing - Theory, News & General
Topic: Why do Vanguard Target Date funds have such high tracking error?
Replies: 15
Views: 2024

Re: Why do Vanguard Target Date funds have such high tracking error?

I appreciate the replies. How often do the Vanguard TDF's glide path allocations themselves change, do they share that? I mirror the allocation percentages of the equivalent ETFs via M1 Finance, so I wanted to see how often I should re-check the TDF's page for the new percentages of each asset. If ...
by vineviz
Fri Apr 09, 2021 9:59 am
Forum: Personal Investments
Topic: constant maturity bond indices versus cash bonds
Replies: 2
Views: 239

Re: constant maturity bond indices versus cash bonds

I worry, though, about the basis risk I am taking by not buying cash bonds with maturities matching when I expect to retire. How do people here navigate around that risk? Would it just be rebalancing over time to lower duration funds as I approach retirement? I'm not sure what you mean by "bas...
by vineviz
Fri Apr 09, 2021 9:40 am
Forum: Investing - Theory, News & General
Topic: Why do Vanguard Target Date funds have such high tracking error?
Replies: 15
Views: 2024

Re: Why do Vanguard Target Date funds have such high tracking error?

How often do the Vanguard TDFs asset allocations adjust when they do; daily, weekly, monthly, quarterly, annually? I have heard the rebalancing process described as follows: 1) daily net cash flows go into/out of asset classes that are farthest away from the target balance, likely with a one busine...
by vineviz
Fri Apr 09, 2021 7:06 am
Forum: Investing - Theory, News & General
Topic: Why do Vanguard Target Date funds have such high tracking error?
Replies: 15
Views: 2024

Re: Why do Vanguard Target Date funds have such high tracking error?

slowandsteadywins wrote: Fri Apr 09, 2021 2:09 am How often do the Vanguard TDFs asset allocations adjust when they do; daily, weekly, monthly, quarterly, annually?
You can safely assume “daily”. For all practical purposes this is the way they operate.
by vineviz
Thu Apr 08, 2021 11:40 am
Forum: Personal Finance (Not Investing)
Topic: Better to buy a new vs used car these days??
Replies: 21
Views: 1976

Re: Better to buy a new vs used car these days??

I was always under the impression that its best to buy a car 3-5 years old with 40k to 60k miles so that most of the depreciation has already been taken but looking around it seems that the price difference between a brand new Rav4 or Outback and a used one is pretty small. Is it even worth buying ...
by vineviz
Thu Apr 08, 2021 10:32 am
Forum: Personal Investments
Topic: Buy more bonds now or wait?
Replies: 25
Views: 4895

Re: Buy more bonds now or wait?

Unless I am missing something your approach will work better for people in the accumulation phase and not so well for people in the deaccumulation phase. Those of us in the deaccumulation phase might need to draw from our bonds funds in years where equities crater and interest rates are rising. If ...
by vineviz
Thu Apr 08, 2021 10:15 am
Forum: Personal Investments
Topic: Buy more bonds now or wait?
Replies: 25
Views: 4895

Re: Buy more bonds now or wait?

Do you know more than the market does about bonds? You make it sound so easy to time the bond market (wait until rates are neutral) but bonds are priced openly, not by the Fed, and all of this (and much more) information is baked into the price available today. Inflation expectations, rate expectat...
by vineviz
Wed Apr 07, 2021 4:36 pm
Forum: Personal Finance (Not Investing)
Topic: Better to buy a new vs used car these days??
Replies: 21
Views: 1976

Re: Better to buy a new vs used car these days??

I was always under the impression that its best to buy a car 3-5 years old with 40k to 60k miles so that most of the depreciation has already been taken but looking around it seems that the price difference between a brand new Rav4 or Outback and a used one is pretty small. Is it even worth buying ...
by vineviz
Wed Apr 07, 2021 6:15 am
Forum: Personal Investments
Topic: Buy more bonds now or wait?
Replies: 25
Views: 4895

Re: Buy more bonds now or wait?

Do you know more than the market does about bonds? You make it sound so easy to time the bond market (wait until rates are neutral) but bonds are priced openly, not by the Fed, and all of this (and much more) information is baked into the price available today. Inflation expectations, rate expectat...
by vineviz
Tue Apr 06, 2021 4:13 pm
Forum: Investing - Theory, News & General
Topic: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?
Replies: 25
Views: 3020

Re: “Bogleheads’ Guide To Investing” Portfolios - 50% in TIPS?

I am looking for thoughts on the importance of balancing the Total Bond Market fund with a TIPS fund, perhaps 50/50. I also understand there are concerns with TIPS funds, such as: 1. They haven’t been tested in a hyperinflationary environment 2. They don’t accurately reflect inflation? 3. What if t...
by vineviz
Tue Apr 06, 2021 11:47 am
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 4405
Views: 338391

Re: Small Cap Value heads Rejoice !!!

1) That’s not a logical extension of the point I made. Why not? The point I made was that a rational investor who tilts toward SCV during accumulation (whatever strength that tilt may be) will not abandon that tilt in decumulation. In other words, whatever the starting tilt is (from 0% to 100%) it ...
by vineviz
Tue Apr 06, 2021 10:39 am
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 1073
Views: 88725

Re: First 20% of bonds in long-term Treasuries

If duration can meaningfully be applied to securities other than bonds, what is the difference between duration and rho? I don't see the term rho used much outside of options markets, but essentially rho and interest rate duration are the same thing. But I think it's worth repeating that the concep...
by vineviz
Tue Apr 06, 2021 9:30 am
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 1073
Views: 88725

Re: First 20% of bonds in long-term Treasuries

That argument has been made, definitely, but the academic consensus has essentially arrived at the conclusion that equity duration is much shorter than the Gordon model once led people to believe. References? I would like to see a serious academic who concludes that equity duration is rather short....
by vineviz
Mon Apr 05, 2021 9:07 pm
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 4405
Views: 338391

Re: Small Cap Value heads Rejoice !!!

Not arguing. Mostly just curious what the difference is. For the most part, adding bonds (especially Treasury bonds) to an equity portfolio has two effects: 1) it reduces the overall level of volatility (aka "de-risking"); and 2) it improves the diversification of the portfolio because th...
by vineviz
Mon Apr 05, 2021 8:10 pm
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 4405
Views: 338391

Re: Small Cap Value heads Rejoice !!!

thenextguy wrote: Mon Apr 05, 2021 7:33 pm
There are many people that don't tilt toward factors because they're concerned about factor premiums not presenting itself over their investment horizon.
I know these people exist.

I also know they are irrational, and I can explain why to anyone who is curious about it.
by vineviz
Mon Apr 05, 2021 6:55 pm
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 4405
Views: 338391

Re: Small Cap Value heads Rejoice !!!

That's certainly fine to do, but I don't think it's accurate to say that you're not a rational investor if you reduce a tilt over time. An investor has a choice between two options: A) De-risk the portfolio by reducing a pre-existing factor tilt; B) De-risk the portfolio by the same amount as optio...
by vineviz
Mon Apr 05, 2021 6:48 pm
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 1073
Views: 88725

Re: First 20% of bonds in long-term Treasuries

You can see that very young investors should, when considering human capital effects, have shorter portfolio durations. In practice, they accomplish this by having the vast majority of their financial wealth invested in stocks (to which this paper, following Bernanke and Kuttner (2005), assigns a d...
by vineviz
Mon Apr 05, 2021 4:43 pm
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 4405
Views: 338391

Re: Small Cap Value heads Rejoice !!!

That's certainly fine to do, but I don't think it's accurate to say that you're not a rational investor if you reduce a tilt over time. An investor has a choice between two options: A) De-risk the portfolio by reducing a pre-existing factor tilt; B) De-risk the portfolio by the same amount as optio...
by vineviz
Mon Apr 05, 2021 11:56 am
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 4405
Views: 338391

Re: Small Cap Value heads Rejoice !!!

thenextguy wrote: Mon Apr 05, 2021 10:37 am Why is that? As you approach retirement you're de-risking your portfolio.
Ideally you should look for a way to de-risk the portfolio without reducing its diversification, and this isn't hard to do with the use of intermediate-term or long-term US Treasury bonds.
by vineviz
Mon Apr 05, 2021 11:22 am
Forum: Personal Investments
Topic: Very heavy SCV tilt: when to add "pure" beta exposure (if at all)?
Replies: 11
Views: 858

Re: Very heavy SCV tilt: when to add "pure" beta exposure (if at all)?

Essentially the question is: is it totally reckless to continue as-is? Or would it be prudent to "backfill" with VTI? No and no. Diversification is arguably more important for decumulators, not less. So your allocation is not “reckless “. And if you want to “backfill”, the cheap beta fund...
by vineviz
Mon Apr 05, 2021 10:32 am
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 4405
Views: 338391

Re: Small Cap Value heads Rejoice !!!

manlymatt83 wrote: Mon Apr 05, 2021 10:20 am I wish it was "OK" to reduce SCV allocation over time.
It’s certainly okay to do that.

It’s also the opposite of what rational investors SHOULD probably do.
by vineviz
Mon Apr 05, 2021 10:21 am
Forum: Personal Investments
Topic: Very heavy SCV tilt: when to add "pure" beta exposure (if at all)?
Replies: 11
Views: 858

Re: Very heavy SCV tilt: when to add "pure" beta exposure (if at all)?

Essentially the question is: is it totally reckless to continue as-is? Or would it be prudent to "backfill" with VTI? No and no. Diversification is arguably more important for decumulators, not less. So your allocation is not “reckless “. And if you want to “backfill”, the cheap beta fund...
by vineviz
Mon Apr 05, 2021 10:17 am
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 4405
Views: 338391

Re: Small Cap Value heads Rejoice !!!

Interesting way to look at it. In that case, if I kept the AVEM, I'd have to do something like 75/10/10/5 to make it clean and round. But I like your thinking TBH. Maybe I'll just keep the AVEM after all... just wish it was a bigger tilt. Will decide, then definitely laminate. If you like clean and...
by vineviz
Sun Apr 04, 2021 6:32 pm
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 1073
Views: 88725

Re: First 20% of bonds in long-term Treasuries

I've come to the conclusion most bogleheads that can't stand LTT just fundamentally think of "bonds" differently than those of us that specifically focus long duration treasuries. TBM and LTT share some similarities but can serve two entirely different purposes. I agree. But to its credit...
by vineviz
Sat Apr 03, 2021 9:58 am
Forum: Personal Investments
Topic: DCA TIPS->Total Stock Market or pay off mortgage
Replies: 7
Views: 477

Re: DCA TIPS->Total Stock Market or pay off mortgage

I'd pay off the mortgage before I put a penny into TIPS. Current 30 Day SEC Yield on VTAPX = -2.19% Regards, Comparing a real yield (eg TIPS) to a nominal yield (eg most other bonds and/or the after-tax cost of a mortgage) is fraught with comparability issues. But your point is still basically true...