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by Rick Ferri
Tue Jan 15, 2019 8:48 am
Forum: Investing - Theory, News & General
Topic: An Annuity Hater Revisits SPIAs
Replies: 11
Views: 1467

An Annuity Hater Revisits SPIAs

Allan Roth revisits whether a single premium immediate annuity (SPIA) is a good option to hedge against longevity risk and inflation: An Annuity Hater Revisits SPIAs "A SPIA provides some longevity insurance at a reasonable rate. Even using a corporate-bond comparison, the cost of longevity insuranc...
by Rick Ferri
Thu Jan 10, 2019 7:48 pm
Forum: Investing - Theory, News & General
Topic: January "Bogleheads on Investing" podcast with Gus Sauter now available
Replies: 32
Views: 2232

Re: January "Bogleheads on Investing" podcast with Gus Sauter now available

Those with knowledge will retire and others without knowledge will take over, so the cycle will repeat.

I'm speculating, of course, but it SOUNDS logical. :D

Rick Ferri
by Rick Ferri
Thu Jan 10, 2019 6:15 pm
Forum: Investing - Theory, News & General
Topic: January "Bogleheads on Investing" podcast with Gus Sauter now available
Replies: 32
Views: 2232

Re: January "Bogleheads on Investing" podcast with Gus Sauter now available

Rick, Can you please explain what "arbitraged away" means? I heard it on the podcast and also see it in your response above, but I still don't understand it :oops: Great Podcast! Thanks for your time and effort. It means investment companies start exploiting the price difference until overcrowding ...
by Rick Ferri
Thu Jan 10, 2019 10:29 am
Forum: Investing - Theory, News & General
Topic: January "Bogleheads on Investing" podcast with Gus Sauter now available
Replies: 32
Views: 2232

Re: January "Bogleheads on Investing" podcast with Gus Sauter now available

Both. I'll record more than an hour and then cut one or two questions that either the guest didn't know or the answer didn't really fit the rest of the interview or may have violated some legal or compliance rule. The question I cut after the interview with Gus was his views on High Frequency Tradin...
by Rick Ferri
Thu Jan 10, 2019 10:07 am
Forum: Investing - Theory, News & General
Topic: January "Bogleheads on Investing" podcast with Gus Sauter now available
Replies: 32
Views: 2232

Re: January "Bogleheads on Investing" podcast with Gus Sauter now available

Echoing the other comments -- great interview. Really down to earth and non-dogmatic guy. I thought his take on factors (like value) and their shelf-lives before they're arbitraged away was particularly thought provoking. In a sense, Gus was saying that factor premiums are arbitraged away to the ex...
by Rick Ferri
Wed Jan 09, 2019 8:35 pm
Forum: Investing - Theory, News & General
Topic: Net net stocks
Replies: 13
Views: 1132

Re: Net net stocks

These [cheap stocks] used to be available in the US but are now mostly available abroad. I want to make sure I understand. You're saying this website is making the argument that it's as hard as heck to pick winning stocks here in the US where we live, but easy to pick winning stocks in foreign mark...
by Rick Ferri
Wed Jan 09, 2019 3:01 pm
Forum: Investing - Theory, News & General
Topic: Gus Sauter: the next "Bogleheads on Investing" podcast guest
Replies: 28
Views: 1829

Re: Gus Sauter: the next "Bogleheads on Investing" podcast guest

Gus and I did not talk about current market conditions or his thoughts valuation or the ERP. Aswath Damodaran would make an excellent guest at some time in the future.

Rick Ferri
by Rick Ferri
Wed Jan 09, 2019 2:38 pm
Forum: Investing - Theory, News & General
Topic: Gus Sauter: the next "Bogleheads on Investing" podcast guest
Replies: 28
Views: 1829

Re: Gus Sauter: the next "Bogleheads on Investing" podcast guest

sunnywindy wrote:
Tue Jan 08, 2019 3:53 pm
If the active ETFs are deemed successful, are they planning to offer more? Potentially more multifactor funds in International and EM?

Thanks!
Gus is no longer employed by Vanguard and since investment companies do not make announcements like this public, he would not know.
by Rick Ferri
Wed Jan 09, 2019 6:03 am
Forum: Investing - Theory, News & General
Topic: January "Bogleheads on Investing" podcast with Gus Sauter now available
Replies: 32
Views: 2232

Re: January "Bogleheads on Investing" podcast with Gus Sauter now available

Good podcast. Except you didn't ask my question. :twisted: Your questions was: "Ask him why Vanguard created the S&P 600 value index fund VIOV and the new factor funds (VFMF, VFVA, etc.) and then put them in the dungeon of the website and barely marketed them. Were they made to suit a particular in...
by Rick Ferri
Tue Jan 08, 2019 7:26 pm
Forum: Investing - Theory, News & General
Topic: January "Bogleheads on Investing" podcast with Gus Sauter now available
Replies: 32
Views: 2232

Re: January "Bogleheads on Investing" podcast with Gus Sauter now available

We could have gone on for a couple more hours! One question that had to be cut due to a time constraint was Gus's view of high frequency trading. He is for it. We both agreed that while HFT may make your blood boil, the algos do make the market more liquid and only get fractions of a penny on each s...
by Rick Ferri
Tue Jan 08, 2019 10:44 am
Forum: Investing - Theory, News & General
Topic: January "Bogleheads on Investing" podcast with Gus Sauter now available
Replies: 32
Views: 2232

Re: January "Bogleheads on Investing" podcast with Gus Sauter now available

duplin county wrote:
Tue Jan 08, 2019 10:16 am
Great interview. I feel Gus did not address Fidelity offering zero amount requirement for initial investing while Vanguard requires $3000 to start.
I'm speculating he would answer that Vanguard ETFs do not have minimums.
by Rick Ferri
Mon Jan 07, 2019 10:55 pm
Forum: Investing - Theory, News & General
Topic: January "Bogleheads on Investing" podcast with Gus Sauter now available
Replies: 32
Views: 2232

January "Bogleheads on Investing" podcast with Gus Sauter now available

You will enjoy this special podcast with Gus Sauter , former Director and Chief Investment Officer of the Vanguard Group. Gus led the Quantitative Investing Group since joining Vanguard and head investment manager of Vanguard index funds from 1987 through 2003. He is also the creator of Vanguard's e...
by Rick Ferri
Mon Jan 07, 2019 10:39 pm
Forum: Investing - Theory, News & General
Topic: Gus Sauter: the next "Bogleheads on Investing" podcast guest
Replies: 28
Views: 1829

Re: Gus Sauter: the next "Bogleheads on Investing" podcast guest

This podcast is now available. Thank you to all who participated by asking question. We were able to cover most questions although not all questions due to a time constraint.

"Bogleheads on Investing" podcast guest Gus Sauter

Rick Ferri
The host
by Rick Ferri
Sat Jan 05, 2019 7:54 pm
Forum: Investing - Help with Personal Investments
Topic: VG advises 15% International Bonds (VTABX)... Why?
Replies: 48
Views: 3372

Re: VG advises 15% International Bonds (VTIAX)... Why?

International bonds add more complexity and add slightly higher cost to a fixed income portfolio. IMO, they are not necessary and I do not recommend them . That being said, if someone believes the international bond story and wants them, I would not argue with them. Rick Ferri Really? https://core-...
by Rick Ferri
Sat Jan 05, 2019 8:58 am
Forum: Investing - Help with Personal Investments
Topic: VG advises 15% International Bonds (VTABX)... Why?
Replies: 48
Views: 3372

Re: VG advises 15% International Bonds (VTIAX)... Why?

International bonds add more complexity and add slightly higher cost to a fixed income portfolio. IMO, they are not necessary and I do not recommend them . That being said, if someone believes the international bond story and wants them, I would not argue with them. Rick Ferri Really? https://core-...
by Rick Ferri
Fri Jan 04, 2019 5:27 am
Forum: Investing - Help with Personal Investments
Topic: BAM Advisor: Advice on alt funds and allocations
Replies: 54
Views: 2595

Re: BAM Advisor: Advice on alt funds and allocations

Advisers make investing complicated for the purpose of job security. Let's look at this pragmatically. Your being asked to add LENDX 6.7%, QSPRX 5.8%, and DFGEX 2.7%. Those percentages are so precise they create the illusion of importance by making you think there is some scientific formula that sol...
by Rick Ferri
Wed Jan 02, 2019 5:17 pm
Forum: Investing - Theory, News & General
Topic: Gus Sauter: the next "Bogleheads on Investing" podcast guest
Replies: 28
Views: 1829

Gus Sauter: the next "Bogleheads on Investing" podcast guest

I am interviewing Gus Sauter, former Chief Investment Officer (CIO) of Vanguard as my next podcast guest. Gus worked at Vanguard for 25 year and was CIO from 2002 to 2012. The interview will be recorded on Monday and posted later in the week. If you would like to ask Gus a question, please post it b...
by Rick Ferri
Wed Jan 02, 2019 12:51 pm
Forum: Investing - Help with Personal Investments
Topic: VG advises 15% International Bonds (VTABX)... Why?
Replies: 48
Views: 3372

Re: VG advises 15% International Bonds (VTIAX)... Why?

International bonds add more complexity and add slightly higher cost to a fixed income portfolio. IMO, they are not necessary and I do not recommend them. That being said, if someone believes the international bond story and wants them, I would not argue with them.

Rick Ferri
by Rick Ferri
Wed Jan 02, 2019 9:12 am
Forum: Investing - Theory, News & General
Topic: Absurd Adviser Fees!
Replies: 16
Views: 2460

Absurd Adviser Fees!

How fair is it when nearly HALF of a client's 4% withdrawal rate for retirement goes to pay the adviser and the funds they invest in? RIAs are supposed to be fiduciaries and consider all costs. Apparently, that doesn't apply to this adviser's own fee. Edelman Financial Engines This company charges $...
by Rick Ferri
Wed Jan 02, 2019 8:17 am
Forum: Investing - Theory, News & General
Topic: Invesco to close two micro cap ETFs
Replies: 20
Views: 1316

Re: Invesco to close two micro cap ETFs

One of the changes I've made since writing All About Asset Allocation 2nd Ed is dropping micro-cap from the portfolio. It just wasn't worth the fight. The small allocation I had to micro was split between the total US stock market and small-cap value.

Rick Ferri
by Rick Ferri
Wed Jan 02, 2019 7:25 am
Forum: Investing - Theory, News & General
Topic: 2019 Hedge Fund Contest
Replies: 119
Views: 5508

Re: 2019 Hedge Fund Contest

LONG: GE
SHORT: TSLA

EAST-WEST FUND
by Rick Ferri
Mon Dec 31, 2018 9:01 pm
Forum: Investing - Help with Personal Investments
Topic: What is the expected real return of S&P 500 for the next 30 years?
Replies: 51
Views: 4287

Re: What is the expected real return of S&P 500 for the next 30 years?

For this to have any relevance he would have to say what the starting and ending PE is and they should both be the same. If the starting PE today is 18, then you would look out 30 years and ask what is the expected rate of return for the stock assuming the ending PE was 18 in 30 years. The answer w...
by Rick Ferri
Mon Dec 31, 2018 11:13 am
Forum: Investing - Help with Personal Investments
Topic: What is the expected real return of S&P 500 for the next 30 years?
Replies: 51
Views: 4287

Re: What is the expected real return of S&P 500 for the next 30 years?

For this to have any relevance he would have to say what the starting and ending PE is and they should both be the same. If the starting PE today is 18, then you would look out 30 years and ask what is the expected rate of return for the stock assuming the ending PE was 18 in 30 years. The answer wo...
by Rick Ferri
Sun Dec 30, 2018 5:13 pm
Forum: Investing - Theory, News & General
Topic: What are some critiques of passive investing/index funds?
Replies: 75
Views: 5643

Re: What are some critiques of passive investing/index funds?

Disclaimer: All of my investments are in low cost index funds (100% VTSAX). I am 100% on board with the Boglehead philosophy. The reason for this post is to better my understanding (newer investor), and to help alleviate confirmation bias. I want to open up a dialogue, I think it is important to un...
by Rick Ferri
Sat Dec 29, 2018 7:54 pm
Forum: Investing - Theory, News & General
Topic: Core-4 Investing is LIVE! It really is this time!
Replies: 141
Views: 12974

Re: Core-4 Investing is LIVE! It really is this time!

I have updated all Core-4 Portfolio fund samples to include the new minimums for Vanguard Admiral shares. I've also change the Adviser Alliance page to the Adviser Marketplace page based on feedback I received. Alliance was too close to "endorsing", which was not my intent. No adviser listing on th...
by Rick Ferri
Mon Dec 24, 2018 7:32 pm
Forum: Investing - Help with Personal Investments
Topic: Should I rebalance again?
Replies: 13
Views: 1532

Re: Should I rebalance again?

If your trigger to rebalance has been hit, then rebalance.
by Rick Ferri
Sun Dec 23, 2018 8:28 pm
Forum: Investing - Theory, News & General
Topic: Why do index funds show lower returns for longer time horizons?
Replies: 8
Views: 1325

Re: Why do index funds show lower returns for longer time horizons?

In the very long run - 30 years - stocks return between 5 and 6 percent over inflation depending on their valuation at the beginning. Based on today's valuation and 2 percent inflation for the long-term (Fed target), I'm using 7 percent nominally as an expected long-term return for US stocks.
by Rick Ferri
Sun Dec 23, 2018 5:06 pm
Forum: Local Chapters and Bogleheads Community
Topic: My Christmas Present To You
Replies: 108
Views: 11123

Re: My Christmas Present To You

Thank you, Taylor. Enjoy your cruise with your family and friends.

Rick Ferri
by Rick Ferri
Wed Dec 19, 2018 8:38 pm
Forum: Investing - Theory, News & General
Topic: A case against buy and hold index investing
Replies: 39
Views: 4426

Re: A case against buy and hold index investing

Buy, hold and rebalance gets attacked as a failure every time stocks drop. Those doing the attacking never provide evidence they did any better.

Rick Ferri
by Rick Ferri
Wed Dec 19, 2018 5:32 pm
Forum: Investing - Theory, News & General
Topic: Artemis Attack on the Bogleheads
Replies: 80
Views: 9136

Re: Artemis Attack on the Bogleheads

He exaggerates and overgeneralizes everything, and sounds like he is whining about why hedge fund managers like himself are underperforming: Here is what I heard: "Central Banks have put all active managers out of business." "The more the market is dominated by passive investors the less opportunity...
by Rick Ferri
Wed Dec 19, 2018 4:23 pm
Forum: Investing - Help with Personal Investments
Topic: Don't put in stocks what you can't afford to lose? Really?
Replies: 16
Views: 2122

Re: Don't put in stocks what you can't afford to lose? Really?

I have yet to find any investor who lost money in a total stock market index fund or S&P 500 index fund if they held onto it long-term, and I doubt the future will be any different than the past.
by Rick Ferri
Mon Dec 17, 2018 10:23 am
Forum: Investing - Help with Personal Investments
Topic: Vanguard Junk Bond fund
Replies: 79
Views: 8719

Re: Vanguard Junk Bond fund

If people want to say HY is not a separate asset class but rather a hybrid of stocks and bonds, they would be correct some times and incorrect other times. HY has had high correlation with stocks but not at turning points. HY recovers months before stocks bottom and sells off months before stocks pe...
by Rick Ferri
Sun Dec 16, 2018 9:26 pm
Forum: Investing - Theory, News & General
Topic: Can Vanguard freeze mutual fund redemptions during times of duress?
Replies: 14
Views: 3160

Re: Can Vanguard freeze mutual fund redemptions during times of duress?

No, you are wrong. I wrote the article over 5 years ago, when it happened, as it happened, and I verified my analysis with both fund companies. ETFs became the price discovery vehicle when the HY market froze, and that's why the the market pricing of the high yield ETF took a bigger dive than the NA...
by Rick Ferri
Sun Dec 16, 2018 9:29 am
Forum: Investing - Theory, News & General
Topic: Can Vanguard freeze mutual fund redemptions during times of duress?
Replies: 14
Views: 3160

Re: Can Vanguard freeze mutual fund redemptions during times of duress?

I was not incorrect and not confused. The high yield ETF (HGY) was trading at a discount to VWEHX even considering the differences in credit ratings. That’s because the HY froze while and ETFs continued to trade. At the end of the day, Vanguard priced its own HY bonds to find NAV, which they priced ...
by Rick Ferri
Fri Dec 14, 2018 1:31 pm
Forum: Investing - Theory, News & General
Topic: Allan Roth: 3 Correlation Myths In Portfolio Construction
Replies: 104
Views: 7089

Re: Allan Roth: 3 Correlation Myths In Portfolio Construction

Asset class correlations are dynamic, not static. Two distinct and separate asset classes may have been highly correlated in the past and may stay correlated for some time the future, and then become non-correlated. In my book All About Asset Allocation , I discuss the issues of correlation that All...
by Rick Ferri
Fri Dec 14, 2018 10:18 am
Forum: Investing - Theory, News & General
Topic: NPR On Point: Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over
Replies: 26
Views: 4270

Re: NPR On Point: Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over

Thanks Rick. I agree that Vanguard is voting proxies responsibly. For example, I was tickled to see that Vanguard withheld votes for Facebook board members Sandberg and Zuckerberg. Mark Explain please, they didn't cast a vote on a measure? I don't know the answer to that question. Rick Ferri
by Rick Ferri
Thu Dec 13, 2018 6:10 pm
Forum: Investing - Theory, News & General
Topic: Podcast: Rick Ferri – What Does the Future of Financial Advice Look Like?
Replies: 4
Views: 838

Podcast: Rick Ferri – What Does the Future of Financial Advice Look Like?

Below is a link to a podcast I did recently for NewRetirement.com I never know how these interview are going to turn out. In this one, I take a whip to the brokerage and adviser industry. Didn't realize I was beating up on them so hard...well...maybe I did a little. Podcast: Rick Ferri – What Does t...
by Rick Ferri
Thu Dec 13, 2018 1:38 pm
Forum: Investing - Theory, News & General
Topic: NPR On Point: Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over
Replies: 26
Views: 4270

Re: NPR On Point: Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over

aristotelian wrote:
Thu Dec 13, 2018 11:52 am
What about just making all shares held by mutual funds disqualified from voting?
I do not want my votes to be disqualified. If I don't like how Vanguard is voting proxies, I'll switch to another index fund provider.

Rick Ferri
by Rick Ferri
Thu Dec 13, 2018 11:08 am
Forum: Investing - Help with Personal Investments
Topic: Vanguard Junk Bond fund
Replies: 79
Views: 8719

Re: Vanguard Junk Bond fund

Rick, an update may be due based on current yields. As of today, VWEAX 30-Day yield is 6.4%, Interm-Term Investment Grade is 3.75%, and Interm-Term Treasury is 2.71%. It appears the premium for owning credit risk has gone up in last few months. There is a near 4% spread with Treasury, perhaps the m...
by Rick Ferri
Thu Dec 13, 2018 10:41 am
Forum: Investing - Theory, News & General
Topic: December "Bogleheads on Investing" podcast with guest Christine Benz now available
Replies: 16
Views: 1936

December "Bogleheads on Investing" podcast with guest Christine Benz now available

The December "Bogleheads on Investing" podcast with guest Christine Benz now available. Click the link below or download through your podcast provider. This information packed podcast with guest Christine Benz, CFP®, Moringstar's Director of Personal Finance covers a lot of important material. We di...
by Rick Ferri
Wed Dec 12, 2018 8:39 pm
Forum: Investing - Theory, News & General
Topic: NPR On Point: Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over
Replies: 26
Views: 4270

Re: NPR On Point: Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over

Don’t worry about it. We shall all be dead a long time before the potential issue of vote concentration Jack Bogle speculated about in his article actually becomes a concern.

Rick Ferri
by Rick Ferri
Tue Dec 11, 2018 9:28 pm
Forum: Investing - Theory, News & General
Topic: Shrinking dividends?
Replies: 30
Views: 4151

Re: Shrinking dividends?

Around 1950, corporate boards reduced dividend payouts and started using excess cash to buy back stock. This was primarily a result of changes in executive compensation from cash to stock incentive programs that included stock option programs for key employees. Rick Do you have a citation on that? ...
by Rick Ferri
Tue Dec 11, 2018 12:34 pm
Forum: Investing - Theory, News & General
Topic: Shrinking dividends?
Replies: 30
Views: 4151

Re: Shrinking dividends?

Around 1950, corporate boards reduced dividend payouts and started using excess cash to buy back stock. This was primarily a result of changes in executive compensation from cash to stock incentive programs that included stock option programs for key employees.