Search found 4909 matches

by Random Walker
Tue Jul 06, 2021 9:59 pm
Forum: Investing - Theory, News & General
Topic: The first time in my investing life I'm "fearful"
Replies: 130
Views: 19055

Re: The first time in my investing life I'm "fearful"

I have a confession... I've been investing for about ~22 years now, with some ups and downs. I didn't fully know what I didn't know in late 1999, and as I started plowing money into the market from 2000-2010, I had this idea of "well, the market will magically fix these problems", and it ...
by Random Walker
Tue Jul 06, 2021 9:53 pm
Forum: Investing - Theory, News & General
Topic: The first time in my investing life I'm "fearful"
Replies: 130
Views: 19055

Re: The first time in my investing life I'm "fearful"

Fear happens when you have something to lose and in this case more to lose than to gain by taking allocation risk. Suggest reading the paperback version of: “The Ages of the Investor: A Critical Look at Life Cycle Investing” by W. Bernstein. Also search and read the forum archives for: Sequence Of ...
by Random Walker
Mon Jul 05, 2021 10:07 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing side discussion
Replies: 29
Views: 2086

Re: U.S. stocks continue to soar! - Rebalancing side discussion

If one uses rebalancing bands such as Larry’s 5/25 rule, come rebalancing time the investor needs to decide whether to rebalance all the way to target allocation or just to the edge of the band. In a rising equity market, just rebalancing to the band edge gives a little more chance for momentum to w...
by Random Walker
Mon Jul 05, 2021 9:47 am
Forum: Investing - Theory, News & General
Topic: How to prepare for a forced early retirement?
Replies: 86
Views: 7479

Re: How to prepare for a forced early retirement?

I had a Monte Carlo simulation performed several years ago on my portfolio. From what I remember, with portfolios ranging from about 40/60 to 80/20, the odds of success increased about the same whether I increased the equity allocation 10% or increased the savings rate 10%. I’m a huge fan of MCS. S...
by Random Walker
Mon Jul 05, 2021 9:43 am
Forum: Investing - Theory, News & General
Topic: How to prepare for a forced early retirement?
Replies: 86
Views: 7479

Re: How to prepare for a forced early retirement?

A) The glide path has nothing to do with age. It has to do with your portfolio size. Vanguard's glide path seems to be 90/10 till age 40, then starts shifting towards 30/60 towards age 70. Also, the common rules of thumb (e.g. 100 minus age) always relate the bond percentage to the person's age. Th...
by Random Walker
Mon Jul 05, 2021 9:37 am
Forum: Investing - Theory, News & General
Topic: How to prepare for a forced early retirement?
Replies: 86
Views: 7479

Re: How to prepare for a forced early retirement?

Personally, I went to 60/40 when I realized that our annual savings alone (with 0% market gains) was enough for us to reach our goal on our time line. At this point, we don't need to take more risk, and my willingness has shifted to take less risk as well. I know nothing of your personal circumstan...
by Random Walker
Mon Jul 05, 2021 9:29 am
Forum: Investing - Theory, News & General
Topic: How to prepare for a forced early retirement?
Replies: 86
Views: 7479

Re: How to prepare for a forced early retirement?

As far as AA, the performance difference between 60/40 and 80/20 over a ten year period is not life altering in my opinion. It's about 10% according to the link, in a given 10 year period. https://www.bogleheads.org/wiki/Asset_allocation Right. 52% versus 42%. Is that life altering? Perhaps I'm not...
by Random Walker
Mon Jul 05, 2021 8:53 am
Forum: Investing - Theory, News & General
Topic: How to prepare for a forced early retirement?
Replies: 86
Views: 7479

Re: How to prepare for a forced early retirement?

The strategy behind the "glide path" used in target date funds seems based primarily on a certain retirement date. This also applies to a variety of strategies based on deducting your age from a certain number to determine your AA. How does one deal with the possible scenario of an undesi...
by Random Walker
Sun Jul 04, 2021 10:31 am
Forum: Investing - Theory, News & General
Topic: Jack Brennan: "I think 60/40 is challenged"
Replies: 249
Views: 23074

Re: Jack Brennan: "I think 60/40 is challenged"

Niceunparticularman: In our case, the comment about using bonds to increase returns when stocks perform poorly is ideal but not the way I look at it. Risk mitigation involves not only gain from the less risky investments but mitigation of losses during downturns. One way we look at it during downtu...
by Random Walker
Tue Jun 29, 2021 9:21 am
Forum: Investing - Theory, News & General
Topic: Question on final value of investment in the face of variance in returns
Replies: 9
Views: 757

Re: Question on final value of investment in the face of variance in returns

No I don’t know formula for relationship between CAGR and simple mean. You’re out of my league math wise. I’ve assumed CAGR and Geo Mean are effectively the same.

Dave
by Random Walker
Tue Jun 29, 2021 8:47 am
Forum: Investing - Theory, News & General
Topic: Question on final value of investment in the face of variance in returns
Replies: 9
Views: 757

Re: Question on final value of investment in the face of variance in returns

Important to realize that we make forward looking portfolio decisions based on expected returns and correlations. Expected returns are a simple mean average. What we eat are the geometric mean, compounded returns. So at least conceptually, one can incorporate lessening of volatility drag into portfo...
by Random Walker
Tue Jun 29, 2021 12:30 am
Forum: Investing - Theory, News & General
Topic: Question on final value of investment in the face of variance in returns
Replies: 9
Views: 757

Re: Question on final value of investment in the face of variance in returns

So Im listening to some online content (The Great Courses, "The Mathematics of Everyday Life") and the person said "The more steady the rate of return, the better our overall return will be". Now I think I've heard this before, about the "performance drag on variance" ...
by Random Walker
Sat Jun 26, 2021 8:04 am
Forum: Investing - Theory, News & General
Topic: Latest Thoughts from Larry Swedroe
Replies: 169
Views: 29845

Re: Latest Thoughts from Larry Swedroe

In Seeking Alpha, Larry discusses FANMAGs (Facebook, Apple, Netflix, Microsoft, Amazon, Google) in his article titled "FANMAGs and Top Dog Strategies." Larry notes that FANMAGS + Tesla is 22.9% of the total market capitalization of the United States, 22.9% of the value of the U.S. Stock M...
by Random Walker
Sun Jun 13, 2021 10:08 am
Forum: Investing - Theory, News & General
Topic: My favorite authors are turning their backs on Bonds
Replies: 167
Views: 18645

Re: My favorite authors are turning their backs on Bonds

... So not making big changes here, mostly staying the course. But I have to admit that I am not certain about what to do here. Even Bobcat2, aka BobK, seems to be running up the white flag in response to very low interest rates and real negative yields from bonds. Bob was saying that we should inc...
by Random Walker
Sat Jun 12, 2021 7:16 pm
Forum: Investing - Theory, News & General
Topic: My favorite authors are turning their backs on Bonds
Replies: 167
Views: 18645

Re: My favorite authors are turning their backs on Bonds

How good is sage advice if people abandon it at the first sign of turmoil? The 60/40 portfolios will probably end up being prudent for many investors in the long run. Why? There is nothing magical about 60/40. We know what the drivers were and the character of the 60/40 portfolio. Now the drivers a...
by Random Walker
Sat Jun 12, 2021 11:55 am
Forum: Investing - Theory, News & General
Topic: One Bogleheads idea I have a hard time understanding...
Replies: 108
Views: 15133

Re: One Bogleheads idea I have a hard time understanding...

This seems applicable to the OP’s question/thoughts: Economics professors Dwight Lee and James Verbrugge of the University of Georgia explain the power of the efficient markets theory in the following manner: "The efficient markets theory is practically alone among theories in that it becomes m...
by Random Walker
Thu Jun 10, 2021 8:16 am
Forum: Investing - Theory, News & General
Topic: A question about glide paths.
Replies: 43
Views: 4835

Re: A question about glide paths.

I started this thread a while back, based on William Bernstein’s book. Customizing the Glidepath. Curious what people think.

viewtopic.php?t=236967

Dave
by Random Walker
Wed Jun 09, 2021 9:17 am
Forum: Investing - Theory, News & General
Topic: A question about glide paths.
Replies: 43
Views: 4835

Re: A question about glide paths.

Hi I am 52 year old DIY investor who takes an interest, and has chosen a moderately aggressive glide path to follow with my investments as I get older and move toward retirement (maybe 2035). The question I have is; after a major correction and a subsequent gradual recovery, say a 50 percent fall a...
by Random Walker
Tue Jun 08, 2021 8:47 am
Forum: Investing - Theory, News & General
Topic: My favorite authors are turning their backs on Bonds
Replies: 167
Views: 18645

Re: My favorite authors are turning their backs on Bonds

Back during the great recession (2008-2009), stocks plunged and Treasury bonds rose a fair amount. That seems to illustrate the non-correlating asset mix in a nutshell, showing the (relative) safety of bonds, especially in a crisis. We can't predict the next crisis, but I suppose it's safe to say t...
by Random Walker
Tue Jun 08, 2021 8:27 am
Forum: Investing - Theory, News & General
Topic: My favorite authors are turning their backs on Bonds
Replies: 167
Views: 18645

Re: My favorite authors are turning their backs on Bonds

10 year Treasury bonds are yielding 1.569%. That is what you can expect. Inflation target is 3%. The Treasury Secretary just said that the economy would be healthier with higher interest rates. She’s right, there should be some incentive for saving and lending. But there is a great deal of pain bet...
by Random Walker
Mon Jun 07, 2021 9:41 am
Forum: Investing - Theory, News & General
Topic: My favorite authors are turning their backs on Bonds
Replies: 167
Views: 18645

Re: My favorite authors are turning their backs on Bonds

Anyway, the 60/40 portfolio was a result of Modern Portfolio Theory in the 1950s ... and Bogleheads nowadays mostly think MPT is bunk. So it is a little weird to be fixated on a result from a theory you think is BS. After all, I'm pretty sure you ignore the current results of running an MPT analysi...
by Random Walker
Mon Jun 07, 2021 9:36 am
Forum: Investing - Theory, News & General
Topic: My favorite authors are turning their backs on Bonds
Replies: 167
Views: 18645

Re: My favorite authors are turning their backs on Bonds

Should the current interest rate environment be changing the “timeless strategies” we have relied on, namely the 60/40 portfolio? Ellis’ book has been one of my all time favorites. I’ve read two editions and will definitely read this one. The most “timeless strategy” of all is diversification. It i...
by Random Walker
Sat May 29, 2021 8:19 am
Forum: Investing - Theory, News & General
Topic: Latest Thoughts from Larry Swedroe
Replies: 169
Views: 29845

Re: Latest Thoughts from Larry Swedroe

Larry Swedroe @larryswedroe I’ve been getting lots of questions about investing in disruptive technologies, and specifically in the funds of ARK Investment Management and Cathy Wood. I share some historical lessons. And one sign of a bubble: when you hear "you don't get it." Larry Swedroe...
by Random Walker
Wed May 26, 2021 2:43 pm
Forum: Personal Investments
Topic: Drawing over 400K on HELOC to invest in market?
Replies: 101
Views: 9382

Re: Drawing over 400K on HELOC to invest in market?

I would recommend not taking out the HELOC. If you want to take on more investing risk, I would recommend taking advantage of the fact that your house is paid off to stick to a more aggressive asset allocation. I have found substantial behavioral and psychological advantage to having the house paid ...
by Random Walker
Mon May 24, 2021 1:48 pm
Forum: Investing - Theory, News & General
Topic: Useless Investment Books
Replies: 170
Views: 15943

Re: Useless Investment Books

I already know more about Roger Federer's tennis career than I care to. The analogies between tennis and investing are very interesting and enlightening. Pro tennis is a different game from amateur. The key for weekend warriors is to avoid the unforced errors. Hitting cross court where the net is l...
by Random Walker
Mon May 24, 2021 12:17 pm
Forum: Investing - Theory, News & General
Topic: Useless Investment Books
Replies: 170
Views: 15943

Re: Useless Investment Books

Wise Investing Made Simple: Amazon price — $27.00 Rational Investing in Irrational Times: Amazon price — $79.06 After Shrinking Alpha, I'm not going to chance it on any more of Swedroe's books, especially when they would cost over $100. If I don't get any more out of it than "own index funds&q...
by Random Walker
Mon May 24, 2021 8:30 am
Forum: Investing - Theory, News & General
Topic: Current thinking about factors in portfolio?
Replies: 35
Views: 6829

Re: Current thinking about factors in portfolio?

I highly recommend this book for someone who is truly interested. When reading the book, certainly learn about the factors and make your own judgements on each. At least as importantly though, learn, understand, appreciate the 5 criteria for evaluating a factor. One can apply these criteria througho...
by Random Walker
Sun May 23, 2021 9:43 pm
Forum: Investing - Theory, News & General
Topic: Useless Investment Books
Replies: 170
Views: 15943

Re: Useless Investment Books

Here's another useless one to avoid: "The Incredible Shrinking Alpha", second edition. I was hoping this book would be an intelligent exposé of the shortcomings of actively-managed mutual funds. It turned out to be a big disappointment. The first 20 pages of this awkwardly-titled book are...
by Random Walker
Sat May 22, 2021 7:21 pm
Forum: Investing - Theory, News & General
Topic: Current thinking about factors in portfolio?
Replies: 35
Views: 6829

Re: Current thinking about factors in portfolio?

Here’s a link to a thread a started a couple of weeks ago where I described a way to evaluate whether a fund with deeper exposures might be worth a greater expense ratio. It is based on a post by Larry Swedroe at Rational Reminder. https://www.bogleheads.org/forum/viewtopic.php?f=10&t=322929&...
by Random Walker
Sat May 22, 2021 4:45 pm
Forum: Investing - Theory, News & General
Topic: Clarification of the 'need, ability, and willingness' framework
Replies: 206
Views: 19661

Re: Clarification of the 'need, ability, and willingness' framework

Again, I think that this is great advice. After all, why would an investor who has the ability to take on 'risk' and the willingness to do so not take on that 'risk' simply because there isn't a need to do so? Because the framework is attempting to achieve some particular goal (e.g. retirement), no...
by Random Walker
Fri May 21, 2021 9:05 am
Forum: Investing - Theory, News & General
Topic: How much diversification is too much diversification?
Replies: 28
Views: 2262

Re: How much diversification is too much diversification?

A lot depends on how one defines diversification. If one is thinking of diversifying away idiosyncratic single stock risk, then as few as 100 stocks will reduce single stock risk to 4% of the portfolio. Certainly a TSM or S&P500 fund goes way beyond that. And for many here that is sufficient di...
by Random Walker
Fri May 21, 2021 8:46 am
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 4446

Re: Value and Momentum- Zero premium for twenty years

From 2000-2012, the US total stock market returned slightly more than cash, 2.26% versus 2.15% annualized. During that same period US SV returned 8.75% annualized, and accumulated more than double each of the other two. The market factor can perform poorly for long periods. A good reason to diversif...
by Random Walker
Fri May 21, 2021 7:52 am
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 4446

Re: Value and Momentum- Zero premium for twenty years

2. Fama-French define the value factor as P/B but an important characteristic about factors is they don't have to be strictly defined in one way. What good is a 'factor' if you can simply re-define it at will? Firstly, all factors are long-short portfolios to isolate the market factor from the fact...
by Random Walker
Thu May 20, 2021 10:41 pm
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 4446

Re: Value and Momentum- Zero premium for twenty years

Stock vs. Long Term Treasury Returns, 1/1/2000 - 12/31/2019 US Stock Market: 6.30% CAGR LT Treasuries: 7.09% CAGR Twenty years seems like enough time to declare the equity premium over. Grazed away. Yesterday's news. :happy https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&...
by Random Walker
Thu May 20, 2021 6:32 pm
Forum: Investing - Theory, News & General
Topic: How much diversification is too much diversification?
Replies: 28
Views: 2262

Re: How much diversification is too much diversification?

A lot depends on how one defines diversification. If one is thinking of diversifying away idiosyncratic single stock risk, then as few as 100 stocks will reduce single stock risk to 4% of the portfolio. Certainly a TSM or S&P500 fund goes way beyond that. And for many here that is sufficient div...
by Random Walker
Thu May 20, 2021 12:21 pm
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 4446

Re: Value and Momentum- Zero premium for twenty years

https://images.aqr.com/-/media/AQR/Documents/Perspectives/The-Long-Run-Is-Lying-to-You.pdf Above is a link to a Cliff Asness article discussing the potential for the value premium. He basically says that valuation changes matter a lot and that the value premium is there if you account for the incre...
by Random Walker
Thu May 20, 2021 11:14 am
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 4446

Re: Value and Momentum- Zero premium for twenty years

3. The value premium is a risk premium, it is a reward for taking risk. The risk is that even for long periods of time like 20+ years, cheap stocks may not outperform expensive stocks, and they may perform worse. This is one of the reasons that we should expect the value premium to continue, becaus...
by Random Walker
Thu May 20, 2021 10:36 am
Forum: Investing - Theory, News & General
Topic: Value and Momentum- Zero premium for twenty years
Replies: 60
Views: 4446

Re: Value and Momentum- Zero premium for twenty years

https://images.aqr.com/-/media/AQR/Documents/Perspectives/The-Long-Run-Is-Lying-to-You.pdf Above is a link to a Cliff Asness article discussing the potential for the value premium. He basically says that valuation changes matter a lot and that the value premium is there if you account for the increa...
by Random Walker
Wed May 19, 2021 12:09 pm
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

Updating which factor fund investors should use based on a newly identified variable "in the research" (I.e., in the latest backtest) is performance chasing based on inadequate evidence in my view. Performance chasing is a behavior which should always be discouraged. No arguments there. I...
by Random Walker
Wed May 19, 2021 10:53 am
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

Updating which factor fund investors should use based on a newly identified variable "in the research" (I.e., in the latest backtest) is performance chasing based on inadequate evidence in my view. Performance chasing is a behavior which should always be discouraged. No arguments there. I...
by Random Walker
Tue May 18, 2021 3:02 pm
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

(God help him if Random Walker holds the alts in taxable) I learned the hard way that P2P lending (including funds like LENDX) in a taxable account is a tax nightmare. I had to list dozens of notes individually on tax forms, and it was highly tax inefficient. I certainly have a strong preference fo...
by Random Walker
Tue May 18, 2021 9:47 am
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

This thread has affirmed my admiration of Random Walker’s investing temperament. Although my strategy looks nothing like his, he and posters like RobertT have been the most important members of the community to my personal growth (and I mean this broadly) because of their ability to make a decision...
by Random Walker
Tue May 18, 2021 9:24 am
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

(God help him if Random Walker holds the alts in taxable) I learned the hard way that P2P lending (including funds like LENDX) in a taxable account is a tax nightmare. I had to list dozens of notes individually on tax forms, and it was highly tax inefficient. I certainly have a strong preference fo...
by Random Walker
Tue May 18, 2021 8:39 am
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

(God help him if Random Walker holds the alts in taxable) I learned the hard way that P2P lending (including funds like LENDX) in a taxable account is a tax nightmare. I had to list dozens of notes individually on tax forms, and it was highly tax inefficient. I certainly have a strong preference fo...
by Random Walker
Mon May 17, 2021 5:28 pm
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

...Yes this is a very well thought out strategy for the long run based on the fundamentals of MPT... How can you have a "strategy for the long run based on the fundamentals of MPT"... ...that includes peer-to-peer lending as one of the asset classes... when LENDX only had inception in 06/...
by Random Walker
Mon May 17, 2021 11:53 am
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

First, Larry Swedroe did write a book about this exact issue, How to Avoid Black Swans or something like that. He laid out the case for using Alternatives for creating sources of return for a portfolio unrelated and uncorrelated to the stock market. This strategy was supposed to give you a better d...
by Random Walker
Sun May 16, 2021 9:10 pm
Forum: Investing - Theory, News & General
Topic: Retail Alternative to DFEVX DFA EM Value
Replies: 14
Views: 1687

Re: Retail Alternative to DFEVX DFA EM Value

As soon as momentum is added as a factor in stock selection turnover goes up and fund capacity goes down. . Don’t momentum screens reduce turnover by not purchasing stocks with negative momentum and holding stocks with positive momentum? I guess these funds are just eliminating negative momentum. Y...
by Random Walker
Sun May 16, 2021 3:49 pm
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

Nisi ignoring the advisory fee is mostly on target too I think, but the issue is a bit cloudy. Larry Swedroe would be the first to say that one should not hire an advisor just for fund access. But if the investor believes that some of the investments he is gaining access to through the advisor crea...
by Random Walker
Sun May 16, 2021 3:32 pm
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

Nisi ignoring the advisory fee is mostly on target too I think, but the issue is a bit cloudy. Larry Swedroe would be the first to say that one should not hire an advisor just for fund access. But if the investor believes that some of the investments he is gaining access to through the advisor crea...
by Random Walker
Sun May 16, 2021 11:31 am
Forum: Investing - Theory, News & General
Topic: "Beware of Sci-Fi Portfolios"
Replies: 185
Views: 15711

Re: "Beware of Sci-Fi Portfolios"

True. But important to appreciate that the factorhead is interested in diversifying away from what dominates most all of our long only equity portfolios, market beta. A pure long-short fund fits that role potentially very well. And in the bigger context of improving portfolio efficiency with uncorre...