Search found 6461 matches

by bob90245
Wed Apr 11, 2012 2:42 pm
Forum: Investing - Theory, News & General
Topic: TSM, Efficient Markets, and tilting
Replies: 33
Views: 3951

Re: TSM, Efficient Markets, and tilting

Like MPT, market efficiency leading to the Market Portfolio of all risky assets being optimal has many assumptions about risk, investor behavior, etc etc. And some people like me scratch their heads and ask why two seperate concepts have been merged in the same sentence. No need to come up with different words. I'll just quote what I wrote upthread. Market Efficiency means that the longer the time frame the less likely it is for active managers to outperform a benchmark index. Think Bill Miller as a recent example. On the other hand, portfolio efficiency means that there is some combination of stock asset classes that will fall on the efficient frontier. Of course, we can never know that optimal combination ahead of time. But we can look a...
by bob90245
Tue Apr 10, 2012 12:30 pm
Forum: Investing - Theory, News & General
Topic: Why Asset Allocation May Not Matter
Replies: 24
Views: 3260

Re: Why Asset Allocation May Not Matter

I haven't read the paper. But I can tell you what I know with playing with all sorts of spreadsheets containing historical data. Yes, savings rate does matter. But only before the nest egg has grown to a certain amount, say, $200,000 or thereabouts. After that, the rate earned on those savings matter more. As to whether asset allocation matters, this is very period-dependent. You can try this thought experiment. Sometimes stocks go for long stretches of above-average performance. Those are also called secular bull markets. Alternatively, sometimes stocks go for long stretches of below-average performance. Those are also call secular bear markets. And to maket the point without having to type a thousand words, refer to this chart and click t...
by bob90245
Mon Apr 09, 2012 4:36 pm
Forum: Investing - Theory, News & General
Topic: TSM, Efficient Markets, and tilting
Replies: 33
Views: 3951

Re: TSM, Efficient Markets, and tilting

I've got news for all you so called no tilt people out there, if you own VTI, or any other single ETF, or mutual fund that owns the markets, then you're tilted toward large cap stocks. So dump the this argument about tilting being a bad thing. VTI et al are "tilted" to whatever the market says has greatest economic value. Since I don't have any information the market doesn't, I'll assume Apple has a bigger market cap than Joe's Hot Dog Stand for a reason, and will weight accordingly. And Enron as well. And all the tech-bombs and dot-bombs that were loaded into VTI (or it's equivalent) during the late 1990's. Their great economic value got sliced by half or more during the 2000-2002 bear market with very few recovering to their fo...
by bob90245
Mon Apr 09, 2012 3:45 pm
Forum: Investing - Theory, News & General
Topic: TSM, Efficient Markets, and tilting
Replies: 33
Views: 3951

Re: TSM, Efficient Markets, and tilting

On the other hand, portfolio efficiency means that there is some combination of stock asset classes that will fall on the efficient frontier. Of course, we can never know that optimal combination ahead of time. But we can look at history to see how it turned out. Click on image for full size. http://bobsfinancialwebsite.com/misc/LCB-LCV-SCB-EAFE-REIT_1972-2010.gif Keep in mind after Gibson posted that famous chart in his book, he then, in full disclosure, shifted the year range by just one year and got a completely different result. And of course, markets don't consult the history books when moving. He was likely looking at a short time period like ten years. Charts don't shift to something completely different incrementing by one year whe...
by bob90245
Mon Apr 09, 2012 12:57 pm
Forum: Investing - Theory, News & General
Topic: TSM, Efficient Markets, and tilting
Replies: 33
Views: 3951

Re: TSM, Efficient Markets, and tilting

ofcmetz wrote:As far as reversion to the mean, John Bogle has excellent writing on this in his book Common Sense on Mutual Funds. I recall other authors writing about it as well. From what I remember it occurs to various mutual funds as well as individual asset classes. For me it confirms my decision to go for total market funds.
Just remember that the data Bogle uses on mutual funds is notoriously subject to style drift. Hence, I would take any conclusions derived from there with a grain of salt.
by bob90245
Sun Apr 08, 2012 10:04 pm
Forum: Investing - Theory, News & General
Topic: TSM, Efficient Markets, and tilting
Replies: 33
Views: 3951

Re: TSM, Efficient Markets, and tilting

Efficient markets mean that the longer the time frame the less likely it is for active managers to outperform a benchmark index. Think Bill Miller as a recent example.

On the other hand, portfolio efficiency means that there is some combination of stock asset classes that will fall on the efficient frontier. Of course, we can never know that optimal combination ahead of time. But we can look at history to see how it turned out. Click on image for full size.

Image
by bob90245
Sun Apr 08, 2012 5:01 pm
Forum: Investing - Theory, News & General
Topic: Wiki - Investment Risk (revised for new investors)
Replies: 103
Views: 7394

Re: Wiki - Investment Risk (revised for new investors)

Kevin M wrote:I do miss the average trend line. Could we make it a very light, dotted line? It could even be non-continuous so it does not interfere with the "average" indicators.
I would cast a "NO" vote. I don't see it necessary to add any more lines. It'll just clutter things up.
by bob90245
Sun Apr 08, 2012 4:04 pm
Forum: Investing - Theory, News & General
Topic: Wiki - Investment Risk (revised for new investors)
Replies: 103
Views: 7394

Re: Wiki - Investment Risk (revised for new investors)

LadyGeek wrote:Next update. The top chart is bob90245's suggestions.
Image
Top chart is even better! :sharebeer
by bob90245
Sun Apr 08, 2012 3:11 pm
Forum: Investing - Theory, News & General
Topic: Wiki - Investment Risk (revised for new investors)
Replies: 103
Views: 7394

Re: Wiki - Investment Risk (revised for new investors)

yobria wrote:Yes, I think that chart is accurate for someone whose holding period is a year - but then, they shouldn't be owning stocks in the first place, as the chart implies. A 20-30 year chart, showing the long term benefits of stocks (returns compound with time, standard deviation with only the square root of time), should also be included.
Remember, this chart came about to be simpler for novices to understand. The other charts are more advanced in nature and will likely be shown in part 2. At least, that is how I understand from what Kevin has written upthread.
by bob90245
Sun Apr 08, 2012 2:14 pm
Forum: Investing - Theory, News & General
Topic: Wiki - Investment Risk (revised for new investors)
Replies: 103
Views: 7394

Re: Wiki - Investment Risk (revised for new investors)

bob90245 wrote:
LadyGeek wrote:I used the same data file and created a new chart.

Image
Much, much better!
Actually, I came up with an idea to make this chart even clearer.

1) Remove the extra vertical bar that is labeled "Risk"

2) Underneath the skinny part of the lower dashed line on the left, write "Less Risk"

3) Underneath the wide part of the lower dashed line on the right, write "More Risk"

4) Then you can make a connecting solid double-arrow pointing to "Less Risk and "More Risk" in parallel and below the lower dashed line. This implies the possibility of a continuous range of risk and can be further explained in Part 2.
by bob90245
Sun Apr 08, 2012 11:48 am
Forum: Investing - Theory, News & General
Topic: Wiki - Investment Risk (revised for new investors)
Replies: 103
Views: 7394

Re: Wiki - Investment Risk (revised for new investors)

LadyGeek wrote:I used the same data file and created a new chart.

Image
Much, much better!
by bob90245
Sun Apr 08, 2012 9:56 am
Forum: Investing - Theory, News & General
Topic: Wiki - Investment Risk (revised for new investors)
Replies: 103
Views: 7394

Re: Wiki - Investment Risk (revised for new investors)

Kevin M wrote:Modified to make increasing risk (uncertainty) and return more clear:

Image
Your title of "Average Returns" is misleading. Yes you do have the horizontal hash marks for average returns. But the vertical lines represent "Range of Annual Returns".

As you describe in the text, the return in any one year as been as high as X and as low as Y. A range that is wider means there is more risk.

Oops! On second reading, I see that "Average Returns" is not the title of the chart but points to the horizontal hash marks.

I'm afraid if I made a mistake of reading the chart, there must be others who did the same. Go back and see if you can make things more clear...
by bob90245
Fri Apr 06, 2012 3:23 pm
Forum: Investing - Theory, News & General
Topic: Wiki - Investment Risk (revised for new investors)
Replies: 103
Views: 7394

Re: Wiki - Investment Risk (revised for new investors)

Maybe this will covered in part 2. But it seems your figures are bi-model (tri-model?).

Perhaps in the sub-section on Asset Allocation, you can make the point that risk can be somewhat controlled by how much or how little you have in risky and less risky assets. Use a chart like this for illustration:

Image
Source: http://www.fundadvice.com/fehtml/bhstra ... 0309a.html
by bob90245
Fri Apr 06, 2012 12:35 pm
Forum: Investing - Theory, News & General
Topic: Wiki - Investment Risk (revised for new investors)
Replies: 103
Views: 7394

Re: Wiki - Investment Risk (revised for new investors)

Also there is no need to take risk. This stuff about risk as a need is straight from Larry Swedroe who is not an academic. Swedroe is often wrong when he talks about risk and this is one of the many cases where he is wrong about risk. This was already discussed. But apparently it didn't sink in. So let's do it again. There is a context about the need to take risk. If you have $2,000,000 in a retirement portfolio and are 65 and are covered by Social Security and a pension and you have gap of only $20,0000 that needs to be covered by the retirement portfolio, then your need to take stock market risk is very low. Maybe all that is needed is a TIPS ladder. That is what is meant by need to take risk. On the other hand, a person just starting th...
by bob90245
Thu Apr 05, 2012 12:13 pm
Forum: Investing - Theory, News & General
Topic: On the radio with Zvi Bodie
Replies: 4
Views: 1180

Re: On the radio with Zvi Bodie

Perhaps Bodie's views were influenced bythe Japanese stock market. That makes sense.
by bob90245
Tue Mar 27, 2012 6:19 pm
Forum: Investing - Theory, News & General
Topic: Is there a Gauss or Einstein of investing?
Replies: 71
Views: 5782

Re: Is there a Gauss or Einstein of investing?

rokidtoo wrote:Peter L. Berstein's book "Capital Ideas, The Improbable Origins of Modern Wall Street" discusses the contributions of such notables as Alfred Cowles, Harry Markowitz, Paul Samuelson, Eugene Fama, James Tobin and others. A very good read.-----Jim
I second the recommendation for Capital Ideas. A brief profile of these names can be found in my post upthread.
by bob90245
Tue Mar 27, 2012 12:47 pm
Forum: Investing - Theory, News & General
Topic: How often have you goofed and placed an incorrect order?
Replies: 46
Views: 4668

Re: How often have you goofed and placed an incorrect order?

snowbound wrote:I use the adage of "measure twice and cut once" so not yet for me.
For me, more like double-, triple-, and quaduple-check. Plus I make hard copies of my spreadsheet that documents the potential trade. Plus I have a separate browser tab telling me the closing trade price. And I look over all documents 3 or 4 times.

(And on an unrelated subject, yes I sometimes go back and double-check that I locked the front door when leaving the house.)
by bob90245
Tue Mar 27, 2012 10:42 am
Forum: Investing - Theory, News & General
Topic: investor.gov
Replies: 11
Views: 1630

Re: investor.gov

I remember from previous web surfing, there is an SEC website that will probably be much more instructive than the one featured in the opening post. Check it out here:

http://www.sec.gov/investor/pubs/assetallocation.htm
by bob90245
Mon Mar 26, 2012 8:10 pm
Forum: Personal Finance (Not Investing)
Topic: Took some off the table today
Replies: 2
Views: 960

Re: Took some off the table today

Tomorrow, take the rest off the table. Stocks are no place for money you need in the short term (college this fall).
by bob90245
Mon Mar 26, 2012 6:14 pm
Forum: Investing - Theory, News & General
Topic: Investors are their own worst enemy
Replies: 19
Views: 3055

Re: Investors are their own worst enemy

A person would have to be in extreme dire straits having burned through all other cash, CDs and other fixed income accounts to have no other choice than to tap their long-term retirement accounts holding stocks in order to put food on the table.
by bob90245
Mon Mar 26, 2012 4:19 pm
Forum: Investing - Theory, News & General
Topic: The Equity risk Premium has all but vanished
Replies: 48
Views: 6946

Re: The Equity risk Premium has all but vanished

Gordon wrote:Where are you there Rick, Larry and William???
You left out Jack Bogle. He seems to be expert on expected returns and when or when not to lighten up on equities.
by bob90245
Mon Mar 26, 2012 4:13 pm
Forum: Investing - Theory, News & General
Topic: QE3 Poll
Replies: 9
Views: 1134

Re: QE3 Poll

Why single out QE3? Aren't there dozens of potential policy actions that will affect investors? Or is your response to change your portfolio in different ways depending on the policy action implemented?
by bob90245
Sun Mar 25, 2012 10:18 pm
Forum: Personal Investments
Topic: Am I being conned?
Replies: 43
Views: 6153

Re: Am I being conned?

It's common for novices to have someone like your Metlife person helping you with your investments. And as you've learned, that advice is not free.

Once you climb up the learning curve, you'll have the knowledge to do this investing stuff yourself. It appears you're on that track.

When you're ready to cut the cord with your Metlife person, you'll need an exit plan where the IRA funds will go and a long-term plan that is consistent with your goals, circumstances and ability, need and willingness to take stock market risk.

Does that sound like a good plan to you? :D
by bob90245
Sun Mar 25, 2012 4:34 pm
Forum: Investing - Theory, News & General
Topic: Bogleheadism goes mainstream?
Replies: 24
Views: 4241

Re: Bogleheadism goes mainstream?

tomforshort wrote:If everyone switches to low-cost index fund investment, would that not "change the game" substantially? Could the market be efficient, if it even is now, if all investments were just market cap weighted index buys? Somebody needs to be out there actively trading.
Don't worry yourself. Human nature what it is, there will always be traders acting overconfident thinking they can "beat the market" by being the next Warren Buffet or star hedge fund manager.
by bob90245
Sun Mar 25, 2012 3:47 pm
Forum: Investing - Theory, News & General
Topic: Money Magazine is bad for me
Replies: 55
Views: 7388

Re: Money Magazine is bad for me

Vanguard advertises in Money Magazine.
by bob90245
Sun Mar 25, 2012 3:45 pm
Forum: Investing - Theory, News & General
Topic: Bogleheadism goes mainstream?
Replies: 24
Views: 4241

Re: Bogleheadism goes mainstream?

I wouldn't consider Forbes a "mainstream" media outlet. The Atlantic might be more "mainstream".

What are some of the most popular "mainstream" media outlets that most Americans read? The national paper USA Today?
by bob90245
Sun Mar 25, 2012 10:40 am
Forum: Investing - Theory, News & General
Topic: Money Magazine is bad for me
Replies: 55
Views: 7388

Re: Money Magazine is bad for me

I just realized that every time I read my monthly subscription of Money Magazine, depending on what I read in that particular issue, I start thinking about changing my plan, or adding to it and basically not staying the course. The way I "solved" this problem is that my portfolio has a variety of asset classes, but missing other asset classes. So what ever asset class is being featured in financial publications like Money, I either have it. Or for those asset classes I don't have, I have thoroughly considered them and decided the disadvantages outweigh the benefit. I strongly encourage you to go through this exercise yourself. It could be that your portfolio is still not diversified enough and you have that nagging feeling you sh...
by bob90245
Fri Mar 23, 2012 10:16 pm
Forum: Personal Finance (Not Investing)
Topic: Malkiel WSJ Editorial - What I Don't Like
Replies: 40
Views: 5859

Re: Malkiel WSJ Editorial - What I Don't Like

This is hindsight bias:
mathwhiz wrote:You know sometimes you don't necessarily have to be a lemming and fall off the cliff and "stay the course." There were numerous indications the US economy was in a severe real estate bubble in the mid 2000's that would end badly.
What very few knew was that the failure of investment banks like Lehman Brothers and AIG would cause the global financial system to freeze up. Had all that toxic subprime mortage paper not been in the picture, the real estate bubble could have gently cooled of its own excesses.
by bob90245
Fri Mar 23, 2012 9:11 pm
Forum: Investing - Theory, News & General
Topic: Single Most Valuable Thing
Replies: 50
Views: 4725

Re: Single Most Valuable Thing

Do-it-yourself investing is not for the faint of heart. Bogleheads are a unique minority.
by bob90245
Fri Mar 23, 2012 9:02 pm
Forum: Investing - Theory, News & General
Topic: chart/article in Times boglehead idea sucessful
Replies: 3
Views: 761

Re: chart/article in Times boglehead idea sucessful

sometimesinvestor wrote:Here is chart

http://www.nytimes.com/interactive/2012 ... your-money
Would the chart be better representative if they used a log scale on the Y axis? I know these linear charts make the steep ups and downs more dramatic looking.
by bob90245
Fri Mar 23, 2012 10:33 am
Forum: Personal Finance (Not Investing)
Topic: Malkiel WSJ Editorial - What I Don't Like
Replies: 40
Views: 5859

Re: Malkiel WSJ Editorial - What I Don't Like

Going by the comments here so far (I haven't read the article), it appears that Malkiel makes the common mistake of examining portfolio components in isolation, and not how each lend their support to the whole.
by bob90245
Thu Mar 22, 2012 4:31 pm
Forum: Investing - Theory, News & General
Topic: from nisiprius, a 'greatest post' in case you missed it
Replies: 147
Views: 21985

Re: from nisiprius, a 'greatest post' in case you missed it

bob90245, do you agree that the data I've presented is reasonably accurate and reasonably objective, and that the issue is not the fact but how to act on them? That is, would you say I'm correct that during periods when the stock market performs poorly, outcome is almost independent of asset allocation? The disagreement is, "if so, so what?" I'll repeat what I wrote above. I think it is very unlikely someone will find themself at either the lower extreme (what you are describing above), nor at the upper extreme. Rather, it is highly likely that the investor will find themself somewhere in the broad middle and a bit away from the extremes. The question I ask is: what happens if you factor in risk tolerance? The answer is: as far a...
by bob90245
Thu Mar 22, 2012 4:10 pm
Forum: Personal Investments
Topic: Do you invest with more than one mutual fund company?
Replies: 19
Views: 2024

Re: Do you invest with more than one mutual fund company?

Re: Do you invest with more than one mutual fund company?

We are talking about options at your sole discretion, right? Because I don't have a choice of mutual fund company my employer offers.

But in both my taxable accounts and traditional and Roth IRAs where I place funds with high distributions, they are with Vanguard.
by bob90245
Thu Mar 22, 2012 3:30 pm
Forum: Investing - Theory, News & General
Topic: from nisiprius, a 'greatest post' in case you missed it
Replies: 147
Views: 21985

Re: from nisiprius, a 'greatest post' in case you missed it

To pick a convenient source, the 2010 SBBI yearbook. There are the usual problems here. The "bonds" allocation is represented by long-term government bonds, which is probably not a typical Boglehead practice, and these are real, not nominal returns. But, here's the data, and I insist that this is the broad pattern. Asset allocation makes a large difference if you are lucky, makes a difference on the average, but makes a surprisingly small difference if you are not. http://i44.tinypic.com/1fxs7n.jpg Let's assume this represents future probabilities. The odds of seeing yourself at the extremes, the blue lines, is extremely remote. However, there is very good chance you'll see yourself somewhere in the broad middle and a bit away fr...
by bob90245
Wed Mar 21, 2012 7:56 pm
Forum: Investing - Theory, News & General
Topic: Tilting vs Total Market: Does it really matter that much?
Replies: 39
Views: 4517

Re: Tilting vs Total Market: Does it really matter that much

Tilting can also add diversification. You want to have sufficient exposure to all equity asset classes (market, value and small) to guard against periods of underperformance. JG, you sum up nicely a significant reason to tilt. The period 1995 to 1999, and then 2000 to 2010 is a prime example of periods where it is nice to not have all eggs in the underperfoming equity class. Whether one tilts or not is not nearly as important as choosing a strategy, and then sticking with it when things aren't going your way. Bill Or said another way, period 1995 to 1999 was easy to stick with the market-only strategy. But it was very hard to stick with it from 2000 to 2010. Reverse can be said for those who had sufficient exposure to all equity asset clas...
by bob90245
Wed Mar 21, 2012 2:26 pm
Forum: Investing - Theory, News & General
Topic: Tilting vs Total Market: Does it really matter that much?
Replies: 39
Views: 4517

Re: Tilting vs Total Market: Does it really matter that much

555 wrote:
bob90245 wrote: To the contrary, if it doesn't really matter that much, would you see so much passion on both sides? No! Of course, not. No one expends all their energy if, at the end of the day, it really doesn't matter that much.[1]

[1] With the possible except of those who debate just for arguments sake. LOL
Actually there is a well-known penomenon of smaller differences, often yielding more intense debates.
Looks like my footnote [1] above was not a joke after all! LOL
by bob90245
Wed Mar 21, 2012 1:48 pm
Forum: Investing - Theory, News & General
Topic: Tilting vs Total Market: Does it really matter that much?
Replies: 39
Views: 4517

Re: Tilting vs Total Market: Does it really matter that much

If there's so much debate, it can't be that clear cut which is better. No, there could be other interpretations. There is so much debate because people are very passionate about their side and put forward pursuasive arguments to a) justify their position b) convert the other side to their position. Yes, I should have clarified that. Obviously the mere existence of a vigorous debate absolutely does not imply equal validity to both sides, and I can easily think of debates where they are not equal (e.g. round earth vs flat earth). But in a Tilting vs Total Market comparison, genuine experts can differ. That's why I wonder if it really matters that much? To the contrary, if it doesn't really matter that much, would you see so much passion on b...
by bob90245
Wed Mar 21, 2012 12:35 pm
Forum: Investing - Theory, News & General
Topic: Tilting vs Total Market: Does it really matter that much?
Replies: 39
Views: 4517

Re: Tilting vs Total Market: Does it really matter that much

555 wrote:If there's so much debate, it can't be that clear cut which is better.
No, there could be other interpretations. There is so much debate because people are very passionate about their side and put forward pursuasive arguments to a) justify their position b) convert the other side to their position.
by bob90245
Tue Mar 20, 2012 1:31 pm
Forum: Personal Investments
Topic: Investment Question?? Zvi Bodie's ". Risk Less and Prosper"
Replies: 4
Views: 2547

Re: Investment Question?? Zvi Bodie's ". Risk Less and Pros

I read the book. But in follow up articles, he departs from his advice in his book. Bodie now has said that if you are an investor in your 20's and 30's, you don't need to put 100% of your nest egg devoted to base retirement needs into TIPS and IBonds.
by bob90245
Tue Mar 20, 2012 1:24 pm
Forum: Investing - Theory, News & General
Topic: What if I'd gotten out of stocks in 1996 based on PE10?
Replies: 42
Views: 5165

Re: What if I'd gotten out of stocks in 1996 based on PE10?

Clearly_Irrational wrote:All this seems like excessive semantic precision, yet there is a big difference between diversifying across "asset classes" and "asset class categories" (Personally I don't like that term and would call them sectors, flavors or class members, but you get my meaning)
If you prefer to use the term "sectors", then you are not distinguishing between a Three-Factor Model and the Coal Sector (your example).
by bob90245
Tue Mar 20, 2012 11:54 am
Forum: Investing - Theory, News & General
Topic: What if I'd gotten out of stocks in 1996 based on PE10?
Replies: 42
Views: 5165

Re: What if I'd gotten out of stocks in 1996 based on PE10?

Clearly_Irrational wrote:
bob90245 wrote:As far as I know, the academic approach to differentiate between equity asset classes is along the lines of big and small, value and growth along with their counterparts in international.
That doesn't match what I've seen, citation?
I suppose you never read about the Three-Factor Model to explain equity returns. That's were my explanation comes from. You can make a Google search for "Three-Factor Model" and get a ton of references. Even the Wiki here on Bogleheads has an article about it:

http://www.bogleheads.org/wiki/Fama_and ... ctor_Model
by bob90245
Tue Mar 20, 2012 10:38 am
Forum: Investing - Theory, News & General
Topic: What if I'd gotten out of stocks in 1996 based on PE10?
Replies: 42
Views: 5165

Re: What if I'd gotten out of stocks in 1996 based on PE10?

Clearly_Irrational wrote:Coal mining stocks perform differently than the total market, that doesn't make them a separate asset class, just a different member of the "equities" class.
I don't think anyone would categorize coal mining stocks as a separate asset class. Instead, it would be called an "equity sector". In fact, some use the sector approach to differentiate among equity types. But as far as I know, the academics don't approach it this way.

As far as I know, the academic approach to differentiate between equity asset classes is along the lines of big and small, value and growth along with their counterparts in international.
by bob90245
Mon Mar 19, 2012 6:24 pm
Forum: Investing - Theory, News & General
Topic: What if I'd gotten out of stocks in 1996 based on PE10?
Replies: 42
Views: 5165

Re: What if I'd gotten out of stocks in 1996 based on PE10?

Others choose to include other asset classes like small, value, REITs and international Just quibbling really, but those are not asset classes, they're just different flavors of equities. Your comment is not a small quibble. It seems to be a firm rejection of the theory put forward by Boglehead authors such as Bill Schultheis, Rick Ferri and Larry Swedroe. We can agree to disagree. But it put my trust in Bill, Rick and Larry. I wasn't suggesting that you not have them, just that they are not separate asset classes. I have a small/value tilt in my portfolio and I am holding international (specifically emerging market) stocks, but those come out of my stock allocation, not some other bucket. Not everyone uses the word "asset class"...
by bob90245
Mon Mar 19, 2012 5:00 pm
Forum: Investing - Theory, News & General
Topic: What if I'd gotten out of stocks in 1996 based on PE10?
Replies: 42
Views: 5165

Re: What if I'd gotten out of stocks in 1996 based on PE10?

Clearly_Irrational wrote:
bob90245 wrote:Others choose to include other asset classes like small, value, REITs and international
Just quibbling really, but those are not asset classes, they're just different flavors of equities.
Your comment is not a small quibble. It seems to be a firm rejection of the theory put forward by Boglehead authors such as Bill Schultheis, Rick Ferri and Larry Swedroe.

We can agree to disagree. But it put my trust in Bill, Rick and Larry.
by bob90245
Mon Mar 19, 2012 4:48 pm
Forum: Investing - Theory, News & General
Topic: The Bogle Interview: Big Picture, Big Challenges
Replies: 15
Views: 2873

Re: The Bogle Interview: Big Picture, Big Challenges

From this quote, we see that Bogle rejects the Efficient Market Hypothesis (prices already reflect information that is known to market participants):
Taylor Larimore wrote:Our mentor, Jack Bogle, gave a long interview with the editors of the Journal of Indexes. It is full of interesting and valuable quotes like these:
The three largest countries, accounting for almost half of the international index, are countries that have significant problems. But when you put them in a single package of international, you don't think about that. You ought to think about that.
Think about it and then what?
by bob90245
Sun Mar 18, 2012 4:35 pm
Forum: Personal Investments
Topic: Bogle on value tilting/REIT/emerging markets
Replies: 23
Views: 4092

Re: Bogle on value tilting/REIT/emerging markets

jginseattle wrote:
bob90245 wrote:Investors expecting value tilting/REIT/emerging markets to pay off year in and year out will be disappointed. This is strictly a long term strategy. Those who lack the neccesary patience should stick to total markets.
Total markets pay off year in and year out?
I don't think those choosing Total markets are worrying about years or decade of underperformance relative to value tilting/REIT/emerging markets. But the opposite seems to worry investors more, and hence their choice for Total markets.
by bob90245
Sun Mar 18, 2012 12:17 pm
Forum: Investing - Theory, News & General
Topic: What if I'd gotten out of stocks in 1996 based on PE10?
Replies: 42
Views: 5165

Re: What if I'd gotten out of stocks in 1996 based on PE10?

letsgobobby wrote:Intraday PE10 fell to about 11 in march 2009. That's close enough that'd I say a single digit figure is highly likely in the future.
I didn't know there is a ticker symbol that tracks P/E10 in real time.
by bob90245
Sun Mar 18, 2012 12:07 pm
Forum: Investing - Theory, News & General
Topic: Is a 2012/2013 Market Collapse Inevitable?
Replies: 49
Views: 6604

Re: Is a 2012/2013 Market Collapse Inevitable?

There is ALWAYS bad news. Always.

And as Larry is wont to point out, crises occur more often than people suspect. Like every 2 or 3 years.
by bob90245
Sun Mar 18, 2012 10:46 am
Forum: Investing - Theory, News & General
Topic: What if I'd gotten out of stocks in 1996 based on PE10?
Replies: 42
Views: 5165

Re: What if I'd gotten out of stocks in 1996 based on PE10?

Lbill wrote:PE10 at the beginning of 2012 was 21.68. It would have to drop by more than 50% [to below 10] by the beginning of 2013 to signal a move from 100% Treasuries to 100% TSM using this decision rule.
With P/E10 having to fall below 10 for you to move back to 100% TSM, I think you'll have a long wait. I doubt it will happen in the next 44 years that I'll be alive. And I'm assuming I'll live to age 95.