Bogleheads.org

Ed 2 wrote: ↑Wed Mar 22, 2023 2:47 pm Just looking for new posts about “beating the market “ by tilting to small cap value. Hello? Anybody home?

Try this thread.
viewtopic.php?t=346206

For tax planning purposes, you should have at least two - traditional and Roth.

captmorgan50 wrote: ↑Sun Mar 19, 2023 9:03 pm • Rarely will it be the most difficult of all answers---“I don’t know.”

That's the quickest way to ensure that you will never be called to appear on CNBC or Bloomberg ever again.

boglebrook wrote: ↑Mon Mar 20, 2023 8:55 am Hi All - I have a First Republic 30-year fixed rate mortgage at 3.3%, but the original terms include several discounts - 0.4% Core Relationship, 0.1% for using online bill pay, and 1% for having a checking account at First Republic. In the case that First Republic goes out of business, what happens to these discounts? Is there a chance that my rates would change somehow?

I had an ARM with the option to lock in rates for another 5 years on the reset date instead of floating, but when it was sold to another servicer, they did not honor that option. I ended up paying it off, but it seems that not all the loan benefits transfer to new servicers.

Keynes making the case for passive index investing before it was a thing. Taken from a recent NY Times opinion piece. Picking stocks, he wrote, was akin to a game “in which the competitors have to pick out the six prettiest faces from 100 photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole: so that each competitor has to pick, not those faces that he himself finds prettiest, but those that he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view.” Indexing was known to be superior long before it existed. The MIT fund from the 1920s sought to match the Dow Jones index as ...

Weathering wrote: ↑Sun Mar 19, 2023 4:22 pm Did Saudi Arabia just lose lots of $ on CS, or are they staying invested somehow with UBS?

They lost 90% of the their investment. That is not recoverable.

rkhusky wrote: ↑Sun Mar 19, 2023 12:14 pm

Harmanic wrote: ↑Sun Mar 19, 2023 12:03 pm
Apparently the Reddit crowd got it right, but Bogleheads refused to believe it.

Has CS collapsed? I thought I just read of a $1B offer to buy CS, which is being rejected because it is 10% or so of market value.

Credit Suisse collapsed. It was taken over by UBS in a shotgun wedding that included a $9 billion bailout from the Swiss and wiping out $17 billion in convertable bonds.

According to College Scorecard, the median salary for CS majors at OSU is $80,252. At Northeastern, it is $108,000. It seems that because of the co-ops, NEU CS grads make significantly more than OSU CS grads. Whether that is worth an additional year of school and the higher tuition is up to the OP. It could mean that. Or it could mean that median salaries in Boston are higher than they are in Ohio. I’d guess that grads from either school, who work the same employers are paid comparably. That's a good point. Most NEU grads end up in the Boston area, which might be an issue. Although it could be because of coops. If an OSU student did two 6 month coops, they might have higher starting salaries. But salaries are not everything. Do you want to...

CS CEO sent out a memo last Friday telling investors not confuse the poor price performance of the stock with the bank's capital and liquidity position. Reddit took this to mean that CS was on the verge of insolvency and pointed to widening spreads on CS credit default swaps to claim that the bank is on the brink of collapse. Really just scaremongering from the Reddit / Wall Streets Bets crowd So it sounds like it's pretty much a chicken little, "the sky is falling" deal? For the most part, yes. CS certainly isn't a pristine financial institution by any means, they've been plagued by a number of scandals and high profile losses over the past couple years (Archeagos hedge fund blow up, Greensill capital collapse, multibillion doll...

The 250k cap is useless. You need to either have banking regulations that prevent all banks (not just the biggest banks) from going under. Or you need all banks to pay into insurance that will cover their depositors in a credit event including deposits over 250k. The banking industry must have confidence for depositors or it ceases to function. We have a combination of the above right now. Regulations enacted in 2009 prevent excessive risk taking by banks but are less strict on smaller banks. In the 90 years of the FDIC, there has never been a period where all deposits were insured. So why now would the banking system cease to function if we continue to insure only mom and pop depositors? Sounds like a knee-jerk reaction to the failure of ...

According to College Scorecard, the median salary for CS majors at OSU is $80,252. At Northeastern, it is $108,000. It seems that because of the co-ops, NEU CS grads make significantly more than OSU CS grads. Whether that is worth an additional year of school and the higher tuition is up to the OP. It could mean that. Or it could mean that median salaries in Boston are higher than they are in Ohio. I’d guess that grads from either school, who work the same employers are paid comparably. That's a good point. Most NEU grads end up in the Boston area, which might be an issue. Although it could be because of coops. If an OSU student did two 6 month coops, they might have higher starting salaries. But salaries are not everything. Do you want to...

The 250k cap is useless. You need to either have banking regulations that prevent all banks (not just the biggest banks) from going under. Or you need all banks to pay into insurance that will cover their depositors in a credit event including deposits over 250k. The banking industry must have confidence for depositors or it ceases to function. We have a combination of the above right now. Regulations enacted in 2009 prevent excessive risk taking by banks but are less strict on smaller banks. In the 90 years of the FDIC, there has never been a period where all deposits were insured. So why now would the banking system cease to function if we continue to insure only mom and pop depositors? Sounds like a knee-jerk reaction to the failure of ...

Vulcan wrote: ↑Sat Mar 18, 2023 1:33 pm

Vulcan wrote: ↑Sat Mar 18, 2023 1:29 pm This could mean one of two things:

1. NEU students are more sought-after than Harvard/MIT students.
2. Harvard/MIT students have more choices (including outside Boston area) than NEU students.

"The estimated total pay for a Co-Op at Northeastern University is $21 per hour."

And you have to take a semester off?

I think I know the answer to that.

CS majors make $35 to $40 per hour average.

I’m super excited to watch this tonight. Frontline, and more specifically their documentary “The Retirement Gamble,” was my introduction to retirement saving and Bogle, caused me to find this forum, and inspired me to open my Roth IRA back in 2015. I love "The Retirement Gamble", a great eye opener for anyone. Another similar documentary was called Broke: The American Dream, which was absolutely great. Unfortunately I can't find that one anywhere. I took a stab at it. The only place that has it is Vimeo and they want $28 to stream it. Not even any of the public libraries have copies. Our local library happens to list it and links to Kanopy.com "Broke: The New American Dream" is not on Kanopy. If it is at your local libr...

Tony-S wrote: ↑Wed Mar 15, 2023 11:11 pm

Harmanic wrote: ↑Wed Mar 15, 2023 5:11 pm
I took a stab at it. The only place that has it is Vimeo and they want $28 to stream it. Not even any of the public libraries have copies.

You can watch it here.
https://www.pbs.org/wgbh/frontline/docu ... nt-gamble/

That's the wrong title. I was referring to the other title in the post, not the Retirement Gamble.

I’m super excited to watch this tonight. Frontline, and more specifically their documentary “The Retirement Gamble,” was my introduction to retirement saving and Bogle, caused me to find this forum, and inspired me to open my Roth IRA back in 2015. I love "The Retirement Gamble", a great eye opener for anyone. Another similar documentary was called Broke: The American Dream, which was absolutely great. Unfortunately I can't find that one anywhere. I took a stab at it. The only place that has it is Vimeo and they want $28 to stream it. Not even any of the public libraries have copies. There are 10 libraries in the US with copies. Montclair State University Harry A. Sprague Library SUNY Brockport, Drake Memorial Library Montgomery ...

Just finished watching. Gave me heartburn. Another “ end of the world “ documentary. Bought some index ETF’s after. I haven’t watched this one yet, but that that’s how I remember “The Retirement Gamble” being. I credit that documentary for inspiring me to actually learn about sound evidence-based investing and to beware of bad 401k plans and brokers like Edward Jones— I bought “The Bogleheads’ Guide to Investing” and opened an Roth IRA at vanguard and filled it with index funds because of it. I’m very glad that I was ale to watch it early in my retirement saving journey. Retirement Gamble was great at exposing the high cost of fees and the benefits of indexing. It also raised the issue of fiduciaries as financial advisors. And the narrator...

Down the road (next 6 years) I'll need to decide what to do with my TIAA traditional funds. An annuity pays more but looking at the site it looks like another option would be to take RMDs beginning at 73. I'm not in need of the money and I'm thinking RMDs (which would be lower from my understanding) would help keep (potentially) keep me from jumping into the 24% bracket (as things stand now). Thoughts? I know the variables of future tax brackets, tax rates and stock market returns, etc. are only predictions. I am doing Roth conversions over the next 6 years and in retrospect I wish I had done that sooner! I know I can/should talk to someone at TIAA but that involves a time commitment I don't want to make and in general I found them to be p...

runner3081 wrote: ↑Sat Mar 11, 2023 2:50 pm 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).

Study abroad - Germany has free colleges and some are in English and accept foreign students. Canada has some inexpensive colleges, like Memorial University of Newfoundland, which has really good CS and engineering programs.
Military service
Summer jobs, internships, coops

KellyInBaconville wrote: ↑Tue Mar 14, 2023 2:40 pm Take a look at that 5.75 load….
I’m a noob here. But have learned about expenses.

This is the stuff the Dave Ramsey pawns off on the gullible.

watchnerd wrote: ↑Mon Mar 13, 2023 1:18 pm

Harmanic wrote: ↑Mon Mar 13, 2023 1:01 pm I will start buying TIPS for my bond allocation when real yields top 2%. Not until then.

Is there something magic about 2% as compared to, say, 1.8%?

I always use rules for investing decisions. It helps avoid emotional rationalization. Also, it has been over 2% many times in the past, so it looks like a reasonable number to start switching from treasuries to TIPS.

I will start buying TIPS for my bond allocation when real yields top 2%. Not until then.

So no need to worry about 250k limits. The government is guaranteeing all deposits of any size.

Uncle Morris wrote: ↑Sun Mar 12, 2023 6:58 pm We file jointly.

My spouse received income via Paypal, and the SSN on that account is mine. So the 1099 from Paypal has my SSN.

Is this a problem? Can we report it (correctly) as her income, not mine, or will the IRS be looking for that amount on my part of the return?

As the other say, it shouldn't be a problem, but I would get it fixed for future returns.

bnttwnbnt wrote: ↑Sun Mar 12, 2023 7:04 pm Wondering what the boglehead philosophy on 401k rollovers is. I've had a former employer's 401k with its same custodian for almost 3 years now.

As far as rollover destination options, I have a 401k with a new employer and also have a Roth IRA with vanguard

It depends on the fees and investment options. If they are good, leave it be. If they are mediocre, roll them over.

runner26 wrote: ↑Sun Mar 12, 2023 5:27 pm Breaking
MARKETS
Regulators close New York’s Signature Bank, citing systemic risk
PUBLISHED SUN, MAR 12 20236:24 PM EDT

Futures are soaring, likely because of the expectation of lower interest rates if banks are collapsing.

TxFrog wrote: ↑Sun Mar 12, 2023 1:03 pm

Harmanic wrote: ↑Sun Mar 12, 2023 12:28 pm ...Covid-19 – the three risks that were both massive and unpredictable." This is false, false, false. Experts predicted each event and the consequences, but they were ignored, ignored, ignored.

Huh? So in 2019 you knew that in March 2020 the S&P 500 would drop 30+% and the developed world would go into lockdowns or stay-at-home orders?

I understand some experts prior to 2020 we stating that the world was "due" for a global pandemic at some point and it was a possibility, but don't know anyone who accurately predicted the stock market drop in March 2020 well beforehand.

Not the specific date, but the consequences, including the shutdowns and market drop were predicted for years.

What does SVB failure mean to our Fixed income of our Port ? ==================================================== Thanks for weighing in to my threads and seeking insights from this forum. I see many thread on SVB failure, but I want to see how it apply to our fixed income component of our Portfolios. We learned that SVB put their money in long term treasury, that caused its failure/situation. How do we know, that our portfolios fixed income ETF/Fund not heavy on long term treasury? I do see Bond duration of 6.4 years cause 6.4 % gain in interest rate fall one percentage point; a 6.4% loss if rates rise one point. What is the bond duration to pick in current rising interest rate environment? Thanks for sharing. If, and this is a big if, it...

The Psychology of Money is a great book and Morgan has published some good articles, but this one is really grasping straws. For instance, "But everyone was blind to 9/11, the 2008 financial crisis, and Covid-19 – the three risks that were both massive and unpredictable." This is false, false, false. Experts predicted each event and the consequences, but they were ignored, ignored, ignored.

IsabellaH555 wrote: ↑Sun Mar 12, 2023 12:11 pm

tunafish wrote: ↑Sat Mar 11, 2023 3:08 am I would put it in 2-3 credit unions because of the federal insurance limit.

I've transferred between places a few times It is simple. For example, Schwab has a form you can down load, fill out, scan in and upload, and presto it happens in a week or so hands off. There is a likelihood the form lets you say transfer everything, this amount, if between brokerages specific assets, etc.

Please explain the difference between the federal insurance limit at credit unions vs banks.

Thanks,

Isabella

There is not really any difference, just a different insurance provider. Both have maximums of $250,000 per account.

cowbman wrote: ↑Fri Mar 10, 2023 11:00 pm Given the recent news with Silicon Valley Bank, you may want to consider the security of the bank. Also, Fidelity allows you to purchase several different MMA as well as T-bills. The SIPC limit is higher at Fidelity than the FDIC limits in banks. If you are set on transferring that amount, I'd probably send it as a wire.

Note that the Fidelity Bank Sweep Account has $1.25 million in FDIC insurance per account holder.
https://www.fidelity.com/why-fidelity/s ... r-accounts

How are you 100% stock folks holding up? I'm 70/30. I'm still feeling nervous but I believe I'll survive if any nightmare scenario plays out. I hope this blows over. Doing great at 80-85% of equities and just put $55k in a major bank yesterday. This is nothing compared to 2008. Correct. It's 2007. I remember the first bank runs during the great recession. People were saying the same thing as now. These are isolated events. Assets are backed by safe real estate mortgages. Well there are some similarities. Then, fed reserve driven bubble in mortgages. Now, fed reserve driven bubble in bonds. Then, defaults and falling real estate values popped the bubble and banks were exposed to losses. Now, falling treasury values popped the bond bubble an...

IMHO, Mr. Zweig is spot on. When times are tough in stocks and bonds, it can be tempting to jump into something that likely is even worse. Swensen himself, in his book Unconventional Success: A Fundamental Approach To Personal investment , recommends that individual investors stay away from illiquid and opaque assets. As you probably know, he recommended the following portfolio for us normal folk, implemented through low cost funds. Domestic equity - 30% Foreign developed equity - 15% Emerging market equity - 5% Real estate - 20% U.S. Treasury bonds - 15% U.S. Treasury Inflation-Protected Securities - 15% Even pension funds have seen their alternative investments blow up on them. Some have been scammed. Many have paid outrageous hedge fund...

Time for schwab customers to start moving assets out? And start another bank run? Better to start a bank run than to be left holding the bag at the end of one! That said I have only $1k in my checking account and about $80 in cash in the brokerage account, so I'm not panicking. Our investment shares are safe, right? If we had widespread bank runs, dollars under your mattress won't save you because they would be worthless. I'm not worried about it. I have cash at an FDIC insured bank. Even if it was above FDIC limits, I have no doubt that I would eventually be made whole. I guess you can either trust the system or stock up on canned food, ammo and gold. Or you can insure yourself by deploying 10% of your assets in a way that will gain in va...

How are you 100% stock folks holding up? I'm 70/30. I'm still feeling nervous but I believe I'll survive if any nightmare scenario plays out. I hope this blows over. Doing great at 80-85% of equities and just put $55k in a major bank yesterday. This is nothing compared to 2008. Correct. It's 2007. I remember the first bank runs during the great recession. People were saying the same thing as now. These are isolated events. Assets are backed by safe real estate mortgages. Well there are some similarities. Then, fed reserve driven bubble in mortgages. Now, fed reserve driven bubble in bonds. Then, defaults and falling real estate values popped the bubble and banks were exposed to losses. Now, falling treasury values popped the bond bubble an...

I just saw a poster say that SVB isn't under the OCC's control. I didn't know that! Well shoot....then piss on SVB, it's a glorified finance company in my book. ha. I've never even heard of SVB until Thursday so I know nothing about them but they sure as hell don't play in the traditional corporate/commercial lending business that I know of, and I don't think they're have a meaningful retail business, but this is weird....if feels like the market's acting like a large commercial bank just went down. I'm feeling better about that $55k I put in that mega bank yesterday than I did after reading this thread this morning. :D I just read an article in the Wall Street journal today that says that the Federal Reserve is the primary federal regulat...

SnowBog wrote: ↑Sat Mar 11, 2023 2:02 pm Is there some connection between First Republic and SVB?

My assumption is they are separate - so I wouldn't think there's any direct impact. But admittedly I don't know.

SVB and FRC are both in California and Massachusetts and cater to high tech and wealthy clients. I am assuming that the OP works for a tech company that uses SVB for payroll and has his money deposited directly to FRC.

SVB is not all that unique in large banks.. SCHWAB has similar percentage (~70%) of it's deposits invested in securities (available for sale and held to maturities) . They also had to take a loan from FHLB to manage liquidity similar to SVB. From the reports I see on Twitter based on their monthly call reports,Schwab's unrealized losses on HTM portfolio exceed equity of it's banking entities which is pretty bad. What is better for them is that they have more equity in the parent level that it can inject into banks. But I can see Schwab's largest depositors getting nervous right now and looking to diversify which can worsen their liquidity problem. Time for schwab customers to start moving assets out? No. Assets would not be impacted either...

Money in a brokerage account, while not covered by FDIC, is also not directly held by the bank, so while not immune to market forces, it is also somewhat insulated because it is not part of the bank’s balance sheet. For example, if you held stocks, bonds or mutual funds in the brokerage account, if First Republic bank were to be shut down, you’d still own those stocks, bonds or mutual funds. First Republic is just the trustee holding them for you. 100% this. There is a lot of misunderstanding on this forum around the difference between a bank and brokerage. Banks hold your assets as a liability on their balance sheet. That is to say that the purpose of a bank is to actually take calculated risk with your money for the benefit of everyone -...

Brokerage accounts are covered by SIPC, but that's very different from FDIC protection and you should read up on that. As for the bank deposits, they are only covered for $250K per person, per type of account. FDIC website has the details . I would not leave close to $3M at a single bank. The bigger issue is that they're almost certainly getting fleeced on fees - to the tune of 5 figures every year - on the money under "management," when a simple 3-fund portfolio would serve them just fine at basically zero cost. I know about the fees- my parents don’t seem to care. Regardless, they only have $18k in checking so if the rest is in a brokerage account, it would be covered by SIPC? What about the estate accounts from the two inherit...

Brokerage accounts are covered by SIPC, but that's very different from FDIC protection and you should read up on that. As for the bank deposits, they are only covered for $250K per person, per type of account. FDIC website has the details . I would not leave close to $3M at a single bank. The bigger issue is that they're almost certainly getting fleeced on fees - to the tune of 5 figures every year - on the money under "management," when a simple 3-fund portfolio would serve them just fine at basically zero cost. I know about the fees- my parents don’t seem to care. Regardless, they only have $18k in checking so if the rest is in a brokerage account, it would be covered by SIPC? What about the estate accounts from the two inherit...

LITeacher wrote: ↑Sat Mar 11, 2023 7:45 am $2.8 million range just sitting in cash accounts... at First Republic.

Why? That $2.8 million is only paying 1.5% interest when they could be getting over 5% with treasuries and paying no state tax. They don't have to move from First Republic, but they should get their advisor to move the cash to treasuries. In case FRC fails, the assets would just be moved to another broker. If they have it in cash, they might not be made whole.

Are there any analyses of SVB's remaining assets and liabilities and the consequences for deposits over FDIC limits? Their 10-K showed $211 billion of assets at 12/31/2022, with a spread of $15 billion between the book value and fair market value of investment securities, so maybe $195B in fair value. Bonds are up a bit on the year, so those securities shouldn't have declined much. They appear to have lost about $42B out of $173B of their deposits, leaving about $130B of deposits and about $22B of other liabilities. Assuming investment securities were sold at year-end fair value to pay those depositors, $42B from $195B leaves over $153B. Let's haircut that by 15%, so $130B. This equals their $130B of remaining deposits. Deposits seem to be...

i can't believe there is a narrative blaming a known large customer of SVB for the failure of SVB. banks runs are a risk that every bank is responsible for hedging against. if you get it wrong, you risk failure. in this case SVB: 1) did not match the maturities of their assets and liabilities 2) did not diversify their customer base these are banking basics had they done this, it wouldn't matter if said large customer wants to take their money out (as is their right as a customer). Which bank is prepared for a 25% drawdown of deposits? And what additional risks are they accepting to hedge against a bank run? What's interesting is that Bogleheads forum comments seem to be more reasoned than the financial press articles that seem to be tryin...

watchnerd wrote: ↑Fri Mar 10, 2023 12:51 pm

Forester wrote: ↑Fri Mar 10, 2023 12:05 pm It's more like 2000/2003 than 2008

I dunno....the SVB closure may be the canary in the coal mine for a bank crisis in the making.

IDK. But there was a talking head on Wall Street Week (Bloomberg) saying that now is the time to buy regional banks at bargain prices. I recall people like Bill Miller saying the same just before the banking crisis of 2008. I guess they do not realize that long bonds are now toxic assets in a rising interest rate environment.

smooth_rough wrote: ↑Fri Mar 10, 2023 8:53 pm Cramer touted SVB weeks before collapse.

https://www.foxnews.com/media/cnbcs-jim ... s-collapse

“Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? No! No! No!
Bear Stearns is fine. Do not take your money out. If there’s one takeaway, Bear Stearns is not in trouble."

ray.james wrote: ↑Fri Mar 10, 2023 4:43 pm Their PE is under 10. I would but this bank. Given how many hassles for mortgage applications they do, they are very conservative with their money.

It doesn't matter if they are conservative if their loan book pays less than 3% and their depositors flee to other banks because FRC can't match the rates and must eat the losses on their loan portfolio and other investments. Currently they are paying 1.5% for accounts over $1 million. Would you stay with them?

enad wrote: ↑Fri Mar 10, 2023 5:21 pm Gold is up today and there is an interesting story on Kitco with the headline: The dominos are starting to fall....

What would be interesting is why did this bank fail and not others? Were they over-extended in some manner. My understanding according to the news report on it is deposits up to $250K are insured, but those with deposits higher than $250K will receive a certificate that they may be able to redeem for some amount on the dollar once the assets are sold. Not good, and another reason to spread your deposits among different banks

They had large depositors who withdrew money all at once. Other banks have smaller depositors, but they are exposed to the same issue and could easily follow SVB.

simplesimon wrote: ↑Fri Mar 10, 2023 9:41 am

CletusCaddy wrote: ↑Fri Mar 10, 2023 9:00 am First Republic Bank now down -50% today.

Smells like Lehman contagion to me.

I just took a look at FRB's 10K. The unrealized loss on its HTM portfolio is about 1/3 the book value of equity.

Cash and AFS portfolio is about $7B against a $176B deposit base, so only 4% of deposits need to leave before FRB will need to do something to solve its liquidity issue.

FRB caters to high net worth individuals and it is paying 1.5% for savings accounts over $1 million. These are the types of people who will bolt in a second. Large banks like BoA cater to average net worth people who often don't have accounts large enough to worry about how much interest they might be losing. So FRB seems at much greater risk.

I have a complicated tax return (have used Turbotax Premier cd version for 10 yrs) with multiple rentals and a lot of 1099 brokerage income, K1s too. Return is over 80 pages. (Im slowly transitioning taxable accounts to boglehead strategy to reduce tax complication). In the 12th edition of “Every Landlords Tax Deduction Guide” by Steven Fishman it strongly adivses to paper file to reduce audit risk. A more recent 18th edition is silent on the issue. Does paper filing really reduce audit risk? The one time I was audited was a year that I filed a paper return. I am convinced it triggered the audit because it had some unusual things in it. That said, it was a correspondence audit and I provided all the documents needed to get the IRS stamp of...