Search found 583 matches

by SovereignInvestor
Fri Jul 03, 2020 9:21 am
Forum: Investing - Theory, News & General
Topic: Will ex-US ever revert to good performance? Or is it just a high-risk, low-reward investment?
Replies: 314
Views: 14886

Re: Will ex-US ever revert to good performance? Or is it just a high-risk, low-reward investment?

US outperformance isn't driven by solely Megacaps. Look at US mid caps and small caps. They put up great returns the last 10 years although S&P large caps have outperformed them because large caps have mega caps. International had major issue of strong dollar. Most of EU finance sector has been crus...
by SovereignInvestor
Sat Jun 27, 2020 9:42 am
Forum: Personal Finance (Not Investing)
Topic: How much umbrella insurance?
Replies: 146
Views: 7523

Re: How much umbrella insurance?

An insurer has a duty to settle below policy limit if they are able to. Otherwise the insurer is forced to pay Loss in excess of policy limit. If someone has $5M of assets and $5M umbrella and the plaintiff was willing to settle at $5M but the insurer wanted to try to defend to get case dismissed a...
by SovereignInvestor
Sat Jun 27, 2020 7:18 am
Forum: Personal Finance (Not Investing)
Topic: How much umbrella insurance?
Replies: 146
Views: 7523

Re: How much umbrella insurance?

An insurer has a duty to settle below policy limit if they are able to. Otherwise the insurer is forced to pay Loss in excess of policy limit. If someonenhas $5M of assets and $5M umbrella and the plaintiff was willing to settle at $5M but the insurer wanted to try to defend to get case dismissed an...
by SovereignInvestor
Thu May 21, 2020 10:49 pm
Forum: Investing - Theory, News & General
Topic: Who's right about the future? Stock or Bond market?
Replies: 50
Views: 4623

Re: Who's right about the future? Stock or Bond market?

My worthless opinion is that the S&P 500 should not be higher than last October, when the unemployment rate was 3.6% and there was no pandemic. Yet here we are. Perhaps people are betting that the government simply won't allow the market to crash. In which case, earnings don't really matter and yes...
by SovereignInvestor
Wed May 20, 2020 9:42 pm
Forum: Personal Investments
Topic: Hold 50% WFC.PL and 50% in BAC.PL
Replies: 9
Views: 648

Re: Hold 50% WFC.PL and 50% in BAC.PL

Writing off an entire asset class doesn't make sense. At the right prices preferred stocks are attractive. Bank preferred usually have qualified dividends and are non cumulative so they County as equity so they yield less due to favorable tax treatment. REIT and utility preferred are often more dive...
by SovereignInvestor
Thu May 14, 2020 11:51 pm
Forum: Personal Investments
Topic: Should we sell our rental?
Replies: 31
Views: 2247

Re: Should we sell our rental?

It depends how small of net worth it is. It is diversifying. For example theres talk for restrictions on buybacks or increased corporate tax rates. These are reasonable Likely headwinds for returns. 0% interest rated also hurts bond returns. Those two things can make owning stocks bad as the returns...
by SovereignInvestor
Thu May 14, 2020 11:49 pm
Forum: Personal Investments
Topic: Should we sell our rental?
Replies: 31
Views: 2247

Re: Should we sell our rental?

Yes assuming no appreciation is conservative. But it is biased to assume the home won't appreciate over 10 years but that a balanced stock portfolio will get 7%.

All else equal the environment where RE doesn't appreciate for 10 years is also likely one where stocks and bonds provide poor returns.
by SovereignInvestor
Thu May 14, 2020 6:55 pm
Forum: Personal Investments
Topic: Should we sell our rental?
Replies: 31
Views: 2247

Re: Should we sell our rental?

Rent is 65K Interest, maintenance, and taxes total 21.5K. I would exclude depreciation since it is a not a true expense since the property will appreciate. So net operating income is 43.5K per year. Also add on expected 2%/year appreciation of 19K and total gain is 62.5K. The denominator for ROE is ...
by SovereignInvestor
Wed May 13, 2020 10:17 pm
Forum: Personal Finance (Not Investing)
Topic: 30 vs 15 year mortgages in today's enviroment
Replies: 7
Views: 1140

Re: 30 vs 15 year mortgages in today's enviroment

Hello everyone, I know this question has been asked before, but I think today's low rates and possibly future inflation warrants another look. My wife and I have been thinking of mowing into a larger house. We stopped looking in March for obvious reasons, but we will resume our search once economic...
by SovereignInvestor
Tue May 12, 2020 11:53 am
Forum: Personal Finance (Not Investing)
Topic: Sell Equities and Pay off Mortgage or wait ?
Replies: 59
Views: 3114

Re: Sell Equities and Pay off Mortgage or wait ?

A little of both since no one knows future?

Take 50K to pay down mortgage immediately and invest other 50K and wait until year end or next year.

Hedging the bet and going 50/50 prevents you from making a very bad decision with 100% conviction.
by SovereignInvestor
Sun May 03, 2020 10:57 am
Forum: Investing - Theory, News & General
Topic: Preferred Stock Index Fund as replacement for Bond Index Fund?
Replies: 15
Views: 1273

Re: Preferred Stock Index Fund as replacement for Bond Index Fund?

In Ye Olde Days, almost every company that issued stock issued both common stock and preferred stock.* Preferred stock has gotten weird because of the advent of junk bonds. I forget the regulatory reasons, but companies that are allowed to, prefer to issue junk bonds rather than preferred stock, an...
by SovereignInvestor
Sun May 03, 2020 10:49 am
Forum: Investing - Theory, News & General
Topic: Preferred Stock Index Fund as replacement for Bond Index Fund?
Replies: 15
Views: 1273

Re: Preferred Stock Index Fund as replacement for Bond Index Fund?

Preferred stock are great--the issue is with the ETFs. Many of the underlying securities are not extremely liquid like stocks where one can sell billions in SPY and not tank it, with preferred stock issues, a million likely tanks most issues. So when market tanks and the ETFs drop, they sell individ...
by SovereignInvestor
Sat Apr 25, 2020 10:56 pm
Forum: Personal Finance (Not Investing)
Topic: Can I afford to move out of NYC and buy a house in the suburbs?
Replies: 36
Views: 3186

Re: Can I afford to move out of NYC and buy a house in the suburbs?

1.5M is nearly 3x your highest income in recent years, and we are just going into a likely major recession, etc. 3x is on the upper end of what this board usually suggests - just a few days ago we had someone else in a vhcol area with a very large down payment getting largely rejected to buy a home...
by SovereignInvestor
Thu Apr 23, 2020 10:56 pm
Forum: Personal Investments
Topic: Does anyone sell puts in order to force re-balancing and collect premiums?
Replies: 34
Views: 1713

Re: Does anyone sell puts in order to force re-balancing and collect premiums?

One can also sell calls on bonds too in theory. Like if they have long term treasurys, they can sell TLT out of money calls, to match duration of their risk free bonds. IF they have 20% in LT treasurys and rebalance above 22%, then selling OTM TLT calls 10% OTM would achieve this. But if done with s...
by SovereignInvestor
Sat Apr 18, 2020 3:01 pm
Forum: Personal Finance (Not Investing)
Topic: Pension vs. simply investing? Is pension even worth it at all?
Replies: 58
Views: 3714

Re: Pension vs. simply investing? Is pension even worth it at all?

The pension funds also assume 7-8% returns generally. So if the 50/50 or whatever portfolio stated have doesn't generate that high a number unless they raise taxes, the benefits would be cut. This happened in some states. It is not 100% guaranteed either. Getting 7-8% returns from a portfolio with n...
by SovereignInvestor
Thu Apr 09, 2020 7:14 am
Forum: Investing - Theory, News & General
Topic: Prospects for S&P 500 Share Buybacks
Replies: 16
Views: 1107

Re: Prospects for S&P 500 Share Buybacks

Of course they will be down, corporations only buy back their own stock when the price is already high. When price is high, they want it to go even higher so that execs can cash in their options at the highest possible price. OTOH, when the price is low, they are not going to cash in even if buy ba...
by SovereignInvestor
Wed Apr 08, 2020 6:51 am
Forum: Investing - Theory, News & General
Topic: Prospects for S&P 500 Company Dividends
Replies: 29
Views: 2017

Re: Prospects for S&P 500 Company Dividends

Just like market pricing for SPX Index call options has them using a risky discount rate since they have the same systematic risk as S&P. It uses the risk free rate, or something pretty darn close. The price is based on a no-arbitrage price. See the put-call parity. If it used a risky rate than I c...
by SovereignInvestor
Tue Apr 07, 2020 11:04 pm
Forum: Investing - Theory, News & General
Topic: Prospects for S&P 500 Company Dividends
Replies: 29
Views: 2017

Re: Prospects for S&P 500 Company Dividends

Just like market pricing for SPX Index call options has them using a risky discount rate since they have the same systematic risk as S&P. It uses the risk free rate, or something pretty darn close. The price is based on a no-arbitrage price. See the put-call parity. If it used a risky rate than I c...
by SovereignInvestor
Tue Apr 07, 2020 9:07 pm
Forum: Investing - Theory, News & General
Topic: Prospects for S&P 500 Company Dividends
Replies: 29
Views: 2017

Re: Prospects for S&P 500 Company Dividends

To prove my point. Since 1960s average annualized increase in EPS and dividends has been about 6-7%. But before this Pandemic crisis hit and market expectations were bullish (see consensus EPS growth for 2021-2022) yet the future dividend index only implied about 2% annual growth...well below histor...
by SovereignInvestor
Tue Apr 07, 2020 9:00 pm
Forum: Investing - Theory, News & General
Topic: Prospects for S&P 500 Company Dividends
Replies: 29
Views: 2017

Re: Prospects for S&P 500 Company Dividends

Dividends are correlated with the S&P and systematic risk so there is likely a risk premium in the futures that makes it so the estimate is biased low. Those future dividends are likely not discounted at a risk free rate but at a risky rate reflecting market risk premium so the interpretation that t...
by SovereignInvestor
Thu Apr 02, 2020 8:51 pm
Forum: Investing - Theory, News & General
Topic: Buy call options for locking in current low prices for future monthly contributions?
Replies: 23
Views: 1645

Re: Buy call options for locking in current low prices for future monthly contributions?

Borrowing at risk free rate then buying 100 shares of SPY and a 330 Put is the same as buying a 330 Call
by SovereignInvestor
Tue Mar 31, 2020 7:01 am
Forum: Investing - Theory, News & General
Topic: Buy call options for locking in current low prices for future monthly contributions?
Replies: 23
Views: 1645

Re: Buy call options for locking in current low prices for future monthly contributions?

Buying a call is the same as being long the index and also long put. Puts are so expensive right now (see VIX), So implied downside protection that a call offers versus basically being long in margin, that protection is basically a put, and it is super expensive right now. What do you mean a long c...
by SovereignInvestor
Sat Mar 28, 2020 10:38 pm
Forum: Investing - Theory, News & General
Topic: Buy call options for locking in current low prices for future monthly contributions?
Replies: 23
Views: 1645

Re: Buy call options for locking in current low prices for future monthly contributions?

Buying a call is the same as being long the index and also long put.

Puts are so expensive right now (see VIX), So implied downside protection that a call offers versus basically being long in margin, that protection is basically a put, and it is super expensive right now.
by SovereignInvestor
Mon Mar 23, 2020 9:24 pm
Forum: Personal Finance (Not Investing)
Topic: Receiving dividend and feeling good
Replies: 33
Views: 2685

Re: Receiving dividend and feeling good

I agree, not sure why many are against them Because you could just as easily sell 1% of your shares each quarter and it would be exactly the same as a utility yielding 4%, but for people that didn't want to + they could choose not to take the tax hit. That's pretty much all it comes down to. This i...
by SovereignInvestor
Sun Mar 15, 2020 9:55 am
Forum: US Chapters
Topic: [Archived] Bogleheads community discussion - Coronavirus
Replies: 4963
Views: 193818

Re: Bogleheads community discussion - Coronavirus

Does any one remember a Swine Flu panic ? I don't recall. Do you know how many Americans were infected in 2009-2010 with the Swine flu? I didn't know but it turns out to be 60 million people. How many were hospitalized? The answer is 274,305(range: 195,086-402,719) and nobody on any these coronavir...
by SovereignInvestor
Sun Mar 15, 2020 9:40 am
Forum: Personal Investments
Topic: Who is staying course and how are you dealing with net worth going down?
Replies: 359
Views: 26259

Re: Who is staying course and how are you dealing with net worth going down?

The stock market values discounted all futures earnings. Obviously this crisis dings 2020 EPS and maybe 2021, but does it really affected 2023, 2024,....2030, etc? Market is always very myopic. I'm pretty sure 2025 EPS will be 0% affected by this crisis, and if it is then we have more issues to worr...
by SovereignInvestor
Wed Mar 11, 2020 5:38 pm
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure Part II: The next journey
Replies: 5316
Views: 475085

Re: HEDGEFUNDIE's excellent adventure Part II: The next journey

Much of the astronomical rise in long bonds was panic hedging for banks for mortgages. Ton of refinance going on so the institutions need to go long Treasurys to hedge mortgage risk. Refinance likely peaked in terms of expectations...then there's those who rebalance who have too much bonds and not e...
by SovereignInvestor
Sun Mar 08, 2020 1:17 pm
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

https://www.ig.com/en/indices/markets-i ... all-street

dow futures showing down 2.6%, which is a tad below fridays low and 1.5% above the 2/28 low.
by SovereignInvestor
Sun Mar 08, 2020 1:15 pm
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

In january, many predicted that this was going to be a crisis. The market did not react, but some very wise people got out, before the market fully understood what was going on. (airline flights etc. were leaving china still). However in 16 -18 days in Iran and Italy, look what happened. it is hard...
by SovereignInvestor
Sun Mar 08, 2020 1:11 pm
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

It is good to have people take meaningful actions that will reduce the spread. It is not good for people to panic. The fact is many have the virus and don't have meaningful symptoms so its untracked yet they spread it. The fatality rates are overstated because of this. The 0.85% fatality rate on di...
by SovereignInvestor
Sun Mar 08, 2020 12:12 pm
Forum: US Chapters
Topic: [Archived] Bogleheads community discussion - Coronavirus
Replies: 4963
Views: 193818

Re: Coronavirus and the market

People are not panicking. A run on bottled waters and toilet papers -- no cost, common sense precautions that provide great upside should you have to stay at home for a couple of weeks -- is not panic. Governments around the world are panicking. But people in the U.S. are still, on average, pretty ...
by SovereignInvestor
Sun Mar 08, 2020 12:02 pm
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

It is good to have people take meaningful actions that will reduce the spread. It is not good for people to panic. The fact is many have the virus and don't have meaningful symptoms so its untracked yet they spread it. The fatality rates are overstated because of this. The 0.85% fatality rate on dia...
by SovereignInvestor
Sun Mar 08, 2020 11:57 am
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

watchnerd wrote:
Sun Mar 08, 2020 11:54 am
SovereignInvestor wrote:
Sun Mar 08, 2020 11:47 am

Agree, but LEI helps you know if recession is coming before. After the fact doesn't save any money.
Save money --- in what context?
Make investment decisions. Isn't that the whole point of recession forecasting?
by SovereignInvestor
Sun Mar 08, 2020 11:47 am
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

Inversion, or the yield curve is just one of 10 leading economic indicators in LEI index. Shouldn't base recession on 1 of ten. Entire 2019 housing permits and jobless claims, and S&P, 3 of 10 indicators kept firing higher. NBER doesn't call a recession until after the fact, and they use multiple i...
by SovereignInvestor
Sun Mar 08, 2020 11:33 am
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

Inversion, or the yield curve is just one of 10 leading economic indicators in LEI index. Shouldn't base recession on 1 of ten.

Entire 2019 housing permits and jobless claims, and S&P, 3 of 10 indicators kept firing higher.
by SovereignInvestor
Sun Mar 08, 2020 11:28 am
Forum: Personal Investments
Topic: Safe to Assume Long Term Stock Averages over the next 25 Years?
Replies: 15
Views: 1040

Re: Safe to Assume Long Term Stock Averages over the next 25 Years?

If we see the US head toward a Japan style recession with a slower economy where do you predict returns long term under those circumstances? Should we assume smaller future returns? I feel like the only bright side is even if the average was a 7% return on stocks and hypothetically only returns lik...
by SovereignInvestor
Sun Mar 08, 2020 11:24 am
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

Weekend website has dow futures down 2% from the close. Basically at Friday's lows
by SovereignInvestor
Sun Mar 08, 2020 9:44 am
Forum: Investing - Theory, News & General
Topic: Coronavirus and the market
Replies: 3987
Views: 303069

Re: Coronavirus and the market

+1, I’m also confident that the market has not yet priced in the economic impact that the world economy will experience from this. IMO- Equities are still very expensive, given the current and impending risks and should soon go lower, before they eventually recover. Posts saying it’s just a flu wil...
by SovereignInvestor
Sun Mar 08, 2020 8:36 am
Forum: US Chapters
Topic: [Archived] Bogleheads community discussion - Coronavirus
Replies: 4963
Views: 193818

Re: Coronavirus and the market

The fact that we have made so much progress in so little time shows how these are scientifically solvable problems. I have a slightly different take on this. It wasn't so long ago that we could not test for viral pneumonia. Had COVID-19 hit us back three decades ago, we would have not been able to ...
by SovereignInvestor
Sun Mar 08, 2020 7:17 am
Forum: Investing - Theory, News & General
Topic: Are Japan like "lost decades" possible in US and world stock market?
Replies: 82
Views: 8340

Re: Are Japan like "lost decades" possible in US and world stock market?

Japan had a forward PE of 55 in 1989 against declining demographics based on birth statistics known in 1989. They have declining work force which is why nominal GDP barely grew 15% since 2000. The US at peak 1999 was at 26x forward earnings. But at least US has and will have slightly positive work ...
by SovereignInvestor
Sat Mar 07, 2020 7:59 am
Forum: Investing - Theory, News & General
Topic: Are Japan like "lost decades" possible in US and world stock market?
Replies: 82
Views: 8340

Re: Are Japan like "lost decades" possible in US and world stock market?

Sure, it could theoretically happen anywhere anytime. Japan was a crazy bubble though. They had CAGR > 20% over forty years heading into the 90s, and a CAPE that hit 94(!) in 1989. Ludicrous speed, secure all animals in the zoo. Right. And CAPE in the U.S. was over 40 back in the year 2000, right b...
by SovereignInvestor
Sat Mar 07, 2020 7:55 am
Forum: Investing - Theory, News & General
Topic: Are Japan like "lost decades" possible in US and world stock market?
Replies: 82
Views: 8340

Re: Are Japan like "lost decades" possible in US and world stock market?

Japan had a forward PE of 55 in 1989 against declining demographics based on birth statistics known in 1989. They have declining work force which is why nominal GDP barely grew 15% since 2000. The US at peak 1999 was at 26x forward earnings. But at least US has and will have slightly positive work f...
by SovereignInvestor
Sat Mar 07, 2020 7:52 am
Forum: Investing - Theory, News & General
Topic: Are Japan like "lost decades" possible in US and world stock market?
Replies: 82
Views: 8340

Re: Are Japan like "lost decades" possible in US and world stock market?

If US keeps inventing new technologies does this prevent a lost decade phenomena? If no, then what has to occur for lost decades to take place? Lost decades — whether in a country, region or the world — are not caused by a dearth of technological innovation. Almost invariably they are caused by exc...
by SovereignInvestor
Fri Mar 06, 2020 9:37 pm
Forum: Investing - Theory, News & General
Topic: Okay, now when you do buy back in?
Replies: 230
Views: 21676

Re: Okay, now when you do buy back in?

"I don't like it" : The refrain of the zero return investor. Bogleheads Blindspots: (1) The market will always go up over the long run. (2) Events never matter. Stay the course, no matter what. That hasn't been the impression I get around here. Most advocate for having some allocation to cash/bonds...
by SovereignInvestor
Sun Mar 01, 2020 3:11 am
Forum: Investing - Theory, News & General
Topic: Where My 100% Equities Peeps At?!?
Replies: 211
Views: 21076

Re: Where My 100% Equities Peeps At?!?

Agree with the recognition that equities have extreme downside risk. But pensions aren't totally risk free. You know...they usually invest half in equities. If stock market dropped 50% and stayed there nearly all pension plans would be insolvent since local government ones and multiemployer ones rel...
by SovereignInvestor
Sat Feb 29, 2020 11:23 pm
Forum: Investing - Theory, News & General
Topic: Where My 100% Equities Peeps At?!?
Replies: 211
Views: 21076

Re: Where My 100% Equities Peeps At?!?

Holding strong and adding weekly. Spread between S&P 500 dividend yield and 10year yield is widest since 2012 and then 2009. S&p forward earnings yield is around 6%, okay shave it to 5% say if corona virus causes hit. 10year note is close to 1%. That's a very fat risk premium that compensates equity...
by SovereignInvestor
Sat Feb 29, 2020 11:23 pm
Forum: Investing - Theory, News & General
Topic: Where My 100% Equities Peeps At?!?
Replies: 211
Views: 21076

Re: Where My 100% Equities Peeps At?!?

Holding strong and adding weekly. Spread between S&P 500 dividend yield and 10year yield is widest since 2012 and then 2009. S&p forward earnings yield is around 6%, okay shave it to 5% say if corona virus causes hit. 10year note is close to 1%. That's a very fat risk premium that compensates equity...
by SovereignInvestor
Wed Feb 26, 2020 8:52 pm
Forum: Investing - Theory, News & General
Topic: Why do companies give dividends?
Replies: 56
Views: 4474

Re: Why do companies give dividends?

You're right, dividends are pointless. If a stock pays a 1% quarterly dividend it's the same as a investor selling 1% of their holding each quarter. The dividend is fully taxable, where selling 1% of the holding is only partially taxable. Picture investor invests $100K in the stock. With dividend,.....