Search found 10382 matches
- Sun Mar 24, 2024 5:37 pm
- Forum: Investing - Theory, News & General
- Topic: More Evidence Against Factor Investing
- Replies: 650
- Views: 46347
Re: More Evidence Against Factor Investing
Larry Swedroe's portfolio increases bonds but uses 100% SCV for Equities. Yikes. That must have made for a rough last several years while the big stocks have outperformed. A lose-lose relative to simply holding a broad market index fund. I'm not seeing the "Yikes" given that SCV has outperformed the market (including those big stocks) by over 1% annualized since AVUV's inception in 2019. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=4gVyaK3CSEngt6gStfJhFZ This is a better comparison. And I used ten years. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=2Uie2msffFyAVggR7gHyi2 The better comparison would be the longest horizon we have Not a cherry picked set of dates, you said “the...
- Sun Mar 24, 2024 4:14 pm
- Forum: Investing - Theory, News & General
- Topic: More Evidence Against Factor Investing
- Replies: 650
- Views: 46347
Re: More Evidence Against Factor Investing
This is a better comparison. And I used ten years.Nathan Drake wrote: ↑Sun Mar 24, 2024 3:48 pmI'm not seeing the "Yikes" given that SCV has outperformed the market (including those big stocks) by over 1% annualized since AVUV's inception in 2019.Triple digit golfer wrote: ↑Sun Mar 24, 2024 3:46 pmYikes. That must have made for a rough last several years while the big stocks have outperformed. A lose-lose relative to simply holding a broad market index fund.Nathan Drake wrote: ↑Sun Mar 24, 2024 3:33 pmLarry Swedroe's portfolio increases bonds but uses 100% SCV for Equities.
https://www.portfoliovisualizer.com/bac ... t6gStfJhFZ
https://www.portfoliovisualizer.com/bac ... VggR7gHyi2
- Sun Mar 24, 2024 3:46 pm
- Forum: Investing - Theory, News & General
- Topic: More Evidence Against Factor Investing
- Replies: 650
- Views: 46347
Re: More Evidence Against Factor Investing
Yikes. That must have made for a rough last several years while the big stocks have outperformed. A lose-lose relative to simply holding a broad market index fund.Nathan Drake wrote: ↑Sun Mar 24, 2024 3:33 pmLarry Swedroe's portfolio increases bonds but uses 100% SCV for Equities.
- Tue Mar 12, 2024 8:18 pm
- Forum: Investing - Theory, News & General
- Topic: what does the "11" mean in this video?
- Replies: 8
- Views: 1235
- Sun Mar 10, 2024 7:55 pm
- Forum: Personal Finance (Not Investing)
- Topic: Any Azul Wells fans here?
- Replies: 9
- Views: 1158
Re: Any Azul Wells fans here?
Yes, I recently discovered him and enjoy his videos. I find him refreshing and calming.
- Sun Mar 10, 2024 11:13 am
- Forum: Investing - Theory, News & General
- Topic: Emerging markets flat
- Replies: 57
- Views: 4472
Re: Emerging markets flat
I'm not sure. I assume either a price chart or a different starting point.muffins14 wrote: ↑Sun Mar 10, 2024 11:09 am6.7% CAGR seems pretty decent. What is the OP looking at then?Triple digit golfer wrote: ↑Sun Mar 10, 2024 10:39 am Nowhere near flat.
https://www.portfoliovisualizer.com/bac ... jFGBPXYzCD
- Sun Mar 10, 2024 10:39 am
- Forum: Investing - Theory, News & General
- Topic: Emerging markets flat
- Replies: 57
- Views: 4472
- Sat Mar 09, 2024 7:02 pm
- Forum: Personal Investments
- Topic: The Three-Fund Portfolio - Which fund should I pick?
- Replies: 19
- Views: 3202
Re: The Three-Fund Portfolio - Which fund should I pick?
The Three Fund Portfolio does not include a cash or money market fund. It includes a high quality, investment grade U.S. bond fund.
- Sat Mar 09, 2024 6:58 pm
- Forum: Personal Consumer Issues
- Topic: How much do you spend a month on food?
- Replies: 336
- Views: 30415
Re: What's normal for grocery costs for a family?
Ours are $700 for a family of three.
- Sat Mar 09, 2024 8:35 am
- Forum: Investing - Theory, News & General
- Topic: Why is Vanguard so bullish on international exposure in their all-in-one funds?
- Replies: 77
- Views: 6900
Re: Why is Vanguard so bullish on international exposure in their all-in-one funds?
Because they seem to be convinced of the same concept that this forum is founded upon: no one can pick stocks be it in a sector, a state, a dividend yield, or a country. Since active management and picking stocks does not work, the only answer is to hold a diversified sampling of the entire market. You can't tell me which country/sector will perform the best and which the worst in the year ahead. So I will own all of the countries and sectors in the proportion that $110 trillion dollars has decided the money should be divvied up. (More than 2x the value of all US real estate, by the way.) That's what Vanguard is angling at, because of the philosophy of one person, after whom this forum is named. The connection there seems pretty obvious. R...
- Fri Mar 08, 2024 4:53 am
- Forum: Personal Investments
- Topic: 16 yr old - how can I best take on high risk?
- Replies: 65
- Views: 5610
Re: 16 yr old - how can I best take on high risk?
AVGE is great for what you want to do. Don't change a thing. Add to it consistently, let it do its thing over decades and you'll be a very wealthy person in due time. Be patient and don't sell. Do not be tempted by individual stocks or leverage.
- Sun Mar 03, 2024 11:45 am
- Forum: Investing - Theory, News & General
- Topic: "How much should I have in my 401k" article for various ages - thoughts?
- Replies: 45
- Views: 6375
Re: "How much should I have in my 401k" article for various ages - thoughts?
Good point.kleiner wrote: ↑Sun Mar 03, 2024 7:56 amThe problem I see is that most people have only the haziest idea of how they spend their money. Assuming they spend a big chunk of their salary, the salary becomes a proxy for "money needed to support lifestyle"Triple digit golfer wrote: ↑Sat Mar 02, 2024 9:00 pm I hate these articles because they're always income-based and they always specify 401(k) only. Why not other retirement vehicles or general taxable accounts? Or is that to be assumed, but in that case, just say how much money you should have invested.
- Sat Mar 02, 2024 9:00 pm
- Forum: Investing - Theory, News & General
- Topic: "How much should I have in my 401k" article for various ages - thoughts?
- Replies: 45
- Views: 6375
Re: "How much should I have in my 401k" article for various ages - thoughts?
I hate these articles because they're always income-based and they always specify 401(k) only. Why not other retirement vehicles or general taxable accounts? Or is that to be assumed, but in that case, just say how much money you should have invested.
- Sun Feb 25, 2024 6:43 pm
- Forum: Investing - Theory, News & General
- Topic: The Three-Fund Portfolio
- Replies: 3898
- Views: 2434715
Re: The Three-Fund Portfolio
Would one use VOO instead of VTI for the 3-fund portfolio, and why? Performance-wise, VOO and VTI are similar, but VOO eliminates all mini-caps that are usually a distraction rather than a value add. Please let me know. I bought VXF (S&P 500 completion index) in early 2021 to complete VOO when it was at its peak, and 3 years later, it is still below its market peak. Back then, as understood, Tesla drove sharp growth of VXF until Tesla got added to the S&P500. I think I made a mistake and would rather stay with VOO only, and it makes me feel about VTI and its value add as VOO does the same job with less volatility. I would slightly favor the total market fund over an S&P 500 fund because it's more of the market. It's truly the m...
- Sun Feb 25, 2024 4:33 pm
- Forum: Investing - Theory, News & General
- Topic: Contributions to AA vs. lagging asset
- Replies: 45
- Views: 2519
Re: Contributions to AA vs. lagging asset
This little, probably nonconsequential conundrum always bugs me a little bit. I have traditionally, to the extent I reasonably can, directed contributions to the lagging asset. As stocks have taken off over the past several months, I've made almost no contributions to equities. Had I been contributing per my AA (80/20), perhaps I'd be at a point now where I'm close to rebalancing. Hard to say and I don't care to do the math. But instead, I'm only about 1 point ahead on equities. As long as you rebalance regularly, and are in a tax-advantaged account, it doesn't make much difference. If you make new investments according to your target allocation, you'll hit your stock rebalancing limit when the stock market is up, and you will then sell st...
- Sun Feb 25, 2024 1:03 pm
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
Reducing tech sector concentration is similar to reducing stock allocation when rebalancing. I hold an equal weight S&P 500 index etf which is much less tech heavy. People don’t understand the risk until a crash happens. How has equal weight performed over 20 or 30 years compared to the standard S&P 500? Many understand the risk and diversify with bonds or cash, not more stocks. They understand that stocks are riskier than bonds so one should diversify with bonds like I do myself. Most don’t understand where the risk within the S&P 500 comes from. They don’t understand that a tech heavy index is riskier than one than is more diversified. I don't agree with this. This makes the assumption that anything other than an equal weight...
- Sun Feb 25, 2024 12:46 pm
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
I am not saying that the Mag 7 stocks are very correlated. I am saying that the Mag 7 stocks on average are correlated and move with the tech sector of the S&P 500. Okay - who cares, though? They make up a huge portion of the tech sector. Why exclude or reduce a sector? If not market weight, what is the proper amount in any given company or sector? Reducing tech sector concentration is similar to reducing stock allocation when rebalancing. I hold an equal weight S&P 500 index etf which is much less tech heavy. People don’t understand the risk until a crash happens. How has equal weight performed over 20 or 30 years compared to the standard S&P 500? Many understand the risk and diversify with bonds or cash, not more stocks. They...
- Sun Feb 25, 2024 12:13 pm
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
Apropos of nothing, just how correlated have the Magnificent Seven stocks been? Have they gone up and down in lockstep? Source https://imgur.com/zVFgOSX.png No two of the stocks have had a correlation higher than 0.58. One (Microsoft and Meta Platforms) as low as 0.25. With the total market, none has had a correlation higher than 0.65, and one (Meta Platforms) as low as 0.41. We are told that small-cap value, e.g. DFSVX, and international stocks, e.g. VXUS, are valuable diversifiers for VTI, despite having had correlations of 0.87 and 0.78, respectively ( Source ). So it seems to me that a case can be made that the stocks of the Magnificent Seven are reasonably diversified amongst themselves, and help diversify Total Stock Market. I am not...
- Sun Feb 25, 2024 11:59 am
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
Apropos of nothing, just how correlated have the Magnificent Seven stocks been? Have they gone up and down in lockstep? Source https://imgur.com/zVFgOSX.png No two of the stocks have had a correlation higher than 0.58. One (Microsoft and Meta Platforms) as low as 0.25. With the total market, none has had a correlation higher than 0.65, and one (Meta Platforms) as low as 0.41. We are told that small-cap value, e.g. DFSVX, and international stocks, e.g. VXUS, are valuable diversifiers for VTI, despite having had correlations of 0.87 and 0.78, respectively ( Source ). So it seems to me that a case can be made that the stocks of the Magnificent Seven are reasonably diversified amongst themselves, and help diversify Total Stock Market. I am not...
- Sat Feb 24, 2024 10:22 pm
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
Why? What's the relevance?smartinvestor2020 wrote: ↑Sat Feb 24, 2024 10:00 pmTake away NVDA returns and see how the S&P 500 has performed recently.
You're overthinking investing greatly.
- Sat Feb 24, 2024 5:09 pm
- Forum: Investing - Theory, News & General
- Topic: How important is management team when trying to value a company?
- Replies: 24
- Views: 2313
Re: How important is management team when trying to value a company?
I say no. Everybody is replaceable. I'd place more value on the company's ability to attract talent.
- Sat Feb 24, 2024 4:29 pm
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
I did and I don’t agree with most of what he said. Even if the definition of high and low change drastically over cherry picked time periods, the time period from the article does show what “high” valuation is defined as numerically in terms of CAPE ratio. So are we now in a different period where “high” abruptly changed after 2020? I can understand the definition and value of CAPE changing between totally different multi decade periods. But please explain how the definition of “high” CAPE suddenly changes drastically in a few years. We have data point to show what CAPE ratio corresponds to in terms of returns. How can one possibly say that CAPE in 2012 was high? Even if the formula for CAPE changed, the linear trend of high CAPE and low r...
- Sat Feb 24, 2024 4:14 pm
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
A belief based on CAPE data, is not a prediction. CAPE has been a good predictor if you believe the information. It's been a bad predictor of returns. Did you digest any of the posts that Homer made? I did and I don’t agree with most of what he said. Even if the definition of high and low change drastically over cherry picked time periods, the time period from the article does show what “high” valuation is defined as numerically in terms of CAPE ratio. So are we now in a different period where “high” abruptly changed after 2020? I can understand the definition and value of CAPE changing between totally different multi decade periods. But please explain how the definition of “high” CAPE suddenly changes drastically in a few years. We have d...
- Sat Feb 24, 2024 3:52 pm
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
A belief based on CAPE data, is not a prediction. CAPE has been a good predictor if you believe the information. It's been a bad predictor of returns. Did you digest any of the posts that Homer made? I did and I don’t agree with most of what he said. Even if the definition of high and low change drastically over cherry picked time periods, the time period from the article does show what “high” valuation is defined as numerically in terms of CAPE ratio. So are we now in a different period where “high” abruptly changed after 2020? I can understand the definition and value of CAPE changing between totally different multi decade periods. But please explain how the definition of “high” CAPE suddenly changes drastically in a few years. We have d...
- Sat Feb 24, 2024 9:44 am
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
Why are people concerned with PE ratios? Why does stock price divided by PRIOR earnings matter in the least? You're not buying past earnings. You're buying future earnings.
- Sat Feb 24, 2024 9:39 am
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
In a lot of your post history, you state that what you're doing goes against Bogleheads philosophy, you're not a Boglehead, or you're doing trading that isn't a Boglehead technique. Why, then, do you come here expecting to see support or approval for what you're doing? What are you trying to get out of it?
It's like posting about cuts of steak on a vegan forum. How do you expect that they'll respond?
It's like posting about cuts of steak on a vegan forum. How do you expect that they'll respond?
- Sat Feb 24, 2024 8:33 am
- Forum: Investing - Theory, News & General
- Topic: How to balance VTSAX?
- Replies: 22
- Views: 3043
Re: How to balance VTSAX?
Bingo. Total world market cap. It's what I do.
But if he wants to tilt away from large caps and growth stocks (both of which I think are silly arbitrary labels), small cap value (another silly arbitrary label) makes sense too.
- Sat Feb 24, 2024 8:32 am
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
Another thing that we should not lose sight of is that at any point in time, the market and components within are valued at the level that millions of investors in the aggregate deem fair. To suggest otherwise is to suggest that you are smarter or have more insight than the market does.
Why would anybody feel that way?
In 1996, people said the market was top heavy and over valued. Look what happened the next three years.
Not only do you have to predict what will happen, you have to be right about when it happens, then be right a third time in when to undo whatever contrarian position you take.
No thanks to that. I'll go with the get rich slow path. It's worked so far and it'll keep working.
Why would anybody feel that way?
In 1996, people said the market was top heavy and over valued. Look what happened the next three years.
Not only do you have to predict what will happen, you have to be right about when it happens, then be right a third time in when to undo whatever contrarian position you take.
No thanks to that. I'll go with the get rich slow path. It's worked so far and it'll keep working.
- Sat Feb 24, 2024 8:27 am
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
For all the kids reading this market timing strategy... don't try it at home. It’s NOT a market timing strategy. Stocks can go up at a very high annual return from here for the next ten years. I am not timing the market by tilting away from Mag 7 stocks. Reducing concentration risk by diversifying is NOT timing the market. What you're doing is the definition of market timing. Also, you are reducing diversification, getting more diversified. How is diversifying the same as market timing? Bogleheads promote diversification by adding bonds and international stocks. I want to diversify by reducing concentration within the S&P 500. I disagree that what you're doing is diversification. If the market was two stocks, Amazon and Buffalo Wild Wi...
- Sat Feb 24, 2024 7:59 am
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
With respect, incorrectly.smartinvestor2020 wrote: ↑Sat Feb 24, 2024 7:55 amI don’t predict the market. I only interpret what has been written about CAPE.exodusing wrote: ↑Sat Feb 24, 2024 7:47 amWhat's the difference between a belief about the next 10 years' returns and a prediction of the next 10 years' returns? A prediction is what someone believes will happen.smartinvestor2020 wrote: ↑Sat Feb 24, 2024 7:41 amA belief based on CAPE data, is not a prediction.
CAPE has been a good predictor if you believe the information.
I don’t predict markets or future returns.
CAPE has not been a good predictor if you're using data available in real time, as ably demonstrated by Homer and others.
- Sat Feb 24, 2024 7:48 am
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
It's been a bad predictor of returns. Did you digest any of the posts that Homer made?smartinvestor2020 wrote: ↑Sat Feb 24, 2024 7:41 amA belief based on CAPE data, is not a prediction.
CAPE has been a good predictor if you believe the information.
- Sat Feb 24, 2024 5:29 am
- Forum: Personal Investments
- Topic: Heavy Value Tilt Away from Mag 7 stocks
- Replies: 221
- Views: 14192
Re: Heavy Value Tilt Away from Mag 7 stocks
https://www.advisorperspectives.com/articles/2020/07/20/the-remarkable-accuracy-of-cape-as-a-predictor-of-returns-1 See, here's what I'm trying to say... See that chart in the website above? It shows pretty high returns around CAPE of 25, because it includes all the years from 1996-2020 that had decent returns with a CAPE of 25. But in 1996, there was only one data point for CAPE of 25, and it was BAD. The chart from 1996 was COMPLETELY different. The best-fit line hit 0% real returns at a CAPE of 25. Which is why Shiller predicted 0% 10-year real returns. The chart today shows 10-year returns in the 8% range (not sure if that's nominal or real) The slope of the line was completely different in the past.. Even in 2012, the slope of the lin...
- Fri Feb 23, 2024 8:39 pm
- Forum: Investing - Theory, News & General
- Topic: How to balance VTSAX?
- Replies: 22
- Views: 3043
Re: How to balance VTSAX?
You said, much more succinctly and effectively, what I tried to say above.UpperNwGuy wrote: ↑Fri Feb 23, 2024 7:51 pm VTSAX didn't change. Morningstar changed their label for VTSAX. Ignore Morningstar.
- Fri Feb 23, 2024 7:47 pm
- Forum: Investing - Theory, News & General
- Topic: How to balance VTSAX?
- Replies: 22
- Views: 3043
Re: How to balance VTSAX?
You're looking at this wrong. VTSAX is the U.S. market. Growth and value are arbitrary labels. The market is the market. It's neutral. It's totally balanced and always will be when the benchmark is the market.
If you wish to tilt away from the market, the logical choice is a small cap value holding.
If you wish to tilt away from the market, the logical choice is a small cap value holding.
- Fri Feb 23, 2024 4:56 pm
- Forum: Personal Finance (Not Investing)
- Topic: 0% 60 month Car loan in todays 5% Savings Environment
- Replies: 43
- Views: 4526
Re: 0% 60 month Car loan in todays 5% Savings Environment
What is your question, exactly?
- Fri Feb 23, 2024 4:02 pm
- Forum: Personal Investments
- Topic: Diversification means always having to say you’re sorry.
- Replies: 62
- Views: 7372
Re: Diversification means always having to say you’re sorry.
Please explain where the logic is wrong from (A) to (D)? When you rebalance back to a set asset allocation, you sell something that has grown at a higher rate in order to buy something that has grown at a smaller rate. Less growth doesn't necessarily make something cheaper, although sometimes both things might be true at the same time. For the long term, stock may grow at a higher rate than the bond. But, that may not be true in the short term with oscillation. Especially not true for the period like July 2020 t0 July 2023. Essentially, the stock just oscillate and back to the same level in that period. And, this may not have to do with rebalancing either. Someone is contributing into their 60/40 portfolio. They just buy whatever is under ...
- Fri Feb 23, 2024 9:23 am
- Forum: Personal Investments
- Topic: Diversification means always having to say you’re sorry.
- Replies: 62
- Views: 7372
Re: Diversification means always having to say you’re sorry.
I did not contradict myself. You just like to argue. I asked you if stocks are on sale all the time. You think that they're always on sale, which contradicts your earlier post saying that they're sometimes on sale. Triple digit golfer, "I asked you if stocks are on sale all the time. You think that they're always on sale, which contradicts your earlier post saying that they're sometimes on sale." A) I do not need the stock to be on sale all the time. B) In fact, in order to buy low and sell high, the stock has to oscillate with high and low. "You think that they're always on sale, which contradicts your earlier post saying that they're sometimes on sale." C) I never stated that they are always on sale. D) With 60/40 por...
- Fri Feb 23, 2024 7:35 am
- Forum: Personal Investments
- Topic: Diversification means always having to say you’re sorry.
- Replies: 62
- Views: 7372
Re: Diversification means always having to say you’re sorry.
Triple digit golfer, Only if you believe that the stock market does not oscillate. It only goes straight up. Is that what you believed? "Stocks are expected to outperform bonds. " But, even if that is true in the real world, it does not goes straight up. It oscillates. Hence, the opportunity to buy low and sell high. KlangFool Of course they oscillate. So do bonds. If stocks perform better than bonds over one's holding period, then bonds weren't on sale. I know what's next. The coming recession and so on. You have to survive to succeed. What if you have to sell depressed stocks. Hold 3 years of cash. I get it. But the fact is, most investors' holding periods see stocks outperforming bonds and therefore, calling bonds a sale is no...
- Fri Feb 23, 2024 6:36 am
- Forum: Personal Investments
- Topic: Diversification means always having to say you’re sorry.
- Replies: 62
- Views: 7372
Re: Diversification means always having to say you’re sorry.
OP, No. Diversification means that you are always buying something on sale. Buy Low and Sell High is a very good thing. Diversification doesn't mean you're always buying something on sale. Triple digit golfer, Only if you believe that the stock market does not oscillate. It only goes straight up. Is that what you believed? "Stocks are expected to outperform bonds. " But, even if that is true in the real world, it does not goes straight up. It oscillates. Hence, the opportunity to buy low and sell high. KlangFool Of course they oscillate. So do bonds. If stocks perform better than bonds over one's holding period, then bonds weren't on sale. I know what's next. The coming recession and so on. You have to survive to succeed. What if...
- Thu Feb 22, 2024 9:50 pm
- Forum: Personal Investments
- Topic: Diversification means always having to say you’re sorry.
- Replies: 62
- Views: 7372
Re: Diversification means always having to say you’re sorry.
OP, No. Diversification means that you are always buying something on sale. Buy Low and Sell High is a very good thing. Diversification doesn't mean you're always buying something on sale. Triple digit golfer, Only if you believe that the stock market does not oscillate. It only goes straight up. Is that what you believed? "Stocks are expected to outperform bonds. " But, even if that is true in the real world, it does not goes straight up. It oscillates. Hence, the opportunity to buy low and sell high. KlangFool Of course they oscillate. So do bonds. If stocks perform better than bonds over one's holding period, then bonds weren't on sale. I know what's next. The coming recession and so on. You have to survive to succeed. What if...
- Thu Feb 22, 2024 8:34 pm
- Forum: Personal Investments
- Topic: Diversification means always having to say you’re sorry.
- Replies: 62
- Views: 7372
Re: Diversification means always having to say you’re sorry.
Diversification doesn't mean you're always buying something on sale.
Stocks are expected to outperform bonds. If stocks are over allocated and you buy bonds, it doesn't mean that bonds are on sale. What does "on sale" even mean in this context? It implies a good value. Just because stocks are high doesn't mean that bonds are a good value. They are independent of one another.
Stocks will likely outperform those bonds that were on sale, so what exactly made it a sale for bonds? If the stocks outperform, doesn't it mean that the stocks were on sale?
Diversification is risk-management, nothing more.
- Thu Feb 22, 2024 11:51 am
- Forum: Personal Investments
- Topic: 401k fund choices (make sure you're sitting down)
- Replies: 32
- Views: 2933
Re: 401k fund choices (make sure you're sitting down)
I agree.toddthebod wrote: ↑Thu Feb 22, 2024 11:25 am Assuming you aren't 100% equities, I would put your fixed income in this account. Lower expected growth means less fees!
I wouldn't give up the tax deferral. I'd use the 401(k).
- Thu Feb 22, 2024 11:30 am
- Forum: Investing - Theory, News & General
- Topic: Contributions to AA vs. lagging asset
- Replies: 45
- Views: 2519
Re: Contributions to AA vs. lagging asset
mikejuss wrote: ↑Thu Feb 22, 2024 11:22 amYour recession-era self is going to thank you.Triple digit golfer wrote: ↑Thu Feb 22, 2024 11:18 am Thank you all for your comments.
Just purchased $2,000 of bonds today!
- Thu Feb 22, 2024 11:18 am
- Forum: Investing - Theory, News & General
- Topic: Contributions to AA vs. lagging asset
- Replies: 45
- Views: 2519
Re: Contributions to AA vs. lagging asset
Thank you all for your comments.
Just purchased $2,000 of bonds today!
Just purchased $2,000 of bonds today!
- Wed Feb 21, 2024 5:48 pm
- Forum: Personal Finance (Not Investing)
- Topic: Paying off credit card debt
- Replies: 31
- Views: 3181
Re: Paying off credit card debt
I totally agree with the Ramsey approach.delamer wrote: ↑Wed Feb 21, 2024 3:18 pm Have you looked into the debt snowball or debt avalanche method, both discussed here: https://www.ramseysolutions.com/debt/ho ... thod-works
If your friend is still using the cards with balances, s/he needs to stop adding to that debt be uase that’s adding interest. Go cash or get a new card that’s paid off every month.
Consolidating is just putting out the fire and lighting another one. Your friend needs to be disciplined and stop the debt habit, and the debt snowball is the best solution I've seen for this.
- Wed Feb 21, 2024 10:45 am
- Forum: Investing - Theory, News & General
- Topic: Contributions to AA vs. lagging asset
- Replies: 45
- Views: 2519
Re: Contributions to AA vs. lagging asset
Why do you assume that I think it's a problem? I was wondering what the practical differences are in two different approaches to contributions. See my above post about strategy and tactics. A practical difference may be the inconvenience of making constant changes to one's investment amounts. The company I worked for has a 401(K) plan and I could specify that automated contributions be done in a way to maintain, as much as possible, the desired AA. If I didn't have that option, I would select a constant contribution stock/bond ratio and do some periodic rebalancing. This has no tax consequences in a 401(k). I like your post. Good points. My tactic at the moment is to contribute to bonds because they are the "under allocated asset.&quo...
- Wed Feb 21, 2024 10:43 am
- Forum: Investing - Theory, News & General
- Topic: Contributions to AA vs. lagging asset
- Replies: 45
- Views: 2519
Re: Contributions to AA vs. lagging asset
Sure, I'll get right on that.KlangFool wrote: ↑Wed Feb 21, 2024 10:32 amThen, don't use the word: lagging. It has some implicit meaning. Try using a neutral word like under allocated asset.Triple digit golfer wrote: ↑Wed Feb 21, 2024 10:21 amWhy do you assume that I think it's a problem? I was wondering what the practical differences are in two different approaches to contributions.KlangFool wrote: ↑Wed Feb 21, 2024 9:40 amThen, what is the problem of buying current lagging asset: bond?Triple digit golfer wrote: ↑Wed Feb 21, 2024 8:18 amI absolutely do not believe that stocks can only go up.
KlangFool
KlangFool
- Wed Feb 21, 2024 10:21 am
- Forum: Investing - Theory, News & General
- Topic: Contributions to AA vs. lagging asset
- Replies: 45
- Views: 2519
Re: Contributions to AA vs. lagging asset
Why do you assume that I think it's a problem? I was wondering what the practical differences are in two different approaches to contributions.KlangFool wrote: ↑Wed Feb 21, 2024 9:40 amThen, what is the problem of buying current lagging asset: bond?Triple digit golfer wrote: ↑Wed Feb 21, 2024 8:18 amI absolutely do not believe that stocks can only go up.KlangFool wrote: ↑Wed Feb 21, 2024 7:20 amI disagreed. I believe that OP has a mistaken belief that stock can only go up. And, that will be fixed in the coming recession.TimeIsYourFriend wrote: ↑Wed Feb 21, 2024 7:05 am If you can tolerate equities straying from your designated allocation, then you should be at the level all the time anyway.
It is easy to tolerate stock going up. It is much harder when it crashes and stay down for a very long time.
KlangFool
KlangFool
- Wed Feb 21, 2024 8:19 am
- Forum: Investing - Theory, News & General
- Topic: Contributions to AA vs. lagging asset
- Replies: 45
- Views: 2519
Re: Contributions to AA vs. lagging asset
This little, probably nonconsequential conundrum always bugs me a little bit. I have traditionally, to the extent I reasonably can, directed contributions to the lagging asset. As stocks have taken off over the past several months, I've made almost no contributions to equities. Had I been contributing per my AA (80/20), perhaps I'd be at a point now where I'm close to rebalancing. Hard to say and I don't care to do the math. But instead, I'm only about 1 point ahead on equities. If equities go on a 4-5 year run, as they often do, are people really contributing nothing to them the entire time? Is it more ideal to contribute per AA, then rebalance and take the equity gains? Are the answers to my questions just a matter of a very slightly mor...
- Wed Feb 21, 2024 8:18 am
- Forum: Investing - Theory, News & General
- Topic: Contributions to AA vs. lagging asset
- Replies: 45
- Views: 2519
Re: Contributions to AA vs. lagging asset
I absolutely do not believe that stocks can only go up.KlangFool wrote: ↑Wed Feb 21, 2024 7:20 amI disagreed. I believe that OP has a mistaken belief that stock can only go up. And, that will be fixed in the coming recession.TimeIsYourFriend wrote: ↑Wed Feb 21, 2024 7:05 am If you can tolerate equities straying from your designated allocation, then you should be at the level all the time anyway.
It is easy to tolerate stock going up. It is much harder when it crashes and stay down for a very long time.
KlangFool