Search found 1919 matches

by Random Walker
Sat Sep 23, 2017 4:32 pm
Forum: Investing - Theory, News & General
Topic: How an asset with a NEGATIVE return can INCREASE your portfolio's return
Replies: 30
Views: 2342

Re: How an asset with a NEGATIVE return can INCREASE your portfolio's return

Sure, Bitcoin, with negative return and extreme volatility, is an extreme example. But the point made about the benefits of multi asset class investing is very relevant. There are many options for all of us that can improve the efficiency of a typical 60/40 TSM type portfolio. There are lots of opti...
by Random Walker
Fri Sep 22, 2017 8:11 am
Forum: Investing - Theory, News & General
Topic: If you will adapt your spending, you money will last longer.
Replies: 8
Views: 1308

Re: If you will adapt your spending, you money will last longer.

I'm a big fan of MCS . A good MCS will show the effects of changes in spending on likelihood of success

Dave
by Random Walker
Wed Sep 20, 2017 10:22 pm
Forum: Investing - Theory, News & General
Topic: Factors are not characteristics but correlations
Replies: 11
Views: 741

Re: Factors are not characteristics but correlations

Packer16, There's more to the factors than you are giving credit for. Sure, they have been revealed by mining past data. But they have subsequently been confirmed with out of sample tests. Out of sample tests include different time periods, different geographic markets, and in some cases even differ...
by Random Walker
Wed Sep 20, 2017 9:32 am
Forum: Investing - Theory, News & General
Topic: Rewards of Multiple Asset Class Investing
Replies: 22
Views: 3085

Re: Rewards of Multiple Asset Class Investing

Dcabler, I think some of the answer to your question regarding 2,3,4,5 assets is implicitly in the original chart I posted. The higher compounded return for a given volatility reflects minimizing the effects of really bad bear markets. Volatility really sucks returns out of portfolios. In the extrem...
by Random Walker
Wed Sep 20, 2017 9:23 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Dividend Strategies Fall Short
Replies: 15
Views: 1414

Re: Larry Swedroe: Dividend Strategies Fall Short

MPT fan,
Hard to disagree with you. Point of diversification within a fund is to eliminate single stock risk. At > 500 stocks, the effect of one single stock on fund performance should be small.

Dave
by Random Walker
Wed Sep 20, 2017 7:16 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Dividend Strategies Fall Short
Replies: 15
Views: 1414

Larry Swedroe: Dividend Strategies Fall Short

http://www.etf.com/sections/index-investor-corner/swedroe-dividend-strategies-fall-short Here is another very short essay from Larry regarding dividend strategies. Economic theory states that dividend policy should be irrelevant to stock returns. The study reviewed in this essay supports this thesis...
by Random Walker
Tue Sep 19, 2017 9:46 pm
Forum: Investing - Theory, News & General
Topic: Rewards of Multiple Asset Class Investing
Replies: 22
Views: 3085

Re: Rewards of Multiple Asset Class Investing

Blindpuppy, I agree with about 1/2 of what Portfolio7 wrote. I agree that costs are certain and something we can control. So it's hard to go wrong with a simple 3 fund portfolio as a starting point. BUT what is in the diagram above is also irrefutable. The addition of weakly, non, negatively correla...
by Random Walker
Mon Sep 18, 2017 11:09 pm
Forum: Investing - Theory, News & General
Topic: Rewards of Multiple Asset Class Investing
Replies: 22
Views: 3085

Re: Rewards of Multiple Asset Class Investing

Thought I would pull up this old post of mine on the rewards of multiple asset class investing. Sorry, the link to Gibson's short essay no longer works, but his diagram alone is very worthwhile. Really like extending his concept to many more uncorrelated sources of return to improve portfolio effici...
by Random Walker
Mon Sep 18, 2017 1:44 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Vanguard Debunks Dividend Myth
Replies: 113
Views: 10822

Re: Larry Swedroe: Vanguard Debunks Dividend Myth

Rbaldini,
Think Larry's article addresses your point as well. There are no returns of dividend stocks not already accounted for in 5 Factor model.

Dave
by Random Walker
Mon Sep 18, 2017 9:35 am
Forum: Investing - Theory, News & General
Topic: Good books for bond investing?
Replies: 16
Views: 1161

Re: Good books for bond investing?

Oldcomputerguy wrote There's a book by Rick Van Ness that might be what you're looking for. It's titled "Why Bother With Bonds?". There's a whole section titled "Are CD's Better Than Bonds?", and another titled "Indivudal Bonds or a Bond Fund?". It's available in paperback and Kindle versions. +1! I...
by Random Walker
Mon Sep 18, 2017 9:27 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Vanguard Debunks Dividend Myth
Replies: 113
Views: 10822

Larry Swedroe: Vanguard Debunks Dividend Myth

http://www.etf.com/sections/index-investor-corner/swedroe-vanguard-debunks-dividend-myth There are two ways a stock can yield profits: price appreciation and dividends. Miller and Modigliani showed that from a financial perspective, they are equivalent. The investor should be indifferent between the...
by Random Walker
Fri Sep 15, 2017 3:51 pm
Forum: Investing - Theory, News & General
Topic: Value Factor Investing is not Value Investing
Replies: 126
Views: 9044

Re: Value Factor Investing is not Value Investing

Also, IMO when you do factor investing you are stating the market has not placed the correct weight on these firms & the factors know better. I think this is a large assumption & is anti-Bogle in the aspect of the non stated Bogle principle that the market on average has it correct more than the av...
by Random Walker
Thu Sep 14, 2017 11:08 am
Forum: Investing - Theory, News & General
Topic: [WSJ] Your Tolerance for Investment Risk Is Probably Not What You Think
Replies: 49
Views: 5518

Re: [WSJ] Your Tolerance for Investment Risk Is Probably Not What You Think

David_that_guy, Sounds like Monte Carlo Simulation could potentially help you out lots. Sometimes the results are a bit anti-intuitive. A certain more aggressive AA can increase the likelihood of leaving a legacy but actually be more likely to run out of money before you pass as well. A MCS that eva...
by Random Walker
Wed Sep 13, 2017 1:19 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: New Passive Criticism Fails
Replies: 58
Views: 3019

Re: Larry Swedroe: New Passive Criticism Fails

Actually, I believe the supermarket comparison is not appropriate. There is daily competition between the supermarkets on price, just as there is daily competition between active traders on price. In both cases, price is set at the margin and us end consumers accept the price, whether it's groceries...
by Random Walker
Wed Sep 13, 2017 9:40 am
Forum: Investing - Theory, News & General
Topic: Patience is very important to profit from the stock market
Replies: 41
Views: 4184

Re: Patience is very important to profit from the stock market

Dbr, I think it's definitely worthy of discussion. For example, I consider myself sort of varsity level Boglehead. I'm a factor junkie and have a super torqued (and expensive by BH standards) portfolio. Even I cannot help myself from every day looking at how each of my individual assets performed re...
by Random Walker
Wed Sep 13, 2017 9:17 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: New Passive Criticism Fails
Replies: 58
Views: 3019

Larry Swedroe: New Passive Criticism Fails

http://www.etf.com/sections/index-investor-corner/swedroe-new-passive-criticism-fails In this article Larry describes one argument made against passive investing and refutes it. The argument is basically that as more and more people index, there is less and less price discovery by hedge funds and ac...
by Random Walker
Tue Sep 12, 2017 8:21 pm
Forum: Investing - Theory, News & General
Topic: Patience is very important to profit from the stock market
Replies: 41
Views: 4184

Re: Patience is very important to profit from the stock market

Dbr, Everything you say is correct, but I think you're missing the point. We're not talking about informed investors critically looking at performance the way statisticians and pros should and would. Instead we're talking about the guy subject to the psychological difficulty of comparing his investm...
by Random Walker
Tue Sep 12, 2017 8:07 pm
Forum: Investing - Theory, News & General
Topic: My Favorite Alternative Funds
Replies: 143
Views: 13196

Re: My Favorite Alternative Funds

I agree with garlandwhizzer. I think that statement from Stone Ridge semi annual report was very straightforward, honest, humble, and correct. Garland comments on the Sharpe ratios of the individual strategies. Mostly from reading Larry's most recent book, I've gained some appreciation for Sharpe ra...
by Random Walker
Mon Sep 11, 2017 3:39 pm
Forum: Investing - Theory, News & General
Topic: Recent Hurricanes Provide Good Lesson For Investors
Replies: 30
Views: 4175

Re: Recent Hurricanes Provide Good Lesson For Investors

My impression is that reinsurance has expected equity like returns with expected SD of about 10. Bonds have SD about 5 and equities SD about 20. Insurance does have big left tail risk, but diversification across different types of insurance risks, each with its own left tail, should minimize the lef...
by Random Walker
Mon Sep 11, 2017 11:53 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Digging Into 'Deep Value'
Replies: 34
Views: 3482

Re: Larry Swedroe: Digging Into 'Deep Value'

Jack56,
The presence of small and value Premia does not exclude market efficiency if the Premia are risk based. An efficient market prices risk efficiently. If risk and return are related, that is a reason to expect the premia to persist.

Dave
by Random Walker
Mon Sep 11, 2017 9:37 am
Forum: Investing - Theory, News & General
Topic: Book Recommendation: Think, Act, & Invest Like Warren Buffett
Replies: 2
Views: 442

Book Recommendation: Think, Act, & Invest Like Warren Buffett

There has been a lot of discussion lately about "value investing" versus "value factor investing". Everyone recognizes Buffett as the ultimate bottom up stock picking value investor, and many of us on the board have learned about the factor approach from Larry Swedroe. We have focused on the differe...
by Random Walker
Mon Sep 11, 2017 9:26 am
Forum: Investing - Theory, News & General
Topic: ownership of "small cap value" stocks
Replies: 50
Views: 3181

Re: ownership of "small cap value" stocks

Publication of the premiums is a huge issue. That's why I first and foremost put my faith in the risk based explanations. The market prices risk, and therefore it would be illogical for the small and value premiums to disappear completely. I have a tougher time with the behavioral explanations, but ...
by Random Walker
Mon Sep 11, 2017 9:07 am
Forum: Investing - Theory, News & General
Topic: ownership of "small cap value" stocks
Replies: 50
Views: 3181

Re: ownership of "small cap value" stocks

If that's the case, you would add risk to your portfolio by tilting. If you are okay with adding risk to your portfolio, you could alternatively just own TSM and increase your asset allocation to equities to get the same effect. This is incorrect. One can certainly have a TSM portfolio and a tilted...
by Random Walker
Mon Sep 11, 2017 8:40 am
Forum: Investing - Theory, News & General
Topic: Recent Hurricanes Provide Good Lesson For Investors
Replies: 30
Views: 4175

Re: Recent Hurricanes Provide Good Lesson For Investors

The real trouble with this world of ours is not that it is an unreasonable world, nor even that it is a reasonable one. The commonest kind of trouble is that it is nearly reasonable, but not quite. Life is not an illogicality, yet it is a trap for logicians. It looks just a little more mathematical...
by Random Walker
Mon Sep 11, 2017 8:03 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Embracing The Downside
Replies: 2
Views: 1071

Larry Swedroe: Embracing The Downside

http://www.etf.com/sections/index-investor-corner/swedroe-embracing-downside In this article, Larry begins by explaining that downside risk is the dominant component of the equity risk peremium. He reviews the behavioral finding that a loss hurts twice as much as the happiness derived from an equal ...
by Random Walker
Sun Sep 10, 2017 5:07 pm
Forum: Investing - Theory, News & General
Topic: Recent Hurricanes Provide Good Lesson For Investors
Replies: 30
Views: 4175

Re: Recent Hurricanes Provide Good Lesson For Investors

Jalbert, If one were investing in a reinsurance company's stock, he would be investing in a stock. This involves taking on lots of market beta risk. The shares would be traded on the secondary market and exposed to all the same qualities that all other stocks are subject to. This is similar to the i...
by Random Walker
Sun Sep 10, 2017 12:25 pm
Forum: Investing - Theory, News & General
Topic: Recent Hurricanes Provide Good Lesson For Investors
Replies: 30
Views: 4175

Re: Recent Hurricanes Provide Good Lesson For Investors

I think it's really important to consider the possibility of alternative histories. Our investing decisions can't necessarily be judged on the outcomes because only one history played out. Decisions need to be evaluated based on when they were made, not knowing what the future would hold. I think it...
by Random Walker
Sun Sep 10, 2017 12:04 pm
Forum: Investing - Theory, News & General
Topic: Recent Hurricanes Provide Good Lesson For Investors
Replies: 30
Views: 4175

Recent Hurricanes Provide Good Lesson For Investors

I was just reading some Hurricane headlines. Just read "This marks the first year on record the continental U.S. has had two Category 4 hurricane landfalls in the same year". This reminds me of Larry Swedroe's investing tenet that we should not treat the highly likely as certain or the highly unlike...
by Random Walker
Sat Sep 09, 2017 2:33 pm
Forum: Investing - Theory, News & General
Topic: My Favorite Alternative Funds
Replies: 143
Views: 13196

Re: My Favorite Alternative Funds

LC, You know I'm not an expert, but this is my best guess. The fund's shares are not traded on the secondary market. Being an interval fund, the shares are only offered and redeemed at a few specific times during the year. I believe the fund does have daily pricing though. The valuation I believe is...
by Random Walker
Sat Sep 09, 2017 10:56 am
Forum: Investing - Theory, News & General
Topic: My Favorite Alternative Funds
Replies: 143
Views: 13196

Re: My Favorite Alternative Funds

I have a 2% position in SRRIX. I too have been surprised at the ~10% drop, like 8% in a single day. I don't know what % of the fund is invested in types of insurance related to hurricane risk. I invested thinking that while each individual insurance has a big left tail risk, the diversification of r...
by Random Walker
Fri Sep 08, 2017 7:25 am
Forum: Investing - Theory, News & General
Topic: Value Factor Investing is not Value Investing
Replies: 126
Views: 9044

Re: Value Factor Investing is not Value Investing

Nisiprius wrote All of this stuff about "you didn't see the effect of [factor X] because Vanguard's funds are icky poo" seems like nonsense to me. There is caffeine in all coffee, be it Dunkin' Donuts, Starbucks, or Pele Plantations Single-Estate 100% Kona, and they will all wake you up (or interfer...
by Random Walker
Fri Sep 08, 2017 12:46 am
Forum: Investing - Theory, News & General
Topic: Value Factor Investing is not Value Investing
Replies: 126
Views: 9044

Re: Value Factor Investing is not Value Investing

See the Larry Swedroe 9/8/17'article posted above on "Deep Value"

Dave
by Random Walker
Fri Sep 08, 2017 12:43 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Digging Into 'Deep Value'
Replies: 34
Views: 3482

Larry Swedroe: Digging Into 'Deep Value'

http://www.etf.com/sections/index-investor-corner/swedroe-digging-deep-value This is a very timely article for Bogleheads. There is currently a long thread running titled "Value Factor Investing Is Not Value Investing". In this article, Larry gives some insight into this issue as he reviews a book, ...
by Random Walker
Wed Sep 06, 2017 8:49 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Longer Horizons, More Risk
Replies: 4
Views: 1256

Re: Larry Swedroe: Longer Horizons, More Risk

Larry always comments that expected returns represent a Mean with a large distribution surrounding it. When we estimate expected returns we typically use the discount dividend model or E/P. These estimates assume constant valuations. If the markets perception of risk changes, we can easily end up on...
by Random Walker
Tue Sep 05, 2017 11:45 pm
Forum: Investing - Theory, News & General
Topic: Reinsurance. CAT bonds
Replies: 24
Views: 2677

Re: Reinsurance. CAT bonds

Was going to post last week on what I thought was a very modest effect of Hurricane Harvey on the price of SRRIX. Thought that spoke to the broad diversification of the fund across many types of insured risks. Now today with Irma gaining steam, I see SRRIX lost 8.48% in a single day! Ouch! Is that a...
by Random Walker
Tue Sep 05, 2017 11:36 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Longer Horizons, More Risk
Replies: 4
Views: 1256

Larry Swedroe: Longer Horizons, More Risk

http://www.etf.com/sections/index-investor-corner/swedroe-longer-horizons-more-risk In this article Larry summarizes a new Fama-French study looking at the distribution of long run returns. The summary is that the longer the time horizon, the wider the potential dispersion of returns. Even though lo...
by Random Walker
Tue Sep 05, 2017 12:15 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Passive Investing Misconceptions
Replies: 5
Views: 1456

Larry Swedroe: Passive Investing Misconceptions

http://www.etf.com/sections/index-investor-corner/swedroe-passive-investing-misconceptions Excellent article. Larry starts out discussing an individual's opinion he respects greatly about today's high valuations of all asset classes. He then describes that person's mixed opinion of passive investing...
by Random Walker
Sun Sep 03, 2017 10:00 pm
Forum: Investing - Theory, News & General
Topic: How much weight do you put on back-testing?
Replies: 53
Views: 3279

Re: How much weight do you put on back-testing?

I would put a lot of weight on historical standard deviations and correlations, with the understanding that correlations change and go to 1 in bad times. I'd put some faith in small and value premia, but maybe expect haircuts. Would not trust historical market returns. I'd use reasonable estimates o...
by Random Walker
Sat Sep 02, 2017 8:37 am
Forum: Investing - Theory, News & General
Topic: The Stock Market Is Always Risky
Replies: 42
Views: 3340

Re: The Stock Market Is Always Risky

The problem with retiring into a bear is that money withdrawn from the portfolio is spent and never gets a chance to recover.

Dave
by Random Walker
Fri Sep 01, 2017 3:27 pm
Forum: Investing - Theory, News & General
Topic: The Stock Market Is Always Risky
Replies: 42
Views: 3340

Re: The Stock Market Is Always Risky

Totally agree with everything Victoria wrote above. I do think it is good to estimate future expected returns based on current valuations rather than just use historical returns. One can use discount dividend model or E\P. I wrote a post a while back on Murphy's Law of Retirement. People see portfol...
by Random Walker
Fri Sep 01, 2017 12:01 pm
Forum: Investing - Theory, News & General
Topic: Value Factor Investing is not Value Investing
Replies: 126
Views: 9044

Re: Value Factor Investing is not Value Investing

I've believed in value factor as risk story from the start. As time has passed, I've gained more and more belief in the behavioral component. It's great that value has both risk based and behavioral explanations. Perhaps this is why it is nearly as persistent as the market factor.

Dave
by Random Walker
Fri Sep 01, 2017 9:33 am
Forum: Investing - Theory, News & General
Topic: Value Factor Investing is not Value Investing
Replies: 126
Views: 9044

Re: Value Factor Investing is not Value Investing

I tend to agree with Siamond. I don't think human behavior is going to change much. Also, I believe Risk and reward should be related. The market prices risk. So I think there is risk based reason to believe in market and small, behavioral to believe in Momentum, and both behavioral and risk for val...
by Random Walker
Fri Sep 01, 2017 9:24 am
Forum: Investing - Theory, News & General
Topic: The Stock Market Is Always Risky
Replies: 42
Views: 3340

The Stock Market Is Always Risky

Many of us have the view that time is on our side; that over enough time the market will rise. But we are subject to our own psychological quirks. I believe that one is we don't anchor on the starting value of our portfolio. I believe most of us anchor on the current level of our portfolio or the hi...
by Random Walker
Fri Sep 01, 2017 8:44 am
Forum: Investing - Theory, News & General
Topic: Reinsurance. CAT bonds
Replies: 24
Views: 2677

Re: Reinsurance. CAT bonds

I have the Stone Ridge reinsurance fund. I've been surprised to see that its price decline has been very small after Hurricane Harvey. Meanwhile Catastrophe Bonds have taken a pretty good hit. I believe this speaks to the wide diversification of the reinsurance risks in the fund.

Dave
by Random Walker
Fri Sep 01, 2017 8:13 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Carry Factor Spans Assets
Replies: 14
Views: 1838

Re: Larry Swedroe: Carry Factor Spans Assets

I certainly understand the attraction of simple, inexpensive TSM portfolios. My view of financial markets comes from envisioning chemical equilibrium and perfect competition in Econ 1. But I don't think most board members appreciate the benefit of diversifying across multiple noncorrelated sources o...
by Random Walker
Fri Sep 01, 2017 8:01 am
Forum: Personal Finance (Not Investing)
Topic: Christine Benz: "75 Must-Know Statistics About Long-Term Care"
Replies: 24
Views: 3679

Re: Christine Benz: "75 Must-Know Statistics About Long-Term Care"

Top99%,
That makes total sense! I just took a look at LTC insurance with my advisor, and we came to the conclusion that way better to self insure.

Dave
by Random Walker
Fri Sep 01, 2017 7:56 am
Forum: Investing - Theory, News & General
Topic: Value Factor Investing is not Value Investing
Replies: 126
Views: 9044

Re: Value Factor Investing is not Value Investing

Packer16, At least the size, value, Momentum, and market factors have risk based and / or behavioral based forward looking reasons to expect them to persist. It's not only backwards looking data. The TSM portfolio may have all stocks, but no net exposure to factors. That is one of the biggest risks ...
by Random Walker
Fri Sep 01, 2017 7:49 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Active Loser's Game Also A Trap
Replies: 1
Views: 473

Larry Swedroe: Active Loser's Game Also A Trap

http://www.etf.com/sections/index-investor-corner/swedroe-active-losers-game-also-trap In this article, Larry reviews some of the reasons some people still go the active route and some of the human behaviors that cause them to continue staying on the active path. Admitting the mistake of going activ...
by Random Walker
Thu Aug 31, 2017 9:01 am
Forum: Investing - Theory, News & General
Topic: Value Factor Investing is not Value Investing
Replies: 126
Views: 9044

Re: Value Factor Investing is not Value Investing

Packer, You mention backward looking historical performance supporting value factor. But it is also important to acknowledge forward looking Risk and behavioral based reasons for the value factor to exist. Also, as stated above, I believe a profitability /quality screen on top of the value factor ex...