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by vineviz
Sun Jan 01, 2023 12:06 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

Nothing at 30 years. Financial planning is path dependent. Even if CAPE has no information at the 30-year horizon, it is relevant if the next 10 or 20 years have lower expected returns. Ignoring valuations leads to the rearview mirror bias, where strong past returns due to rising valuations will increase your estimate of expected returns when in fact your estimate should be decreasing. At the peak of valuations you probably don't want to revise your financial plan upward because expected returns are higher (based on past returns) when the information that we have suggests future returns will be lower in that case. Understood. But don't you think if valuations were low when you retired and expected returns were higher, at some point they wo...
by vineviz
Sun Jan 01, 2023 11:12 am
Forum: Personal Investments
Topic: QQQ mutual fund equivalent?
Replies: 16
Views: 6329

Re: QQQ mutual fund equivalent?

Currently have my monthly DCA split 1/3 each between VTSAX, SPY, QQQ but I'm looking to back the QQQ off to more like 1/4. Given the amounts I'm buying, that would mean buying less than a full share of QQQ, which I can't do on Vanguard. Is there a mutual fund option/equivalent I could buy in dollar amount/fractional share instead? The elephant in the question is the EXTREMELY redundant asset allocation. These three funds all own basically the same group of stocks (81% of QQQ is in SPY and 93% of SPY is in VTSAX), producing a very high cross-correlation and therefor little diversification benefit. You could get virtually the same result using just two funds (e.g. 65% VTI 35% QQQ), though my honest feedback would be to omit QQQ altogether an...
by vineviz
Sun Jan 01, 2023 11:09 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

Wade Pfau says that "Checking the relationship between PE10 and subsequent 10-year real stock returns with updated data reveals that PE10 explains 30.2 percent of the variation in these subsequent returns. The explanatory power increases to as much as 60 percent for 19-year average real stock returns. " So, at 19 years 60%. That isn't terribly high. Less at 10 years. Nothing at 30 years. Now do the same exercise using a naive extrapolation of past returns. Is it better? Why not? An r-squared of 0.6 (or even 0.3) would be HUGE for retirement planning, even measured over just over 10 or 20 years. The performance of a portfolio under decumulation is massively determined by the real returns over the first 15 years or so, so even minu...
by vineviz
Sun Jan 01, 2023 10:57 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

michaeljc70 wrote: Sun Jan 01, 2023 10:54 am Give me an example of this research.
https://scholar.harvard.edu/files/campb ... jf1988.pdf
by vineviz
Sun Jan 01, 2023 10:49 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

michaeljc70 wrote: Sun Jan 01, 2023 10:44 am
vineviz wrote: Sun Jan 01, 2023 10:39 am
michaeljc70 wrote: Sun Jan 01, 2023 9:50 am Show me the proof of that. Where is the evidence?
The academic literature is literally FULL of such evidence.

Current bond yields provide a better estimate of future bond returns than past returns do, and excess earnings yield provides a better estimate of future excess equity returns than past equity returns.
Not over long periods like retirement. You ignored that part and edited it out of my post.
Yes, even over long periods.

Valuations affect expected returns, and this is such a fundamental law of markets that I’m not sure why there is even a debate.
by vineviz
Sun Jan 01, 2023 10:46 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

NiceUnparticularMan wrote: Sun Jan 01, 2023 10:19 am
But replacing those central estimates with estimates not derived from such a model is not likely to improve that situation. Again, de facto that has already been implicitly tested in the regression process. And so if it would have worked better in the past, then the model would already work like that.

So the important takeaway here is that as bad as these models seem to be at predicting the future of asset returns, just substituting historical averages and such has been even worse.
This is a good (and diplomatic) way to frame the explanation.

There are very few situations in which y=x is a more robust model than y=ax + b.
by vineviz
Sun Jan 01, 2023 10:39 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

michaeljc70 wrote: Sun Jan 01, 2023 9:50 am Show me the proof of that. Where is the evidence?
The academic literature is literally FULL of such evidence.

Current bond yields provide a better estimate of future bond returns than past returns do, and excess earnings yield provides a better estimate of future excess equity returns than past equity returns.
by vineviz
Sun Jan 01, 2023 10:05 am
Forum: Personal Investments
Topic: QQQ mutual fund equivalent?
Replies: 16
Views: 6329

Re: QQQ mutual fund equivalent?

Currently have my monthly DCA split 1/3 each between VTSAX, SPY, QQQ but I'm looking to back the QQQ off to more like 1/4. Given the amounts I'm buying, that would mean buying less than a full share of QQQ, which I can't do on Vanguard. Is there a mutual fund option/equivalent I could buy in dollar amount/fractional share instead? The elephant in the question is the EXTREMELY redundant asset allocation. These three funds all own basically the same group of stocks (81% of QQQ is in SPY and 93% of SPY is in VTSAX), producing a very high cross-correlation and therefor little diversification benefit. You could get virtually the same result using just two funds (e.g. 65% VTI 35% QQQ), though my honest feedback would be to omit QQQ altogether an...
by vineviz
Sun Jan 01, 2023 9:36 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

michaeljc70 wrote: Sun Jan 01, 2023 9:01 am This all begs the question, if US returns are fairly predictable based on valuations for a fairly long period, why aren't more financial advisors, ETFs, investors capitalizing on this? Meaning, successful market timing based on valuations?
Remember, all we are saying is that naively extrapolating past returns into the future creates WORSE estimates of future returns than more sensible approaches do.

That doesn’t imply that “market timing” works or will generate excess risk-adjusted returns.
by vineviz
Sat Dec 31, 2022 5:19 pm
Forum: Investing - Theory, News & General
Topic: Is It Too Late to Add Inflation Protection to Your Portfolio?
Replies: 156
Views: 14635

Re: Is It Too Late to Add Inflation Protection to Your Portfolio?

I think if the dollar's lost 95% of its value over 60-odd years, that's going to be reflected in almost anything you're consuming. Energy prices affect transport costs affect food costs, etc. And over long periods, all you're really measuring is the decline in value of cash. If you ran a business that was specifically very affected by the price of oil, it could certainly make more sense to track that than CPI. Logan Roy, And, that has nothing to do with whether TIPS is the right answer to fight that. Stock works for me. I do not believe in TIPS. As to why you choose to believe in TIPS, I have no idea. KlangFool It’s not a question of “belief”. Anyone who understands the nature of inflation should understand how to use TIPS vs nominal bonds...
by vineviz
Sat Dec 31, 2022 3:44 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

I'll point out two things from the report: -"The ECOC is an estimate of expected returns based on more than 120 years of global asset class return historical data ." -"Empirical evidence suggests that the MBER has a high explanatory power for fixed income and a relatively low explanatory power for equity ." The studies I've seen on expected returns using current market conditions show that the reliability is poor for a 30+ time frame. If anyone has studies that show otherwise I'd be interested. If you read the methodology closely you'll see that PWL is using "a weighted average of the Market-Based Expected Return (MBER) and the Equilibrium Cost of Capital (ECOC)" for all their expected return estimates, and th...
by vineviz
Sat Dec 31, 2022 1:32 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

Triple digit golfer wrote: Sat Dec 31, 2022 1:27 pm
vineviz wrote: Sat Dec 31, 2022 1:18 pmHypothetically, I probably would tell a client that a 4% inflation-adjusted withdrawal rate is "too high" IF they had no flexibility to adjust their spending in retirement AND IF stock and bond valuations were significantly lower than they are today. And I'd probably tell a client that a 4% inflation-adjusted withdrawal rate is "too low" IF they had significant flexibility to adjust their spending in retirement AND/OR stock and bond valuations were significantly higher than they are today.
Did you get the valuations mixed up in the two scenarios?
Yep. I was thinking "yield" and typing "valuation". Thanks for the catch.
by vineviz
Sat Dec 31, 2022 1:31 pm
Forum: Investing - Theory, News & General
Topic: a computational (?) peek behind indices?
Replies: 20
Views: 1934

Re: a computational (?) peek behind indices?

That said, funds/ETFs that set up their own closet indices, then claim their in-house funds are index funds, when in fact many are active funds disguised as index funds, that is another story. I don’t think that is happening. Can you give me an example? I was referring to custom-built indices of the types described in this article: https://www.investor.gov/introduction-investing/investing-basics/investment-products/mutual-funds-and-exchange-traded-3 My concern is really one of nomenclature. When mutual funds or ETFs employ custom-built indices, but then call themselves “index” or “passive” funds, they create confusion. IMHO, such products do not align with conventional “passive, low cost funds that track established cap weighted indices wi...
by vineviz
Sat Dec 31, 2022 1:18 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

Detailing how to form estimates for model parameters is outside the scope of this thread, I think. And such details aren't unique to forming SWR estimates: every financial decision depends on having estimates you think are reliable. Remember George Fox: Since all models are wrong the scientist must be alert to what is importantly wrong. It is inappropriate to be concerned about mice when there are tigers abroad. So do you really advise your clients that 4% SWR is too high and suggest 2.7% going forward? I'm genuinely curious how you use this information, if at all. I don't think I've ever relied on historical SWRs to form advice for any client, and I don't think I've ever had a client who lacked at least some flexibility to adjust their re...
by vineviz
Sat Dec 31, 2022 12:57 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

michaeljc70 wrote: Sat Dec 31, 2022 12:49 pm
Every firm comes up with their own estimate. They are all over the place. What specific estimate are you using for 2023 going forward for expected return?
Detailing how to form estimates for model parameters is outside the scope of this thread, I think. And such details aren't unique to forming SWR estimates: every financial decision depends on having estimates you think are reliable.

Remember George Fox:
Since all models are wrong the scientist must be alert to what is importantly wrong. It is inappropriate to be concerned about mice when there are tigers abroad.
by vineviz
Sat Dec 31, 2022 12:47 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

michaeljc70 wrote: Sat Dec 31, 2022 12:40 pm
vineviz wrote: Sat Dec 31, 2022 12:36 pm
michaeljc70 wrote: Sat Dec 31, 2022 12:07 pm
What data are you going to Monte Carlo if you don't use historical data?
Expected returns, expected inflation, etc.
So guesses. Okay.
Not guesses. Informed estimates.

Why ask how something is done if you're not interested in learning how to do it?
by vineviz
Sat Dec 31, 2022 12:47 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

The bigger question is - if you don't believe 4% for US will likely ever fail in the future, what is the reasoning? Why would the US be special? Why would it continue to have favorable return expectations (or less "worse" worst-case sequence of returns) in the future that are not priced in by the market? Because it always worked before. This line of argument sounds convincing until you think about it. If a person retiring in 1966 had relied on purely historical data they'd have picked a withdrawal rate well above 4.0%. They'd have felt "safe" because such a high withdrawal rate had "never failed before". They'd have had no indication that the next 30 years would be "worse than the worst case scenario"...
by vineviz
Sat Dec 31, 2022 12:36 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

michaeljc70 wrote: Sat Dec 31, 2022 12:07 pm
What data are you going to Monte Carlo if you don't use historical data?
Expected returns, expected inflation, etc.
by vineviz
Sat Dec 31, 2022 11:59 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

I want to make sure this is clear. It is very important. The US has historically supported a 4% SWR. That is an empirical fact that nobody can argue with. The point of all this international data is to ask whether that is the "true" universal SWR full stop, or whether the US is an outlier. The evidence strongly suggests that 4% has been more the exception than the rule, so betting on the outlier to repeat its exceptional outcome may not be wise. Maybe another way of saying this is that while the backward looking SWR in the US was ~4%, the forward looking SWR is likely much lower. But that's what SWR literally is - backward looking. It doesn't HAVE to be backward looking. We can estimate FUTURE sustainable withdrawal rates without...
by vineviz
Sat Dec 31, 2022 11:49 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

I want to make sure this is clear. It is very important. The US has historically supported a 4% SWR. That is an empirical fact that nobody can argue with. The point of all this international data is to ask whether that is the "true" universal SWR full stop, or whether the US is an outlier. The evidence strongly suggests that 4% has been more the exception than the rule, so betting on the outlier to repeat its exceptional outcome may not be wise. Maybe another way of saying this is that while the backward looking SWR in the US was ~4%, the forward looking SWR is likely much lower. But that's what SWR literally is - backward looking. It doesn't HAVE to be backward looking. We can estimate FUTURE sustainable withdrawal rates without...
by vineviz
Sat Dec 31, 2022 11:47 am
Forum: Personal Consumer Issues
Topic: Ronzoni Pastina To Be Discontinued
Replies: 32
Views: 5535

Re: Ronzoni Pastina To Be Discontinued

abuss368 wrote: Sat Dec 31, 2022 10:42 am Another pasta which is excellent is “De Cecco” from Fara San Martino, Italy. Part of our family is from this region.
De Cecco is great, but I think the smallest shape they sell in the U.S. is acini di pepe. I don't think they market pastina (or stelline) here.
by vineviz
Sat Dec 31, 2022 11:29 am
Forum: Investing - Theory, News & General
Topic: Is It Too Late to Add Inflation Protection to Your Portfolio?
Replies: 156
Views: 14635

Re: Is It Too Late to Add Inflation Protection to Your Portfolio?

km91 wrote: Sat Dec 31, 2022 11:10 am Would it be correct to say that an investor should be practically indifferent between a TIPS and nominal bond of the same maturity. If we expect the market to efficiently price both off of the same inflation expectations, the expected real yield on either bond should more or less be the same
The expected return might be the same, but it'd be unlikely for the risk to be the same.

When push comes to shove few investors are literally indifferent about whether their returns are nominal or real, since their liabilities have a specific real/nominal composition.
by vineviz
Sat Dec 31, 2022 11:26 am
Forum: Investing - Theory, News & General
Topic: Fidelity fund ownership of now-private Twitter
Replies: 17
Views: 1658

Re: Fidelity fund ownership of now-private Twitter

Per this report , Fidelity has written down the value of the Twitter shares in its mutual funds. I was surprised to learn that Fidelity funds held shares of non-public companies. Of course, it's a very small portion of the funds' total holdings. To keep this actionable, let's focus here on whether you see it as an advantage or disadvantage of active funds that they may hold a modest portion of their portfolios in non-public holdings. It's pretty common for mutual funds to allocate a small portion of their portfolio to private companies. The regulatory limit is 15% of assets, I think, but most firms have policies that keep it well under 10%. I've seen no evidence that active managers generate any benefit for shareholders from such private h...
by vineviz
Sat Dec 31, 2022 10:17 am
Forum: Personal Consumer Issues
Topic: Ronzoni Pastina To Be Discontinued
Replies: 32
Views: 5535

Re: Ronzoni Pastina To Be Discontinued

Ronzoni has announced that its pastina (cut no. 155) has been discontinued. I don't live near major supermarkets. I obtain my food supplies from a general store, and so won't have access to any alternatives. Can anyone suggest a product comparable in quality that I may be able to purchase the next time I venture into the nearest city? I can't make a recommendation, since I don't typically use pastina in recipes but both Barilla and San Giorgio sell pastina that (at first glance) seem like they'd be comparable. Both brands are broadly distributed and are available via Amazon and other websites. I've always used acini de pepe when I need a very small pasta, which seems similar to pastina albeit with a round shape instead of a five-pointed st...
by vineviz
Sat Dec 31, 2022 10:10 am
Forum: Personal Investments
Topic: Small cap and ex-US stock valuations
Replies: 14
Views: 1351

Re: Small cap and ex-US stock valuations

burritoLover wrote: Sat Dec 31, 2022 9:50 am I guess Shiller didn't come up with the CAPE metric either as there were valuation metrics before CAPE lol.
I'm not sure what the sarcasm signifies, but you're pretty much right on this: economists and analysts have been using various forms of cyclical adjustment and trailing averaging with both prices and valuation multiples for a century or more.

"CAPE" as a catchy acronym is pretty new, but both the procedure for calculating it and the name "cyclically adjusted price" go back to at least the 1950s and I'm pretty sure both appear in the 1934 edition of Graham and Dodd's textbook on security analysis.
by vineviz
Sat Dec 31, 2022 9:18 am
Forum: Personal Investments
Topic: Small cap and ex-US stock valuations
Replies: 14
Views: 1351

Re: Small cap and ex-US stock valuations

This is similar in concept to what Shiller calls “excess CAPE yield”. A Google search should reveal his own paper on this, but here’s a Morningstar article to tide you over. Interesting, thanks! Surprised to see in the Morningstar article that the historical variation in this excess CAPE yield is actually more than the variation in the CAPE yield, expected the opposite. However, it's a bit comforting to see the excess CAPE yield showing stock valuation to be more reasonable today. The fact that a new metric had to be invented to "explain" high US valuations tells you all you need to know. Nothing was "invented" by Shiller. The concept of an earnings yield has existed since, well, the concept of earnings has existed. And...
by vineviz
Sat Dec 31, 2022 9:15 am
Forum: Investing - Theory, News & General
Topic: Is It Too Late to Add Inflation Protection to Your Portfolio?
Replies: 156
Views: 14635

Re: Is It Too Late to Add Inflation Protection to Your Portfolio?

alluringreality wrote: Sat Dec 31, 2022 8:49 am An issue with a label like "mistake" or "misconception", in relation to the idea of relative valuation, is that individual investors remain free to define their personal models in whatever way they choose.
The "mistake" I referenced above was one of factual misunderstanding, not one of preference.
by vineviz
Sat Dec 31, 2022 7:41 am
Forum: Investing - Theory, News & General
Topic: Is It Too Late to Add Inflation Protection to Your Portfolio?
Replies: 156
Views: 14635

Re: Is It Too Late to Add Inflation Protection to Your Portfolio?

To me, valuations matter and it is just hard to buy something if you are locking in losses in purchasing power. The whole point to buying TIPS is to protect the purchasing power. I suppose we have to accept that when TIPS real yields go negative that some inflation protection is better than none. Sure, "valuations matter" but it's important to look at valuations and not just price . When the real yield on TIPS was negative, the expected real yield on nominal Treasuries was ALSO negative, and the expected real return on stocks was ALSO lower than it is today. In other words, TIPS are not less attractive relative to other alternatives when yields are -1.5% than they are when yields are +1.5% if the breakeven inflation rate is the s...
by vineviz
Sat Dec 31, 2022 6:14 am
Forum: Personal Investments
Topic: Money Markets more tax efficient than bonds?
Replies: 4
Views: 785

Re: Money Markets more tax efficient than bonds?

billfromct wrote: Sat Dec 31, 2022 5:59 am I don’t get why everyone calls “interest” payments “dividends” now.

“The google” divines dividends as, “A sum of money paid regularly (typically quarterly) by a company to shareholders out of profits (or reserves).”

Maybe it sounds more “professional”!

bill
Mutual funds are companies, which is why their distributions are treated as dividends.
by vineviz
Sat Dec 31, 2022 6:11 am
Forum: Investing - Theory, News & General
Topic: 1-mo t-bill yield below federal funds rate?
Replies: 32
Views: 4930

Re: 1-mo t-bill yield below federal funds rate?

constructor wrote: Fri Dec 30, 2022 11:59 pm Is there a “reverse repo” fund that I can access?
No. Not unless you run a bank.
by vineviz
Fri Dec 30, 2022 5:31 pm
Forum: Investing - Theory, News & General
Topic: Is It Too Late to Add Inflation Protection to Your Portfolio?
Replies: 156
Views: 14635

Re: Is It Too Late to Add Inflation Protection to Your Portfolio?

Long-term, we know gold and real estate have proven fairly stable measures of inflation. People seem to THINK they know this, but this is a belief that doesn't hold up to close scrutiny. Gold, for instance, has functioned as more of a hedge to the dollar than to inflation but even so it's been a fairly unreliable hedge against both risks. I'm sure we've been over this, but the cost of an average home in gold hasn't changed much since the early Islamic era. If we're talking about gold as a dollar hedge, we're certainly not talking long-term. An inflation hedge that only performs reliably over centuries or millennia is of no benefit to individuals whose investment horizon is measured in years or decades. Investors have access to assets which...
by vineviz
Fri Dec 30, 2022 5:22 pm
Forum: Personal Investments
Topic: Unwinding a high fee SMA
Replies: 7
Views: 708

Re: Unwinding a high fee SMA

Transferring the portfolio to another broker in-kind is easy, but it won’t insulate you from the taxes and difficulty in unwinding the portfolio.

But you are likely Overestimating the tax drag, since tax-optimization is one of the things that wire houses are least likely to mess up.
by vineviz
Fri Dec 30, 2022 4:56 pm
Forum: Investing - Theory, News & General
Topic: Is It Too Late to Add Inflation Protection to Your Portfolio?
Replies: 156
Views: 14635

Re: Is It Too Late to Add Inflation Protection to Your Portfolio?

Logan Roy wrote: Fri Dec 30, 2022 3:31 pm Long-term, we know gold and real estate have proven fairly stable measures of inflation.
People seem to THINK they know this, but this is a belief that doesn't hold up to close scrutiny.

Gold, for instance, has functioned as more of a hedge to the dollar than to inflation but even so it's been a fairly unreliable hedge against both risks.
by vineviz
Fri Dec 30, 2022 4:48 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

That always amazes me. Can you post the link so I can tinker with the inputs and see the source data? The data has to be custom imported into PortfolioVisualizer, so a link won't work unfortunately. But you can import the data yourself. It's a chained series that includes live fund returns in the first part then transitions in turn to MSCI EAFE, MSCI World, and finally VGTSX. Period Total Return 01/31/1961 6.50% 02/28/1961 6.39% 03/31/1961 6.76% 04/30/1961 2.19% 05/31/1961 1.75% 06/30/1961 -4.12% 07/31/1961 1.12% 08/31/1961 5.10% 09/30/1961 -1.56% 10/31/1961 5.04% 11/30/1961 4.16% 12/31/1961 -3.23% 01/31/1962 -3.24% 02/28/1962 2.66% 03/31/1962 -1.10% 04/30/1962 -4.87% 05/31/1962 -15.81% 06/30/1962 -7.30% 07/31/1962 4.74% 08/31/1962 4.21% 0...
by vineviz
Fri Dec 30, 2022 4:12 pm
Forum: Personal Investments
Topic: BILS [SPDR® Bloomberg Barclays 3-12 Month T-Bill ETF] vs SHV [iShares Short Treasury Bond ETF]
Replies: 11
Views: 1115

Re: BILS vs SHV

Booogle wrote: Fri Dec 30, 2022 3:50 pm
vineviz wrote: Fri Dec 30, 2022 3:46 pm It's hard to imagine there's a duration you might want in the range of 1 year to 10 years that you couldn't efficiently target with 1 or 2 low-cost ETFs.
My ideal duration range is 6 months to 1 year.
The suggestion was that IF you don't need the money within a year then a longer duration would be more appropriate.

If you DO need the money within a year then clearly that suggestion is moot, but I was merely pointing out that longer duration funds ARE available in whatever duration that might need to be.
by vineviz
Fri Dec 30, 2022 3:46 pm
Forum: Personal Investments
Topic: BILS [SPDR® Bloomberg Barclays 3-12 Month T-Bill ETF] vs SHV [iShares Short Treasury Bond ETF]
Replies: 11
Views: 1115

Re: BILS vs SHV

Booogle wrote: Fri Dec 30, 2022 3:11 pm
grabiner wrote: Fri Dec 30, 2022 3:00 pm If you don't need the money within the next year, you might want a slightly longer duration.
They really don't exist.

Except for BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF) and BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE).
There are over 30 US Treasury ETFs with average durations less than 6 years.

It's hard to imagine there's a duration you might want in the range of 1 year to 10 years that you couldn't efficiently target with 1 or 2 low-cost ETFs.
by vineviz
Fri Dec 30, 2022 3:25 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

michaeljc70 wrote: Fri Dec 30, 2022 2:52 pm I don't know Ben and have never heard of him until the last month so I am not trying to personally disparage him. I've given my reasons I disagree with him above and in the other thread.
If you have arguments with the analysis, let's debate them.

Character attacks get us nowhere.
by vineviz
Fri Dec 30, 2022 2:48 pm
Forum: Investing - Theory, News & General
Topic: Why Can't Money Managers Beat The Market
Replies: 53
Views: 7080

Re: Why Can't Money Managers Beat The Market

like2read wrote: Fri Dec 30, 2022 2:44 pm I get it. The managed funds at times did not hug the index. Umm, yeah.

I am happy with the performance of the two funds I mention, and have observed, as the chart I included shows, periods where index funds outperformed and vice versa.
The point I'm making has nothing to do with "hugging the index" or not.

My point is that Hartford funds has basically lied to you, by manipulating the data into making UNDERperformance look like OUTperformance to consumers who are not trained to spot the slight-of-hand.
by vineviz
Fri Dec 30, 2022 2:44 pm
Forum: Personal Investments
Topic: LifeStrategy Taxable Account
Replies: 48
Views: 5418

Re: LifeStrategy Taxable Account

I think you made a good choice and long term will be very happy. You will *never* have to see the underlying components performance or rebalance yourself again. It is truly a hands off, set it and forget it solution to help staying the course easier. And if you wish later to reduce your AA as you get older and/or your portfolio gets larger then simply use a lower stock allocation in your tax deferred accounts. You may decide to eventually use a single, all in one balanced fund in your those accounts too. Good luck! I do think that it's important for investors to understand what they're investing in. While I agree that getting started is the smartest thing to do, you'll always need to be aware of where your money is going. The LifeStrategy ...
by vineviz
Fri Dec 30, 2022 2:41 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

"Gouge?" I'm not saying that Sir Ben is doing that. However, where does one charge for providing value? Where does the AUM for indexing provide value? If Ben, or any other provides a service like a CMA does or a full financial picture (and a sit down in person mind you), then maybe it could be considered. Otherwise, its just a guy on Bogleheads and YouTube trying to "educate" you. The firm Ben works for provides comprehensive financial planning and wealth management services. There’s no need to drag this conversation in the direction of character attacks. Doesn't a firm that manages your portfolio make more money if you work an extra 10 years and have that much more in assets under management? Isn't it more likely the p...
by vineviz
Fri Dec 30, 2022 1:27 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

canadianbacon wrote: Fri Dec 30, 2022 1:22 pm
vineviz wrote: Fri Dec 30, 2022 11:00 am This graph shows the difference for a 1966 US retiree with a 4% inflation-adjusted withdrawal rate and 50/50 stock/bond portfolio.
To be clear, I was referencing a scenario where a 2.7% WR would be relevant, not 3.8%. You can still disagree, but this will help you disagree with the right thing.
My point stands: a well diversified portfolio CAN make (and has made) the difference between a particular withdrawal rate succeeding or not succeeding.
by vineviz
Fri Dec 30, 2022 1:08 pm
Forum: Investing - Theory, News & General
Topic: Why Can't Money Managers Beat The Market
Replies: 53
Views: 7080

Re: Why Can't Money Managers Beat The Market

This likely warrants a closer look, but could suggest a place for both (low cost!) active as well as passive indexing. https://www.hartfordfunds.com/insights/market-perspectives/equity/cyclical-nature-active-passive-investing.html This is not investment advice. More likely it suggests a need to acknowledge that if you twist your definitions enough, and distort your data presentation enough, a talented market team can make a falsehood seem plausible. Yeah, it does pay to be vigilant with most marketing. The way the Hartford chart presents the data does accentuate the reversal of leadership between managed funds and indexes, no doubt. It does more than "accentuate" the reversals: it manufactures the reversals. The fact is that ALL ...
by vineviz
Fri Dec 30, 2022 12:33 pm
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

Sure, but that's what a 4% SWR working literally looks like - this chart is why we have 4% not 4.3% or 4.5% or what have you. Only supporting a 2.7% SWR looks much much worse than that. Also, while everyone certainly wants to have 2.1M instead of $0, the SWR makes no promises on the ending balance so discussing that is a moot point. Technically this shows 4% failing : the US-only portfolio was depleted before the last monthly withdrawal was made. But the point I'm making is bigger than that: no one needs to IMAGINE the benefits of diversification since we can LITERALLY observe the benefit. There's a bizarre narrative that sometimes appears in these SWR discussions around the issue of equity diversification. This narrative usually sounds li...
by vineviz
Fri Dec 30, 2022 11:00 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

I'm going to guess that many here poop-pooing the 2.7% don't have anywhere near 50% ex-US and probably none at all in most cases. The economy of the future could eventually look quite different from today (stating the obvious!) but it's hard to envision a scenario in the next 2-3 decades where the US stock market tanks to portfolio-wrecking proportions where ex-US somehow saves you. This seems possible to the extent that economies are decoupled and there are other just-as-strong capitalist markets to take over the mantle of #1, which doesn't seem to be where we are today. Steering away from the hyperbole, I'll just point out that you don't have to imagine a period in which a US-only portfolio has a dramatically lower SWR than a globally di...
by vineviz
Fri Dec 30, 2022 10:21 am
Forum: Personal Investments
Topic: Does vanguard have a SCV fund?
Replies: 54
Views: 5148

Re: Does vanguard have a SCV fund?

If an ETF, why does it need to be vanguard? Almost every brokerage I know of gives free trades for ETFs There’s: IJS, FNDA, AVUV That's my opinion for etfs just use the best one and forget the creator because you can hold any index one just about anywhere. Right. Whether say AVUV or VBR is used should be based on the properties of the products and how a portfolio is constructed, not whether it is a Vanguard product. I agree with that. I'm just probably hyper focused on cost. I'm mainly attracted to vanguard (VBR) because of the low cost. I would prefer something with higher percentage of small cap value such as AVUV, but the expense ratio steers me away. I guess I have to decide what's more important: saving some on cost or getting somethi...
by vineviz
Fri Dec 30, 2022 10:19 am
Forum: Investing - Theory, News & General
Topic: Is It Too Late to Add Inflation Protection to Your Portfolio?
Replies: 156
Views: 14635

Re: Is It Too Late to Add Inflation Protection to Your Portfolio?

technovelist wrote: Fri Dec 30, 2022 10:08 am If there is a lot of unexpected inflation, having gold in your portfolio generally improves results.
My point is that it does not "generally" do this.
by vineviz
Fri Dec 30, 2022 10:17 am
Forum: Personal Investments
Topic: How is this possible? [Negative return on investment over past 10 years]
Replies: 110
Views: 17310

Re: How is this possible? [Negative return on investment over past 10 years]

For anyone interested I just received the statement from my friends son. It’s bizarre, there’s at least 200 very small positions. For example, 1share of Apple, 2 shares of Exon Mobil, 2 Shares I-shares dividend etf…etc plus a random assortment of every flavor of bond etfs. The son just drove all night to get here so waiting for him to get out of bed. It's possible that the equity portion was invested in a separately managed account (SMA), but also possible the "advisor" was simply buying stocks that were on their firm's "buy list" at the time. The large number of positions is a minor annoyance, since it makes it harder to benchmark the account's investment performance, but probably isn't close to the most egregious prob...
by vineviz
Fri Dec 30, 2022 9:27 am
Forum: Investing - Theory, News & General
Topic: Is It Too Late to Add Inflation Protection to Your Portfolio?
Replies: 156
Views: 14635

Re: Is It Too Late to Add Inflation Protection to Your Portfolio?

technovelist wrote: Fri Dec 30, 2022 9:20 am Gold is still under $2000, so I would say it's not too late.
But gold isn’t inflation protection.
by vineviz
Fri Dec 30, 2022 9:13 am
Forum: Personal Finance (Not Investing)
Topic: Balancing housing in HCOL area vs. FIRE ambitions?
Replies: 89
Views: 8268

Re: Can’t buy house in HCOL despite high income

coachd50 wrote: Thu Dec 29, 2022 10:06 pm
StewedCarrot wrote: Thu Dec 29, 2022 9:58 pm 2x-3x income is nonsense. Today 5x is reasonable.

I’m in an HCOL area and we saved and finally bought after renting for 20 years.

Try not to compare yourself to people with inherited wealth.

Keep at it!
What do you feel has changed that makes 5x "reasonable" or prudent?
Perhaps it’s more that 2x or 3x were never sensible guidelines to begin with?
by vineviz
Fri Dec 30, 2022 8:57 am
Forum: Investing - Theory, News & General
Topic: Ben Felix: 2.7% Retirement Rule.
Replies: 847
Views: 75844

Re: Ben Felix: 2.7% Retirement Rule.

JoMoney wrote: Fri Dec 30, 2022 8:32 am
Apathizer wrote: Thu Dec 29, 2022 7:17 am... advises clients on a wide breadth of financial issues: financial planning, insurance, and estate planning...
Oh... maybe that explains it: "look what this study says, a traditional stock and bond portfolio may not support more than a 2.7% withdrawal rate, now let me show you all these insurance products available that will guarantee a higher withdrawal rate"
It would be interesting, but not at all surprising, to learn that it was insurance companies promulgating the idea that other investment vehicles may not be able to support a reasonable withdrawal rate.
It might be unsurprising if it were true.

It’s not.

Can we PLEASE cut out the ad hominem attacks? Not least because they are baseless.