Search found 9050 matches

by Doc
Sat Jun 15, 2019 11:36 am
Forum: Investing - Theory, News & General
Topic: Slice and dice for bonds
Replies: 43
Views: 2562

Re: Slice and dice for bonds

I have relatives that have been retired for many years and hold Total Bond in tax advantage and intermediate term tax exempt in taxable. This one bond fund in each account has worked well. That may work well if you consider the FI portion of your portfolio in isolation but it does nothing for the d...
by Doc
Sat Jun 15, 2019 8:23 am
Forum: Investing - Theory, News & General
Topic: Slice and dice for bonds
Replies: 43
Views: 2562

Re: Slice and dice for bonds

Dandy wrote:
Sat Jun 15, 2019 7:46 am
I also think that, for the most part, rebalancing this portion of the portfolio could be minimal. i.e. if there is a bit more in Treasuries vs an intermediate bond fund it won't make much difference. So, the thought that this "complexity" is too much to manage isn't really warranted.
Agreed.
by Doc
Thu Jun 13, 2019 5:20 pm
Forum: Investing - Theory, News & General
Topic: Slice and dice for bonds
Replies: 43
Views: 2562

Re: Slice and dice for bonds

I'm guessing slice and dice is anything that isn't just Total Bond? I think the 3 reasons for doing so are 1) interest rate or inflation risk, 2) tax efficiency, and 3) return I don't look at it that way at all. My bond portfolio is not modeled after Total Bond but after the Bloomberg Barclays US G...
by Doc
Thu Jun 13, 2019 1:57 pm
Forum: Investing - Theory, News & General
Topic: Slice and dice for bonds
Replies: 43
Views: 2562

Re: Slice and dice for bonds

I have looked at slice and dice for bond portfolio. I will show some of my results below. The second is not a good slice and dice comparison example. The Treasury fund has a 3-10 year range. The other two have a 5-10 year range. So you are looking at duration differences not a slice and dice of a g...
by Doc
Wed Jun 12, 2019 9:12 pm
Forum: Investing - Theory, News & General
Topic: Slice and dice for bonds
Replies: 43
Views: 2562

Re: Slice and dice for bonds

Then, why not doing something similar for bond? So slice and dice between one long term and one short term for US, developped ex-US and emerging markets. On one side, maybe 6 bonds funds sounds like too many and maybe something like a world short term and a world long term might be better or at lea...
by Doc
Wed Jun 12, 2019 10:59 am
Forum: Investing - Theory, News & General
Topic: Vanguard statements - spouse gets combined statement while I get separate account statements
Replies: 9
Views: 707

Re: Vanguard statements - spouse gets combined statement while I get separate account statements

I use the download button on the Vanguard family accounts page. It is important to me that all accounts and their funds download, because I use the resulting file in an Excel spreadsheet used to re-balance to our target allocation. We converted to brokerage accounts, and so far, I still have the fa...
by Doc
Tue Jun 11, 2019 3:37 pm
Forum: Investing - Theory, News & General
Topic: The logical fallacy behind "Bonds Are For Safety"
Replies: 248
Views: 15013

Re: The logical fallacy behind "Bonds Are For Safety"

Agreed. In a perfect world, one wouldn’t hold bonds in taxable , but life tends to happen. Interestingly, this also speaks to the premise of the thread: the idea that there is one optimal approach for all is misguided. "(O)ne wouldn't hold bonds in taxable" Huh? According to the Bogleheads Wiki wit...
by Doc
Tue Jun 11, 2019 1:41 pm
Forum: Investing - Theory, News & General
Topic: The logical fallacy behind "Bonds Are For Safety"
Replies: 248
Views: 15013

Re: The logical fallacy behind "Bonds Are For Safety"

One way to include both time frames in one's Investment portfolio is to not use TBM as their only FI asset. Sorry for all you three funders but while easy it ignores the short term concerns. Just break that TBM into it's components and both short and lifetime concerns can be addressed. This is only...
by Doc
Tue Jun 11, 2019 6:53 am
Forum: Investing - Theory, News & General
Topic: The logical fallacy behind "Bonds Are For Safety"
Replies: 248
Views: 15013

Re: The logical fallacy behind "Bonds Are For Safety"

One way to include both time frames in one's Investment portfolio is to not use TBM as their only FI asset. Sorry for all you three funders but while easy it ignores the short term concerns. Just break that TBM into it's components and both short and lifetime concerns can be addressed. If you get la...
by Doc
Mon Jun 10, 2019 4:39 pm
Forum: Investing - Theory, News & General
Topic: The logical fallacy behind "Bonds Are For Safety"
Replies: 248
Views: 15013

Re: The logical fallacy behind "Bonds Are For Safety"

Furthermore, to the extent that there is a relationship between stock prices and bond yields, the covariance matrix of the portfolio captures it. This is precisely the reason that paying attention to the aggregate portfolio, and not just the component pieces, is so critical. The problem that I have...
by Doc
Mon Jun 10, 2019 2:53 pm
Forum: Investing - Theory, News & General
Topic: The logical fallacy behind "Bonds Are For Safety"
Replies: 248
Views: 15013

Re: The logical fallacy behind "Bonds Are For Safety"

Furthermore, to the extent that there is a relationship between stock prices and bond yields, the covariance matrix of the portfolio captures it. This is precisely the reason that paying attention to the aggregate portfolio, and not just the component pieces, is so critical. The problem that I have...
by Doc
Mon Jun 10, 2019 10:57 am
Forum: Investing - Theory, News & General
Topic: The logical fallacy behind "Bonds Are For Safety"
Replies: 248
Views: 15013

Re: The logical fallacy behind "Bonds Are For Safety"

No, I mean a Rolling Ladder of Bonds. I project my nominal cash needs (expenses - Income) on a yearly basis out to 10 years. Then purchase bonds (or bond funds) to match. Bond ladder is maintained yearly as part of rebalancing. What you are describing, if I understand you correctly, is maintaining ...
by Doc
Sat Jun 08, 2019 9:47 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

John Rekenthaler from Morningstar has just addressed some of the points we have been discussing. Maybe he gets some of his ideas by reading the Boglehead forum. :D He also directly answers the OP's question. Sort of. One form of defense is staying short. Three-month Treasuries now pay 2.3%, more tha...
by Doc
Thu Jun 06, 2019 6:13 pm
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

The problem is that we can't directly observe the risk premiums--there are two main ones, not just one, and since they work in opposite directions, we don't know how much of each is embedded in the relative prices/yields of TIPS and nominal Treasuries. Right. The liquidity premium was not well "res...
by Doc
Thu Jun 06, 2019 4:26 pm
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

Calling TIPS cheap or expensive assumes that you can predict inflation better than the market, and that you think you know the values of the nominal Treasury liquidity price premium (yield discount) and nominal Treasury unexpected inflation yield premium (price discount). Although there are various...
by Doc
Thu Jun 06, 2019 12:39 pm
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

Yes, if now you assume no unexpected inflation over the short term, then short-term nominals will protect you against the non-existent unexpected inflation just fine! I don't care if unexpected inflation is 10% if it only occurs 30 days before my note matures. If I need the money in 10 years I just...
by Doc
Thu Jun 06, 2019 11:19 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

I don't think that's the answer. The question is I thought was about unexpected inflation. Yes if short nominals are yielding 1% and inflation is 2% and remains steady the short nominals don't keep up with inflation. But if the inflation unexpectedly increases to 3% when your short Treasuries (on a...
by Doc
Thu Jun 06, 2019 9:41 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

Short term nominal treasuries cannot be counted on to reliably match inflation . Since 2010, an investment in short term treasuries has lost 7% of its purchasing power. I don't think that's the answer. The question is I thought was about unexpected inflation. Yes if short nominals are yielding 1% a...
by Doc
Thu Jun 06, 2019 7:31 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

Northern Flicker wrote:
Thu Jun 06, 2019 1:48 am
Yes, published in 2006 when expected real yields were much higher, and TIPS still incorporated a significant liquidity risk premium in the yields. This is no longer a useful allocation method for TIPS.
Ok, but what else do we have except a whole lot of Boglehead's comments? :D
by Doc
Wed Jun 05, 2019 2:34 pm
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

dbr wrote: ↑Wed Jun 05, 2019 9:00 am Prudence wrote: ↑Wed Jun 05, 2019 7:24 am Doc, suppose I decide to hold short term Treasuries instead of a TIPs ladder for protection against unexpected inflation. Can I get that protection with a short term Treasury mutual fund? Doc can answer that question but...
by Doc
Wed Jun 05, 2019 6:39 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

Did the book provide any analysis that led to these recommendations. At first glance, they appear entirely arbitrary, and of little relevance today and likely at the time the book was written. In retrospect, I'm guessing that if a person had totally disregarded that chart and placed 100% FI into 1%...
by Doc
Tue Jun 04, 2019 11:11 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

In the I believe unusual case of someone who loads up on corporate bonds as a 'safe' asset to the point where any other fixed income instrument is subject to likely sale for rebalancing , then the liquidity premium of any TIPS couldn't be assumed to go into the investor's pocket. But in a more usua...
by Doc
Tue Jun 04, 2019 8:42 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

Just caught a news clip.

This week's FED meeting may address what they are going to do about the low inflation?
by Doc
Tue Jun 04, 2019 8:25 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

I think people are misinterpreting Swedroe. TIPS protect you from unexpected inflation. Inflation estimates in the short term should be reasonably reliable. Therefore short nominals should be equivalent to TIPS except for possibly liquidity issues. As you go out in time inflation estimates become le...
by Doc
Mon Jun 03, 2019 11:47 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

From Swedroe's "Winning Bond Book" Allocation to TIPS vs. short term fixed income Real Yield on TIPS Allocation to TIPS >3% 75 - 100% >2.5% <3% 50 - 75% >2% <2.5% 25 - 50% >1.5% <2% 0 - 25% <1.5% 0% This was published before '08 so maybe "things have changed" but if not, TIPS are expensive.
by Doc
Sun Jun 02, 2019 6:47 pm
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

You said you had to sell *all* bonds to rebalance. I meant to say that I sold all my TIPS to rebalance. The rest of my FI portfolio was in corporates which were down even more than the TIPS. If that's not what I said my bad. Back to the OP's question: Whether or not TIPS are expensive or cheap may ...
by Doc
Sun Jun 02, 2019 4:25 pm
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

Say stocks fall 60% and bonds rise 20%. That's not what happens usually. At least if you are speaking of bonds in general. Nominal Treasuries especially long term, tend to be negatively correlated with equities in times of stock market stress. On the other hand I do not think that corporate bonds b...
by Doc
Sun Jun 02, 2019 11:48 am
Forum: Investing - Theory, News & General
Topic: Your favorite international stock mutual fund
Replies: 16
Views: 1449

Re: Your favorite international stock mutual fund

I use DFA World ex U.S. Targeted Value (DWUSX). This is a broad-based all-world ex-U.S. fund with smaller cap and value exposures. I find that compared the broad large cap indexes, small cap U.S. funds have lower correlations with small cap non-U.S. funds. In ETF's I like the combination of the SPD...
by Doc
Sun Jun 02, 2019 7:31 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

TIPS then became indeed ridiculously cheap for investors who could just hold them to maturity But I couldn't hold them to maturity because I had to sell ALL of them to rebalance. Catch 22. Sure if you were willing to sell all bonds to buy equities it ended up working the best. But if you wanted to ...
by Doc
Sat Jun 01, 2019 6:00 pm
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are TIPS expensive? or are they cheap?

JackoC wrote:
Sat Jun 01, 2019 5:46 pm
TIPS then became indeed ridiculously cheap for investors who could just hold them to maturity
But I couldn't hold them to maturity because I had to sell ALL of them to rebalance. Catch 22.
by Doc
Sat Jun 01, 2019 10:02 am
Forum: Investing - Theory, News & General
Topic: are TIPS expensive? or are they cheap?
Replies: 82
Views: 6239

Re: are tips expensive? or are they cheap?

I don't worry about unexpected inflation in the short run. Even if it soars in the next five years I'm not going to lose that much over five years. Unexpected inflation in the long run could be a problem. Even an extra 2 or three percent over 20 years is something I might care about. But accepting 0...
by Doc
Fri May 31, 2019 7:37 am
Forum: Investing - Theory, News & General
Topic: Does one need a bank account anymore?
Replies: 60
Views: 4261

Re: Does one need a bank account anymore?

Yes. Some of us need to have actual cash in the form of $5s and $10s etc. The bank branch at the supermarket 3 blocks away is very convenient for that purpose. The local Schwab and Fidelity branches are 20 minutes away by car and I doubt if they have much actual cash on hand if any. Would I need to ...
by Doc
Tue May 28, 2019 10:44 am
Forum: Investing - Theory, News & General
Topic: Is Cash Trash? The Purpose of Cash
Replies: 212
Views: 25842

Re: Is Cash Trash? The Purpose of Cash

I think that when you are in retirement, you are by nature "rebalancing in one direction only"... you sell investments to spend money and live. I'm done "buying when the market is low" except for automatically reinvested dividends. I don't think it's "by nature". It depends a lot on the size of you...
by Doc
Mon May 27, 2019 2:42 pm
Forum: Investing - Theory, News & General
Topic: Is Cash Trash? The Purpose of Cash
Replies: 212
Views: 25842

Re: Is Cash Trash? The Purpose of Cash

In terms of your 85/15 allocation, the problem I see is that a mere 15% doesn’t give you much room to rebalance if there’s a severe downturn. It gives you all you need. Start with E=85 & B=15 (Total 100) Equity tanks by 47% (double ugh) Now have E=85*(1-.47)= 45 & B=15 (Total = 60) Want 85% E or .8...
by Doc
Mon May 27, 2019 9:51 am
Forum: Investing - Theory, News & General
Topic: Do you have an allocation more conservative than 50/50 ?? What is it? Why? How Bogleheads are getting it done.
Replies: 135
Views: 11876

Re: Do you have an allocation more conservative than 50/50 ?? Why?

stan1 wrote:
Sun May 26, 2019 5:11 pm
Reasons:
- Won the game (no need to take more risk)
- Live off pensions (again no need to take risk)
- Realized heirs will get millions (yet again no need to take risk)
All reasons to take on more risk because you can not because you have need. :D
by Doc
Sun May 26, 2019 5:33 pm
Forum: Investing - Theory, News & General
Topic: Is Cash Trash? The Purpose of Cash
Replies: 212
Views: 25842

Re: Is Cash Trash? The Purpose of Cash

Why not I bonds? 1) I bonds protect you from unexpected inflation. Cash is by definition a short term asset. It is not plausible that unexpected inflation will occur in the short term. 2) I bonds "tanked" in '08. Cash did not. I-bonds may have a place in your portfolio. But a substitute for cash is...
by Doc
Sun May 26, 2019 10:36 am
Forum: Investing - Theory, News & General
Topic: Is Cash Trash? The Purpose of Cash
Replies: 212
Views: 25842

Re: Is Cash Trash? The Purpose of Cash

I was quoting post from Mr. Ferri from 3/2018 as I looked through posts on what people do with cash. I'm still comfortable with keeping reserves I'll need in a couple of years (cars, future vacations) in a short-term bond fund instead of a bank account or MMF. Date 1 Mo 2 Mo 3 Mo 6 Mo 1 Yr 2 Yr 3 Y...
by Doc
Sun May 26, 2019 9:48 am
Forum: Investing - Theory, News & General
Topic: Is Cash Trash? The Purpose of Cash
Replies: 212
Views: 25842

Re: Is Cash Trash? The Purpose of Cash

I was quoting post from Mr. Ferri from 3/2018 as I looked through posts on what people do with cash. I'm still comfortable with keeping reserves I'll need in a couple of years (cars, future vacations) in a short-term bond fund instead of a bank account or MMF. Date 1 Mo 2 Mo 3 Mo 6 Mo 1 Yr 2 Yr 3 Y...
by Doc
Sun May 26, 2019 7:40 am
Forum: Investing - Theory, News & General
Topic: Is Cash Trash? The Purpose of Cash
Replies: 212
Views: 25842

Re: Is Cash Trash? The Purpose of Cash

bck63 wrote:
Sun May 26, 2019 7:35 am
Rick Ferri wrote:
Sun Mar 04, 2018 1:24 pm
The yield curve it typically steep on the short end.
I hate cash.
Today's yield curve is not typical.
by Doc
Thu May 23, 2019 12:12 pm
Forum: Investing - Theory, News & General
Topic: When to trade total international ETFs?
Replies: 8
Views: 609

Re: When to trade total international ETFs?

You can check a ticker of TICKER.IV for the indicative value of an ETF, but the premium or discount isn't meaningful when the foreign markets are closed. A Europe-only ETF might be able to avoid this in the morning in the US, but a broad-based international fund will have a lot of holdings in Japan...
by Doc
Wed May 22, 2019 7:19 pm
Forum: Investing - Theory, News & General
Topic: When to trade total international ETFs?
Replies: 8
Views: 609

Re: When to trade total international ETFs?

When trading foreign ETFs (not funds) I try to trade in the hour or so when both European and NY exchanges are both open. (Maybe 10 to 11 eastern. Don't recall exact time.) When I was looking at price charts there is a discontinuency in the chart after Europe exchanges close. May not matter on high ...
by Doc
Sat May 18, 2019 7:31 am
Forum: Investing - Theory, News & General
Topic: Bond funds without mortgage backed part?
Replies: 26
Views: 1332

Re: Bond funds without mortgage backed part?

The problem with negative convexity is that it is asymmetrical. In the example above, if rates rose by 1% instead, the conventional bond would lose 4.8%, while the mortgage-backed bond would lose 6%. In addition the MBS duration also increases because people don't move. Maybe this is just the reaso...
by Doc
Sat May 18, 2019 7:22 am
Forum: Investing - Theory, News & General
Topic: Vanguard is Discontinuing their VanguardAdvantage Accounts
Replies: 623
Views: 52627

Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

it’s a long convoluted story because our Joint MM Account is a brokerage account and our IRAs are individual mutual fund accounts) It's not just the brokerage vs. mutual fund account. Transfers between accounts with different ownership forms like joint, single, taxable, ROTH is subject to weird res...
by Doc
Fri May 17, 2019 4:33 pm
Forum: Investing - Theory, News & General
Topic: Bond funds without mortgage backed part?
Replies: 26
Views: 1332

Re: Bond funds without mortgage backed part?

The very short answer is that move in the opposite direction than normal bonds. When interest rates fall then bonds rise. Unless they have negative convexity, then they fall. And when rates fall, bonds rise except those which have negative convexity which fall. Without nitpicking, "Generally, when ...
by Doc
Fri May 17, 2019 3:56 pm
Forum: Investing - Theory, News & General
Topic: Bond funds without mortgage backed part?
Replies: 26
Views: 1332

Re: Bond funds without mortgage backed part?

So this "negative convexity" thing...is it any worse than the higher default rate of corporate bonds or the lower yield of a treasury due to state tax deductions? It's different. With MBS the borrower has the option to extend or shorten the term whenever it suits his needs. While some corporate bon...
by Doc
Fri May 17, 2019 3:18 pm
Forum: Investing - Theory, News & General
Topic: Bond funds without mortgage backed part?
Replies: 26
Views: 1332

Re: Bond funds without mortgage backed part?

The "problem" with MBS is their negative convexity. First, when you are looking at the statement of holdings, realize that there is a difference between Fannie Mae and Freddie Mac debt and MBS that have been issued by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac debt works like any other ...
by Doc
Fri May 17, 2019 7:44 am
Forum: Investing - Theory, News & General
Topic: Bonds beyond Total Bond Market - Anyone ?
Replies: 47
Views: 3477

Re: Bonds beyond Total Bond Market - Anyone ?

midareff wrote:
Fri May 17, 2019 7:04 am
71 and 8 years retired with a pension and SS that pay the monthly bills.
This is just one of many reasons that a single TBM bond position is why one size does not fit all. Others include high equity positions, tax sheltered space and aversion to mortgage backed securities.
by Doc
Fri May 17, 2019 7:32 am
Forum: Investing - Theory, News & General
Topic: Bond funds without mortgage backed part?
Replies: 26
Views: 1332

Re: Bond funds without mortgage backed part?

I'm looking to reduce the exposure to mortgage backed bonds which I owe via BND. Any diversified funds but without mortgage backed part? :confused Why don’t you like mortgage backed bonds? The "problem" with MBS is their negative convexity. If interest rates rise borrowers tend to hold on to their ...
by Doc
Mon May 13, 2019 8:24 am
Forum: Investing - Theory, News & General
Topic: Bonds for growth Vs Bonds for rebalancing
Replies: 7
Views: 572

Re: Bonds for growth Vs Bonds for rebalancing

Is this question about rebalancing or is it about optimizing portfolio efficiency, meaning specifically reducing volatility at same return or increasing return at same volatility (or both). It should be right that a portfolio fairly heavy in stock would best be paired with long bonds, but that is a...
by Doc
Sat May 11, 2019 6:21 pm
Forum: Investing - Theory, News & General
Topic: Vanguard is Discontinuing their VanguardAdvantage Accounts
Replies: 623
Views: 52627

Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Part of verifying a new bank connection is sending paper mail to your address of record notifying you that a new bank has been added to your account, and giving you time to dispute the new connection before it's used. This is a fraud protection measure to prevent someone masquerading as you from qu...