Search found 139 matches

by PicassoSparks
Fri Oct 30, 2020 11:49 am
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure Part II: The next journey
Replies: 6639
Views: 628197

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

Why all this financial engineering around the low treasury rates but not around the CAPE being at 30?

We should have lower expected returns for UPRO and TMF, no?
by PicassoSparks
Thu Oct 29, 2020 11:48 am
Forum: Investing - Theory, News & General
Topic: Dalio - bonds don't provide a diversification benefit when interest rates are near zero
Replies: 164
Views: 13051

Re: Dalio - bonds don't provide a diversification benefit when interest rates are near zero

The chart has me intensely curious about realized returns. Lending to sovereigns used to be extremely risky. You could face default, or suddenly your entire community might become persecuted, or who knows what else.
by PicassoSparks
Thu Oct 29, 2020 9:00 am
Forum: Investing - Theory, News & General
Topic: What do you mean when you say "risk"?
Replies: 39
Views: 1601

Re: What do you mean when you say "risk"?

Ooo good one. You're right. I hadn't thought about that at all.
by PicassoSparks
Thu Oct 29, 2020 6:47 am
Forum: Investing - Theory, News & General
Topic: Online Savings Alternatives
Replies: 41
Views: 4292

Re: Online Savings Alternatives

Can you explain why HMBradley and Porte Bank are paying 3%? When Ally, Marcus, Credit Unions etc are paying 0.6%. Most customers will not get the 3% rate. You have to do direct deposit and be a net saver of 20% of the income they see. I suspect that most people don’t have employers who will split D...
by PicassoSparks
Wed Oct 28, 2020 4:33 pm
Forum: Investing - Theory, News & General
Topic: What do you mean when you say "risk"?
Replies: 39
Views: 1601

Re: What do you mean when you say "risk"?

You really need to define long term versus short term here before reaching that conclusion. 1964 Dow 800 1981 Dow 800 I think there are a lot of folks who haven't lived through a 17 year period like the above and therefore are not psychologically prepared for it. For those who are in or close to re...
by PicassoSparks
Wed Oct 28, 2020 11:35 am
Forum: Investing - Theory, News & General
Topic: What do you mean when you say "risk"?
Replies: 39
Views: 1601

Re: What do you mean when you say "risk"?

“Market risk: The volatility of the markets that we are compensated for holding thanks to the high expected returns. (This is understood to be a short term risk and in the long term, not really a risk at all.” There is a common but significant error in the market risk. There is no guarantee we will...
by PicassoSparks
Wed Oct 28, 2020 11:13 am
Forum: Investing - Theory, News & General
Topic: What do you mean when you say "risk"?
Replies: 39
Views: 1601

Re: What do you mean when you say "risk"?

Can you provide a link to the paper on decision-making? Thanks. It's here: https://www.cambridge.org/core/journals/behavioural-public-policy/article/freerolls-and-binds-making-policy-when-information-is-missing/97D5F7FBED1BF64FF63B536FD80BB321 The paragraph I'm thinking of starts the "What choosers...
by PicassoSparks
Wed Oct 28, 2020 10:20 am
Forum: Investing - Theory, News & General
Topic: What do you mean when you say "risk"?
Replies: 39
Views: 1601

Re: What do you mean when you say "risk"?

The answer is simple: “Risk comes from not knowing what you’re doing.” – Warren Buffett I was reading a paper about decision making under uncertainty and they defined three kinds of conditions that are commonly accepted in that discipline: Risk: When you know the possible outcomes and know the prob...
by PicassoSparks
Wed Oct 28, 2020 9:07 am
Forum: Investing - Theory, News & General
Topic: What do you mean when you say "risk"?
Replies: 39
Views: 1601

What do you mean when you say "risk"?

We talk a lot about risk on these boards. I have been trying to wrap my head around what that word means. I think that it means a lot of things and that sometimes those meanings are used interchangeably. I find this confusing. Here are some meanings of risk that I've observed: Consumption risk: The ...
by PicassoSparks
Mon Oct 26, 2020 10:47 am
Forum: Personal Finance (Not Investing)
Topic: How can I cultivate my love of saving money?
Replies: 50
Views: 4309

Re: How can I cultivate my love of saving money?

My wife and I have slightly different relationships to saving and as a result we have made a pretty good team. My approach is to get the macro right, and not worry about the micro. So if my overall budget is in good shape, I don't really look carefully at individual purchases. I save my money-managi...
by PicassoSparks
Mon Oct 26, 2020 10:06 am
Forum: Investing - Theory, News & General
Topic: Dalio - bonds don't provide a diversification benefit when interest rates are near zero
Replies: 164
Views: 13051

Re: Dalio - bonds don't provide a diversification benefit when interest rates are near zero

willthrill81 wrote: Mon Oct 26, 2020 9:38 am There was no 'flight to safety' back in March when stocks were plummeting. On the contrary, intermediate-term Treasuries fell by a not insignificant amount just as stocks were dropping.
That's not what I see in PV…
Image
by PicassoSparks
Mon Oct 26, 2020 10:00 am
Forum: Investing - Theory, News & General
Topic: Friend’s Investment Strategy Envy
Replies: 71
Views: 7156

Re: Friend’s Investment Strategy Envy

The most recent Ben Felix video has a lot of great sources on how day traders actually perform, sourced by real studies. Surprising no one on this forum the answer is: not good. What really surprising is exactly how not good the performance is, and how few manage to have a positive outcome at all. h...
by PicassoSparks
Mon Oct 26, 2020 12:11 am
Forum: Investing - Theory, News & General
Topic: If you have a sizable portfolio, you don't need an emergency fund
Replies: 260
Views: 24964

Re: If you have a sizable portfolio, you don't need an emergency fund

I think there are at least two models at play here and people aren’t being clear. One is a question for people who are not presently maxing their tax advantaged accounts. Should you keep an emergency fund before maxing, which has a drain on earnings but prevents paying penalties at a moment when an ...
by PicassoSparks
Sun Oct 25, 2020 5:42 pm
Forum: Investing - Theory, News & General
Topic: This synthetic ETF has recently beaten the index it is supposed to track by 7%/yr: should I invest? What's the risk?
Replies: 64
Views: 5150

Re: This ETF is expected to beat the index by nearly 7%: is there a catch?

I worry about swaps because they are generally the mechanisms for picking up pennies in front of a steamroller. You juice your returns in the short to medium turn in return for massively increasing your systemic risks. Which is fine for individual fund managers—they collected fees along the way and ...
by PicassoSparks
Sun Oct 25, 2020 7:07 am
Forum: Investing - Theory, News & General
Topic: Dalio - bonds don't provide a diversification benefit when interest rates are near zero
Replies: 164
Views: 13051

Re: Dalio - bonds don't provide a diversification benefit when interest rates are near zero

Dalio seems like a smart guy and all but why we spend more than two seconds considering the advice of an active manager on the buy and hold passive indexing forum is a mystery to me. What’s the durations of his advice? When he tells people to get out of bonds into something or other, is he suggestin...
by PicassoSparks
Sat Oct 24, 2020 1:22 pm
Forum: Investing - Theory, News & General
Topic: 7 Reasons Not to Use a 100% Stock Portfolio - The White Coat Investor
Replies: 200
Views: 13224

Re: 7 Reasons Not to Use a 100% Stock Portfolio - The White Coat Investor

The long-run only matters when a person can survive the short run. This is strictly accurate but, in this context, is utterly ridiculous nonsense. I'm afraid this is true, Klang. Your constant refrain of "surviving" is a bit much. You keep equating 100% stocks with a chance of DEATH if a crash happ...
by PicassoSparks
Sat Oct 24, 2020 5:55 am
Forum: Investing - Theory, News & General
Topic: Do renters need more real estate exposure?
Replies: 29
Views: 3083

Re: Do renters need more real estate exposure?

If your investing universe was a village with 12 houses and 5 publicly traded businesses, but 11 of the houses were in private hands and only 1 was controlled by the local REIT you might be tempted to lower your stake in the businesses and up your weight in the REIT so that your overall allocation m...
by PicassoSparks
Fri Oct 23, 2020 8:25 am
Forum: Investing - Theory, News & General
Topic: If you have a sizable portfolio, you don't need an emergency fund
Replies: 260
Views: 24964

Re: If you have a sizable portfolio, you don't need an emergency fund

Nope. The OP fundamentally misunderstands that an emergency/contingency fund is an insurance fund. A low risk tiered contingency fund provides increased returns without the massive risk of the OP's plan. I have had to use contingency funds for two periods of > 12 months of unemployment. 2002 - 2003...
by PicassoSparks
Thu Oct 22, 2020 3:52 pm
Forum: Personal Investments
Topic: Getting Started - TIAA Investments
Replies: 17
Views: 849

Re: Getting Started - TIAA Investments

Unfortunately my MAGI means I'm ineligible to contribute to a ROTH IRA or Traditional IRA. This is a side point but you are not ineligible for the Trad IRA, you are just ineligible for the tax credit when you make the contribution. The growth of your assets will still be tax-deferred so it might st...
by PicassoSparks
Thu Oct 22, 2020 3:30 pm
Forum: Investing - Theory, News & General
Topic: Does Dry Powder Work? - The White Coat Investor
Replies: 89
Views: 10984

Re: Does Dry Powder Work? - The White Coat Investor

This is a thought experiment but I wonder how this approach would look if we didn't conceive of dry powder as being a delay in investing (holding available funds until a crash) but an acceleration of it (pulling from future funds to invest). Meaning, you have whatever schedule of investment and cons...
by PicassoSparks
Thu Oct 22, 2020 5:39 am
Forum: Investing - Theory, News & General
Topic: What is the truth behind the statement very few people are able to beat the market?
Replies: 62
Views: 5028

Re: What is the truth behind the statement very few people are able to beat the market?

Do active managers fail to beat the market or do they fail to beat the market net fees?
by PicassoSparks
Wed Oct 21, 2020 7:34 pm
Forum: Investing - Theory, News & General
Topic: Does Dry Powder Work? - The White Coat Investor
Replies: 89
Views: 10984

Re: Does Dry Powder Work? - The White Coat Investor

At that time CADUSD was $0.65-ish When I market timed the US credit crisis/housing crash, the C$ shot above the US$ for a significant period of time. I remember CADUSD even going over $1 Funny. I was on the opposite side of that dynamic. The company I was working for had a number of contracts in US...
by PicassoSparks
Wed Oct 21, 2020 2:16 pm
Forum: Investing - Theory, News & General
Topic: Seriously, what is going on with international?
Replies: 216
Views: 19714

Re: Seriously, what is going on with international?

It's only underperformed for 10, 20, 30 , 40 and 50 years. This is about factors not international but it illustrates the point: In 1999, growth outperformed value looking back over the past 1, 5, 10, 20 years. In 2001, value outperformed growth looking back over the past 1, 5, 10, 20 years. Lookin...
by PicassoSparks
Wed Oct 21, 2020 1:21 pm
Forum: Investing - Theory, News & General
Topic: What's the difference between mental accounting and having a budget?
Replies: 17
Views: 1292

What's the difference between mental accounting and having a budget?

I am dipping my toes into the behavioral economics literature on mental accounting. Mental accounting is “the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities” (Thaler, 1999). Mental accounting often shows up as a villain on...
by PicassoSparks
Wed Oct 21, 2020 10:21 am
Forum: Investing - Theory, News & General
Topic: Diversification First, Risk Second
Replies: 28
Views: 2786

Re: Diversification First, Risk Second

Your data was from 1972 and 1986 onwards. This is less than half a long term debt cycle This is a sincere question phrased slightly snakily: Is the long term debt cycle a real thing or just something that Dalio et al have intuitions about? What's the literature or what evidence do we have for the e...
by PicassoSparks
Wed Oct 21, 2020 6:38 am
Forum: Investing - Theory, News & General
Topic: If you have a sizable portfolio, you don't need an emergency fund
Replies: 260
Views: 24964

Re: If you have a sizable portfolio, you don't need an emergency fund

It seems like the lesson of the original scenario is that if you have an emergency fund and the stocks crash and at the same moment you have to dip into it, don’t wait until it’s refilled before starting your contributions back to the stock market.
by PicassoSparks
Tue Oct 20, 2020 8:47 pm
Forum: Personal Investments
Topic: Which Megatrends for the next decade ? Which ETFs ?
Replies: 34
Views: 2509

Re: Which Megatrends for the next decade ?

It's only in books that people say "So that Colonel Lindbergh has flown the Atlantic! Impressive! Yes, I see a bright future in aviation, a bright future indeed , I do believe I shall , after all back young Mr. Hughes' venture--Transcontinental & Western Air, TWA, isn't it?" and become rich. Even w...
by PicassoSparks
Tue Oct 20, 2020 12:33 pm
Forum: Investing - Theory, News & General
Topic: Does Dry Powder Work? - The White Coat Investor
Replies: 89
Views: 10984

Re: Does Dry Powder Work? - The White Coat Investor

White Coat Investor wrote: Tue Oct 20, 2020 12:02 pm The results were the same as the study above. I also included data from Q2 and Q3 of 2020. 

Final totals:

Fully Invested Strategy: $5,725,029

Dry Powder Strategy: $5,718,327
Thanks! These results are surprising. These numbers are much much closer than I would have guessed.
by PicassoSparks
Mon Oct 19, 2020 10:19 am
Forum: Investing - Theory, News & General
Topic: Does Dry Powder Work? - The White Coat Investor
Replies: 89
Views: 10984

Re: Does Dry Powder Work? - The White Coat Investor

Of course it's easier to criticize a study than run the numbers. But here's the thing: [OT comment removed by admin LadyGeek] . You do good work on your blog and I've benefitted from it. Sorry to read that you're feeling defensive about my response. Of course it's easier to run the numbers with a lu...
by PicassoSparks
Mon Oct 19, 2020 9:55 am
Forum: Investing - Theory, News & General
Topic: Does Dry Powder Work? - The White Coat Investor
Replies: 89
Views: 10984

Re: Does Dry Powder Work? - The White Coat Investor

I'm not arguing for dry powder — I agree that it's a form of market timing and so bears a strong burden of proof for any results it might give. But this demo strategy doesn't make any sense to me as a way of testing whether or not dry powder works. The argument for dry powder is that you get a chanc...
by PicassoSparks
Sun Oct 18, 2020 8:30 pm
Forum: Investing - Theory, News & General
Topic: Please Rate the risk between A)S&p500 B)Reits C)Direct Real Estate
Replies: 8
Views: 504

Re: Please Rate the risk between A)S&p500 B)Reits C)Direct Real Estate

This pair of videos from Ben Felix summarizing the academic research on real estate and REITs was very useful to me. In the first, Ben argues that though real estate is one of the best investments on paper, the problem is that those outstanding returns almost certainly do not apply to the particular...
by PicassoSparks
Sun Oct 18, 2020 4:28 pm
Forum: Investing - Theory, News & General
Topic: Seriously, what is going on with international?
Replies: 216
Views: 19714

Re: Seriously, what is going on with international?

Seriously, I have no idea what's going with international. Here are international p/e ratios: https://www.starcapital.de/en/research/stock-market-valuation/. I keep myself diversified internationally because I know nothing. I don't want to end up in a situation holding all US if the US becomes Japa...
by PicassoSparks
Sun Oct 18, 2020 4:15 pm
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure Part II: The next journey
Replies: 6639
Views: 628197

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

Mechanically, how will you short the short funds and what are the costs?

Implementation is the devil.
by PicassoSparks
Fri Oct 16, 2020 10:34 pm
Forum: Investing - Theory, News & General
Topic: BRK-B, Value Fund?
Replies: 41
Views: 3635

Re: BRK-B, Value Fund?

When Steve Jobs left (for the first time), the end of Apple would have very nearly been an accurate prediction. What happened to the "internal education and culture maintenance" then? They didn’t have it. Apple University was set up as part of Jobs’ second tenure. It was part of the succession plan...
by PicassoSparks
Fri Oct 16, 2020 8:47 pm
Forum: Investing - Theory, News & General
Topic: BRK-B, Value Fund?
Replies: 41
Views: 3635

Re: BRK-B, Value Fund

When Steve Jobs died, many predicted the end of Apple. They did not think that the company could continue to succeed without the genius founder at the helm. Apple’s ability to produce new design hit after new design hit seemed impossible and risky even when he was alive, let alone after his loss. Si...
by PicassoSparks
Fri Oct 16, 2020 12:43 pm
Forum: Investing - Theory, News & General
Topic: How long after starting investing, did you start to be happy about the power of compounding?
Replies: 186
Views: 20213

Re: How long after starting investing, did you start to be happy about the power of compounding?

I don’t think we are rare https://www.cnbc.com/2020/01/30/nearly-1-in-4-millennials-report-having-100000-or-more-in-savings.html They defined 41 year olds as millennials!!! I wonder if they break the numbers down further. Because having $100K in long term savings isn’t that good if you are in your ...
by PicassoSparks
Fri Oct 16, 2020 12:34 pm
Forum: Investing - Theory, News & General
Topic: What happens after the risk shows up?
Replies: 41
Views: 4294

Re: What happens after the risk shows up?

What we do: Establish your desired annual increase in assets after expenses and new contributions. Assume it is 8% during accumulative years, for example. If it is 2% in a given year (Risk shows up), then go back to whatever number of years you designate and take the asset total for that point. Com...
by PicassoSparks
Fri Oct 16, 2020 12:16 pm
Forum: Investing - Theory, News & General
Topic: What are the intricacies of a country having debt denominated in a foreign currency?
Replies: 21
Views: 1565

Re: What are the intricacies of a country having debt denominated in a foreign currency?

I found this article a very interesting explanation of the benefits (and pitfalls!) to a country of holding the reserve currency (or being the reserve currency). https://phenomenalworld.org/analysis/the-class-politics-of-the-dollar-system The global dollar system has few national winners. In the typ...
by PicassoSparks
Thu Oct 15, 2020 11:39 am
Forum: Investing - Theory, News & General
Topic: The Wrong Way to Think About Debt - The White Coat Investor
Replies: 207
Views: 24832

Re: The Wrong Way to Think About Debt - The White Coat Investor

Of course shaving consumption leads to increased compounded savings down the line. But to what end? Is frugality the end? Or something else that might require some spending above and beyond subsistence? In my case, the end is a more comfortable, happy life all the way though. On these boards, I see...
by PicassoSparks
Thu Oct 15, 2020 9:01 am
Forum: Investing - Theory, News & General
Topic: The Wrong Way to Think About Debt - The White Coat Investor
Replies: 207
Views: 24832

Re: The Wrong Way to Think About Debt - The White Coat Investor

The money I borrowed from a credit card to fund a Roth IRA in 2005 didn't make a lick of difference. Moving money between Prime MMF and Ally Bank didn't make a difference. Waiting two extra years to pay off my mortgage so I could start my taxable account didn't make a difference. Waiting 17 years t...
by PicassoSparks
Tue Oct 13, 2020 7:35 pm
Forum: Investing - Theory, News & General
Topic: What happens after the risk shows up?
Replies: 41
Views: 4294

Re: What happens after the risk shows up?

The problem with this very good advice is that YOU CAN’T KNOW THAT IN ADVANCE. “Pick an asset allocation that you’ll be comfortable with in 20 years no matter what happens” Hmm, let’s see what asset allocation would 20 years ago me have been comfortable with through to today? ~20 years ago me workin...
by PicassoSparks
Tue Oct 13, 2020 6:09 pm
Forum: Investing - Theory, News & General
Topic: What happens after the risk shows up?
Replies: 41
Views: 4294

Re: What happens after the risk shows up?

I can’t say for certain, but they’re Canadian so there would have been a significant domestic tilt and their results would have been quite different from the US market. I’d similarly assumed various stock picking mishaps on their part as part of the explanation until I came across this surprising pa...
by PicassoSparks
Tue Oct 13, 2020 11:51 am
Forum: Investing - Theory, News & General
Topic: What happens after the risk shows up?
Replies: 41
Views: 4294

Re: What happens after the risk shows up?

What do you mean when you say your father was "generally persuaded by low-cost mutual funds"? What funds was he invested in? What was his asset allocation? I try to be realistic about the yields on index funds, but the numbers above seem low for an indexed portfolio. Was you father at least partial...
by PicassoSparks
Tue Oct 13, 2020 11:28 am
Forum: Investing - Theory, News & General
Topic: "Active" Index investing vs. "Passive" Index investing
Replies: 197
Views: 7847

Re: "Active" Index investing vs. "Passive" Index investing

So this is what I proposed, buying companies from an index that you are comfortable with and hold for the long term. Not randomly picking, not momentum chasing, not daily trading. Your idea cuts to the heart of how efficient the market is. If the market is efficient, then there should be very few o...
by PicassoSparks
Tue Oct 13, 2020 10:55 am
Forum: Investing - Theory, News & General
Topic: What happens after the risk shows up?
Replies: 41
Views: 4294

Re: What happens after the risk shows up?

Thank you everyone for all your experiences and responses. I wonder how much survivor's bias there is on these forums. Meaning, how many people capitulate during a downturn which means they get out of investing AND they stop posting in places like this. Some of what's informing my questions is my pa...
by PicassoSparks
Mon Oct 12, 2020 5:22 pm
Forum: Investing - Theory, News & General
Topic: "Active" Index investing vs. "Passive" Index investing
Replies: 197
Views: 7847

Re: "Active" Index investing vs. "Passive" Index investing

Since 2010, the S&P 500 has only had a .1% higher CAGR than the TSM. That’s true. Because the S&P 500 is most of US TSM. But when you compare it to the Russell 2000 or the Global TSM you get a sense of just how significantly it outperformed. https://www.portfoliovisualizer.com/backtest-portfolio?s=...
by PicassoSparks
Mon Oct 12, 2020 2:22 pm
Forum: Investing - Theory, News & General
Topic: "Active" Index investing vs. "Passive" Index investing
Replies: 197
Views: 7847

Re: "Active" Index investing vs. "Passive" Index investing

The other reality is that even the vast majority of passive investors will underperform the benchmark. We will lose income to the drag of taxes, expense ratios, tracking errors from our asset allocations, any behavioral hiccups along the way, the fact that our investments will be uneven according to...
by PicassoSparks
Mon Oct 12, 2020 2:20 pm
Forum: Investing - Theory, News & General
Topic: "Active" Index investing vs. "Passive" Index investing
Replies: 197
Views: 7847

Re: "Active" Index investing vs. "Passive" Index investing

I suspect that the collective minds in this BH community couldn't come up with the one best index fund to invest in so that you don't underperform the market. If there is such a fund, then all of BH-ers would be on such a fund, right, so we don't underperform the market in the long run? Every time ...
by PicassoSparks
Mon Oct 12, 2020 6:49 am
Forum: Investing - Theory, News & General
Topic: Equities in past election years
Replies: 15
Views: 1233

Re: Equities in past election years

Ben Felix just released an excellent video summarizing and reviewing the relevant literature on this subject. I want to highlight this video because the results from the literature that he discusses are so surprising and counter intuitive and the outcomes are so interesting. Also notable because th...