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by Clearly_Irrational
Sat Apr 16, 2016 10:41 am
Forum: Investing - Theory, News & General
Topic: Warning Signs [Economic health indicators]
Replies: 283
Views: 58077

Re: Warning Signs [Economic health indicators]

Dividend cuts are red but everything else looks the same.

Dividend Cuts in the last six months:
OCT 2015: 22
NOV 2015: 35
DEC 2015: 40
JAN 2016: 55
FEB 2016: 64
MAR 2016: 70

Anything over 20 is usually unhealthy with over 30 being a very bad sign. For comparison the worst part of the housing crisis peaked out at 81 dividend cuts in Mar 2009 one month after the market bottom. Still, the lack of confirmation from the other signals means there is no action to take at the moment. A possible interpretation is that it's a continuation of the energy market bloodbath plus wage pressure from a strengthening labor market, but since it's so easy to create stories that explain the data I don't put much weight on that.
by Clearly_Irrational
Sat Apr 16, 2016 10:15 am
Forum: Investing - Theory, News & General
Topic: Warning Signs [Economic health indicators]
Replies: 283
Views: 58077

Re: Warning Signs [Economic health indicators]

fortyofforty wrote:The host was predicting not just an economic downturn but a catastrophic, worldwide economic collapse the likes of which we haven't seen since the Great Depression.
There are certainly some weird things going on with the economy but I don't claim to have enough knowledge to back a prediction of that magnitude. I work pretty hard just to be able to tell when things have started declining and aren't done going down yet. There are a few knowledgeable people I listen to and none of them are saying the sky is falling so I'm not too stressed about that at the moment.
by Clearly_Irrational
Wed Mar 23, 2016 11:27 am
Forum: Investing - Theory, News & General
Topic: ‘Rich Dad’ author says the 2016 market collapse is coming
Replies: 53
Views: 12645

Re: ‘Rich Dad’ author says the 2016 market collapse is coming

There are some signs that we're late cycle and that the bull market foundations are starting to erode but my crash indicator is still within normal bounds. If something is going to happen it would be later in the year. At the moment I'm twiddling my fingers and continuing to buy & hold.
by Clearly_Irrational
Sat Feb 27, 2016 1:20 pm
Forum: Personal Consumer Issues
Topic: Don't understand nutrition and exercise
Replies: 340
Views: 44760

Re: Don't understand nutrition and exercise

just frank wrote:Don't want to stir the pot, but...

Scientific studies have not shown that changing diet and adding exercise leads to more sustained weight loss than just changing diet.

Exercise to be fit. But just exercising without looking at your diet is very unlikely to lead to weight loss.
Exercise without diet is likely to be ineffective as you aren't controlling your calories or macro intake which is key to making progress.

Diet without hypertrophy inducing exercise is likely to be ineffective as a high proportion of the weight lost will be from lean body mass.
by Clearly_Irrational
Fri Feb 26, 2016 11:14 am
Forum: Personal Consumer Issues
Topic: Don't understand nutrition and exercise
Replies: 340
Views: 44760

Re: Don't understand nutrition and exercise

you a misc brah? Gah, no. Stay out of the misc if you value your sanity, it's a cesspool. (Though amusing to read now and then) But going along these lines, most of the sub forums are pretty bad with little to no substance. If you enter the supplements section and ask for advice you will just get a bunch of reps pushing their products. The supplements section is worthless because supplements are mostly worthless. I get my supplement recommendations off of pubmed, which shows very little evidence for any of them being useful. (With a few minor exceptions like creatine) But like above the nutrition and workout subsections are pretty good. I have posted videos asking for form advice on lifts and about diet advice. There are tons of knowledgea...
by Clearly_Irrational
Wed Feb 24, 2016 9:58 am
Forum: Personal Consumer Issues
Topic: Don't understand nutrition and exercise
Replies: 340
Views: 44760

Re: Don't understand nutrition and exercise

fakin' the funk wrote:The most important thing is not the total time, intensity, or type, but whether or not you enjoy it.
I understand what you're saying but that doesn't match his objectives of "build muscle and lose the fat". For example, the typical old school plan of restrict calories + jogging would be a terrible plan for that goal despite the fact that some people might enjoy it.
by Clearly_Irrational
Tue Feb 23, 2016 12:49 pm
Forum: Personal Consumer Issues
Topic: Don't understand nutrition and exercise
Replies: 340
Views: 44760

Re: Don't understand nutrition and exercise

dm200 wrote:"Body Building"?? I don't think so (based on the credible thing I read)
There is a big difference between the drug fueled Mr. Olympia contests and the average forum poster just trying to get in shape. Although the main site http://www.bodybuilding.com doesn't have much value, the forum site actually has a wealth of extremely useful information & posters, especially the nutrition and workout program sub-forums. Not just anywhere can you see a thread discussing the latest pubmed fitness research and discussing the applicability and quality of methodology.
by Clearly_Irrational
Tue Feb 23, 2016 10:21 am
Forum: Personal Finance (Not Investing)
Topic: Why is Dave Ramsey wrong?
Replies: 180
Views: 52279

Re: Why is Dave Ramsey wrong?

jimb_fromATL wrote:telling people what they want to hear -- that they are victims of the evil banks, credit card companies and other lenders who forced them to borrow more money than they could pay back, to buy stuff they could not afford; and it is NO fault of their own.
I haven't listened to Dave in years, but that's not the spiel I remember. He was heavy into personal responsibility and digging out of the problems you brought on yourself. As an anti-debt guy I think he's got a good message, it's just the rest that's a bit questionable.
by Clearly_Irrational
Tue Feb 23, 2016 10:16 am
Forum: Personal Finance (Not Investing)
Topic: Why is Dave Ramsey wrong?
Replies: 180
Views: 52279

Re: Why is Dave Ramsey wrong?

CT-Scott wrote:Getting off-tangent here, but knowing that people like Ramsey and Donald Trump, who are touted as amazingly successful businessmen, but who's initial big wealth came about via real estate, gets me wondering often if I'm missing out by not exploring real estate as a way to grow my wealth.
Years ago when I was first getting into investing I did a bunch of reading about people who had made it big and how they got there. It seemed like nearly every story started with something like "I do X now, but I made all of my initial money in real estate".
by Clearly_Irrational
Mon Feb 22, 2016 2:15 pm
Forum: Personal Consumer Issues
Topic: Don't understand nutrition and exercise
Replies: 340
Views: 44760

Re: Don't understand nutrition and exercise

You're in the wrong place, check out forum.bodybuilding.com instead, but here's the cliffs notes version:

You MUST:

1) Control calories
2) Eat sufficient protein (0.82g/lb+) and fat (0.4g/lb+)
3) Lift weights

Other things may help but are optional.
by Clearly_Irrational
Mon Feb 22, 2016 2:11 pm
Forum: Investing - Theory, News & General
Topic: At what rate would you borrow to invest?
Replies: 81
Views: 10418

Re: At what rate would you borrow to invest?

For bonds if I could borrow cheap enough to buy 2yr TIPS and make a profit. For stocks, they'd have to pay me. For real estate at market rates as long as I can find properties that pencil out correctly and leave me enough income/emergency funds in case something goes wrong.
by Clearly_Irrational
Tue Jan 26, 2016 1:44 pm
Forum: Investing - Theory, News & General
Topic: Time property cycles, so why not market cycles?
Replies: 31
Views: 3841

Re: Time property cycles, so why not market cycles?

I've done a significant amount of work to determine a good timing strategy. As best I can tell after all that effort is that normal cycles can't be reliably timed in a way that improves returns net of taxes & fees over a simple buy & hold strategy. All of the indicators you need are too laggy and result in your being too late to get in/out. It does appear that there may be an exception for Fed created bubbles (which extend the timeline, mitigating the lag issue) if you can properly identify them. My own efforts now focus on that area.
by Clearly_Irrational
Thu Jan 21, 2016 10:17 am
Forum: Investing - Theory, News & General
Topic: Warning Signs [Economic health indicators]
Replies: 283
Views: 58077

Re: Warning Signs [Economic health indicators]

The indicators I'm using for crash detection aren't necessarily the best ones for predicting stock market moves that don't involve crashes. For general use, I usually look at this model:

http://politicalcalculations.blogspot.c ... qEEa_FnT68

Image
by Clearly_Irrational
Wed Jan 20, 2016 4:47 pm
Forum: Personal Investments
Topic: What is your action plan?
Replies: 43
Views: 4858

Re: What is your action plan?

matjen wrote:I was wondering where you have been during this bit of market turmoil Clearly_Irrational. Thanks for the update on your indicators.
I still believe most bear markets aren't actionable, so far the current turmoil seems to be in that category.
by Clearly_Irrational
Wed Jan 20, 2016 3:33 pm
Forum: Personal Investments
Topic: What is your action plan?
Replies: 43
Views: 4858

Re: What is your action plan?

My IPS contains a narrow provision for times when the active trading prohibition is lifted, but the current conditions don't match the requirements. At the moment I'm twiddling my fingers as usual. For anyone who cares, key indicators I'm watching:

FED CHANGES - Green
USSLIND - Green
FRED RECESSION - Green
CFNAI-MA3 - Green
SHILLER PE10 - Yellow
YIELD INVERSION - Green
DIVIDEND CUTS - Red

My offhand analysis of current market action is that everyone is just coming to their senses and realizing fundamentals might matter now that the Fed is taking away the endless free punch. Absent other events, this actually probably a good thing as it could bring valuations down to a more reasonable level.
by Clearly_Irrational
Thu Dec 17, 2015 6:06 pm
Forum: Investing - Theory, News & General
Topic: Rotating out of gold
Replies: 4
Views: 1215

Re: Rotating out of gold

It will be interesting to see what comes next for gold. Is there a price where you would get back in, or is it completely dependent on your interest rate outlook? It's strictly based on actual real interest rates, no projections allowed. IPS says no active trading authorized under current conditions. Any reason why you were holding such a high % of gold? 20% seems like a very high % for most people, unless you are following the Permanent Portfolio (PP) - and most PP adherents would never sell all their gold at once. My portfolio is sort of Markowitz meets Fama/French with PP overtones and some macro rules. Basically I liked the fundamental diversification of the PP but thought it had a few things that needed improvement. For example, I wou...
by Clearly_Irrational
Thu Dec 17, 2015 6:01 pm
Forum: Investing - Theory, News & General
Topic: Rotating out of gold
Replies: 4
Views: 1215

Re: Rotating out of gold

lack_ey wrote:Just out of curiosity, how are you counting inflation? Which measure, and is it projected or using the recent past?
12 month rolling average of the year over year CPI-U index rates. I double check vs. the billion prices project for reasonableness.
lack_ey wrote:Also, why actually use a short-term Treasury bond fund (iShares Short Treasury, SHV, duration = 0.47 years, ER = 0.15%, SEC yield = 0.31%) as opposed to say a bank account or rolling the 1-year Treasury for the higher yield, or going max lazy and leaving it in a settlement or some money market fund?
Enforcing my hands off rule. If it were somewhere else I'd be tempted to do something fancy with it.
by Clearly_Irrational
Thu Dec 17, 2015 5:35 pm
Forum: Investing - Theory, News & General
Topic: Rotating out of gold
Replies: 4
Views: 1215

Rotating out of gold

So I've been holding 20% gold for quite some time. My IPS rule is to hold gold when real interest rates are negative as making zero is better than a negative number. With the recent Fed rate increase and the falling inflation rate we're finally there. At some point in a previous thread I promised to update you all when that happened and I actually went through with it. I couldn't find the thread so I'm posting it here. Sold my 20% GLD and bought the same amount in SHV today. Since this rotation is complete, my IPS requires me to evaluate the performance of the real interest rate rule over this cycle. Based on my definition (Fed funds rate - rolling 12mo average of YoY CPI-U index) the purchase signal was generated Jan 30 2008 and the Sell s...
by Clearly_Irrational
Tue Nov 24, 2015 11:31 am
Forum: Personal Investments
Topic: Thoughts on paying Mortgage down vs Investing
Replies: 45
Views: 5343

Re: Thoughts on paying Mortgage down vs Investing

My rule of thumb would go like this:

1) Max out your tax advantaged space
2) Pay down mortgage
3) Invest in taxable space
by Clearly_Irrational
Fri Nov 20, 2015 6:17 pm
Forum: Personal Finance (Not Investing)
Topic: MBA dilemma
Replies: 41
Views: 5319

Re: MBA dilemma

Novak wrote:OP- Please also consider reading this book for knowledge before spending your hard earned money.

The Personal MBA
Personally I think I've learned plenty on my own, through work experience and my undergrad program, however I'm more interested in the HR Checkbox and resume signalling effects than the actual academics.
by Clearly_Irrational
Fri Nov 20, 2015 6:15 pm
Forum: Personal Finance (Not Investing)
Topic: MBA dilemma
Replies: 41
Views: 5319

Re: MBA dilemma

You should look into the Georgia WebMBA. I looked at every program in the country and settled on it. It can be completed in 18-months and is more reasonably priced than those you mentioned. You may want to check out geteducated.com and compare programs on the website. Although it's reasonably priced, I'm not sold on the idea since the schools aren't particularly well ranked. Combined with the low number of Alumni I think the follow on value would be fairly low. Any AACSB program is going to reasonably solid academically but an MBA gets a significant amount of it's value from "branding" effects like name recognition and Alumni. If I were going to work in the Georgia area and my employer was paying I might be fine with that program...
by Clearly_Irrational
Fri Nov 20, 2015 5:59 pm
Forum: Personal Finance (Not Investing)
Topic: MBA dilemma
Replies: 41
Views: 5319

Re: MBA dilemma

joeples wrote:I'm 60% through the Georgia WebMBA program. I love the format of the program. I work alongside 4 other students, in a cohort of approximately 40 people.
I'm currently looking at Arizona State's online MBA, they have a similar cohort system and a nice lockstep class schedule that I like as well as being decently ranked. I'm also considering Indiana University and University of North Carolina, they both have decent online programs.
by Clearly_Irrational
Fri Nov 20, 2015 4:23 pm
Forum: Personal Finance (Not Investing)
Topic: MBA dilemma
Replies: 41
Views: 5319

Re: MBA dilemma

I wouldn't take an MBA from a non-accredited school, it would add little value and it would prevent you from taking it at a better school later if decided you needed it. As best I can tell MBAs come in four flavors: Awesome (money for nothing and chicks are free) - Top name brand school like Harvard, Stanford, Wharton, Kellogg, Booth, Columbia, MIT, Dartmouth, Berkeley, Duke Good (your place as a middle management drone is assured) - A well ranked school in the top 50 or so. Not so hot (you might be able to use this to get hired locally, maybe) - Most schools ranked worse than 50 up to say 200 or so. Worthless (self explanatory) - Any school ranked worse than 200 and schools that are not accredited For online degrees skip the first flavor a...
by Clearly_Irrational
Fri Nov 20, 2015 11:07 am
Forum: Personal Finance (Not Investing)
Topic: High Earner Careers?
Replies: 305
Views: 53086

Re: High Earner Careers?

stoptothink wrote:I'd love to see something substantive that backs up these numbers. I think I was the first person to throw out tech in this thread, my wife is in tech, as are several of my friends, and their compensation (for their education and level of experience) isn't really comparable to any other field; still, these numbers seem WAY optimistic. The top 10% making $450k+ :shock:?
I'm in Tech, how the heck do I get that job? From what I know the top people make half of that in expensive markets with terrible work/life balance. For example developers who work on flash trading who live in New York.
by Clearly_Irrational
Wed Nov 18, 2015 3:53 pm
Forum: Personal Finance (Not Investing)
Topic: High Earner Careers?
Replies: 305
Views: 53086

Re: High Earner Careers?

Keenobserver wrote:the 1% number is meant for non degree holders who ventured out on their own not 1% of the entire population..
Well, as a percentage of all small business owners with more than one employee then yeah it's likely higher than 1%. Not sure what it would be though.
by Clearly_Irrational
Wed Nov 18, 2015 3:38 pm
Forum: Personal Finance (Not Investing)
Topic: High Earner Careers?
Replies: 305
Views: 53086

Re: High Earner Careers?

Keenobserver wrote:I would love see your stats.
FRED data suggests the fraction of incorporated self employed persons compared to all employees is around 3.7% or so. Whatever the actual rate of people making $300k plus from small business ownership without a college degree, it's very likely to be less than that amount. Frankly I think 1% might be a bit high. (it would still be a pretty big number given the size of the population though)
by Clearly_Irrational
Wed Nov 18, 2015 1:45 pm
Forum: Personal Finance (Not Investing)
Topic: High Earner Careers?
Replies: 305
Views: 53086

Re: High Earner Careers?

If it was all rainbows and unicorns they wouldn't pay you to do it. Sure they would. They don't care how you feel about a job. What they care about is do they make money hiring you to do the work. The problem is the unicorn jobs tend to be either ones with a high barrier of entry (think rock star or pro athlete) that pay well or have a low barrier of entry and pay like cr*p (professional horse comber:)). There are bunch more in the middle that some people aspire to (software developer, architect, ceo, doctor,teacher, ...) that might not be all rainbow and unicorns all of the time but are good enough that you don't mind showing up at work. I was alluding to the second type with a low barrier to entry. Pay is only for things people won't do ...
by Clearly_Irrational
Wed Nov 18, 2015 11:18 am
Forum: Personal Finance (Not Investing)
Topic: High Earner Careers?
Replies: 305
Views: 53086

Re: High Earner Careers?

Starper wrote:Perhaps one can lower their expectations a little?

-what you don't mind doing
-what you are reasonably good at
-what pays reasonably well

That's what I use anyway.
Sure, and that's what I've done. I picked a career I'm pretty good at that pays pretty well and I dislike it less than everything else I've tried or looked into. *shrug* If it was all rainbows and unicorns they wouldn't pay you to do it.
by Clearly_Irrational
Wed Nov 18, 2015 11:15 am
Forum: Personal Finance (Not Investing)
Topic: High Earner Careers?
Replies: 305
Views: 53086

Re: High Earner Careers?

In general to really make big money you're looking at (in no particular order):

1) Doctor
2) Lawyer
3) Management
4) Sales
5) Self Employment or Business Ownership
6) Be a 1% superstar in some other field
by Clearly_Irrational
Wed Nov 18, 2015 10:48 am
Forum: Personal Finance (Not Investing)
Topic: High Earner Careers?
Replies: 305
Views: 53086

Re: High Earner Careers?

furwut wrote:Everybody should do a Venn diagram composed of what they love doing, what they are good at doing and what pays enough to allow a decent living standard.
Sadly, as best I can tell there is no three way intersection on that diagram.
by Clearly_Irrational
Wed Nov 11, 2015 11:41 am
Forum: Personal Finance (Not Investing)
Topic: Define Wealthy ..How to ?
Replies: 42
Views: 6218

Re: Define Wealthy ..How to ?

boxerbali wrote:I finished reading millionaire next door and that made me wonder what that magic number net worth that puts people on wealthy side ?
Well, in order to be "wealthy" I'd suggest you first need to be financially independent, so passive income > living expenses. To move from FI to Wealthy you need enough for significant luxury spending on top of that. As a rough estimate I'd say it's somewhere between $5 million and $10 million depending on where you live.
by Clearly_Irrational
Fri Nov 06, 2015 1:55 pm
Forum: Investing - Theory, News & General
Topic: New Housing Bubble and upcoming cycle peak
Replies: 86
Views: 15370

Re: New Housing Bubble and upcoming cycle peak

swaption wrote:To your point VT, I was reading along quite nicely, and then suddenly I was reading my own comment! Dang those old restarted threads.
Well, at least I didn't necro my own thread.
But CI has done us the favor of recycling the very same mistake
I haven't re-run the Case Schiller numbers, but I suspect the result would be the same as last time, same trend but somewhat muted.

Anecdotally, home prices in my area have increased fast enough to price us out of the market.
by Clearly_Irrational
Fri Nov 06, 2015 11:57 am
Forum: Investing - Theory, News & General
Topic: New Housing Bubble and upcoming cycle peak
Replies: 86
Views: 15370

Re: New Housing Bubble and upcoming cycle peak

New housing compared to real median household income is getting more expensive:

Image

I'm not sure how that is sustainable. I mean sure, some of it is covered by the switch to two income families but we've blown way past the doubling mark so it's not all that.
by Clearly_Irrational
Thu Oct 29, 2015 3:40 pm
Forum: Investing - Theory, News & General
Topic: Any books for how people become wealthy?
Replies: 67
Views: 10428

Re: Any books for how people become wealthy?

I've read quite a few of them, most stories I've read can be summed up like this:

"I do X to make my money now, but I got my first couple of million in real estate"

or

"I do X to make money now, but I made my initial stake by starting and then selling my business"

If you read only one book on the subject then I recommend The Richest Man in Babylon, best of all it's free.
by Clearly_Irrational
Mon Oct 26, 2015 12:59 pm
Forum: Personal Finance (Not Investing)
Topic: Goal mindset when seeing ceiling in career
Replies: 32
Views: 5038

Re: Goal mindset when seeing ceiling in career

You basically have four options: 1) Become even better at what you do now and switch jobs once or twice to get pay raises. This can probably get you up into the low six figures before you cap out again, but after that you'll be pretty much stuck. Additionally due to ageism in IT you may have trouble finding employment as you get older. 2) Become a consultant so that you can bill at higher rates and have multiple clients, as you mentioned however this conflicts with some of your other goals. 3) Change careers to one with a higher cap, the traditional choice being a move to IT Management. There are pluses and minuses to this choice. 4) Lower your goals Regardless of what you do, there is likely going to be a ceiling of some sort as long as yo...
by Clearly_Irrational
Fri Oct 23, 2015 1:45 pm
Forum: Personal Finance (Not Investing)
Topic: What are your 2 retirement numbers?
Replies: 260
Views: 42474

Re: What are your 2 retirement numbers?

tomhole wrote:$2.1M in 2015 dollars.
That's my minimum number. I'd still be "working" in that I'd have some minor oversight tasks of my portfolio and property management companies, and I'd likely be doing some things to increase my income but it wouldn't be my regular job. At $3M I wouldn't really be trying to increase my income. Anything over $5M I'd be looking into shifting to a completely passive strategy rather than a mostly passive one.
by Clearly_Irrational
Wed Oct 21, 2015 5:21 pm
Forum: Personal Investments
Topic: Tesla Motors Stock
Replies: 264
Views: 60817

Re: Tesla Motors Stock

sawhorse wrote:The very concept of determining a company's fundamental value using market forces is becoming obsolete.
I don't think so, it's just that fundamentals play out over longer time frames.

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” --Benjamin Graham
by Clearly_Irrational
Thu Oct 01, 2015 11:57 am
Forum: Investing - Theory, News & General
Topic: Warning Signs [Economic health indicators]
Replies: 283
Views: 58077

Re: Warning Signs [Economic health indicators]

Grt2bOutdoors wrote:Dollars to donuts, most of the dividend cuts came from Energy based companies. Nothing to see here, keep investing.
Hadn't looked at the breakdown by sector. That's interesting, I thought most of the energy company carnage was over at this point. Apparently some of them must have been more optimistic till recently. The other signals are still fine so I'm busy twiddling my fingers. IPS says hands off the wheel.
by Clearly_Irrational
Thu Oct 01, 2015 11:39 am
Forum: Investing - Theory, News & General
Topic: Warning Signs [Economic health indicators]
Replies: 283
Views: 58077

Re: Warning Signs [Economic health indicators]

Massive spike in corporate dividend cuts reported today, from 15 in August to 43 in September! (anything over 30 is quite bad) Other signals are still muted but they're on more of a reporting lag so it's possible they'll start deteriorating soon. No action to take at the moment, it's still too early to tell. I suppose it could be mostly related to the VW scandal rather than an indication of something larger.
by Clearly_Irrational
Wed Sep 30, 2015 10:20 am
Forum: Investing - Theory, News & General
Topic: Why don't people use the Permanent Portfolio?
Replies: 158
Views: 22702

Re: Why don't people use the Permanent Portfolio?

stemikger wrote:They invest in productive businesses that add value to society.
Wait, they have to add value to society? That leaves out a hefty portion of the market right there.
by Clearly_Irrational
Tue Sep 29, 2015 5:27 pm
Forum: Investing - Theory, News & General
Topic: A better Permanent Portfolio?
Replies: 39
Views: 7969

Re: A better Permanent Portfolio?

linenfort wrote:Still, as with the Boglehead approach, trying to figure out when times are prosperous and when they are prosperous no longer, well that would be market timing. This is clearly irrational. ;-)
So obviously if you were trying to identify tops and bottoms in the gold market that would definitely be market timing in the traditional sense. I do think there is some room for identifying when the odds are more or less in your favor and adjusting allocations based on that, but that's definitely not a standard boglehead approach, of course neither is holding gold in the first place.
by Clearly_Irrational
Tue Sep 29, 2015 4:51 pm
Forum: Investing - Theory, News & General
Topic: A better Permanent Portfolio?
Replies: 39
Views: 7969

Re: A better Permanent Portfolio?

In my opinion the real weakness of the PP is the static gold allocation. Gold is insurance like in nature and thus has a fairly high carrying cost. Holding it even when times are good is a significant drag on performance. Personally, I think the answer is to hold gold only when times are not prosperous, as a proxy for that I use real interest rates. When real rates are negative then the risk/reward trade off of gold tends to be pretty good. When real rates are positive the risk/reward trade off of gold tends to be fairly poor.
by Clearly_Irrational
Tue Sep 29, 2015 2:26 pm
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 36221
Views: 4652138

Re: U.S. stocks in freefall

HomerJ wrote:So you agree that the PE10 signal failed in the 90s.
No, I just think that PE10, by itself, is not a sufficient reason to reduce your stock allocation. It's a signal that things are starting to get over-valued but it's not a good timing indicator in isolation. It was correct that stock valuations were stretched, but they can stay stretched for an extended period of time before the actual crash.
by Clearly_Irrational
Tue Sep 29, 2015 12:36 pm
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 36221
Views: 4652138

Re: U.S. stocks in freefall

lack_ey wrote:Did you run the analysis in "real time" going along or using the full history at every point?
I did both. You didn't specify what month of 1995, so for illustration I'll use June. At that time I would have been worried about values above 24. Following along in real time as the threshold adjusts, it doesn't show a red light until November 1995 at which point the threshold was 24.08. A signal indicator does not a robust system make however, which is why I use seven and the combined indicator didn't start screaming until years later in late 2000.
by Clearly_Irrational
Tue Sep 29, 2015 10:42 am
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 36221
Views: 4652138

Re: U.S. stocks in freefall

HomerJ wrote:We base AA on the need and willingness to take risk, not on what the market is doing.
I find the PE10 a reasonable indicator for when we're experiencing non-normal levels of risk but my own testing suggested that non-extreme values have little signaling power.
by Clearly_Irrational
Mon Sep 28, 2015 11:06 am
Forum: Investing - Theory, News & General
Topic: U.S. stocks in free fall
Replies: 36221
Views: 4652138

Re: U.S. stocks in freefall

nisiprius wrote:Extremes happen. 1929 happened. 1937 happened. The panic of 1907 happened. The stock market dropping 22% in one day in 1987 happened. Bonds beating stocks over a 30-year period happened. 2008-2009 happened. They are not typical. They are also not hit-by-a-meteorite rare. Not only do extremes happen, but one of the important lessons of financial history is that they happen more often than they "should," if we use statistical models that assume random samples from the normal distributions and the like.
I consider this to be a very important point and I think it's one that often gets glossed over.
by Clearly_Irrational
Tue Sep 22, 2015 1:40 pm
Forum: Investing - Theory, News & General
Topic: VW stock goes from 170 to almost 100 and falling, good time to buy?
Replies: 169
Views: 22912

Re: VW stock goes from 170 to almost 100 and falling, good time to buy?

If I were buying individual stocks then I would definitely use a reputation hit as a signal to examine the stock more closely. This doesn't really change their long term fundamentals that much so I'd start by downloading their 10-K and doing some analysis. That said, you shouldn't really be buying individual stocks, so why do you ask?
by Clearly_Irrational
Thu Sep 17, 2015 5:52 pm
Forum: Personal Finance (Not Investing)
Topic: Cost of living expenses that have gone down
Replies: 7
Views: 1993

Re: Cost of living expenses that have gone down

It depends on what you pick as your starting date of course. In general buying stuff is cheaper, anything that involves regular payments is more expensive.
by Clearly_Irrational
Thu Sep 17, 2015 5:49 pm
Forum: Investing - Theory, News & General
Topic: Decided to try timing the market. 100% short on 9/17/15
Replies: 361
Views: 73181

Re: Decided to try timing the market. 100% short on 9/17/15

nisiprius wrote:Or are you using an inverse ETF which is quite different from actually shorting, and, in my opinion, a fairly bad idea if you are planning to hold for more than a short time--see Inverse and leveraged ETFs.
I had good luck with inverse ETFs, just stay away from the leveraged ones they don't track well.