Search found 218 matches

by lostInFinance
Tue Dec 17, 2013 10:25 pm
Forum: Investing - Theory, News & General
Topic: Margin of Error
Replies: 32
Views: 2632

Margin of Error

I'm thinking maybe a young(under 30) investor's probability of success has at most 1 significant figure and I'll wait for other bogleheads to tear this apart.

1. Stock returns could be a non-stationary random process. If so, any historical performance data of stock returns is useless for predicting future investment returns or estimating SWRs.
2. Congress could decide to tax capital gains and dividends at ordinary income tax rates.
3. Congress could decide to tax IRAs and 401ks at some point. SS benefits were tax exempt until they weren't.
4. Life expectancy could increase dramatically due to advances in medical technology.
by lostInFinance
Mon Dec 16, 2013 6:18 pm
Forum: Personal Finance (Not Investing)
Topic: Auto Lawsuit Statistics [Purchasing umbrella insurance]
Replies: 53
Views: 8210

Re: Auto Lawsuit Statistics [Purchasing umbrella insurance]

Andrew0504 wrote: I'm guessing the chance of you getting kidnapped/ransomed is not all that dissimilar from actually needing the whole $5 million from an umbrella policy for a lawsuit when you were not drunk/malicious.
Paying a ransom is unethical. The government should make it illegal for anyone to pay a ransom, or buy or sell kidnapped/ransom insurance.
by lostInFinance
Sun Dec 15, 2013 9:25 pm
Forum: Personal Consumer Issues
Topic: Venezuela report Dec 15 2013
Replies: 42
Views: 4522

Re: Venezuela report Dec 15 2013

There's a lot of discussion on this board from a vocal minority on how to protect yourself from high to hyperinflation, so it's very interesting to see the perspective of someone who's living through it as "ground truth". 1. If you're a citizen of Venezuela and have dollars, what is the penalty for trading them on the black market instead of at the official exchange rates, if caught? Could you go to jail? 2. Are dollars the only currency that's popular on the black market or are others (Euro?) stable and liquid as well? 3. If you have a foreign bank account in dollars, can you withdraw as much as you want in Venezuela or are there limits on how much hard currency in US dollars you can obtain at a time? 4. Are there any restriction...
by lostInFinance
Sun Dec 15, 2013 5:44 pm
Forum: Personal Investments
Topic: Low Income 29yr old
Replies: 32
Views: 4656

Re: Low Income 29yr old

When you suggest saving 10k/year is that including the 403(b) contributions? The reason I ask is because when all is said and done I think after everything is taken out of of my paycheck, taxes, SS, insurance, transit, 403b. I'm taking home like 21k. I also have roughly 9-10k of fixed expenses(rent, utilities, cell phone). That leaves me 11k to live on for the year. Maybe its just perception but living in New York City and making 32k at my age feels grossly below my earning potential. Obviously working for a non-profit is not the best way to earn a living. The median income in NYC for a full time year-round worker is only about $45k, so $32k at your age is reasonable. I'm sure you're not going to take this advice, but I would either 1) get...
by lostInFinance
Sun Dec 15, 2013 3:34 pm
Forum: Personal Finance (Not Investing)
Topic: Auto Lawsuit Statistics [Purchasing umbrella insurance]
Replies: 53
Views: 8210

Re: Auto Lawsuit Statistics [Purchasing umbrella insurance]

BolderBoy wrote: Also, if your net worth is $1 mil do you think a company is going to simply underwrite you for a $5 mil umbrella, willy-nilly?
I'm sure insurance companies will be happy to sell you as much coverage as you are willing to buy, provided you pay the premiums on time.
by lostInFinance
Sun Dec 15, 2013 3:26 pm
Forum: Personal Finance (Not Investing)
Topic: Any bogleheads work "for the dark side"?
Replies: 36
Views: 5426

Re: Any bogleheads work "for the dark side"?

Valuethinker wrote: There was me thinking you were asking if I worked for the National Security Agency (Fort Meade MD?) or General Communications Headquarters Group (GCHQ in Cheltenham).

No I don't work for the darkside. But I am sure they are reading my email.
I assume you're being sarcastic, but it's ridiculous how many people actually believe that.

As for the actual dark side, don't you work or used to work in finance?
by lostInFinance
Sun Dec 15, 2013 12:28 pm
Forum: Personal Finance (Not Investing)
Topic: Auto Lawsuit Statistics [Purchasing umbrella insurance]
Replies: 53
Views: 8210

Re: Auto Lawsuit Statistics

tadamsmar wrote:
tadamsmar wrote:This will probably help:

http://www.forbes.com/sites/ashleaebeli ... insurance/
The article says that 13% of personal liability claims exceed a million or more. That's probably 13% of those that go to court.
Does that include lawsuits against corporations?
by lostInFinance
Sun Dec 15, 2013 12:07 pm
Forum: Investing - Theory, News & General
Topic: Have Index Funds Become Too Popular?
Replies: 34
Views: 5289

Re: Have Index Funds Become Too Popular?

If everyone used index funds, then the markets would become wildly inefficient, and the ONE person who decided to pick stocks would do incredibly well. Like there would be an announcement that a company was going bankrupt. But the stock price wouldn't budge, since index funds can't selectively sell that stock, without selling the entire index. So the ONE stock picker who sells/shorts that stock would do incredibly well. Same deal if a company announces fantastic earnings, or has a new game-changing product/service. The stock price wouldn't move. So the ONE stock picker who started buying that stock would do very well over the long run, collecting huge dividends, and eventually cashing out when there's a M&A deal. I'm not sure the activ...
by lostInFinance
Fri Dec 13, 2013 8:34 pm
Forum: Investing - Theory, News & General
Topic: Despite the headline defaults, munis doing okay
Replies: 85
Views: 11241

Re: Despite the headline defaults, munis doing okay

manwithnoname Just to repeat --changing cola's to reduce payments is DEFAULTING on promises, no different than say lowering the interest rate they promised to pay on a loan Larry Where is the default on a promise? Colas are enacted by the legislature as a valid law. It is an axiom of judicial interpretation that all statutes can be amended by the legislature at any time in the future. If states can lower tax rates they can lower colas. If it was true that Colas were guaranteed forever at a particular rate then there would be no legal basis for the proposals to reduce Social Security colas by using chained cola. Colas are not protected from future reductions or even termination. Are you claiming that it would be a default for Congress to su...
by lostInFinance
Fri Dec 13, 2013 2:56 pm
Forum: Investing - Theory, News & General
Topic: Despite the headline defaults, munis doing okay
Replies: 85
Views: 11241

Re: Despite the headline defaults, munis doing okay

manwithnoname wrote: If ANPL is such an accurate metric what state pension default has ANPL predicted?
I don't know about ANPL predictions, but from the point of view of state retirees, the states that have stopped providing their retirees with COLAS are in partial default on their pensions.
by lostInFinance
Fri Dec 13, 2013 2:49 pm
Forum: Personal Finance (Not Investing)
Topic: Family member renting 2nd house. Ok to ignore on tax return?
Replies: 203
Views: 57702

Re: Family member renting 2nd house. Ok to ignore on tax ret

WhiskeyJ wrote:
tadamsmar wrote:I see you are using Turbotax. Here's an answer to essentially the same question on the Turbotax website:

https://ttlc.intuit.com/questions/12218 ... d-a-renter

You're welcome!
Unfortunately I think that "not renting for profit" requires the renter to be a non-family member, so the advice in this link is questionable.
Why don't you email the IRS and see what response they give you? Then report back.
by lostInFinance
Thu Dec 12, 2013 9:25 pm
Forum: Investing - Theory, News & General
Topic: A levered 50/50 portfolio is better than a 90/10 one?
Replies: 43
Views: 7452

Re: A levered 50/50 portfolio is better than a 90/10 one?

nisiprius wrote:The right conclusion to draw from this is not that miracles are possible, and not that you can win against a casino, but that infinite lines of credit don't exist.
If you're considered too big to fail and can borrow from the Fed and the Fed can print money, is that considered very close to an infinite line of credit? I just need to figure out how to get on the "too big to fail" list...
by lostInFinance
Thu Dec 12, 2013 8:24 pm
Forum: Investing - Theory, News & General
Topic: Despite the headline defaults, munis doing okay
Replies: 85
Views: 11241

Re: Despite the headline defaults, munis doing okay

jackholloway wrote: But then you are living in Florida or Texas, when you at least initially wanted to live in CA. As my own company has discovered, we can pay a lot less in the Midwest for top tier talent that already lives there, but we cannot convince people to move there from Silicon Valley even by vastly overpaying. (We also cannot convince them to move from WA to those regions.). Personally, I would rather live here, not far from a resort area, than there, and I would want substantially more to live there.
It's interesting how different people look at it. I would want at least a 25% raise to move to Silicon Valley to compensate for the higher COLA.
by lostInFinance
Thu Dec 12, 2013 7:46 pm
Forum: Personal Finance (Not Investing)
Topic: Umbrella coverage for lawsuits
Replies: 34
Views: 7518

Re: Umbrella coverage for lawsuits

I work as one of the lawyers that is hired when someone is sued and has an umbrella policy. It is smart to make sure you obtain broad and deep coverage. If you are sued for something that is covered under the policy, then the insurer will hire a defense attorney for you. You are required to cooperate with the defense attorney to help defend the case. Assuming that the amount covered is more than the amount the Plaintiff is suing you for, an umbrella policy can greatly reduce your stress. Be careful: you may be surprised by the amount a Plaintiff can sue you for and you do not want to be in a position where you wished you paid for more coverage after the fact. Also, most policies will not cover punitive damaged which are awarded when conduc...
by lostInFinance
Thu Dec 12, 2013 5:48 pm
Forum: Personal Finance (Not Investing)
Topic: Umbrella coverage for lawsuits
Replies: 34
Views: 7518

Re: Umbrella coverage for lawsuits

I work as one of the lawyers that is hired when someone is sued and has an umbrella policy. It is smart to make sure you obtain broad and deep coverage. If you are sued for something that is covered under the policy, then the insurer will hire a defense attorney for you. You are required to cooperate with the defense attorney to help defend the case. Assuming that the amount covered is more than the amount the Plaintiff is suing you for, an umbrella policy can greatly reduce your stress. Be careful: you may be surprised by the amount a Plaintiff can sue you for and you do not want to be in a position where you wished you paid for more coverage after the fact. Also, most policies will not cover punitive damaged which are awarded when conduc...
by lostInFinance
Tue Dec 10, 2013 9:43 pm
Forum: Personal Investments
Topic: Protective puts
Replies: 21
Views: 3520

Re: Protective puts

Here is a sort of Boglehead-ish argument against puts. Collectively, investors earn market returns minus ordinary fess. If investors sell each other puts, then some will make money and others lose money, but the total earnings of investors will be the same. So investors will earn the same market returns minus ordinary fess minus the exchange fees for their puts. So on average, investors will be worse off (financially) buying and selling puts than they would have been if they had just road out the markets. On the other hand, investors may be better off psychologically if they have some insurance during stressful market conditions. So earning less may be compensated for with more psychological well-being. I look at significantly out of the m...
by lostInFinance
Tue Dec 10, 2013 7:06 pm
Forum: Personal Investments
Topic: Buying my own company's stock
Replies: 5
Views: 1249

Re: Buying my own company's stock

Are you an accredited investor? Companies can give their employee's equity or stock options as part of their compensation, but I don't understand how it's legal for the company to sell you shares if you're not an accredited investor and the company is private, unless it's a 504 offering. I would treat any company making a 504 offering as an extremely speculative investment.
by lostInFinance
Tue Dec 10, 2013 6:57 pm
Forum: Investing - Theory, News & General
Topic: Derivatives to hedge inflation? (swap, futures, etc)
Replies: 9
Views: 1706

Re: Derivatives to hedge inflation? (swap, futures, etc)

I think this mutual fund follows the strategy you're talking about.
https://www.jpmorganfunds.com/cm/Satell ... =48121A589

One of the objections some people make with TIPS is counter-party risk. What's the counter-party risk with a private party if inflation ever heated up not to hyperinflation levels, but 10-20%?
by lostInFinance
Tue Dec 10, 2013 6:15 pm
Forum: Personal Finance (Not Investing)
Topic: Family member renting 2nd house. Ok to ignore on tax return?
Replies: 203
Views: 57702

Re: Family member renting 2nd house. Ok to ignore on tax ret

Mom? $650/month? Sure sounds like family cost sharing to me. I would ignore this on my tax return, but I am kind of a "wild man" when it comes to this stuff. I don't collect and remit sales tax when I sell junk at yard sales or on Craigslist, and I keep forgetting to file a "use tax" form for stuff I buy off Amazon. My son buys cases of Pop Tarts at Costco and sells them individually in his dorm, he also charges people for car rides to/from college at every break. Tax Man is cut out of those deals too - must run in the family. 8-) Do people really go "all out" on finding more ways to pay additional taxes in grey areas? Sounds like a bad hobby. :mrgreen: Amen Bruce Yes, paying the taxes you are legally obligate...
by lostInFinance
Sun Dec 08, 2013 11:07 pm
Forum: Investing - Theory, News & General
Topic: safety hedges - TIPS, Permanent Portfolio, 529s, Roths
Replies: 10
Views: 1380

Re: safety hedges - TIPS, Permanent Portfolio, 529s, Roths

The only investment that I can see no one has mentioned yet is foreign sovereign bonds. I think most people get enough foreign currency exposure if they just hold their stocks at global market cap, but if you want more "currency diversification" then that's where I would look. It comes down to a tradeoff between what Bernstein calls shallow risk and deep risk. If the US ever had high 10%+ inflation, then presumably the dollar would be devalued to reflect that.
by lostInFinance
Sun Dec 08, 2013 8:03 pm
Forum: Personal Finance (Not Investing)
Topic: Family member renting 2nd house. Ok to ignore on tax return?
Replies: 203
Views: 57702

Re: Family member renting 2nd house. Ok to ignore on tax ret

Mom is not a renter and she is not paying rent. She is contributing to the family's household expenses associated with owning a second home. I think the tax law as explained in Pub 527 handles all of these situations exactly right. Families are permitted to take care of each other. This is an incredibly tortured interpretation of Pub 527. I'll quote one of their examples again. Example 5. You rent an apartment to your mother at less than a fair rental price. You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. What am I missing? Aren't you both saying the apartment is being used for personal purposes? Bruce The apartment is being used for personal pur...
by lostInFinance
Sun Dec 08, 2013 6:49 pm
Forum: Personal Finance (Not Investing)
Topic: Physician Malpractice tail insurance-which would you choose?
Replies: 39
Views: 3971

Re: Physician Malpractice tail insurance-which would you cho

Artsdoctor wrote:
Jack wrote:
Artsdoctor wrote:Such is the world we live in. The good news is that umbrella policies are so amazingly affordable.
Which implies that in this world claims are amazingly rare.
LOL. Yes! Until it happens to you. And then no matter how rare they might be it doesn't matter: you're the only one that matters.

And it did indeed happen to me.
So a plaintiff against you actually won or settled for an amount greater than your underlying auto/homeowner limits, so that your umbrella policy had to pay out?
by lostInFinance
Sun Dec 08, 2013 6:41 pm
Forum: Personal Finance (Not Investing)
Topic: Family member renting 2nd house. Ok to ignore on tax return?
Replies: 203
Views: 57702

Re: Family member renting 2nd house. Ok to ignore on tax ret

stan1 wrote:Mom is not a renter and she is not paying rent. She is contributing to the family's household expenses associated with owning a second home.

I think the tax law as explained in Pub 527 handles all of these situations exactly right. Families are permitted to take care of each other.
This is an incredibly tortured interpretation of Pub 527. I'll quote one of their examples again.

Example 5. You rent an apartment to your mother at less than a fair rental price. You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price.
by lostInFinance
Sat Dec 07, 2013 9:06 pm
Forum: Personal Finance (Not Investing)
Topic: Family member renting 2nd house. Ok to ignore on tax return?
Replies: 203
Views: 57702

Re: Family member renting 2nd house. Ok to ignore on tax ret

End result the same. Property is used 365 days of the year for personal use, therefore it is used less than 15 days per year as a rental, therefore the income is not reportable. The property is used 365 days of the year for personal use, but it does not follow that the home is not rented during the days when it is used for personal use. Here's from the IRS pub: Example 5. You rent an apartment to your mother at less than a fair rental price. You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. The IRS recognizes that your mother can rent the property on days that the apartment is used personal purposes. Perhaps, the real lesson is the OP should hire a...
by lostInFinance
Sat Dec 07, 2013 8:34 pm
Forum: Personal Finance (Not Investing)
Topic: Family member renting 2nd house. Ok to ignore on tax return?
Replies: 203
Views: 57702

Re: Family member renting 2nd house. Ok to ignore on tax ret

I'm pretty sure Retread is correct, and people telling you this is a rental property and that you owe taxes or are committing tax fraud are completely off-base. To whit: http://www.forbes.com/sites/anthonynitti/2013/01/18/tax-lesson-of-the-day-no-good-can-come-from-letting-your-in-laws-mooch-off-of-you/ ...a personal residence is any home that is rented for fewer than 14 days during the year. Expenses associated with a personal residence, aside from mortgage interest and real estate taxes, are not deductible, but the taxpayer is also not required to report the rental income. As you can see, the key to making the determination between the three types of properties is the extent of personal use by the owner. But personal use is not always wh...
by lostInFinance
Sat Dec 07, 2013 7:45 pm
Forum: Investing - Theory, News & General
Topic: safety hedges - TIPS, Permanent Portfolio, 529s, Roths
Replies: 10
Views: 1380

Re: safety hedges - TIPS, Permanent Portfolio, 529s, Roths

One way to hedge against "black swan" events on paper is to buy way out of the money puts on a stock market index etf, which can be had for fairly cheap. The question is if the US stock market ever dropped 80%, would the sellers of the put still be solvent? What's the counter-party risk with options in a systemic financial crisis? What do other bogleheads think?
by lostInFinance
Sat Dec 07, 2013 5:55 pm
Forum: Personal Finance (Not Investing)
Topic: Family member renting 2nd house. Ok to ignore on tax return?
Replies: 203
Views: 57702

Re: Family member renting 2nd house. Ok to ignore on tax ret

I'm learning there are a lot of grey areas with our tax code. Just so I understand, if I let her live in the condo with no rent (market value $1,250/month) and she pays the HOA ($250/month), I'm essentially gifting her $1,000 per month, which would be totally fine from a tax standpoint (under $13k), so long as I treat it as a second home (deducting only mortgage interest and property taxes), and not as a rental property (no depreciation/maintenance deduction). Unrelated, there is nothing wrong with her gifting us $650 per month. But, when the two are done together, I'm probably entering a grey area from a tax standpoint, and if I wanted to be completely safe (option A) I would just declare the $7,800 a year as miscellaneous income and give...
by lostInFinance
Sat Dec 07, 2013 4:02 pm
Forum: Personal Finance (Not Investing)
Topic: Physician Malpractice tail insurance-which would you choose?
Replies: 39
Views: 3971

Re: Physician Malpractice tail insurance-which would you cho

LostInFinance, Location might be key here, and I can only speak about something that I am familiar with in my own area. The reason why malpractice premiums are much higher than umbrella premiums is because a doctor is more likely to be sued for large amounts at work than at home. Even if you never even get as far as a settlement, it costs money to utilize defense attorneys just for discovery. And in states that don't have some limits, those cases that are settled can be settled for large amounts. In reality, most malpractice cases will drag in everyone involved, including the hospital, if possible; there's a search for "deep pockets." Usually (and that is a different word than always), if a settlement is inevitable, you will most...
by lostInFinance
Sat Dec 07, 2013 3:32 pm
Forum: Investing - Theory, News & General
Topic: safety hedges - TIPS, Permanent Portfolio, 529s, Roths
Replies: 10
Views: 1380

Re: safety hedges - TIPS, Permanent Portfolio, 529s, Roths

If 90%+ of your retirement investments are in tax advantaged accounts, then I think the most conservative option would be 100% TIPS and once you're 70 think about buying a SPIA, LTC insurance, or some other product that insures for longevity.
by lostInFinance
Sat Dec 07, 2013 10:22 am
Forum: Investing - Theory, News & General
Topic: Time Diversification actually DOES reduce stock risk
Replies: 70
Views: 13025

Re: Time Diversification actually DOES reduce stock risk

The argument against time diversification can be traced back to Paul Samuelson's paper "Risk and Uncertainty: A fallacy of large numbers." In the paper, Samuelson gives the example of betting $100 on a coin toss at 2:1 odds. Suppose you refuse to take the bet since, for you, the pain of losing $100 would be greater than the satisfaction of winning $200. Should you be more willing to accept the outcome of a series of similar bets (or "trials")? Based on the "law of averages", the reasoning goes that over the long run, wins and losses should even out, thereby making it almost certain that you'll come out ahead. But Samuelson shows this reasoning is fallacious and the answer is "No." Imagine, for exampl...
by lostInFinance
Sat Dec 07, 2013 12:14 am
Forum: Investing - Theory, News & General
Topic: Leaps [Long-term Equity AnticiPation Securities]
Replies: 5
Views: 874

Leaps [Long-term Equity AnticiPation Securities]

So portfolio A is 100% in the S&P 500. Portfolio B is 60% cash/CDs/short term bonds and 40% deep in the money LEAPS on an S&P 500 ETF. How do these two portfolios compare in the long run?
by lostInFinance
Fri Dec 06, 2013 7:40 pm
Forum: Personal Finance (Not Investing)
Topic: Physician Malpractice tail insurance-which would you choose?
Replies: 39
Views: 3971

Re: Physician Malpractice tail insurance-which would you cho

Perhaps non-physicians don't get that. I'm in nowhere near the most expensive malpractice specialty, but an umbrella for $1 Million is like $200 a year. A $1 Million malpractice policy for my specialty in my area is $16-18K per year. That's not a direct comparison because you typically have home owner's and auto insurance as the primary coverage. Nevertheless, assuming similar profit margins for the insurance companies, you might infer from those numbers, that a physician has a 10x higher probability of going bankrupt from malpractice claims than from an auto accident. Based on that, aren't all the umbrella threads where physicians worry whether a 1 million policy is sufficient, at best debating something that doesn't matter, since it has ...
by lostInFinance
Fri Dec 06, 2013 4:01 pm
Forum: Personal Finance (Not Investing)
Topic: Physician Malpractice tail insurance-which would you choose?
Replies: 39
Views: 3971

Re: Physician Malpractice tail insurance-which would you cho

manwithnoname wrote: If that were true then every doc would carry the minimum coverage regardless of his net worth because the lawyers will settle for minimum amount instead of a greater amount awarded by a jury.
There's some circular reasoning here. First, doctor A, I'll buy as much coverage as doctor B has. Later on, doctor B: I wonder whether I could drop my coverage to a lower amount. No, on second thought, I better stick with at least as much coverage as doctor A.
by lostInFinance
Fri Dec 06, 2013 3:57 pm
Forum: Personal Finance (Not Investing)
Topic: Physician Malpractice tail insurance-which would you choose?
Replies: 39
Views: 3971

Re: Physician Malpractice tail insurance-which would you cho

EmergDoc wrote: I've heard that argument too. I'd sure love to have as much malpractice coverage as I have umbrella coverage, but I guess I would have to keep it secret, which would probably be difficult to do.
I would guess that you should have at least as much as malpractice coverage as umbrella coverage. While I don't have any data, I'm guessing for most specialties, the probability of ever needing a malpractice policy to pay out X million is at least as high as the probability of ever having an umbrella policy pay out that much.
by lostInFinance
Fri Dec 06, 2013 3:36 pm
Forum: Investing - Theory, News & General
Topic: Endpoint sensitivity on "historic" data
Replies: 30
Views: 3890

Re: LT equity returns

bobcat2 wrote:Hi Nisi,

Since I keep getting dragged into this, let me say what I believe the most important LT historical return data are. I look primarily at the Triumph of the Optimists data (the Dimson, Marsh, & Staunton data) from 1900 to the latest available year, which currently is 2012. This covers return data for stocks, bonds, and bills from capital markets of 22 countries and roughly 90% of world capitalization in many of the last 113 years thru 2012.
How much can we really trust some of the early data to be predictive of future results, especially for ex-US? During the first half of the twentieth century, most of the developed world, excluding the US, got bombed to rubble twice in WW1 and WW2.
by lostInFinance
Thu Dec 05, 2013 4:43 pm
Forum: Investing - Theory, News & General
Topic: Bogleheads, why is this taboo? [Use Leverage in a Portfolio]
Replies: 189
Views: 26286

Re: Bogleheads, why is this taboo? [Use Leverage in a Portfo

It is interesting those that bring up MarketTimer as an example of how leverage fails. As I read his system, he was saying you can recover from a leverage failure based on future income. Since he now claims a net worth of 500K at age 33 and just 5 years ago had a net worth of negative 200k, it would seem his system actually did work. His system failed him... his human capital did not. Imagine if he had actually just stuck with the standard Boglehead advice how much more he would have today. The one part of this equation that you cannot measure, is if the large debt improved his long term situation by spurring him to find a more lucrative job than he would have otherwise found. His system may have failed him, but it doesn't mean it was a ba...
by lostInFinance
Wed Dec 04, 2013 6:30 pm
Forum: Personal Finance (Not Investing)
Topic: should my nephew apply to a top-tier university?
Replies: 274
Views: 19740

Re: should my nephew apply to a top-tier university?

The debate was a long time ago, this is what I dredged up in a quick google search now: http://www.slate.com/articles/news_and_politics/the_highbrow/2005/01/dont_let_larry_summers_off_the_hook_yet.html you read that, and take your own view. http://harvardmagazine.com/2005/05/at-odds-html http://www.slate.com/articles/health_and_science/human_nature/2005/02/the_girls_of_summers.2.html Educational Research and Evaluation: An International Journal on Theory and Practice Volume 12, Issue 2, 2006 Special Issue: Cross-Cultural Comparison of Group-Related Educational Inequality: The PISA 2000 Study Select Language​▼Translator disclaimer Exploring cross-national differences in gender gaps in education Access optionsDOI:10.1080/13803610600587016 >A...
by lostInFinance
Tue Dec 03, 2013 9:21 pm
Forum: Personal Consumer Issues
Topic: Tactical Flashlight for long walks at night vs. pepper spray
Replies: 85
Views: 11140

Re: Tactical Flashlight for long walks at night vs. pepper s

Don't bother with a pocket knife or pepper spray.
Either
0) Worry less
1) Stop walking at night
2) Get other people to walk with you. Criminals tend to avoid groups.
3) Get a vicious dog
4) Get a gun

A pocket knife or pepper spray is security theater and a flash light is a joke.
by lostInFinance
Tue Dec 03, 2013 5:44 pm
Forum: Personal Finance (Not Investing)
Topic: should my nephew apply to a top-tier university?
Replies: 274
Views: 19740

Re: should my nephew apply to a top-tier university?

Valuethinker wrote: What was galling was that Summers repeated a stereotype, and the whole point of the conference had been to consider women in academic science, and why the stereotype was incorrect. The point of the conference as I understand it was to consider why there were far fewer tenured women academics in maths/ sciences disciplines than test scores at earlier ages would predict. And note that *Finnish* women don't score below men in those tests as I understand the position-- so it's not even clear that there are some genetic predispositions here, as opposed to cultural ones.
I don't know what data source you're using, but the OECD PISA test results in math and science for Finland provide supporting evidence for Summer's hypothesis.
by lostInFinance
Mon Dec 02, 2013 11:16 pm
Forum: Personal Finance (Not Investing)
Topic: should my nephew apply to a top-tier university?
Replies: 274
Views: 19740

Re: should my nephew apply to a top-tier university?

Valuethinker wrote: It wasn't just *one remark* and the scope of that final remark, at a conference of scientists dedicated to challenging that very preconception that he reiterated, was spectacularly badly placed. It was the proverbial straw that broke the camel's back --even his supporters backed away.
I think it's hard to read Summer's remarks and take a look at the data and conclude that he was too far off the mark. I certainly don't believe anyone has proven that his hypothesis was wrong. However, a university that fires or claims to fire its President simply because his theories are inconsistent with how some people think the world should be has a profoundly anti-intellectual climate.
by lostInFinance
Mon Dec 02, 2013 8:21 pm
Forum: Investing - Theory, News & General
Topic: Delete Wiki [Article] on Tax-Efficient Asset Location
Replies: 285
Views: 43911

Re: Fund placement from the Bogleheads' Guide to Investing.

Lady Geek: In our Bogleheads' Guide to Investing (page 141) we provide Tables showing the after-tax returns when we place stocks in taxable accounts and bonds in tax-deferred accounts vs. the opposite fund placement: We can demonstrate the importance of fund placement with a simple illustration (Tables 11.2 and 11.3). Suppose you had a $100,000 portfolio of two funds--a $50,000 stock fund and a $50,000 bond fund. However, your tax-deferred retirement account can only accommodate $50,000. --You put the bond fund in your retirement account and what's left (your stock fund) in your taxable account. Now let's look at Table 11.2 to see what happens at the end of 30 years. We see that the after-tax value after 30 years is more than one million d...
by lostInFinance
Mon Dec 02, 2013 7:37 pm
Forum: Personal Investments
Topic: Success Stories of Bogleheads
Replies: 62
Views: 9661

Re: Success Stories of Bogleheads

MooreBonds wrote:
To answer your question on advice: I would stress stick to indexing with super low cost funds, but also understand that a majority of investing lies beyond our borders.
It may be heresy on this board, but I think many bogleheads over-emphasize the importance of low cost funds. The worst 20-year period for the S&P 500 from 1950-2010 returned 2.4% while the best returned 14.4%. Cutting costs is important, but the luck to be investing at the right time in history is even more so.

http://usatoday30.usatoday.com/money/pe ... ting_n.htm
by lostInFinance
Sun Dec 01, 2013 11:45 pm
Forum: Personal Finance (Not Investing)
Topic: Status...Independent Contractor or Company Employee?
Replies: 17
Views: 1726

Re: Status...Independent Contractor or Company Employee?

1. Does the company furnish you with office space?
2. Are required to work a fixed set of hours?
3. Does the company provide all the equipment that you need for your job?
4. Do you consult for more than one company?

If the answer to the first three is yes and the last is no, then you're probably an employee per the IRS and the company is breaking the law by paying you as a 1099.
by lostInFinance
Sun Dec 01, 2013 8:01 pm
Forum: Investing - Theory, News & General
Topic: REIT Magazine - Sam Zell Interview
Replies: 34
Views: 3809

Re: REIT Magazine - Sam Zell Interview

REITS basically: 1) have income and value derived from rent of land-, and ownership of land,which basically does not go away (barring Atlantis), versus ownership of a business entity, that will at some point cease to exist, and business profits, from selling widgets or washing cars/finance whatever. Rent of Terra firma, Rent of money, Business profit. All three, fundamentally different. REITS, at least all the ones accessible to retail investors, are already included in the Vanguard Total Stock Market Index. There's no need to hold a separate fund for REITs, unless you want to overweight real estate. The only somewhat good reason I've heard for over-weighting real estate is that if you're a long term renter, over-weighting real estate inve...
by lostInFinance
Sun Dec 01, 2013 7:37 pm
Forum: Personal Finance (Not Investing)
Topic: should my nephew apply to a top-tier university?
Replies: 274
Views: 19740

Re: should my nephew apply to a top-tier university?

Rodc wrote:
Those saying that he can get just as good an education at the local community college...
Did anyone say that or did you just make that up?
The Krueger study that you brought up does seem to indicate that you could go to almost any college and have the same earning potential.
by lostInFinance
Sun Dec 01, 2013 7:27 pm
Forum: Personal Finance (Not Investing)
Topic: Master Limited Partnerships grow in importance: action??
Replies: 21
Views: 2715

Re: Master Limited Partnerships grow in importance: action??

I think people undervalue the Investment Company Act of 1940 and the protection, transparency, and liquidity of mutual funds. Not to mention the Securities Act of 1933 and the Securities Exchange Act of 1934. I believe everyone should read Reminiscences of a Stock Operator (it's still in print or here's a pdf version ) before considering the purchase of anything other than vanilla, fully regulated securities and mutual funds, that includes partnerships of any kind, hedge funds, private equity, penny stocks anything that requires an accredited investor, ...? In the real world, market efficiency requires something very close to a level playing field when it comes to information. Without it, the old saw about playing poker is equally true of ...
by lostInFinance
Wed Nov 27, 2013 7:20 pm
Forum: Personal Finance (Not Investing)
Topic: should my nephew apply to a top-tier university?
Replies: 274
Views: 19740

Re: should my nephew apply to a top-tier university?

Rodc wrote: And the fact that I hire many engineers and scientists from BS to PhD and we only hire the very top students from the best to the very solid schools. You really can't tell the folks from MIT from the top state schools if you stick to the very top of the class at both. Down the road in their careers there really isn't a correlation between school and career trajectory.
Fair enough, but if you're paying out of state tuition at Berkeley, you could go to any of the Ivies for the same price.
by lostInFinance
Wed Nov 27, 2013 4:48 pm
Forum: Personal Finance (Not Investing)
Topic: should my nephew apply to a top-tier university?
Replies: 274
Views: 19740

Re: should my nephew apply to a top-tier university?

Rodc wrote: That is easy enough. The harder issues are what is the trade off is you have to bite into retirement savings? How big a bite is ok, that is how much risk to retirement is ok?

Or if you could pay for one really bright kid but can't also pay private for your less stellar kids?
I suspect this is the real reason people are so enamored with the Krueger study. It's popular not because it's more scientifically defensible than the alternative research, but because it assuages the guilt of parents who tell their kids to take the scholarship at the 2nd tier school.
by lostInFinance
Tue Nov 26, 2013 8:12 pm
Forum: Personal Finance (Not Investing)
Topic: should my nephew apply to a top-tier university?
Replies: 274
Views: 19740

Re: should my nephew apply to a top-tier university?

Tycoon wrote:How would one measure "unobservable" student ability?
Krueger represents it as the average SAT score of the schools that a student applies to.
by lostInFinance
Tue Nov 26, 2013 7:56 pm
Forum: Personal Finance (Not Investing)
Topic: should my nephew apply to a top-tier university?
Replies: 274
Views: 19740

Re: should my nephew apply to a top-tier university?

That seems like an odd way to read the research. I think the point is more that if you are smart enough (hi enough SATs for example) to reasonably apply... I don't think the point is that if you can only get an 300 on your math SATs you can boost your career odds by applying to Harvard... Have you even read the Krueger study? Krueger found that students with the same SAT and GPAs saw a significant salary bump from going to a more selective college, which was consistent with prior research on the topic. Krueger decided that the "basic" model(GPA, SAT) was wrong because it didn't include unobservable student ability. He proposed a self revelation model that used the average SAT score of the schools applied to as a measure in the re...