Search found 840 matches

by Bill Bernstein
Wed Mar 13, 2024 11:40 pm
Forum: Investing - Theory, News & General
Topic: What is the appeal of Robinhood
Replies: 85
Views: 6518

Re: What is the appeal of Robinhood

All true.

But that doesn't negate the fact that without them we wouldn't have today's world of commission-free ETFs.
by Bill Bernstein
Wed Mar 13, 2024 6:32 pm
Forum: Investing - Theory, News & General
Topic: What is the appeal of Robinhood
Replies: 85
Views: 6518

Re: What is the appeal of Robinhood

RH deserves the gratitude of investors everywhere simply for triggering the major brokerage firms rush to zero commissions several years ago.

I'm curious if anyone on the forum has used it for a simple BH 3-fund portfolio, putting cash balances into a low-cost short-duration MMF equivalent such as SGOV.

RH wouldn't be too happy, I imagine, to attract a large number of folks who did so.
by Bill Bernstein
Tue Mar 12, 2024 2:37 pm
Forum: Investing - Theory, News & General
Topic: Was the Shiller CAPE in the 30s, or the 40s, in the January 2000 Shiller Spreadsheet?
Replies: 6
Views: 1260

Was the Shiller CAPE in the 30s, or the 40s, in the January 2000 Shiller Spreadsheet?

In a previous thread https://www.bogleheads.org/forum/viewtopic.php?t=423723 there was a discussion about whether, had an investor looked at the Shiller ie_data.xls in early 2000, would they have seen the value of 44.2 listed in the current spreadsheet. It was posited that at that time the actual reported CAPE was actually in the low 30s, not far from current values, because of restatements of earnings, which have about a 3 month delay, in any case. This didn't make a lot of sense to me, since even restatement of a year's earnings, out of a 10-year average, shouldn't have moved the CAPE that much. I didn't have access to the original archives, so I ran this by Jordan Brooks of AQR, who replied as follows: There are some archived files avail...
by Bill Bernstein
Sun Mar 10, 2024 6:02 pm
Forum: Investing - Theory, News & General
Topic: William Bernstein On the Financial Industry
Replies: 81
Views: 10155

Re: William Bernstein On the Financial Industry

Amen. Take a brief mental survey of your family members and close friends. What percentage of them TODAY could do a better job with their own financial planning and investment management than a true fiduciary advisor charging a few thousand a year? That percentage is probably in the single digits for me. The problem isn't that people use advisors. The problem is they don't get good advice at a fair price when they do. Frankly, more people should buy financial advice than do so. That's exactly right. I think what some on this thread find confusing is that there's no inconsistency between that statement and the fact that 95% of advisors and 99% of brokers are harmful to your financial health. One squares that circle by choosing the purchased...
by Bill Bernstein
Thu Mar 07, 2024 10:46 am
Forum: Investing - Theory, News & General
Topic: Argument against people that say stock market is rigged, so don’t invest in it
Replies: 80
Views: 5752

Re: Argument against people that say stock market is rigged, so don’t invest in it

My favorite is "The stock market is a casino."

It sure is, but you're the house, not the mark. And occasionally, the house has a bad night.
by Bill Bernstein
Mon Mar 04, 2024 7:30 pm
Forum: Investing - Theory, News & General
Topic: Emerging Markets Stocks have been a complete disaster
Replies: 175
Views: 17692

Re: Emerging Markets Stocks have been a complete disaster

"Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell."

--John Templeton
by Bill Bernstein
Fri Feb 23, 2024 1:02 pm
Forum: Investing - Theory, News & General
Topic: LMP/TIPS Ladder Pros & Cons Master Thread
Replies: 71
Views: 6034

Re: LMP/TIPS Ladder Pros & Cons Master Thread

Better to have too much than too little.
Right: Pascal's Wager. Better to rue not flying biz class and driving a beamer than having to move in with your kids prematurely.
by Bill Bernstein
Fri Feb 23, 2024 12:14 pm
Forum: Investing - Theory, News & General
Topic: LMP/TIPS Ladder Pros & Cons Master Thread
Replies: 71
Views: 6034

Re: LMP/TIPS Ladder Pros & Cons Master Thread

Re taxes, the best place for TIPS is inside of a Traditional IRA. And just as there's no Easter bunny, TIPS won't make that tax liability (or of holding TIPS in a taxable account) go away either. I figure that, in exchange for nearly a half century of tax-free contributions and tax-free growth, Uncle Sam and my home state now own about 40% of my IRA. That's more than fair.

And just as there's no Santa Claus, there's no way of avoiding all of the economic, societal, and personal risks that can befall a person. One adds a decent margin of safety to one's financial planning, then crosses all 20 digits.
by Bill Bernstein
Fri Feb 23, 2024 11:47 am
Forum: Investing - Theory, News & General
Topic: LMP/TIPS Ladder Pros & Cons Master Thread
Replies: 71
Views: 6034

Re: LMP/TIPS Ladder Pros & Cons Master Thread

One big con is that TIPS are based on nationwide inflation numbers, not regional. If you live in a location that experiences higher inflation than the national number, you might not meet your liabilities. The other issue with the inflation number used is the distribution of items might significantly differ from your own, especially if you have paid off your home.
Absolutely, TIPS aren't a perfect hedge against future consumption.

This reminds me of Churchill's famous knock on the dysfunctionality of democracy, "the worst form of government, except for all the others.”

If someone knows of a vehicle that better matches future real consumption than TIPS, particularly with the current 2% (yield) margin of safety, I'm all ears.
by Bill Bernstein
Thu Feb 22, 2024 3:12 pm
Forum: Investing - Theory, News & General
Topic: 30 yr TIPS = 2.2% real!
Replies: 26
Views: 4775

Re: 30 yr TIPS = 2.2% real!

Quite right: Interesting point. As of today, the '52 has a duration of 27.29 years, and today's auction has a duration of 22.24 years, which correlates with its higher reinvestment risk . . .
by Bill Bernstein
Sun Feb 04, 2024 6:48 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing Challened - Scott Cederburg
Replies: 83
Views: 8025

Re: Lifecycle Investing Challened - Scott Cederburg

The amount of trading is irrelevant.

There were huge trading volumes in stock and bond trading in 2007-2009.

But if, theoretically, zero trading of stocks and bonds had occurred, then I suppose that prices couldn't have changed. But if at least one share of each company's stock and one of each of all extant bonds traded at the new price, then the change in aggregate allocations would have been the same.

I.e., the aggregate stock allocation didn't halve between 2007 and 2009 because investors "sold"; for all practical purposes, except for net issuance/buybacks, there was no net "selling."
by Bill Bernstein
Sun Feb 04, 2024 1:42 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing Challened - Scott Cederburg
Replies: 83
Views: 8025

Re: Lifecycle Investing Challened - Scott Cederburg

Fundamentally what happens is that as equity valuations go up, investors buy more equity. As equity valuations drop, investors sell more equity.
Nope; exclusive of IPOs and buybacks, every share that gets sold by someone gets bought by someone else, and vice versa.

What changes is the equilibrium price at which those transactions occur.

That's why the CAPE and aggregate stock allocation move in lock step: as another poster put it, "inertia."
by Bill Bernstein
Sun Feb 04, 2024 11:28 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing Challened - Scott Cederburg
Replies: 83
Views: 8025

Re: Lifecycle Investing Challened - Scott Cederburg

Almost by definition, when the CAPE rises/falls, the aggregate stock market allocation/market cap also rises/falls. Stock shares don't disappear during a bear market, after all, they just change hands--from weak ones to strong ones. (Or, as JP Morgan supposedly said, a during a bear market stocks return to their proper owners.) The trick is not being overconfident about the strength of your hands. My hypothesis is that this is how the rich get richer--they have enough safe assets to live off of for decades, in addition to enough risky assets to live off of for generations, and so at opportune times are able to take stocks off the hands of folks who see their retirements/consumption, and maybe even their income, melting away before their eyes.
by Bill Bernstein
Sat Feb 03, 2024 12:13 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing Challened - Scott Cederburg
Replies: 83
Views: 8025

Re: Lifecycle Investing Challened - Scott Cederburg

Given the sheer magnitude of US retirement savings, we estimate that Americans could realize trillions of dollars in welfare gains by adopting the all-equity strategy.
Of course, if all investors followed that advice, stock prices would likely get bid up to the point that expected returns would fall enough to obviate the supposed advantages of a 100% stock allocation.

More to the point, few sentient beings in this quadrant of the galaxy are capable of executing a 100% equity strategy. It's been my experience reading both the popular and academic literature that articles favoring this approach tend to appear following periods of high realized stock returns; during the Global Financial Crisis of 2007-2009, not so much.
by Bill Bernstein
Tue Jan 16, 2024 7:27 pm
Forum: Investing - Theory, News & General
Topic: More Evidence Against Factor Investing
Replies: 650
Views: 46400

Re: More Evidence Against Factor Investing

The proof is in the DFA pudding. For domestic small value with a real world portfolio incepting with DFSVX, from April 1993 to Dec 2023: DFSVX 11.34% vs 10.08% for S&P 500, end wealth $27.23 vs $19.17 For foreign developed from Jan 1995, for small value, DISVX 7.01% vs 5.34% for the MSCI EAFE, end wealth $7.13 vs $5.42. The DFA emerging markets SV fund has too short a track record, but for emerging markets value, from May 1998, DFEVX 9.00% vs 6.24% for the MSCI EM, $9.13 vs 4.73% end wealth. In the US, SV has been a wild ride vs large company stocks, but abroad the outperformance is smoother, for the simple reason that the latter benefits from diversification of the factors across multiple nations, whereas in the US you're only dealing ...
by Bill Bernstein
Sat Jan 13, 2024 3:23 pm
Forum: Investing - Theory, News & General
Topic: 20 year equity return always positive
Replies: 64
Views: 8399

Re: 20 year equity return always positive

I'm guessing that most of the comments on this thread come from behind the paywall.

Unlike a lot of WSJ commentary, this piece is dead on: Yes, there have been no long periods of real negative stock returns, but only in the US; in Austria, they were negative for 99 years.

The article even quotes McQ's marvelous work, which is getting an ever-increasing amount of well-deserved play on the subject: Yes, occasionally, it's indeed bonds for the long run; now that the long-term real expected bond return, as judged by TIPS, is around 2%, there's a modest probability that might happen.
by Bill Bernstein
Sun Jan 07, 2024 10:54 am
Forum: Personal Investments
Topic: Pros & Cons of SNSXX vs. SGOV (Yield Confusion...)
Replies: 13
Views: 2561

Re: Pros & Cons of SNSXX vs. SGOV (Yield Confusion...)

Optimal will always be a short T-bill ladder, but that's a lot of work (unless you're at Fido, which has autoroll).

SGOV is a good second best to that, but will cost you, currently, 7 bp, rising to 13 bp when the waiver runs out in a year or two, plus about a 1 bp spread round trip.

Finally, SNSXX is more convenient, but will cost you about an additional 20 bp in expense.

So it's simply a matter of convenience vs cost. If you're holding for >1 mo, SGOV is a good compromise.
by Bill Bernstein
Sun Jan 07, 2024 10:34 am
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2950
Views: 623289

Re: Now that long TIPS yields are 60 bp off their highs I will…

Only on this forum will one find folks awaiting the next TIPS auction with as much anticipation as a new Taylor Swift album. :wink:

The announcement for the 1/15/34 is this Thursday, 1/11, look for it then at better brokerages everywhere.
by Bill Bernstein
Fri Dec 29, 2023 12:55 pm
Forum: Investing - Theory, News & General
Topic: Cathie Wood - What's the story?
Replies: 83
Views: 14021

Re: Cathie Wood - What's the story?

The OP asks a very good, general, question about how "star" managers get so much attention. For the best description of this phenomenon, I can't recommend highly enough Philip Tetlock's Expert Political Judgment, which describes how the media is attracted to extreme/charismatic forecasters, who attract eyeballs/advertising revenue and also tend to have lousy long-term track records. The result is a media-forecasting death spiral that seeks extreme, and hence poor, forecasters, whose media exposure then worsens their predictions through overconfidence. In his words, “The three principals—authoritative-sounding experts, the ratings-conscious media, and the attentive public—may thus be locked in a symbiotic triangle.” If that doesn't...
by Bill Bernstein
Fri Dec 01, 2023 11:29 pm
Forum: Personal Consumer Issues
Topic: Did Jason Zweig stop writing for WSJ?
Replies: 12
Views: 4622

Re: Did Jason Zweig stop writing for WSJ?

Book leave; he'll be back.

Meantime, this podcast from 12/1 on Charlie Munger is not to be missed:

https://www.wsj.com/podcasts/the-journal
by Bill Bernstein
Wed Nov 29, 2023 10:31 pm
Forum: Personal Consumer Issues
Topic: USPS labels: cover with clear tape or not?
Replies: 32
Views: 4078

Re: USPS labels: cover with clear tape or not?

One more "no problems" with clear tape over a the paper USPS label, maybe a hundred packages over the past several years. I completely tape over the paper label, make sure the edges are well covered.

And I'm using "boglehead" tape, ie, not the most expensive kind. :wink:
by Bill Bernstein
Fri Nov 17, 2023 3:55 pm
Forum: Investing - Theory, News & General
Topic: New Book on the Life Cycle Model - "The Missing Billionaires: A Guide to Better Financial Decisions"
Replies: 154
Views: 33612

Re: New Book on the Life Cycle Model - "The Missing Billionaires: A Guide to Better Financial Decisions"

When it comes to asset allocation, the basic prescription of the model is to maintain a consistent level of risk across time. In a simple setting with constant risk/reward, that would translate to a fixed asset allocation. Except that that's not quite what the authors advocate in the book. They do indeed start out with the Merton share, but then they endorse changing allocations--radically--according to the ERP calculated from the CAPE and TIPS yield. (See pages 53-65). The LTCM criticism is valid; if the peak of your skill set is that you can solve differential equations as easily as most people brush their teeth, then it's easy to believe that answer for better finance is more math. This would be true if the financial markets were an air...
by Bill Bernstein
Fri Nov 17, 2023 3:25 pm
Forum: Personal Investments
Topic: Help me understand my TIP order on Vanguard
Replies: 9
Views: 1089

Re: Help me understand my TIP order on Vanguard

High finance!

You put in an order for 1 bond, face $1,000.

If the indicated yield of 2.144% holds on the auction date (it won't exactly), you'll pay 93.33. If the inflation factor stays at 1.012 (it won't either) the actual principal amount will be $944.48 or so, plus there will be another 4 months of accrued interest, call it $4 or so, for a total of somewhere around $950. (#cruncher will tell me if I got this one right.)

Enjoy your TIPS adventure. Your 7/15/33 future self should have some nice dinners out on this one :wink:
by Bill Bernstein
Thu Nov 02, 2023 1:15 pm
Forum: Investing - Theory, News & General
Topic: William Bernstein on TIPS, asset allocation, and four deep risks
Replies: 189
Views: 30434

Re: William Bernstein on TIPS, asset allocation, and four deep risks

Yes. dcabler is using a Liability Driven Investment (LDI) strategy to provide a reliable floor of real retirement income. :thumbsup :thumbsup
Ah, here we are back to to-ma-toe to-mah-to again.

The point being, as well described by dcabler, that TIPS, no matter in what wrapper--individual securities or an ETF/open-end fund--align liabilities and assets better than any other asset class. Not perfect, but good enough. And of course, in the real world, no liability stream is certain, and no asset is truly riskless. Even tying your shoes ain't riskless.

When I want to fall asleep, I don't count sheep. I count TIPS.

So let's put the semantics to bed as well.
by Bill Bernstein
Mon Oct 30, 2023 7:59 am
Forum: Investing - Theory, News & General
Topic: William Bernstein on TIPS, asset allocation, and four deep risks
Replies: 189
Views: 30434

Re: William Bernstein on TIPS, asset allocation, and four deep risks

you don't fully "immunize" (match cash flows) the portfolio by this "barbell" approach. To exactly match the Cash Flows you need individual TIPS in a ladder. To be more precise you need *zero coupon* TIPS bonds in a ladder - but they don't exist. If they did, you could exactly match cash flows to needs and you would be interest rate indifferent - I don't know how far off you would be with a medium term TIPS fund + a short term fund to keep the duration at your target horizon, but it's probably close for practical purposes. You will be exposed to price volatility (and reinvestment risk, which is true of all bond investing that is not zero coupon instruments) I pretty much agree, I'm not wild about the two-fund approach e...
by Bill Bernstein
Sun Oct 29, 2023 5:09 pm
Forum: Investing - Theory, News & General
Topic: William Bernstein on TIPS, asset allocation, and four deep risks
Replies: 189
Views: 30434

Re: William Bernstein on TIPS, asset allocation, and four deep risks

I removed a post requesting Dr. Bernstein's opinion of dynastic wealth in America (assets which are passed down in a family), upward mobility, along with the rapid increase of US debt. Discussion of topics in the podcast does not imply they can be discussed here. See: Non-actionable or Trolling Topics If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include: US or world economic, political, tax, health care and climate policies conspiracy theories of any type discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" reci...
by Bill Bernstein
Sun Oct 29, 2023 12:43 pm
Forum: Investing - Theory, News & General
Topic: William Bernstein on TIPS, asset allocation, and four deep risks
Replies: 189
Views: 30434

Re: William Bernstein on TIPS, asset allocation, and four deep risks

Being able to buy small amounts of fixed maturity TIPS through iShares is an excellent point, thanks for bringing that up.

But once you have enough to meet the secondary market minimums, you're better off with a ladder, of course. I think a lot of people are just afraid to learn how to navigate the brokerage sites' Treasury trading menu.

And, of course, you can buy small amounts at auction, but only for 5, 10, and 30 years.

The best part of a ladder is it's fire and forget. You show the maturities to the kids, and they can see where your HOA dues are coming from. It's a lot simpler than teaching them how to rebalance your TIPS funds to match your life expectancy.
by Bill Bernstein
Sun Oct 29, 2023 8:08 am
Forum: Investing - Theory, News & General
Topic: Billionaire in 70 years???
Replies: 37
Views: 6942

Re: Billionaire in 70 years???

Aside from all the reality tests above, all excellent points, I'd rather kill the compounding "magic" by spending real time in Paris, Chiang Mai, Singapore, and Madeira, and be generous with my relatively young heirs, than try, likely unsuccessfully, to be a tightwad 95 year old billionaire. (And at 3% inflation, you'll only have about $125M of today's dollars anyway. By that point, billionaires will be dime a dozen.)
by Bill Bernstein
Sat Oct 28, 2023 9:50 pm
Forum: Personal Consumer Issues
Topic: Luxury train travel in Europe
Replies: 43
Views: 5722

Re: Luxury train travel in Europe

We've done Orient Express in both Europe and Bangkok-Singapore. "Expensive but worth it," I suppose. The Bangkok-Singapore trip was a bit much: confined to one's own suite, the lounge and dining car for almost 3 full days, eating like a prince with zero exercise gets old fast. Like other posters, I love the Boglehead practice of booking one's high-speed European segments just when the 3- or 4- month windows open. It's stunning to be able to go from Milan to Rome in less than 3 hours (if you bypass Florence) or from Paris to Zurich in about 5 hours for a pittance. Easily the most underrated US segment is the Empire Builder from Portland to Pasco, WA, in 4 hours. Book cheap seats, then head for the vista car. The scenery up the Colu...
by Bill Bernstein
Sat Oct 21, 2023 10:40 am
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2950
Views: 623289

Re: Now that long TIPS have pushed past 2.50% I will…

Did you miss the :wink: ? Years ago either you or Larry S told me I had a duty to estimate returns. I was and continue to be unconvinced there's much useful to be done with estimated returns, given the massive uncertainty surrounding them. Perhaps they can help give a vague sense. I've become fond of Ken French's "Chance dominates realized returns." "stocks have fallen only by approximately 10%, which implies a rise of expected return by a much smaller amount, likely in the vicinity of about 1%". The change in expected return estimate needs an all else being equal assumption. It's possible prices have decreased due to a rational view that future performance will be lower, so that the decrease in price does not imply an ...
by Bill Bernstein
Fri Oct 20, 2023 5:40 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2950
Views: 623289

Re: Now that long TIPS have pushed past 2.50% I will…

This all would be much easier if we knew what the returns will be That's why they're called "expected returns," and not "[realized] returns." But just because expected returns aren't a certainty doesn't mean you shouldn't estimate them. Over the past 24 months the expected return of the 30-Y TIPS has risen 3%, which computes out to about a 50% price fall, whereas stocks have fallen only by approximately 10%, which implies a rise of expected return by a much smaller amount, likely in the vicinity of about 1%. So the risk premium relative to TIPS has fallen by roughly 2%. In which case, buying TIPS here seems a far better risk-adjusted deal than buying stocks. Like everything else in finance, that's at best a 60/40 bet, b...
by Bill Bernstein
Fri Oct 20, 2023 5:10 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2950
Views: 623289

Re: Now that long TIPS have pushed past 2.50% I will…

Let me ask a contrarian question to stimulate debate :happy : Why does it matter? If you can generate sufficient income to live comfortably with current TIPS rates why are you chasing even higher rates? Just buy 'em now, take the money and run so you can enjoy your retirement! The winner does not necessarily have the biggest pot when he dies. The winner is the one who recognizes a good value, acts to obtain it, and then enjoys the fruits of his actions without regret. Just sayin... Wrench Absolutely! "Enough" is a powerful and useful concept. Hard to disagree with that sentiment, well put. But . . . assume that you've made your TIPS number, have a 100% funded ratio, etc etc. If TIPS yields have spiked more than the expected retur...
by Bill Bernstein
Mon Oct 02, 2023 12:08 pm
Forum: Personal Investments
Topic: Dr. William Bernstein on Bonds
Replies: 106
Views: 23074

Re: Dr. William Bernstein on Bonds

If not held to maturity, TIPS may well not protect against inflation, and the longer the maturity, the greater that risk is. If held to maturity, they most certainly do protect against inflation. Since you can't hold a TIPS fund "to maturity," they suffer from the same problem, though the longer you hold it, the less risky it becomes. What are the odds that a TIPS fund will lose real spending power over 1 year? Considerable. 5 years? Still possible. 20 years? Very small, at least at present yields. Here's the best way to think about "risk freedom": TIPS: zero consumption risk when held to maturity, and risky until then. A 30-year TIPS has roughly the same volatility as stocks. T-bills: riskless short term, moderately ris...
by Bill Bernstein
Tue Sep 19, 2023 4:06 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2950
Views: 623289

Re: Now that long TIPS have cracked 2.00% again I will…

In a lifetime of practicing medicine I can't offhand recall meeting anybody who made it to 108.
Neither do I. But the nonagenarians I was seeing in 2000 were born around 1905.

Longevity's going to be different for someone born in 1950, 1975, and especially in 2000.
by Bill Bernstein
Fri Sep 08, 2023 1:07 pm
Forum: Personal Investments
Topic: BH's Get Nice Mention on Economist Podcast
Replies: 0
Views: 582

BH's Get Nice Mention on Economist Podcast

Money Talks is a high-level finance podcast that's at the top of my queue. The three participating journalists are several cuts above the typical financial journalist, and all have a superb knowledge of the academic finance literature. This one, on the institutional competition in wealth management, was not up to their usual standard--lots of big wirehouse shills with posh English and Swiss accents talking their exclusive private equity books. *But* the Bogleheads do get a brief, and favorable, mention: https://www.economist.com/podcasts/2023/09/07/why-wealth-managers-are-targeting-the-not-so-wealthy (There's a little inside joke at the beginning about Taipei being the "Lexington Kentucky" of Asian finance, which refers to the fac...
by Bill Bernstein
Wed Sep 06, 2023 9:04 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein's new book available [Four Pillars of Investing]
Replies: 114
Views: 25724

Four Pillars Finally Available on Audible

I'm sorry it too so long:

https://www.audible.com/pd/The-Four-Pil ... B0CHBNH5GP

Tom Parks is a superb narrator; his reading of Delusions of Crowds got better reviews than the book itself. ;-)
by Bill Bernstein
Mon Sep 04, 2023 3:56 pm
Forum: Investing - Theory, News & General
Topic: 5% burn rate [recommendation by Bill Bernstein]
Replies: 5
Views: 1738

Re: 5% burn rate [recommendation by Bill Bernstein]

A 5% 30-y survival with TIPS needs a 2.95% average TIPS yield across the ladder.

But there's a rub with that: the economy and markets are very likely not going to be in a good place at that point, and stocks will very likely have much higher expected returns, more than enough to support a 5% SWR as well.

The problem being: that's 5% of a much smaller portfolio.
by Bill Bernstein
Fri Sep 01, 2023 10:21 am
Forum: Investing - Theory, News & General
Topic: Cash is a terrible long-term investment
Replies: 369
Views: 40291

Re: Cash is a terrible long-term investment

It's remarkable how many all-stock enthusiasts there are after a long bull market.

As that great financial economist Mike Tyson said, "Everyone's got a plan until they get punched in the mouth." Cash is what prevents you from suffering the inevitable consequence of being overconfident about your risk tolerance outside the confines of a spreadsheet.

I.e., there's a reason why Warren Buffett/Berkshire holds 20% T-bills/cash equivalents.
by Bill Bernstein
Wed Aug 30, 2023 2:05 pm
Forum: Investing - Theory, News & General
Topic: Four Pillars — Metals and Commodity Producers?
Replies: 18
Views: 2873

Re: Four Pillars — Metals and Commodity Producers?

The latter would have taken great fortitude---and conviction---during the many lean years. That's absolutely true. It's even more true of precious metals equity: http://www.efficientfrontier.com/ef/adhoc/gold.htm How much complexity one wants in a portfolio is almost entirely a matter of taste. There's nothing wrong with a simple two- or three-fund portfolio, or even a one-fund (target date/life strategy) one. At the opposite end of the spectrum are folks who embrace complexity. Far less important than where one is on that spectrum is one's ability to stick with the policy allocation. And, if I can be permitted a heresy, occasionally an asset class goes so far out of fashion--as it did with oil stocks during early 2020 when the spot price ...
by Bill Bernstein
Wed Aug 30, 2023 12:28 pm
Forum: Investing - Theory, News & General
Topic: Four Pillars — Metals and Commodity Producers?
Replies: 18
Views: 2873

Re: Four Pillars — Metals and Commodity Producers?

What we find is a positive but low association between the 2. IIRC, a correlation of around 0.6 for precocious metals. Commodities producers provide a good example of how the naive use of correlations can lead one astray. The problem with them is that they're almost always based on short-period increments, typically a month, and so they suffer from risk aversion myopia. Rather, one needs to broaden the lens beyond simple correlations and look at 1) longer-period return divergences and also 2) geopolitical environments. For example, between 1973 and 1990, there were 9 years in which inflation exceeded 5%. The CPI during those 9 years averaged 9.4%, the total stock market (CRSP 1-10) returned 4.8%, and oil stocks returned 13.4% (Kenneth Fren...
by Bill Bernstein
Tue Aug 29, 2023 2:55 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2950
Views: 623289

Re: Now that long TIPS have cracked 2.00% again I will…

The result for me is no TIPS unless the rates become extraordinary.
I'd be willing to bet that some day in the next decade or two we'll see 3% TIPS.

But it'll be for a reason, in which case there will be better bargains in stocks.
by Bill Bernstein
Tue Aug 29, 2023 12:56 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2950
Views: 623289

Re: Now that long TIPS have cracked 2.00% again I will…

FWIW, it's reasonable to consider your TIPS as entirely separate from your overall allocation.

Rather, stick it in the "Social Security income stream" bucket, since TIPS behave exactly the same way when held to maturity as SS.

I think that's a better way to do retirement planning. If you're lucky (or just a typical BH), then at some point:

annual SS + maturing TIPS = living expenses

In which case you're not investing for yourself at all, but rather for charity, heirs, or the beamer you've always wanted.

If you've been buying TIPS like there's no tomorrow lately, then you'll likely want to up the equity policy of the remaining "risk portfolio" to compensate (unless you've been selling stocks to buy the TIPS).
by Bill Bernstein
Sun Aug 27, 2023 6:40 pm
Forum: Investing - Theory, News & General
Topic: Please help me understand- Four Pillars of Investing
Replies: 11
Views: 2434

Re: Please help me understand- Four Pillars of Investing

All good explanations. I'll try to give as succinct a one as I can: Stocks yielded 5% in 1926. Had companies continued paying out at that rate, the Gordon Equation predicted a 5.9% return in 1926. But for the reasons explained by the other posters, over the 96 years between 1926 and 2021 stock prices rose to the point that the yield fell to only 1.26%, falling by a factor of almost 4. That juiced returns by a factor of nearly 4 over 96 years, which annualizes out to 1.45% per year of return in excess of that predicted by the Gordon Equation. This is the "speculative return" in excess of the "fundamental return" predicted by the Gordon Equation. The point of that book section is that the shorter the time period, the specu...
by Bill Bernstein
Fri Aug 18, 2023 10:55 am
Forum: Personal Consumer Issues
Topic: Would this car buying tactic work?
Replies: 51
Views: 5987

Re: Would this car buying tactic work?

Act like you're a broker.
I'd guess it's not going to work because the car dealership has encountered this and every other buyer's tactic over the years, every day, several times a day, and they know how to counter it. Whereas you buy a car maybe every few years and you're looking to go in cold and attempt a bluff. So it's a matter of their experience versus your experience.
Hire a broker. The few hundred $ he/she will cost will pay for itself, not only in the purchase price but also by saving your sanity.
by Bill Bernstein
Sat Aug 12, 2023 9:31 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein's new book available [Four Pillars of Investing]
Replies: 114
Views: 25724

Re: Bill Bernstein's new book available

Does this book discuss Dr. Berstein's investment strategy if you've "won the game"?
Most definitely, in general terms in Chapter 6, and specifically on pages 113-114.
by Bill Bernstein
Mon Aug 07, 2023 6:15 pm
Forum: Investing - Theory, News & General
Topic: Nuggets from Bernstein's "Four Pillars"
Replies: 57
Views: 9290

Re: Nuggets from Bernstein's "Four Pillars"

So you're saying he suggests the T bonds and CD's are there just to look at for comfort, and not spend while stocks are down?
Nope.

From page 35, you want cash/T-bills not only as elixir of equanimity, but also to "purchase stocks when they’re cheap, to snap up the coveted corner lot of your overextended neighbor, or merely to pay for groceries and rent after you’ve been downsized. Buying stocks in the teeth of a bear market never feels good; it feels even worse when the bonds you’re selling to do so have hit the discount rack."
by Bill Bernstein
Mon Aug 07, 2023 10:06 am
Forum: Investing - Theory, News & General
Topic: Nuggets from Bernstein's "Four Pillars"
Replies: 57
Views: 9290

Re: Nuggets from Bernstein's "Four Pillars"

1) Sylvia enjoyed her money, but was also smart enough not to get on the hedonic treadmill.
2) She died knowing her money would benefit neighbors who needed it far more than she did. What greater life satisfaction than that is there?
by Bill Bernstein
Sun Aug 06, 2023 10:40 am
Forum: Investing - Theory, News & General
Topic: Dr. Bill Bernstein "Won The Game" Risk Portfolio
Replies: 81
Views: 14611

Re: Dr. Bill Bernstein "Won The Game" Risk Portfolio

I confess to timing the bond market.
Good on you! I do the same; stocks are different than bonds, since the latter is under the at least the partial control of the Fed.

Almost as surely as the sun rises, from time to time it becomes the lender of last resort and craters real interest rates, and as surely as the sun sets it will take away the punch bowl and juice the real rate, as just happened. True, you can't set your watch by either, but the eventuality of both is a near certainty.

Good things come to those who wait for what another poster on this forum labels the "whatever" yield on TIPS. It appears that they just have.
by Bill Bernstein
Tue Aug 01, 2023 8:13 pm
Forum: Personal Investments
Topic: Adios, Vanguard
Replies: 465
Views: 96191

Re: Vanguard Customer Service Mega-thread

Schwab settlement account pay minuscule returns - place a trade to buy their MM accounts with good returns. It’s a huge Money maker for them.
True. The best way around that is to put all your cash balances into a T-bill-like ETF like SGOV, which beats VUSXX by a smidge, tho that will go away as the ER slowly gets raised to 12 bp. Second best is one of Schwab's MMFs, which have around a 34 bp ER.

Those are separate transactions, but well worth your time these days.

It's nice not having to play those games at Vanguard, which at least partially offsets their quality of service.
by Bill Bernstein
Tue Aug 01, 2023 12:22 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein's new book available [Four Pillars of Investing]
Replies: 114
Views: 25724

Re: Bill Bernstein's new book available

It's available for the moment on Spotify and Audiobooks.com

I'll see what i can find out about Apple and Audible.

Bill