Search found 3746 matches

by peter71
Tue Jan 03, 2012 2:51 pm
Forum: Investing - Theory, News & General
Topic: Bodie: Plan your retirement portfolio for zero real return
Replies: 230
Views: 18790

Re: Bodie: Plan your retirement portfolio for zero real retu

DMcMahon, If you want another example, my 30-something brother is a property-tax lawyer and gets huge money to, as he puts it, "have our paralegals bury those poor dumb municipal lawyers in so much BS that they just have to give in and reduce our [corporate] clients' taxes." So there's an...
by peter71
Mon Jan 02, 2012 8:28 pm
Forum: Investing - Theory, News & General
Topic: Bodie: Plan your retirement portfolio for zero real return
Replies: 230
Views: 18790

Re: Bodie: Plan your retirement portfolio for zero real retu

Hi Jenny,

Nope. But I'm happy to let it go!

Take care,
Pete
by peter71
Mon Jan 02, 2012 8:06 pm
Forum: Investing - Theory, News & General
Topic: Bodie: Plan your retirement portfolio for zero real return
Replies: 230
Views: 18790

Re: Bodie: Plan your retirement portfolio for zero real retu

Brick, What I like about indexing is that it's almost an anti-strategy. I'll admit to a bias against planning -- or at least "plans" (I think Eisenhower is famous for preferring the former) and so that's why I'm skeptical of ESP. As discussed above, If we can measure and plan for everythin...
by peter71
Mon Jan 02, 2012 7:47 pm
Forum: Investing - Theory, News & General
Topic: Bodie: Plan your retirement portfolio for zero real return
Replies: 230
Views: 18790

Re: Bodie: Plan your retirement portfolio for zero real retu

DMcMahon, If you want another example, my 30-something brother is a property-tax lawyer and gets huge money to, as he puts it, "have our paralegals bury those poor dumb municipal lawyers in so much BS that they just have to give in and reduce our [corporate] clients' taxes." So there's ano...
by peter71
Mon Jan 02, 2012 7:02 pm
Forum: Investing - Theory, News & General
Topic: Bodie: Plan your retirement portfolio for zero real return
Replies: 230
Views: 18790

Re: Bodie: Plan your retirement portfolio for zero real retu

Jenny,

Bob is the one invoking academia, and I'd be absolutely delighted if we could all swear off so doing . . . also "science says X . . . " while we're at it.

As for your question about LTCM in particular, LTCM'er Merton is actually one of Bodie's co-authors/buddies.

Pete
by peter71
Mon Jan 02, 2012 5:44 pm
Forum: Investing - Theory, News & General
Topic: Bodie: Plan your retirement portfolio for zero real return
Replies: 230
Views: 18790

Re: Bodie: Plan your retirement portfolio for zero real retu

I don't doubt that the professors selling ESPlanner think it's spectacular, I just doubt how far the fascination with it has reached beyond BU.

Here's the results of a Google Scholar search -- which makes it look pretty dated and BU-centric.

http://scholar.google.com/scholar?hl=en ... =&as_vis=0

Best,
Pete
by peter71
Mon Jan 02, 2012 5:19 pm
Forum: Investing - Theory, News & General
Topic: Bodie: Plan your retirement portfolio for zero real return
Replies: 230
Views: 18790

Re: Bodie: Plan your retirement portfolio for zero real retu

Hi Bob, What exactly are your qualifications to speak about what's mainstream in Economics? Are you currently an active (i.e., non-emeritus) faculty member at a major research university? (I'm a political scientist at a major research university and while I know dozens of economists I've never known...
by peter71
Mon Jan 02, 2012 5:10 pm
Forum: Investing - Theory, News & General
Topic: Bodie: Plan your retirement portfolio for zero real return
Replies: 230
Views: 18790

Re: Bodie: Plan your retirement portfolio for zero real retu

if you live in America and realistically want to retire, you must work for the government. The truth of this statement has yet to fully penetrate the collective conciousness. Brilliant. My multi-millionaire CFO uncle was just about to retire, but I'll let him know he'd better get a job as a governm...
by peter71
Fri Dec 30, 2011 11:43 pm
Forum: Investing - Theory, News & General
Topic: Definition of Risk from "Risk Less and Prosper"
Replies: 7
Views: 1740

Re: Definition of Risk from "Risk Less and Prosper"

Bob, As you may know there's no shortage of dogmatic charlatans asserting that it's just "a fact of life" that experimental economics/neuroeconomics has struck a death blow to expected utility theory . . . not so much people at the center of the field, to be sure, but people on the periphe...
by peter71
Fri Dec 30, 2011 10:35 pm
Forum: Investing - Theory, News & General
Topic: Definition of Risk from "Risk Less and Prosper"
Replies: 7
Views: 1740

Re: Definition of Risk from "Risk Less and Prosper"

Hi Bob, Why not take your crusade against Knightian uncertainty to the Wikipedia page devoted to it, complete with cites to all the major economists who discredited the definition beginning in the 40's? m I only skimmed the rest of your post, but per your last question see here (for starters) re the...
by peter71
Fri Dec 30, 2011 1:06 pm
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Hi Chisey, Agreed that it's a little off, but moneychimp puts the SD at 18.9 rather than 16-18, so some of those 8 outsized years might drop out? m Of course, arguably the entire enterprise of trying to forecast based on any past distributions alone is crazy given changes in the system (though I thi...
by peter71
Fri Dec 30, 2011 12:41 pm
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Hi Greg, So the practical take-home of right-skewness is that investors in the S&P should assume there's a significantly better chance of outsized positive returns than would be suggested by the normal curve (which suggests that a return of over 67.23% for the S&P 500 next year is a highly i...
by peter71
Fri Dec 30, 2011 12:00 pm
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Hi Again Chisey, So how can a long term index investor profit from thinking about distributions other than the normal distribution? This seems to me a classic case in which intellectual effort DOESN'T pay off, in that, e.g., the possibility that the S&P could theoretically increase more than 100...
by peter71
Fri Dec 30, 2011 11:36 am
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Hi Chisey, I teach stats to social scientists and I can assure you I'm part of the problem in the sense that I just don't teach students much beyond normal distribution and the fact that it often doesn't hold (plus I also cover skewness and kurtosis). Thinking back to what I was myself taught in Pro...
by peter71
Fri Dec 30, 2011 11:06 am
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Most people who hear the term "standard deviation" would naturally assume a Gaussian (Normal) distribution. What makes you think that? Other distributions have standard deviations, most of them finite. Because it is by far the most common context. The association of "standard deviati...
by peter71
Thu Dec 29, 2011 11:02 pm
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Hi Lady Geek, MVO = Mean-variance optimization. I'm using it as shorthand for "designing portfolios by looking at a portfolio's mean and standard deviation over a relatively short period." By the way, as far as I know Bobcat and other Bodie fans on here at least started out having a differ...
by peter71
Thu Dec 29, 2011 10:39 pm
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Hi Dick, It's a complicated question of the sort that makes social science so difficult: namely, to what extent is the MVO advisor industry (for which I have no particular love) an important cause of investor "fleecing." I'm skeptical that it's played a big role, and we can't ever really r...
by peter71
Thu Dec 29, 2011 8:59 pm
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Hi Dick, I don't think there's any shortage of academics selling their services and models to un-Bogle-esque financial enterprises, but I suspect they're mostly selling the sort of stuff you read about at Wilmott.com rather than MVO stuff. In any case, there's a lot of economic problems in the world...
by peter71
Thu Dec 29, 2011 4:58 pm
Forum: Investing - Theory, News & General
Topic: Risk vs uncertainty
Replies: 142
Views: 9844

Re: Risk vs uncertainty

Dick, Please take some time to review an introductory textbook on social science research methods. The bottom line is that there's absolutely nothing conspiratorial about the way in which academics have, at times, attempted to represent a complex semantic concept -- "risk" -- with a measur...
by peter71
Fri Dec 23, 2011 7:50 am
Forum: Investing - Theory, News & General
Topic: Is Home Bias necessarily bad?
Replies: 51
Views: 5827

Re: Is Home Bias necessarily bad?

My advice is based on SCIENCE, peer reviewed research that shows ... I'm sorry but macro economics is not a science. In science, we come up with a hypothesis based on logic and past experience and then test it in a double blind trial with a control group. In economics and investing research, we com...
by peter71
Tue Dec 20, 2011 10:17 am
Forum: Personal Consumer Issues
Topic: Do you prefer to buy investment books or borrow them?
Replies: 16
Views: 1579

Re: Do you prefer to buy investment books or borrow them?

Between blogs and freely available academic articles, I think you can actually get a better (if drier) investment education on the internet than you can from books. The good thing and the bad thing about books (other than self-published books) is that a publisher needs to be convinced that they're n...
by peter71
Sat Dec 17, 2011 5:12 pm
Forum: Investing - Help with Personal Investments
Topic: Why would anyone buy hedge funds?
Replies: 37
Views: 2893

Re: Why would anyone buy hedge funds?

For the ones brave enough to report their returns, on average, they lag the market. Can you site the source of this assertion? What market? Over what time period? Nick http://whitecoatinvestor.com/the-death-of-alpha-among-hedge-funds/ The WSJ graph in that article seems to me to answer your origina...
by peter71
Fri Dec 16, 2011 5:25 pm
Forum: Investing - Help with Personal Investments
Topic: Cap Weighted Indexing?
Replies: 12
Views: 1179

Re: Cap Weighted Indexing?

Kenyan: I could just as easily say, "of course mid-caps outperformed large caps . . . "large caps" is just a made up category based on arbitrary cutoff points that refers to the largest companies in the S&P 500, and "mid caps" is just an arbitrary category that tends to ...
by peter71
Fri Dec 16, 2011 12:32 am
Forum: Investing - Help with Personal Investments
Topic: Cap Weighted Indexing?
Replies: 12
Views: 1179

Re: Cap Weighted Indexing?

Equal-weighting is actually pretty strategy-free too (particularly as opposed to trying to mirror "factors" derived from some B-School profs' equations. One means you put 5% of your money in Apple because Apple is 5% of the market (and almost nothing on the 500th largest company); another ...
by peter71
Fri Dec 09, 2011 6:13 pm
Forum: Personal Consumer Issues
Topic: What's the most overrated book you've read?
Replies: 193
Views: 10780

Re: What's the most overrated book you've read?

My dad's an English prof and he told me to read Ulysses with a guide. m Even though I loved THE DEAD and had a course on Irish lit in college, I'd agree with all the haters if I hadn't done so. And I still wouldn't exactly rave about it, but it was something to do. As for FINNEGAN'S WAKE . . . at le...
by peter71
Wed Nov 30, 2011 12:12 am
Forum: Investing - Theory, News & General
Topic: Griftopia
Replies: 16
Views: 1684

Re: Griftopia

Hi Protagonist, I think part of the problem is that many of Taibbi's "factual" claims are tough to pin down. Consider the following opening to one of his Rolling Stone articles: "The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful in...
by peter71
Thu Nov 17, 2011 1:09 pm
Forum: Investing - Theory, News & General
Topic: Many Americans say they will have to work until they're 80
Replies: 101
Views: 8606

Re: Many Americans say they will have to work until they're

This survey targeted the "middle class" in a weird way that itself capped investable assets! So even as these things go I'd be particularly hesitant to read too much into this study. "To target the middle class, the survey included only respondents who fell within specified income and...
by peter71
Thu Nov 17, 2011 11:16 am
Forum: Investing - Theory, News & General
Topic: Investors got it wrong again in October
Replies: 66
Views: 5235

Re: Investors got it wrong again in October

Hi Larry, On TFB's study, the methods are definitely tricky and as TFB himself posted upthread I'll let him jump in if he wants to. On Barber and Odean, we've had some previous threads on their work. I think they control for some of the problems TFB is talking about but because they have to use brok...
by peter71
Wed Nov 16, 2011 10:37 pm
Forum: Personal Consumer Issues
Topic: Cheapest practice you've "heard" of......
Replies: 38
Views: 3876

Re: Cheapest practice you've "heard" of......

I saw a TV show about someone who halved and respooled two-ply toilet paper. Re rubber bands, I've never lived in a house where they weren't all stored on doorknobs. The thinking there isn't so much money saving but reduced time spent storing them, finding them and re-storing them in the centralized...
by peter71
Wed Nov 16, 2011 8:06 pm
Forum: Investing - Theory, News & General
Topic: Investors got it wrong again in October
Replies: 66
Views: 5235

Re: Investors got it wrong again in October

Hi Larry, The ICI fund flows data is also tricky (I had several exchanges with SmallHi on this years ago and my critique of the way he was using it is similar to Renditt's critique of how you're using it) but I thought we were now focused on investor returns: As I posted upthread, I think TFB's blog...
by peter71
Wed Nov 16, 2011 6:47 pm
Forum: Investing - Theory, News & General
Topic: Investors got it wrong again in October
Replies: 66
Views: 5235

Re: Investors got it wrong again in October

Lots of previous threads on here on the M* "investor returns" methodology (as Larry knows), and the bottom line is that the figures are very period-dependent (with older data that includes the late 90's tending to make investors look worse). I believe the 3 biggest stock mutual funds are V...
by peter71
Mon Nov 14, 2011 10:48 pm
Forum: Investing - Theory, News & General
Topic: Investors got it wrong again in October
Replies: 66
Views: 5235

Re: Investors got it wrong again in October

Hi Renditt, Thanks for looking into the data on outflows. As for investor returns, this post from The Finance Buff seems like a fair-minded estimate of the behavior gap as at most 0.27% per annum: m Not nothing (as DIY'er's like me would wish) but also not nearly as much as advisors would like to ha...
by peter71
Sun Nov 13, 2011 8:38 am
Forum: Investing - Help with Personal Investments
Topic: Median net worth in US by age
Replies: 84
Views: 11847

Re: Median net worth in US by age

While I alluded to the same problem with the low end stats upthread, the change in seniors' wealth over time is a positive 42%. So even if the young had dropped 5% rather than 68% there'd be a story here:

http://pewresearch.org/pubs/2124/age-ga ... wealth-gap
by peter71
Fri Nov 11, 2011 8:21 am
Forum: Investing - Help with Personal Investments
Topic: Median net worth in US by age
Replies: 84
Views: 11847

Re: Median net worth in US by age

The many posts to the effect of, "people always accumulate assets as they age" seem to be missing the point. Here's how Bloomberg Businessweek explains things. While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five ...
by peter71
Tue Nov 08, 2011 7:08 pm
Forum: Personal Finance (Not Investing)
Topic: Best/Cheapest way to access the internet-no WiFi or smartpho
Replies: 22
Views: 2146

Re: Best/Cheapest way to access the internet-no WiFi or smar

thanks boglebrit! will check out kinstant. in the meantime i'm trying a first post from the kindle ...i do think i have the mobile gmail and a restart usually fixes things but it does freeze on me,
by peter71
Tue Nov 08, 2011 6:32 pm
Forum: Personal Finance (Not Investing)
Topic: Best/Cheapest way to access the internet-no WiFi or smartpho
Replies: 22
Views: 2146

Re: Best/Cheapest way to access the internet-no WiFi or smar

I haven't yet made up my mind about my Kindle Keyboard 3G's browser . . . for everything BUT gmail, I'm finding that it's working better than I expected . . . but for gmail it's spotty, particularly (it seems) with 3G, even in locations where gmail on my flip phone is fine . . .
by peter71
Tue Nov 01, 2011 4:56 pm
Forum: Personal Finance (Not Investing)
Topic: Ultimatum Game - Your vote
Replies: 75
Views: 4500

Re: Ultimatum Game - Your vote

While it's been awhile since I've studied this I did have to study it back in grad school and IIRC there's been considerable research on varying the size of the stakes -- though of course not up to the millions:

http://scholar.google.com/scholar?hl=en ... =&as_vis=0

Best,
Pete
by peter71
Fri Oct 28, 2011 7:29 am
Forum: Investing - Theory, News & General
Topic: "Why Economic Models Are Always Wrong"
Replies: 33
Views: 2659

Re: "Why Economic Models Are Always Wrong"

At least the short version of the article seems pretty muddled (I didn't read the long version). Is it just me or does the Paul Wilmott quote emerge out of nowhere, without him ever being introduced and after primarily discussing geophysical models? Finance is trickier than other branches of social ...
by peter71
Sun Oct 23, 2011 8:05 am
Forum: Investing - Theory, News & General
Topic: Article from The NY Times Magazine (10/23/11)
Replies: 15
Views: 3310

Re: Article from The NY Times Magazine (10/23/11)

It's also worth noting that the "Trading is Hazardous to Your Wealth" paper was published 11 years ago, looking back at a very different seven year period than the one we've just experienced. See here for a thoughtful longer term estimate of the dumb money effect as 0.27% per year or less:...
by peter71
Fri Oct 21, 2011 5:13 pm
Forum: Personal Finance (Not Investing)
Topic: Girlfriend is an heiress, who should pay?
Replies: 197
Views: 17307

Re: Girlfriend is an heiress, who should pay?

Hi HSV, Agreed (and having now looked at it I think the Chronicle data suggests the same), but I think another tricky thing about applying Pareto principles to academic salaries is that it's more like the military than it is like other civilian jobs . . . i.e., even if you're a world-historical youn...
by peter71
Fri Oct 21, 2011 4:27 pm
Forum: Personal Finance (Not Investing)
Topic: Girlfriend is an heiress, who should pay?
Replies: 197
Views: 17307

Re: Girlfriend is an heiress, who should pay?

Hey All, On Salary.com they may be talking $80,000 for a "Full Professor," which begins to sound close, though the vast majority of tenure-track and tenured profs under 45 are going to be "Assistant" or "Associate" Profs . . . Anyway, one angle that hasn't yet been ment...
by peter71
Wed Oct 19, 2011 9:12 pm
Forum: Personal Consumer Issues
Topic: Clothing for -40 F windchill factor
Replies: 26
Views: 2915

Re: Clothing for -40 F windchill factor

when I was that age I shoveled snow at night in Minneapolis and so the temps were similar . . . main thing I'd add is to have a ski mask and maybe even goggles if he's on the back of a truck . . . I can remember my eye sockets getting cold as the only uncovered thing. All of that said it should be f...
by peter71
Fri Oct 14, 2011 9:01 pm
Forum: Investing - Help with Personal Investments
Topic: Defining Risk
Replies: 13
Views: 1086

Hi Bob, Thx for the fuller cites . . . to me it sounds like they're saying that it's only in "some situations" that upside deviations are undesirable (and that they're stopping short of condemning "what people normally consider" when considering risk) but no doubt B&M do want...
by peter71
Fri Oct 14, 2011 5:58 pm
Forum: Investing - Help with Personal Investments
Topic: Defining Risk
Replies: 13
Views: 1086

great reply. Can you recommend any books that do a good job of covering a wide variety of risks? Risk for Dummies ? Thanks for the very informative reply. I'm not sure I have a finger tip on the best book for that subject exactly. I can say the eye-openers for me in general would be The Four Pillar...
by peter71
Thu Oct 13, 2011 9:47 pm
Forum: Personal Finance (Not Investing)
Topic: I am not the 99%
Replies: 15
Views: 1959

jenny345 wrote:He is just a bit short, ~$330K per year, from being in the top 1%.


Exactly. Plenty of hardworking minimum wage-earning college students aspire to be in the 1%, but my first reaction was, "actually still a ways to go! maybe time to invest in a few more math classes !" :D
by peter71
Wed Oct 12, 2011 9:06 am
Forum: Investing - Theory, News & General
Topic: Risk - A Primer
Replies: 33
Views: 4077

While there's very little at stake here, I guess I object to the idea that "risk as understood in economics" is any more fixed than it is in the four top-selling econ textbooks I linked to above. It would at a minimum be nice to have at least a couple of academic economists on the forum we...
by peter71
Tue Oct 11, 2011 9:31 am
Forum: Investing - Theory, News & General
Topic: Risk - A Primer
Replies: 33
Views: 4077

Hi Magician, Well, we then circle back to the question of what aspect of risk is of interest to people posting about it, and I suspect the possibility of adverse outcomes (i.e., disutility) is of concern to many . . . On what it is that mean reverts, however, I am indeed betraying my own bias that v...
by peter71
Tue Oct 11, 2011 8:42 am
Forum: Investing - Theory, News & General
Topic: Risk - A Primer
Replies: 33
Views: 4077

Now, obviously the introductory textbooks are going to be the highest sellers, but it's nonetheless interesting to me that these Harvard, Columbia, NYU and Princeton profs feel comfortable introducing their field without any formal "primer" on defining risk. Instead, they seem happy to us...