Search found 102 matches

by scout1
Thu Jan 14, 2021 9:28 pm
Forum: Investing - Theory, News & General
Topic: Sequence Risk: is it really a big deal?
Replies: 79
Views: 5379

Re: Sequence Risk: is it really a big deal?

I think sequence risk is meaningless and should be ignored entirely.
by scout1
Tue Jan 12, 2021 1:21 pm
Forum: Investing - Theory, News & General
Topic: The Most Concentrated Market in 40 Years
Replies: 74
Views: 7180

Re: The Most Concentrated Market in 40 Years

Sure let's just ignore all of 1940-1970 then The further you go back, the less useful the data is. But the chart you posted seems to contradict, not support, your claim. The last two times in the last FIFTY years when we were near the current concentration were c. 1972 and c. 2000. And going back f...
by scout1
Mon Jan 11, 2021 2:22 pm
Forum: Investing - Theory, News & General
Topic: The Irony of Growth: How investors systematically err on growth forecasts
Replies: 4
Views: 496

Re: The Irony of Growth: How investors systematically err on growth forecasts

They basically say "Our research suggests that you should short stocks with high long term growth forecasts, although this strategy would have performed terribly over the last 10 years."

:oops:
by scout1
Thu Jan 07, 2021 4:36 pm
Forum: Personal Investments
Topic: Having such a hard time with investing now
Replies: 37
Views: 2710

Re: Having such a hard time with investing now

It's not going to get any easier.
by scout1
Thu Jan 07, 2021 10:24 am
Forum: Investing - Theory, News & General
Topic: Start Date Sensitivity: A Potentially Important Variable Impacting Portfolios
Replies: 91
Views: 5313

Re: Start Date Sensitivity: A Potentially Important Variable Impacting Portfolios

Here is what I am going to do. I am going to go to PortfolioVisualizer. I am only going to look at the prebuilt portfolios common to PortfolioVisualizer and this list. I am going to look at the volatility of the portfolio as measured by standard deviation, over whatever time period PortfolioVisuali...
by scout1
Wed Jan 06, 2021 1:35 pm
Forum: Personal Investments
Topic: Has the world gone bonkers?
Replies: 22
Views: 1934

Re: Has the world gone bonkers?

Maybe your view of what stock prices should be is wrong?
by scout1
Thu Dec 31, 2020 3:29 pm
Forum: Investing - Theory, News & General
Topic: If markets are efficient why does fund allocation matter?
Replies: 38
Views: 2231

Re: If markets are efficient why does fund allocation matter?

Bond holders get paid before stock holders, so a company's bonds are always less risky than its stock. Since they're less risky they get a lower rate of return. Adjusted for risk, they're the same.
by scout1
Wed Dec 30, 2020 12:41 pm
Forum: Investing - Theory, News & General
Topic: The Case Against 529's
Replies: 219
Views: 12253

Re: The Case Against 529's

I believe your second point isn't mentioned anywhere because it isn't accurate. If you're have a child who will be attending college in 8 years and you decide to pay for it, your horizon is 8 years for some subset of your funds and it should probably be a mixed allocation. Also, that seems unrelated...
by scout1
Tue Dec 29, 2020 12:59 pm
Forum: Personal Consumer Issues
Topic: Effective Altruism. Using the fact based approach to selecting charities.
Replies: 141
Views: 5290

Re: Effective Altruism. Using the fact based approach to selecting charities.

I think the EA philosophy sounds reasonable but in practice it's too complicated to be worthwhile. Just because money is spent on advertising or goes to the foundation CEO, it doesn't mean it's wasted for the same reason businesses spend tons of money on CEOs and advertising, even if they could be m...
by scout1
Mon Dec 28, 2020 10:24 am
Forum: Personal Consumer Issues
Topic: College comparisons (and cost estimates) for life sciences
Replies: 51
Views: 2222

Re: College comparisons (and cost estimates) for life sciences

UW is the best on paper but I know many people that were very unhappy there and regretted the decision.
by scout1
Sat Dec 26, 2020 3:58 pm
Forum: Personal Investments
Topic: Super Conservative in Early Retirement?
Replies: 48
Views: 4950

Re: Super Conservative in Early Retirement?

SORR isn’t a big deal and trying to mitigate it is worse than accepting it as feature of the process. Just because it’s called a “risk”, it’s not really risky.
by scout1
Wed Dec 16, 2020 5:01 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

There is no value in estimating future returns incorrectly, and historically the CAPE has been incorrect. Now if you could estimate future returns even a little bit accurately, there would be a LOT of value in that. No value -- really? Historically, if you constrained CAPE values by rounding up any...
by scout1
Wed Dec 16, 2020 4:36 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

There is no value in estimating future returns incorrectly, and historically the CAPE has been incorrect. Now if you could estimate future returns even a little bit accurately, there would be a LOT of value in that. No value -- really? Historically, if you constrained CAPE values by rounding up any...
by scout1
Wed Dec 16, 2020 3:37 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

Anyone who changed their AA based on valuations over the past 30 years has LESS money than those of us who ignored valuations. Please provide evidence that CAPE usually produced better outcomes regarding savings rate and asset allocation than ignoring it. From what I have seen (but I could be wrong...
by scout1
Sat Dec 05, 2020 2:32 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

Current price is on both sides of the regression equation and accounts for 100% of the relationship we're seeing. They are not independent. This is so wrong that I don't even know where to begin. Begin anywhere. CAPE in year 0 (i.e. when the prediction is being made) were known at that time. The cu...
by scout1
Sat Dec 05, 2020 2:26 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

Current price is on both sides of the regression equation and accounts for 100% of the relationship we're seeing. They are not independent. This is so wrong that I don't even know where to begin. Begin anywhere. If you regress price against itself the correlation is 1. You're regressing price again...
by scout1
Sat Dec 05, 2020 1:41 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

Second, the analysis is flawed in the same way because you're regressing current price against future price/current price. Current price is in the denominator so you're regressing a variable against itself and finding a relationship. That isn't meaningful or predictive. Nope. The regression is curr...
by scout1
Sat Dec 05, 2020 1:26 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

IMO, there is no relationship between stock price and expected returns. Far more importantly though, as you recognize, there is an mathematical identity that higher prices mean returns are lower. The two above statements are mutually exclusive (i.e. both cannot be true). It doesn't make sense to me...
by scout1
Sat Dec 05, 2020 12:58 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

The problems is there is just not enough data and minimal theory, so empiric relationships are very problematic in this field. There is nothing "minimal" about the theory that a relationship MUST exist between the price the market places on a set of cash flows and the expected return of t...
by scout1
Mon Nov 30, 2020 5:18 pm
Forum: Investing - Theory, News & General
Topic: CAPE: A much stronger predictor of stock returns than many think
Replies: 544
Views: 34944

Re: CAPE: A much stronger predictor of stock returns than many think

No Willthrill81, you need to thoroughly read the thread. Many posters throughout the thread go into detail about why this analysis, which has been done hundreds of times by many many people, is entirely wrong. Also, it should be suspicious to you that you're getting a correlation of -.99 in predicti...
by scout1
Fri Nov 20, 2020 12:53 pm
Forum: Investing - Theory, News & General
Topic: Tesla finally added to S&P 500 - Concerns from Reckenthaler
Replies: 58
Views: 4357

Re: Tesla finally added to S&P 500 - Concerns from Reckenthaler

Most of my day is spent using my Apple phone, my Microsoft computer, searching Google, buying things on Amazon, browsing Facebook, and reading articles about TSLA. I don't think people should try to make the case that the market is inefficient. The author should have bought TSLA if it was a sure thi...
by scout1
Wed Nov 18, 2020 5:57 pm
Forum: Investing - Theory, News & General
Topic: New Trend? Contribute only up to your match on 401k?
Replies: 79
Views: 5759

Re: New Trend? Contribute only up to your match on 401k?

Thanks OP for the post. I’ve also been seeing this trend and was hoping to hear the boglehead’s view.
by scout1
Mon Nov 16, 2020 6:42 pm
Forum: Personal Investments
Topic: Individual Stock Portfolio Experiment Using Berkshire Hathaway 13Fs
Replies: 14
Views: 953

Re: Individual Stock Portfolio Experiment Using Berkshire Hathaway 13Fs

This is fairly straightforward to backtest. Do you know how the results would have looked if you had done this over the last few years?
by scout1
Fri Sep 04, 2020 3:10 pm
Forum: Personal Finance (Not Investing)
Topic: Exterior only appraisals
Replies: 6
Views: 566

Exterior only appraisals

My wife and I are interested in refinancing our current mortgage but due to coronavirus and underlying health issues we are reluctant to have an appraiser walk through our home. We would be fine with them walking around the exterior of the home though. We have reached out to 3 different lenders and ...
by scout1
Fri Aug 28, 2020 1:48 pm
Forum: Personal Consumer Issues
Topic: Going back to the office
Replies: 20
Views: 951

Re: Going back to the office

Don't take the job, not even a close decision. Your wife works, you get unemployment for a year and it sounds like this company totally sucks. Also, I think you should have been even more snarky to atikovi's suggestion. You'd be lucky to NOT receive an offer.
by scout1
Fri Aug 28, 2020 9:42 am
Forum: Personal Investments
Topic: New Fed Policy on Inflation, Impact to Common Bond Funds
Replies: 5
Views: 741

Re: New Fed Policy on Inflation, Impact to Common Bond Funds

Interest rates and inflation are inversely related but together determine the yield on bonds. If the fed keeps interest rates at 0%, inflation goes to 2% so the yield on bonds ends up being 2% (0% + 2%). If the fed keeps interest rates at 1%, inflation is lower at 1% so the yield on bonds is still 2...
by scout1
Mon Aug 24, 2020 9:38 pm
Forum: Investing - Theory, News & General
Topic: Changing how the Fed views inflation
Replies: 32
Views: 2314

Re: Changing how the Fed views inflation

The Financial Times reported on the likelihood of this happening on February 9th of this year. https://www.ft.com/content/c0a1fddc-4672-11ea-aeb3-955839e06441 Scott Sumner addressed it in his blog as well. Basically this is a good thing as the Fed is finally figuring out how to use monetary policy m...
by scout1
Wed Aug 19, 2020 2:42 pm
Forum: Investing - Theory, News & General
Topic: Correlated Fat Tails Formula
Replies: 3
Views: 349

Re: Correlated Fat Tails Formula

You can generate correlated random numbers by using a latent random variable, for example stock A returns .5 * latent variable + .5* Gaussian noise, stock B returns .5 * latent variable + .5 * Gaussian noise. Since both returns depend on the latent variable they will be correlated. To estimate the p...
by scout1
Wed Aug 19, 2020 1:06 am
Forum: Investing - Theory, News & General
Topic: Can Academics Beat the Stock Market?
Replies: 109
Views: 7616

Re: Can Academics Beat the Market?

000 wrote: Tue Aug 18, 2020 9:13 pm If the academics underperform, who is outperforming? :confused
The richest people in the world, Gates, Bezos, Zuckerburg, Musk, Page and Brin.
by scout1
Fri Aug 14, 2020 10:00 am
Forum: Personal Consumer Issues
Topic: Chess.com, FICS or something else?
Replies: 12
Views: 1346

Re: Chess.com, FICS or something else?

I've been moving more towards lichess from chess.com over the last few years. I would use chess.com for longer time controls and rated games against stronger opponents. I would use lichess for quick anonymous games when you're just having fun and killing time. chess.com also has lots of other resour...
by scout1
Mon Aug 10, 2020 11:39 am
Forum: Investing - Theory, News & General
Topic: Why I don't trust S&P 500 index funds (Brett Arends)
Replies: 21
Views: 2199

Re: Why I don't trust S&P 500 index funds (Brett Arends)

If you'd invested in 30 random stocks each year, who knows how much money you would have.
by scout1
Sun Aug 09, 2020 1:32 am
Forum: Investing - Theory, News & General
Topic: Demographic Destiny [US vs International]
Replies: 49
Views: 3211

Re: Demographic Destiny

This is talked about all the time by the financial press and the market is well aware of it. Investors have had decades to look at Japan's struggles and consider if the US may faces similar challenges in the future. Also the stock market is not the economy. Tens of thousands of businesses can go out...
by scout1
Sun Aug 02, 2020 2:22 pm
Forum: Investing - Theory, News & General
Topic: Efficient Market Theory vs Tesla Stock Price
Replies: 68
Views: 3789

Re: Efficient Market Theory vs Tesla Stock Price

If the market is wrong you should put your money where your mouth is and bet against the market, you’ll make some money. If you’re not willing to do that, how can you claim the market is inefficient? The market probably won’t do it for the same reason you won’t, e.g. short fees, asymmetric outcomes,...
by scout1
Sat Aug 01, 2020 3:22 pm
Forum: Personal Finance (Not Investing)
Topic: Buying a House in Sellers Market?
Replies: 17
Views: 2060

Re: Buying a House in Sellers Market?

It was a sellers market when I was buying a house 5 years ago and it's still a seller's market today except prices are ~50% higher. Don't time the market.
by scout1
Fri Jul 31, 2020 1:39 pm
Forum: Investing - Theory, News & General
Topic: Trying to Understand ETF Buy/Sell
Replies: 8
Views: 376

Re: Trying to Understand ETF Buy/Sell

All that NAV stuff isn't particularly relevant for ETFs. An ETF works like this: an ETF issuer says "i will exchange 1 share of AAPL and 1 share of MSFT for 1 share of the Scout1 Technology ETF and vice versa any time anyone wants". If you bring them 1 share of AAPL and 1 share of MSFT, th...
by scout1
Tue Jul 21, 2020 12:52 pm
Forum: Investing - Theory, News & General
Topic: The Remarkable Accuracy of CAPE As A Predictor Of Returns
Replies: 77
Views: 6475

Re: The Remarkable Accuracy of CAPE As A Predictor Of Returns

I believe the accuracy of the CAPE is more a product of over fitting than anything else. Ten year returns are function of price: the price in year 10 divided by the price in year 1. The lower the price in year 1, the higher the returns. The main driver of the CAPE is the current price, so you're bas...
by scout1
Sat Jun 20, 2020 2:47 pm
Forum: Personal Investments
Topic: advice buying stocks in private company
Replies: 27
Views: 1244

Re: advice buying stocks in private company

Do not buy any shares, there are a million reasons why. Just be happy with the stock market.
by scout1
Mon Jun 15, 2020 10:40 am
Forum: Investing - Theory, News & General
Topic: Sequence of return risk -- when is it most dangerous?
Replies: 34
Views: 1569

Re: Sequence of return risk -- when is it most dangerous?

Your logic is right, I think. The only difference I can see is that you are closer to death later in retirement, so your total need is reduced. I have never understood why this forum obsesses so much over SORR; it seems to me to be a contrived kind of risk. SORR says that given a known set of retur...
by scout1
Sat Jun 13, 2020 10:46 am
Forum: Personal Investments
Topic: Risk sharing thought experiment
Replies: 17
Views: 842

Re: Risk sharing thought experiment

When he wants to sell some bonds, you’re going to need to sell the equities you purchased and give him the money. You may have a long time horizon but he may not and he controls when you have to sell.
by scout1
Wed Jun 10, 2020 5:47 pm
Forum: Personal Investments
Topic: Young investors and bonds
Replies: 94
Views: 5351

Re: Young investors and bonds

No, you shouldn't own bonds with money you don't plan to touch for 20+ years. In 10 or 15 years you can add the bonds. You don't need risk adjusted returns you need absolute returns.
by scout1
Mon May 25, 2020 12:29 pm
Forum: Personal Consumer Issues
Topic: Pandemic buys that have improved quality of life?
Replies: 185
Views: 19778

Re: Pandemic buys that have improved quality of life?

Monitors, mouse and keyboard for a better WFH setup.
by scout1
Thu Apr 30, 2020 4:23 pm
Forum: Investing - Theory, News & General
Topic: Isn’t this the Ultimate Expression of Uncertainty?
Replies: 13
Views: 1131

Re: Isn’t this the Ultimate Expression of Uncertainty?

There was more long-term uncertainty when the number of covid cases was accelerating. Now that it appears to have stabilized, there is less long-term uncertainty. The market doesn’t care about the short term.
by scout1
Sat Apr 18, 2020 3:28 pm
Forum: Investing - Theory, News & General
Topic: Negative interest rates and Present Value
Replies: 19
Views: 1034

Re: Negative interest rates and Present Value

You should still use the negative interest rate. The math doesn’t change.
by scout1
Mon Apr 13, 2020 7:48 pm
Forum: Personal Investments
Topic: Innovator S & P 500 Defined Outcome ETF
Replies: 8
Views: 644

Re: Innovator S & P 500 Defined Outcome ETF

In my opinion, one should move to a 90/10 allocation from 100/0, rather than pay 0.79% for 90% the upside and 90% the downside. Buying options is the farthest thing from a free lunch out there. Also you have to buy a different etf each month which seems like a headache.
by scout1
Sat Apr 11, 2020 11:02 pm
Forum: Investing - Theory, News & General
Topic: How good is the "market" at pricing itself?
Replies: 19
Views: 1021

Re: How good is the "market" at pricing itself?

Does it make sense that you calculated 9.19% as the long run cagr of the sp500 and then determined that in the long run the stocks are fairly priced if you use a 9.19% discount rate?
by scout1
Thu Apr 09, 2020 6:31 pm
Forum: Investing - Theory, News & General
Topic: An alternative argument for REITs
Replies: 16
Views: 1406

Re: An alternative argument for REITs

I’m disputing that REITs are inherently tax inefficient for personal investors and therefore should always be held in tax deferred accounts. They certainly appear that way if you only look at the personal side. What you’re not seeing, when you look at tax favored dividends from C corps, is the laye...
by scout1
Thu Apr 09, 2020 12:26 am
Forum: Investing - Theory, News & General
Topic: An alternative argument for REITs
Replies: 16
Views: 1406

Re: An alternative argument for REITs

Oddly enough, I have come to the same conclusion and have allocated my hsa to a reits only fund. I don’t have any conviction in this theory and the hsa is basically play money. As a counter argument, you could make the same case for any asset. Every asset is worth more to a nontaxable account since ...