Search found 88 matches

by BH+
Sun Aug 09, 2020 6:26 pm
Forum: Investing - Theory, News & General
Topic: Malkiel: Preferred and High-Dividend Stocks are "Bond Substitutes"
Replies: 36
Views: 2723

Re: Malkiel: Preferred and High-Dividend Stocks are "Bond Substitutes"

A better bond substitute in the current interest rate environment might be an SPIA for the right person. Better cash flow with a touch of longevity insurance.
by BH+
Wed Aug 05, 2020 7:04 pm
Forum: Investing - Theory, News & General
Topic: Burton Malkiel pans value/ factor investing on the Long View podcast
Replies: 24
Views: 1894

Re: Burton Malkiel pans value/ factor investing on the Long View podcast

One approach would be to swap the "corporate" portion of total bond market with preferred shares, dividend stocks, or even TSM, but leave the government/treasury portion alone (which provides most of the ballast). So instead of 60/40 TSM/BND for example, one could use 60/20/20 TSM/preferred shares o...
by BH+
Tue Aug 04, 2020 2:17 am
Forum: Personal Investments
Topic: Preferred Stock
Replies: 30
Views: 1972

Re: Preferred Stock

If a preferred stock yields 4%, and then rising rates drive the yield to 5%, the stock loses 25% of its value. (For comparison, if the yield on Total Bond Market rises by 1%, the fund will lose 6% of its value.) In this instance for both cases it would take about 6 years to get back to even with a ...
by BH+
Sun Aug 02, 2020 10:15 pm
Forum: Personal Investments
Topic: Preferred Stock
Replies: 30
Views: 1972

Re: Preferred Stock

LQD has a YTM of about 2%. I won't be surprised if PFF which currently yields 5.7% beats that on an after-tax basis.
by BH+
Sun Aug 02, 2020 5:36 pm
Forum: Personal Investments
Topic: Preferred Stock
Replies: 30
Views: 1972

Re: Preferred Stock

Hello - I read that preferred stock may be an investment worthy of consideration. I read a bit about them but am not an expert in the area at all. Does anyone have thoughts on how much one should allocate to preferred stock (assuming a fairly high risk tolerance and a long term investor)? I was loo...
by BH+
Sat Jul 25, 2020 12:42 pm
Forum: Investing - Theory, News & General
Topic: Japan, 1989
Replies: 161
Views: 45756

Re: Japan, 1989

I wonder how corporate bonds and preferred shares (if issued by Japanese corporations) would have fared during the last three decades. I have no data, but my guess would be that corporate bonds would have done fine given the tailwind of declining interest rates and relatively stable credit (if that ...
by BH+
Sun May 31, 2020 8:12 pm
Forum: Personal Investments
Topic: OTM Puts on long dated treasury/treasury futures
Replies: 5
Views: 402

Re: OTM Puts on long dated treasury/treasury futures

TLT has relatively liquid options going out to Dec 2022. The maturity however is longer than 10 years.
by BH+
Thu May 28, 2020 5:06 pm
Forum: Investing - Theory, News & General
Topic: I don't understand stock buybacks
Replies: 169
Views: 9569

Re: I don't understand stock buybacks

If you issue a bond to buy back shares the effect on the price will be less, because you have to pay back the bond with interest out of future earnings, which means you are not looking at $10 of earnings going forward, but less. If paid out of excess cash, the price could be slightly lower than $10...
by BH+
Thu May 28, 2020 5:02 pm
Forum: Investing - Theory, News & General
Topic: I don't understand stock buybacks
Replies: 169
Views: 9569

Re: I don't understand stock buybacks

In the real world there are a lot of other confounding factors. Cash, to a certain extent, indicates a healthy company with a higher multiple. The float could change with management exercising options, etc. I don't think this is the case. You don't think the number of outstanding shares could chang...
by BH+
Thu May 28, 2020 4:31 pm
Forum: Investing - Theory, News & General
Topic: I don't understand stock buybacks
Replies: 169
Views: 9569

Re: I don't understand stock buybacks

If the corporation decides to do a buyback in one fell swoop using all its excess cash, it can retire 200 shares using all of its 10,000 in cash. After the transaction is completed, Unit B is still creating $2000 of earnings per year and there are 200 shares outstanding. So now each share is entitl...
by BH+
Thu May 28, 2020 3:43 pm
Forum: Investing - Theory, News & General
Topic: I don't understand stock buybacks
Replies: 169
Views: 9569

Re: I don't understand stock buybacks

A share buyback must increase the price of the stock, if everything else is kept constant. As an example: Corporation XYZ has 2 units. Unit A holds $10,000 of cash (excess cash). Unit B is an operating company creating $2000 of earnings per year. 400 shares are outstanding as of today. Each of the 4...
by BH+
Sun May 24, 2020 9:33 am
Forum: Personal Investments
Topic: Which ETF should i choose from the big list of Vanguard ETF's?
Replies: 19
Views: 1399

Re: Which ETF should i choose from the big list of Vanguard ETF's?

VT would be a good recommendation for stocks. It includes about 8400 stocks from all over the world and includes every sector.

BND is good for bonds.
by BH+
Sat May 23, 2020 11:11 am
Forum: Investing - Theory, News & General
Topic: Examples of why NOT to hold individual stocks
Replies: 93
Views: 7842

Re: Examples of why NOT to hold individual stocks

Most people who invest in individual stocks carry a relatively diversified portfolio (but not as diversified as a broad-based index fund). The bigger risk is not a stock going bust (where you can only lose 100% of the position), but missing on big gains on ten-baggers etc (I believe Dr. Bernstein st...
by BH+
Fri May 22, 2020 7:37 pm
Forum: Personal Finance (Not Investing)
Topic: The axe falls and I am prepared. What's next?
Replies: 376
Views: 32761

Re: The axe falls and I am prepared. What's next?

...3) And, the job/project has to interesting and lucrative enough for me to consider... KlangFool I would not discount the value of relevant work that would generate a meager income while still keeping you in the lower tax brackets. That lightly taxed income could reduce the stress on your savings...
by BH+
Fri May 22, 2020 7:26 pm
Forum: Personal Finance (Not Investing)
Topic: The axe falls and I am prepared. What's next?
Replies: 376
Views: 32761

Re: The axe falls and I am prepared. What's next?

...3) And, the job/project has to interesting and lucrative enough for me to consider... KlangFool I would not discount the value of relevant work that would generate a meager income while still keeping you in the lower tax brackets. That lightly taxed income could reduce the stress on your savings...
by BH+
Wed May 20, 2020 1:54 pm
Forum: Investing - Theory, News & General
Topic: Healthcare post COVID-19
Replies: 66
Views: 6453

Re: Healthcare post COVID-19

I am surprised that mid-levels are not utilized more in medicine. A lot of visits are follow-ups and prescriptions. Beyond original diagnostic workup, establishing a treatment plan and performing procedure, most of what an MD does can be replicated by mid-levels with appropriate software/checklist s...
by BH+
Tue May 19, 2020 10:12 am
Forum: Investing - Theory, News & General
Topic: Why don't investors hedge to the upside?
Replies: 14
Views: 999

Re: Why don't investors hedge to the upside?

I see a lot of investors buying Puts or hedging in case the market declines and crashes. They want some sort of insurance if you will to protect their investments from a sudden drop in value. Since markets go up over time, why don't investor hedge to the upside and buy Calls? :confused In my opinio...
by BH+
Mon May 18, 2020 9:28 pm
Forum: Personal Investments
Topic: Is QQQ (Nasdaq100) better reflective of new economy
Replies: 60
Views: 3982

Re: Is QQQ (Nasdaq100) better reflective of new economy

Hi, Long time reader here and I have used this advice and invest using VTI. For the world of me I could not revive my old handle and hence the new one. Even before the covid-19, I have been observing that QQQ being more reflective or the new economy as opposed to S&P 500 (VTI is pretty close to thi...
by BH+
Mon May 18, 2020 8:51 pm
Forum: Investing - Theory, News & General
Topic: Why don't investors hedge to the upside?
Replies: 14
Views: 999

Re: Why don't investors hedge to the upside?

I see a lot of investors buying Puts or hedging in case the market declines and crashes. They want some sort of insurance if you will to protect their investments from a sudden drop in value. Since markets go up over time, why don't investor hedge to the upside and buy Calls? :confused In my opinio...
by BH+
Sun May 17, 2020 11:08 pm
Forum: Personal Investments
Topic: Anything wrong if you [tilted] large cap towards growth
Replies: 17
Views: 1163

Re: Anything wrong if you titled large cap towards growth

realclemsongrad wrote:
Sun May 17, 2020 10:07 pm
Why should one NOT do VOOG instead of VTI if we have another 16+ years left on the employment.
Because no one knows for sure and no one can predict with any consistency. Sometimes growth outperforms, other times value does. Better to own them all, hence VTI.
by BH+
Sun May 17, 2020 7:40 pm
Forum: Investing - Theory, News & General
Topic: Dividend vs Total Return question
Replies: 66
Views: 2937

Re: Dividend vs Total Return question

One question and I do not want to start the usual back and forth about this. Please clearly explain this one thing that bothers me to no end. You have 100,000 to invest. I have 100,000 to invest. You invest it in the total mkt and take out 300 dollars per month selling shares. I invest it in a qual...
by BH+
Sun May 17, 2020 2:34 pm
Forum: Personal Investments
Topic: Jettison QSPIX?
Replies: 64
Views: 4791

Re: Jettison QSPIX?

QSPIX has been sinking slowly but consistently since December 2017. Plain old stocks and bonds have outperformed. It would be safer to assume that there must be some flaw in the design or implementation of its strategies.
by BH+
Sun May 17, 2020 1:54 pm
Forum: Investing - Theory, News & General
Topic: NYTs article:— New York Times article May 17, Dealing With the Dark Side of Low Interest Rates
Replies: 79
Views: 7918

Re: NYTs article:— New York Times article May 17, Dealing With the Dark Side of Low Interest Rates

Lower interest rates are not all bad news. Many businesses are able to flourish and grow with debt, which in turn leads to improvements in labor conditions. Lower interest rates also decrease the burden of debt on mortgages, student loans, etc, which will benefit many non-retired people. As for the ...
by BH+
Fri May 15, 2020 9:50 pm
Forum: Personal Investments
Topic: Option Trading
Replies: 11
Views: 939

Re: Option Trading

...by simply placing a put when to buy and call when to sell - Why aren't we all doing that. I don't think you loose anything by trying. The only way I see you loosing is if you sell high and the stock doesn't come back down.... I think you need to explain this strategy in the parlance that option ...
by BH+
Fri May 15, 2020 9:22 pm
Forum: Investing - Theory, News & General
Topic: "Expected Return" ?
Replies: 44
Views: 2693

Re: "Expected Return" ?

The expected return for a fair coin toss is what one could approximate in the case of innumerable events (tossing the coin thousands of times perhaps). The expected return for an investment could be based on historical observations or metrics (assuming history repeats itself). Of course, a fair coin...
by BH+
Fri May 15, 2020 9:01 pm
Forum: Investing - Theory, News & General
Topic: Healthcare post COVID-19
Replies: 66
Views: 6453

Re: Healthcare post COVID-19

I am a bit worried that healthcare has become a hazardous occupation. Given high fatalities among healthcare professionals, every young and bright student who desires to become a doctor, nurse, technician, etc. needs to grapple with, and come to terms with the possibility that they could be putting ...
by BH+
Fri May 15, 2020 12:16 am
Forum: Investing - Theory, News & General
Topic: Why it’s a good idea to hold long term Treasuries as your emergency fund
Replies: 114
Views: 9398

Re: Why it’s a good idea to hold long term Treasuries as your emergency fund

The title of thread states "emergency fund", which could be the same or different from a "cash reserve." If the "cash reserve" is part of the portfolio, then LTTs could be considered vis-a-vis equities. If it is a separate "emergency fund", then it should be considered separate from the portfolio an...
by BH+
Thu May 14, 2020 9:57 pm
Forum: Investing - Theory, News & General
Topic: Fixed Income lessons learned from Coronavirus?
Replies: 48
Views: 4358

Re: Fixed Income lessons learned from Coronavirus?

Currently it is a negative real return for ST Treasury Index. Historically, ST Treasuries have kept up with inflation. I expect that in the long term (next 10 years or so), the returns will keep up with inflation, hence a 0 real return. The expected nominal return for VSBSX is 0.15% for the next tw...
by BH+
Thu May 14, 2020 9:14 pm
Forum: Personal Investments
Topic: Option Trading
Replies: 11
Views: 939

Re: Option Trading

Sure - take VTI in the past month the low is 136-138 and high around 147. I am betting it is going to bounce around like this for a year maybe two. Each bounce you can pick up $5/share. You don't need to use options to harvest those gains, if your theory is correct. You can buy and sell the ETF (go...
by BH+
Thu May 14, 2020 6:18 pm
Forum: Investing - Theory, News & General
Topic: Fixed Income lessons learned from Coronavirus?
Replies: 48
Views: 4358

Re: Fixed Income lessons learned from Coronavirus?

My take has been that fixed income is not the field to chase returns. Better to lean toward higher quality and shorter term issues for the stability in price (relative to stocks) and be content to receive a 0% real return over the long term. For higher returns, I'd take risk in equities, real estat...
by BH+
Thu May 14, 2020 12:19 am
Forum: Investing - Theory, News & General
Topic: Why it’s a good idea to hold long term Treasuries as your emergency fund
Replies: 114
Views: 9398

Re: Why it’s a good idea to hold long term Treasuries as your emergency fund

I think short term fixed income is better as an emergency fund, simply because it is less volatile. LTTs' higher volatility make them a great candidate for rebalancing with stocks. The difference in yield between short term and long term is very low these days. If you are willing to stomach the vola...
by BH+
Wed May 13, 2020 11:53 pm
Forum: Personal Finance (Not Investing)
Topic: Good Time to Buy New Car or Wait?
Replies: 38
Views: 3692

Re: Good Time to Buy New Car or Wait?

From what I gather, there are good deals on leftover new 2019 models. I am not sure many of the 2020s are being attractively discounted yet. The manufacturers will probably try to manage supply for a little while.
by BH+
Wed May 13, 2020 11:48 pm
Forum: Investing - Theory, News & General
Topic: Why is total market weighted index best?
Replies: 61
Views: 4440

Re: Why is total market weighted index best?

A broad-based capitalization index lets you capture the returns and ride the momentum of all the long-term winners in the market. You don't have to find the needle in the haystack. It will rise to the top. I don't know if that is definitively the best in terms of risk and return, but in terms of po...
by BH+
Wed May 13, 2020 8:52 pm
Forum: Personal Investments
Topic: Option Trading
Replies: 11
Views: 939

Re: Option Trading

Most option strategies are money losers in the long term. The ones that do work mostly involve selling premium but after taxes, fees and bid-ask spreads, the returns do not substantially beat buy-and-hold.
by BH+
Wed May 13, 2020 8:46 pm
Forum: Investing - Theory, News & General
Topic: Fixed Income lessons learned from Coronavirus?
Replies: 48
Views: 4358

Re: Fixed Income lessons learned from Coronavirus?

My take has been that fixed income is not the field to chase returns. Better to lean toward higher quality and shorter term issues for the stability in price (relative to stocks) and be content to receive a 0% real return over the long term. For higher returns, I'd take risk in equities, real estate...
by BH+
Wed May 13, 2020 7:01 pm
Forum: Investing - Theory, News & General
Topic: Why is total market weighted index best?
Replies: 61
Views: 4440

Re: Why is total market weighted index best?

A broad-based capitalization index lets you capture the returns and ride the momentum of all the long-term winners in the market. You don't have to find the needle in the haystack. It will rise to the top. I don't know if that is definitively the best in terms of risk and return, but in terms of por...
by BH+
Wed May 13, 2020 6:56 pm
Forum: Personal Finance (Not Investing)
Topic: Small businesses stopping employees from getting Pandemic payments?
Replies: 54
Views: 3445

Re: Small businesses stopping employees from getting Pandemic payments?

I think he should make decisions based on his long-term interests, which would likely mean keeping on good terms with his employer. Some of the supporting programs, such as PP, may not last very long. I would think that "avoiding dying of COVID-19" would be a more important long-term interest than ...
by BH+
Wed May 13, 2020 3:02 pm
Forum: Personal Finance (Not Investing)
Topic: Small businesses stopping employees from getting Pandemic payments?
Replies: 54
Views: 3445

Re: Small businesses stopping employees from getting Pandemic payments?

I think he should make decisions based on his long-term interests, which would likely mean keeping on good terms with his employer. Some of the supporting programs, such as PP, may not last very long.
by BH+
Mon May 11, 2020 10:31 pm
Forum: Personal Finance (Not Investing)
Topic: $5k - $7k to replace engine, or get something else? (loan on car)
Replies: 109
Views: 7008

Re: $5k - $7k to replace engine, or get something else? (loan on car)

The 15k that you have paid for the car (and maintenance) so far is a sunk cost; without a running engine, the car is probably worth less than 1k (just guessing, I don't know). If you fix the engine for 5k to 7k, and keep the car for 10 years, it will cost you 500 to 700 dollars extra per year in dep...
by BH+
Mon May 11, 2020 10:07 pm
Forum: Personal Investments
Topic: Market vs. Limit Orders
Replies: 59
Views: 3702

Re: Market vs. Limit Orders

I use marketable limit orders and always get filled at a good price (limit or better). I doubt using a market order would improve on that.
by BH+
Mon May 11, 2020 12:35 am
Forum: Personal Finance (Not Investing)
Topic: Unhappy with job (MD) - need perspective
Replies: 27
Views: 4427

Re: Unhappy with job (MD) - need perspective

If you are looking for a better standard of living post-residency, you could consider immigration to the US, Canada, or Australia. Pays are better and taxes are lower in these countries, but it is likely that you would have to go through another few years of training. You could also consider tempora...
by BH+
Sun May 10, 2020 11:58 am
Forum: Investing - Theory, News & General
Topic: Event-Driven Bear Markets in U.S. History, 1835-2020
Replies: 26
Views: 2729

Re: Event-Driven Bear Markets in U.S. History, 1835-2020

A silver lining is that big tech has held up well in terms of earnings so far. That bodes well for the future, given that they have been engines of growth for the bull market in the past decades.
by BH+
Sat May 09, 2020 10:54 am
Forum: Investing - Theory, News & General
Topic: [Are American markets likely to outperform INTL]
Replies: 237
Views: 16386

Re: [Are American markets likely to outperform INTL]

:arrow: What I am saying is that when things are cheap, there is a reason for it being cheap, and it is usually a bad reason. And when things are really cheap, it is a worse reason. There is a dilemma here. Those who subscribe to factor investing would argue that cheaper stocks are likely to out-pe...
by BH+
Fri May 08, 2020 12:26 am
Forum: Investing - Theory, News & General
Topic: [Are American markets likely to outperform INTL]
Replies: 237
Views: 16386

Re: [Are American markets likely to outperform INTL]

One should to keep in mind that exceptionalism does not necessarily lead to market out-performance. Top corporations are generally well-run, but not all well-run companies make it to the big league.
by BH+
Fri May 08, 2020 12:15 am
Forum: Investing - Theory, News & General
Topic: 2007 to 2020: The changing advice of "A Random Walk Down Wall Street"
Replies: 68
Views: 11120

Re: The changing advice of "A Random Walk Down Wall Street" - 2007 to 2020

On "Bond Substitutes (using emerging markets bonds and high dividend-paying stocks) 2007 edition: - No mention. 2015 & 2020 editions: - "Extremely low interest rates present a daunting challenge for bond investors. All the developed countries of the world are burdened with excessive amounts of debt...
by BH+
Fri May 08, 2020 12:04 am
Forum: Personal Investments
Topic: ETF put buying details
Replies: 10
Views: 545

Re: ETF put buying details

- I've seen bid and offer prices. For a contract there is a spread between bid and offer, but for a particular put the mean was about 7% of the ETF price. . I buy the put at the premium offer price. Or I could spend some time and see if the offer drops at some point and I can buy that option for le...
by BH+
Mon May 04, 2020 9:33 pm
Forum: Investing - Theory, News & General
Topic: Build Browne Permanent Portfolio at M1; leverage it and hold the cash in a reward checking account.
Replies: 33
Views: 2429

Re: Build Browne Permanent Portfolio at M1; leverage it and hold the cash in a reward checking account.

Margin is effectively negative cash, so you'd likely be better off dropping the cash allocation first. On a pure math basis that's absolutely true. But you also have to have an emergency fund and it has to be in cash (or perhaps some in T Bills or I Bonds or something similar). Everyone has cash dr...
by BH+
Mon May 04, 2020 9:22 pm
Forum: Investing - Theory, News & General
Topic: [Are American markets likely to outperform INTL]
Replies: 237
Views: 16386

Re: [Are American markets likely to outperform INTL]

To someone in 2021 with easy access to inexpensive global index tracking ETFs, trying to take the Boglehead principles literally, it seems that anything other than global market cap is making a bet on a specific sub-market. It is the ultimate haystack. Any other smaller haystack seems to be a viola...
by BH+
Sun May 03, 2020 3:28 pm
Forum: Investing - Theory, News & General
Topic: Why doesn't Warren Buffett follow his own advice?
Replies: 15
Views: 2338

Re: Why doesn't Warren Buffett follow his own advice?

Warren Buffett recommends that after he passes the cash left to his wife should be invested 10% in short-term government bonds and 90% in a very low-cost S&P 500 index fund. Does anyone know why he does not invest this way? I think he buys stocks in individual companies. :confused Shareholders pay ...
by BH+
Sun May 03, 2020 3:19 pm
Forum: Investing - Theory, News & General
Topic: Build Browne Permanent Portfolio at M1; leverage it and hold the cash in a reward checking account.
Replies: 33
Views: 2429

Re: Build Browne Permanent Portfolio at M1; leverage it and hold the cash in a reward checking account.

What is the purpose of the cash in this portfolio? Why not just buy 33% of stocks, bonds, and gold each? There would be no leverage involved and no interest to pay. The same as in the original PP (stagflation defense and rebalancing powder). This setup also allows the cash allocation to be your eme...