Search found 4833 matches

by ogd
Thu May 10, 2018 7:21 pm
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7129

Re: How does stock buyback benefit investors?

About time I answer the OP in this thread as well. Occasionally I hear companies return their extra cash to their share holders by stock buybacks. Recently there was a report that Apple will return $100 billion to its share holders by stock buybacks. A typical argument goes like this: A company redu...
by ogd
Thu May 10, 2018 6:55 pm
Forum: Investing - Help with Personal Investments
Topic: move out of bonds into money market and online savings
Replies: 19
Views: 2951

Re: move out of bonds into money market and online savings

Hi . I am about 70:30 in stock and bond funds . In the present environment with bond returns not that impressive and also with the online savings , money market and cd rates keep going up , I am thinking of pulling out of bonds into these . What do you think ? The recent bad returns are the price t...
by ogd
Thu May 10, 2018 3:39 pm
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7129

Re: How does stock buyback benefit investors?

What about the impact on the shareholder of an index (in whatever form)? If they choose to reinvest dividends, they in essence take the dividend paid by one company in the index & use it to buy parts of all companies in the index. When a stock in the index does a buyback, the index holder doesn't h...
by ogd
Thu May 10, 2018 2:02 pm
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7129

Re: How does stock buyback benefit investors?

Let me put your position to you in the form of its logical extension: should management be entirely agnostic about the share price at which it issues shares? PS I realized I haven't answered your question about issuance. I'd argue that this is a considerably more complicated proposal, for two relat...
by ogd
Thu May 10, 2018 1:31 pm
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7129

Re: How does stock buyback benefit investors?

Let me put your positions back to you in a form of a question. How exactly do you propose that managements decide between (1) retaining their earnings, (2) issuing a dividend, or (3) buying back their shares, if as you suggest, management must be entirely agnostic about the current market price? I'...
by ogd
Thu May 10, 2018 3:23 am
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 13720

Re: Total Bond - SEC yield breaks 3%

Thanks ogd for your reply. I was thinking about brokered CD's all wrong. These do have principle fluctuation One of my points, probably not the best expressed, is that the principal fluctuation is not the issue - it's only a symptom. It's the market telling you "if you want to get out of your old i...
by ogd
Thu May 10, 2018 2:50 am
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7129

Re: How does stock buyback benefit investors?

The simplest way is to think about this like a business owner. Say you owned a highly lucrative business with a partner - 50%-50% split. I reckon there would be a price at which you would JUMP at the chance to retire his share in the business, and then there would be a price where you would be will...
by ogd
Thu May 10, 2018 2:36 am
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7129

Re: How does stock buyback benefit investors?

This is why the answer to whether stock buybacks benefit investors is this: it depends on the price per share at which the buyback occurs. I couldn't resist answering because I actually think the complete opposite of what you just said: Knowing what we know now (at the time of the buyback), the pri...
by ogd
Tue May 08, 2018 4:07 pm
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 13720

Re: Total Bond - SEC yield breaks 3%

An opposing view jalbert -- worth noting that in this article that generally argues that bond ladders can work well, there is no mention of interest rate risk as an advantage for ladders, and the same goes for other articles from Larry's firm. They know what they are talking about and they're quite...
by ogd
Tue May 08, 2018 3:47 pm
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 13720

Re: Total Bond - SEC yield breaks 3%

This is a minor point, but with brokered CDs aren't coupons reinvested in the same CD so that the yield held until maturity matches what one expected. There is no guarantee with bonds, since coupons must be reinvested in other bonds. Thanks triceratop! I would classify the inability to invest at sa...
by ogd
Tue May 08, 2018 3:40 pm
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 13720

Re: Total Bond - SEC yield breaks 3%

...a brokered CD has the same interest rate risk as a similar duration bond fund (say, Treasuries, to keep the guarantees similar). But, at least currently, the brokered CD has a higher yield. Same risk, higher return so the CD = free lunch? Is this because most invested money is in taxable account...
by ogd
Tue May 08, 2018 2:27 pm
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 13720

Re: Total Bond - SEC yield breaks 3%

Kevin's post, demonstrates that a single issue direct CD with low EWP is vastly superior (if you can get these in tax deferred accounts, like an IRA). I think a ladder of brokered CD's would have a similar behavior (with the difference of being better in rising interest rate env, and worse in falli...
by ogd
Mon Apr 23, 2018 4:55 pm
Forum: Personal Finance (Not Investing)
Topic: Strategy for Use of Restricted Stock Units
Replies: 18
Views: 1600

Re: Strategy for Use of Restricted Stock Units

Just to add what others have said, think of RSUs this way. When an RSU vests, your company gives you a cash salary bonus. They then immediately turn around and buy company stock with that cash bonus. If you received a cash bonus instead of RSUs, would you also buy company stock? Both are taxed the ...
by ogd
Thu Apr 05, 2018 6:44 pm
Forum: Investing - Help with Personal Investments
Topic: Bond fund vs. CD
Replies: 26
Views: 5231

Re: Bond fund vs. CD

Something caught my eye Kevin, sorry for rewinding a bit. Five-year return of the VG intermediate-term Treasury funds as of 3/31 was 0.86% and 0.85% (all figures here are for Admiral shares), while a 5-year CD of mine that matured in late March returned 2.47% (as I knew it would). So in this case te...
by ogd
Sat Mar 31, 2018 2:20 pm
Forum: Investing - Help with Personal Investments
Topic: Explain one more time how balance funds work
Replies: 37
Views: 3718

Re: Explain one more time how balance funds work

Portfolio A = 60% Total US stock fund, 40% Total US Bond rebalanced once a year Portfolio B = 60/40 Total US Stock and Bond fund rebalanced daily (or however frequently the Vanguard 60/40 Balanced fund rebalances) Would it be true that if one of the assets (say stocks) steadily outperformed the oth...
by ogd
Sat Mar 31, 2018 1:25 pm
Forum: Investing - Help with Personal Investments
Topic: Explain one more time how balance funds work
Replies: 37
Views: 3718

Re: Explain one more time how balance funds work

My explaining is subpar for sure - which leads to confusion by the reader. It shows I too am confused. Let say you have two portfolios - 1. A Balanced Fund (BF) of 60-40 and 2. A 3 Fund Portfolio (3FP) of 60-40 which is currently at exactly 60-40 (no rebalncing needed) RMD comes along and you must ...
by ogd
Thu Mar 29, 2018 2:45 am
Forum: Investing - Help with Personal Investments
Topic: Tax-exempt muni bond mix vs. CA intermediate-term tax-exempt muni-bond fund
Replies: 20
Views: 2580

Re: Tax-exempt muni bond mix vs. CA intermediate-term tax-exempt muni-bond fund

But this is purely because of interest rate hikes, which reduces the bond values (negative YTD). This is not timing, it is just that I was already at capital loss in muni bonds, so I sold them, and bought treasuries with guaranteed gains. For my tax bracket, muni bonds return better returns than tr...
by ogd
Thu Mar 29, 2018 2:33 am
Forum: Investing - Help with Personal Investments
Topic: Total return vs dividends
Replies: 54
Views: 6469

Re: Total return vs dividends

I understand that in theory, focusing on total return and selling shares to generate cash is just as good as or perhaps better than relying on dividends for cash flow in retirement. However, I’m having a mental block on what this means in practice. If my portfolio will generate enough dividends and...
by ogd
Thu Mar 29, 2018 2:00 am
Forum: Investing - Help with Personal Investments
Topic: bid-ask spread for limit orders
Replies: 24
Views: 1936

Re: bid-ask spread for limit orders

My question is, if you place a limit order, does bid-ask spread matter? It doesn't have to execute immediately. Yes, it does. If a large spread is happening throughout the period, the limit order will probably execute at an unfair price - even if it's a price you were previously okay with. This mig...
by ogd
Thu Mar 29, 2018 12:33 am
Forum: Investing - Help with Personal Investments
Topic: Explain one more time how balance funds work
Replies: 37
Views: 3718

Re: Explain one more time how balance funds work

There are circumstances when taking RMDs from a balanced fund would have resulted in lower portfolio balances versus using an initially equivalent portfolio of separate stock and bond funds, without necessarily rebalancing to the target stock:bond allocation of the balanced fund. Yes, but this is e...
by ogd
Tue Mar 27, 2018 10:53 am
Forum: Investing - Help with Personal Investments
Topic: Explain one more time how balance funds work
Replies: 37
Views: 3718

Re: Explain one more time how balance funds work

But with this balanced fund you are "forced" to sell, at least in part, that worse porforming holding. How do you reconcile this? It's not a big deal. The fund has been buying stocks after they started dropping and selling bonds, so compared to the beginning of that period you have indeed sold more...
by ogd
Sun Mar 25, 2018 8:20 pm
Forum: Investing - Help with Personal Investments
Topic: Wrapping my head around bond funds
Replies: 57
Views: 6912

Re: Wrapping my head around bond funds

I took a small loss on Fidelity's short term bond fund (FSBAX 1-3 year bonds) last year. If I had parked the same amount of money in a CD that came to maturity, obviously things would have been different. Ok, let's analyze this a bit. The CD that came to maturity would have been a very short-term i...
by ogd
Fri Mar 16, 2018 6:37 pm
Forum: Investing - Help with Personal Investments
Topic: Wrapping my head around bond funds
Replies: 57
Views: 6912

Re: Wrapping my head around bond funds

I have also researched and found that bond fund correlation with equities increases in a severely down market. Not sure where you read this, but I'm pretty sure it's wrong. It might be referring to certain types of higher-risk bonds that behave more equity like, but the safe bonds we typically reco...
by ogd
Thu Mar 15, 2018 7:58 pm
Forum: Investing - Theory, News & General
Topic: What % of the stock market volume are (primary) tx from index funds
Replies: 4
Views: 1112

Re: What % of the stock market volume are (primary) tx from index funds

Thanks for this. That the transactions triggered by indexfonds really only make up 5% of the total volume is lower then I expected. Understandable when you look at the turnover numbers. For index funds, it's 5% and below. For active funds, it can exceed 100% a year! If it's too low, they're accused...
by ogd
Mon Mar 12, 2018 1:47 pm
Forum: Investing - Help with Personal Investments
Topic: Municipal Bond Fund NAV and interest rates
Replies: 19
Views: 1947

Re: Municipal Bond Fund NAV and interest rates

Beware that for munis held less than 6 months there is a rule about the tax free dividends received in the interim -- when selling at a loss, the dividends have to be discounted from the loss to prevent gaming the dividend payment dates. Let's say that one owned the OP's VWITX (Vanguard Intermediat...
by ogd
Sun Mar 11, 2018 8:39 pm
Forum: Investing - Help with Personal Investments
Topic: Municipal Bond Fund NAV and interest rates
Replies: 19
Views: 1947

Re: Municipal Bond Fund NAV and interest rates

1) Please explain what happens if I hold this fund long term. Does the principal loss get wiped out or reset? I am failing to grasp this concept. Since it's very unlikely that any of the bonds have actually defaulted (have not checked, but you'd hear about such things), the principal loss should be...
by ogd
Fri Feb 23, 2018 6:57 pm
Forum: Investing - Help with Personal Investments
Topic: Still lose with bonds even at duration
Replies: 41
Views: 5351

Re: Still lose with bonds even at duration

The point is, unless someone has a crystal ball that tell them exactly when rates are going to rise and when they will stop rising, there is no way to stay out of bonds and into stable value / CDs without risking either losing additional bond returns, or accepting lower returns in a rising rate env...
by ogd
Thu Feb 22, 2018 11:28 am
Forum: Investing - Help with Personal Investments
Topic: Still lose with bonds even at duration
Replies: 41
Views: 5351

Re: Still lose with bonds even at duration

Current: $115,995 @ 2.91% compounded over 6 years: $138,094, interest paid: $18,678, taxes: $6,164, Net: $131,930 Net loss: $1,225 over 6 years Hi stocknoob4111 -- as I was mentioning in another thread, you need to be a little patient when it comes to SEC yield. Since it's a 30-day average, it's in...
by ogd
Wed Feb 21, 2018 7:01 pm
Forum: Investing - Help with Personal Investments
Topic: Muni Bond market
Replies: 29
Views: 3359

Re: Muni Bond market

It is $500k. See this blog from Larry’s coauthor and coworker. http://buckinghamadvisor.com/deciding-between-individual-bonds-and-bond-funds-jared-kizer-042413/ Second the thanks for posting this. DanL, continuing what I was saying above: these advisors (well-trusted around here compared to the nor...
by ogd
Wed Feb 21, 2018 12:57 am
Forum: Investing - Help with Personal Investments
Topic: Muni Bond market
Replies: 29
Views: 3359

Re: Muni Bond market

DanL -- here are some words from author and past forum contributor Rick Ferri: I managed several hundred million dollars in municipal bond portfolios for many years. Not any more. My choice now is a low-cost Vanguard tax-exempt fund. The costs is very low, the fund has overnight liquidity, and the p...
by ogd
Wed Feb 21, 2018 12:31 am
Forum: Investing - Theory, News & General
Topic: Why investors shouldn’t panic over falling bond prices
Replies: 36
Views: 7038

Re: Why investors shouldn’t panic over falling bond prices

Should I be comparing the APR of a CD to the equivalent average annual returns on the bonds (in this case 2.02% for 1yr)? Use SEC yield for funds. The other numbers are backward looking, like it would be to say "last year I made 2.5% in a 1 year CD at X Bank" -- well, that was then and I need to lo...
by ogd
Wed Feb 21, 2018 12:01 am
Forum: Investing - Theory, News & General
Topic: Why investors shouldn’t panic over falling bond prices
Replies: 36
Views: 7038

Re: Why investors shouldn’t panic over falling bond prices

So you guys are saying now would not be a good time to buy bonds to rebalance? What should we do if our AA is off-balance? Leave it for now? Go ahead and rebalance - that's why you have an AA. You should in fact feel better now buying bonds at 2.65% (@5 years) than a year ago at 1.9%, when none of ...
by ogd
Fri Feb 16, 2018 2:49 am
Forum: Investing - Help with Personal Investments
Topic: Why not just do CDs and skip bonds?
Replies: 38
Views: 11173

Re: Why not just do CDs and skip bonds?

How are bond funds easier to manage? Is there a document somewhere that explains how to manage the duration on these funds in the withdrawal stage or close to it, and how to manage rebalancing when you have a bunch of bond funds with different durations? It's easier to manage because I don't have a...
by ogd
Fri Feb 16, 2018 12:03 am
Forum: Investing - Help with Personal Investments
Topic: Why not just do CDs and skip bonds?
Replies: 38
Views: 11173

Re: Why not just do CDs and skip bonds?

I should add -- you don't know this will happen. We're not talking about Fed overnight rates, but the yields of 5 year bonds (or 10, or so on), and those are set by bond market participants with wisdom, political connections and advanced degrees, who don't like to lose money. You're saying that you...
by ogd
Thu Feb 15, 2018 11:06 pm
Forum: Investing - Help with Personal Investments
Topic: Why not just do CDs and skip bonds?
Replies: 38
Views: 11173

Re: Why not just do CDs and skip bonds?

CDs are a great alternative. Better than bond funds of similar duration and yield because with a bond fund if yields keep rising you may need to wait almost double the duration to get your principal back with the interest based on the original yield. Can you explain that? Why almost double? I thoug...
by ogd
Wed Feb 07, 2018 11:28 pm
Forum: Investing - Theory, News & General
Topic: Spread between taxable and tax-exempt bond yields returning to normal
Replies: 1
Views: 551

Re: Spread between taxable and tax-exempt bond yields returning to normal

So why is this? Possible reasons are Fed policy returning to a more typical situation (short term interest rates not pegged to zero, with quantitative easing to boot), a change in the risk of munis (but is the state pension situation really any better now?), the liquidity premium, or relative issua...
by ogd
Sat Feb 03, 2018 7:26 am
Forum: Investing - Help with Personal Investments
Topic: Bonds - Am I missing something
Replies: 89
Views: 9517

Re: Bonds - Am I missing something

Forgot to include I was only looking at last 5 years - hence the “have been” VBTLX over the last 5 years sure has looked like a roller coaster of a ride I think you're doing this wrong, like eyeballing the volatility from one line at a time. Either read the numbers to see how big the fluctuations r...
by ogd
Sat Feb 03, 2018 7:14 am
Forum: Investing - Help with Personal Investments
Topic: Bonds - Am I missing something
Replies: 89
Views: 9517

Re: Bonds - Am I missing something

well VBTLX dropped another 0.3% today and I am looking at the yield at it's stuck at 2.69% for the last 3 0.25-0.3% declines in value, I thought yield was supposed to keep going up when NAV drops? These bond funds make no sense to me. I bought VBTLX at 10.69 when the yield was 2.55%, so now the pri...
by ogd
Fri Jan 26, 2018 8:16 pm
Forum: Investing - Help with Personal Investments
Topic: VBLTX (Vanguard Long-Term Bond Index Fund)
Replies: 13
Views: 1964

Re: VBLTX (Vanguard Long-Term Bond Index Fund)

The long term bond currently has a lot of interest rate risk built-in. A rough rule of thumb is to hold a bond fund for a period that is two times its duration. The holding period for a long term bond fund is currently 48 years (perhaps too long). The recommended holding period for the Total Bond M...
by ogd
Fri Jan 26, 2018 7:46 pm
Forum: Investing - Help with Personal Investments
Topic: VBLTX (Vanguard Long-Term Bond Index Fund)
Replies: 13
Views: 1964

Re: VBLTX (Vanguard Long-Term Bond Index Fund)

The long term bond currently has a lot of interest rate risk built-in. A rough rule of thumb is to hold a bond fund for a period that is two times its duration. The holding period for a long term bond fund is currently 48 years (perhaps too long). The recommended holding period for the Total Bond M...
by ogd
Fri Jan 26, 2018 1:47 am
Forum: Investing - Theory, News & General
Topic: Personal psychology of bonds: funds vs individual
Replies: 3
Views: 726

Re: Personal psychology of bonds: funds vs individual

Is this just "mental accounting", or are these really different animals? It's mostly mental accounting. The individual bonds are 1) riskier by virtue of being undiversified than an equivalent rating bond fund, 2) harder to manage, 3) illiquid -- and the time may come where it would really be best t...
by ogd
Fri Jan 26, 2018 12:39 am
Forum: Investing - Help with Personal Investments
Topic: Ready to give up on bond fund, Lost 2.25% past 6 months
Replies: 85
Views: 12456

Re: Ready to give up on bond fund, Lost 2.25% past 6 months

Thanks for your clear reply - that makes sense. My real question is to compare holding-to-maturity strategy, vs. holding a constant-maturity bond fund. OK - so sell the closer-to-maturity for a loss, and buy another slightly longer-term bond - as you say, with a higher yield (for duration risk). No...
by ogd
Wed Jan 17, 2018 11:20 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Market
Replies: 30
Views: 2872

Re: Bond Market

20% loss in a week happens all the time in stocks? That doesn't seem right -- do you even remember a weekly loss that large in stocks? Technically, I said that "-20% happens all the time" and that it might be called a bad week, not necessarily those two combined. But you've made me curious. Found a...
by ogd
Wed Jan 17, 2018 4:55 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Market
Replies: 30
Views: 2872

Re: Bond Market

And on the plus side, it leaves you with 7%-yielding bonds and the possibility to buy more going forward, not a bad place to be. I was of belief that yields would take a considerable time to catch up with changes since they have to work their way through the fund? Say hypothetically interest rates ...
by ogd
Wed Jan 17, 2018 3:32 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Market
Replies: 30
Views: 2872

Re: Bond Market

I think it's not only Schiff, a lot of the press is reporting about an imminent bond market meltdown. I think it's reasonable to understand what the consequences are for those of us who have a good chunk in bond funds. The very purpose of owning bonds is to mitigate equity risk so to think that bon...
by ogd
Thu Nov 23, 2017 1:36 pm
Forum: Investing - Theory, News & General
Topic: Is holding bonds now dangerous?
Replies: 162
Views: 22120

Re: Is holding bonds now dangerous?

Let me just add that the behavior of bond yields / prices in this decade has thoroughly convinced me that nobody knows anything about the future of bonds, or at least nobody I could pick out from the crowd ahead of time, which is functionally equivalent. The more sensational the proposition, the les...
by ogd
Thu Nov 23, 2017 1:24 pm
Forum: Investing - Theory, News & General
Topic: Is holding bonds now dangerous?
Replies: 162
Views: 22120

Re: Is holding bonds now dangerous?

It is an undeniable fact that the price of a long-dated bond decreases as interest rates rise. There is absolutely no question about this, it's finance 101. However if you have a portfolio of bonds, or a bond fund, or ladder, or a mix of maturities, yields, and counterparties (i.e. corporate and go...
by ogd
Wed May 17, 2017 7:58 pm
Forum: Investing - Theory, News & General
Topic: The Case for Dividend Stocks in Retirement (article)
Replies: 92
Views: 12124

Re: The Case for Dividend Stocks in Retirement (article)

I back tested three portfolios without reinvesting dividends. The portfolio with only total stock market and bond market, certainly appreciates the most in value, but adding dividend fund component to your equity position certainly generates more income and also seems to reduce risk. (See 2002 and ...
by ogd
Tue Apr 11, 2017 2:10 pm
Forum: Investing - Theory, News & General
Topic: "Did Declining rates actually matter"
Replies: 26
Views: 2587

Re: "Did Declining rates actually matter"

Of course this all relies on rates moving in a completely linear fashion over time. And we're totally ignoring convexity. But it isn't a horrible approximation. Other functions (i.e. rate vs time) can be reasoned about similarly, even with calculus if you're feeling fancy. The question you're askin...
by ogd
Tue Apr 11, 2017 1:11 pm
Forum: Investing - Theory, News & General
Topic: SEC yield vs. distribution yield - Vanguard muni funds / ETFs
Replies: 3
Views: 816

Re: SEC yield vs. distribution yield - Vanguard muni funds / ETFs

I guess I'm just surprised that two funds with similar duration from the same company would have such different portfolios, but I guess I shouldn't be surprised since VTEB is tied to a muni fund index while VWIUX has no such constraints. One big reason is that VTEB is much newer, so it doesn't have...