Search found 1501 matches

by steve_14
Thu Sep 04, 2014 6:07 pm
Forum: Investing - Theory, News & General
Topic: Let me get this straight about SCV & factor diversification
Replies: 154
Views: 19637

Re: Let me get this straight about SCV & factor diversificat

There's been much discussion about factor investing, which is advocated by Larry Swedroe. In many comments, he has argued that one should not put all one's eggs in one factor basket, but diversify across factors: beta, value, size, and momentum. Yep, that's why I only invest in stocks based in Broo...
by steve_14
Thu Sep 04, 2014 5:59 pm
Forum: Investing - Theory, News & General
Topic: Why is REIT only sector fund recommended in slice & dice?
Replies: 113
Views: 11271

Re: Why is REIT only sector fund recommended in slice & dice

Since REITS are 90% pass-through, doesn't their expected return approximately equal their yield, currently < 3% ? If so, seems like a terrible risk/return proposition. VCIT-- interm-term corp BBB-- has the same yield. Indeed, REITs are not a good value today, as Dr. Bernstein has recently noted. Un...
by steve_14
Thu Sep 04, 2014 1:22 pm
Forum: Investing - Theory, News & General
Topic: Why is REIT only sector fund recommended in slice & dice?
Replies: 113
Views: 11271

Re: Why is REIT only sector fund recommended in slice & dice

REITS once may have semi-justified a separate allocation - they had 7% yields and low volatility. Today they're not practically different from any other sector. I think people who spice up their portfolios with a small REIT allocation are just finding comfort in complexity - more funds equals more d...
by steve_14
Wed Sep 03, 2014 3:42 pm
Forum: Investing - Theory, News & General
Topic: F-Squared receives SEC Wells notice
Replies: 0
Views: 829

F-Squared receives SEC Wells notice

According to the Wall Street Journal (registration may be required, or google the title "F-Squared Investments Received Wells Notice From SEC"), the SEC has sent F-Squared a Wells notice, meaning it's considering formally investigating them. F-Squared is a major provider or ETF portfolios available ...
by steve_14
Tue Aug 05, 2014 6:33 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Funds
Replies: 3
Views: 763

Re: Bond Funds

You'll probably (depending on your time horizon and exactly how rates move: plateau/increase at a constant rate/increase at an accelerating rate) still get break even "eventually" even if you don't reinvest, because the fund will begin buying higher yielding bonds immediately with your remaining pri...
by steve_14
Tue Aug 05, 2014 1:44 pm
Forum: Personal Finance (Not Investing)
Topic: Scott Burns Blog, Is inflation Coming Back?
Replies: 7
Views: 1238

Re: Scott Burns Blog, Is inflation Coming Back?

Absent deflation, I fully expect we'll see inflation going forward.
by steve_14
Tue Aug 05, 2014 10:09 am
Forum: Investing - Help with Personal Investments
Topic: REITS-worth the time to add 10% into portfolio
Replies: 33
Views: 3681

Re: REITS-worth the time to add 10% into portfolio

REITs are about 3-4% of the total US market (which you already have). What makes REITs so special that you would overweight them over Materials or Utilities (which are a similarly small part of the market)? It's accurate to say that they are 3-4% of the total US publicly available stock market. The...
by steve_14
Tue Aug 05, 2014 10:05 am
Forum: Investing - Theory, News & General
Topic: Is "Private Equity" just the new "Hedge Fund"?
Replies: 7
Views: 1125

Re: Is "Private Equity" just the new "Hedge Fund"?

If you have capital to invest, you have only two choices: companies that went public, and companies that didn't. In the current regulatory environment, fewer companies are going (or staying) public, and the number of public companies is falling rapidly. Staying private doesn't make your company a ba...
by steve_14
Tue Aug 05, 2014 12:45 am
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

Here's the in-sample study (1965-2001): Do Investors Capture the Value Premium? Using the same indexes and time period as in the Houge et al paper (Table I in the paper) , but presenting annualized returns and implied growth in $1000 over the same time periods. I don't see the same time periods - m...
by steve_14
Tue Aug 05, 2014 12:36 am
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

DFSVX: DFA US Small Cap Value... The last 10 years should certainly have been good to DFSVX, as once again the FF data has shown a significant value premium. Except: http://i58.tinypic.com/5cypap.jpg VISGX = Vanguard Small Growth Fund (that's the space the FF data says should really do poorly).
by steve_14
Tue Aug 05, 2014 12:05 am
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

If the Fama/French data has little relationship to reality, why not look at the very funds that use the data to target the value premium, i.e. DFA's value funds? Here are their results since inception, and after the premiums would supposedly be arbitraged away following the publication of the 1992 ...
by steve_14
Mon Aug 04, 2014 11:19 pm
Forum: Investing - Theory, News & General
Topic: Do I need a small cap index if I already have total market ?
Replies: 58
Views: 7203

Re: Do I need a small cap index if I already have total mark

Nope, small caps, large caps, green caps, red caps and all other caps are all represented in your TSM holding in the proportion the market says they deserve. There's no need to bet on one cap or another beyond this.
by steve_14
Mon Aug 04, 2014 11:16 pm
Forum: Investing - Help with Personal Investments
Topic: REITS-worth the time to add 10% into portfolio
Replies: 33
Views: 3681

Re: REITS-worth the time to add 10% into portfolio

When you feel the urge to complexify and sectorize your three fund portfolio, lie down until it does away (with apologies to Sam Clemens).
by steve_14
Mon Aug 04, 2014 10:55 pm
Forum: Investing - Help with Personal Investments
Topic: wealthfront, betterment, and clones
Replies: 8
Views: 2368

Re: wealthfront, betterment, and clones

These start-ups are certainly welcome to seek profits for their VC backers. They're not getting any from me though. Cut out the middleman and invest directly.
by steve_14
Mon Aug 04, 2014 5:00 pm
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 7478

Re: Why would anyone buy a deferred income annuity?

This is one of the primary practical benefits. In many cases it makes sense at or around the age of retirement to ensure (and insure) that you will have $X of basic income - enough to feed clothe and house you - until you die, even if you happen to live until 110 years old. You can do that with a c...
by steve_14
Mon Aug 04, 2014 2:51 pm
Forum: Investing - Theory, News & General
Topic: not all small value funds are created equal
Replies: 48
Views: 5187

Re: not all small value funds are created equal

[OT comments removed by admin LadyGeek] As I've taken pains to point out to you, the P/E of BOSVX is nowhere near 14. It's more on the order of 60. The only way to get 14 is to intentionally throw out all the companies with negative earnings, including 9 of its top 25 holdings. Maybe I'll start cal...
by steve_14
Mon Aug 04, 2014 2:01 pm
Forum: Investing - Theory, News & General
Topic: Why should a portfolio get safer as one ages?
Replies: 30
Views: 3677

Re: Why should a portfolio get safer as one ages?

There are some interesting articles these days about letting your stock positions actually increase over time once you hit your conservative point at retirement (i.e. by drawing down bonds but not selling stocks to replenish them right away). And the idea is that even though your time horizon is sh...
by steve_14
Mon Aug 04, 2014 1:36 pm
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 7478

Re: Why would anyone buy a deferred income annuity?

There's never a reason to deal with the distant uncertainties of a deferred annuity IMO, especially at current low interest (and therefore payout) rates. As you approach 80, if you're in good health and need a higher level of income than your portfolio is providing, consider spending a portion on a...
by steve_14
Mon Aug 04, 2014 11:35 am
Forum: Investing - Theory, News & General
Topic: Suze Orman - Doesn't Like Target Date Funds
Replies: 26
Views: 7781

Re: Suze Orman - Doesn't Like Target Date Funds

LAlearning wrote:I dislike all TDF except Vanguard's. Even then I am nonplussed about the intl bond portion.
Me too. I'm a huge fan of the Vanguard funds, but don't trust those from other providers.
by steve_14
Mon Aug 04, 2014 11:32 am
Forum: Personal Finance (Not Investing)
Topic: Margin for error in early retirement
Replies: 12
Views: 1351

Re: Margin for error in early retirement

You certainly have a wide margin of error if you're happy living on $1,200 per month. I'm not sure how many enjoyable retirement things (like travel) you're going to be able to do on that budget though. And does that budget include large one time expenses, like a new vehicle, and home repairs?
by steve_14
Mon Aug 04, 2014 11:28 am
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 7478

Re: Why would anyone buy a deferred income annuity?

There's never a reason to deal with the distant uncertainties of a deferred annuity IMO, especially at current low interest (and therefore payout) rates. As you approach 80, if you're in good health and need a higher level of income than your portfolio is providing, consider spending a portion on an...
by steve_14
Sun Aug 03, 2014 11:36 pm
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

Since you're still posting this paper, I will continue posting my criticism of it. Ok, and since the value crowd is still talking about Fama/French results, I'll continue to post my criticism of it: It's a spurious reconstructed data set that has little relationship to reality, and is used mainly a...
by steve_14
Sun Aug 03, 2014 10:15 pm
Forum: Personal Consumer Issues
Topic: To Buy or Not after Paid off Car & House
Replies: 7
Views: 1470

Re: To Buy or Not after Paid off Car & House

There's no right or wrong answer. Personally, I'm insurance averse, so I self insure if the maximum cost would be less than 10% or so of my savings. Others would take those policies for the peace of mind alone.
by steve_14
Sun Aug 03, 2014 10:11 pm
Forum: Investing - Help with Personal Investments
Topic: Where does 4% start
Replies: 28
Views: 4213

Re: Where does 4% start

The comment about if you didn't retire with enough annuitize doesn't ring true for me. Annuities typically pay less than I would get in the market. If I don't have enough to live on from market returns an annuity surely won't help. Well if you retire at 65 with a 4% withdrawal rate, and after 10 ye...
by steve_14
Sun Aug 03, 2014 10:03 pm
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

And in reality - in real fund results - valuations do in influence future returns, on average. Value, momentum, sector bets, do not. Interesting that you believe valuations influence future returns, but that this doesn't apply to stocks with low valuations. Ok! Yeah, because again I'm big on what r...
by steve_14
Sun Aug 03, 2014 1:55 pm
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

Everything I said above is all very well and good, but is that sort of middle-of-the-road approach practicable or even actionable? In my humble opinion, it absolutely is. I myself decided to get out of small cap stocks (VTMSX) completely in my passive core portfolio about two weeks ago due to what ...
by steve_14
Sun Aug 03, 2014 11:05 am
Forum: Investing - Help with Personal Investments
Topic: Where does 4% start
Replies: 28
Views: 4213

Re: Where does 4% start

And yet the MAJORITY of financial planners use 4%. I don't see any point in all those powerpoint slides that adds or negates my question. I'm not debating if 4% is safe I'm using it as an example to question what is the real value of my portfolio at a market high. If you need a number, go with 4% o...
by steve_14
Sun Aug 03, 2014 10:50 am
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

I didn't say anything about "overpriced" or "a free lunch". I simply pointed out that investors as a whole have changing preferences for asset classes, and at the moment are willing to pay a lot for small caps, which often means lower returns ahead. The idea is that if there really is evidence that...
by steve_14
Sat Aug 02, 2014 6:20 pm
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

Thanks for the link. At this point, calling REITs and small caps expensive is just stating the obvious. The many posts here about overweighting these bits of the market are further evidence of overheated asset classes. However, as you say, the future is a very uncertain place. Also agree about EM. ...
by steve_14
Sat Aug 02, 2014 2:40 pm
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

You cannot rationally set an allocation based only on point estimates of the expected central tendencies of some unknown and unestimated distributions. Well, you can consider how many dollars of profits you're getting for each $100 spent. If this differs between two investments, your returns expect...
by steve_14
Sat Aug 02, 2014 11:12 am
Forum: Investing - Theory, News & General
Topic: Arnott's/RAFI 10 year 'expected' returns
Replies: 78
Views: 7551

Re: Arnott's/RAFI 10 year 'expected' returns

Thanks for the link. At this point, calling REITs and small caps expensive is just stating the obvious. The many posts here about overweighting these bits of the market are further evidence of overheated asset classes. However, as you say, the future is a very uncertain place. Also agree about EM.
by steve_14
Fri Aug 01, 2014 11:55 pm
Forum: Investing - Theory, News & General
Topic: Prove adding SV will lower the risk, given the same E(r)
Replies: 79
Views: 5903

Re: Prove adding SV will lower the risk, given the same E(r)

My proof is simple: the expected returns of SV is higher than TSM, and the correlation is less than 1. SV has a unique factor exposure, just as bonds exposure you to credit risk and interest rate risk. All also true of small growth, which is clearly as risky, if not more so, than SV in real fund re...
by steve_14
Fri Aug 01, 2014 11:47 pm
Forum: Investing - Theory, News & General
Topic: Huff Post: How Financially Literate Is the Investing Public?
Replies: 52
Views: 6010

Re: Huff Post: How Financially Literate Is the Investing Pub

What struck me about the article was this statement, which would seem to confirm that the investing public are very illiterate: The 2014 DALBAR report , for instance, concluded that over the past 20 years, individual stock fund investors achieved only a 5.02 percent average annual return, which is ...
by steve_14
Fri Aug 01, 2014 11:24 pm
Forum: Investing - Theory, News & General
Topic: MOM faltering? [Momentum]
Replies: 108
Views: 10604

Re: MOM faltering? [Momentum]

it sometimes amazes me to see folks somehow think one of the three FF factors is proved canon but the other two are some sort of made up mystical mumbo-jumbo. Because, ya know, CAPM was around twenty years before FF so it must be true! It's as if beta is mathematically proved but value and small ar...
by steve_14
Fri Aug 01, 2014 4:20 pm
Forum: Investing - Theory, News & General
Topic: Any thoughts on this study of active v passive
Replies: 6
Views: 955

Re: Any thoughts on this study of active v passive

For one thing, he should not have compared a large cap only index to all stock mutual funds. He should have used a total market fund, which outperformed the S&P 500 by almost 1% per year over the last 15 years. Here is a far more rigorous and trustworthy study showing that index beat active over 15 ...
by steve_14
Thu Jul 31, 2014 5:12 pm
Forum: Investing - Help with Personal Investments
Topic: Help me save my parents from Merrill Lynch
Replies: 54
Views: 9128

Re: Help me save my parents from Merrill Lynch

Paying a modest fee for AUM --- (hello Rick Ferri)---may have value for even the smartest of bogle-head advocates. +1. As I posted in the other thread, Mom's in her mid-80's and not willing or interested in becoming internet-savvy, and my sister is a non-practicing attorney who is contentious and s...
by steve_14
Thu Jul 31, 2014 5:06 pm
Forum: Investing - Theory, News & General
Topic: International investing. A good call by our mentor.
Replies: 150
Views: 20692

Re: International investing. A good call by our mentor.

It completely supports Mr.Bogle's opinion that for a U.S. investor, an international allocation doesn't (it didn't) really matter It's just like putting 100% of your portfolio in GE stock - 90% of the time, investing in more than one company "won't really matter" over your time horizon. You diversi...
by steve_14
Thu Jul 31, 2014 2:42 pm
Forum: Investing - Theory, News & General
Topic: Dave Ramsey still defending 12% and still angry at "nerds"
Replies: 194
Views: 32792

Re: Dave Ramsey still defending 12% and still angry at "nerd

Pshaw! So called "experts" like Dave Ramsey don't know what they're talking about. The long run, stock markets clearly return 17% per year. I'm so tired of this guy raining on my parade with his pessimistic predictions. Well, he recommends mutual funds with loads, so 12% is what you're left with af...
by steve_14
Thu Jul 31, 2014 2:40 pm
Forum: Investing - Theory, News & General
Topic: MOM faltering? [Momentum]
Replies: 108
Views: 10604

Re: MOM faltering? [Momentum]

If you think you can time individual stocks based on 12-month momentum, based on empirical data, there is no a priori reason not consider other trend-following strategies, for example moving average crossovers. Right, and not only do you have to believe in the idea, you have to believe that the Wal...
by steve_14
Thu Jul 31, 2014 1:27 pm
Forum: Investing - Theory, News & General
Topic: Dave Ramsey still defending 12% and still angry at "nerds"
Replies: 194
Views: 32792

Re: Dave Ramsey still defending 12% and still angry at "nerd

Pshaw! So called "experts" like Dave Ramsey don't know what they're talking about. The long run, stock markets clearly return 17% per year. I'm so tired of this guy raining on my parade with his pessimistic predictions.
by steve_14
Thu Jul 31, 2014 11:20 am
Forum: Investing - Theory, News & General
Topic: International investing. A good call by our mentor.
Replies: 150
Views: 20692

Re: International investing. A good call by our mentor.

My foreign stocks are purely insurance against country specific risk, which we know can pop up dramatically from time to time. In that 10% chance where the US economy implodes (see: Japan), I'll be glad I took out the policy. In the other 90% of cases, my real estate, human capital, etc. values show...
by steve_14
Thu Jul 31, 2014 11:12 am
Forum: Investing - Help with Personal Investments
Topic: Is rebalancing worth having bonds?
Replies: 26
Views: 2434

Re: Is rebalancing worth having bonds?

In general you don't really know your risk tolerance until you have a large portfolio that loses 50% or more of its equity investment. The 2008-9 plunge was a good test. I was an experienced investor (30 years of investing) and had a large portfolio and I learned that I was not quite the risk taker...
by steve_14
Wed Jul 30, 2014 10:29 pm
Forum: Investing - Theory, News & General
Topic: MOM faltering? [Momentum]
Replies: 108
Views: 10604

Re: MOM faltering? [Momentum]

I doubt Larry has ever referred to them as "free lunches" And here's your quote: Also based on the research my thinking on value has changed over the years. I started out thinking it was almost all risk story. Then converted by the research on behavioral errors to probably at least a free stop at t...
by steve_14
Wed Jul 30, 2014 4:50 pm
Forum: Investing - Help with Personal Investments
Topic: Help me save my parents from Merrill Lynch
Replies: 54
Views: 9128

Re: Help me save my parents from Merrill Lynch

I'd bury my money in a coffee can long before I'd let one of the nice folks at ML get their hands on it. But you can only lead a horse to water. Maybe a chart showing how painful even a small fee can over the long term would help.
by steve_14
Wed Jul 30, 2014 3:52 pm
Forum: Investing - Theory, News & General
Topic: MOM faltering? [Momentum]
Replies: 108
Views: 10604

Re: MOM faltering? [Momentum]

I've noticed that each of these patterns - value, momentum, etc - which have been waterboarded out of some specious historical data set yield material for numerous investing articles. You first publish one announcing the free lunch has been discovered. Then a few years later, you do the "remember, t...
by steve_14
Wed Jul 30, 2014 12:00 pm
Forum: Investing - Theory, News & General
Topic: Using equal mortality time intervals for planning
Replies: 17
Views: 1825

Re: Using equal mortality time intervals for planning

Interesting work, but might be of limited value for individuals. If you were to "fit" them to your current situation (family longevity and health issues, your current health, past health issues), you'd probably get very different outcomes.
by steve_14
Wed Jul 30, 2014 12:17 am
Forum: Investing - Help with Personal Investments
Topic: Which one is the better portfolio?
Replies: 5
Views: 992

Re: Which one is the better portfolio?

I wouldn't own a fund that cost more than .2%, assuming I had cheaper choices.
by steve_14
Tue Jul 29, 2014 10:35 pm
Forum: Investing - Theory, News & General
Topic: Which is King: Income Stream or $ Invested
Replies: 52
Views: 5729

Re: Which is King: Income Stream or $ Invested

$ in the bank is king. Everything else is just promises from another party.
by steve_14
Tue Jul 29, 2014 10:19 pm
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 5511

Re: Stocks: losing money for 20-30 years not uncommon

Obvious answer: don't invest in a single country's stock -- diversify globally. Yes, I keep half my assets abroad for just this reason. However I think our short dataset regarding these things (last 90 years or so) was probably an abnormally good period for country diversification, mainly due to Ja...
by steve_14
Tue Jul 29, 2014 4:59 pm
Forum: Personal Finance (Not Investing)
Topic: Principal Residence = Poor Investment?
Replies: 70
Views: 7706

Re: Principal Residence = Poor Investment?

Since you (presumably) need to spend money to live somewhere anyway, wouldn't you really need to subtract a theoretical alternate housing (renting) cost, and figure out what he makes on the difference, if this is the argument you want to make? Right, the OP has considered the capital gain, but not ...