Search found 815 matches

by rmelvey
Tue Jul 05, 2022 9:56 am
Forum: Investing - Theory, News & General
Topic: Small value is a premium, why isn’t large growth one as well?
Replies: 17
Views: 1746

Re: Small value is a premium, why isn’t large growth one as well?

I don't agree with the assertion that small value represents a risk premium. Yes it outperformed for a historical period, but that does not mean it was a risk premium. If you slice and dice the market into different segments, you will always find that one half of the segmentation beat the market for a measured period of time. That has no bearing on whether or not that was driven by a 'premium'. The main benefit of "value" is that you avoid investment bubbles in segments of the market. However, you also lose exposure to stronger firms that are likely to take market share, which the market rewards with a higher multiple. Whether or not avoiding bubbles is more important than owning dominant firms is unknown. I would rather just own ...
by rmelvey
Tue Dec 22, 2020 9:46 pm
Forum: Personal Investments
Topic: places and ways to invest in crypto
Replies: 44
Views: 8135

Re: places and ways to invest in crypto

Gemini is fine. Except you have to email them to enable the limit order function for your account! :annoyed I generally prefer Coinbase Pro. I would stick with accounts where you actually hold the key so that you can move funds off of the exchange and onto a hardware wallet so you can do DeFi stuff and get the real gains 8-)
by rmelvey
Tue Dec 22, 2020 9:32 pm
Forum: Investing - Theory, News & General
Topic: Bitcoin @ 23K, why am I anti-Bitcoin?
Replies: 404
Views: 26088

Re: Bitcoin @ 23K, why am I anti-Bitcoin?

If you had a friend who kept asking you 'why should i buy stocks when i can just keep my money in the bank' how long would you entertain them before realizing you are just wasting your time? Crypto is entirely voluntary, no one is forcing you to buy it. Some people live their whole lives with all of their money in a savings account. When you describe the stock market to them they act like you are a gambler who only talks about their winners. We all accumulate assets through our life and keep score in different ways. Some people keep score with money in the bank, others with stocks, some with real estate, and some with crypo. At the end of the day we are all just keeping score in society so that we can command real goods and services when we...
by rmelvey
Tue Dec 22, 2020 3:42 pm
Forum: Investing - Theory, News & General
Topic: Bitcoin @ 23K, why am I anti-Bitcoin?
Replies: 404
Views: 26088

Re: Bitcoin @ 23K, why am I anti-Bitcoin?

oldfort wrote: Tue Dec 22, 2020 3:41 pm
rmelvey wrote: Tue Dec 22, 2020 3:35 pm Not owning Bitcoin and Ethereum is active management because they are part of the liquid global investment portfolio, and becoming larger portions over time.
Gold has a market cap 10x that of Bitcoin? Do you own 10x as much gold as Bitcoin to avoid active management?
Nope. I gave up on passive purity tests a long time ago :)
by rmelvey
Tue Dec 22, 2020 3:35 pm
Forum: Investing - Theory, News & General
Topic: Bitcoin @ 23K, why am I anti-Bitcoin?
Replies: 404
Views: 26088

Re: Bitcoin @ 23K, why am I anti-Bitcoin?

Not owning Bitcoin and Ethereum is active management because they are part of the liquid global investment portfolio, and becoming larger portions over time. With Ethereum if you have the technical knowledge you can get APYs that would make the average boglehead weak at the knees, with less than bond-like volatility. Not a recommendation because this forum steers older and I do strongly believe that most older people should stay away from crypto currencies because the space is full of scammers and its easy to scam older people. But if you are young and have a technical mind it's kind of crazy to not be learning about it. It's not just betting on prices going up. Ethereum has reached the point of a self sustaining financial system where you ...
by rmelvey
Thu Sep 03, 2020 6:06 am
Forum: Personal Finance (Not Investing)
Topic: CARES Act Withdrawl - Roth?
Replies: 4
Views: 537

Re: CARES Act Withdrawl - Roth?

JoeRetire wrote: Thu Sep 03, 2020 6:03 am
rmelvey wrote: Thu Sep 03, 2020 6:00 amDoes it allow you to withdraw your earnings tax free up to 100k?
No. Withdrawals are not tax-free.
Okay, so basically I would have to pay ordinary income on any gains in the account, but without the 10% penalty?
by rmelvey
Thu Sep 03, 2020 6:00 am
Forum: Personal Finance (Not Investing)
Topic: CARES Act Withdrawl - Roth?
Replies: 4
Views: 537

CARES Act Withdrawl - Roth?

I'm getting really confused reading about cares act withdrawals. I understand the rules for 401k and traditional IRA, but how does it work for Roth? Does it allow you to withdraw your earnings tax free up to 100k? I have tried researching this but am stuck!
by rmelvey
Mon Jul 13, 2020 4:30 pm
Forum: Personal Investments
Topic: hyper inflation hedges
Replies: 54
Views: 4416

Re: hyper inflation hedges

Gold is the obvious answer, with maybe a small % in bitcoin (something like 1% of portfolio). Not sure why you are writing off gold because it went down in the 80s. That's when inflation rate started going down and stocks/bonds started going up in value. If you are looking for a hedge that always goes up you won't find it. I would also say paid off real estate is nice to have, but I wouldnt consider it a hedge because it won't shoot up in value in a way that would offset losses in other parts of the portfolio like gold would.
by rmelvey
Wed Jun 10, 2020 3:01 pm
Forum: Investing - Theory, News & General
Topic: Paul Tudor: Compelling case for bitcoin ?
Replies: 312
Views: 24712

Re: Paul Tudor: Compelling case for bitcoin ?

Bitcoin is still not truly integrated with the rest of the financial markets, so by owning it you are beta testing a new asset class. I wouldn't recommend it to people unless they like the idea of being involved in testing a new financial system / asset. I think the biggest next step will be an ETF with physical redemption, or an extremely trusted cryptodollar that is widely used (aka NOT tether, ideally something government backed). This will bring the dollar liquidity to the market that is needed to reduce price fluctuations and bring the volatility closer to gold. Germany Stock Exchange just said that there will be soon (2020) a BTC ETF for investors. Can’t imagine the other Stock Exchanges in the world are far behind, especially when e...
by rmelvey
Wed Jun 10, 2020 8:09 am
Forum: Investing - Theory, News & General
Topic: Paul Tudor: Compelling case for bitcoin ?
Replies: 312
Views: 24712

Re: Paul Tudor: Compelling case for bitcoin ?

I view bitcoin as a disruptor of physical gold. The average boglehead doesn't like gold, so Bitcoin doesn't really appeal to them. For me personally, I like have having gold in conjunction with nominal bonds. I also like having bitcoin because it has some properties of gold, but with much more speculative upside potential as the market cap is tiny compared with other asset classes. It also has close to zero correlation with stocks/bonds/gold, so within a portfolio at small weightings doesn't increase risk as much as you would think. Bitcoin is still not truly integrated with the rest of the financial markets, so by owning it you are beta testing a new asset class. I wouldn't recommend it to people unless they like the idea of being involved...
by rmelvey
Sun May 17, 2020 6:44 am
Forum: Personal Finance (Not Investing)
Topic: Rent is increased by 6%, negotiation tips?
Replies: 62
Views: 6997

Re: Rent is increased by 6%, negotiation tips?

I would counter with asking for a 10% reduction in rent. They should be cutting your rent not raising it. They are being squeezed financially and are trying to have you make up for it. If you leave they are in an even worse financial position so you have leverage over them. +6% is pretty egregious given the market conditions so I would have zero shame in playing hardball with them. Gloves off :sharebeer
by rmelvey
Thu Apr 23, 2020 11:24 pm
Forum: Personal Investments
Topic: Leaning towards EE Bond Purchase...
Replies: 36
Views: 2745

Re: Leaning towards EE Bond Purchase...

I used to have EE bond and I-bonds but dumped them because i really dislike Treasury direct after a lock out experience from them that took forever to resolve. I'm back purchasing more now because the spread between the market and the EE bond is worth the head ache. In terms of returns, think of it like an emergency fund except if you end up not needing the money you get a way better (and tax deferred) return. Or carve it out of your fixed income allocation. I actually like having fixed income in taxable just from a safety perspective so EE-Bonds / I-Bonds allow me to do that without feeling like I am being super tax inefficient. Rates are negative in many parts of the world, and could get that way here. You might also find yourself happy w...
by rmelvey
Wed Apr 15, 2020 1:51 pm
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 876
Views: 211215

Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

If the long end of the curve is too scary, you can still get a PP like portfolio by replacing the cash/LTT with intermediate term bonds. So you would do something like 60% 10 Year Treasury, 20% Gold, 20% Stocks.

Also keep in mind that you can use EE bonds which are essentially a 20 year zero coupon bond. Not liquid, but can form a part of your bond allocation. What the PP is really doing is equal weighted on a risk parity basis between stocks, gold, and interest rate duration. There is a lot of flexibility in terms of how you get that duration especially for a retail investor that can make use of savings bonds and CDs.
by rmelvey
Fri Apr 10, 2020 12:52 pm
Forum: Investing - Theory, News & General
Topic: With the govt forcing interest rates near 0, why bother with bonds anymore?
Replies: 29
Views: 2370

Re: With the govt forcing interest rates near 0, why bother with bonds anymore?

I'm surprised Ally is still giving 1.5%. Hopefully it stays that high but at that rate savings accounts seem like a better deal than most bonds. For now my fixed income allocation is just cash at Ally and I-Bonds/EE bonds.
by rmelvey
Fri Apr 10, 2020 9:47 am
Forum: Personal Finance (Not Investing)
Topic: Would you quit your job without another job now?
Replies: 34
Views: 3376

Re: Would you quit your job without another job now?

Does she want to keep this job as a reference? Is it possible for her to just start acting on her own terms and if the company doesn't like it then let them do what they need to do? She might have more leverage than she realizes.
by rmelvey
Thu Apr 09, 2020 2:55 pm
Forum: Investing - Theory, News & General
Topic: Portfolio Margin
Replies: 24
Views: 3260

Re: Portfolio Margin

I think the key issue/problem with margin usage is that you need the discipline to sell down rigorously and quickly when the market is dropping (even modestly). i.e. Let's say you start with $100K in capital and add $100K in margin borrowing. So, gross exposure $200K. Margin is 50% of the gross. Say some reference index is at 100. Even a 5% drop in the market leaves you with only $90K in net equity and margin at 52.6% of the gross. Now let's say the market keeps sliding downward and is at 15% below what you bought in at. Now you've got only $70K in net equity, and margin is at 58.9% of the gross. And we're not even in a real bear market yet! I think the strong temptation, for one who is margined, would be to say, hey, I thought it was wort...
by rmelvey
Mon Mar 23, 2020 6:53 am
Forum: Personal Investments
Topic: Selling 100% stocks on a bounce
Replies: 256
Views: 27336

Re: Selling 100% stocks on a bounce

There are many others who are attempting to do the exact same thing, which is why a bounce may not happen (at least not before more drops, and then a long road to recovery over many years).

Jack Bogle never recommended 100% stocks, and he even has talked about how during extreme crashes sometimes you have to sell if it maintains a floor of value that you cannot personally breach. This usually only happens if your allocation was too risky in the first place because if you had enough bonds you wouldn't be in this position to begin with.
by rmelvey
Thu Mar 19, 2020 5:34 pm
Forum: Personal Investments
Topic: When will S&P 500 go back to 3386 ?
Replies: 98
Views: 8787

Re: When will S&P 500 go back to 3386 ?

2025. I think we are in for a rough road ahead with large increases in unemployment, corporate and household balance sheets both underwater and with reduced income for both.
by rmelvey
Sun Mar 15, 2020 8:21 am
Forum: Investing - Theory, News & General
Topic: So.... is this really "it"? Is this what we needed to mentally prepare for?
Replies: 158
Views: 17069

Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

What you need to mentally prepare for is that you think this is it, but then it keeps going down over multiple years :D

So no this is not it.
by rmelvey
Wed Mar 11, 2020 9:46 am
Forum: Investing - Theory, News & General
Topic: Futures Trading
Replies: 25
Views: 2838

Re: Futures Trading

Interactive Brokers has been fine for me after getting used to the UI. It can be hard to find the tickers you are looking for but once you know what you want to trade it's pretty easy.
by rmelvey
Tue Mar 03, 2020 7:47 am
Forum: Personal Investments
Topic: Study CFA just for personal investment and portfolio management knowledge
Replies: 55
Views: 6041

Re: Study CFA just for personal investment and portfolio management knowledge

I am a CFA holder, and my portfolio is still dead simple. 100% US equities right now. CFA has value, but I wouldn't expect it to give you a radically different result than just reading the wiki and following Bogle principles.
by rmelvey
Thu Feb 06, 2020 3:01 pm
Forum: Investing - Theory, News & General
Topic: Well, I am market timing due to coronavirus... Wish me luck.
Replies: 1439
Views: 157466

Re: Well, I am market timing... Wish me luck.

Bull market ahead confirmed. Thanks OP :mrgreen: :beer
by rmelvey
Thu Oct 31, 2019 12:02 pm
Forum: Personal Finance (Not Investing)
Topic: Budget tracking with CC "float"
Replies: 19
Views: 1488

Re: Budget tracking with CC "float"

I keep track of both. I track expenses as they accrue to get a true sense of my spending, and I track payment dates/outflows for managing my cashflow. I use a lot of 0% interest credits, so tracking both is very important to get the full picture.
by rmelvey
Fri Aug 30, 2019 5:32 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 1730
Views: 333314

Re: Lifecycle Investing - Leveraging when young

Credit cards were mentioned earlier as a possible borrowing method. Obviously, they have high interest, but I've been thinking about one method around this. Many cards have large sign-up bonuses (Chase gives $750 when spending $3,000 on the Sapphire Reserve) in the 10-30% range. If you couple this with something like M1 Borrow or another low interest portfolio loan, you could pretty easily borrow for free. M1 will let you borrow 35% of your taxable account. If you had $100K, you could then put $35K onto these higher tier credit cards and pay them off with M1 at 4.25% interest. Chase Sapphire Reserve - $750 reward for $3,000 spend Chase Ink Preferred - $1200 reward for $5,000 spend Chase Ink Cash - $500 reward for $3,000 spend Amex Platinum...
by rmelvey
Mon Jul 08, 2019 6:19 pm
Forum: Personal Investments
Topic: Anyone itching to dabble in crypto?
Replies: 46
Views: 5001

Re: Anyone itching to dabble in crypto?

I've been long bitcoin since around $4k. It's not for the faint of heart... Proceed with caution and only buy what you can afford to lose, and then (ironically enough) apply all of boglehead principles of staying the course, ignoring the noise, and not timing the market. :wink:
by rmelvey
Wed Jul 03, 2019 1:57 pm
Forum: Investing - Theory, News & General
Topic: Unvested RSU Equity Exposure and AA
Replies: 14
Views: 832

Re: Unvested RSU Equity Exposure and AA

I ignore unvested RSUs for asset allocation purposes, then as soon as they vest I sell them and allocate those funds. Anything else is too confusing. Would you count future salary income as a bond? Theoretically you could make an argument for that but I don't think I could ever stick with something that made sense to me trying to factor all of that in.
by rmelvey
Wed Jun 26, 2019 8:36 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: How Trading Costs Erode Factor Returns
Replies: 43
Views: 5460

Re: Larry Swedroe: How Trading Costs Erode Factor Returns

I stopped obsessing over the idea of 'active' or 'passive' a long time ago. It doesn't matter except for Boglehead purity points. With that said, I consider factor investing just a lazy/mechanical form of active management that is over intellectualized. You can put anything you want in a linear regression. Doesn't make an asset class out of thin air. :wink:
by rmelvey
Tue Jun 18, 2019 12:25 pm
Forum: Investing - Theory, News & General
Topic: Should I abandon the Total International Stock Index Fund for greener pastures?
Replies: 164
Views: 23664

Re: Should I abandon the Total International Stock Index Fund for greener pastures?

I know it's not the "right" thing to do but I have had all of my equity exposure in the US for years. I sleep better and have had better performance :happy
by rmelvey
Mon Jun 17, 2019 1:15 pm
Forum: Personal Investments
Topic: Any way other than real estate to leverage good income and credit?
Replies: 9
Views: 926

Re: Any way other than real estate to leverage good income and credit?

Curious for the responses on this. The only thing I have been able to find is credit cards. Find cards with good signing bonuses and 0% interest, put all of your regular spend on the credit card and make minimum payment during 0% period, invest the money you would have had to pay out of pocket for your spend, pay off credit card at end of 0% interest period. Not super scalable because you can't borrow tons of money, but you are certainly putting your good credit rating to use. You can invest the proceeds in something risk free if you want it to just be pure profit, or use it as general leverage for your portfolio.
by rmelvey
Mon Jun 17, 2019 11:28 am
Forum: Investing - Theory, News & General
Topic: Would a war be bullish for bearish for stocks?
Replies: 14
Views: 1570

Re: Would a war be bullish for bearish for stocks?

Given that we are already at full employment and with a strong economy, I think a war could cause some upwards pressure on inflation. Not to mention that it would likely be a war that destabilized the oil market. Wars are only really "good" for an economy if you are selling weapons to other countries fighting.
by rmelvey
Wed May 22, 2019 11:55 am
Forum: Personal Consumer Issues
Topic: Inexpensive way to gain weight
Replies: 54
Views: 3932

Re: Inexpensive way to gain weight

I really like homemade yogurt, eaten in massive quantities. You can pack in a lot of calories for a low cost and you still feel great after eating it due to the probiotics and high amounts of protein. It tastes way better than store bought yogurt so its not even about saving money for me but its a nice benefit. Unfortunately it worked a little too well for me and now I need to lose some weight!
by rmelvey
Fri Mar 29, 2019 2:08 pm
Forum: Personal Investments
Topic: Is this a novel concept or a stupid one?
Replies: 18
Views: 1787

Re: Is this a novel concept or a stupid one?

I would just hold on them and count them as part of you stock allocation.
by rmelvey
Wed Mar 13, 2019 6:07 am
Forum: Personal Investments
Topic: Can I emulate a riskier AA using leverage?
Replies: 15
Views: 1632

Re: Can I emulate a riskier AA using leverage?

The 2x, 3x, ETFs are the easiest way to get more exposure to equities. Your only other alternatives would be a margin account at interactive brokers, rolling futures contracts (annoying, easy to fall into a behavioral trap), or using options.

If I needed leverage in a retirement account I would lean towards the levered ETFs, in a taxable account I would look at plain vanilla margin at interactive brokers.

All of this said, this is creating more complexity in your portfolio for something that is adding more risk at a higher cost than stocks bought with cash. For making such a minor tweak to your portfolio I'm not sure this is worth opening the can of worms.
by rmelvey
Tue Feb 26, 2019 4:03 pm
Forum: Personal Consumer Issues
Topic: Staying in Brooklyn- Recommendations
Replies: 18
Views: 1566

Re: Staying in Brooklyn- Recommendations

I live in Manhattan but want to move to Brooklyn. Here are some nice neighborhoods.

Brooklyn Heights - Beautiful brownstones and tree lined streets. Has been a nice area for a long time.

Boereum Hill - Nice mixture of being laid back (for NYC mind you) but still with plenty to do. Has been a nice area for a long time.

Williamsburg - Where lots of young people / hipsters like to hang out. This area was 'gentrified' over the past 15 years so there is lots of new construction.
by rmelvey
Tue Feb 26, 2019 10:01 am
Forum: Investing - Theory, News & General
Topic: Gold ETF
Replies: 35
Views: 8053

Re: Gold ETF

If you are going to hold gold, another strategy to consider is to have a 'core' position in physical gold (1 oz American Eagles are easy to buy and sell) and then do your rebalancing using gold ETFs. This hybrid strategy gives you a lot of flexibility. While physical gold in the form of eagles has much higher bid/ask spread, it benefits over longer time frames from no expense ratio. One thing I like about physical gold is that I can buy it with credit cards, giving me large signing bonuses and often 15 months of no interest. You have to do the math on your credit card rewards but it's easy to come out ahead using the right credit card strategy.
by rmelvey
Sat Feb 23, 2019 11:14 am
Forum: Personal Finance (Not Investing)
Topic: What's Your Credit Card Rewards Strategy?
Replies: 7203
Views: 1413779

Re: What's Your Credit Card Rewards Strategy?

The purchase APRs don't have a fee, but yes the balance transfers do. However, the balance transfers are still a good deal if you use the proceeds to invest in risk assets. So when it comes to do a balance transfer you pay 3% and its very common to get 18 months, but let's say you only do 17 months (to play it safe so you pay off well before). That comes out to an interest rate of 2.1% (borrowing at a rate lower than t-bills). Interactive brokers has a margin rate of 3.9%, so you are borrowing well below that and with a form of debt that is non-callable. Obviously all of this effort isn't really worth it if you use the proceeds to buy risk free debt, but for me the idea of borrowing cheaper than the US government can to purchase higher yie...
by rmelvey
Sat Feb 23, 2019 10:41 am
Forum: Personal Finance (Not Investing)
Topic: What's Your Credit Card Rewards Strategy?
Replies: 7203
Views: 1413779

Re: What's Your Credit Card Rewards Strategy?

Anyone else taking advantage of 0% APRs for purchases / balance transfers? I am putting all my spend on these types of cards and investing the proceeds.I plan to keep rolling this debt over at 0%. Of course you need to have a big enough portfolio so that you can always pay off the balance. This is way better than margin loans for many reasons: *You are borrowing below the risk free rate, so could lock in small risk free profits by buying treasuries *If you invest in risk assets it is superior to margin loans because the debt is non-callable Don’t most of these offers come with a fee? The purchase APRs don't have a fee, but yes the balance transfers do. However, the balance transfers are still a good deal if you use the proceeds to invest i...
by rmelvey
Sat Feb 23, 2019 10:15 am
Forum: Personal Finance (Not Investing)
Topic: What's Your Credit Card Rewards Strategy?
Replies: 7203
Views: 1413779

Re: What's Your Credit Card Rewards Strategy?

Anyone else taking advantage of 0% APRs for purchases / balance transfers? I am putting all my spend on these types of cards and investing the proceeds.I plan to keep rolling this debt over at 0%. Of course you need to have a big enough portfolio so that you can always pay off the balance.

This is way better than margin loans for many reasons:
*You are borrowing below the risk free rate, so could lock in small risk free profits by buying treasuries
*If you invest in risk assets it is superior to margin loans because the debt is non-callable
by rmelvey
Sat Feb 23, 2019 2:10 am
Forum: Investing - Theory, News & General
Topic: Understanding using treasury futures for leverage to implement risk parity
Replies: 182
Views: 27745

Re: Understanding using treasury futures for leverage to implement risk parity

rhe wrote: Sat Feb 23, 2019 1:32 am A while back I started out doing basically what is being proposed here. Once you take a position in treasury futures, though, the historical sharpe ratio of short term treasuries has been substantially better than the 10 year treasuries... so if you're going to use leverage anyways, you might as well take a 5x larger position on the 2 year treasuries, rather than using the 10 year treasuries.
Are you still using the strategy? If not, what caused you to stop?
by rmelvey
Fri Feb 22, 2019 8:32 pm
Forum: Investing - Theory, News & General
Topic: Understanding using treasury futures for leverage to implement risk parity
Replies: 182
Views: 27745

Re: Understanding using treasury futures for leverage to implement risk parity

I have had interest in using futures for a passive buy and hold stock/treasury/gold portfolio because of the cheap leverage, but I keep talking myself out of it because of the taxes. With futures you have to pay tax each year on your P&L marked to market, so you completely give up the tax deferral benefit of buy and hold equities... I suppose you could hold the equities directly and just use futures for the bonds. But then its even more explicit that you are really just taking a leveraged position in bonds with rates at historic lows... I can't quite make the mental jump to do that (and then have the discipline to blindly roll it each month!) Treasury futures are more tax efficient than treasuries in a lot of cases. I don't know how go...
by rmelvey
Fri Feb 22, 2019 2:34 pm
Forum: Investing - Theory, News & General
Topic: Understanding using treasury futures for leverage to implement risk parity
Replies: 182
Views: 27745

Re: Understanding using treasury futures for leverage to implement risk parity

I have had interest in using futures for a passive buy and hold stock/treasury/gold portfolio because of the cheap leverage, but I keep talking myself out of it because of the taxes. With futures you have to pay tax each year on your P&L marked to market, so you completely give up the tax deferral benefit of buy and hold equities... I suppose you could hold the equities directly and just use futures for the bonds. But then its even more explicit that you are really just taking a leveraged position in bonds with rates at historic lows... I can't quite make the mental jump to do that (and then have the discipline to blindly roll it each month!)
by rmelvey
Fri Feb 22, 2019 2:22 pm
Forum: Investing - Theory, News & General
Topic: Does investing actually help a company ?
Replies: 46
Views: 6336

Re: Does investing actually help a company ?

Even though the cash doesn't directly work its way into the companies balance sheet, buying stock on the secondary market does help increase the price of the shares, which can make raising debt/equity in the future easier for the company.
by rmelvey
Fri Feb 22, 2019 12:29 pm
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]
Replies: 3353
Views: 883845

Re: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]

PluckyDucky wrote: Fri Feb 22, 2019 12:25 pm
gw wrote: Fri Feb 22, 2019 11:47 am ...

TLDR - if you think the appeal of this strategy isn't driven by the outstanding performance of bonds over the past 30 years, which is highly unreliable going forward, then you're simply fooling yourself.

And the rest of y'all need to stop reinvesting your retirement portfolios into 3x levered ETFs based on some anonymous internet dude's half-baked, week-old forum post. Jesus.
And the three fund portfolio doesn't rely on bonds?
Not like this portfolio does. If the Fed ever decides to tighten aggressively this strategy will have steep drawdowns.
by rmelvey
Thu Feb 21, 2019 3:05 pm
Forum: Personal Finance (Not Investing)
Topic: Side gig ideas with minimal requirements?
Replies: 124
Views: 12419

Re: Side gig ideas with minimal requirements?

Are you already churning credit card bonuses? That can be an extra $1k per year when you are just starting out. Not a ton but very easy for the amount of work involved.
by rmelvey
Thu Feb 21, 2019 1:55 pm
Forum: Personal Finance (Not Investing)
Topic: How to get money out of the house for aging parent
Replies: 8
Views: 1394

Re: How to get money out of the house for aging parent

Wonder if he could look into selling the house and then renting it back from a buyer? So... interesting solution. Since the father is ademant about moving... and getting him to move out at this point may be difficult. I am wondering if it is possible to have his son buy the house and rent it back to the father. Lets say the house is appraised at 650,000 and they buy it at $250,000? Is that allowed? The son would get a loan to buy it and have the father pay off the loan with some of the money he gets. Is this legal.. would it be seen as a gift causing him to incure gift taxes or???? I guess check with a tax expert, but if the father and son have a decent relationship this could be a decent solution. Keeping it in the family means the father...
by rmelvey
Wed Feb 20, 2019 3:39 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Small Value Lags For 15 Years
Replies: 57
Views: 4971

Re: Larry Swedroe: Small Value Lags For 15 Years

You guys got it all backwards. We are seeing the emergence of the growth premium! :wink:
by rmelvey
Tue Feb 19, 2019 12:27 pm
Forum: Personal Finance (Not Investing)
Topic: How to get money out of the house for aging parent
Replies: 8
Views: 1394

Re: How to get money out of the house for aging parent

Wonder if he could look into selling the house and then renting it back from a buyer?
by rmelvey
Fri Feb 08, 2019 2:21 pm
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]
Replies: 3353
Views: 883845

Re: HEDGEFUNDIE's excellent adventure [3x leveraged ETF strategy]

Gold is a good hedge for inflation shocks, not so much for grinding, slowly increasing, "normal" inflation. Since 1982 inflation has averaged 2.7% / year. I am among those who believe that Paul Volker basically "solved" the problem of inflation 40 years ago. There is a reason the 3-fund portfolio does not include gold. https://www.economist.com/finance-and-economics/2018/12/01/paul-volckers-memoir-invites-a-rethink-of-the-fight-against-inflation Yeah I meant inflation shocks (supply curve shifting left specifically). The three fund portfolio bonds have much shorter duration, so I don't think the omission of hard assets is as relevant as it is in your proposed portfolio. If you chose to ignore that risk then i guess that...
by rmelvey
Fri Feb 08, 2019 1:44 pm
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]
Replies: 3353
Views: 883845

Re: HEDGEFUNDIE's excellent adventure [3x leveraged ETF strategy]

The entire premise of my strategy rests upon the idea that when one asset collapses, the other asset rises sharply. If you don’t believe this will happen reliably going forward, you should not undertake this strategy. I am comfortable on this point, both because of historical returns and the underlying risk story of why this occurs. Again, you are only looking at a period of time where long-term bonds were basically in a bull market 90% of the time with falling interest rates. You've seen that UPRO can lose a ton of money and take 17 years to recover. And you expect the long-term treasury returns to make up for that. But I doubt they will make up for any UPRO losses as STRONGLY starting from low interest rates like today. I mean, your stra...
by rmelvey
Wed Feb 06, 2019 11:47 am
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]
Replies: 3353
Views: 883845

Re: HEDGEFUNDIE's excellent adventure [3x leveraged ETF strategy]

I think that the use of leverage to create a more efficient portfolio is an interesting one. Here's a link to PV that looks at three portfolios: 25% 3x leverage S&P and 75% Inter US Treas 37.5% 2x leverage S&P and 62.5% Inter US Treas 75% S&P and 25% Inter US Treas https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2019&lastMonth=12&calendarAligned=true&endDate=02%2F05%2F2019&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&showYield=false&reinvestDividends=true&symbol1=UPRO...