Search found 409 matches

by SovereignInvestor
Sun Nov 10, 2019 8:32 am
Forum: Personal Finance (Not Investing)
Topic: Refinance Rental Property? What do you think?
Replies: 5
Views: 530

Re: Refinance Rental Property? What do you think?

So you're saving about 0.9% per year in interest, and it will cost 2 points plus the $9000 which is about 4.5 points of new loan, so saving 0.9% annually for a initial cost of about 6.5% of the initial loan (roughly, from 2 points plus $9000/$198K). Therefore ballparking, the breakeven is 6.5 divide...
by SovereignInvestor
Thu Oct 17, 2019 4:44 pm
Forum: Personal Investments
Topic: Where to Put "Extra" Taxable Savings
Replies: 28
Views: 3365

Re: Where to Put "Extra" Taxable Savings

I buy ultra short term investment grade bond ETFs. Tickers are ICSH and ULST. Yields are in the 2.3% to 2.4% range. Essentially no duration risk since they're short term and it's all IG paper which has tiny default rate over such a short period. 50bps or so higher than most money markets..worth it t...
by SovereignInvestor
Thu Oct 17, 2019 8:03 am
Forum: Investing - Theory, News & General
Topic: John Bogle’s formula says 1% real stock returns likely over next decade
Replies: 187
Views: 19741

Re: John Bogle’s formula says 1% real stock returns likely over next decade

I'm loving all the people banging on about chi squared tests and how 'CAPE is unimportant' :-) :-) https://i.ibb.co/XVG4yPh/Screen-Shot-2019-10-10-at-08-18-41.png It looks like a fairly useful correlation to me... Why don't you actually look at the numbers on that chart. Look at 1929 or the entire ...
by SovereignInvestor
Wed Oct 16, 2019 5:25 pm
Forum: Personal Investments
Topic: Cash basically sitting uninvested. What to do?
Replies: 40
Views: 3630

Re: Cash basically sitting uninvested. What to do?

What recession? Leading economic indicators just made new all time highs. There's never been a post 1960 recession without them dropping for many months before recession. They just busted to new high for July and the fed has been cutting since then. Consumer debt service ratio is lowest in over 35 y...
by SovereignInvestor
Wed Oct 16, 2019 5:18 pm
Forum: Personal Finance (Not Investing)
Topic: Offered 18-Month, 0% interest loan w/2% fee. Should I take the loan and invest or pass on the offer?
Replies: 72
Views: 5217

Re: Offered 18-Month, 0% interest loan w/2% fee. Should I take the loan and invest or pass on the offer?

If one wanted to lever stock investments best way is deep ITM call options on SPX. It is implicitly borrowing at risk free rate to buy stock. I like the way you think. I recently looked into this, and it appears that SPX call options do not pay dividends. So, it'll be a no from me. Option traders k...
by SovereignInvestor
Fri Oct 11, 2019 9:38 pm
Forum: Personal Finance (Not Investing)
Topic: Offered 18-Month, 0% interest loan w/2% fee. Should I take the loan and invest or pass on the offer?
Replies: 72
Views: 5217

Re: Offered 18-Month, 0% interest loan w/2% fee. Should I take the loan and invest or pass on the offer?

If one wanted to lever stock investments best way is deep ITM call options on SPX. It is implicitly borrowing at risk free rate to buy stock.
by SovereignInvestor
Fri Oct 11, 2019 9:14 am
Forum: Investing - Theory, News & General
Topic: John Bogle’s formula says 1% real stock returns likely over next decade
Replies: 187
Views: 19741

Re: John Bogle’s formula says 1% real stock returns likely over next decade

The data points have serial correlation so there is much less data than indicated by the graph. There are very few unique 10 year periods that would allow one to fully avoid autocorrelation issues. Sure. Nobody should be arguing that a general law is demonstrated and completely parameterized. But t...
by SovereignInvestor
Fri Oct 11, 2019 7:10 am
Forum: Investing - Theory, News & General
Topic: John Bogle’s formula says 1% real stock returns likely over next decade
Replies: 187
Views: 19741

Re: John Bogle’s formula says 1% real stock returns likely over next decade

I'm loving all the people banging on about chi squared tests and how 'CAPE is unimportant' :-) :-) https://i.ibb.co/XVG4yPh/Screen-Shot-2019-10-10-at-08-18-41.png It looks like a fairly useful correlation to me... Here's the one without CAPE I've been alluding to. It is just the ratio of US stocks ...
by SovereignInvestor
Thu Oct 10, 2019 6:22 am
Forum: Investing - Theory, News & General
Topic: John Bogle’s formula says 1% real stock returns likely over next decade
Replies: 187
Views: 19741

Re: John Bogle’s formula says 1% real stock returns likely over next decade

I'm loving all the people banging on about chi squared tests and how 'CAPE is unimportant' :-) :-) https://i.ibb.co/XVG4yPh/Screen-Shot-2019-10-10-at-08-18-41.png It looks like a fairly useful correlation to me... As one of the staunchest CAPE opponents who has written about its flaws not adjusting...
by SovereignInvestor
Thu Oct 10, 2019 6:18 am
Forum: Investing - Theory, News & General
Topic: John Bogle’s formula says 1% real stock returns likely over next decade
Replies: 187
Views: 19741

Re: John Bogle’s formula says 1% real stock returns likely over next decade

As I understand his reasoning, he uses CAPE because he's trying to extrapolate a decade into the future. Extrapolating 10 years using a single previous year's P/E is kind of brave. Hence use the CAPE because it's an average that reveals the trend . This simply isn't true. Using the previous year's ...
by SovereignInvestor
Wed Oct 09, 2019 10:10 pm
Forum: Investing - Theory, News & General
Topic: John Bogle’s formula says 1% real stock returns likely over next decade
Replies: 187
Views: 19741

Re: John Bogle’s formula says 1% real stock returns likely over next decade

(Not that CAPE even matters for the formula calculation) As I understand his reasoning, he uses CAPE because he's trying to extrapolate a decade into the future. Extrapolating 10 years using a single previous year's P/E is kind of brave. Hence use the CAPE because it's an average that reveals the t...
by SovereignInvestor
Wed Oct 09, 2019 7:36 pm
Forum: Investing - Theory, News & General
Topic: John Bogle’s formula says 1% real stock returns likely over next decade
Replies: 187
Views: 19741

Re: John Bogle’s formula says 1% real stock returns likely over next decade

CAPE has been elevated since 1990s, because of buybacks. The market doesn't care about CAPE, it cares about future earnings. Buybacks allow future EPS to be greater, much more than older years. IT's sort of like inflation...inflation also allows future earnings to be much more than older years....CA...
by SovereignInvestor
Wed Oct 09, 2019 5:41 pm
Forum: Investing - Theory, News & General
Topic: John Bogle’s formula says 1% real stock returns likely over next decade
Replies: 187
Views: 19741

Re: John Bogle’s formula says 1% real stock returns likely over next decade

These predictions appear so so low and seem so punitive for stocks First the buyback run rate is about 3.0% of market cap and has been last decade and buybacks and dividends are less than 100% of cash flow so its sustainable. And even assuming 0.5%/year dilution that's 2.5% net buyback yield. So if ...
by SovereignInvestor
Wed Oct 02, 2019 7:59 am
Forum: Investing - Theory, News & General
Topic: TD Ameritrade Introduces $0 Commissions for Online Stock, ETF and Option Trades
Replies: 49
Views: 5379

Re: TD Ameritrade Introduces $0 Commissions for Online Stock, ETF and Option Trades

Nothing is free.  They likely will sell orders to Citadel etc. to fill them. So you get worse fill.

Obvious if you use market order but even if you use limit of the market is at your limit price and it doesn't fill you have to adjust limit unfavorably to get fill which still let's them skim.
by SovereignInvestor
Sat Sep 28, 2019 12:09 pm
Forum: Investing - Theory, News & General
Topic: Interactive Brokers (Best Kept Secret)
Replies: 176
Views: 51247

Re: Interactive Brokers (Best Kept Secret)

Yes the interest rates for margin and lending are lower than normal IBKR. IMO not an issue .with commission free trades if I want the same interest rate I'd just buy short term ETF like BIL for $0 commission. It's higher yield than IB normal rate of 50bps below FFR. If one needs margin that's a sepa...
by SovereignInvestor
Wed Sep 25, 2019 7:48 am
Forum: Personal Investments
Topic: Currently invested in 100% stock
Replies: 130
Views: 13879

Re: Currently invested in 100% stock

It's my only useful tip I feel I offer to this forum. Since stocks have always outperformed bonds and since stocks have hit a high at least every seven years since 1950.... Don't even think about fixed income till 10 years or less from retirement and buy your fixed income on a market high somewhere...
by SovereignInvestor
Thu Sep 12, 2019 11:01 am
Forum: Investing - Theory, News & General
Topic: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns
Replies: 14
Views: 800

Re: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns

BNY uses 2.6% as total US yield for its assumptions. The buyback + dividend yield averaged over 5% since 2010. Seems like they are way way too low there. Possibly, though I tend to agree with them that the earnings yield over the past decade is not likely to prove sustainable. It's certainly been w...
by SovereignInvestor
Thu Sep 12, 2019 7:13 am
Forum: Investing - Theory, News & General
Topic: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns
Replies: 14
Views: 800

Re: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns

Do you know how they explicitly incorporate this into their forecasts & the magnitude of the changes from a raw valuation model would be. TIA. Unfortunately, it all boils down to who "they" are. Every firm that publishes market forecasts has their own methodology, and you'd need to go through the d...
by SovereignInvestor
Wed Sep 11, 2019 8:45 pm
Forum: Personal Investments
Topic: Too Late To Get Back Into Stocks?
Replies: 115
Views: 9843

Re: Too Late To Get Back Into Stocks?

Comments are appreciated. "Settled" to me means the removal of all Trump tariffs on imported goods, which may not occur until #46 gets sworn in. I've used the VG asset allocation questionnaires and generally I tend to follow them, perhaps a bit more conservatively than recommended. I'm just very wa...
by SovereignInvestor
Sat Sep 07, 2019 8:42 am
Forum: Investing - Theory, News & General
Topic: Why an S&P 500 P/E multiple of 25x is reasonable
Replies: 12
Views: 1797

Re: Why an S&P 500 P/E multiple of 25x is reasonable

Agree the current 16-17x forward PE seems too low given rates. Not sure if 25 is a but high. Maybe 20. The SPX traded at 20 minus 10Y yield for most of late 1970s until 1995 when it surged unto bubble through 2000 to 25 PE as 10Y yield was 6% Then it crashed down to 10 PE by 2011 when 10Y was under ...
by SovereignInvestor
Wed Sep 04, 2019 5:01 pm
Forum: Personal Finance (Not Investing)
Topic: Paying off mortgage early - am I thinking about this right?
Replies: 127
Views: 11243

Re: Paying off mortgage early - am I thinking about this right?

Many goood points on both sides which is why those saying non absolutes may be spot on. PartI ally pay off mortgage and keep some cash perhaps. HELOCS can be cut in a crisis as others have mentioned I prefer the mortgage because it's not the debt that's issue it's cash flow that affects our lives as...
by SovereignInvestor
Tue Sep 03, 2019 4:56 pm
Forum: Personal Consumer Issues
Topic: Long Island NY housing
Replies: 55
Views: 4620

Re: Long Island NY housing

Nassau County was rated as safest in NY state due to low crime. Yes, the county is also bankrupt. Low crime is relative, there are some parts of Nassau County that a rational person would avoid at all hours of the day. Yes but isn't every county like that. The fact that there are very bad areas in ...
by SovereignInvestor
Tue Sep 03, 2019 7:59 am
Forum: Personal Consumer Issues
Topic: Long Island NY housing
Replies: 55
Views: 4620

Re: Long Island NY housing

Nassau County was rated as safest in NY state due to low crime.
by SovereignInvestor
Mon Sep 02, 2019 1:13 pm
Forum: Investing - Theory, News & General
Topic: US long term future (and bond rates): Japanese trajectory?
Replies: 27
Views: 2259

Re: US long term future (and bond rates): Japanese trajectory?

Great scatter plot. Very interesting. Once a country is deemed developed and stable it seems like demographics and Nominal GDP growth have more a play in government bond yields than credit. Greek Bond yields are lower than US ones. Italian ones are very low too and the ratings for those countries ar...
by SovereignInvestor
Mon Sep 02, 2019 8:27 am
Forum: Investing - Theory, News & General
Topic: US long term future (and bond rates): Japanese trajectory?
Replies: 27
Views: 2259

Re: US long term future (and bond rates): Japanese trajectory?

Applaud the people who cite demographics. The US is not japan. Japan has working age population decline well over 1% annually since 2000 and it will go near 2.0%/ year soon. EU is in decline and China will see decline within decade from 1 child policy. In US it is projected at about 0.5%/year workin...
by SovereignInvestor
Mon Sep 02, 2019 8:20 am
Forum: Personal Investments
Topic: Young people with good earnings and still want to work do 100 equities
Replies: 44
Views: 4726

Re: Young people with good earnings and still want to work do 100 equities

So say you are 25 and "relax" for the next 30 years at 100% equities. Then in your early 50's the market tanks and you lose your job. That is what happened to many of my co workers in 2008-9. Those great retirement dreams were gone. The company almost went under and put their pension and health ins...
by SovereignInvestor
Mon Sep 02, 2019 8:15 am
Forum: Personal Investments
Topic: Young people with good earnings and still want to work do 100 equities
Replies: 44
Views: 4726

Re: Young people with good earnings and still want to work do 100 equities

based on backtesting, 100% stocks is actually less efficient then adding 25% bonds to the mix (Bengen and Trinity). You are loosing the opportunity to re-balance for one, you are loosing out on bond income to invest when the market crashes for second (and currently not applicable given the lousy bo...
by SovereignInvestor
Fri Aug 30, 2019 7:53 pm
Forum: Investing - Theory, News & General
Topic: Japan and PE Ratio
Replies: 45
Views: 3677

Re: Japan and PE Ratio

No need to be rude. If U.S. CAPE is not reliable, then any comparison with other countries' CAPE ratios may not be reliable. No need to even address other countries' CAPE. Beyond that, it is well known that the increasing interest in buybacks is unique to the U.S. market and may explain the differe...
by SovereignInvestor
Thu Aug 29, 2019 9:35 am
Forum: Investing - Theory, News & General
Topic: Japan and PE Ratio
Replies: 45
Views: 3677

Re: Japan and PE Ratio

CAPE has serious issues: 1) IT will be greater when there's buybacks since it allows inflation adjusted EPS to grow faster than without buybacks So Comparing post 2000 readings to pre 1990 readings when buybacks barely existed has a bias issue. 2) CAPE relies on adjusting 10 years of EPS to present...
by SovereignInvestor
Thu Aug 29, 2019 8:16 am
Forum: Investing - Theory, News & General
Topic: Japan and PE Ratio
Replies: 45
Views: 3677

Re: Japan and PE Ratio

Barclays has CAPE data for Japan and the US going back to 1981, along with about 25 other countries: https://shiller.barclays.com/SM/12/en/indices/static/historic-ratios.app Japan had two periods (late 1980s and early to mid-2000s) where their CAPE ratios were in the 70-90 range. These high reading...
by SovereignInvestor
Wed Aug 28, 2019 7:03 pm
Forum: Investing - Theory, News & General
Topic: Japan and PE Ratio
Replies: 45
Views: 3677

Re: Japan and PE Ratio

In 1989 the Nikkei was at over 50x forward PE..while someone could have bought government long bonds and got over 5% yields. That's a mega bubble. Also anyone with birth statistics would have seen a decline in population coming within a decade so growth would come to a halt and deflationary forces ...
by SovereignInvestor
Wed Aug 28, 2019 4:59 pm
Forum: Investing - Theory, News & General
Topic: Japan and PE Ratio
Replies: 45
Views: 3677

Re: Japan and PE Ratio

In 1989 the Nikkei was at over 50x forward PE..while someone could have bought government long bonds and got over 5% yields. That's a mega bubble. Also anyone with birth statistics would have seen a decline in population coming within a decade so growth would come to a halt and deflationary forces p...
by SovereignInvestor
Thu Aug 22, 2019 5:29 pm
Forum: Personal Finance (Not Investing)
Topic: Prepare for Recession?
Replies: 74
Views: 10468

Re: Prepare for Recession?

Conference board leading economic index just printed a fresh clean new high for July.

What recession?
by SovereignInvestor
Wed Aug 21, 2019 3:24 pm
Forum: Investing - Theory, News & General
Topic: Bond appreciation is impossible without market timing.
Replies: 94
Views: 5975

Re: Bond growth is impossible without market timing.

Well usually during normal sloping yield curve bonds.will produce capital gains slowly over time if rates don't move. As one holds longer term bonds and they get closer to maturity a normal yield curve slope indicates their yields should drop and prices rise subtly. But this is tiny effect usually d...
by SovereignInvestor
Wed Aug 21, 2019 12:06 pm
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 204
Views: 12523

Re: Why do dividends still exist?

Capital gains are more tax efficient than dividends in the US. Presumably, that is why Berkshire Hathaway doesn’t generate dividends. So, why do any US companies still provide shareholders with dividends? Is it some sort of tax-inefficient budgeting tool for investors? EDIT: I guess my follow up qu...
by SovereignInvestor
Wed Aug 21, 2019 11:52 am
Forum: Investing - Theory, News & General
Topic: Preferred Stock
Replies: 27
Views: 1730

Re: Preferred Stock

I have bought baby bonds/preferreds on secondary stock exchange that yield a full point higher than the normally placed bonds that institutions would buy, same maturity, coupon, and same lien standing . You bet there are inefficiencies! Normal placements institutions can probably take $5m-$10M ppist...
by SovereignInvestor
Wed Aug 21, 2019 11:49 am
Forum: Investing - Theory, News & General
Topic: Preferred Stock
Replies: 27
Views: 1730

Re: Preferred Stock

They are less risky than stocks. Preferred shares crushed stocks from 1999 to 2013. That's really not a helpful subset of time. You take common stocks from their all time high (US has passed its previous high, many other indices have not). Then you compare it to a hybrid instrument (bond and equity...
by SovereignInvestor
Wed Aug 21, 2019 11:13 am
Forum: Investing - Theory, News & General
Topic: Preferred Stock
Replies: 27
Views: 1730

Re: Preferred Stock

Absolutely yes. They market tends to be less.liquid so there's more inefficiencies since large institutions cannot take big positions often. IMO only sophisticated investors should be here who understand risk and can diversify and capitalize off inefficiencies. I created a basket of 10-20 preferred ...
by SovereignInvestor
Tue Aug 20, 2019 4:26 pm
Forum: Personal Investments
Topic: Cd instead of bonds
Replies: 21
Views: 2309

Re: Cd instead of bonds

A bond index fund has a chance for increased total return over just yield because of capital gains. For instance, the Vanguard Total US Bond Index fund has a total return from January 1, 2019 through yesterday of 8.55%. What CD would have paid you 8.55% for holding it 8.5 months? . Even if the bond...
by SovereignInvestor
Tue Aug 20, 2019 11:52 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 204
Views: 12523

Re: Why do dividends still exist?

WB likes divisends for reasons that largely don't apply to BH's. Once again, I would like a cite for that. For while what you say is true for dividends, it is even truer for earnings. And whenever he talks about a company it is always about its earnings and the quality of those earnings. Dividends,...
by SovereignInvestor
Tue Aug 20, 2019 8:42 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 204
Views: 12523

Re: Why do dividends still exist?

WB likes divisends for reasons that largely don't apply to BH's. 1) He pays near 0 tax on them since for most of his holdings where he owns big stakes the dividends are taxed at around 5%. 2) He has and believes he can beat the market. So he would rather have the cash flow from stocks he owns (while...
by SovereignInvestor
Tue Aug 20, 2019 7:48 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 204
Views: 12523

Re: Why do dividends still exist?

Also, it shows that the combo of buybacks and dividends has not kept up with share price (speculative return): It does not show that. As the discount rate falls - see sub 2% 10 year treasuries- the value of future free cash flows increase. There are a couple of models out there. My favorite one is ...
by SovereignInvestor
Tue Aug 20, 2019 7:46 am
Forum: Investing - Theory, News & General
Topic: If you think oil prices will drop where would you invest?
Replies: 70
Views: 3863

Re: If you think oil prices will drop where would you invest?

All else equal airline stocks that havent hedged fuel costs benefit a lot from lower oil.
by SovereignInvestor
Tue Aug 20, 2019 2:00 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 204
Views: 12523

Re: Why do dividends still exist?

Buyback is the same as an auto invested dividend. If a company announces buyback for 5% of shares, then sell 5% of your stock and your in the same position. In theory the sales need to be times with the buyback. The buyback is more tax efficient because 1) If you wanted to reinvest dividends then bu...
by SovereignInvestor
Tue Aug 20, 2019 2:00 am
Forum: Investing - Theory, News & General
Topic: Why do dividends still exist?
Replies: 204
Views: 12523

Re: Why do dividends still exist?

Buyback is the same as an auto invested dividend. If a company announces buyback for 5% of shares, then sell 5% of your stock and your in the same position. In theory the sales need to be times with the buyback. The buyback is more tax efficient because 1) If you wanted to reinvest dividends then bu...
by SovereignInvestor
Fri Aug 16, 2019 2:43 pm
Forum: Investing - Theory, News & General
Topic: When should I invest on Vanguard margin?
Replies: 24
Views: 2640

Re: When should I invest on Vanguard margin?

Generally even IB margin is foolish. Options are priced such that they imply borrowing at the risk free rate. If one wants leveraged long position buy deep ITM call options same great leverage but limited downside and implied borrowing at risk free rate.
by SovereignInvestor
Wed Aug 14, 2019 12:37 pm
Forum: Investing - Theory, News & General
Topic: Rent and invest the difference?
Replies: 15
Views: 1000

Re: Rent and invest the difference?

Can't compare stock returns to just RE appreciation, because RE has implied yield from the saving on home expenses versus Rent. But adjusting for this Stock market often outperforms RE, unless one levers a lot with RE. Renting and investing difference is good strategy--the benefit too is when stock ...
by SovereignInvestor
Wed Aug 14, 2019 12:15 pm
Forum: Investing - Theory, News & General
Topic: Domestic returns next 10 years
Replies: 45
Views: 3164

Re: Domestic returns next 10 years

No one knows what valuation multiples will be in the future, but I do think, one can predict the underlying fundementals to some extent. That is returns at the same multiple should equal: Dividends + Inflation + GDP = Total return. So assuming 1.8% dividends, 2% inflation, and 2.5% GDP total is 6.3...
by SovereignInvestor
Wed Aug 14, 2019 6:59 am
Forum: Investing - Theory, News & General
Topic: Treasury 2-10 year yield curve has inverted!
Replies: 115
Views: 10873

Re: Treasury 2-10 year yield curve has inverted!

https://www.cnbc.com/bonds/ As of this post, 2Y yield is higher than 10Y yield. The data cited is from daily closes, but intraday it currently inverted. I think this is overrated, since most historical data is from monthly averages, and with Fed cutting the 2Y can move a lot lower before end of mont...