Search found 24 matches

by SmithIndex
Tue Jun 28, 2011 11:55 am
Forum: Investing - Help with Personal Investments
Topic: Rebalance only on upside
Replies: 35
Views: 5028

ThePrune wrote:snip ...
Jim Otar [writes] ... Withdrawals are never to be taken directly from the equity portion of the portfolio so as to avoid Reverse Dollar Cost Averaging.
...snip for brevity
This is the key to make a bond floor work.
by SmithIndex
Tue Jun 28, 2011 11:51 am
Forum: Investing - Help with Personal Investments
Topic: Rebalance only on upside
Replies: 35
Views: 5028

Re: Rebalance only on upside

Retired and not taking IRA RMD yet. Rebalance is easy to do on the upside but hard to do on steep downsides, so doe's anybody else do this and is there any historical studies for it? A bond floor might work if bonds are sold when needed for withdrawals. Bonds are not sold to buy stocks during rebal...
by SmithIndex
Mon Jun 27, 2011 7:00 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalance only on upside
Replies: 35
Views: 5028

Re: Rebalance only on upside

Say your portfolio is $1 million invested 40/60 Equities/Fixed and Equities drop 50%... $200K/$600K. Do I need and am I able to risk another $120K in Equities.... $320K/$480K? Whatever the answer - as applicable to YOUR circumstances - it should be part of your overall plan. Everything else is a lo...
by SmithIndex
Mon Jun 27, 2011 6:48 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalance only on upside
Replies: 35
Views: 5028

Re: Rebalance only on upside

I have $10 million in Bonds and need $300K per year withdrawal. Now what? If you can't answer that yourself, hire someone who can. If your "I" is not you, but is a thought experiment then it depends on risk profile, investment outlooks, and investment timeframe. It is an easy exercise to say what a...
by SmithIndex
Mon Jun 27, 2011 6:34 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalance only on upside
Replies: 35
Views: 5028

Re: Rebalance only on upside

YDNAL wrote:
SmithIndex wrote:The answer depends on the withdrawal rate. Stock investments must be kept high enough to support the withdrawal rate. If the bond floor prevents this, the portfolio might fail.
Says who?
Says history. The world changes, but the lessons of history remain.
by SmithIndex
Mon Jun 27, 2011 6:28 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalance only on upside
Replies: 35
Views: 5028

A bond floor might work if bonds are sold when needed for withdrawals. Bonds are not sold to buy stocks during rebalancing. This approach gives similar results as a fixed percentage portfolio from 1972 to 2001. (with 4% withdrawals) The difference is seen in 1974. Inflation was higher than the bond ...
by SmithIndex
Mon Jun 27, 2011 4:19 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalance only on upside
Replies: 35
Views: 5028

The answer depends on the withdrawal rate. Stock investments must be kept high enough to support the withdrawal rate. If the bond floor prevents this, the portfolio might fail. I would say if you are going to reduce risk by using a bond floor, then you cannot expect to successfully use a 4% SWR. The...
by SmithIndex
Wed Jun 22, 2011 6:17 pm
Forum: Personal Consumer Issues
Topic: Things that will Disappear in our Lifetime.....anything else
Replies: 75
Views: 9101

What? No more party balloons? http://www.scientificamerican.com/blog/post.cfm?id=the-coming-shortage-of-helium-2010-06-30 "helium essentially could be gone in less than three decades, Robert C. Richardson, winner, along with Douglas Osheroff and David Lee, of the 1996 Nobel Prize in Physics, said at...
by SmithIndex
Wed Jun 22, 2011 5:25 pm
Forum: Investing - Theory, News & General
Topic: Minimized Fat Tails Portfolio
Replies: 21
Views: 5413

MidCaps and Health Care have outperformed in the past, and I think will continue to do so. I would drop the Large Cap Growth and REIT funds, and add MidCap and Health Care funds.

Vanguard Mid-Cap VO , or SPDR S&P MidCap 400 MDY
Vanguard Health Care VHT , or Rydex S&P Equal Weight Health Care RYH
by SmithIndex
Wed Jun 22, 2011 4:22 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Health Care ETF (VHT) or SPDR Health Care ETF (XLV)
Replies: 21
Views: 5375

These are pretty close, but I would go with Vanguard VHT as it is more diversified: 46% in top 10 holdings vs 57% for State Street XLV.
You could look at Rydex S&P Equal Weight Health Care RYH: only 20% in top 10 holdings. But very small, so liquidity might be a concern.
by SmithIndex
Tue Jun 21, 2011 11:06 pm
Forum: Investing - Theory, News & General
Topic: Supreme Court strips fund investors of fraud protections
Replies: 26
Views: 2667

There are Janus stockholders. And there are investors in Janus mutual funds. Two different groups of people. This lawsuit was brought by stockholders because Janus' stock price fell. It says nothing about mutual fund regulations. Class action suits are filed anytime a stock price declines by more th...
by SmithIndex
Mon Jun 20, 2011 9:49 pm
Forum: Investing - Theory, News & General
Topic: Valuation-based market timing with PE10 can improve returns?
Replies: 696
Views: 119832

Looking at the full history of data, P/E10 shows about the same thing: it predicts (more technically correlates) with returns best out around 20 years, much smaller correlation at 10 years, very little correlation for less than 10 years. (note really this is only a handful of independent points so ...
by SmithIndex
Mon Jun 20, 2011 8:50 pm
Forum: Investing - Theory, News & General
Topic: Valuation-based market timing with PE10 can improve returns?
Replies: 696
Views: 119832

Looking at the full history of data, P/E10 shows about the same thing: it predicts (more technically correlates) with returns best out around 20 years, much smaller correlation at 10 years, very little correlation for less than 10 years. (note really this is only a handful of independent points so ...
by SmithIndex
Sat Jun 18, 2011 4:18 pm
Forum: Investing - Theory, News & General
Topic: Valuation-based market timing with PE10 can improve returns?
Replies: 696
Views: 119832

Looks to me like any predictive value of PE10 has decreased over time. Maybe this worked from 1900 to 1950. Probably didn't work 1960 to 2010. PE10 timing gave lower returns recently. Say you use a limit of 25. Then out of market: 1996 to 2002, 2004 to 2007. Sharpe Ratio, CAGR (for past 15 years 199...
by SmithIndex
Sat Jun 18, 2011 2:46 pm
Forum: Investing - Theory, News & General
Topic: Valuation-based market timing with PE10 can improve returns?
Replies: 696
Views: 119832

What I find interesting is the concept of using PE10 as an indicator of the next year's market return. This paper rolls this prediction up into a portfolio, and concludes on average over the past 100 years PE10 had predictive powers. I like the use of rolling median PE10. This allows the analysis to...
by SmithIndex
Thu Jun 16, 2011 1:20 pm
Forum: Investing - Theory, News & General
Topic: longer-term past performance as predictor?
Replies: 30
Views: 2963

You could try looking at some old magazines. Fortune, Forbes, and others print lists of mutual funds with some sort of ranking. Otherwise, you have to deal with surviorship bias. Maybe Hulbert has done this?
by SmithIndex
Fri Jun 03, 2011 6:51 pm
Forum: Investing - Theory, News & General
Topic: New Video is Up!! - Active Managers Explain How It Works
Replies: 24
Views: 3962

I enjoyed watching these. Thanks.
1,4,2,3
by SmithIndex
Thu Jun 02, 2011 12:40 pm
Forum: Investing - Theory, News & General
Topic: Equal weight within portfolio
Replies: 47
Views: 4034

Larger companies have lower returns because they have less risk. It's a risk story. I agree. Assessing risk depends on the portfolio and the person, but I think slicing large/mid/small can add a small amount to risk adjusted return, maybe 1% on average. That's MUCH to high a benefit from US styles ...
by SmithIndex
Thu Jun 02, 2011 10:19 am
Forum: Investing - Theory, News & General
Topic: Equal weight within portfolio
Replies: 47
Views: 4034

Another worry of mine is the idea that market cap indices buy into the bubbles. I look at this differently. Market cap weighted indexes are not automatically affected by bubbles. They buy the same percentage of all companies regardless of price. So any mispricings have no effect on the decision on ...
by SmithIndex
Thu Jun 02, 2011 10:12 am
Forum: Investing - Theory, News & General
Topic: Equal weight within portfolio
Replies: 47
Views: 4034

Larger companies have lower returns because they have less risk. It's a risk story. I agree. Assessing risk depends on the portfolio and the person, but I think slicing large/mid/small can add a small amount to risk adjusted return, maybe 1% on average. Might not be worth the bother, and there is m...
by SmithIndex
Wed Jun 01, 2011 3:14 pm
Forum: Investing - Help with Personal Investments
Topic: Asset allocation/ rebalancing software
Replies: 16
Views: 7760

Have you searched in the Bogleheads wiki for 'Excel'
/wiki/Using_a_Spreadsheet_to_Maintain_a_Portfolio

Gummy might have something. Google: gummy-stuff Excel
by SmithIndex
Wed Jun 01, 2011 1:42 pm
Forum: Investing - Theory, News & General
Topic: Equal weight within portfolio
Replies: 47
Views: 4034

Market cap weighted indexes are perfect investments in theory but not the best in practice. Google 'Fama French' or look at the Wikipedia stock market index article. Large cap stocks have historically underperformed. Investing more in a stock because the market cap is higher makes no sense for the s...
by SmithIndex
Wed Jun 01, 2011 12:51 pm
Forum: Investing - Theory, News & General
Topic: Equal weight within portfolio
Replies: 47
Views: 4034

Go equal weighting if you can keep expenses low. Expenses include taxes, fees, and your time. Stay away from RSP which weirdly equal weights sectors. Include a mid-cap fund. Your idea of equal weighting large, mid, and small cap standard U.S. Vanguard funds is fine. International is harder. There ar...
by SmithIndex
Wed Jun 01, 2011 11:10 am
Forum: Personal Finance (Not Investing)
Topic: Your first year investing ?
Replies: 36
Views: 3492

Early 1980's. A few thousand dollars into a balanced fund as part of company profit sharing plan. A poor investment, too conservative. Not really investing because I didn't take the time to understand. Just went for the match. Early 1990's. After buying a house, my savings were enough to start inves...