Search found 9201 matches

by Doc
Fri Oct 18, 2019 3:48 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

I have read that since no one knows tomorrow, it is a good idea to assume that tomorrow's rate would be similar to today's rate. Article seems to emphasis that today's rate on short term securities is not going to last for long. I think the idea was "The best predictor of the future yield curve is ...
by Doc
Thu Oct 17, 2019 4:26 pm
Forum: Investing - Theory, News & General
Topic: Bond Investor's Dilemma
Replies: 12
Views: 1345

Re: Bond Investor's Dilemma

Maybe Kathy Jones should get together from that guy from Schwab: Barbells and Bond Ladders: How to Invest When the Yield Curve is Flat By Collin Martin Of gee whiz, both of them are from Schwab. Martin link: https://www.schwab.com/resource-center/insights/content/barbells-and-bond-ladders-how-to-inv...
by Doc
Tue Oct 15, 2019 10:28 am
Forum: Investing - Theory, News & General
Topic: Equity Style Boxes (Morningstar)
Replies: 26
Views: 1104

Re: Equity Style Boxes (Morningstar)

I'm not totally clear on what you're looking for, but you can access the premium version of the Morningstar x-ray through TDAmeritrade and/or T. Rowe Price. Here's the link to the TDAmeritrade Morningstar x-ray tool: https://www.tdameritrade.com/education/tools-and-calculators/morningstar-instant-x...
by Doc
Tue Oct 15, 2019 8:39 am
Forum: Investing - Theory, News & General
Topic: Equity Style Boxes (Morningstar)
Replies: 26
Views: 1104

Re: Equity Style Boxes (Morningstar)

I'm not totally clear on what you're looking for, but you can access the premium version of the Morningstar x-ray through TDAmeritrade and/or T. Rowe Price. Here's the link to the TDAmeritrade Morningstar x-ray tool: https://www.tdameritrade.com/education/tools-and-calculators/morningstar-instant-x...
by Doc
Mon Oct 14, 2019 3:27 pm
Forum: Investing - Theory, News & General
Topic: Equity Style Boxes (Morningstar)
Replies: 26
Views: 1104

Re: Equity Style Boxes (Morningstar)

Is this the type of stuff you're looking for?

Image
by Doc
Mon Oct 14, 2019 3:26 pm
Forum: Investing - Theory, News & General
Topic: Equity Style Boxes (Morningstar)
Replies: 26
Views: 1104

Re: Equity Style Boxes (Morningstar)

Is this the type of stuff you're looking for?

Image
by Doc
Sun Oct 13, 2019 9:36 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

With a 1 year return of 10% based on Vanguard intermediate treasury, if stocks were to fall now, perhaps you've already gotten your rise in bond prices in advance? Yeh! The price increase over the past year is 7.4%. Just slightly more than the S&P 500. http://quotes.morningstar.com/chart/fund/chart...
by Doc
Sat Oct 12, 2019 7:11 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Obviously bond yields do not always drop during market corrections, but often they do. Going back to the Schwab paper referenced in the OP. Of the last 6 periods when stocks have fallen sharply intermediate T's have out performed T-Bills 3 times, T-Bills have outperformed 2 times and the other was ...
by Doc
Sat Oct 12, 2019 4:12 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Long-term Treasuries are the best diversification strategy, and the shape of the yield curve doesn’t change the decision. 1) Show us some data where the curve was inverted and long term Treasuries were a better diversifier. The spike in the 10-2 spread concurrently with the stock market crash in '9...
by Doc
Sat Oct 12, 2019 2:57 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Yes, we have this data and this is what I keep repeating it: Long-term Treasuries are the best diversifier among bond types REGARDLESS of the shape of the yield curve Please show me some data. I would like to belive you. The 1998 data does not seem to support that. In 1998 the stock market tanked a...
by Doc
Sat Oct 12, 2019 2:32 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

You want bond duration to match investment horizon, regardless of yield curve OR how much of the portfolio is allocated to bonds. I understand that but I don't have an investment horizon. (Unless you add 90 years to the age of my youngest grandchild. :D ) I'm trying to have some of my FI portfolio ...
by Doc
Sat Oct 12, 2019 11:28 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

On a side note, If you were looking to make a series of withdrawals every year over the next 20 years, the bond portfolios duration isn't 20 years, the duration would be more like 10 years. A portfolio with a ladder of bonds maturing in (1,2,3, ..., 20) years would have a duration of about 10 years...
by Doc
Sat Oct 12, 2019 9:55 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

This idea of matching duration to one's investment horizon needs better definition. I'm going to die in 20 years so my entire FI allocation should be in a single 20 year zero coupon bond? Obviously not. I would be able to do this because I am not going to spend the money from my bonds but rather spe...
by Doc
Thu Oct 10, 2019 7:17 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

vineviz & 305pelusa, thanks.
by Doc
Wed Oct 09, 2019 4:44 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Many people think that "(b)y going longer you take on more risk" but this isn't true. No, my comment was not limited exclusively to a bond/equity portfolio. It would be true even for a 0% equity portfolio. I don't understand. If going long does not mean you are taking on more risk but you get highe...
by Doc
Wed Oct 09, 2019 6:50 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Anyway, my post answered your question: long-term Treasuries will do the same thing they typically do. If you want to diversify an equity portfolios, long-term Treasuries are the best way to do that no matter what the yield curve looks like. We agree on that. But your original response was Many peo...
by Doc
Tue Oct 08, 2019 5:16 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

And going back to the 1950s, if you isolate months in which the yield curve was relatively flat AND US stocks dropped by more than 3% you see the average return of long-term Treasuries during those same months was positive 0.9% which is precisely what you'd expect and the same as when the yield cur...
by Doc
Tue Oct 08, 2019 3:22 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Every few weeks/months, instead of renewing 4 week bill, I exchange some with 5 year notes. By doing this, I can maintain average maturity to 3 years. This is going to take few years before I hold only notes. You can do the whole thing tomorrow morning after 10:00 Eastern. Just sell the T-Bills and...
by Doc
Tue Oct 08, 2019 3:17 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Term (or duration) exposure is, indeed, an excellent diversifier for the risks associated with equity investing. Agreed, at least in normal times. This thread started out with a discussion about flat yield curves. The interaction of Treasuries with equities is a side issue but it was raised in the ...
by Doc
Tue Oct 08, 2019 2:31 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

vineviz wrote:
Tue Oct 08, 2019 2:09 pm
Many people think that "(b)y going longer you take on more risk" but this isn't true.
If going longer is not taking on more risk than why do long term Treasuries generally have higher yields than T-Bills?

TANSTAAFL
by Doc
Tue Oct 08, 2019 2:27 pm
Forum: Investing - Theory, News & General
Topic: Statistics question
Replies: 33
Views: 2605

Re: Statistics question

I was on the other side of the river at Northeastern where I did well in stats but that was 30 yrs ago. You could have done worse. You could have been at the other end of Mass Ave. :twisted: Ha! NU IS at the wrong end of mass ave! You're OK. I didn't think that NU was even in the same city let alon...
by Doc
Tue Oct 08, 2019 1:28 pm
Forum: Investing - Theory, News & General
Topic: Statistics question
Replies: 33
Views: 2605

Re: Statistics question

Kelly wrote:
Tue Oct 08, 2019 1:18 pm
I was on the other side of the river at Northeastern where I did well in stats but that was 30 yrs ago.
You could have done worse. You could have been at the other end of Mass Ave. :twisted:
by Doc
Tue Oct 08, 2019 1:23 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

So there are two advantages of selling it earlier: 1. LTCG over ordinary income. 2. You get money earlier and re-invest it. Right but it is not a freebie. By going longer you take on more risk. In the past a rule of thumb number like 15 to 20 basis points a year was needed for extending duration. T...
by Doc
Tue Oct 08, 2019 10:53 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

When you sold 7 years at sell points, yield curve was inverted. Lets say, sell point was at 1 year remaining maturity. What is the downside of not letting it mature and then buy 6 months bill? Was LTCG more than what you could have earned from last one year of interest? It's not one year. The sell ...
by Doc
Tue Oct 08, 2019 8:16 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

What is your view on the economy? The bond market reflects the weighted average view of all participants, but it seems you are thinking that we are in fact not heading into a recession and that the Fed will be able to maintain 2% inflation. If those are your thoughts, then shortening up your maturi...
by Doc
Mon Oct 07, 2019 3:33 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Does that mean if stocks don't fall sharply and yield stay where they are, bills should outperform intermediate bonds? No. The intermediate Treasury out performing T-Bills in stock market corrections/crashes is the result of "flight to quality" events. Many people bail out of stocks in such a situa...
by Doc
Mon Oct 07, 2019 12:27 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

But if I were establishing a 1-10 year ladder today, the range of rates I would get is just 1.34-1.58% based on the treasury yield curve site. I assume the author would say something like "you will likely get a wider variety rates when you reinvest as the ladder rungs mature, since the yield curve ...
by Doc
Mon Oct 07, 2019 10:36 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Is there really much difference if I own an equal amount of each of, say, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 year bonds vs. skipping the 4, 5, 6 year ones? Schwab's rational for that type of ladder FWIW: 1. Reducing risk. By staggering maturity dates, investors avoid getting locked into a single interes...
by Doc
Mon Oct 07, 2019 8:33 am
Forum: Investing - Theory, News & General
Topic: Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges
Replies: 106
Views: 9476

Re: Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges

The larger stock brokers can make up the zero fee because they get paid for market flow apparently. That means that they route orders first to market makers not an exchange. The market makers pay for the privilege. Low volume ETFs just go along for the ride.
by Doc
Sun Oct 06, 2019 11:59 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

ofckrupke wrote:
Sun Oct 06, 2019 11:06 am
Mountain Doc wrote:
Sun Oct 06, 2019 8:41 am
Converting income to LTCG could have some value, though.
yahbut I pay 28.1% on LTCG vs. 27.8% on treasury interest...
Think about moving to another state. :D
by Doc
Sun Oct 06, 2019 9:11 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

So do you think the treasury market is mispricing the time value of money between a 7-year bond with 3 years to go, and a new 3-year bond? I would be highly skeptical that the treasury market is pricing that inefficiently. No not inefficiency. The point of the "Roll Down Return" ladder is just to g...
by Doc
Sun Oct 06, 2019 8:34 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

Yes, after four years your 7-year bonds become kind of like 3-year bonds. But your bond is not like other 3-year bonds on the market, because it has the higher 7-year bond coupon payments. Isn't the price appreciation just compensation for giving up those remaining coupons, which are larger than yo...
by Doc
Sun Oct 06, 2019 7:23 am
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Re: Bond Investing when Yield Curve is Flat

You still don’t get to diversify the portfolio turnover days and reinvestment interest rate across many days of the year without taking on a major management headache of frequent ladder maturities. A rolling return ladder over the "fat" part of the yield curve only needs 4 or 5 rungs to be effectiv...
by Doc
Sat Oct 05, 2019 2:31 pm
Forum: Investing - Theory, News & General
Topic: Bond Investing when Yield Curve is Flat
Replies: 91
Views: 7662

Bond Investing when Yield Curve is Flat

While doing some research on Treasury yield calculations I came upon this recent article from schwab. Barbells and Bond Ladders: How to Invest When the Yield Curve is Flat https://www.schwab.com/resource-center/insights/content/barbells-and-bond-ladders-how-to-invest-when-yield-curve-is-flat "Key Po...
by Doc
Tue Oct 01, 2019 3:14 pm
Forum: Investing - Theory, News & General
Topic: Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges
Replies: 106
Views: 9476

Re: Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges

I don't think their financial consultants are fiduciaries, so I wouldn't trust them to be looking out for me. Any good reasons to visit these Schwab offices? My "consultant" has these credentials: Series 7, 9, 10, 66 Securities Licenses Life & Variable Annuity Insurance License I don't know what th...
by Doc
Tue Oct 01, 2019 2:53 pm
Forum: Investing - Theory, News & General
Topic: When Value Is More Valuable
Replies: 74
Views: 4478

Re: When Value Is More Valuable

rkhusky wrote:
Tue Oct 01, 2019 2:49 pm
Which beats which - sin(x) or cos(x)?
cos(x) of course. A B C D ... R S T ... :D
by Doc
Tue Oct 01, 2019 2:48 pm
Forum: Investing - Theory, News & General
Topic: Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges
Replies: 106
Views: 9476

Re: Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges

If other brokers don't match. Schwab would keep getting new money $ in. They make money from their sweep accounts fees (ER of Money Market Funds), by offering their inventory for secondary treasury trading, other commissions on fix income options, bid and spread difference in trading. Schwab's Swee...
by Doc
Tue Oct 01, 2019 10:23 am
Forum: Investing - Theory, News & General
Topic: Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges
Replies: 106
Views: 9476

Re: Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges

This eliminates one of my three Schwab pet peeves, namely having to use 3 international Schwab ETF's to approximate an all-country (ex-US) all cap fund like VXUS to avoid paying commissions. On the other side of the coin it eliminates one of my pet peeves with Vanguard by not making me buy EM. :beer
by Doc
Tue Oct 01, 2019 10:15 am
Forum: Investing - Theory, News & General
Topic: When Value Is More Valuable
Replies: 74
Views: 4478

Re: When Value Is More Valuable

If we look at last 10 years of SCV vs TSM, TSM performed better around 5-10%. Building on that idea but using large cap blend instead of TSM to reduce the overlap: One year rolling return chart. Green Small Cap Value, Orange Large Cap Blend, (Blue MM) https://i.postimg.cc/bNQsb5yv/SCV.jpg Sometimes...
by Doc
Wed Sep 25, 2019 10:04 am
Forum: Investing - Theory, News & General
Topic: Actively-managed bond funds
Replies: 21
Views: 1761

Re: Actively-managed bond funds

Some well respected fund companies are especially good about beating bond markets (Nuveen for munis, PIMCO, etc.). Three year rolling return chart: https://i.postimg.cc/RCsmHDhZ/PTTRX-vs-TBM.jpg http://quotes.morningstar.com/chart/fund/chart?t=VMFXX®ion=usa&culture=en-US&dataParams=%7B%22zoomKey...
by Doc
Tue Sep 17, 2019 12:22 pm
Forum: Investing - Theory, News & General
Topic: Should I buy separate corporate and treasure bond instead of total bond?
Replies: 6
Views: 911

Re: Should I buy separate corporate and treasure bond instead of total bond?

My bogey is a 1-10 investment grade (Treasury/Corporate no MBS) instead of TBM. That said I basically brake it into 4 pieces: Short Treasuries Intermediate Treasury ~ short Corporate Intermediate Corporate The top of the list goes into Taxable and the bottom into tax advantaged. In a high state tax ...
by Doc
Mon Sep 16, 2019 4:45 pm
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19107

Re: First 20% of bonds in long-term Treasuries

Well there was a disappearance of the Liquidity premium because the market got a fat whale of a market maker in the Federal Reserve. No argument. But we do not know if that fat whale will continue forever. A quick look has $140 billion in Inflation Indexed securities on its balance sheet in July 20...
by Doc
Mon Sep 16, 2019 3:29 pm
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19107

Re: First 20% of bonds in long-term Treasuries

It's far more likely there were not actually any "liquidity issues" to begin with. The Federal Reserve Bank of San Francisco apparently doesn't agree with you. November 21, 2016 https://www.frbsf.org/economic-research/publications/economic-letter/2016/november/tips-liquidity-and-the-outlook-for-inf...
by Doc
Mon Sep 16, 2019 12:15 pm
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19107

Re: First 20% of bonds in long-term Treasuries

My point was simply that back in 2007, what morphed then was your IPS. A TIPS laddered LMP is not meant to be used for rebalancing when needed, it's meant to be like an insurance product which is cashed in at maturity. But you chose to abandon your LMP insurance and treat the ladder as part of your...
by Doc
Mon Sep 16, 2019 10:36 am
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19107

Re: First 20% of bonds in long-term Treasuries

I understand that. My question is whether we should expect similar movements in the future (i.e. in times of substantial uncertainty, significant drops in stocks accompany drops in TIPS' market value). We don't know. That's a question each of us has to decide for themselves. If you are not going to...
by Doc
Mon Sep 16, 2019 10:16 am
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19107

Re: First 20% of bonds in long-term Treasuries

TIPS being down compared to nominals at the end of 2008 seems to me to be indicative of the market anticipating deflation on the horizon, where nominals would be more valuable than TIPS It isn't the end that is the issue. It was in September/October when the stock market crashed. My IPS tells me to...
by Doc
Mon Sep 16, 2019 9:42 am
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19107

Re: First 20% of bonds in long-term Treasuries

Actual question, did he say that the stocks he rebalanced into did not then recover by 2013 or so? No, I do not believe that he ever said that. Not only did they recover but I had some 40% more shares because I rebalanced. Since my T's were in TIPS that rebalancing cost me mo than if they were nomi...
by Doc
Sun Sep 15, 2019 3:39 pm
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19107

Re: First 20% of bonds in long-term Treasuries

Because, as Angst pointed out, he apparently used those funds to rebalance into stocks, but such a move seems antithetical to a TIPS laddering approach. Exactly. Vineviz started this thread using long nominal Treasuries as a balance to the equity portfolio. Now some people have morphed that long no...
by Doc
Sun Sep 15, 2019 2:02 pm
Forum: Investing - Theory, News & General
Topic: First 20% of bonds in long-term Treasuries
Replies: 290
Views: 19107

Re: First 20% of bonds in long-term Treasuries

People believe lots of things that aren't actually true, and I suspect this "liquidity risk issue" is one of them. But whatever anyone thinks would explain the price volatility of long-term TIPS in 2008, the've got a very easy solution for guarding against it: match the duration of their bonds to t...
by Doc
Sun Sep 15, 2019 1:48 pm
Forum: Investing - Theory, News & General
Topic: Are TIPS really a good inflation hedge? Pros and Cons
Replies: 145
Views: 8798

Re: Are TIPS really a good inflation hedge? Pros and Cons

Ben Mathew wrote:
Sun Sep 15, 2019 1:33 pm
Many investors might be in a position where unexpected inflation will help, not hurt, the portfolio.
Food for thought. Thanks.