Search found 526 matches
- Thu May 24, 2018 10:44 am
- Forum: Investing - Theory, News & General
- Topic: Microcap Stock Screener
- Replies: 21
- Views: 2819
Re: Microcap Stock Screener
This makes the average market cap of your portfolio larger than many mass market microcap funds. If you end up in the same playfield IMO defeat the purpose of doing it yourself. The average weighted market value of my portfolio is $161M. (This is weighted by the purchase amount of each stock). This is accomplished by giving adequate weight to the size score. Are those factor loadings? How did you get such high exposure to both value and momentum at the same time? They usually dilute each other. Doesn’t smell quite right. I would need a definition & mathematical formula for determining one's "factor loading" to answer your question. I just calculated percentiles. They do dilute each other. But there are some stocks with both a...
- Mon May 21, 2018 10:02 pm
- Forum: Investing - Theory, News & General
- Topic: Microcap Stock Screener
- Replies: 21
- Views: 2819
Re: Microcap Stock Screener
For instance, an Excel sort of one Fidelity data dump of companies (with less than $650M market cap, an average daily volume of at least 1K, a ROA > 0, an operating margin > 1%, and at least 50 employees) produced a 30-company basket with a weighted average market cap of $321M, a weighted average P/B of 1.86 Why $650M? It's the way Fidelity's stock screen defines "microcap," if I remember correctly. One of the limitations of Fidelity's stock screener is that it only allows you to download the first 200 stocks and related stock data in the list. By reversing the alphabetical order, you can increase that to about 400 stocks. I'm not aware of any way to download more than that number. For that reason, I chose limits within the Fidel...
- Mon May 21, 2018 5:02 pm
- Forum: Investing - Theory, News & General
- Topic: Microcap Stock Screener
- Replies: 21
- Views: 2819
Re: Microcap Stock Screener
Following up... In my Microcap stock selection worksheet, I finished incorporating lack_ey 's much-appreciated suggestions (e.g., using Z-scores and (partially) weighting the final stock selection by the composite scores, giving those with higher scores more weight). I have also an optional sector weighting scheme, to force the planned portfolio to be weighted by sector targets you provide. The spreadsheet is designed for Fidelity stock-screen data dumps. It could be (relatively easily) modified to other stock screen dumps. If anyone is interested in a copy of the Excel file, please send me a PM. I still haven't implemented anything, just in case I am persuaded to abandon this effort. In the meantime, feel free to "front run" me! ...
- Wed May 16, 2018 8:31 pm
- Forum: Investing - Theory, News & General
- Topic: Microcap Stock Screener
- Replies: 21
- Views: 2819
Re: Microcap Stock Screener
Brian & Denis,
Thank you for those great links!
Eric
Thank you for those great links!
Eric
- Wed May 16, 2018 8:04 pm
- Forum: Investing - Theory, News & General
- Topic: Microcap Stock Screener
- Replies: 21
- Views: 2819
Re: Microcap Stock Screener
So is your goal to have multifactor loadings or to have microcaps? You kind of have to prioritize at some point. What's your starting universe of stocks, anyway? Rank is probably fine in doing the sorts, but something like z-scores may be a little better. Or something in between. Frankly, z-scores can be problematic when you have outliers in the data set; you could do some kind of variant or cap scores at around 3/-3 sd away from the mean (or some kind of soft cap). Or pre-normalize somehow. I doubt this would make a huge difference. If you want factor weights more than diversification, you could weight stocks by scores rather than by market cap, at least to some extent. In general there may be better ways to deal with missing data, but it...
- Wed May 16, 2018 6:56 pm
- Forum: Investing - Theory, News & General
- Topic: Microcap Stock Screener
- Replies: 21
- Views: 2819
Re: Microcap Stock Screener
Sounds like a lot of work to me. What do you expect to gain over TSM or the microcap funds that already exist? Larry Swedroe's book reported the following annual premiums: Equity (broad market): 8.3% from 1927-2015 Size (CRSP 6-10 vs CRSP 1-5): 3.3% from 1927-2015 Value (by BtM): 4.1% from 1952-2015 Momentum (ranking stocks by returns over past year but not including past month, and comparing top 30% to bottom 30%): 9.6% from 1927-2015 Profitability, measured as most profitable vs. least profitable: 3.8% Profitability, based on ROE: 7.4% Quality, based on various measures: 2.8% to 5.8% for small stocks, based on July 1988-June 2012 Obviously, the factors partially overlap, so one should not expect to reap the sum of the factors through sto...
- Wed May 16, 2018 4:43 pm
- Forum: Investing - Theory, News & General
- Topic: Microcap Stock Screener
- Replies: 21
- Views: 2819
Microcap Stock Screener
This is the first time I have posted in many years. I'm returning in hopes of tapping into this forum's terrific theoretical insight. I am trying to fill a microcap allocation. I am not satisfied with the fund options (e.g., BRSIX, IWC) currently available. BRSIX, in particular, has had a very large tracking error that previous Boglehead commentary suggests was unavoidable. I am trying to gauge whether it is possible & feasible to create a factor-based basket of microcaps. With guidance from Larry Swedroe's "Your Complete Guide to Factor-Based Investing," I have created an Excel spreadsheet that curates a data dump from a Fidelity stock screener into various factor categories and metrics. I would attach it if I could, but I ca...
- Fri Apr 06, 2012 10:00 am
- Forum: Personal Investments
- Topic: TIP$TER Retirement Planning Calculator
- Replies: 3
- Views: 3170
Re: TIP$TER Retirement Planning Calculator
Sorry to everyone about the delay. I'm an extremely busy patent attorney, and TIP$TER was born of the lull I experienced during the Great Recession of 2008-2009. Since then, I have gotten very busy with my practice again. I posted a time-valid version yesterday, with only minor user-end changes (just mostly major work-arounds to deal with new problems created by the most recent release of LockXLS). This version is programmed to last through January 2014. By that time (if not already), a program dependent on this particular platform -- Microsoft OS + Microsoft Excel + LockXLS -- will be obsolete. If anybody has any suggestions on a quality but low-cost firm (foreign is acceptable) that could transform TIP$TER into a platform-independent web-...
- Wed Sep 14, 2011 11:12 pm
- Forum: Investing - Theory, News & General
- Topic: Retirement Calculators and Spending Models
- Replies: 74
- Views: 19539
TIP$TER
ThePrune -- thanks for doing this. I can see that a lot of effort has been put into reviewing the various calculators. I wrote the TIP$TER calculator. As far as methods of calculation go, it can do both HRET (historical/exploratory), which is the default option, and MC (w/ choices between "normal," "lognormal," "double lognormal," and an randomized resort of historical returns). It also responds to "flexible spending" parameters: (a) you can specify additional withdrawals over specified periods of time (e.g., college tuition for your kid(s)); and (b) you can specify that spending will fluctuate (in accordance with user-specified limits and thresholds) with simulated portfolio performance. The principa...
- Tue Feb 15, 2011 9:00 pm
- Forum: Investing - Theory, News & General
- Topic: 30 year TIPs yield at 1.98%- back up the truck, beep, beep..
- Replies: 501
- Views: 119488
Re: To beep or not to beep?
I expect that if/when the US TIPS market matures (i.e., becomes comparably large, familiar, and widely accepted as the UK inflation-adjusted bonds), US TIPS yields will fall and be more commensurate with their UK counterparts. So I'm loading up on TIPS now while yields are attractive.grok87 wrote:Long dated tips in the UK yield under 1%!
cheers,
- Tue Feb 15, 2011 8:51 pm
- Forum: Personal Investments
- Topic: Inflation Rate to Use in Retirement Planning
- Replies: 34
- Views: 8932
Re: Inflation Rate to Use in Retirement Planning
You might consider doing retirement projections in "real" terms. Instead of projecting both inflation and a nominal rate of return on your investments, project a single variable: an expected real rate of return on your investments.Lorraine wrote:The inflation rate we keep hearing is no where in the realm of reality. I'm working on retirement projections and need a more accurate number....
- Tue Mar 23, 2010 11:11 am
- Forum: Personal Investments
- Topic: Why not put it all in TIPS
- Replies: 35
- Views: 5581
Re: Why not put it all in TIPS
I think this beats putting all of your retirement funds in non-inflation-adjusted CDs -- which is what a very large portion of the elderly population, including my parents, do today.JimWaldo wrote:Why not just put all your retirement funds in TIPS and live of the interest and declining balance?
(Yes, I've spent hours trying to explain the benefits of TIPS to my parents, but they seem "exotic" and "risky" to them -- they would much rather stick to the ~2% nominal CDs)
- Tue Mar 23, 2010 12:27 am
- Forum: Personal Finance (Not Investing)
- Topic: Rollover into Roth before 2014
- Replies: 2
- Views: 851
I actually prepared the spreadsheet in the OP last year, and made a substantial rollover, well into the 25% tax bracket, last year because of it. I plan to do similarly for years 2010-2013. I also expect a VAT in the future, but I don't think it will be paired with lower marginal income tax rates. More likely, the VAT will simply start small and grow as fiscal demands dictate. It really is a good question whether Roth distributions will be treated as part of AGI for purposes of determining subsidies. Eventually it may, but I think that will happen only if enough people engineer their Roth/non-Roth finances for it to make a big impact. In any event, most cannot afford to just "wait and see." Come 2014, the opportunity to roll over ...
- Mon Mar 22, 2010 2:46 pm
- Forum: Personal Finance (Not Investing)
- Topic: Rollover into Roth before 2014
- Replies: 2
- Views: 851
Rollover into Roth before 2014
(No political commentary at all, here, please . Please restrict comments to whether it makes sense to roll over $ into Roths) If you expect your marginal tax rate to be higher in retirement than you are experiencing now, then you are well advised to roll money over from existing IRAs into Roth IRAs. A phase-out of a subsidy has the same impact on an extra dollar of income as a tax; therefore it makes sense to consider one's marginal "implicit" tax rate ("implicit" taking phased-out subsidies into account) when considering whether, and when to roll over into a Roth. For purchasers (such as the self-employed) of individual health insurance policies, this calculus is now affected by the just-passed Patient Protection and Af...
- Sat Mar 20, 2010 12:49 pm
- Forum: Investing - Theory, News & General
- Topic: TIPS vs. Nominal Bonds in a Retirement Portfolio?
- Replies: 68
- Views: 9041
Re: TIPS vs. Nominal Bonds in a Retirement Portfolio?
However, if your WR is at or lower than the SWR, Otar argues that you should favor short and intermediate-term nominal bonds for your bond allocation rather than TIPS . He argues that, at lower withdrawal rates, you can tolerate more portfolio volatility without increasing the probability of portfolio failure. You should therefore allocate to higher yielding assets than TIPS in order to increase your potential upside returns. Why would "short and intermediate-term nominal bonds" be expected to yield more than TIPS of presumably longer maturities? (I refer to TIPS with "longer maturities" because a typical retiree concerned with a "safe withdrawal rate" is trying to make his or her portfolio last a long time).
- Fri Mar 19, 2010 3:55 pm
- Forum: Personal Investments
- Topic: LTPZ -- I must be the only one interested
- Replies: 21
- Views: 3431
Hi dothemontecarlo, This sentence near the end of the linked article tells me again that it's impossible for an average Joe to figure out the so-called "liquidity and bid-ask spreads of the underlying securities." Beyond an understanding of the structure and market structure of ETFs, it can be very handy to have a quantitative, real-time assessment of the factors impacting pricing while trading. It is this piece that can be harder to come by. Most APs are happy to tell you where they would trade an ETF, but it is only a few brokers who can first tell you where they should trade an ETF. Knowing the “should” before finding out the “would” can lead to much more pleasant outcomes as well as minimizing instances of buyer’s remorse. As...
- Fri Mar 19, 2010 2:06 pm
- Forum: Personal Investments
- Topic: LTPZ -- I must be the only one interested
- Replies: 21
- Views: 3431
Today's volume was reported to be 695 shares. Average daily volume is like 7500 shares. Maybe folks were kind of waiting for new from the Fed. Those volume numbers mean this is a non-starter for me and probably most folks. I would not want to own more than about 5% of the average amount traded in a day of any ticker. Unfortunately, I have had to violate that principle for some small cap int'l ETFs. :oops: This article may be of interest to you: ETF Liquidity Explained, March/April 2010 Journal of Indexes It argues that the bid-ask prices on even thinly-traded ETFs is governed much more by the liquidity and bid-ask spreads of the underlying securities than by the trading volume of the thinly-traded ETF. Consequently, it concludes that inves...
- Thu Mar 18, 2010 9:21 pm
- Forum: Personal Investments
- Topic: LTPZ -- I must be the only one interested
- Replies: 21
- Views: 3431
Whether it's stocks or bonds, investors pay to wait. Right now, looking at the figures for TIP and VIPSX and STPZ, there's at least 10X (and probably considerably more) the volume being traded in short-term TIPS (10 years or less) as in long-term TIPS (15-years or more). I guess many of them are on the sidelines, waiting for long term yields to rise before moving into long term TIPS. Meanwhile, as they wait ... and wait ... and wait ... and the months add up and turn into years while everyone keeps waiting ... the difference between 5 year and 20 year+ yields is about 1.9%. After "waiting on the sidelines" long enough, that can add up to some real change. My guess is that once long term TIPS are plentiful and liquid enough for peo...
- Wed Mar 17, 2010 8:01 pm
- Forum: Personal Investments
- Topic: LTPZ -- I must be the only one interested
- Replies: 21
- Views: 3431
LTPZ -- I must be the only one interested
LTPZ is a recent Pimco ETF that concentrates on long-term TIPS (15 years or greater). I was quite happy to see it become available. It has an ER of 0.2%. Recently I swapped most of my TIP etf shares for Pimco's longer-term maturity LTPZ etf shares. But in the last few days the volume of LTPZ shares in circulation dropped in half, from about $22M to only about $11M. By contrast, Pimco now has almost $0.5 billion in their short term TIPS etf -- (STPZ). I'm surprised for several reasons: 1) longer term TIPS provide a higher real yield than shorter term TIPS; 2) longer term TIPS' maturities match the long term needs of a lot of still-working savers better than shorter term TIPS; and 3) long term TIPS real yields in the US are still > 2% for lon...
- Thu Mar 04, 2010 11:04 pm
- Forum: Investing - Theory, News & General
- Topic: All Tips Calculator
- Replies: 2
- Views: 979
Re: All Tips Calculator
Might one of the calculators you are referring to be TIP$TER?antiqueman wrote:Would someone be kind enough to provide me the website for a calcualtor that computes how long an all tips, or mostly tips portfolio will last at various real returns. I know Bob has referred to one many times but I can not find the post or the site with the calculator. I also remember a calculator that allowed one to put X amount in TIPS and Y amount in equities that provided success rates of the portfolio lasting. If anyone can provide a link to that calculator as well I would appreciate it.
Thanks for everyones help.
- Wed Feb 24, 2010 10:53 am
- Forum: Investing - Theory, News & General
- Topic: Retirement Solutions for the Future
- Replies: 49
- Views: 10500
Why not? Look at the independent claims -- they are quite narrow. If the claimed invention meets the statutory requirements by having utility, being novel, and nonobvious, why shouldn't it be patentable?paper200 wrote:Can't believe a patent was issued for this retirement planning "plan" -
The purpose of patent protection is to spur and incentivize innovation and promote the progress of science and the useful arts.
Right now, where can you find that technology? It will take a lot of resources to implement it. Armed with patent protection, the patent owner is more likely to be able to raise the resources it will be necessary to implement the claimed technology.
- Sun Feb 21, 2010 10:37 pm
- Forum: Personal Consumer Issues
- Topic: What mysteries get solved by living a long time?
- Replies: 138
- Views: 21492
- Thu Feb 18, 2010 5:32 pm
- Forum: Investing - Theory, News & General
- Topic: Tax diversification: Optimal ratio of Roth/Non-Roth?
- Replies: 47
- Views: 7595
Re: Tax diversification: Optimal ratio of Roth/Non-Roth?
The optimal contribution distribution, and timing of rollovers, between Roth IRAs and regular IRAs is going to depend on a lot of highly individual factors.pochax wrote:I was wondering if anyone has already figured out whether there is an optimal "ratio" for Roth to non-Roth (Pre-tax/tax-deferred) retirement accounts?
A free program call "Optimal Retirement Planner" (http://i-orp.com) attempts to find the optimal timing and amounts depending on one's individual circumstances, assuming (ahem) no changes to the tax code.
- Tue Feb 16, 2010 6:58 pm
- Forum: Investing - Theory, News & General
- Topic: TIP$TER Financial Planner & Simulator v2.0
- Replies: 3
- Views: 2485
Ran a simulation (MC) where 5% case was higher than 50% case. Also, where 50% case went above 95% case. Many times it runs fine. Errors occur near the end of the time spectrum. Hi RM, TIP$TER displays two primary charts: the annual retirement budget, versus time, supported by selected ranked trials of a simulated portfolio; and the corresponding portfolio balance, versus time, for each of those trials. For each simulation trial, TIP$TER calculates the weighted average of the annual retirement budget supported by any given simulation trial and ranks it accordingly. The "weight" given any year is the actuarial probability of the person, or his or her spouse, if any, surviving to that year. That's why a 5%-ranked trial can cross abo...
- Tue Feb 16, 2010 9:42 am
- Forum: Investing - Theory, News & General
- Topic: TIP$TER Financial Planner & Simulator v2.0
- Replies: 3
- Views: 2485
Pro version & reports
Announcement: Bogleheads (including those who aren't professional financial planners) are now welcome to use TIP$TER Pro, without registering it, to generate reports for themselves. (It's free.) Why: Over the past several months, several Boglehead DIY types have registered TIP$TER Pro, presumably so that they can generate reports for themselves. This makes sense. I find the report-generating function useful for myself, and so would DIY-investors. I have been reluctant to open up this functionality to non-professionals, because I feared that it might be misused by non-professionals who have no business advising third parties, even though the license agreement restricts use of the reports to advise third parties to those competent to do so. B...
- Mon Feb 01, 2010 11:01 pm
- Forum: Investing - Theory, News & General
- Topic: Calculate withdrawal rate for changing income?
- Replies: 11
- Views: 1653
Re: Calculate withdrawal rate for changing income?
In other words, you want to amortize your current portfolio, plus your future anticipated income streams, over a targeted duration, in order to yield a sustainable expenditure level.richard wrote:How would you adjust your withdrawal rate to take into account a scheduled increase in income (or decrease in spending) in the future?
TIP$TER, ORP, and ESPlanner Basic can all do that. In each of these, you enter your expected rate of return (in TIP$TER, your expected real rate of return; in the others, your expected nominal rate and the your expected inflation rate).
- Wed Jan 20, 2010 2:56 pm
- Forum: Personal Finance (Not Investing)
- Topic: Anyone Understand Hospital Billing?
- Replies: 66
- Views: 18261
I'm a lawyer, so a few years ago I did a little research for cases contesting the absurd "list" charges charged to uninsured or underinsured patients. I was surprised to find that many of the cases rubber stamped the hospital's "list charges," even in the face of claims that the charges were unconscionable or that the contract was a contract of adhesion. See, e.g., Nygaard v. Sioux Valley Hosps. & Health Sys. , 731 N.W.2d 184, 191-92 (S.D. 2007) (refusing to "impute commercially reasonable or fair and reasonable price terms into the agreements" and citing similar cases); Cox v. Athens Reg'l Med. Ctr., Inc. , 631 S.E.2d 792 (Ga. App. 2006) (summarily rejecting challenge that "amounts are unduly inflated...
- Sat Nov 21, 2009 8:53 pm
- Forum: Investing - Theory, News & General
- Topic: Anyone selling TIPS?
- Replies: 55
- Views: 8830
The last time yields got this low (about Jan. 08), I sold almost all my TIPS and put the proceeds into stocks.
Talk about "timing" the market. I kept adding to those equity positions through about Aug. of 08. Yep, just before the big spectacular Lehman crash.
Despite that horrible timing, I've recovered almost all my losses. Don't ask me how. Dumb luck. Even lottery ticket buyers win sometimes.
Talk about "timing" the market. I kept adding to those equity positions through about Aug. of 08. Yep, just before the big spectacular Lehman crash.
Despite that horrible timing, I've recovered almost all my losses. Don't ask me how. Dumb luck. Even lottery ticket buyers win sometimes.
- Wed Nov 18, 2009 11:01 am
- Forum: Investing - Theory, News & General
- Topic: Why the 4% retirement withdrawal rule is a myth - NOT!
- Replies: 58
- Views: 10047
This wouldn't be the first time that:Lbill wrote:dbr - thanks for the "fine print" regarding the 4% rule. I still think it has achieved the status of a "myth" in the popular media that is in need of debunking.
1) An academic or scientist made a cautiously-stated insight, filled with appropriate caveats; and
2) Journalists and marketers started trumpeting the insight and either ignored the caution and caveats or demoted it to the fine print.
After all, the general public usually isn't interested in the "fine" details.
- Wed Nov 11, 2009 9:06 am
- Forum: Investing - Theory, News & General
- Topic: Gross: stocks and other assets may be 100% overvalued
- Replies: 30
- Views: 4943
I have similar dreams, with all the aforementioned details. Bizarre how common this dream theme is.nisiprius wrote:I still sometime dream that I've signed up for a college course and forgot all about it, and it's the day of the final exam, and I can't find the room, and I have only five minutes to get there, and the building is a twisted maze of corridors from every elementary school, high school, and university building I've ever been in, and the air is mysteriously filled with syrupy stuff that slows me down.
- Fri Nov 06, 2009 4:54 pm
- Forum: Investing - Theory, News & General
- Topic: Mismeasurement of Risk in Retirement Planning
- Replies: 28
- Views: 4382
I like that. If I understand the graph correctly, you are showing that a 40/60 portfolio has a about a 95% chance of providing the same income as a 100% TIPS portfolio and about a 5% chance of about 150% of a 100% TIPS portfolio. (With the caveat of course that simulations are not real life.) I think this is a good way of looking at the problem. The difficulty of course is knowing ahead of time what income you are going to get (that is if you start out thinking you might get the 1 in 20 shot at 150% income and spend too much you can get in real trouble, whereas if you had started out at 100% income you would have been ok.) In the simulations that produced that graph, the trials that ended up with an actuarially-weighted average retirement ...
- Fri Nov 06, 2009 4:44 pm
- Forum: Investing - Theory, News & General
- Topic: Mismeasurement of Risk in Retirement Planning
- Replies: 28
- Views: 4382
I like that. If I understand the graph correctly, you are showing that a 40/60 portfolio has a about a 95% chance of providing the same income as a 100% TIPS portfolio and about a 5% chance of about 150% of a 100% TIPS portfolio. (With the caveat of course that simulations are not real life.) I think this is a good way of looking at the problem. .... Also interesting how the downside risk flattens out below 40% stocks. By that graph there is little reason to go below 40%. That may be an artifact of the simulation though. Thanks. You do understand the graph correctly. The graph was based on a set of specific inputs. The results will differ depending on those inputs ... most significantly how long before you retire and how long you need to m...
- Fri Nov 06, 2009 1:47 pm
- Forum: Investing - Theory, News & General
- Topic: Mismeasurement of Risk in Retirement Planning
- Replies: 28
- Views: 4382
I'm with dbr -- such a measure would be dubious -- because the measure assumes a fixed and inflexible retirement budget. Wouldn't it be more meaningful to: 1) assume some flexibility in retirement expenditures, one that is loosely tied to the amortized retirement budget that one's current and future assets would be likely to support at some assumed (expected) rate of return? 2) simulate hundreds or thousands of trials using historical returns scaled to match the user's forward looking expected rate of return (preferably) or monte-carlo-simulated returns (less preferably)? 3) for each trial, compute the average (or better yet, the actuarially-weighted average) retirement budget supported over the course of the trial; 4) rank the summary stat...
- Sat Oct 31, 2009 6:44 pm
- Forum: Personal Investments
- Topic: Is gold more than 5% of your portfolio? 10%?
- Replies: 44
- Views: 7503
- Wed Oct 28, 2009 8:52 pm
- Forum: Investing - Theory, News & General
- Topic: Money decoupled from value?
- Replies: 27
- Views: 3457
mda42,
if you want to understand how $10 of M0 money supply can turn into $100 of a broader measure of the money supply, nisiprius's post above explains it well:
if you want to understand how $10 of M0 money supply can turn into $100 of a broader measure of the money supply, nisiprius's post above explains it well:
But that's not the same as printing more M0 currency and handing it to the banks to loan out.nisiprius wrote:If a lot of people borrow money from one bank and deposit it in another, each bank keeping 10% reserves and lending out 90%, at some point depositor #1 sees $100 in his account, depositor #2 sees $90, depositor #3 sees $81, depositor #4 sees $72.9, and so forth, and sum of that infinite series eventually reaches $1,000.
- Wed Oct 28, 2009 8:46 pm
- Forum: Investing - Theory, News & General
- Topic: Money decoupled from value?
- Replies: 27
- Views: 3457
Re: Money decoupled from value?
What I read does not contradict what you say, but it made it sound like the Fed actually would create the money for the bank. That is, if you opened a bank with $10 reserves and found someone willing to borrow $100, the Fed would create the money for you to lend. Is this incorrect? Yes, that is incorrect. We probably read the same book, b/c I remember reading the same thing. As I see it, the real issue is that the value of money is very much dependent on the velocity of money. The faster money circulates -- and FRB combined with low reserve requirements helps money circulate faster -- the less its value, all other things (including the economy's output of goods and services) being equal. (But when credit seizes up and the velocity of money...
- Wed Oct 28, 2009 11:50 am
- Forum: Investing - Theory, News & General
- Topic: Money decoupled from value?
- Replies: 27
- Views: 3457
Re: Money decoupled from value?
Basically, it said that if $10 is deposited into a bank, the bank can turn around and lend, like, $100. The money the bank distributes for the loan does not come from deposits, it is created out of thin air, with the Fed's blessing. This is simply wrong, as Sommerfield's post points out. Other than the Federal Reserve itself, banks don't get to create new M0 money supply. Also, the fact is, you can have a fractional reserve system with a hard gold-backed currency too. And eliminating fractional reserve banking would be tantamount to eliminating credit altogether, and replacing it with hiding your money in a "secure" mattress, for a fee. Does this bother anyone else? I've read similar things as the OP pointed out. I'm bothered by ...
- Sun Oct 25, 2009 10:07 pm
- Forum: Investing - Theory, News & General
- Topic: Average maturity of US debt
- Replies: 3
- Views: 1624
Average maturity of US debt
I have long wondered how US debt is distributed over different maturities. Just learned that the best source for this kind of info is the US Treasury's Office of Debt Management. Page 8 of the following report offers an interesting graph showing the average maturity of US debt: http://www.ustreas.gov/offices/domestic-finance/debt-management/qrc/2009/2009-q3-chart.pdf . The average maturity of US debt is under 5 years, making US debt resemble an adjustable rate mortgage more than a 30-year fixed mortgage. The report also projects that the average maturity will increase over the next few years. So what are the implications? Here are some of my non-expert thoughts (and questions): 1) Greater supply of long-term debt could lead to higher long-t...
- Mon Oct 19, 2009 11:00 pm
- Forum: Personal Finance (Not Investing)
- Topic: Retirement Calculators
- Replies: 3
- Views: 1340
TIP$TER.
A little information about it here:
http://www.bogleheads.org/forum/viewtop ... 28&start=0
Feedback is welcome.
A little information about it here:
http://www.bogleheads.org/forum/viewtop ... 28&start=0
Feedback is welcome.
- Sun Sep 27, 2009 6:53 pm
- Forum: Investing - Theory, News & General
- Topic: TIP$TER Financial Planner & Simulator v2.0
- Replies: 3
- Views: 2485
TIP$TER Financial Planner & Simulator v2.0
I would like to invite fellow Bogleheads to try out TIP$TER Financial Planner v2.0 . It’s a free Excel-based simulator that uses historical S&P 500 returns. Inspired and shaped by Boglehead-dissemimated nuggets of wisdom and critiques, TIP$TER is structured on the fundamental – and much-discussed-on-this-forum – concepts of the risk free rate and equity risk premium. The main purpose of this tool is help a person choose a stock/bond allocation by contrasting the potential risks and rewards – both stated in terms of the average flexible retirement budget different ranked simulation trials sustain – of different asset allocations. Using historical returns that are scaled to match the user’s equity risk premium expectations, TIP$TER simula...
- Wed Sep 23, 2009 11:14 pm
- Forum: Investing - Theory, News & General
- Topic: Risk of owning stocks goes down the longer you own them...
- Replies: 82
- Views: 9316
The fallacy of the fallacy article above is the assumption that the null hypothesis is true -- that stocks follow a random walk, are unaffected by fundamentals (like PE ratios), and therefore are not prone (beyond mere chance) to "revert" toward some fundamentally sound valuation, even over extremely long periods.TheEternalVortex wrote:The fallacy of time diversification
What Norstad's article really demonstrates is the fallacy of modeling stock returns over long periods (e.g., 20+ years) using a stationary normal distribution.
- Tue Sep 22, 2009 4:57 pm
- Forum: Personal Finance (Not Investing)
- Topic: Dropped my LTC Insurance
- Replies: 97
- Views: 14064
The OP has discovered the true value of insurance:
The right to fight (and, when necessary, sue) the company to get it to honor your claim.
That's been my experience with almost every insurance claim I've ever made, whether auto, health, or homeowners. Had to fight for almost every dime.
It's one of the reasons I prefer large-deductible policies; insurance is not worth the stress of fighting over small claims anyway.
The right to fight (and, when necessary, sue) the company to get it to honor your claim.
That's been my experience with almost every insurance claim I've ever made, whether auto, health, or homeowners. Had to fight for almost every dime.
It's one of the reasons I prefer large-deductible policies; insurance is not worth the stress of fighting over small claims anyway.
- Mon Sep 21, 2009 8:30 pm
- Forum: Personal Finance (Not Investing)
- Topic: Tax Act - Incorrect tax figured [turned out to be IRS error]
- Replies: 57
- Views: 15055
I once received an erroneous deficiency notice from the IRS caused by an IRS agent entering a simple form incorrectly.
I spent well over an hour on the phone trying to step the agent through, but it was futile. The person I was speaking w/ would have failed 6th grade math.
Then an idea occurred to me: I filed the same form again as an "amended form" -- only it wasn't any different from the original.
Sure enough, the second time, the IRS entered the data correctly, and that resolved the problem.
I spent well over an hour on the phone trying to step the agent through, but it was futile. The person I was speaking w/ would have failed 6th grade math.
Then an idea occurred to me: I filed the same form again as an "amended form" -- only it wasn't any different from the original.
Sure enough, the second time, the IRS entered the data correctly, and that resolved the problem.
- Mon Sep 21, 2009 11:38 am
- Forum: Investing - Theory, News & General
- Topic: As boomers pull out funds, will they pull down markets?
- Replies: 30
- Views: 5000
- Sat Sep 19, 2009 7:10 pm
- Forum: Investing - Theory, News & General
- Topic: Monte Carlo applied to normal distributions
- Replies: 9
- Views: 2296
Re: Monte Carlo applied to normal distributions
When I average all of the investment values after 40 years, and then compute the geometric mean (i.e., the 40th root) of that average, I get a value that is very close to 8% per year. In fact, I'm typically between 7.9% and 8.1% for the geometric mean growth of the average investment value within 5 years. (So far, so good.) The observation that has me a bit puzzled is that if I compute the geometric mean growth over 40 years for each trial, and then take the average geometric mean over 1000 trials, I end up with a number on the order of 6.5% per year (for year 40). The average geometric mean growth decreases from 8% for year 1 to about 6.5% per year by Year 5 or so. I can't reconcile the first paragraph above with the second -- they seem t...
- Fri Sep 18, 2009 9:47 pm
- Forum: Investing - Theory, News & General
- Topic: Dementia poses threat to aging boomers' portfolios
- Replies: 57
- Views: 9362
Re: Dementia poses threat to aging boomers' portfolios
Oh really? A nice linear decline? The research shows a 20-yr-old person of median (50 percentile) intelligence can expect to be a vegatable (0 percentile) by the age of 70? Hmm.Analytic cognitive function, according to the research, falls by about one percentile a year after 20.
I'd be really surprised if analytic cognitive functions peak for most people at the age of 20. I certainly don't think I peaked at age 20.
This paper suggests peak financial intelligence at age 53.
- Thu Sep 17, 2009 9:16 am
- Forum: Investing - Theory, News & General
- Topic: Withdrawal Methods: PMT() Formula
- Replies: 31
- Views: 9873
Accurate & beautifully succinct explanation.Oicuryy wrote:Loan payments are calculated so that the sum of the present values of the payments is equal to the sum of the present values of the loan advances.Vero wrote:Do you know a formula to attain the needed amount?
The present value of your $1000 loan is
905 =PV(0.1/12,12,0,-1000)
So your payment for both loans is
-158=PMT(0.1/12,36,4000+905)
Ron
- Thu Sep 17, 2009 7:51 am
- Forum: Investing - Theory, News & General
- Topic: Withdrawal Methods: PMT() Formula
- Replies: 31
- Views: 9873
I don't have a formula handy, although I once derived one with two such inputs many years ago. For n inputs, I developed an iterative solution (which would take a long time to explain) in TIP$TER, but it assumes annual -- not monthly -- periods; and it also assumes that payments/withdrawals are made at the beginning of every period.Vero wrote:Hi Dothemontecarlo,
Do you know a formula to attain the needed amount?
Thanks,
Vero
- Wed Sep 16, 2009 9:11 pm
- Forum: Investing - Theory, News & General
- Topic: Withdrawal Methods: PMT() Formula
- Replies: 31
- Views: 9873
Re: Please Help
Somewhere between $156 and $158 per month.Vero wrote:Hi,
I am currently using the PMT formula to get the amount I need to pay off my credit card in a period of a 36 months and it is working so far, however the formula is not calculating futures charges using the credit card.
If I know that my current balance is $4,000 at 10% interest, we get with the PMT that I should pay $129 each month to pay off the credit card in 36 months.
What if I made a charge of $1,000 in 12 months and would like to know how much I should pay now in order to also pay it in 36 months along with the $4,000 I owe now.
Thanks,
Vero
- Sat Sep 05, 2009 8:03 am
- Forum: Investing - Theory, News & General
- Topic: The Equity Premium in 100 Textbooks
- Replies: 14
- Views: 2634