Search found 5071 matches

by grayfox
Thu Jul 04, 2019 8:05 am
Forum: Investing - Theory, News & General
Topic: Misbehaviour of markets and the Black Swan
Replies: 86
Views: 7298

Re: Misbehaviour of markets and the Black Swan

Just read these two books by Mandelbrot and Nassim and I'm absolutely fascinated by the material. I always kinda knew asset prices didn't follow a neat Bell Curve and that they displayed fat tails. These books go far beyond that though. That the distributions aren't Gaussian at all, and instead dis...
by grayfox
Sun May 12, 2019 6:49 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Post WWII US Returns’ Changing Nature
Replies: 33
Views: 3448

Re: Larry Swedroe: Post WWII US Returns’ Changing Nature

I agree that despite its flaws and some of the rather erroneous conclusions that some of its proponents put forward, modern monetary theory seems to be the most explanatory and predictive theory of how money functions at the macro level. I want to make it clear that there are limits on everything. ...
by grayfox
Sat May 11, 2019 6:06 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Post WWII US Returns’ Changing Nature
Replies: 33
Views: 3448

Re: Larry Swedroe: Post WWII US Returns’ Changing Nature

1/CAPE is currently indicating that the next decade's real returns will be 3.35%. The average investor allocation to equities is indicating that the next decade's real returns will be 4.40%. These two very disparate metrics are reaching very similar conclusions: the next decade's real returns will ...
by grayfox
Tue May 07, 2019 5:46 am
Forum: Investing - Theory, News & General
Topic: Reversion to the Mean Is Dead?
Replies: 63
Views: 6852

Re: Reversion to the Mean Is Dead?

Reversion to the mean is always there, mandated by rather simple mathematics. It is not uncommon for people to misunderstand it, though. Which mean is being reverted to? Please run through the rather simple mathematics. If you have a random number generator with a certain mean, eventually the avera...
by grayfox
Mon May 06, 2019 6:15 am
Forum: Personal Investments
Topic: CDs in early retirement to enable Roth Conversions?
Replies: 33
Views: 3250

Re: CDs in early retirement to enable Roth Conversions?

... we take it year by year and will certainly adjust as needed and according to our situation. I strongly suggest that you do a projection to at least age 80 instead of year-by-year. A yearly analysis seems quite short-sighted to me. After doing a long term analysis, it could end up that your curr...
by grayfox
Sun May 05, 2019 9:15 am
Forum: Personal Investments
Topic: CDs in early retirement to enable Roth Conversions?
Replies: 33
Views: 3250

Re: CDs in early retirement to enable Roth Conversions?

The way I look at it, about 1/3 of large tIRAs belongs to Uncle Sam. That was the deal. Medium-sized tIRAs, 1/4. Small tIRAs, 1/8. That's at current tax rates. It may be even more in the future. What I see are a lot of people here with multi-million dollar tIRAs who seem to think they will get away ...
by grayfox
Sun May 05, 2019 8:24 am
Forum: Personal Investments
Topic: CDs in early retirement to enable Roth Conversions?
Replies: 33
Views: 3250

Re: CDs in early retirement to enable Roth Conversions?

I have been thinking lately about what I might do to optimize the Roth conversions, or whether it's really worth bothering at all in my case. I am in similar situation. I looked at 1) where I am, 2) where I want to be and 3) path to get there. 1) Where I am is a very large tIRA, large taxable, smal...
by grayfox
Sat May 04, 2019 5:36 am
Forum: Investing - Theory, News & General
Topic: Share Buybacks — Savior of the U.S. Equity Market?
Replies: 58
Views: 4292

Re: Share Buybacks — Savior of the U.S. Equity Market?

The issue is how to divide up the economic fruits of the enterprise: how much goes to owners, how much goes to ordinary workers and how much goes to executives. With stock options/stock buybacks, executives have found a way to grab a bigger slice of the pie. From Forbes: For most of the 20th century...
by grayfox
Fri May 03, 2019 7:27 am
Forum: Investing - Theory, News & General
Topic: Share Buybacks — Savior of the U.S. Equity Market?
Replies: 58
Views: 4292

Re: Share Buybacks — Savior of the U.S. Equity Market?

It appears that the worst nightmare for U.S. equity investors today would be a world without share buybacks — in fact, the report includes a section calculating what the hypothetical impacts of zero buybacks would be on S&P 500 earnings growth and prices. A rather sobering read, if interested. Any ...
by grayfox
Thu May 02, 2019 5:16 am
Forum: Investing - Theory, News & General
Topic: Why an 0.57 "low correlation" represents only an 11% volatility reduction
Replies: 56
Views: 3532

Re: Why an 0.57 "low correlation" represents only an 11% volatility reduction

The standard deviation can only "measure" risk which showed up in the past, but your examples are about possible risks in the future. nisiprius compared the standard deviations and max drawdowns from the past. And I agree that these are mathematically related, thus both can be used as a measure of ...
by grayfox
Wed May 01, 2019 7:03 pm
Forum: Investing - Theory, News & General
Topic: Why an 0.57 "low correlation" represents only an 11% volatility reduction
Replies: 56
Views: 3532

Re: Why an 0.57 "low correlation" represents only an 11% volatility reduction

Dec 2004 - Dec 2017 Standard deviation, max drawdown St. dev. Max drawdown CASHX 0.50% 0.00% VBMFX 3.22% -3.99% VWEHX 8.19% -28.90% FNMIX 9.59% -26.04% VTSMX 14.18% -50.89% VJPNX 16.80% -54.96% VGTSX 17.65% -58.50% LMVTX 18.04% -68.91% GLD 18.21% -42.91% DFSTX 18.79% -55.02% PCRIX 19.87% -63.49% VE...
by grayfox
Thu Apr 25, 2019 6:25 am
Forum: Personal Investments
Topic: Should I start doing Roth Conversions and if so
Replies: 89
Views: 6331

Re: Should I start doing Roth Conversions and if so

Back to the drawing board. While not as good as 60%, 30% isn't terrible. Chart below shows the same $300K QD, but $210K in charitable contribution due to appreciated stock. Above $400K tIRA withdrawal the marginal rates go above 35%, but up to that point they are more palatable. https://i.postimg.c...
by grayfox
Thu Apr 25, 2019 5:42 am
Forum: Personal Finance (Not Investing)
Topic: Taxes: marginal rate now vs effective rate in retirement
Replies: 198
Views: 9756

Re: Taxes: marginal rate now vs effective rate in retirement

I'm in the "marginal vs. marginal" crowd. I calculate it like this: Assume 30 years to retirement, $400k current tax-deferred savings, $74k/year tax-deferred contributions and plan to max out each year, married, 8% expected return, 3% inflation, 4% withdrawal rate. Taxable withdrawals = FV(8%-3%, 3...
by grayfox
Wed Apr 24, 2019 6:43 am
Forum: Personal Finance (Not Investing)
Topic: Taxes: marginal rate now vs effective rate in retirement
Replies: 198
Views: 9756

Re: Taxes: marginal rate now vs effective rate in retirement

Ugh, another overblown RMD boogeyman post. OP, please ignore this hyperbole unless you will end up with several million $ in tIRA. I agree. If you expect to have a small tIRA at age 70, you will not have to worry about RMDs. Nothing to see here. But why are you so pessimistic and expect only a smal...
by grayfox
Tue Apr 23, 2019 7:03 am
Forum: Investing - Theory, News & General
Topic: Why should stocks beat bonds in the long run?
Replies: 106
Views: 6260

Re: Why should stocks beat bonds in the long run?

But the reason stock expected returns are higher, and realized returns usually higher, than bond returns does basically come back to Corp Finance 101 in one of the very early chapters. Bondholders get paid first. Therefore profit, the name for residual cashflow over and above the cashflow necessary...
by grayfox
Tue Apr 23, 2019 5:42 am
Forum: Personal Finance (Not Investing)
Topic: Taxes: marginal rate now vs effective rate in retirement
Replies: 198
Views: 9756

Re: Taxes: marginal rate now vs effective rate in retirement

I was trying to explain to a friend why I contribute to a traditional 401k as opposed to a Roth 401k. He strongly disagrees with my logic and it has me questioning myself. I explained that every dollar I contribute to my traditional 401k now would have been taxed at my marginal rate of 22%. When I ...
by grayfox
Mon Apr 22, 2019 9:24 am
Forum: Personal Investments
Topic: Have I figured out Roth conversion?
Replies: 19
Views: 1941

Re: Have I figured out Roth conversion?

I guess that's "part 2" of my question. Should I do it? I'm not needing to take any distributions from my Tax-deferred accounts yet; our expenses are low and we have getting on nicely with pension and DH's SS. You have to look at how big your Tax-Deferred IRA, a.k.a Traditional IRA (TIRA) is and wi...
by grayfox
Mon Apr 22, 2019 8:56 am
Forum: Investing - Theory, News & General
Topic: Why should stocks beat bonds in the long run?
Replies: 106
Views: 6260

Re: Why should stocks beat bonds in the long run?

Looking at the next, say, 100 years in the US total stock and total bond markets. Assume the money is getting Roth-like tax treatment (no ongoing or terminal tax burden) and all dividends/distributions reinvested. No justifications on the basis of long-term historical data, please (“past performanc...
by grayfox
Sun Apr 21, 2019 8:38 am
Forum: Investing - Theory, News & General
Topic: The Fundamental Axioms / Laws / Principles of Investing
Replies: 30
Views: 1704

Re: The Fundamental Axioms / Laws / Principles of Investing

Investing, Finance, Business, Economics, these are not fundamental sciences. They Social sciences. They could be called a behavioral sciences. So there are no fundamental axioms or laws. All the outcomes depend on the actions taken by billions of people, plus natural phenomenon like weather. They ar...
by grayfox
Sat Apr 20, 2019 10:17 am
Forum: Personal Investments
Topic: Should I start doing Roth Conversions and if so
Replies: 89
Views: 6331

Re: Should I start doing Roth Conversions and if so

It seems to me that most of the questions and advice for Roth Conversion is suitable for small IRAs. The discussion will be about ROTH-converting $50,000 IRA. Solution, convert up to the top of the 12% bracket which is like $9,000 per year. So you are converting maybe 20% per year. That may be good ...
by grayfox
Sat Apr 20, 2019 8:56 am
Forum: Personal Investments
Topic: Should I start doing Roth Conversions and if so
Replies: 89
Views: 6331

Re: Should I start doing Roth Conversions and if so

Should I start doing Roth Conversions and if so does it matter whether I start converting IRA, SEP, Solo410(K) first? ... So I will shutdown the business and join the FIRE movement at 55 years old. Over the years I have amassed total deferred retirement plans of $4,460,000 $40,000 - State Deferred ...
by grayfox
Wed Apr 17, 2019 6:49 am
Forum: Personal Consumer Issues
Topic: seriously thinking about leaving S. CA but where to?
Replies: 177
Views: 10293

Re: seriously thinking about leaving S. CA but where to?

There is something called Köppen climate classification . Here is Köppen–Geiger climate classification for the world. https://upload.wikimedia.org/wikipedia/commons/thumb/d/d5/Köppen-Geiger_Climate_Classification_Map.png/2560px-Köppen-Geiger_Climate_Classification_Map.png California coast looks to ...
by grayfox
Tue Apr 16, 2019 8:28 am
Forum: Personal Consumer Issues
Topic: seriously thinking about leaving S. CA but where to?
Replies: 177
Views: 10293

Re: seriously thinking about leaving S. CA but where to?

Checked out Arizona - Prescott and Scottsdale AZ sounds good. Any zip code in particular? Hoping for replies from someone who lives in Scottsdale or Prescott. Scottsdale is a great choice. But what about the other six months of the year? You will have to leave April 1 and don't return until Oct 1. ...
by grayfox
Tue Apr 16, 2019 8:14 am
Forum: Personal Consumer Issues
Topic: seriously thinking about leaving S. CA but where to?
Replies: 177
Views: 10293

Re: seriously thinking about leaving S. CA but where to?

As far as low crime goes, here is List of United States cities by crime rate . Sort it by Total Violent Crime. Irvine, CA in OC is about the lowest on the list with 61.21 total violent crimes per 100,000. St. Louis, MO is on top with 2082.29 total violent crimes per 100,000. Measuring crime levels i...
by grayfox
Tue Apr 16, 2019 7:53 am
Forum: Personal Consumer Issues
Topic: seriously thinking about leaving S. CA but where to?
Replies: 177
Views: 10293

Re: seriously thinking about leaving S. CA but where to?

I am retired so I can move anywhere in the country. I have spent countless hours searching for a place to live. Originally , I was searching for a state free of taxes. But it doesn't matter anymore. I just want to leave CA but not sure where. Any suggestions based on the criteria Criteria: 1/ Good ...
by grayfox
Fri Apr 12, 2019 6:45 am
Forum: Investing - Theory, News & General
Topic: Is there a relatively stable junk bond fund?
Replies: 43
Views: 5121

Re: Is there a relatively stable junk bond fund?

Here is something you might find useful. I looked up the Max Drawdown and CAGR of several Vanguard finds on portviz. Then I made a column of an estimate of the current expected return, E(R). E(R) is the center of the probability distribution of outcomes. For the bond funds E(R) is SEC Yield, except ...
by grayfox
Thu Apr 11, 2019 9:42 am
Forum: Investing - Theory, News & General
Topic: Is there a relatively stable junk bond fund?
Replies: 43
Views: 5121

Re: Is there a relatively stable junk bond fund?

Looking for a junk bond fund that provides some resemblance of stability and income. Is the vanguard junk bond fund a worthy contender? Is there something better? Is there a bond fund that mixes junk and investment grade? According to portviz if you had bought $10,000 VWEHX back in Jan 1985, and sp...
by grayfox
Wed Apr 10, 2019 7:17 am
Forum: Investing - Theory, News & General
Topic: Vanguard Prime Money Market yield over 2.5%
Replies: 231
Views: 48327

Re: Vanguard Prime Money Market yield over 2.5%

TIPS and I-bonds would get you about 0.5% or more above inflation, even at 2.5%. You have to go out to 2026 to get 0.5%. Treasury Inflation-Protected Securities . According to Treasury yield curve, even 5 year is over 0.5%. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/P...
by grayfox
Wed Apr 10, 2019 6:45 am
Forum: Investing - Theory, News & General
Topic: Vanguard Prime Money Market yield over 2.5%
Replies: 231
Views: 48327

Re: Vanguard Prime Money Market yield over 2.5%

TIPS and I-bonds would get you about 0.5% or more above inflation, even at 2.5%. You have to go out to 2026 to get 0.5%. Treasury Inflation-Protected Securities . TIPS are only good at one thing: insurance against unexpected inflation. It looks like CPI inflation averaged 2.4% in 2018. So Prime MMF...
by grayfox
Wed Apr 10, 2019 5:51 am
Forum: Investing - Theory, News & General
Topic: Vanguard Prime Money Market yield over 2.5%
Replies: 231
Views: 48327

Re: Vanguard Prime Money Market yield over 2.5%

Why are you so desperate to get to 3%? If the market isn't giving 3%, there's no way for you to force it without incurring additional risk. At this point, I think you should be happy with any rate over 2.4%. Prime MMF is stuck at about 2.45%. It will probably be stuck there until the next recession...
by grayfox
Tue Apr 09, 2019 2:40 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Prime Money Market yield over 2.5%
Replies: 231
Views: 48327

Re: Vanguard Prime Money Market yield over 2.5%

I'm trying to understand the comments. Maybe I'm wrong but the bolded comment (by me) has me thinking you believe a recession is likely in the near term. If that is the case wouldn't having a longer term treasury fund go up since they will have higher interest rate securities than the rates in a re...
by grayfox
Tue Apr 09, 2019 1:32 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Prime Money Market yield over 2.5%
Replies: 231
Views: 48327

Re: Vanguard Prime Money Market yield over 2.5%

Currently Roth IRA has a lot in Vanguard Prime Money Market Fund ( VMMXX ). SEC 2.45%. The idea is to park money while generating spendable Income. [...] Which is better, the old GNMA fund VFIJX or the newer Mortgage-backed Index VMBSX? Per my reply to you earlier in this thread - it's not clear to...
by grayfox
Tue Apr 09, 2019 7:15 am
Forum: Investing - Theory, News & General
Topic: Vanguard Prime Money Market yield over 2.5%
Replies: 231
Views: 48327

Re: Vanguard Prime Money Market yield over 2.5%

Currently Roth IRA has a lot in Vanguard Prime Money Market Fund ( VMMXX ). SEC 2.45%. The idea is to park money while generating spendable Income. Rates ain't going no higher. :annoyed I think it might be a good time to lock in something with higher rate, like 3%. I looked at Treasuries. Current of...
by grayfox
Mon Apr 08, 2019 7:03 am
Forum: Investing - Theory, News & General
Topic: The "dividend preference anomaly"
Replies: 183
Views: 8733

Re: The "dividend preference anomaly"

Here was the assertion: W hen a stock pays a dividend, the stock price drops by the amount of the dividend. Yes, that is the assertion and it is correct. Stocks with a dividends have an "ex-dividend" date, on or after which investors who buy the stock will not get paid the dividend. The stock goes ...
by grayfox
Mon Apr 08, 2019 6:09 am
Forum: Investing - Theory, News & General
Topic: The "dividend preference anomaly"
Replies: 183
Views: 8733

Re: The "dividend preference anomaly"

Hello? 29.97 - 27.39 = 2.58 It didn't go down by $3. But only down by $2.58 You just presented an example when the price did not fall by the amount of the dividend. :!: You could have bought MSFT at 29.97 on Friday, pocketed $3 dividend, and then sold on Monday at 27.39. Net profit $0.42 per share ...
by grayfox
Mon Apr 08, 2019 5:57 am
Forum: Investing - Theory, News & General
Topic: The "dividend preference anomaly"
Replies: 183
Views: 8733

Re: The "dividend preference anomaly"

Here is the assertion: When a stock pays a dividend, the stock price drops by the amount of the dividend. So there must be some time t1 when the price is P1 and some later time t2 the price is P2 = P1 - D. Right? That's what the assertion say. But when is t1 and t2? And which price are we talking ab...
by grayfox
Mon Apr 08, 2019 5:40 am
Forum: Investing - Theory, News & General
Topic: The "dividend preference anomaly"
Replies: 183
Views: 8733

Re: The "dividend preference anomaly"

$27.39 is the closing price. The Closing price on 11/12 was $29.97. The dividend was $3 The opening price on 11/15 was $26.97, then it closed that day at $27.39. That is what that chart shows. What chart? Where do you see that opening price on 11/15 was $26.97? Poster said the data he presented is ...
by grayfox
Sun Apr 07, 2019 6:14 pm
Forum: Investing - Theory, News & General
Topic: The "dividend preference anomaly"
Replies: 183
Views: 8733

Re: The "dividend preference anomaly"

You are saying the price adjustment for dividends is permanent and that statement is not correct and there is no evidence to back it up. There is plenty of evidence to back it up. If you need to see something, just look at the prices of companies that have paid one time large dividends. Here's an e...
by grayfox
Sat Apr 06, 2019 5:57 am
Forum: Investing - Theory, News & General
Topic: The "dividend preference anomaly"
Replies: 183
Views: 8733

Re: The "dividend preference anomaly"

Article describing investor preference for dividend stocks as an "anomaly." This is also Larry Swedroe's view. ...dividends fall under the category of mental accounting. ...a "free dividend fallacy", in which investors view dividends as a source of return that is independent of the price of the sto...
by grayfox
Thu Apr 04, 2019 10:31 am
Forum: Investing - Theory, News & General
Topic: Make sure your retirement investment plan includes being fired from your job in your 50s
Replies: 285
Views: 16849

Re: Make sure your retirement investment plan includes being fired from your job in your 50s

It is only logical that H1-B worker would be paid less. They can only work for the employer that sponsors them. They can not quit their current employer to take a higher paying job. And if they get fired, they have to return to their home country. They have no bargaining position. And besides, what ...
by grayfox
Thu Apr 04, 2019 10:23 am
Forum: Investing - Theory, News & General
Topic: Make sure your retirement investment plan includes being fired from your job in your 50s
Replies: 285
Views: 16849

Re: Make sure your retirement investment plan includes being fired from your job in your 50s

One (very unfortunate, in my opinion) trend that many employers seem to be adopting is a strong bias against hiring someone who is not currently employed. I believe that may be especially impacting older folks who become unemployed. And, the trend will change when the employer cannot find the emplo...
by grayfox
Thu Apr 04, 2019 6:07 am
Forum: Personal Investments
Topic: When are Roth Conversion Taxes Due?
Replies: 12
Views: 1266

Re: When are Roth Conversion Taxes Due?

Why not just read through Form 2210 and its instructions? For tax year 2018: Exceptions to the Penalty You won't have to pay the penalty or file this form if either of the following applies. • You had no tax liability for 2017, you were a U.S. citizen or resident alien for the entire year (or an es...
by grayfox
Sat Mar 30, 2019 9:38 am
Forum: Personal Investments
Topic: When are Roth Conversion Taxes Due?
Replies: 12
Views: 1266

Re: When are Roth Conversion Taxes Due?

Thanks for all the responses. Let me see if I understand this. As an example, suppose my 2018 1040 Line 11 Tax is 0. Then I do a huge ROTH Conversion from Traditional IRA to Roth IRA in April 2019. Let's say the taxes owed on the Roth Conversion are $1,000,000. :?: I do not have to make any estimate...
by grayfox
Fri Mar 29, 2019 9:29 am
Forum: Personal Investments
Topic: When are Roth Conversion Taxes Due?
Replies: 12
Views: 1266

When are Roth Conversion Taxes Due?

Suppose you do a Roth Conversion at the beginning of 2019. Let's say April 2019.
When do the taxes have to be paid on that conversion?

Is it by April 15, 2020? Or do you have to make payments in 2019 before you file in April 2020?
by grayfox
Mon Mar 25, 2019 7:00 am
Forum: Investing - Theory, News & General
Topic: In Search of... the Inverted Yield Curve
Replies: 78
Views: 7318

Re: In Search of... the Inverted Yield Curve

Looking at those charts, knowing when the recessions start and end does not look like a very good market timing tool. What did the S&P500 do from the start to end of a recession? Sometimes it went down, as you might expect. But sometimes it went up. And sometimes it stayed about the same. Plus the w...
by grayfox
Sun Mar 24, 2019 7:28 am
Forum: Personal Finance (Not Investing)
Topic: Using the Time Value of Money Formula to Determine Withdrawals: Year 2000 Retiree Example
Replies: 55
Views: 4009

Re: Using the Time Value of Money Formula to Determine Withdrawals: Year 2000 Retiree Example

When I've brought up the concept of using the TVM formula to calculate annual withdrawals in other threads, many have thought that it was too complex. As such, I though that it would be useful to demonstrate how relatively simple it can be. ... For those wanting to implement this type of withdrawal...
by grayfox
Sun Mar 24, 2019 6:49 am
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14186

Re: On Leverage

No responce. OK, I will run portwiz on 120/180/-200 VFINX/VUSTX/CASHX from Feb-2006 to Dec-2010. I compared it to 100% S&P500 and 60/40 portfolio. Link Surprisingly, it looks like 3x40/60 practically sailed right through the 2008/2009 debacle :!: At least compared to 100% S&P500 It did get down to 7...
by grayfox
Sun Mar 24, 2019 6:20 am
Forum: Investing - Theory, News & General
Topic: In Search of... the Inverted Yield Curve
Replies: 78
Views: 7318

Re: In Search of... the Inverted Yield Curve

Does anyone have a chart which illustrates how far in advance of prior recessions equity prices peaked? This chart from macrottrends shows S&P500 with recessions. Check the box Show Recessions. Then use the slider at the bottom to zoom in on a period. S&P 500 Index - 90 Year Historical Chart There ...
by grayfox
Sat Mar 23, 2019 7:15 am
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14186

Re: On Leverage

When yield curve inverts, how do these leverage strategies perform? For instance, about Feb-2006, the yield curve first started inverting. Does anyone have any simulations showing what would have happened starting around the beginning of 2006. Here is 200/-100 VFINX/CASHX and leveraged ETF SSO (2xS&...