Bogleheads.org

More present earnings for present spending does seem to be a good hypothesis; it is possible that it could reduce the sequence of returns risk. However, it is very hard to support this claim securely merely looking at US stock data.

As far as I can tell, value stocks as a whole generally carry more negative skew than the total market does. This would probably improve the percentage of success of a richer spending at the expense of holding more tail risk (that is, one might fail harder).

Simple, I didn't forsee the issues that I have encountered. In discussions and even planning some of this over the years there were no indications that these issues would pop up. But the lowest level answer to your question is because they are things I think I would really enjoy. I am not sure what you are having trouble grasping about this circumstance. If you can afford the buddy trip, take the buddy trip. I think there is more concern that there is decision paralysis based on what others might be thinking than reality of what they will actually do. That is, the isolation could be self-inflicted partly (which is unfortunately easy for introverts). I never really get stuck on what people might think when I say and do things; however, they...

But a key component of the Buddies Trip is the Buddies, similarly a key component of the Family Trip is the Family, it is a shared experience thing. You are specifically identifying barriers to your goals. If you cannot figure out a reasonable method to circumvent any of the issue(s) why did you place them on the list to begin with? Simple, I didn't forsee the issues that I have encountered. In discussions and even planning some of this over the years there were no indications that these issues would pop up. But the lowest level answer to your question is because they are things I think I would really enjoy. I am not sure what you are having trouble grasping about this circumstance. If you can afford the buddy trip, take the buddy trip. I ...

A large part of it, and finances are virtually the sole reason these trips don't pan out. This is my point about how differences in finances can be isolating. Although sometimes it is willingness to spend more than ability to spend. Unfortunately I am not wealthy enough where my paying for it isn't hurtful to people's pride. Seems to me it is much easier to take a free trip from someone with private jet money than someone you still want to consider your peer. I am stunned more BH haven't experienced this, it is just basic human nature. There will always be reasons not to do something - and there are always ways to do anything you want to do. But a key component of the Buddies Trip is the Buddies, similarly a key component of the Family Tri...

Be honest: Is there ever a point when you would stop investing in equities? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to? There is little reason why a person would be recommended to have no equities if there is a considerable investment timeframe. If the goal is to reduce long-term risks, then some amount of equities is required. Not to mention, owning a business is equity; runni...

I believe there was a famous academic refutation of Efficient Markets, that showed the level of volatility in markets seemed much larger than would be predicted based on the amount and impact of information being priced in.. I think the Covid mini-crash was an example – as was the flash crash, of course – when you have lots of Stops being hit, and forced de-risking from strategies like risk parity, fundamentals can go out the window for a bit. There's also broad market selling, esp. in international stocks, where quality/defensive businesses sell-off sharply, when they probably shouldn't.. In the UK, with a lot of illiquid Investment Trusts in the indexes, we had things going to 80-90% discounts during the covid panic.. It's obviously hard...

rockstar wrote: ↑Wed Mar 22, 2023 2:59 pm Takes some time to figure out what makes you happy versus what marketing tells you will make you happy. That’s been my experience.

Right. Marketing is lost on me; they would do themselves a favor by having all the details and the price upfront. I have a better gauge of my own happiness then they do.

For 1) I think the answer should be to learn techniques for being less anxious, rather than to buy bonds that are suboptimal for your horizon I agree! In fact I have a rant that I've never posted, about how to do this: know your history and how your investment strategy performed e.g. during the great depression, 1970s stagflation, etc. Maybe I'll post it some day if people are interested. However, the current mindset is to assess your ability, willingness and need to take risk. There's nothing about *increasing* your risk tolerance. I think this comes from the world of financial advisors. Clients of financial advisors, by definition, consider investing to be something they're not going to learn, but instead pay someone else to do for them....

danbdzs wrote: ↑Wed Mar 22, 2023 10:05 am October 24th (1 trading day after the initiation of this thread), marked the bottom of TLT - Long term US Treasuries (so far).

What a beautiful thing.

Best regards to McQ, trully apreciate your contributions to this board.

The question is whether anyone put money into long-term bonds around this time. I was on leave of this forum during this time, so I never saw this thread; but, I did buy quite a bit of long-term bonds around this time given how far it dropped.

Before I indexed, I was one of the bottom fishers; not timing the market low, but finding hopefully the diamonds in the rough. I got reasonable returns actually, but it took too much time.

If this is the case then meaningful financial success might be harmful. I know a lot of people here disagree but I think for multiple reasons increased financial success slowly becomes isolating for many. It is a lot easier to live freely when the fear of losing a job is not overriding spending time with others. I find that I am less stressed the more I have accumulated. The past year was rough but financially/relationally it was not the case. When there are no figurative Joneses to keep up with, the only things that money will do is buy peace of mind and allow for a generous heart. Some of that depends on why you were investing. For a lot of people it was to have "nicer" things which can sometimes be a barrier with others. Or to...

Introverted people don't need the same amount of social interaction that extroverted need. It depends on personality type. Right. I feel a stronger pull to introspection and adding my thoughts to society's grand book. I'm an introvert, but I think it's a mistake to assume that introverts are unable to build strong, meaningful relationships. It's easier for introverts to keep to themselves and not socialize, I'll admit. But with the benefit of hindsight, I now realize that it was a mistake to not put more effort into building a meaningful social network. Just as important as the time I've spent figuring out how to accumulate more money. I can feel others emotions, but I have to recharge considerably to handle the next social event. It is a ...

delamer wrote: ↑Tue Mar 21, 2023 4:54 pm

secondopinion wrote: ↑Tue Mar 21, 2023 4:38 pm

gotoparks wrote: ↑Tue Mar 21, 2023 4:30 pm Introverted people don't need the same amount of social interaction that extroverted need. It depends on personality type.

Right. I feel a stronger pull to introspection and adding my thoughts to society's grand book.

But note that the study quote is about “people who are more isolated than they want to be.”

Good eyes. So I guess we are arguing against a straw man (we are did not understand it entirely).

sc9182 wrote: ↑Tue Mar 21, 2023 4:20 pm Tied buying pound of Bananas with Gold !? Or, a traded a pound for TIPs !? Safekeeping!? FDIC/otherwise insured?

Taxes when you sell appreciated metal ?

Recent Gold transport/transfer episode - https://news.abplive.com/states/man-arr ... 588118/amp

Well, I would not try storing a pound of bananas as a long-term investment/speculation; even gold skeptics would agree with this.

gotoparks wrote: ↑Tue Mar 21, 2023 4:30 pm Introverted people don't need the same amount of social interaction that extroverted need. It depends on personality type.

Right. I feel a stronger pull to introspection and adding my thoughts to society's grand book.

TheTimeLord wrote: ↑Tue Mar 21, 2023 4:23 pm If this is the case then meaningful financial success might be harmful. I know a lot of people here disagree but I think for multiple reasons increased financial success slowly becomes isolating for many.

It is a lot easier to live freely when the fear of losing a job is not overriding spending time with others. I find that I am less stressed the more I have accumulated. The past year was rough but financially/relationally it was not the case. When there are no figurative Joneses to keep up with, the only things that money will do is buy peace of mind and allow for a generous heart.

Relationships are important, but understand not everyone is social. I have rather slow developed relationships and rather few, but the quality is what matters. Social situations are stressful, even if that is with people I know. My most likely regret is what I did with my life, not who I got to know.

jebmke wrote: ↑Tue Mar 21, 2023 1:40 pm

secondopinion wrote: ↑Tue Mar 21, 2023 1:32 pm I stand corrected that emergencies cannot be major and all at once. But in this case, that is a complete exhaustion of funds. More or less, this is not something an emergency fund would have helped regardless. In fact, it helped probably that stock growth has occurred over all of those years.

There is always a risk of getting hit with a massive bill, but the question is whether it is riskier not to invest even if it does hit.

That's exactly why we ditched our EF in our early 40s

Do you have any short-term fixed income (1-5 years) whether directly or indirectly? That is what I do instead as it is a compromise, since my short-term risks are relatively high still. If things improve, I will consider abandoning the notion altogether.

See part I bolded above. It seems you made a risk assessment and determined job loss was not a risk for you, or at least not a risk you felt the need to insure against. I'm glad this worked out for you, but just because it worked for you doesn't mean it will for someone else. More to the point, in my case, I'd never even heard of it. I claim no process and no success. I never heard anybody use the phrase "emergency fund" until Dave Ramsey, and if I had been thinking I was planning for an emergency, it would never have occurred to me that the emergency in question is a period of unemployment (duration of which obviously I have to predict). I suppose, and I have for a long time, that everybody has to choose his own emergency. I don...

If there were no expected premium to earn from small cap value, would you still hold it above the market weight? If the true answer for your case is yes, then tilt; if not, then do not tilt.

See part I bolded above. It seems you made a risk assessment and determined job loss was not a risk for you, or at least not a risk you felt the need to insure against. I'm glad this worked out for you, but just because it worked for you doesn't mean it will for someone else. More to the point, in my case, I'd never even heard of it. I claim no process and no success. I never heard anybody use the phrase "emergency fund" until Dave Ramsey, and if I had been thinking I was planning for an emergency, it would never have occurred to me that the emergency in question is a period of unemployment (duration of which obviously I have to predict). I suppose, and I have for a long time, that everybody has to choose his own emergency. I don...

Clarky wrote: ↑Mon Mar 20, 2023 4:52 pm From Bankrate.com: “Since 1960, reinvested dividends accounted for 84% of the total return of the S&P 500 index.” How does this relate to the current debate? As a relative neophyte, I assume I’m missing something…

It essentially is stating the reinvestment of earnings (paid out as dividends or retained) is the vast majority of the returns. That should be the case, since it is by the future stream of earnings that a stock is priced usually. We certainly would hope that the earnings compound after 60+ years.

I think wrong is a bit harsh, but far from the best choice. Wait until you see how much money Americans let sit in bank accounts earning low to no interest. There is nothing rational about these investors, they just put money where their 401K or advisor tells them to, or where someone on MSNBS says to. They are being led into dividend stocks against their own best interest. And maybe the fund is just good enough not to be a problem for them. $300B isn't a huge amount either, the biggest, and I would argue the best, have over $1 Trillion. VG has what, about $7T under management. Not sure what the equity-fixed income fund split is but if it about 50-50, then this $311B figure I quoted for dividend focused funds, which is probably under-count...

OP, 1) It does lose it's nominal value. Aka, you know exactly the dollar value. 2) Accessibility, you can get at it when you want it. It is not subject to someone's else decision. Aka, HELOC does not qualify since it can be cancelled. 3) It does not cost you to use the money. For example, you have to pay interest in order to use it. 4) Cash or cash equivalent. KlangFool 1. Knowing the exact dollar amount on withdrawal is not the same as not not losing nominal value. A direct CD often has it where the nominal value is known but would be a loss with early withdrawal. 2. Sadly, almost everything counts as being subject to "someone else's decision" to some extent. 3. Some choices, it is at the point of use that the cost is had; other...

If one is getting close to loan terms of what the overnight rate is, then I think it is irrespective as to what the actual rate is. Are your short term risks well enough managed? Because my short-term risks are considerable against my distant risks, I cannot carry a margin balance. Maybe you can take those risks and hence it is less likely to bankrupt your portfolio.

But something tells me the risk tolerance is not there.

I was curious so did a max time period chart for VBR for small value and VTI for the rest of us. VTI healthily beat VBR. I learned about small cap value being a bad place from a Jack Bogle interview some time ago. He used it as an example of a sector where people find something that's outperformed for some particular time period and it becomes a rush to get in and continues being a rush for a while. Well, what happens when you get all this investment? It becomes overpriced and from what Jack said, that's where small cap value is now. So if you want to beat small cap value, use the entire US market. VTI or VTSAX work great for this. The root question is whether one should overweight stocks that have more present earnings or book value now p...

Swensen on Private Equity.. And I've said it too, but one can access some very fine PE firms (HG Capital, Harbourvest) via UK investment trusts, sometimes on 50% discounts: https://www.cfr.org/event/conversation-david-swensen SWENSEN: So that is what I love most in my portfolio. I think the private equity that you’re talking about, where you buy the company, you make the company better— RUBIN: Yeah. SWENSEN: —and then you sell the company is a superior form of capitalism. I’m really concerned about what’s going on in our public markets. I think short-termism is incredibly damaging. There’s this focus on quarter-to-quarter earnings. There’s this focus on whether you’re a penny short or a penny above the estimate. And there’s this activist m...

Swensen on Private Equity.. And I've said it too, but one can access some very fine PE firms (HG Capital, Harbourvest) via UK investment trusts, sometimes on 50% discounts: https://www.cfr.org/event/conversation-david-swensen SWENSEN: So that is what I love most in my portfolio. I think the private equity that you’re talking about, where you buy the company, you make the company better— RUBIN: Yeah. SWENSEN: —and then you sell the company is a superior form of capitalism. I’m really concerned about what’s going on in our public markets. I think short-termism is incredibly damaging. There’s this focus on quarter-to-quarter earnings. There’s this focus on whether you’re a penny short or a penny above the estimate. And there’s this activist m...

Depending on the brokerage, it might not be showing the price change of today (let alone at that given moment). That is, the data might be stale.

I think it’s very interesting that a partner in a financial planning firm is asking for third-party opinions on his financial risks. :shock: I honestly don't think snarky comments like this are helpful in encouraging people from all backgrounds to ask questions on this forum. Part of the reason I visit is to be able to interact with people I would never have the opportunity to share ideas with otherwise. Echo chamber existence be damned. Labelling, and being dismissive is not helpful. OP asking people on this forum means he is humble and open to suggestions and wise enough to understand that, despite his personal qualifications, he too might have some blind spots. Which, in turn means he not blinded by hubris and is actually a good financi...

MOBY DICK wrote: ↑Fri Mar 17, 2023 9:15 am TIPS are one of those things that sound good to have. Actually seemed like a no-brainer.
They have proven to be worse than useless after real inflation kicked in 2 years ago.
So apparently it did work well... for the government... not for the investor.
So much for all the TIPS discussions.

Did they fail? The government had to pay more interest. TIPS “failed” only because the market real yield increased. That is a big difference from being good for the government.

investwise1983 wrote: ↑Fri Mar 17, 2023 10:32 am Anyone taking profits that hasn't been hit too hard?

I am waiting for the profits. But I guess I have dividends and interest, however.

For a youngish investor with the stomach for risk and the need to grow your principal is there any reason to not just do the 3 fund portfolio and forget it? At least with the part of your portfolio that you wouldn't need for 7 years or more? I have a stomach for risk, including going against the grain and not hold BND as my fixed income. BND, the commonly touted bond ETF, is about 40% of bonds that are 1-5 years until maturity and 30% are 5-10 years until maturity. To be frankly honest, if I-bonds or direct CD offerings happen to be superior at the time with a perspective towards long-term investing versus treasuries or even corporate bonds in this maturity range, I do not think it is worth holding BND. The worst case for me is underperfor...

anoop wrote: ↑Fri Mar 17, 2023 11:18 am CD not best for liquidity because of penalty.

Liquidity is a concern for direct CDs. However, because it is normally a fixed penalty, it can be a rate hedge for the case when rates pop up higher (I utilized this fact in 2022 in my favor).

My taxable account managed by my former financial advisor has two real estate funds, REET and DFGEX. I read in “The Four Pillars of Investing” and a book by Rob Berger that REIT’s can generate lots of taxes. Should I consider selling them? REITs, as some of the posters have commented, are not terrible in the sense of how the income is taxed. It is more of a question whether you want to hold more REITs than the market; the taxes are secondary in all honesty. As someone who has a large taxable account in comparison to my tax-advantaged, I would not push REITs out of the taxable account. Maybe they rank 3 out of 5 stars (in my mind) as far as tax efficiency, but I can think of other classes of companies that are far worse. And with yields of ...

An unrelated question: Do any of you use microcap funds, or do you think a small cap value fund is sufficient? Unfortunately, there is not a CRSP U.S. Micro Cap Index (the bottom 2% of cap) fund to go with Vanguard's offerings (which contains all the companies too small for VB, their small-cap ETF). The most similar choice for an ETF is IWC; but with an 0.60% ER, it is very expensive and follows the Russell Microcap Index. https://www.ishares.com/us/products/239716/ishares-microcap-etf If one believes in small cap value intensely, then they might want to consider the S&P 600 Value Index or even the S&P 600 Pure Value Index. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=2&startYear=1985&firstMonth...

The largest risk is that you could lose access to all of your portfolio for some time. Even though I am within insured limits, I choose to have more than one brokerage for this reason.

Franklin Templeton has posted a very interesting history on the Mutual Series Funds going back to the 1930s. Thanks for posting. I got a kick out of the Adapting To Changing Markets title on page 15. Those of us of a certain age will remember Franklin-Templeton as a big name player in the late 20th century, particularly in international investing. What they did not do, however, was adapt. Their lethargic, high-cost model fell out of favor when Vanguard, Fidelity and others came to prominence. Maybe they are trying to reinvent themselves. Well, I know their index single-country ETFs (such as FLAU) are favorites of mine (far cheaper than iShares with FLAU being 0.09% rather than EWA's 0.50%). https://www.franklintempleton.com/investments/opt...

That is correct; they rescheduled. Normally, they do give more notice, however.

Hi! I'd like to invest more in the stock market (esp during times like this) but I am also saving for a down payment. What % of my net pay should I use for investments vs house down payment? Would it be silly to delay purchasing a house so I can invest more of my money in the stock market? Here are the pros/cons I see. Pros Flexibility. Who knows where my career might take me? I can always sell my stocks if I want to purchase a house (stock market could tank when I want to buy a house though) I can take more risks with my career Cons I live in a VHCOL area. House prices may continue to go up. I like having a home of my own FOMO. Friends are buying homes. Home ownership is fine to seek, but I would tend to not take it lightly. I do not want...

I opened a bunch of add-on CDs ranging from 1 to 5 years over the past few months. That way, if the very short-term interest rates do drop quickly then I have somewhere that is yielding >4% for the next 5 years on new cash.

Well of course the absolute values are greater, but as a percentage of total wealth they are much smaller. And the latter matters more from a behavioral and emotional standpoint. Behavior being the biggest factor! And of course these charts assume all else is equal, which it's not. The average investor is going to be buying individual stock, crypto, gold, options, buying high and selling low, taking advice from friends in the locker room and at the bar, etc. If an advisor puts a stop to that catastrophic behavior and gets them into a diversified allocation and pushes them to increase their savings, the results will be substantially better than what the investor would accomplish on their own. The drag from that 1% fee will be minuscule by c...

We are planning the following: 100% Paid books/tuition for 2-years of Community College, living at home. 100% Paid books/tuition for in-state University, living at home. Anything else? They are responsible for it (i.e., room and board if they want 4-years away). There are plenty of times when CC credits don’t transfer even with an articulation agreement or transfer as generic credits, which fulfill neither gen ed nor major requirements. Living at home is socially stunting, and a lot of lifetime friendships form freshman year. CCs also vary hugely from excellent, well resourced places to grade 13 and 14 filled with slackers and low achievers. Obviously you need to do research on schools for transferability. Everything else is very dependant...

Lack of better options for long-term savings. Risk-adjusted expected real rates were historically poor for all USD assets at the same time TIPS real yields were negative. TIPS were just more transparent about it. Some people seem to think negative real rates are not sustainable, but there is no good reason to assume that. There is reason to believe nominal rates can't sustainably be below the expected cost of storage/insurance for paper cash. But expected real rates can be as much below that as expected inflation, since stored paper cash is subject to the same expected inflation. If I dare go here according to forum rules, then consider this: consider the potential that could happen if there were no accepted physical form of cash after 203...

freakyfriday wrote: ↑Wed Mar 15, 2023 4:34 am The livestream last night had ChatGPT4 writing code, fixing it's own bugs.

See Rice's Theorem; I doubt it will defy computational theory and fix everything wrong with itself: https://en.wikipedia.org/wiki/Rice%27s_theorem

It might not be fake. Do you still have a mutual fund-only account?

wbond wrote: ↑Wed Mar 15, 2023 1:04 pm Right. I get that in the current crisis mode. But longterm anyone with access to U.S. banking: is there any meaningful difference between a bank account & T bills if no de facto FDIC limits?

Yes. I cannot pay my bills from a treasury bill until the money from a treasury bill lands into my bank account. Not to mention, many direct CDs are puttable (some have other features worth having). And taxation differs.

It is still a bit of an apples to oranges comparison, regardless of the insurance limits.

swansong wrote: ↑Wed Mar 15, 2023 12:07 pm Is it ever worth it to sell early, profit wise?

It may or may not. It depends on what you actually are going to do with the money. I was posed this dilemma in 2020 for some long-term treasury bonds; I had an add-on CD yielding 3% for four years, so 1.2% or 3%? It would have taken about a decade to earn what 4 years gives. Glad I chose to sell.

But generally, most people do not have such clear-cut situations. Take a moment to assess whether you should be holding the treasuries.

I assume they mean individual REITs. It sounds crazy to me. Please try to find your source so we can figure out what they were saying. Are you sure it isn't someone hawking REITs? The average REIT was cut down to less than ⅓ of its previous value in 2008-2009: Source https://imgur.com/6K6nO75.png If you'd bought it using 5X leverage, you'd have been in trouble. You'd have gotten a margin call if you'd bought it on margin. If the average REIT was down that much, then many individual REITS must have been down even farther. If I remember right, the leverage employed by REITs was worse back in 2008 than it is now (hence why 2008 was so bad). But regardless, they do employ quite a bit of it already; why add to it? I rather not.

REITs already use leverage; I do not know how much exactly, but using 5x leverage on REITs is certainly not right.

I don’t plan to retire for another 30 years. ... Even though you have a long time horizon, I'd caution you with regard to long term bonds or long term bond funds. I can't tell you how many times (a lot) I've seen someone in this forum who purchased a long term treasury fund with a duration of 15 - 20 years, then 2 or 3 years later, they're disappointed and want to sell out of it because it's suffered a loss. Regards, Especially if one's expenses are real denominated and the long-term bonds are nominal. It is easier to tolerate, at least for me, that long-term TIPS are very likely to match expenses far into the future. For nominal bonds, I either stay shorter in duration or accept the fact it is a speculation because I do not have long-term...