Search found 363 matches

by TJSI
Fri Jan 17, 2020 2:38 pm
Forum: Investing - Theory, News & General
Topic: Did John Bogle ever say anything about stock buybacks?
Replies: 8
Views: 569

Re: Did John Bogle ever say anything about stock buybacks?

This question has been asked several times and is caused by the misuse of the term buyback yield, Returns are only generated by an increase in the number of shares owned and increases in their price. The rate at which shares increase is the dividend yield and buybacks don't increase the number of sh...
by TJSI
Sat Dec 28, 2019 11:58 am
Forum: Non-US Investing
Topic: Is Gold really as bad as it made out to be?
Replies: 42
Views: 3086

Re: Is Gold really as bad as it made out to be?

Nisiprius, When you discuss correlations, you must specify the time interval over which you are measuring it. For short periods of time gold has had negative correlation. Long term correlation is slightly positive. If you have gold in your portfolio and just hold it over multiple years it will do no...
by TJSI
Wed Nov 20, 2019 7:16 pm
Forum: Investing - Theory, News & General
Topic: What Powered Such a Great Decade For Stocks?
Replies: 36
Views: 3803

Re: What Powered Such a Great Decade For Stocks?

Jeff,

Thanks for the link. A very clear and succinct analysis by Ben Carlson.

I think that in addition to QE and low interest rates we should add buybacks which I believe are keeping PEs afloat.

TJSI
by TJSI
Mon Oct 21, 2019 11:21 am
Forum: Personal Consumer Issues
Topic: Email Compromised On The Dark Web
Replies: 20
Views: 3881

Re: Email Compromised On The Dark Web

Yes you should be concerned because that message itself may be a scam. You can't scan the "dark web". Call the number on your credit card to see if there is any validity to that message.
by TJSI
Fri Oct 04, 2019 4:59 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe's "Rules of Prudent Investing"
Replies: 32
Views: 4712

Re: Larry Swedroe's "Rules of Prudent Investing"

Some very good rules by LS. Note the contradiction between 6 & 8.
by TJSI
Thu Oct 03, 2019 3:27 pm
Forum: Investing - Theory, News & General
Topic: S&P 500 cap-weighted beaten by Growth, Momentum, Min Vol, Low Vol & Quality since 2004
Replies: 20
Views: 2046

Re: S&P 500 cap-weighted beaten by Growth, Momentum, Min Vol, Low Vol & Quality since 2004

To answer Nisiprius' question on why small is not included in the paper: The study only looked at S&P 500 Indices. The indices studied are all subsets of the S&P 500. And thanks for your questions because it always brings Elvis's "Suspicious Minds" to my mind. It was a good song and I believe his la...
by TJSI
Wed Oct 02, 2019 9:32 pm
Forum: Investing - Theory, News & General
Topic: S&P 500 cap-weighted beaten by Growth, Momentum, Min Vol, Low Vol & Quality since 2004
Replies: 20
Views: 2046

Re: S&P 500 cap-weighted beaten by Growth, Momentum, Min Vol, Low Vol & Quality since 2004

Thanks for the link to a very informative paper. It provides further validation to the out-performance of low volatility and dividend paying stocks.
Of course, these results are only valid in a no-tax environment.

TJSI
by TJSI
Mon Sep 16, 2019 10:44 pm
Forum: Investing - Theory, News & General
Topic: Don't confuse strategy with outcome:
Replies: 94
Views: 6360

Re: Don't confuse strategy with outcome:

A good excuse for poor performance.
by TJSI
Thu Aug 15, 2019 6:30 pm
Forum: Personal Investments
Topic: How can I accomplish "Locking in Gains"
Replies: 53
Views: 3767

Re: How can I accomplish "Locking in Gains"

You can lock in your gains by transferring your risky investments to less risky ones. Moving some/all of your investments to treasury bonds for instance.

Same concept as taking winnings off the table.

TJSI
by TJSI
Wed Aug 14, 2019 6:41 pm
Forum: Personal Consumer Issues
Topic: Windows 10 urgent update alert.
Replies: 6
Views: 1902

Re: Windows 10 urgent update alert.

Thanks for the heads up. There were two updates out there an antivirus and a .NET . Update was painless as these things go.
by TJSI
Sun Aug 11, 2019 3:33 pm
Forum: Investing - Theory, News & General
Topic: Do you think about volatility drag on your portfolio?
Replies: 246
Views: 24688

Re: Do you think about volatility drag on your portfolio?

willthrill88, Nope, I' m referring to the roll of volatility in a portfolio. The possibility of achieving the "rebalancing bonus" exists. There is some fellow on this forum who loves his RBDs. I would not say it is easy to get a volatility lift but it is possible. And I would certainly recommend tha...
by TJSI
Sun Aug 11, 2019 3:14 pm
Forum: Investing - Theory, News & General
Topic: Do you think about volatility drag on your portfolio?
Replies: 246
Views: 24688

Re: Do you think about volatility drag on your portfolio?

Like the Loch Ness Monster and Big Foot, volatility drag will always exist in some minds. Northern Flicker has seen through the fog of mathematics. If you have some compounding action in your portfolio, the arithmetic mean is an incorrect method of computing return. Volatility is neither a friend or...
by TJSI
Fri Jun 14, 2019 3:02 pm
Forum: Investing - Theory, News & General
Topic: Correlation vs. Differential of Asset Returns
Replies: 4
Views: 385

Re: Correlation vs. Differential of Asset Returns

SimpleGift,

I agree with you 100%. I just thought your graphs showed very dramatically why it is hard to get a return benefit from diversification.

However, that does not negate, as you point out, the potential reduction in risk by diversifying return sources.

TJSI
by TJSI
Fri Jun 14, 2019 2:03 pm
Forum: Investing - Theory, News & General
Topic: Correlation vs. Differential of Asset Returns
Replies: 4
Views: 385

Re: Correlation vs. Differential of Asset Returns

I don't see how you can get a diversification benefit unless you are really good at foretelling the future. Looks like you should have gone with all UK around 1960 and 35 years later switched to all US and stuck with it. Those are great plots--thanks. I think it illustrates perfectly the difficulty ...
by TJSI
Tue Mar 19, 2019 8:54 pm
Forum: Investing - Theory, News & General
Topic: Passive investing now controls nearly half the US stock market
Replies: 39
Views: 3680

Re: Passive investing now controls nearly half the US stock market

BJJ_GUY Thank you for your comments. Yes, the US market is the referenced market and the S&P 500 would be a good proxy for it. I find it both amusing and frustrating that the most basic of information on the "market" seems to be covered in fog. Perhaps the FED has produced a report on market owners ...
by TJSI
Tue Mar 19, 2019 7:58 pm
Forum: Investing - Theory, News & General
Topic: Passive investing now controls nearly half the US stock market
Replies: 39
Views: 3680

Re: Passive investing now controls nearly half the US stock market

Several people have mentioned the issue of defining the "market". It is a topic for which I have never seen a clear or good study. Instead you usually see references to traders, sovereign funds, institutional investors, endowments, pension funds, and retail investors but never a good breakdown of wh...
by TJSI
Wed Mar 06, 2019 7:20 pm
Forum: Investing - Theory, News & General
Topic: S&P 500 Dividend Yield Plus Buyback Yield for 2018 Was 5.96%
Replies: 32
Views: 4454

Re: S&P 500 Dividend Yield Plus Buyback Yield for 2018 Was 5.96%

jdilla1107, You can't null out a buyback by selling your shares since you don't know when, if, or at what price the buyback (if any) was performed. The simple fact is that if a company is overpaying for their stock they are reducing their return on equity. Or as it was well put: You can't get rich p...
by TJSI
Wed Feb 20, 2019 1:54 pm
Forum: Investing - Theory, News & General
Topic: Portfolio visualizer says no rebalance bonus
Replies: 38
Views: 3516

Re: Portfolio visualizer says no rebalance bonus

A slightly different purpose to rebalancing is the desire to "take your winnings off the table". Although just a part of risk management, it provides a rational for rebalancing. If you are at or near retirement, it does make sense to book your gains. However, in general there is no automatic rebalan...
by TJSI
Wed Jan 16, 2019 6:44 pm
Forum: Investing - Theory, News & General
Topic: John Bogle has died at age 89
Replies: 856
Views: 58647

Re: John Bogle is dead at 89

The passing of a giant of the investment industry is a sad day. He freely gave of himself his time, knowledge and wisdom. The welfare of the common investor was always his goal. We are sad today, but we are all richer for having read his books, read his papers, or listened to him. Rest in peace in M...
by TJSI
Tue Jan 15, 2019 11:24 pm
Forum: Personal Investments
Topic: low volatility funds in a Roth IRA
Replies: 13
Views: 1354

Re: low volatility funds in a Roth IRA

Aristotelian, The low volatility anomaly has been known and well documented for quite some time. Back in 1972 Black, Jensen, and Scholes found that low beta stocks outperformed the market ( The Capital Asset Pricing Model: Some Empirical Tests). There have been several published studies since then c...
by TJSI
Sun Dec 23, 2018 8:36 pm
Forum: Personal Investments
Topic: Research paper James Grant CNBC
Replies: 9
Views: 1126

Re: Research paper James Grant CNBC

Finished reading this paper by Prof McQuarrie in which he dissects stock market returns. He reviews the market return over multiple time periods starting in 1830. There is a lot of good analysis and discussion of the Siegel return and the total return approach. He tells a cautionary tale that one sh...
by TJSI
Wed Dec 19, 2018 11:37 pm
Forum: Personal Investments
Topic: Research paper James Grant CNBC
Replies: 9
Views: 1126

Re: Research paper James Grant CNBC

rmgtl,

Thank you posting an interesting and provocative paper. It is long so it will take some effort to digest it completely. But it certainly presents a fresh look at the topic of stock market returns.


TJSI
by TJSI
Fri Nov 16, 2018 11:44 am
Forum: Investing - Theory, News & General
Topic: If riskier than US, why doesn't international outperform?
Replies: 245
Views: 17080

Re: If riskier than US, why doesn't international outperform?

The idea that taking more risk leads to greater return is one of most enduring fallacies of finance. Sometimes it is stated something like "investors demand greater return otherwise they would not take the added risk." Well you can demand all you want but that does not mean you are going to get. TJSI
by TJSI
Sat Nov 10, 2018 12:09 pm
Forum: Investing - Theory, News & General
Topic: 18 topics badly explained by many Finance Professors
Replies: 14
Views: 3147

Re: 18 topics badly explained by many Finance Professors

Thanks for the link--very informative paper.

TJSI
by TJSI
Sun Oct 28, 2018 10:07 pm
Forum: Investing - Theory, News & General
Topic: Bogle’s SP500 Returns Math
Replies: 21
Views: 4074

Re: Bogle’s SP500 Returns Math

GuitarXM, I believe the chart you are looking at are returns developed using Bogle's predictive method. See for instance, the paper What's Ahead for Stocks and Bonds--And How to Earn Your Fair Share-- Keynote Speech by John Bogle. On page 8 where he discusses the returns of the 1990s it is in terms ...
by TJSI
Sun Oct 28, 2018 12:11 am
Forum: Investing - Theory, News & General
Topic: Bogle’s SP500 Returns Math
Replies: 21
Views: 4074

Re: Bogle’s SP500 Returns Math

GuitarXM, If I understand your comments correctly, you are comparing a prediction with an actual result. Mr Bogle has provided a predictive tool and it is not 100% accurate. As a predictive tool it is fairly accurate. I believe in his second book he discusses its accuracy and limitations. Valuation ...
by TJSI
Thu Oct 18, 2018 10:02 pm
Forum: Investing - Theory, News & General
Topic: Why is dividend yield a part of expected future returns
Replies: 15
Views: 1200

Re: Why is dividend yield a part of expected future returns

At all times, the value of your investment is equal to the number of shares you own times the price of each share. The rate at which you shares increase is the dividend yield. So it is one component of your return. Price increase is the other component of your return.
by TJSI
Fri Sep 28, 2018 11:29 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Exploring Buyback’s Impacts
Replies: 19
Views: 2123

Re: Larry Swedroe: Exploring Buyback’s Impacts

I once had a distinguished Prof of Mathematics say of Cramer's Rule for solving linear equations:

"Of little theoretical use and no practical use whatsoever."

The same statemet applies to MM theory.

TJSI
by TJSI
Mon Sep 17, 2018 4:53 pm
Forum: Investing - Theory, News & General
Topic: Discount Cash Flow Analysis (DCF)
Replies: 11
Views: 990

Re: Discount Cash Flow Analysis (DCF)

GuitarXM, I think the difficulty lies in your understanding of terminal value. One method of estimating terminal value is to use an assumed P/E times the earnings after X years. So if you are using a 5 year estimate, you calculate (estmate) the earnings after 5 years and mutiply by an assumed P/E. T...
by TJSI
Thu Sep 06, 2018 10:24 am
Forum: Investing - Theory, News & General
Topic: Good time to do value investing?
Replies: 37
Views: 3015

Re: Good time to do value investing?

Steve321, Value stocks earn their reward when they are oversold. The outperformance is relative to their underlying value not compared to growth stocks. Its quite possible that growth is oversold and value stocks are also oversold but not as much. Maybe they are near their true value. Value stocks e...
by TJSI
Sun Jul 22, 2018 7:28 pm
Forum: Investing - Theory, News & General
Topic: Speculative PE change equation
Replies: 5
Views: 663

Re: Speculative PE change equation

augifm, Because to some degree P/E refelects the "animal spirits" of the market it is the most difficult parameter to estimate in the Bogle model of returns. And 10-year estimates of return can have significant error due to its unpredicability. In the paper "Occam's Razor Redux: Establishing Reasona...
by TJSI
Mon Jul 16, 2018 1:19 pm
Forum: Investing - Theory, News & General
Topic: Is rebalancing an advantage when holding a 3 fund portfolio instead of 2 or 1 fund portfolio?
Replies: 17
Views: 1243

Re: Is rebalancing an advantage when holding a 3 fund portfolio instead of 2 or 1 fund portfolio?

willthrill81 said" "There is no rebalancing bonus. It is a myth." I think a more balanced statement would be: There might be a rebalancing bonus or perhaps a rebalancing loss. Under the right conditions you can get a bonus. See for instance: "The Rebalancing Bonus" by William Bernstein If there is a...
by TJSI
Mon Jul 02, 2018 6:58 pm
Forum: Investing - Theory, News & General
Topic: "homemade dividends" from Total Stock Market fund
Replies: 135
Views: 10385

Re: "homemade dividends" from Total Stock Market fund

IlliniDave, Your suspicions are correct. The stock price of a dividend paying stock does indeed rise before the payment. See: Dividend Capture and the EX-Dividend Price Behavior of Electric Utilities. Unless there is an impairment to the ability of a company to pay future dividends, the intrinsic va...
by TJSI
Mon Jun 11, 2018 8:41 pm
Forum: Personal Consumer Issues
Topic: Chipmunk Repellent?
Replies: 36
Views: 3329

Re: Chipmunk Repellent?

I have had great success with a Havahart trap. Trapped 15 chipmunks last year and three this year. None seen for over a month. However, you need to transport the little creatures to another location. Tried various chemicals-- none were effective. Chipmunks can do a lot of damage. Cats can also be ve...
by TJSI
Fri May 25, 2018 12:12 am
Forum: Investing - Theory, News & General
Topic: Three-fund portfolio returns and variance drain
Replies: 106
Views: 11515

Re: Three-fund portfolio returns and variance drain

Random Walker wrote: "I believe there is an error or two in your logic. Firstly, need to account for rebalancing." But that is the point of the thought experiment. Without rebalancing there is no loss. It is only through your investment decision to rebalance at some point does the possibilty of loss...
by TJSI
Sun May 20, 2018 2:01 pm
Forum: Investing - Theory, News & General
Topic: Three-fund portfolio returns and variance drain
Replies: 106
Views: 11515

Re: Three-fund portfolio returns and variance drain

Mlretired, You don't need to bother with excel to see why there is no such as thing as volatility drag. A thought experiment will suffice. Assume you have two simple portfolios each consisting of a single stock--stock A is highly volatile while stock B is a dullard-- not much volatility. You buy the...
by TJSI
Sun May 20, 2018 12:13 pm
Forum: Investing - Theory, News & General
Topic: Three-fund portfolio returns and variance drain
Replies: 106
Views: 11515

Re: Three-fund portfolio returns and variance drain

Bah, humbug. There is no such thing as volatility drag. It is just the use of mathematics to obfuscate what is going on. If there is a loss due to volatility, it is due to your investment plan. You are buying high and selling low. As for me, I prefer to get my free lunch at the diversification banqu...
by TJSI
Tue May 15, 2018 4:06 pm
Forum: US Chapters
Topic: Yes, I'm 89 all right! [Jack Bogle]
Replies: 126
Views: 15247

Re: Yes, I'm 89 all right! [Jack Bogle]

There use to be a commercial that went:

"When EF Hutton talks people listen".

I'll borrow a bit of that and say:

"When Jack Bogle talks---Pay Attention!"

Happy Birthday and thanks for all your contributions to investors everywhere,

TJSI
by TJSI
Wed Mar 21, 2018 11:26 am
Forum: Investing - Theory, News & General
Topic: Do "dividend dollars" maintain in a market downturn?
Replies: 13
Views: 1946

Re: Do "dividend dollars" maintain in a market downturn?

Dividends are more stable than earnings and price. Dividends can and have been cut in the past. But a market downturn by itself will not reduce dividends. It takes a significant economic downturn for a dividend reduction. In fact, the generally superior performance of dividend based funds is in part...
by TJSI
Sun Mar 18, 2018 3:06 pm
Forum: Personal Consumer Issues
Topic: Quiet vehicle for two cats
Replies: 15
Views: 1448

Re: Quiet vehicle for two cats

Just tell them they are not going to the Vet. They will relax and sleep the rest of the way.
by TJSI
Sat Mar 17, 2018 11:31 am
Forum: Investing - Theory, News & General
Topic: Gordon Equation Update???
Replies: 13
Views: 1680

Re: Gordon Equation Update???

The Gordon Equation is based on a specific set of assumptions. Mr Bogle's formulation does not assume or depend on those assumptions. The Gordon Equation is of no use for short term estimates of market return. The Bogle Equation is not based on the Gordon Equation. Without trying to speak for him, I...
by TJSI
Sat Mar 17, 2018 10:48 am
Forum: Investing - Theory, News & General
Topic: Gordon Equation Update???
Replies: 13
Views: 1680

Re: Gordon Equation Update???

The Bogle formulation is not based on the Gordon Equation. It does not depend on the assumptions made in the Gordon Equation. It includes the effect of valuation change which is very important in short term market returns.
by TJSI
Sat Mar 17, 2018 10:36 am
Forum: Investing - Theory, News & General
Topic: Gordon Equation Update???
Replies: 13
Views: 1680

Re: Gordon Equation Update???

It looks like the Gordon equation is not getting much love here. If you keep in mind the assumptions behind it, it might get more respect. It assumes a discounted cash flow valuation, constant dividend growth, and an infinite holding period. It is certainly of no use in predicting or analyzing short...
by TJSI
Wed Mar 14, 2018 6:36 pm
Forum: Investing - Theory, News & General
Topic: CAPE in the Context of Real Rates & Inflation, 1880-2018
Replies: 37
Views: 5111

Re: CAPE in the Context of Real Rates & Inflation, 1880-2018

In answer to gmaynarkrebs question, I believe the best candidate for high valuations are buybacks. They are buying pressure for sure and unless they illicit a negative reaction are going to increase price. Interest rates also play an important role. If interest rates continue to rise, bonds will aga...
by TJSI
Sat Mar 03, 2018 3:11 pm
Forum: Investing - Theory, News & General
Topic: Harvard blows $1Billion picking stocks, averaged 4.4% returns over last decade
Replies: 79
Views: 11507

Re: Harvard blows $1Billion picking stocks, averaged 4.4% returns over last decade

James Stewart in a recent NYT article discussed the under performance of endowments (College Endowments Opt for Alternatives, and Less Lucrative, Route https://www.nytimes.com/2018/02/22/business/college-endowments.html ). Avg Ten-Year Returns: Endowments 4.6% 60-40 Index Portfolio 5.3% 70- 30 Index...
by TJSI
Fri Feb 16, 2018 3:17 pm
Forum: Investing - Theory, News & General
Topic: philosophicaleconomics predicts 4% real equity returns
Replies: 152
Views: 13019

Re: philosophicaleconomics predicts 4% real equity returns

HomerJ,


Div yield and EPS have been fairly flat over the last five years. I suspect that buybacks have had a major impact only on valuations. If the music ever stops we could see a collapse of valuations.

TJSI
by TJSI
Mon Feb 12, 2018 5:14 pm
Forum: Personal Investments
Topic: Is it stupid of me to comprise almost all of my portfolio with high dividend funds/etfs?
Replies: 17
Views: 1730

Re: Is it stupid of me to comprise almost all of my portfolio with high dividend funds/etfs?

andrew24p, You are doing ok with your fund selection as each of them has a good record of exceeding the market total return on a long term basis. However, you need to pay attention to the effect of taxes on your return. Try to estimate the effect on your marginal tax rate by investing in another div...
by TJSI
Fri Jan 05, 2018 8:25 pm
Forum: Investing - Theory, News & General
Topic: Evaluation principle for non-dividend paying stock
Replies: 5
Views: 535

Re: Evaluation principle for non-dividend paying stock

One good method is to calculate the "owners cash flow". That being the cash flow you could extract from the company if you were the owner. You also need to discount that hypothetical cash flow. It treats the company as if it were a private company where you the owner get to enjoy the excess cash flo...
by TJSI
Wed Jan 03, 2018 5:25 pm
Forum: Investing - Theory, News & General
Topic: Nice Explanation of Volatility Drag
Replies: 31
Views: 3297

Re: Nice Explanation of Volatility Drag

I think it is an obsession!
by TJSI
Sat Dec 23, 2017 7:48 pm
Forum: Investing - Theory, News & General
Topic: One answer to the Dividend stocks puzzle from behavioral finance
Replies: 184
Views: 17127

Re: One answer to the Dividend stocks puzzle from behavioral finance

Thank you Patrick! That is one of the most interesting studies of the superior performance of dividend paying stocks. For the study period ( 12/99 to 9/17) the classic div aristocrats had a return of 10.1%, the high div-low vol had a return of 11.8% while the S&P had a return of 5.1%. And their retu...