Bogleheads.org

Nothing magical about the FFR the 1y is already at 4.7% and there are many many billions in it. If people want 4.7% yield they can get it already. And yet many still choose the 30y and consider 3.98% a fair yield for the 30y. That won't change just because the FFR rate changes. When FFR went from 3.25 to 4 the 30y dropped. Same could easily happen when FFR goes to 4.5. The 30y is based on inflation and expected FFR over the next 30 years, which has almost nothing to do with the FFR today. I was talking about FFR and 20Y with respect to this strategy. I'm not sure why you're busting out 1Y and 30Y as I was talking about neither. Because it's the exact same concept principles and market forces :oops: When the FFR went from 3.25% to 4%, 30Y w...

Yeah, I think I misread the data. VTSAX was a little more volatile overall, but total returns weren't significantly different. But volatility can be more effectively reduced with diversification across stocks and bonds rather than focusing on dividends. That's true. But one could do both, i.e. use dividend focus for a portion of the stock allocation. But again, there's no reason to focus on dividends at all. Dividends are just an inconsequential accounting mechanism that are irrelevant to total return. Mathematically this must be true. Broad diversification is a more effective way to reduce volatility. In the end I'd rather go with the data you provided, though, over your advice. If we include 2022, then we got a higher return with much le...

To the rest of your post - I think it's understood that dividend growth funds will have different factor exposures than TSM and that's why many people choose to use them. But these factors aren't limited to dividends, so can be targeted more effectively with a dividend-neutral approach. I 100% agree that intuitively that makes sense, but when I put VIG (Vanguard Dividend Growth) against QUAL, VFQY, FQAL, and SPHQ (the "quality etfs" from ishares, vanguard, fidelity, and invesco) in portfolio visualizer's factor regression model, VIG actually has the highest exposure to "robust minus weak", the quality factor. Whatever screens the other etfs are applying isn't as effective as just taking reliably dividend growing compani...

To the rest of your post - I think it's understood that dividend growth funds will have different factor exposures than TSM and that's why many people choose to use them. It is an interesting angle if we say that "dividend stocks" is a reframing of "the value factor". Maybe there is some merit in that, but in that case why not just discuss the value factor? (Sorry, I don’t mean that to be snarky if it seems that way… maybe in the end I’m a bigger dividend fan than I realized :-P) No it's a very fair point that it could be a different discussion. I actually consider it as giving more exposure to a quality factor. VIG, according to portfolio visualizer, has a much higher exposure to quality than vanguard's own quality etf...

Since 2002 VDIGX has outperformed VTSAX by half a percent with less risk. That's recency bias. 2002-2021 the return difference was statistically insignificant, and VTSAX was less volatile. And again, there's no basis to attribute the recent out-performance of VDIGX this year to dividends. VDIGX is underweight large growth, which has tanked this year. The return difference is almost certainly attributable to their allocation differences rather than dividends. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=2002&firstMonth=1&endYear=2021&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=tru...

OP - It all depends on what you're looking for! I definitely see how dividend strategies could be helpful for some types of investors, though I think that purely "high dividend" strategies will tend to underperform over the long term, dividends are a bit more of a reliable and psychologically comfortable form of income rather than selling shares. Personally I don't own any high dividend funds, but one of my accounts has vanguards' dividend growth etfs, which I think have a good change of providing a superior risk-adjusted returns by using dividend growth as a measure of quality. Maybe not! But I'm hopeful and their ERs are reasonable (.06 for VIG, .15 for VIGI). Still, I'm overwhelmingly just market cap weighted, especially in tax...

No. This is a fallacy. When you buy a business, you're always speculating on its future earnings – dividends make absolutely no difference, in principle. Whether those earnings are distributed, or reemployed, or used for buybacks, an efficient market will ensure the same overall return, assuming the business is being run well (which is again, always the case). In principle, dividends should have no impact on investor behaviour. This isn't quite the case. And economists call this the 'free dividends fallacy'. It's probably a minor market inefficiency. Two phrases from your post ring out as fallacies: "in principle" and "efficient market". I'm being careful not to proclaim fallacies as fact there, as there may be ways in ...

Over the past 40 years, stocks that maintained or grew their dividends outperformed those that cut their payouts or offered none at all. Over the last 30 years Vanguard Dividend Growth has under-performed the Vanguard Total Stock Market Index by about 1% annually. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&...

Seems like another gimmick devised by financial institutions to charge higher expenses. I’m avoiding it entirely. I broadly agree, but I think there's a bigger strategy here that a lot of investment managers are taking: 1. Investment managers have realized how great ETFs are, and how in particular they are amazingly tax efficient and perfect for taxable accounts. This makes it super hard for them to sell high-fee active funds with more capital gains distributions, given that they'll need to beat a pure index return which has 1) super low operating costs from minimum fees and trading and 2) super low tax costs. 2. Investment managers want to sell active funds but don't want to cut fees. So they need a way to cut the tax costs to make them l...

I'm surprised that no one has raised the idea of using a dividend appreciation etf (like VIG or VIGI) for this. Those would overweight you in healthcare/consumer defensive/utilities, underweight tech/consumer cyclicals and pull out the companies in other sectors with more resilient earnings growth/quality, which I'd consider defensive. As opposed to a pure sector model, it would recognize that there are more and less defensive companies within given sectors. What does the community think of that in lieu of the 60/40? Obligatory note that dividend appreciation is not "high dividend" - in fact VIGI has a way lower dividend than VXUS. It's about companies that have steadily increased their dividends for years, in fact cutting out the...

Anyways I really enjoyed the book. I've read the first half in detail but may only skim the second half. It gave me a lot to think about, though ultimately I don't think I'll change my allocations much. To the point Rick made in his thread about his portfolio, to use a factor like value or defensive you have to really believe in it and be willing to commit for 25 years, but I don't feel strongly enough about any of these factors to do that. The book's discussion of asset classes was definitely helpful and interesting but not too groundbreaking in part because Antti focuses only on asset classes with decades (or preferably a century) of data. One big weakness in the book, which Antti acknowledges, is that it's written, like most academic boo...

Wow - an increase to 33.75% maintenance margin during US elections? I wonder what will happen in a 1929-type crash? Were all securities (also Vanguard ETFs) increased in their maintenance margin? So where VT, VTI etc. also increased to 33.75% maintenance margin requirement? Securities whose MM was set by Reg-T at IBKR (like Vanguard ETFs) did not have their MM increased during the 2020 election. The example in the IBKR message was wrong and they retracted that example afterwards. They did bump up the MM by 35% for futures though. You are correct. I forgot about the correction and pasted that email below. The issue for me was that, from my perspective, the first email arrived 9/22, the second one 10/04. I had some margin at the time and had...

I received this email from IBKR ahead of the 2020 election: As you’ve likely observed, elevated option implied volatilities indicate that the markets will be confronting elevated volatility both before and after the November 2020 election. IBKR shares that sentiment and believe it’s appropriate to start controlling leverage in a measured fashion in advance. Consequently, to protect IBKR and its customers, IBKR will increase margin requirements by as much as 35% above normal margin requirements leading up to the November U.S. election. To illustrate, consider a Reg. T margin account with stock XYZ having an Initial Margin requirement of 50% and a Maintenance Margin requirement of 25%. With the increase fully implemented, the new requirements...

Congratulations on the trip! I'd just second what other people have already put here. If you plan to get travel health insurance, I had to use CISI - https://www.culturalinsurance.com/ - while I was in Italy and it really saved me. A toe surgery cost me a couple hundred euros, and I was at the hospital that all the football players went to. You'll want a debit card like the Schwab card with no atm fees. Cash is preferred in a lot of places. Watch some Rick Steves episodes and get one of his books to prepare yourself. Avoid restaurants immediately around the most touristic areas. Try to spend a day or two in a smaller country town. Do not talk to people in touristy areas. Scams are common - I remember one when I was there was an older lady p...

I sold my car in Texas a few years ago. You can find a change in title form on the state's website. Meet your buyer at a bank, have that form signed and notarized. Accept the cash, and take your license plate off of the vehicle - the change in title form will act as their license temporarily while they order a new one.

muffins14 wrote: ↑Fri Apr 08, 2022 9:59 pm If you want more than 100k credit, do you just purchase one box with larger spread, or multiple boxes of smaller spreads?

It’s interesting that you think the strike prices don’t matter that much

Hi muffins - I think (without much evidence) that the economics may be a bit better with one big box, but as someone who did that I kind of regret it. The issue now is, how do I ever pay this thing off? Build up the full amount in a bank account? For the future I plan to buy a set of small boxes that I can then pay down one or two of when I want to decrease my leverage.

I'm surprised no one has mentioned this yet, but I'd suspect that the performance of the Canadian dollar in 2008 would have something to do with them being a big oil exporter, when the U.S. was still a big importer. Oil prices were exceptionally high (relative to the time) for most of that year.

I'll just add that selling a box at Schwab worked for me. The people I talked to had no idea what it was, but I called them after the trade and verified 1) that the trade had reduced my margin amount by the expected amount (I had purchased ETFs that day and briefly had a margin loan) and 2) though they didn't really understand/couldn't explain how it would impact maintenance margin requirements, they ran a hypothetical decline of my ETF positions of 50% through an internal calculator and said it wouldn't result in a margin call. I do not have portfolio margin but they said it wouldn't impact the positions.

To start - thank you everyone for their valuable contributions to this thread. I'm still pretty ignorant but felt good enough to pull the trigger. It looks like 2-year bond yields jumped 9bps today on inflation news, which was not great for my first box trade (4000-5000 for Dec 2023 at 977.5, it shows up on boxtrades.com as an embarrassing outlier). I was trading at Schwab and don't know if it also hurt that my trade was being routed with "smart" as the venue but I couldn't see a way to change it (though I did see different venue options for equity trades) and didn't want to bother calling in about it. I put in a limit order and decreased it slightly every couple of minutes to get the trade filled and be done with it. Even at 977....

I split across multiple custodians, just because that's what makes sense for me - I like a fund exclusive to one, I like the features of another, have a 401k at another. But I do like being split for security reasons - not because of any custodian concerns, but because if one of my accounts was somehow compromised and emptied (despite all my extensive efforts to prevent that) I'd at least have the two others.

I bought an Oasis early as a treat for myself/to replace a broken paperwhite, and I totally regretted it. The biggest issue, as serbeer pointed out, is that the Oasis's larger size makes it harder to carry around. I ended up getting a new paperwhite a few months later.

One - VT, or VTSAX, or a target date. Personally I just use VT.