Bogleheads.org

While Chinese companies may post good returns, it doesn't appear the largess is widely dispersed among shareholders. I suppose 8.4% of a small number is an even smaller number. https://www.morningstar.ca/ca/news/225163/china-stocks-the-road-to-nowhere.aspx https://www.morningstar.com/articles/1085524/chinese-stocks-what-went-wrong All markets go through periods of poor performance. The US has had very poor sequences throughout its history that has resulted in returns being worse than Bonds or other equity markets. China is no exception. That does not mean that the expected return on Chinese stocks today is low, or that returns throughout any predefined period are guaranteed to be low. And a 2-3% allocation for a standard globally diversifi...

Are you suggesting that banks actually match the timing of all assets and liabilities, for example, having cash or cash equivalents to cover all deposits that could be redeemed on demand or close to it? Banks absolutely cannot do this, because it's not how banking works. "Mismatching maturities" IS banking . You deposit money in a checking or savings account. The bank would like to lend that money out and earn interest. You have the right to withdraw your money tomorrow. The bank would prefer to lend your money out for a bit longer than that. :D There is no magic wand you can wave and take the risk out of this. Sure, banks should be concerned about undiversified assets or liabilities, but if you impose 100% capital requirements, ...

McQ wrote: ↑Mon Feb 27, 2023 10:14 pm ...
Bonds only make sense if you will hold less than 50% stocks in the combination. You have to crave that much reduction in risk; else, why bother. The question of which bonds to hold only comes into play for stock allocations less than 50%. For that and lower allocations, we can ask, Which bond asset, when combined with stocks, produces the lowest risk for any particular level of return? Because risk reduction is the only good argument for diluting stocks with bonds.
...

+1 (but I still hold them).

... I went to Portfolio Visualizer and compared Vanguard Total Bond Market Index Investor shares with Vanguard Intermediate Term Treasury Fund Investor Shares. The data goes back from January 1992 through November 2022. Almost 30 years of data. Edit: I added the Vanguard Long Term Treasury fund Investor Shares. . . . . . . . . . . . . . . . . . Total Bond Index. . . . .Intermediate Treasury. . . .Long Term Treasury Initial Balance. . . . . . . .$10,000. . . . . . . . . . .$10,000. . . . . . . . . . . . .$10,000 Final Balance. . . . . . . . $38,961 . . . . . . . . . . .$41,092. . . . . . . . . . . . .$56,246 CAGR. . . . . . . . . . . . . 4.50%. . . . . . . . . . . . 4.68%. . . . . . . . . . . . . . 5.75% Standard Deviation. . . . .3.89%. . ...

Cheez-It Guy wrote: ↑Sun Feb 26, 2023 9:25 am This is where the soaring and free fall threads really used to be a help.

Ah, the good old days.

Perhaps a new thead titled "Stocks continue to Soar while in Free Fall"

Ocean77 wrote: ↑Fri Feb 24, 2023 5:11 pm Quick folks, we need some threads started "Bear Market Is Not Over". So that the market can go back up, like it did until this thread started...

Good Stuff.

RetiredAt49 wrote: ↑Mon Feb 20, 2023 7:43 pm According to history and the financial “experts”:

The S&P 500 closed Wednesday (2/15/2023) above its 200-day moving average for the 18th session in a row... No prior S&P 500 bear market in history has made a new low after making 18 consecutive closes above its 200-day average

On the one hand you have the above.
On the other hand, if it truly is a 2022-2023 Bear Market, must it not hit a new low in 2023?

burritoLover wrote: ↑Thu Feb 02, 2023 12:25 pm recency bias
performance chasing
confirmation bias

not a way to manage a portfolio.

You missed one.

"Success" bias.

It is a real concept.

https://www.credit-suisse.com/media/ass ... dition.pdf

"Since 1900, the US equity market has given an annualized real return of 6.7%, the highest common-currency return for any Yearbook country. ... Extrapolating from such a successful market can lead to “success” bias. Investors can gain a misleading view of equity returns elsewhere, or of future equity returns for the USA itself."
Page 38.

burritoLover wrote: ↑Fri Jan 27, 2023 11:24 am
Vanguard

It is interesting to me how global ex-US is forecasted higher ex-US developed and EM.

Ricola wrote: ↑Sun Jan 22, 2023 1:39 pm

livesoft wrote: ↑Sat Jan 21, 2023 7:35 pm I would put it all in Vanguard LifeStrategy Moderate Growth (VSMGX) or DFA Global Allocation 60/40 (DGSIX). No managing necessary at all.

And if you wanted more complicated, then put 50% in VSMGX and 50% DGSIX. That way you can see when one does better than the other one.

Or the less expensive Balanced Index Fund VBIAX.

Both good options. The one question you need to decide on is if you want to hold global equities.

You can read about 100 threads on that topic.

deleted

This post documents the monthly return and asset-class weights as of December 31, 2022 of the (free-float) Global Stock-and-Bond Portfolio or, if you prefer, William Sharpe's Market Portfolio . Here's a link to the previous entry . The December 2022 return was: Global Stock-and-Bond Portfolio: ((60.73% X -4.39% (global stocks)) + (39.27% X -1.76% (global bonds))) = -3.36% (USD) Global stocks: Vanguard Total World Stock ETF (VT) NAV return Global bonds: Vanguard Total World Bond ETF (BNDW) NAV return [/size] As of December 31, 2022 the weights were: Global stocks: $63,167,956 million USD Market cap -- 59.70% FTSE Global All Cap Index ( GEISLMS ) -- Net MCap [/size] Global bonds: $42,645,650 million USD Market cap -- 40.30% FTSE World Broad ...

Logan Roy wrote: ↑Mon Jan 16, 2023 4:09 pm I think you may have established all of this without my being aware of it. Asness: There is no Size Effect. https://www.google.com/

Current paper on No Size Effect
https://www.aqr.com/Research-Archive/Pe ... ly-Edition

Five years earlier he wrote that size did matter if you control your "junk."
https://papers.ssrn.com/sol3/papers.cfm ... id=2553889

Which he address in the current paper as meaning size does not work "alone."

burritoLover wrote: ↑Mon Jan 16, 2023 3:02 pm Yeah, super-easy. Just wait for geopolitical winds to shift and then make changes to your portfolio so you can take advantage of the upcoming outsized returns. lol.

FWIW, I laughed.

So, the treasuries that were selected to have more volatility during a 40 year bull market (in which is the best case for treasuries) do not outperform junk bonds? Honestly, this graph even worsens your point against junk bonds; junk bonds often do not have as much duration risk (because of their coupon and the fact a good number are callable), so it is not like they get similar benefits from rate changes. I'll address rate changes in the next reply – but considering we're comparing the safest type of debt investment there is, to the least safe (next to distressed), it's not obvious the market's offering any risk premium beyond noise. Sure, but this was during one of the great bull markets in bonds. My take is different than both of you, e...

You seem to fundamentally misunderstand the argument for factors. Factor investing is perfectly compatible with the EMH. Fundamentally, the EMH is that market prices more likely accurately reflect risk than any other determination. Assets deemed safer are priced higher than riskier assets. Riskier assets have both higher return potential and more risk of under-performance. So tilting towards riskier assets increases both potential return and risk. I think it's important to point out the market is only as efficient as the aggregate of investors, and not all are inherently rational. There are numerous examples of this: meme stocks, crypto, and over-paying for some growth stocks. It also seems some investors ignore or otherwise overlook small...

Here's Bill Sharpe on rebalancing based on market moves rather than to specified percentages: ... https://web.stanford.edu/~wfsharpe/aaap/wfsaaap.pdf Sharpe's ideal portfolio holds assets in proportion to market caps. But that got me thinking, how does VT (Total World Stocks) compare to various splits of U.S. / ex US. Simba data 1970 to 2021, rebalanced annually. 60 / 40 is roughly the current split. It had been 40/60. I threw in 50/50 for good measure. Any guesses? World (VT) underperformed all of the above expcept (arguably) 40/60: 9.87 CAGR / 17.47 (std. dev.) 60/40 10.39 / 17.07 50/50 10.16 / 17.41 40/60 9.91 / 17.88 (same Sharpe ratio as VT, higher Sortino) On the other hand, and not surprisingly, the unrebalanced portfolios above out...

The debates will never be settled... Apart from presenting stock allocation from drifting above your risk tolerance, I would make the following observations... "6) The bad mental model is that rebalancing guarantees that you will buy low, sell high. In reality, if you consider a major dip like 2008-2009, you will be buying low, selling lower all the way down, then buying low, selling higher all the way up. So you lose on the way down and gain on the way up. It's not guaranteed that the total gains going up will exceed the total losses on going down. Furthermore, even if there is a gain, it's not necessarily going to be a big one. It's not like the fantasy that you rebalance once near the bottom." This is a good example of what I ...

... So I think a more realistic (but unlikely) tail risk is something like: you could lose a few percent, and it could take you 1-2 years to get most of the rest back. Personally, for money I might be willing to accept the risk of it being frozen for 1-2 years, I'd just assume have it in a bond fund. Fidelity's Short-Term Bond Index fund (FNSOX) current yield to maturity is something like 4.36% (and a very low .03% ER.) The duration for that fund is 2-3 years. I realize this is an old thread. But can FNSOX be set up like a Core Account? Or, can it be set up to automatically move money into FNSOX when the core account is above a set level and move money from FNSOX into the core when the core is too low? I am asking if there is a way to auto...

... So I think a more realistic (but unlikely) tail risk is something like: you could lose a few percent, and it could take you 1-2 years to get most of the rest back. Personally, for money I might be willing to accept the risk of it being frozen for 1-2 years, I'd just assume have it in a bond fund. Fidelity's Short-Term Bond Index fund (FNSOX) current yield to maturity is something like 4.36% (and a very low .03% ER.) The duration for that fund is 2-3 years. I realize this is an old thread. But can FNSOX be set up like a Core Account? Or, can it be set up to automatically move money into FNSOX when the core account is above a set level and move money from FNSOX into the core when the core is too low? I am asking if there is a way to auto...

...And this is a key point. There are asset classes that did not exist in the Great D. Heck, mutual funds didn't exist... They did. Massachusetts Investors' Trust, now part of MFS, was founded in 1924 and still exists today: MITTX. The Wellington Fund was founded in 1929 and still exists today: VWELX. However, "investment companies," as they were then known had a bad reputation. Many of them used a lot of leverage. The situation changed completely with the Investment Company Act of 1940, which created "the mutual fund as we know it" and introduced investor protections which I don't think people appreciate sufficiently. I agree with your point that you can never step twice into the same river, and that you cannot find ce...

I would take about half VT's LCV (about 28% of fund) and about a third of VT's LC blend holdings (29%) ... and spead that into small/mid value/blend ... while maintaing a similar expense ratio. Ahhh, to dream.

403b (Equitable) [/b] - $1,200 EQ/ Large Cap Growth Index - 65% Allocation EQ/ American Centry Mid Cap Value - 25% Allocation EQ/ MFS International Growth - 10% Allocation Company match? No. *I honestly wish my employer had a different 403(b) option. This is the best I can do... I don't even know the ticker symbols and or expense ratios (this bothers me. The prospectus is different than what I have seen before. Can someone look into this for me?* My wife is a school teacher, and the 403b options are dreadful. I do not know your fund, but this concerns me. https://markets.ft.com/data/funds/tearsheet/summary?s=0p0000tm3q I suspect other class shares will be worse. Perhaps much worse. The issue is that school employers tend not design this, b...

Just because there is no explicit fee doesn't mean there is no cost to you. Everyone needs to make money. There is no free lunch. There are already funds which are nearly free at 0.03% - 0.1% ERs. This savings in cost is not what will make or break your retirement. True. It will not make or break you. But, backtest suggest some differences. A million dollar investment in FZROX compared to its Vanguard equivalent VTI and VTSAX since the Zero fund came to be in late 2018 ... over $6,000 in favor of Fidelity. https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults The annual / monthly return links are interesting. The performance leader changes regularly. And yes, the highest expense ratio fund VTSAX does lead at times. And the...

repost / duplicate

Just because there is no explicit fee doesn't mean there is no cost to you. Everyone needs to make money. There is no free lunch. There are already funds which are nearly free at 0.03% - 0.1% ERs. This savings in cost is not what will make or break your retirement. True. It will not make or break you. But, backtest suggest some differences. A million dollar investment in FZROX compared to its Vanguard equivalent VTI and VTSAX since the Zero fund came to be in late 2018 ... over $6,000 in favor of Fidelity. https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults The annual / monthly return links are interesting. The performance leader changes regularly. And yes, the highest expense ratio fund VTSAX does lead at times. And the...

Coincidentally, the final portfolio I converted yesterday was mostly AVUS and IXUS. Yes the returns were similar and lower fees but it was just another thing to compare and wonder which was the optimal holding. I still felt compelled to log in and compare too frequently. Right. Though IXUS is not tilted the way AVDE is. See allocation weights on this Morningstar link. https://www.morningstar.com/etfs/arcx/avde/portfolio Not to mention how AVIV is tilted. It is hard to come up with the exact estimate of how much higher the expense ratio is over a mixture of low Expense Ratio / total market funds like IXUS and titlted funds. That said, probably higher than 0.02 but lower than 0.20. I tried find a basket that minimized costs and ended up with...

Duplicate

I was all set to move the rest of our VTI/VXUS/AVUV equity mix to AVGE yesterday at TD Ameritrade, however the bid-ask spread was around .11 which I’m not willing to absorb. If I have a couple of million $ to move,would the trading desk assist with purchases in 6 different accounts in the .01 to .02 spread range or is that amount of $ considered “ small potatoes “ ? Any input would be appreciated! Discussed earlier in thread. https://www.bogleheads.org/forum/viewtopic.php?p=6984172#p6984172 Short answer is I had the same concern. A bunch of times I bought in 500 share lots at market price. I always realized a price in the middle of the B/A spead. Some say it was not necessary. IDK. I would suggest this for your smaller accounts. Perhaps ca...

Intersting. A "the market is closed" premia.

If you need to sell equities, do it at open. If you need to buy, do it at close. If you need to reblance ... well, ahh ... don't overthink things.

4343.43

This may have been mentioned already since I have not read the entire thread. But, has anyone noticed that the expense ratio of AVGE is higher than if you bought all the funds yourself? By my math, using the holding breakdown on Avantis' website, holding the individual funds would incur and ER of about 0.195 compared to the ER of 0.25 by holding AVGE. Am I crazy or is there some reason why you'd want to pay that much more for simplicity purposes? The expenses are printed in prospectus: there is a 0.03% net management fee on top of the underlying fund expenses. That’s a small price IMHO: $30/year on - $100,000 investment. Wouldn't this compound over time as your investment grew? For example after 40 years at 10% return, an additional 0.03 i...

drumboy256 wrote: ↑Wed Dec 28, 2022 2:58 pm I would also argue fund of funds is superior to a singular ETF with equities. Simplicity of product maters as well.

+1
I wouldn't be factor tilting otherwise.

But there is plenty of theory for going smaller and increasing value weighing over market cap. Other factors are perhaps more controversial. If you review my recent post with the link to PV you will find that a 50/50 Large Cap Blend/Small Cap Value handily outperforms 100% LCB for about 25 years (I forget the length of time). It does so with only a trivial increase in standard deviation (which is a poor measure of "risk," but so be it). Now, is 50% SCV too much? Also true. While the SC and Value premium is stronger than other finance theories related to factors, I would not equate to the equity risk premium or the law of demand. For me, yes 50 percent SCV is a bit extreme. And yes, the standard deviation did not sway much, but it...

Further, is there evidence on the relative riskiness of stocks and bonds in the 1800s? What we call "stocks" and "bonds" might have been very different from what they were in the last 100 years. Perhaps stock markets were not very efficient then. If I had to guess what investments would look like in the next 100 years, I would think they would be closer to the 1900s than to the 1800s. My confidence would increase if my future were, say, 30 years. I agree more recent data is preferred, but no so much you have recancy bias. Old data is problematic, because things really do change. Trading cost and spreads, for example, have come way done since 1927 and even 1972, and this (I recall once reading) can explain part of the sm...

CletusCaddy wrote: ↑Mon Dec 26, 2022 4:03 pm There is never enough data, and it’s a social science not a physical one. Under these constraints the factor theory of investing is as good as we have got.

And yes behavioral issues will swamp theory anyday. For me this is why the advent of all-in-one funds like AVGE is game changing. Any level of slice and dice opens up the entire edifice to collapse.

True. The data is also as good as we have got. It it "good enough?" I truly do not know.

AVGE is "game changing" for me as well.

... it's great enough as is. Striving for perfection is a losers game. +1 Lower fees. Also, the low amount of AUM is a very small concern as a buy and hold type of investment. One more to my list. Automatic dividend reinvestment. It did not work for me this go around in my Vanguard account. I am not sure why, but I suspect it is because of low average trading volume (a VG rule). I mentioned this in the other thread. I don't know all the details, but I think for legal/technical reasons most new ETFs must distribute dividends during their first year of existence. This was the case with AVDE. When I first owned it I couldn't automatically reinvest dividends, but eventually they were automatically reinvested. I think this will happen for AVGE ...

This is one area of life where you really need formal academic training to really “get it” Before I took classes in econometrics and statistical analysis I couldn’t really comprehend factors either, beyond the Taylor-ish platitudes that you cite. I have taught econometrics before ... and when it comes to factor models I don't "get it." :wink: It is not so much the mathematics I don't get, but the willingness to accept an econometric model as something akin to the law of demand. They are not akin. For that you need much stronger theory. Anyone who has seriously played around with backtesting data will realize that the start/end dates matter significantly. This is true in the factor model (argubaly more so). So academics test it wi...

steve r wrote: ↑Mon Dec 26, 2022 10:33 am

JSPECO9 wrote: ↑Sun Dec 25, 2022 10:14 pm ... it's great enough as is. Striving for perfection is a losers game.

+1
Lower fees.
Also, the low amount of AUM is a very small concern as a buy and hold type of investment.

One more to my list. Automatic dividend reinvestment. It did not work for me this go around in my Vanguard account. I am not sure why, but I suspect it is because of low average trading volume (a VG rule).

Interesting how a thread on diversifying past total stock market became a thread on diversifying within stocks.

JSPECO9 wrote: ↑Sun Dec 25, 2022 10:14 pm ... it's great enough as is. Striving for perfection is a losers game.

+1
Lower fees.
Also, the low amount of AUM is a very small concern as a buy and hold type of investment.

But as soon as you assume that at SOME point you will rationally want to move down the efficient frontier to a less risky point, then on almost any plausible capital model it will turn out you will want to do that gradually, not all once. Because as much as it may feel like there is a discontinuity when you retire, in truth typically there has been a gradually shifting balance from human capital to financial capital, and indeed typically from new contributions to returns from reinvestment (which is just a different expression of the same thought), that started long before retirement. It's not just feeling, there IS a discontinuity when you retire, especially for FIRE which means you purposely walk away from the workforce when you still hav...

I don't understand why you can't see a difference between paying living expenses from employment and having to rely on your nest egg to pay your living expenses. Two completely different situations. That doesn't happen gradually over 5 or 10 years. It happens overnight. Two completely different situations that call for different tolerances for market risk. And I don't understand why you can't see that it DOES "happen gradually". Retirement is not a windfall, like a lottery or unexpected inheritance. ESPECIALLY if you're planning when to retire and/or making the decision to do so. ... Likewise, no rational person is comfortable owning $2million worth of stocks on Monday and only $1million worth of stocks on Wednesday. No one's uti...

Johm221122 wrote: ↑Sat Dec 17, 2022 4:15 pm

steve r wrote: ↑Sat Dec 17, 2022 4:04 pm My other thought is one of the reasons why delaying retirement might help, is not so much contributions, but a belief held by many that markets will recover in time. They almost always have, BUT ... there are exceptions like 1929 where it took years to get back to new highs. OTOH as recently as last year, market highs were being reached. So I guess it matters how many more years you are willing to work.

Or lower your goals, plus every year working makes less money you may need (for example Social Security bridge and the amount needed for it would lower every year more you work)

Good point.

Interesting thread.

Sort of Fat FIRE ish in terms of aggressive investing until retiring into fixed income.

Random thoughts.

What about work buyouts? I have observed these tend to be in bad times. If you "might" get an offer, it might make sense to hold more bonds/glide?

My other thought is one of the reasons why delaying retirement might help, is not so much contributions, but a belief held by many that markets will recover in time. They almost always have, BUT ... there are exceptions like 1929 where it took years to get back to new highs. OTOH as recently as last year, market highs were being reached. So I guess it matters how many more years you are willing to work.

KlangFool wrote: ↑Thu Dec 15, 2022 9:12 am Folks,

Glide path makes sense because it is a lousy gamble/bet to do something else.

Let's compare 100/0 versus 60/40 and the person is one year away from retirement.

Let's assume the stock returns 10% and the bond returns 0%.

1) If it goes well, the 100/0 gain 40% more = 4% more than 60/40.

2) If it goes bad and the stock drops 50%, the 100/0 lose 20% more.

Aka, gamble a possible loss of 20% versus a possible gain of 4%. It is a lousy bet.
...
KlangFool

This is a game of heads you lose, tails you breakeven. That is, of course, a bad bet.

You do not account for stocks doing well, say +120% or whatever.
+120 and -50 gets a CAGR of 10.

Interesting thread.

Apathizer wrote: ↑Sat Dec 17, 2022 1:16 pmI think my New Year's resolution is will be to only check and re-balancing my portfolio at most quarterly since daily performance is meaningless.

Cheers!

What time does the futures market open?

... If anything, this fund does what its supposed to do and help avoid the behavior of caring too much about what the fund is or is NOT doing by owning the haystack similar to the behavior model with VT/VTWAX. +1 The behavioral benefit is very much part of my rationale. That and sort of wanting to tilt "away" from growth and in particular LCG. Reading the comments today, with debates on how much of this or that or the other factor to have takes enormous conviction of each and every tilt in the long run, which will be difficult (for me) as each tilt will have cold spells. Even a portfolio as simple as a five fund model (like Nathan's) will be second guessed by me if I implemented it. (and yes I thought about it :wink: ) Keeping it...

drumboy256 wrote: ↑Fri Dec 16, 2022 10:48 pm Just got notified that the dividend is $0.4142.
Ex-Date: 12/19/22
Payable: 12/22/22

Also of interest. AVGE is still growing.

Up to $65 million in assets, with 1.2 million share outstanding. Previous updates earlier in thread.

Can I ask you, what kind off price improvement did you typically get on your marketable orders of funds like AVUS or AVUV (or any other similar ETF that has a few cents of bid/ask spread)? Also, what price improvement do you typically get on ETFs with $0.01 spread like VTI, BND, or MINT? Thanks, I really appreciate it. I did a bunch of 500 share transactions at market price on Vanguard (Roth). They all filled somewhere in the bid ask / middle. I also did a small limit order and paid that price. I did a 300 share order at Fidelity brokerage account, and paid the higher ask. Did markets change that quickly, IDK. While I did not try a larger order, the bid / ask prices instantly reverted back to what it was before I placed my order after each...