Search found 558 matches

by 305pelusa
Sat Sep 14, 2019 11:25 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Are you or are you not entering into a contract to do something in the future? I'll not use the term loan and you can replace my word loan for contract in my referred post and you'll get the same reasoning. A futures contract obligates you to do something, whereas a letf doesn't. Ah ok I understand...
by 305pelusa
Sat Sep 14, 2019 10:39 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Lee_WSP wrote:
Sat Sep 14, 2019 10:25 am
You're mincing definitions and i think I'll just leave it at that. Bail is a loan, The defendant is being loaned their freedom in exchange for the promise to appear at their court date and if they don't they will forgo the collateral.
*Sigh*

I. Give. Up.
by 305pelusa
Sat Sep 14, 2019 10:19 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

If S&P futures aren't loans, why do they require collateral and are daily settled to ensure you don't drift too far? Many things aren't loans and require collateral. Posting bail is an example of something that requires collateral yet no borrowing is taking place. Daily settlement has nothing to do...
by 305pelusa
Sat Sep 14, 2019 8:29 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

... The expense ratio comes in by slightly limiting SPY's upside. Fair enough. That just means that my potential returns from leveraging (positive returns - cost of leverage) is lower because the former quantity is a little smaller; not because the latter is a little bigger. That's exactly what I m...
by 305pelusa
Sat Sep 14, 2019 7:51 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Thank you, I really appreciate it. Do you happen to know if there are any futures brokers that allow any equities or ETFs as collateral? I think a while ago I read in some futures regulatory publication that various assets can serve as futures collateral at different percentages of current value, b...
by 305pelusa
Sat Sep 14, 2019 7:48 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

But I don't even see where you account for it in your calcs. If you assume SPY's performance is x in your math, you have leveraged exposure to x with a certain cost of leverage; but SPY is less likely to achieve x the higher its expense ratio. The cost of leverage calculation does not make any assu...
by 305pelusa
Sat Sep 14, 2019 6:50 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Thank you, I really appreciate it. Do you happen to know if there are any futures brokers that allow any equities or ETFs as collateral? I think a while ago I read in some futures regulatory publication that various assets can serve as futures collateral at different percentages of current value, b...
by 305pelusa
Sat Sep 14, 2019 6:26 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Then where does the leverage come from? edit: This article certainly seems to take the position that a futures contract is bought on margin. https://www.unitedfutures.com/futures-education/arithmetic.htm As does this one from the CME: https://www.cmegroup.com/education/courses/introduction-to-futur...
by 305pelusa
Fri Sep 13, 2019 9:46 pm
Forum: Investing - Theory, News & General
Topic: Explaining the Demise of Value Investing
Replies: 240
Views: 13938

Re: Explaining the Demise of Value Investing

You take on more risk and/or different dimensions of risk to earn a higher return on the equity portion of your portfolio. This allows you to own more safe bonds. This in turn creates a more efficient portfolio. So I don't think there's necessarily even a disagreement here. Except this hasn't worke...
by 305pelusa
Fri Sep 13, 2019 6:30 pm
Forum: Investing - Theory, News & General
Topic: U.S. stocks continue to soar!
Replies: 1506
Views: 148923

Re: U.S. stocks continue to soar!

Any idea why VTSAX (Vanguard Total Market) fell 0.5% today while the S&P 500 fell only 0.07% and checking most of the mid caps funds were down 0.3% or so, small caps were slightly up. I was thinking an aggregate of all those asset classes would result in almost a flat outcome. Bonds were the only t...
by 305pelusa
Fri Sep 13, 2019 6:16 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

How so? That the money you put down is called a "deposit" does not change the fact that the rest is lent to you. I didn't put down any "deposits" and no money was lent to me. I bought one option and sold another option. edit: maybe I've got it wrong, but do you or do you not have to come up with th...
by 305pelusa
Fri Sep 13, 2019 5:43 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

The big difference lies in the fact that a leveraged ETF does not require the investor to borrow money, but as I understand it, trading derivatives does in order to hit the same or near the same leverage. Trading derivatives does not require any borrowing of money. Anywho do have a question for OP:...
by 305pelusa
Fri Sep 13, 2019 5:39 pm
Forum: Investing - Theory, News & General
Topic: U.S. stocks continue to soar!
Replies: 1506
Views: 148923

Re: U.S. stocks continue to soar!

Any idea why VTSAX (Vanguard Total Market) fell 0.5% today while the S&P 500 fell only 0.07% and checking most of the mid caps funds were down 0.3% or so, small caps were slightly up. I was thinking an aggregate of all those asset classes would result in almost a flat outcome. Bonds were the only t...
by 305pelusa
Fri Sep 13, 2019 7:28 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Instead of requesting 305pelusa to remove the post content, may I suggest providing an explanation as to why the math is wrong and show how to correct it? In that manner, everyone learns. Also, it provides an opportunity to review the approach. It's incorrect due to two reasons: 1) An allocation of...
by 305pelusa
Thu Sep 12, 2019 4:11 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Also good point about LETFs; in retrospect you're right. They're quite literally innapropiate for temporal diversification. Why? If you are constantly putting money into the pot, eventually, the unleveraged additions will overtake the leveraged portion and/or you can just start trading the LETF's f...
by 305pelusa
Thu Sep 12, 2019 4:10 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

[The quoted post below has been modified since the time of this post. The content is currently: "[math may not be correct]" --admin LadyGeek] Say the market drops and continues to drop. Two things will happen eventually: 1) The market eventually gets back to the pre-crash level. 2) The market never...
by 305pelusa
Thu Sep 12, 2019 3:53 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

If 1 occurs, constant leverage will always outperform. Here's the key part though: I'm OK with that one. Lifecycle Investment is not about making the most profitable portfolio; it is about minimizing risk for me personally. So I am perfectly ok leaving gains on the table that could be realized by t...
by 305pelusa
Thu Sep 12, 2019 2:19 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

These past few weeks are an excellent example of why I make a big deal of maintaining exposure instead of constant leverage. As the market dipped, my leverage increased slightly. A pay period came by and I was able to erase some of those losses, effectively buying right at the market bottom (~28400...
by 305pelusa
Thu Sep 12, 2019 10:30 am
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 253
Views: 25743

Re: Small Cap Value Heads: A Lesson Learned.

We do not live as a world citizen, who has expenses in multiple currencies, sleeps in one country one day and wake up in another next day. We do not speak multiple languages every day, we have different tax systems and corporate laws, so on. Astounding I tell you. Quotes from Bogle on simplicity ar...
by 305pelusa
Thu Sep 12, 2019 9:42 am
Forum: Investing - Theory, News & General
Topic: Small Cap Value heads Rejoice !!!
Replies: 253
Views: 25743

Re: Small Cap Value Heads: A Lesson Learned.

Quotes from Bogle on simplicity are certainly worthwhile, but he also had zero international which is an opinion the majority doesn't hold? Zero in international may be perfectly fine, and up to 20% is okay as per Bogle if you must have it. International performance typically corresponds with weake...
by 305pelusa
Wed Sep 11, 2019 5:52 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

These past few weeks are an excellent example of why I make a big deal of maintaining exposure instead of constant leverage. As the market dipped, my leverage increased slightly. A pay period came by and I was able to erase some of those losses, effectively buying right at the market bottom (~28400...
by 305pelusa
Wed Sep 11, 2019 4:42 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

These past few weeks are an excellent example of why I make a big deal of maintaining exposure instead of constant leverage. As the market dipped, my leverage increased slightly. A pay period came by and I was able to erase some of those losses, effectively buying right at the market bottom (~28400)...
by 305pelusa
Tue Sep 10, 2019 6:48 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Is there any way to get historical data on options prices? Doesn't even have to be too far back, just from a few years ago when the yield curve wasn't inverted. I'd like to see whether comeinvest is right that the lower apparently cost of options leverage right now is due to duration and the yield ...
by 305pelusa
Tue Sep 10, 2019 2:28 pm
Forum: Investing - Theory, News & General
Topic: Diversifying Across Factors - 2 Questions
Replies: 47
Views: 1693

Re: Factor Funds vs. Total Stock Market

vineviz wrote:
Tue Sep 10, 2019 11:40 am
The difference in returns between the TSM and large cap index funds is not statistically significant.
I really doubt that. TSM is neutral the size factor while LC is short it. So I would expect a statistically significant outperformance of TSM.

Do you have a source backing up your claim?
by 305pelusa
Tue Sep 10, 2019 2:25 pm
Forum: Investing - Theory, News & General
Topic: [Leveraged ETFs vs. Bogleheads Investment Philosophy]
Replies: 113
Views: 4029

Re: [Leveraged ETFs vs. Bogleheads Investment Philosophy]

Just out of curiosity, if my strategy did maintain 20%+ CAGRs for the next 20 years, would you call me vindicated or lucky? I'd ask you the same as well: If it achieved terrible results, lagging that of a simple portfolio of index stock funds, would you say you were unlucky or would you agree it wa...
by 305pelusa
Tue Sep 10, 2019 1:20 pm
Forum: Investing - Theory, News & General
Topic: [Leveraged ETFs vs. Bogleheads Investment Philosophy]
Replies: 113
Views: 4029

Re: [Leveraged ETFs vs. Bogleheads Investment Philosophy]

Check back in 20 years. Bookmarked ;-) Just out of curiosity, if my strategy did maintain 20%+ CAGRs for the next 20 years, would you call me vindicated or lucky? I'd ask you the same as well: If it achieved terrible results, lagging that of a simple portfolio of index stock funds, would you say yo...
by 305pelusa
Tue Sep 10, 2019 11:10 am
Forum: Investing - Theory, News & General
Topic: [Leveraged ETFs vs. Bogleheads Investment Philosophy]
Replies: 113
Views: 4029

Re: [Leveraged ETFs vs. Bogleheads Investment Philosophy]

Heck, the average market return has been 7% annually. And if you get 3X, that’s 21%. $100k compounded over 50 years would turn into $1.3 billion. So I’ll look forward to seeing a lot of leveraged ETF folks on the Forbe’s list of wealthiest Americans in the decades to come Then I’ll admit the levera...
by 305pelusa
Tue Sep 10, 2019 7:23 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

Since 1.77% is below the current risk-free rate of ca. 2%, something must be wrong with your math. I'm open to anyone pointing out errors in my math. I never claimed it was perfect 0_o That said, you seemed to answer this comment yourself any ways: With your options, you borrowed for ca. 2.5 years....
by 305pelusa
Mon Sep 09, 2019 4:21 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 543
Views: 35372

Re: Lifecycle Investing - Leveraging when young

... - Leveraged ETFs: These ETFs borrow at the LIBOR rate (and even lower). When you factor in the hefty expense ratio, they begin to have similar costs to using futures (perhaps a little more expensive). These reset the leverage daily to achieve 2:1 leverage between every trading day. This makes t...
by 305pelusa
Mon Sep 09, 2019 3:17 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

I mistyped that, my apologies. I was referring to 1966, since that was the year when 4% failed. My point was that real treasury bond yields are lower today than they were back in a period when 4% already failed. But nominal yields don't matter. Real yields do. The cumulative real return for interme...
by 305pelusa
Mon Sep 09, 2019 2:44 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

I can trivially prove it for bonds. The real yields are currently lower than at any period the Trinity study looked it. This is a fact and indisputable. If you treat rates as random walks then, on average, the future returns of treasuries are unequivocally lower than past ones. Give a link to data?...
by 305pelusa
Mon Sep 09, 2019 2:08 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

Representation of my comments: Poster 1: 4% should be fine because it represents the safest withdrawal during the worst times in the past already Me: But the bond and stock returns today are even worse than the worst in the past... Poster 2: You can't compare those because they might not be measure...
by 305pelusa
Mon Sep 09, 2019 11:12 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

I was merely stating that the data are not suggesting that the returns will be below 1%, even though it could happen. I just wanted to give a word of caution about using probabilistic expected returns when making such statement, as the 'probabilistic' qualifier can get lost really fast... The proba...
by 305pelusa
Mon Sep 09, 2019 10:26 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

10Y Bonds are yielding 0% real returns today. TIPS even had a negative yield a couple of days ago. If you extend to 30 years, you can reach closer to 0.4% real though. If you hold the bonds until maturity (like BHs do) then that is what your return will be. No need to predict; it will happen. So yo...
by 305pelusa
Mon Sep 09, 2019 9:32 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

You don't add it to all of the numbers because stock returns represent interests on real assets. So the inverse of the CAPE represents a real return already. One could say the real return of stocks might be ~ 3.33% today. Real return of bonds is virtually zero nowadays. Perhaps you're an optimist a...
by 305pelusa
Mon Sep 09, 2019 9:24 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

Because their is a 3rd number that matters 1966 inflation = 2.86% 2019 inflation = 1.81% So basically add 1% to all of todays numbers. Things look better right?:) And is a 30 CAPE10 today higher or lower than a CAPE10 of 24 in 1966? Given they are calculated using different rules it is hard to say....
by 305pelusa
Mon Sep 09, 2019 8:58 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

Yes, Trinity found 4% to work in the time period from 1925 to 1995. The lowest 10-year Treasury yields was 1.95% (1941). It is 1.55% today. The highest sustained CAPE 10 in that time period was 24 (1966, as you point out). It is at 30 today. And 4% didn't survive that. As if that wasn't enough, in ...
by 305pelusa
Mon Sep 09, 2019 8:47 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

Yes, Trinity found 4% to work in the time period from 1925 to 1995. The lowest 10-year Treasury yields was 1.95% (1941). It is 1.55% today. The highest sustained CAPE 10 in that time period was 24 (1966, as you point out). It is at 30 today. And 4% didn't survive that. As if that wasn't enough, in ...
by 305pelusa
Mon Sep 09, 2019 8:13 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: 3% is the new 4%
Replies: 662
Views: 47926

Re: Larry Swedroe: 3% is the new 4%

For those looking for a summary: if I remember correctly Larry gives 4 or 5 reasons why 4% may be too high. 1. expected bond returns are lower now 2. expected stock returns are lower (also due to high valuations) 3. longer life expectancy 4. SS will be lower And I think he mentioned another one. 4%...
by 305pelusa
Sun Sep 08, 2019 10:03 pm
Forum: Investing - Theory, News & General
Topic: 3X leveraged ETFs - where are the gains coming from?
Replies: 40
Views: 2959

Re: 3X leveraged ETFs - where are the gains coming from?

When the S&P500 doubles, where are the gains coming from? Someone else is now willing to pay double for the share you held. Why is a 3x LETF and it's underlying holdings any different? Just to pile on, when you borrow money from a bank to buy a house, and the house appreciates, who lost to give you...
by 305pelusa
Sun Sep 08, 2019 9:13 pm
Forum: Investing - Theory, News & General
Topic: 3X leveraged ETFs - where are the gains coming from?
Replies: 40
Views: 2959

Re: 3X leveraged ETFs - where are the gains coming from?

When the S&P500 doubles, where are the gains coming from? Someone else is now willing to pay double for the share you held. Why is a 3x LETF and it's underlying holdings any different? Just to pile on, when you borrow money from a bank to buy a house, and the house appreciates, who lost to give you...
by 305pelusa
Sun Sep 08, 2019 9:08 pm
Forum: Investing - Theory, News & General
Topic: 3X leveraged ETFs - where are the gains coming from?
Replies: 40
Views: 2959

Re: 3X leveraged ETFs - where are the gains coming from?

but where is all that money coming from to pay all these players? Imagine you're a large financial institution whose future earnings are strongly dependent on the market. When markets do well, your number of clients increases substantially and vice-versa. Because virtually all of the future progres...
by 305pelusa
Sun Sep 08, 2019 10:57 am
Forum: Investing - Theory, News & General
Topic: [Leveraged ETFs vs. Bogleheads Investment Philosophy]
Replies: 113
Views: 4029

Re: [Leveraged ETFs vs. Bogleheads Investment Philosophy]

Leverage in general (and these products specifically) can be quite complicated and difficult to figure out. Do you really think that an allocation of 101% stocks is fundamentally different than an allocation of 99% stocks? So different that it is an entirely different approach to investing? I certa...
by 305pelusa
Sun Sep 08, 2019 10:47 am
Forum: Investing - Theory, News & General
Topic: Episode 013: Bogleheads on Investing - guest Dr. Bill Bernstein, host Rick Ferri
Replies: 36
Views: 4232

Re: Episode 013: Bogleheads on Investing - guest Dr. Bill Bernstein, host Rick Ferri

Rick projected future returns of bonds as around 2.5% based on current yields. But I ran quick backtest and found Long term treasuries rates were approx 3% in 2009. Yet TLT returned 7%+ to investors over these 10 years. Predicting future returns to design portfolios seems like totally random planni...
by 305pelusa
Sun Sep 08, 2019 10:28 am
Forum: Investing - Theory, News & General
Topic: [Leveraged ETFs vs. Bogleheads Investment Philosophy]
Replies: 113
Views: 4029

Re: [Leveraged ETFs vs. Bogleheads Investment Philosophy]

The leveraged ETF's being discussed don't represent traditional forms of leveraged stocks. They're a unique product meant to track the daily movements , and reset daily. They're impacted by volatility in some unexpected ways. It’s only “unexpected” if you don’t know how they work. And they are aren...
by 305pelusa
Fri Sep 06, 2019 4:10 pm
Forum: Investing - Theory, News & General
Topic: Mortgage Sequence of Returns Risk Example.
Replies: 52
Views: 2536

Re: Mortgage Sequence of Returns Risk Example.

The problem with this scenario is that you might plan on living in that house for ten more years but there are lots of reasons that you might decide to move before the ten years is up. You could also end up being laid off or disabled and your income stream could stop early. There are many reasons t...
by 305pelusa
Fri Sep 06, 2019 3:21 pm
Forum: Investing - Theory, News & General
Topic: Mortgage Sequence of Returns Risk Example.
Replies: 52
Views: 2536

Re: Mortgage Sequence of Returns Risk Example.

If anyone can see a way to improve my example, focusing on the first year or two, I would sure like to hear any suggestions. Then, instead of putting the $100k into an equity account, put it into a ST bond fund (duration of ~2 years). That way your time frames are consistent; otherwise, you are com...
by 305pelusa
Fri Sep 06, 2019 1:13 pm
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 12035
Views: 2047802

Re: U.S. stocks in free fall

People are saying there is no evidence that some stocks will outperform others, so they are deciding to speculate on a subset of stocks. Based on what?? You just said there was no evidence... :confused Lol yes. My other favorite inconsistency is when posters claim there's no diversification benefit...
by 305pelusa
Fri Sep 06, 2019 12:37 pm
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 12035
Views: 2047802

Re: U.S. stocks in free fall

If you expect internationals to perform similarly to US stocks, and international has greatly underperformed US Stocks for decades, then you must expect internationals to outperform us equities going forward in order to even the playing field. If you believe the market is a random walk, the above i...
by 305pelusa
Fri Sep 06, 2019 11:28 am
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 12035
Views: 2047802

Re: U.S. stocks in free fall

If you expect internationals to perform similarly to US stocks, and international has greatly underperformed US Stocks for decades, then you must expect internationals to outperform us equities going forward in order to even the playing field. If you believe the market is a random walk, the above i...