Search found 48 matches

by SirHorace
Wed Feb 04, 2015 5:29 pm
Forum: Investing - Theory, News & General
Topic: "how to measure risk?"
Replies: 35
Views: 3998

Re: "how to measure risk?"

I’m with nisiprius on this issue. I have been playing around with trying to develop a visual metric for evaluating risk. A preliminary example is below. I have calculated the drawdown characteristics of the 45 Fidelity sector funds (enumerated below). Seven of the funds showed drawdowns in excess of 80% of which I have shown 5 in the chart (four of the 45 funds did not have sufficient data to plot in the time frame selected). In terms of risk factors, the chart shows the relative speed and time duration in which a fund recovers a significant loss. I would certainly rather have a fund with FSAVX (Automotive) recovery characteristics as opposed to recovery characteristics of FSVLX (Consumer Finance) for example. http://i58.tinypic.com/15n6ntw...
by SirHorace
Wed Feb 04, 2015 3:31 pm
Forum: Investing - Theory, News & General
Topic: Vanguard survey: what should they do differently?
Replies: 72
Views: 8070

Re: Vanguard survey: what should they do differently?

Implement the ability to download all fund data (including dividends) for all funds for all time in CSV format for those of us who like to play with data in Excel (or other analytical tools). As best as I can figure out this capability does not currently exist or the time frames are limited or the number of funds are limited, etc.
by SirHorace
Fri Jul 19, 2013 6:45 pm
Forum: Investing - Theory, News & General
Topic: How and when did you do it - to get to 1 Million
Replies: 129
Views: 31289

Re: How and when did you do it - to get to 1 Million

1) Marry a frugal woman
2) Live below your means
3) Anytime you get an increase in your income or a unexpected windfall automatically allocate 25% (or more if possible) of the increase to your investments
4) Plus everything else that has been mentioned !!!
by SirHorace
Mon Jun 10, 2013 8:38 pm
Forum: Investing - Theory, News & General
Topic: The Three-Fund Portfolio
Replies: 3895
Views: 2424573

Re: The Three Fund Portfolio

UMFONDI wrote:
(Chart of Wellesley vs. Vanguard LifeStrategy)

Looks impressive but I believe there is a problem with data registration in your chart. I believe the proper comparison would be shown by the chart below. I assume the chart is of total return.

Image

Uploaded with ImageShack.us

SirHorace
by SirHorace
Mon Jun 10, 2013 2:24 pm
Forum: Investing - Theory, News & General
Topic: The Three-Fund Portfolio
Replies: 3895
Views: 2424573

Re: The Three Fund Portfolio

Question: I have been following this thread with the intent of implementing the 3-fund portfolio for at least a part of my holdings. But when I plotted the 3-fund portfolio components against Wellesley (my major holding) I was surprised and confused. From the chart below, it would appear that Wellesley had a 240% gain in the time frame Jan 1999 to June 2013 (limits of available data) and by eyeball it would appear impossible to create that performance from any combination of the 3-fund portfolio. Also, (again by eyeball) it appears the volatility and drawdown characteristics of Wellesley would be superior to those of any implementation of the 3-fund portfolio (unless the 3-fund portfolio consisted of 100% bonds which have performance issues...
by SirHorace
Thu Aug 09, 2012 7:02 pm
Forum: Personal Consumer Issues
Topic: Side jobs or hobbies that make you money
Replies: 127
Views: 26666

Re: Side jobs or hobbies that make you money

The best idea is to find an activity that makes money while you sleep. Avoid trading your labor for dollars on a one-to-one basis. If you have the skills, create a useful web page and sell advertising such as at the web site below:

[link removed by admin LadyGeek]

Note the innocuous add panel in the lower right hand corner.

SirHorace

Disclaimer: The web site was created by my son.
by SirHorace
Thu Aug 09, 2012 6:21 pm
Forum: Investing - Theory, News & General
Topic: When does it pay to delay Social Security?
Replies: 98
Views: 8960

Re: When does it pay to delay Social Security?

Archbish99 wrote: In what way does delaying SS change your expenses in this scenario? Sounds like the expenses for your wife's healthcare are the same regardless of when SS starts. The expenses do not change. The point I was making is that if a couple were “cash-strapped” (not my case) they could experience an unexpected, not-insignificant, hit on their out-of-pocket savings that would not be offseted by SS payments. Nonnie wrote: Why would your wife's health care bill be $4800 a year? Does she have to stay on your policy? I'm not quite clear on what you're paying-- $100 a month for a Medicare supplement-- I assume that's a Medigap policy?? and then another $300 to your company which totals $400 a month? That sounds like a pretty hefty Med...
by SirHorace
Thu Aug 09, 2012 3:18 pm
Forum: Investing - Theory, News & General
Topic: When does it pay to delay Social Security?
Replies: 98
Views: 8960

Re: When does it pay to delay Social Security?

Another factor to consider is the possible impact of delayed SS on health insurance. I am retired on Medicare for which I pay approximately $100/mo with a Medicare supplement through my company for which I pay approximately $300/mo ($4800/yr total). My wife, who will be 65 in November, is not eligible for SS until she is 66. Currently, her health care is provided by my previous company but that will end when she is eligible for Medicare at age 65. So, we will have to pay the total bill for her health care ($4800) for a year without any offsetting income from SS. Not a crisis, but just another factor to delaying SS.

Hope I got my facts right!

SirHorace
by SirHorace
Wed Jul 25, 2012 5:08 pm
Forum: Forum Issues and Administration
Topic: New Post Notification
Replies: 2
Views: 1174

New Post Notification

How do I indicate I want to be notified when a new post is added to a topic ???
by SirHorace
Wed Jul 25, 2012 4:36 pm
Forum: Personal Finance (Not Investing)
Topic: Optimal Retirement Calculator improved by user feedback
Replies: 13
Views: 3143

Re: Optimal Retirement Calculator improved by user feedback

I used to use ORP but I no longer trust it. The main issue I have with it is that the owner (James Welch) changed the program to report some sort of inflated value for the desired estate value of the portfolio. I used to be able to specify a desired estate value and the program would report that value in the solution. This was a good thing for two reasons. First, reporting the desired estate value I specified gave me a good indication that the program was correctly processing my input data and was working correctly. Second, if I want to leave my kids $1,000,000 (for example) ORP would report that I was leaving them $1,000,000 (in today’s dollars). I understand that having $1,000,000 today would be equivalent to having $3,000,000 in the futu...
by SirHorace
Wed Apr 25, 2012 10:29 pm
Forum: Investing - Theory, News & General
Topic: [Poll] My philosophy on SPIAs
Replies: 65
Views: 5337

Re: [Poll] My philosophy on SPIAs

What is a SPIA ???

SirHorace
by SirHorace
Sat Nov 26, 2011 7:02 pm
Forum: Investing - Theory, News & General
Topic: Vanguard PRPFX Tracking Portfolio II
Replies: 4
Views: 1182

Re: Vanguard PRPFX Tracking Portfolio II


nisiprius said

If it's not too much to ask for more: I am very curious about the one that tracked a perfectly steady 8% growth--the one you called "the 8% solution."


I shall start working on it shortly.

Sir Horace
by SirHorace
Sat Nov 26, 2011 5:52 pm
Forum: Investing - Theory, News & General
Topic: Vanguard PRPFX Tracking Portfolio II
Replies: 4
Views: 1182

Vanguard PRPFX Tracking Portfolio II

My Dear Friends, In an August 2007 submission ( Vanguard Tracking Portfolio I ) I attempted to find an all-Vanguard portfolio that would track the performance of PRPFX (Permanent Portfolio) to within an acceptable accuracy. In this submission, I have extended the graph of the original submission with actual out-of-sample prices for the Vanguard Tracking Portfolio and PRPFX starting in August 2007. Results are shown below: Vanguard PRPFX Tracking Portfolio http://img685.imageshack.us/img685/8482/vanguardprpfxtrackingpo.jpg Vanguard PRPFX Tracking Portfolio Drawdown http://img213.imageshack.us/img213/1158/vanguardprpfxtrackingpob.jpg PRPFX Drawdown http://img46.imageshack.us/img46/763/prpfxdrawdown.jpg SirHorace
by SirHorace
Wed Nov 03, 2010 9:32 pm
Forum: Investing - Theory, News & General
Topic: Retirement Calculators?
Replies: 8
Views: 4505

by SirHorace
Thu Aug 05, 2010 9:45 am
Forum: Investing - Theory, News & General
Topic: Quantitative mutual funds. Then and now.
Replies: 3
Views: 1208

Quantitative methods work great when the underlying data is statistically stationary. Unfortunately, economic time series do not meet that criteria (certainly not in the long run). No mathematics can predict the outcome of human endeavors and to attempt to do so is folly.

SirHorace
by SirHorace
Mon Mar 29, 2010 2:27 pm
Forum: Investing - Theory, News & General
Topic: Fidelity Portfolio Advisory Service
Replies: 68
Views: 59916

70 year old retiree (3+ years) I do some options trading with Fidelity and in talking with some of the local personnel (mid 2009) they asked me if they could make up a proposal to transfer my portfolio (low seven figures) from VG to them. I never had the intention of transferring and did not initiate the request for the proposal but I was curious as to what they would recommend. Their plan would have me in 38 funds!!! I think the composite ER was somewhere between 1-2 % (I can't remember the exact value but I think it was closer to 2%). In reading the proposal I got the feeling that they had thrown in everything including the kitchen sink!!! As I am actively working to reduce my portfolio to 3-4 funds and the Fidelity ER was about three tim...
by SirHorace
Wed Mar 24, 2010 3:17 pm
Forum: Investing - Theory, News & General
Topic: Best investing books - What are your recommendations?
Replies: 23
Views: 4333

I basically like the concepts outlined in: Asset Dedication: How to Grow Wealthy with the Next Generation of Asset Allocation, By S. J. Huxley, J. B. Burns (Hardcover, 1995) The basic premise seems to be: >Bond ladders for required income >Invest the remaining in a 100% equity index fund (S&P500) Although all of the Amazon reviews of the book were highly favorable (save one) the one negative review did point out a problem with the equity allocation increasing with years. I like to categorize books into two categories: > Strategic > Tactical Strategic books like "A Random Walk Down Wall Street" elucidate information that is useful in explaining general philosophies of investing. Tactical books like the "Asset Dedication: H...
by SirHorace
Sat Feb 27, 2010 9:34 am
Forum: Investing - Theory, News & General
Topic: Can a family of 3 live on 1.2M and never touch principal?
Replies: 43
Views: 12011

I think the "peace of mind" factor outweighs any investment advantage of owning a mortgage. We paid off our mortgage about 15 years ago and have never regretted it. During the several times when the job market looked bleak I was able to sleep well knowing that the economy would really have to tank for us to worry about loosing our home. It also gave great consolation to my wife who is a bit of a worry wart anyway.

SirHorace
by SirHorace
Thu Feb 18, 2010 10:36 pm
Forum: Personal Finance (Not Investing)
Topic: Have you ever tracked your spending for a year?
Replies: 105
Views: 18128

When I retired three years ago I wanted to know exactly how much we were spending (for retirement planning and tracking purposes). I was not concerned for what the money was spent, only how much was spent. So what I did was to make up an Excel spreadsheet with a separate sheet for each month, a summary sheet, and a chart sheet. For each month there are two categories: inflow and outflow. Inflow is SS payments, company pension payments, and capital gains and dividends from investments (90% in Vanguard, 50% in Wellesley). Medicare supplement and company health care expenses for my wife are automatically deducted from the SS deposits, etc. but I add them back in (and later deduct them as expenses) since they are valid expenses. I don't bother ...
by SirHorace
Wed Feb 03, 2010 7:33 pm
Forum: Forum Issues and Administration
Topic: deleted from test post thread
Replies: 54
Views: 5453

Image
by SirHorace
Wed Apr 01, 2009 8:08 am
Forum: Personal Investments
Topic: TurboTax vs TaxAct: A First-Timer's Very Quick Review
Replies: 18
Views: 5667

Last year I used both TurboTax (TT) and TaxCut but found TurboTax the easiest to use (not that it is perfect - many of the complaints listed above apply). One problem I had (with VG?) is that whereas when I downloaded Fidelity brokerage options data it appeared in the correct TT locations and format but when I downloaded VG brokerage options data I had to manually enter the data into the TT forms. I assume this is a VG problem.

SirHorace
by SirHorace
Mon Mar 09, 2009 2:11 pm
Forum: Personal Investments
Topic: The 1 Book for Asset Allocation
Replies: 25
Views: 5934

I basically like the concepts outlined in: Asset Dedication: How to Grow Wealthy with the Next Generation of Asset Allocation (Hardcover, 1995) S. J. Huxley, J. B. Burns The basic premise seems to be: >Bond ladders for required income >Invest the remaining in a 100% equity index fund (S&P500) By buying a bond ladder to satisfy your income requirement you automatically set the bond/equity asset ratio and you therefore simplify the asset allocation problem. Although all of the Amazon reviews of the book were highly favorable (save one) the one negative review did point out a problem with the equity allocation increasing with years. I bought the book used for practically nothing and it was in perfect shape. I am tending to agree with Zvi B...
by SirHorace
Mon Feb 02, 2009 7:54 pm
Forum: Investing - Theory, News & General
Topic: Did Anyone MAKE money last year?
Replies: 53
Views: 8889

John wrote:
I tried to find the 20% loss reference you mentioned - maybe you were looking at the bar graph on the MSN page that showed a 20% average decline for the category "conservative allocation funds"? It shows a positive result for the specific fund HSTRX.
Well, you are totally correct. I misread the chart and when I downloaded and plotted HSTRX historical data from Yahoo I somehow got the wrong data (I apparently need new glasses)!!!

Thanks for the clarification.

Horace
by SirHorace
Mon Feb 02, 2009 5:27 pm
Forum: Investing - Theory, News & General
Topic: Did Anyone MAKE money last year?
Replies: 53
Views: 8889

What Am I Missing ???

I must be missing something. Quasimodo says that Hussman Strategic Total Return (HSTRX) made money last year (2008?) but when I look at the HSTRX web site I see that HSTRX shows a 20% decline in 2008. Can someone please explain???
Quasimodo:
I wasn't smart enough to buy it last year, but Hussman Strategic Total Return, a conservative allocation-style fund managed to make money last year:
http://moneycentral.msn.com/in....mbol=HSTRX
SirHorace
by SirHorace
Fri Nov 07, 2008 9:08 pm
Forum: Personal Investments
Topic: If you had to recommend just one good book...
Replies: 25
Views: 6584

I basically like the concepts outlined in: Asset Dedication: How to Grow Wealthy with the Next Generation of Asset Allocation (Hardcover, 1995) S. J. Huxley, J. B. Burns The basic premise (for retirees) seems to be: >Bond ladders for required income >Invest the remaining in a 100% equity index fund (S&P500) By buying a bond ladder to satisfy your income requirement you automatically set the bond/equity asset ratio and you therefore simplify the asset allocation problem. Although all of the Amazon reviews of the book were highly favorable (save one) the one negative review did point out a problem with the equity allocation increasing with years. I bought the book used for practically nothing and it was in perfect shape. SirHorace[/quote]
by SirHorace
Sat Oct 18, 2008 11:46 am
Forum: Personal Investments
Topic: Help with Zvi Bodie's Equity LEAPS strategy
Replies: 6
Views: 3302

I read the book about a year ago (2003 version). I was very intrigued by the ideas in the book but was disappointed by the lack of comprehensive real-world examples and also that the person in the example Professor Bodie cited ended up not using the technique!!! I wrote Professor Bodie inquiring if he knew of any real-world implementation or simulations of the technique. I received a short reply in which he did not really answer my question but rather he recommend that I should just buy the largest annuity I could afford. I am still mildly interested in the technique but will want to see more analysis using real data before considering any implementation of it. The thread cited by Wab has a lot of good information and analysis – most of whi...
by SirHorace
Wed Feb 27, 2008 1:24 pm
Forum: Investing - Theory, News & General
Topic: Yahoo Download Program (Help)
Replies: 2
Views: 1250

Thanks but I am quite familiar with "manually" downloading Yahoo data. This program I am trying to (re)find is extremely useful in that it will automatically download all at once as many funds as you want.

SirHorace
by SirHorace
Tue Feb 26, 2008 10:25 pm
Forum: Investing - Theory, News & General
Topic: Yahoo Download Program (Help)
Replies: 2
Views: 1250

Yahoo Download Program (Help)

My Dear Friends,

In the recent past, I had a simple, very handy, free program that would read a file of fund names and then download the historical fund values from Yahoo into multiple Csv files. I have lost that program due to a recent disk failure. Does anyone know the name or location of that program? I have extensively Googled searching for the program without success.

Thanks,

SirHorace
by SirHorace
Wed Nov 21, 2007 10:19 am
Forum: Investing - Theory, News & General
Topic: How to emulate Total Stock Market Index
Replies: 12
Views: 4086

The technique described in post "Vanguard Tracking Portfolio I" will do exactly what you want.

Horace
by SirHorace
Mon Oct 22, 2007 1:02 pm
Forum: Investing - Theory, News & General
Topic: (Just For Fun) Retirement Planning Differential Equation
Replies: 14
Views: 4648

Squirl wrote: Even though it's deterministic (with all the known flaws of such it's good for taking quick looks at many possible scenarios. That will help build an intuitive feel for the sensitivity of the results to the various input parameters. And later: Here, one has the capability quickly to do sensitivity analyses Sensitivity analysis is a very important point. For example, using the default parameters in the spreadsheet, your money would last until you were 100. If, however, you only realized 6% return on your investments, you would run out of money at age 94!!!. Also, consider inflation. If inflation rose by only 1% (to 5%), and your payout was adjusted accordingly, you would run out of money at age 92!!! No wonder inflation is call...
by SirHorace
Mon Oct 22, 2007 10:26 am
Forum: Investing - Theory, News & General
Topic: (Just For Fun) Retirement Planning Differential Equation
Replies: 14
Views: 4648

Gummy wrote: Now that's neat! Thank you. Coming from the "Master" that's a real compliment. It'd really be slick if'n the a = annual return could be made random I believe doing that would turn the differential equation (DE) into a "stochastic" differential equation (SDE) which at the present time I know essentially nothing about. I hope to learn though. ... but maybe time-varying a(t) Yes, that could be done but the issue is what function should a(t) follow? How about a sine wave or perhaps an exponential? And, you would of course have to estimate the function parameters which in itself has a whole world of issues. I cannot think of any function that would make sense except perhaps a statistical distribution which again ...
by SirHorace
Sun Oct 21, 2007 9:18 pm
Forum: Investing - Theory, News & General
Topic: (Just For Fun) Retirement Planning Differential Equation
Replies: 14
Views: 4648

Market Timer said Your terminal boundary condition is that you want zero principal at age 100? Well, the terminal age and portfolio level is of course user-defined. I use 100 because my wife is 9 years younger than me and while I most likely won't live to 100 my wife may very well live to 91 so I use 100 for me just to be conservative. This equation would work fine if the world were deterministic. Yes, the spreadsheet process is deterministic. I think that knowing the probability of portfolio success is a good data point but if my portfolio success probability is 85% should I be worried? Should it be 95%? Should it be 99%? Also, how close to reality are the statistical assumptions underlying the MC process? I think all MC processes are fund...
by SirHorace
Sun Oct 21, 2007 8:22 pm
Forum: Investing - Theory, News & General
Topic: (Just For Fun) Retirement Planning Differential Equation
Replies: 14
Views: 4648

(Just For Fun) Retirement Planning Differential Equation

(Just For Fun) Retirement Planning Differential Equation Several years ago I was playing around with an equation while building retirement planners when I suddenly realized that the equation looked like a differential equation (see below): Rate Of Change Of Principal = Interest On Principal + Social Security + Company Pension - Yearly Payout Or p'(t) = a*p(t) + b*Exp(c*t) + d - e*Exp(f*t) With initial condition: p(0) = P Where: p'(t) = Rate of change of principal ($/Yr) p(t) = Value of principal ($) a*p(t) = Return on principal ($/Yr) b*Exp(c*t) = Social Security income compensated for SS inflation ($/Yr) e*Exp(f*t) = Yearly payout from principal and entitlements compensated for inflation ($/Yr) And: P = Value of principal at retirement ($)...
by SirHorace
Mon Sep 03, 2007 9:23 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio II (aka The 8% Solution)
Replies: 35
Views: 14052

Gatorking wrote >Similar in what way? I was really referring to the fact that all three portfolios closely tracked their target growth curve and all three had almost negligible drawdowns. Since the portfolio characteristics were very close to each other I classified them as "similar". I was not making any statement about the composition of the portfolios which is not my primary focus in this exercise. >I find it interesting that a Tax exempt fund, VMLTX, crept into the mix. At this stage I am not including any consideration of taxes. This project is a very enjoyable hobby and including the tax impacts would complicate the situation beyond bounds and probably give me a big headache!!! The fact that VMLTX, crept into the mix only re...
by SirHorace
Mon Sep 03, 2007 3:14 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio II (aka The 8% Solution)
Replies: 35
Views: 14052

CORRECTION:

SirHorace wrote
The downside to placing conditions on fund activity is that any constraints placed on the model reduce the degree of freedom of the model. The resulting portfolio would then be sub-optimal with respect to its design goal (minimum absolute deviation (MAD) from a stated growth curve)
The correct wording should have been:

The downside to placing conditions on fund activity is that any constraints placed on the model reduce the degree of freedom of the model. The resulting portfolio would then be sub-optimal with respect to its design goal (maximum absolute deviation (MAD) from a stated growth curve)

Horace
by SirHorace
Mon Sep 03, 2007 9:29 am
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio II (aka The 8% Solution)
Replies: 35
Views: 14052

marana wrote: The model did not capture much of the global equity capitalization in the table of results as a function of design growth. The linear programming (LP) formulation is extremely adaptable. The formulation you suggest would be trivial to implement and could be used to "fine tune" the portfolio to suit a person's particular requirements. Typical LP formulations that could be considered include: --- Force a fund to have a minimum activity --- Force a non-zero participation of a fund not normally in the solution --- Force a specific activity value of a fund --- Limit the maximum activity of a fund --- Prevent a fund from having a non-zero activity The downside to placing conditions on fund activity is that any constraints ...
by SirHorace
Sat Sep 01, 2007 7:52 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio II (aka The 8% Solution)
Replies: 35
Views: 14052

bearcat98 wrote I would be interested to see what your results would be at 5%, 6%, and 7%. Well, it appears that the results are very similar to each other (see charts below). I have also corrected some errors in the portfolio summary chart and reproduced it below. Please note that some funds are closed to new investors. Corrected portfolio summary Chart (below) http://i2.tinypic.com/6ajvq6a.jpg 5% Portfolio performance chart (below) http://i9.tinypic.com/4u291ew.jpg 5% Portfolio Drawdown Chart (below) http://i13.tinypic.com/4r7xvrd.jpg 6% Portfolio performance chart (below) http://i18.tinypic.com/6aq1ruq.jpg 6% Portfolio Drawdown Chart (below) http://i1.tinypic.com/5xfztbl.jpg 7% Portfolio performance chart (below) http://i5.tinypic.com/53...
by SirHorace
Fri Aug 31, 2007 10:13 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio II (aka The 8% Solution)
Replies: 35
Views: 14052

Definition: "designed portfolio" means a portfolio designed by the methods I have described in this thread. Definition: "superior characteristics/superior performance" means a portfolio that adheres to its target growth with a minimum deviation from the target growth. Mas wrote: SirHorace, this is a very interesting technique... Well, I do think so. As I said elsewhere in this thread, however, I did not originate the idea. I am fairly certain that professional fund managers use similar techniques (abet much more complicated) to construct some index funds. If you read the Vanguard Emerging Markets Stock Index (VEIEX) prospectus you will find the material quoted below: Indexing Methods In seeking to track a particular inde...
by SirHorace
Thu Aug 30, 2007 6:03 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio II (aka The 8% Solution)
Replies: 35
Views: 14052

My dear friends >I definitely need new glasses!!! A slight error crept into the "Vanguard 10% Tracking Portfolio" chart above. The portfolio was constructed using VBIIX instead of VBLTX. I have recreated the chart using the correct fund and presented it below. The funny thing is that the error made essentially no difference!!! http://i17.tinypic.com/6faieli.jpg http://i17.tinypic.com/6613rt4.jpg ################################ Also, as Mudfud discovered, I made a mistake concerning one of the funds in the Vanguard recommended retirement portfolio. I used: VASGX (80%) --- LifeStrategy Growth Fund When I should have used: VSCGX (80%) --- LifeStrategy Conservative Growth Fund How this impacts my comments in this thread is outlined b...
by SirHorace
Thu Aug 30, 2007 2:43 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio II (aka The 8% Solution)
Replies: 35
Views: 14052

My Dear Friends, Please note that the portfolio chart below was created including the Vanguard funds that are closed to new investors: VGHCX --- Health Care Fund Inv VGPMX --- Precious Metals & Mining VHCOX --- Capital Opportunity Investors Shares I did this for (my) educational purposes and because there may be some readers who already have these funds and would be interested in the portfolios. I plan on creating a similar chart excluding the closed funds in the near future. ######################################## Livesoft wrote: >What is the highest % deterministic return for which you can get an acceptable solution? 20%? 15%? Well, there are no absolutes but I would be comfortable with the portfolios shown below that fall within the...
by SirHorace
Tue Aug 28, 2007 7:40 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio II (aka The 8% Solution)
Replies: 35
Views: 14052

Vanguard Tracking Portfolio II (aka The 8% Solution)

Vanguard Tracking Portfolio II (aka The 8% Solution) My Dear Friends, When I retired a year ago Vanguard proposed the following retirement portfolio for me: VASGX (80%) --- LifeStrategy Growth Fund VTSMX (20%) --- Total Stock Mkt Idx Inv The historical growth and drawdown characteristics of this portfolio are charted below: http://i12.tinypic.com/5yd1npj.jpg http://i11.tinypic.com/4mx5s0g.jpg In looking at the drawdown characteristics of this portfolio I was deeply disappointed. It appears that over the last twelve years the portfolio experienced a 37.2% loss during 2000-2005 and took about four years to recover from its peak!!! To me, this was not an acceptable portfolio for a retiree. I had told the Vanguard representative that I was most...
by SirHorace
Sat Aug 25, 2007 9:26 am
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio I
Replies: 15
Views: 4953

gatorking: >I think you have enough variables here i.e. the returns of 57 funds, to fit just about any curve you want. Interesting observation. It would also mean that one could construct equivalent low-cost Vanguard portfolios to high-cost non Vanguard portfolios. >Do you get different portfolios if you give excel different starting points? Don't know how to do that but since it is "linear" programming the starting point should have no impact on the final solution. >Also, instead of minimizing expense ratio what if you put a looser constraint on it - like ER < 0.5? Linear programming is very adaptable and I'm sure one could do as you suggest. My focus was on closeness of curve fit at minimum cost. mudfud: >The question you have a...
by SirHorace
Fri Aug 24, 2007 10:20 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Tracking Portfolio I
Replies: 15
Views: 4953

Vanguard Tracking Portfolio I

My Dear Friends, Once a month I attend an informal investment club breakfast meeting. Members are encouraged to present their investment activities. Several months ago, a lady presented a mutual fund she "found" and was considering purchasing (Permanent Portfolio, PRPFX). I looked at the fund and agreed that it had some desirable characteristics. It was a mix of many types of equities (Gold, Silver, Swiss Franc assets, U.S. and foreign real estate, natural resource stocks, aggressive growth stocks, U.S. treasury bills, bonds, and other assets). It had steady growth and minimal drawdown during the 2000-2003 market meltdown. The fund, however, has a relatively high expense ratio (1.11%). So, as an intellectual exercise, I ask myself...
by SirHorace
Fri Aug 24, 2007 9:50 pm
Forum: Forum Issues and Administration
Topic: deleted from test post thread
Replies: 54
Views: 5453

Why do I keep getting these messages - I meet the posting cr

Why do I keep getting these messages - I meet the posting criteria!!!

General Error

In order to try to prevent spammers, we do not allow our members to post links or images until they have posted at least 4 legitimate posts and have been with us for more than 6 days. We appreciate your understanding in this matter in order to help us eliminate spam from this forum. If you have somehow gotten this message even though you meet both of the criteria, please email the Site Admin at bhadmin (at) diehards (period) org

Thanks!
by SirHorace
Wed Aug 01, 2007 5:38 pm
Forum: Investing - Theory, News & General
Topic: Order of withdrawal during retirement
Replies: 2
Views: 2301

Take a look at: www i-orp com It determines how you should spend from various funds to minimize the amount of taxes owed (it has built-in tax code models). From the ORP home page: The Optimal Retirement Planner (ORP) is a tool to evaluate how the first two issues impact the third. Given your current savings, planned savings and the amount that you plan to leave in your estate (immortality is not a retirement option) ORP's case management allows you to compare how inflation and asset returns impact the annual amount of after-tax money available for retirement spending. ORP does not ask you how much money you plan to spend each year. Instead, ORP tells you how much will be available. ORP computes your cash flow during retirement from investme...
by SirHorace
Sun Jun 03, 2007 7:15 pm
Forum: Personal Investments
Topic: LEASE vs. OWN
Replies: 20
Views: 5987

LEASE vs. OWN

The (free) web site shown below has an interesting spread sheet that may help one evaluate the lease vs. own issue.

http://www.gummy-stuff.org/buy-or-rent.htm

(The actual spreadsheet name is house-vs-apt.xls)

Horace
by SirHorace
Sun Jun 03, 2007 6:41 pm
Forum: Personal Investments
Topic: At retirement, draw from taxable or tax defered first?
Replies: 22
Views: 7970

At retirement, draw from taxable or tax deferred first

Taylor Larimore wrote: I assume you may be James Welch, founder of the ORB website… Thank you for the complement but no, I am not James Welch but I will admit that I am very envious of the real James Welch for his ability to implement the ORP website. I have no connection with the web site whatsoever other than as a satisfied user. My great fear is that the ORP web site may go away so I take every opportunity I can to promote it. I have used linear programming for a number of years in my work and, since retirement, in the design and control of my retirement portfolio. I have a feeling for how difficult it is to implement the ORP web site which only increases my appreciation of Mr. Welch. The ORP web site features a retirement planner that i...
by SirHorace
Sun Jun 03, 2007 3:25 pm
Forum: Personal Investments
Topic: At retirement, draw from taxable or tax defered first?
Replies: 22
Views: 7970

At retirement, draw from taxable or tax defered first?

I call your attention to a wonderful free retirement-oriented web site at http://www.i-orp.com/ This web site (named Optimal Retirement Planner, ORP) features a retirement calculator that uses tax models and mathematical optimization (specifically linear programming) to maximize your spending money and minimize your taxes given your income streams and economic conditions. Specific to this thread, the ORP web site FAQ has the following to say about what fund to withdrawal from first: Q: Why does ORP begin withdrawals from both the Tax-deferred and the After-tax Accounts until the After-Tax Account is depleted rather than solely from the After-Tax Account until it is depleted? A: Taxes! When larger Tax-deferred withdrawals tend to kick you up...