Search found 3360 matches

by SimpleGift
Thu Nov 07, 2019 2:38 pm
Forum: Investing - Theory, News & General
Topic: Bonds for Retirement
Replies: 12
Views: 1428

Re: Bonds for Retirement

Even if one does not use a liquidating bond ladder, a retiree with more than 50% bonds in their portfolio (in orange, chart below) is certainly more exposed to unexpected inflation risk than those with higher stock allocations — and thus might consider adding inflation-indexed bonds to their nominal...
by SimpleGift
Tue Nov 05, 2019 12:07 pm
Forum: Forum Issues and Administration
Topic: [Admin] tinypic (picture hosting) website is gone
Replies: 16
Views: 1597

Re: [Admin] tinypic (picture hosting) website is gone

One partial consolation for the OP and others who have lost images to defunct image hosting sites: As you've no doubt noticed over the years, the same questions and topics seem to re-appear on a regular basis on the Forum, month after month. This provides the opportunity to re-post one's charts and ...
by SimpleGift
Tue Nov 05, 2019 10:52 am
Forum: Forum Issues and Administration
Topic: [Admin] tinypic (picture hosting) website is gone
Replies: 16
Views: 1597

Re: [Admin] tinypic (picture hosting) website is gone

Right now this looks like a minor disaster for the forum. As various image hosting websites have gone defunct over the years, I've also seen many of the charts in my posts disappear. At first, it used to bother me and I attempted to restore some of them from original copies that I'd retained — but ...
by SimpleGift
Tue Nov 05, 2019 9:44 am
Forum: Investing - Theory, News & General
Topic: When DID the stock market recover from 1929?
Replies: 51
Views: 4798

Re: When DID the stock market recover from 1929?

Are the returns in the chart predicated on rebalancing to maintain the labeled allocation, or is the allocation unchanged from Sep 1929? Rebalanced monthly to maintain the stated portfolio mixes of stocks and bonds. Probably not at all realistic for a real world investor, but the analysis was more ...
by SimpleGift
Mon Nov 04, 2019 9:39 am
Forum: Investing - Theory, News & General
Topic: Nominal or inflation-protected bonds?
Replies: 42
Views: 2763

Re: Nominal or inflation-protected bonds?

What matters is the portfolio as a whole not just it's individual components. Quite right, but ALL portfolios suffered during the oil and inflation shocks of the 1970s, not just bond-heavy portfolios. Initially, stock-heavy portfolios were hit the hardest, declining up to 50% within 18 months (char...
by SimpleGift
Sun Nov 03, 2019 6:08 pm
Forum: Investing - Theory, News & General
Topic: When DID the stock market recover from 1929?
Replies: 51
Views: 4798

Re: When DID the stock market recover from 1929?

Was someone who invested at the peak in 1929 back to even by 1937, or not until 1945? In real (inflation-adjusted) terms, a 100% stock investor was back to even by 1937 (in purple, chart below) — but this was very short lived. For most stock-heavy portfolios, it took 12-15 years to fully recover (b...
by SimpleGift
Sun Nov 03, 2019 4:58 pm
Forum: Investing - Theory, News & General
Topic: Nominal or inflation-protected bonds?
Replies: 42
Views: 2763

Re: Nominal or inflation-protected bonds?

The worst U.S. inflation since 1976 was during the late 70s and early 80s with the worst annual inflation being 13.3% in 1979. ...(snip)... My takeaway was that Vanguard Total Bond Market Index Fund has provided adequate safety during periods of inflation. Not sure how one could possibly come to th...
by SimpleGift
Sun Nov 03, 2019 3:41 pm
Forum: Investing - Theory, News & General
Topic: Nominal or inflation-protected bonds?
Replies: 42
Views: 2763

Re: Nominal or inflation-protected bonds?

Nominal or inflation-protected bonds? Short answer: Both, in my view. An allocation to high-quality nominal bonds for deflation protection and an allocation to TIPS for protection against unexpected inflation. One can refine this allocation further, since one's exposure to the risks of unexpected i...
by SimpleGift
Sun Nov 03, 2019 10:05 am
Forum: Investing - Theory, News & General
Topic: How do you explain individual stock risk (idiosyncratic) vs. stock market risk (systematic) in a simple, intuitive way?
Replies: 21
Views: 1203

Re: How do you explain individual stock risk (idiosyncratic) vs. stock market risk (systematic) in a simple, intuitive w

What is the clearest and most intuitive way that you could explain this concept to someone? The clearest way to explain the difference between idiosyncratic and systematic risk, to my mind, is this classic chart: https://i.imgur.com/nJqZGF1.jpg Source: PSU Diversification can eliminate idiosyncrati...
by SimpleGift
Sun Oct 27, 2019 1:48 pm
Forum: Investing - Theory, News & General
Topic: Stock market index investing - problem of induction?
Replies: 41
Views: 3598

Re: Stock market index investing - problem of induction?

But if the market dropped 80% and stayed that way for the 10-20 more years... It is true that there is a non-zero probability that this could happen or even something worse. We actually have two historical examples of major stock markets with annual real losses of more than 80% in the last century ...
by SimpleGift
Fri Oct 25, 2019 3:48 pm
Forum: Investing - Theory, News & General
Topic: Stock market index investing - problem of induction?
Replies: 41
Views: 3598

Re: Stock market index investing - problem of induction?

It seems that our view of the US market follows inductive reasoning. Because we have observed it to have performed well over a long period of time, we think it will continue to do so (over a long period of time). On a superficial level, stock index investing does rely upon observations of past perf...
by SimpleGift
Tue Oct 15, 2019 3:00 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Research: Aging demographics
Replies: 7
Views: 1889

Re: Vanguard Research: Aging demographics

■ We estimate that these demographic trends will have a neutral to negative impact on long-term GDP growth through lower population growth and lower participation in the labor force. These downward pressures may be offset by the higher productivity growth that is needed for a shrinking number of wo...
by SimpleGift
Sat Oct 12, 2019 11:00 am
Forum: Investing - Theory, News & General
Topic: Vanguard: the case for global equity investing
Replies: 160
Views: 12187

Re: Vanguard: the case for global equity investing

Charts like this seem to be designed less to communicate useful information and more to provide confirmation for the creator's viewpoint. Agree that any chart with a double Y axis should be immediately suspect, as most often they are employed to suggest correlations that are suspect or spurious. Bu...
by SimpleGift
Sat Oct 12, 2019 12:51 am
Forum: Investing - Theory, News & General
Topic: Vanguard: the case for global equity investing
Replies: 160
Views: 12187

Re: Vanguard: the case for global equity investing

Can you elaborate on the data behind the chart? The legend suggests that one ratio is merely the inverse of the other. In that case, no surprise that they are nearly mirror images of each other. The actual values, however, don't appear to quite work out to be a simple inverse. Yes, though the two r...
by SimpleGift
Fri Oct 11, 2019 6:42 pm
Forum: Investing - Theory, News & General
Topic: Vanguard: the case for global equity investing
Replies: 160
Views: 12187

Re: Vanguard: the case for global equity investing

Certainly there is no question that over the past 10 years US only has hugely outperformed by a wide margin but clearly Vanguard does not expect this trend to continue forever. On this subject, the chart below caught my eye. It appears the valuation of large-cap international stocks are trading at ...
by SimpleGift
Tue Oct 08, 2019 4:12 pm
Forum: Investing - Theory, News & General
Topic: Global Stocks — Market Cap vs. Revenue Exposure
Replies: 17
Views: 2329

Re: Global Stocks — Market Cap vs. Revenue Exposure

I enjoyed this thread very much. Is there any new data from what you already posted (which is from 2014)? I've been looking online but have had no luck. Where can we find updated data of MSCI ACWI/World revenue exposure? Apologies for not responding to your queries sooner. An updated Forum post fro...
by SimpleGift
Mon Oct 07, 2019 11:38 am
Forum: Investing - Theory, News & General
Topic: Why so many inverted yield curves pre-1930?
Replies: 6
Views: 805

Re: Who so many inverted yield curves pre-1930?

What is the explanation for this? Because deflation was the predominant expectation during the mostly gold-standard years prior to 1930, not inflation (chart below). Only when lenders expect inflation to be the future price regime is there a positively-sloped yield curve. https://i.imgur.com/BU7BXi...
by SimpleGift
Thu Oct 03, 2019 4:46 pm
Forum: Investing - Theory, News & General
Topic: Historical Bond Returns - [Simulating Total Bond Market]
Replies: 26
Views: 819

Re: Historical Bond Returns - From Rates to Returns [Bond Fund Simulator]

...but if we could find any corporate bond index back to 1920s it might prove fruitful. Not sure if helpful for your specific application, but FRED has a corporate bond series starting from 1919: Moody's Seasoned Aaa Corporate Bond Yield This data is monthly, yield only, and for bonds with maturiti...
by SimpleGift
Mon Sep 23, 2019 9:54 pm
Forum: Investing - Theory, News & General
Topic: Historical Bond Returns - From Rates to Returns [Bond Fund Simulator]
Replies: 305
Views: 51206

Re: Historical Bond Returns - From Rates to Returns [Bond Fund Simulator]

So I had little confidence that something that was fudged to track post-1976 returns would actually map to pre-1976 returns without some way to at least check the composition of the total market. In 1970 were corporate bonds 25% of the total market, like they are today? Or were they 50%? From the c...
by SimpleGift
Thu Sep 19, 2019 11:29 pm
Forum: Investing - Theory, News & General
Topic: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash
Replies: 20
Views: 2123

Re: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash

I'm not sure how much of Total World would have been invested in Japanese securities at the end of the 1980s, and I'm not sure how to go about recreating how Total World would have behaved had it been in existence then. Can anyone share some thoughts about this, or suggest how I could simulate this...
by SimpleGift
Thu Sep 19, 2019 6:44 pm
Forum: Investing - Theory, News & General
Topic: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash
Replies: 20
Views: 2123

Re: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash

This is really a discussion about world market cap allocation, not specific to the fund in question. If the Japanese equity bubble and subsequent lost decade is of interest, viewing it from the perspective of a Japanese investor is also useful when thinking about international diversification. Yes,...
by SimpleGift
Thu Sep 19, 2019 4:58 pm
Forum: Investing - Theory, News & General
Topic: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash
Replies: 20
Views: 2123

Re: How Would Vanguard Total World Have Behaved During the Japanese Bubble/Crash

I'm not sure how much of Total World would have been invested in Japanese securities at the end of the 1980s, and I'm not sure how to go about recreating how Total World would have behaved had it been in existence then. There are world stock market capitalization studies going back to the 1880s — h...
by SimpleGift
Mon Sep 02, 2019 10:30 pm
Forum: Investing - Theory, News & General
Topic: US long term future (and bond rates): Japanese trajectory?
Replies: 27
Views: 2259

Re: US long term future (and bond rates): Japanese trajectory?

This Is an excellent point. I wonder if this model can be used to project US interest rates in 10 -20 years, since we have a very good projections of US demographics from US census etc. The difficulty is that nearly all of the recent and projected U.S. population growth in the decades ahead comes f...
by SimpleGift
Mon Sep 02, 2019 11:59 am
Forum: Investing - Theory, News & General
Topic: US long term future (and bond rates): Japanese trajectory?
Replies: 27
Views: 2259

Re: US long term future (and bond rates): Japanese trajectory?

I wonder whether the true cause of both variables is a nation's stability. I believe that low average age is strongly related to being an emerging economy, and emerging nations are not trusted lenders so must borrow at a higher rate. Though stability and trust are no doubt factors in the higher int...
by SimpleGift
Mon Sep 02, 2019 10:58 am
Forum: Investing - Theory, News & General
Topic: US long term future (and bond rates): Japanese trajectory?
Replies: 27
Views: 2259

Re: US long term future (and bond rates): Japanese trajectory?

Developed nations around the world are seeing their populations age for at least two reasons. The first is simply that people are living longer than they once did. The second and more important reason is because birth rates have been steadily declining for decades. Beyond that, I don't see how an a...
by SimpleGift
Sun Sep 01, 2019 9:59 pm
Forum: Investing - Theory, News & General
Topic: US long term future (and bond rates): Japanese trajectory?
Replies: 27
Views: 2259

Re: US long term future (and bond rates): Japanese trajectory?

The more I think about it, the more it looks to me that Japanese type low bond rate is the future of the US. All the major factors are there: stagnant aging population, huge pension obligation and budget deficit, activist central bank obliged to keep interest rates low. I do not see anything on the...
by SimpleGift
Sun Sep 01, 2019 2:40 pm
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19863

Re: First 20% of bonds in long-term Treasuries

From a risk management perspective, however, the bigger risk for an investor today is that of higher inflation in the future. Doesn't mean that is likely to happen--that's just a risk that needs to be taken into consideration more than it is currently. And that leads to moving the midpoint more in ...
by SimpleGift
Sun Sep 01, 2019 2:07 pm
Forum: Investing - Theory, News & General
Topic: Real Estate vs Equities
Replies: 29
Views: 2739

Re: Real Estate vs Equities

It's a fascinating study for students of historical asset returns. Previously discussed on the Forum here:

Study: The Rate of Return on Everything

The fact that rental income was greater than stock dividends explained most of the advantage to housing over 150 years.
by SimpleGift
Sat Aug 31, 2019 12:39 pm
Forum: Investing - Theory, News & General
Topic: When real interest rates go negative are real assets the place to be?
Replies: 6
Views: 602

Re: When real interest rates go negative are real assets the place to be?

Like everybody else, I'm wondering where to hide as interest rates fall and even head negative. My sense is that, rather than make big portfolio changes in the face of zero (or even negative) rates, the most Bogleheadian course is to re-frame how one thinks about bonds in the portfolio. After all, ...
by SimpleGift
Sat Aug 31, 2019 12:01 pm
Forum: Investing - Theory, News & General
Topic: Does the US dollar mean revert?
Replies: 36
Views: 1877

Re: Does the US dollar mean revert?

What is the mean value claimed to be reverting to, precisely? From just a casual glance at the history of the U.S. dollar index, 1967-2015, one could conceivably make a case that it's a stationary series, i.e., with a fixed mean and a large variance around the 100 index value in the chart below. Bu...
by SimpleGift
Sat Aug 31, 2019 7:50 am
Forum: Investing - Theory, News & General
Topic: Chart: Why Broad, Cap-weighted Index Funds Can't Move Markets
Replies: 30
Views: 2072

Re: Chart: Why Broad, Cap-weighted Index Funds Can't Move Markets

In the end, I think the special properties of the market index don't hold to individual slices when the market is subdivided (into US vs foreign, or large vs small, or growth vs value etc etc). The valuation of each slice can change relative to other slices depending on flows. Agree. If investors a...
by SimpleGift
Fri Aug 30, 2019 11:15 pm
Forum: Investing - Theory, News & General
Topic: Chart: Why Broad, Cap-weighted Index Funds Can't Move Markets
Replies: 30
Views: 2072

Re: Chart: Why Cap-weighted Index Funds Can't Move Markets

Total market properties are only properties of the total market. Once you start slicing, then the slices are affected by flows from one slice to another, and saying you hold all the equities in that slice doesn't get you the same assurance that you are not affecting price. Yes, Sharpe's model of th...
by SimpleGift
Fri Aug 30, 2019 9:10 pm
Forum: Investing - Theory, News & General
Topic: Chart: Why Broad, Cap-weighted Index Funds Can't Move Markets
Replies: 30
Views: 2072

Re: Chart: Why Cap-weighted Index Funds Can't Move Markets

I don't know how many of the people who say cap-weighted broad market index funds are ruining the market are sincere. Whether sincere or not, I find myself with a growing inchoate concern that if the drum beats against index (or passive) investing get loud enough and go on long enough, at some poin...
by SimpleGift
Fri Aug 30, 2019 8:09 pm
Forum: Investing - Theory, News & General
Topic: Chart: Why Broad, Cap-weighted Index Funds Can't Move Markets
Replies: 30
Views: 2072

Re: Chart: Why Cap-weighted Index Funds Can't Move Markets

There is certainly a point that the market will not be efficiently priced (as active investors approach zero). And all your points assume that efficient prices can be determined (that is the only way to determine the market cap). In reality, however, if there is even a tiny number of active investo...
by SimpleGift
Fri Aug 30, 2019 1:37 pm
Forum: Investing - Theory, News & General
Topic: Chart: Why Broad, Cap-weighted Index Funds Can't Move Markets
Replies: 30
Views: 2072

Re: Chart: Why Cap-weighted Index Funds Can't Move Markets

If a large group of investors sell their actively-managed growth funds (for instance, after a period of growth underperformance) and buy total market funds instead, that act will reduce valuations for growth stocks relative to value stocks. Yes, but this is not index fund investors moving the marke...
by SimpleGift
Fri Aug 30, 2019 12:04 pm
Forum: Investing - Theory, News & General
Topic: Chart: Why Broad, Cap-weighted Index Funds Can't Move Markets
Replies: 30
Views: 2072

Chart: Why Broad, Cap-weighted Index Funds Can't Move Markets

If there's one persistent fallacy in the financial press, it's that broad market, cap-weighted index investors are increasing the mis-valuation of the market by making overvalued stocks more overvalued and undervalued stocks more undervalued. This post presents a chart and two key points outlining h...
by SimpleGift
Thu Aug 29, 2019 11:16 am
Forum: Investing - Theory, News & General
Topic: Dr. Bill Bernstein: Next "Bogleheads on Investing" podcast guest
Replies: 56
Views: 5903

Re: Dr. Bill Bernstein: Next "Bogleheads on Investing" podcast guest

Dr. Bernstein was one of the first to popularize the idea of a "societal risk premium," in a 2001 blog post at Efficient Frontier . In the intervening years, other commentators have expanded on this concept, often citing Dr. Bernstein's original post. Question: To what extent is this idea — that as ...
by SimpleGift
Wed Aug 28, 2019 4:00 am
Forum: Investing - Theory, News & General
Topic: Yield curve slope and rate levels?
Replies: 5
Views: 691

Re: Yield curve slope and rate levels?

Currently we have seen the yield curve inverted in a period of lower interest rates designed to keep invigorating the economy...correct? Yes, but this is after the Fed has been steadily raising short-term rates from 0.0% in October 2015 to a high of 2.4% in July 2019. As in previous yield curve inv...
by SimpleGift
Wed Aug 28, 2019 1:03 am
Forum: Investing - Theory, News & General
Topic: Yield curve slope and rate levels?
Replies: 5
Views: 691

Re: Yield curve slope and rate levels?

What I wonder is, is the ratio of this spread to the absolute value of interest rates of concern? Shouldn’t both the spread and level of rates be involved in slowing or speeding up the economy. Or are they best considered separately? OK, I'll take a swing at your question. My sense is they should b...
by SimpleGift
Tue Aug 27, 2019 6:04 pm
Forum: Investing - Theory, News & General
Topic: At what point would Bonds be considered a bubble or 'speculative asset'?
Replies: 51
Views: 4868

Re: At what point would Bonds be considered a bubble or 'speculative asset'?

It could be that the primary relationship between nominal growth and nominal interest rate is simply that they both approximate the inflation rate. Global bond markets are forecasting both future inflation rates and future GDP growth rates when they set long-term nominal bond yields in the global m...
by SimpleGift
Tue Aug 27, 2019 5:09 pm
Forum: Investing - Theory, News & General
Topic: At what point would Bonds be considered a bubble or 'speculative asset'?
Replies: 51
Views: 4868

Re: At what point would Bonds be considered a bubble or 'speculative asset'?

I don’t know how much I buy into a link between rates and future growth. All we really have to go on is the past history of the trend relationship between GDP growth rates and nominal interest rates (including inflation) — which has been fairly strong in the U.S. over the past 60 years (chart below...
by SimpleGift
Tue Aug 27, 2019 3:26 pm
Forum: Investing - Theory, News & General
Topic: Best of Bogleheads - your #1 takeaway
Replies: 151
Views: 15295

Re: Best of Bogleheads - your #1 takeaway

What is the single most useful piece of knowledge that you have learned here at Bogleheads? That it's possible to find and hone one's personal investing style amid all the conflicting beliefs and opinions. Do-it-yourself investing is not particularly easy and requires a great deal of individual res...
by SimpleGift
Tue Aug 27, 2019 3:06 pm
Forum: Investing - Theory, News & General
Topic: At what point would Bonds be considered a bubble or 'speculative asset'?
Replies: 51
Views: 4868

Re: At what point would Bonds be considered a bubble or 'speculative asset'?

lazyday wrote:
Tue Aug 27, 2019 12:55 pm
You and SimpleGift sound fairly sure of things.
Ha, my post was just to point out that the global bond markets are forecasting low economic growth and low inflation in the developed countries for the years ahead. Personally, I'm not sure about very much at all!
by SimpleGift
Tue Aug 27, 2019 11:07 am
Forum: Investing - Theory, News & General
Topic: At what point would Bonds be considered a bubble or 'speculative asset'?
Replies: 51
Views: 4868

Re: At what point would Bonds be considered a bubble or 'speculative asset'?

Bonds are only in a bubble if one believes the developed world will see a rising trend of economic growth in the years ahead. At root, what low and negative bond yields are suggesting is that the bond markets don't have a very optimistic forecast of GDP growth (and increased inflation) in the develo...
by SimpleGift
Mon Aug 26, 2019 4:23 pm
Forum: Investing - Theory, News & General
Topic: Is the US / Ex-US global cap still around 50/50?
Replies: 5
Views: 677

Re: Is the US / Ex-US global cap still around 50/50?

This chart from Vanguard is one of the best I've seen:
Current U.S. percentage of total world market cap is just around 55%.
by SimpleGift
Mon Aug 26, 2019 10:55 am
Forum: Investing - Theory, News & General
Topic: Overweight China and Emerging Markets? (Ray Dalio)
Replies: 34
Views: 3876

Re: Overweight China and Emerging Markets? (Ray Dalio)

I'd like to ask you your opinion on portfolio allocations to Emerging Markets, in general, and China, in particular. Should they be overweighted relative to their market cap weight and closer to their world GDP weight? To address the OP's question more directly, the charts below compare the country...
by SimpleGift
Sun Aug 25, 2019 5:22 pm
Forum: Investing - Theory, News & General
Topic: Overweight China and Emerging Markets? (Ray Dalio)
Replies: 34
Views: 3876

Re: Overweight China and Emerging Markets? (Ray Dalio)

Just to add that most broad emerging market index funds today already have at least a 30% exposure to China — and this is scheduled to grow significantly in the years ahead, as more mainland Chinese shares qualify for inclusion in the FTSE and MSCI emerging market indexes (China A-shares, in dark re...
by SimpleGift
Sun Aug 25, 2019 2:57 pm
Forum: Investing - Theory, News & General
Topic: Overweight China and Emerging Markets? (Ray Dalio)
Replies: 34
Views: 3876

Re: Overweight China and Emerging Markets? (Ray Dalio)

Therefore, I'd like to ask you your opinion on portfolio allocations to Emerging Markets, in general, and China, in particular. Should they be overweighted relative to their market cap weight and closer to their world GDP weight? What's your personal stance on EM/China investing? As most research s...
by SimpleGift
Sat Aug 24, 2019 10:22 am
Forum: Investing - Theory, News & General
Topic: GDP affect on Dow and S&P
Replies: 15
Views: 1013

Re: GDP affect on Dow and S&P

If GDP lowers and for example cut by 10% does that also translate to a 10% cut on the dow and s&p 500? Asking for knowledge. Studies have shown there's little correlation between GDP growth rates and stock returns for individual countries (due to foreign revenues, stock dilution and a host of other...
by SimpleGift
Thu Aug 22, 2019 3:18 pm
Forum: Investing - Theory, News & General
Topic: Foreign Investment in U.S. Stocks & Bonds, 2000-2019
Replies: 2
Views: 329

Re: Foreign Investment in U.S. Stocks & Bonds, 2000-2019

In the bond market we are clearly the best house in a bad neighborhood. Yes, and the U.S. will probably be so for a long while to come. When considering U.S. Treasuries as a global safe haven, foreigner investors don't need to believe the U.S. government is absolutely fiscally strong, just stronger...