Search found 605 matches

by pezblanco
Wed Jul 31, 2019 7:29 pm
Forum: Personal Finance (Not Investing)
Topic: Social Security -- Take it at 62, 67 or 70
Replies: 317
Views: 24146

Re: Social Security -- Take it at 62, 67 or 70

I have seen a lot of discussion about delaying taking Social Security until age 70. If you assume that you are going to live to be 85 or greater, the typical thing I have seen is to add up all your payments from 62 to 85 and compare that to all your payments from 70 to 85. Generally, taking it at 7...
by pezblanco
Sat Jul 06, 2019 7:39 pm
Forum: Investing - Theory, News & General
Topic: No More Posts Of Larry Swedroe Essays [by Random Walker]
Replies: 64
Views: 6568

Re: No More Posts Of Larry Swedroe Essays

This is a very very sad disgraceful decision. It's too bad that a few influential people have been able to stifle discussion that challenges their "belief system". But if you own the forum, you get to call the tune .... The place to win a discussion is in the marketplace of ideas, of intellectual gi...
by pezblanco
Wed Jun 05, 2019 9:14 am
Forum: Investing - Theory, News & General
Topic: Investing bonds in tax advantaged versus taxable accounts
Replies: 10
Views: 1112

Re: Investing bonds in tax advantaged versus taxable accounts

You should read "Bonds in Taxable" by the White Coat Investor. As bond rates get low, the preference will shift to putting your bonds in the taxable account. If you're in a high marginal tax regime, you can consider munis which are federal tax free and depending on your state of residence can even b...
by pezblanco
Fri May 31, 2019 9:20 pm
Forum: Personal Investments
Topic: Delay Social Security?
Replies: 35
Views: 3520

Re: Delay Social Security?

The Wizard wrote:
Fri May 31, 2019 8:01 pm
People are not reading/answering the OP's question.
The question is: When does it NOT make sense to delay SS?
If you answer why "Not A" completely, then you have also logically answered why "A" completely.
by pezblanco
Fri May 31, 2019 9:17 pm
Forum: Personal Investments
Topic: Delay Social Security?
Replies: 35
Views: 3520

Re: Delay Social Security?

The main reason to delay is longevity risk. If yo die at the “normal” age it doesn’t matter when you claim, but if you live a long life you end up with more. Use the open social security calculator on advanced to check different claiming ages. https://opensocialsecurity.com/ I think that I read onc...
by pezblanco
Fri May 31, 2019 7:24 pm
Forum: Personal Consumer Issues
Topic: Tequila and Magaritas
Replies: 122
Views: 14679

Re: Tequila and Magaritas

Lots of clueless comments so far in this thread. :D As an inhabitant of a part of the country where margaritas are a way of life .... Recipe for an high quality margarita: 1) slice a lime in half 2) wet rim of glass with lime and touch to the sal gorda (rock salt) (half rim ... full rim whatever yo...
by pezblanco
Fri May 31, 2019 7:14 pm
Forum: Personal Investments
Topic: Delay Social Security?
Replies: 35
Views: 3520

Re: Delay Social Security?

Use the search feature but there are tens of threads discussing this in general. You don't give enough data for your particular case to give specific advice. In general, SS is the best annuity that you'll get a chance at. If you are married and your spouse will receive your survivor benefit then in ...
by pezblanco
Thu May 23, 2019 5:58 pm
Forum: Investing - Theory, News & General
Topic: How to "lie" with Personal Finance
Replies: 28
Views: 5258

Re: How to "lie" with Personal Finance

“Do not trust any statistic you did not fake yourself” (Winston Churchill) I had not come across that Churchill quote before. It's not actually a Churchill quote. Perhaps that's why I hadn't run across it before! In any case, don't leave us hanging. What's the true attribution? The usual translatio...
by pezblanco
Thu May 16, 2019 1:36 pm
Forum: Investing - Theory, News & General
Topic: Expected return of a bond fund
Replies: 39
Views: 5609

Re: Expected return of a bond fund

Nice explanation. Thank you.

So, the extra that you get over the SEC yield is called the "roll yield", I'm thinking.
by pezblanco
Sat May 04, 2019 8:44 am
Forum: Personal Investments
Topic: Small Cap Blend vs Small Cap Value
Replies: 19
Views: 4384

Re: Small Cap Blend vs Small Cap Value

In my 401k I am fortunate enough to have a few Vanguard funds on offering - enough to build a portfolio I'm happy with. Right now my equities are in VFIAX and VGTSX. I don't have Vanguard small cap value offered as an option, but I DO have Vanguard small cap blend - VSMAX. Given the fairly consiste...
by pezblanco
Sat Apr 20, 2019 7:36 pm
Forum: Personal Finance (Not Investing)
Topic: Sell Home Now or Wait? Relocating with Spouse
Replies: 14
Views: 1084

Re: Sell Home Now or Wait? Relocating with Spouse

This is a complicated question with a lot of weighting towards the relationship health. Is this the first you and your fiancée will be in a long distance relationship for an extended time? It’s something you have to consider. 1) Which partner has the house in their name? Assuming you own the house ...
by pezblanco
Fri Apr 12, 2019 11:01 am
Forum: Investing - Theory, News & General
Topic: Indexing on leverage?
Replies: 31
Views: 1912

Re: Indexing on leverage?

People on this forum give all sorts of nuanced answers to this question and miss the absolutely critical point. Equity margin is callable. This means if stocks drop, you will have to put up more cash immediately. Where will this cash come from? If you don't have the cash, your position is immediate...
by pezblanco
Fri Apr 12, 2019 8:56 am
Forum: Investing - Theory, News & General
Topic: Indexing on leverage?
Replies: 31
Views: 1912

Re: Indexing on leverage?

The leveraged SPDRs are peculiar entities. When I researched getting into them, they require entering and exiting at certain points in the day, at which point a 2x or 3x leverage on an index could be done. But these do not grow at 2x or 3x the growth rate of the SP500 as a general index. Not sure w...
by pezblanco
Fri Apr 12, 2019 8:50 am
Forum: Investing - Theory, News & General
Topic: Indexing on leverage?
Replies: 31
Views: 1912

Re: Indexing on leverage?

People on this forum give all sorts of nuanced answers to this question and miss the absolutely critical point. Equity margin is callable. This means if stocks drop, you will have to put up more cash immediately. Where will this cash come from? If you don't have the cash, your position is immediate...
by pezblanco
Thu Apr 11, 2019 4:49 pm
Forum: Investing - Theory, News & General
Topic: Indexing on leverage?
Replies: 31
Views: 1912

Re: Indexing on leverage?

Your leveraged portfolio has to do well enough to cover the cost of borrowing and the increased risk. Individuals cannot borrow at the T bill rate, so that cost would be substantial. You need to have enough liquidity to survive steep market drops, or sell out during those drops to satisfy the margi...
by pezblanco
Thu Apr 11, 2019 4:46 pm
Forum: Investing - Theory, News & General
Topic: Indexing on leverage?
Replies: 31
Views: 1912

Re: Indexing on leverage?

What's the general consensus of doing this? Since over the long term the index should go up wouldn't it be better to buy more using leverage? Is it that much different to buying a house with a mortgage.. (apart from possible margin calls) Aye, therein lies the rub. The market can go the wrong way l...
by pezblanco
Mon Apr 08, 2019 7:28 pm
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1688

Re: Should I place bonds in my IRA or Roth IRA

I don't think it really matters. Let x be your income tax bracket when you withdraw (I realize that this may not be known but the OP will have a better idea than us ... but anyway if your income tax backet is 22% then x = .22). So, suppose the amount of money in the Roth is M dollars. That money pla...
by pezblanco
Sun Apr 07, 2019 12:25 pm
Forum: Investing - Theory, News & General
Topic: When to add bonds?
Replies: 37
Views: 2946

Re: When to add bonds?

If you are willing to be 100% stocks (which I think is fine at your age), you might also want to consider being more than 100% stocks ... i.e. a judicious use of leverage. Look at some of the discussions involving Life Cycle Investing on the site. The book by Ayres and Nalebuff is a good intro to so...
by pezblanco
Sun Mar 24, 2019 9:33 pm
Forum: Personal Investments
Topic: Is there any reason to buy a short term bond index versus long term one?
Replies: 26
Views: 2469

Re: Is there any reason to buy a short term bond index versus long term one?

If you hold a bond fund for its duration, or a bond to maturity, you will get your principal back plus the interest you signed up for. If you hold the bond fund for its duration, you will be more or less indifferent to interest rate changes that occurred during the holding period. This is false ......
by pezblanco
Sun Mar 24, 2019 8:36 pm
Forum: Personal Investments
Topic: Is there any reason to buy a short term bond index versus long term one?
Replies: 26
Views: 2469

Re: Is there any reason to buy a short term bond index versus long term one?

If you hold a bond fund for its duration, or a bond to maturity, you will get your principal back plus the interest you signed up for. If you hold the bond fund for its duration, you will be more or less indifferent to interest rate changes that occurred during the holding period. This is false ......
by pezblanco
Sun Mar 24, 2019 4:07 pm
Forum: Investing - Theory, News & General
Topic: Leveraging Stock/Bond Portfolios and the Kelly Criterion
Replies: 19
Views: 1418

Re: Leveraging Stock/Bond Portfolios and the Kelly Criterion

The “18% CAGR” was from 1982-present (actually 20%). If this is 50 years then that explains the discrepancy alone. Hedge’s portfolio is as much a bet that rates won’t go straight up again as anything, but given the upside potential, your distribution doesn’t look so scary. Yes, I think when I wrote...
by pezblanco
Sun Mar 24, 2019 9:29 am
Forum: Investing - Theory, News & General
Topic: Leveraging Stock/Bond Portfolios and the Kelly Criterion
Replies: 19
Views: 1418

Re: Leveraging Stock/Bond Portfolios and the Kelly Criterion

The “18% CAGR” was from 1982-present (actually 20%). If this is 50 years then that explains the discrepancy alone. Hedge’s portfolio is as much a bet that rates won’t go straight up again as anything, but given the upside potential, your distribution doesn’t look so scary. Yes, I think when I wrote...
by pezblanco
Sun Mar 24, 2019 9:24 am
Forum: Investing - Theory, News & General
Topic: Leveraging Stock/Bond Portfolios and the Kelly Criterion
Replies: 19
Views: 1418

Re: Leveraging Stock/Bond Portfolios and the Kelly Criterion

Hi Pez Thanks for the analysis. I read Fortune Formula but still have not been able to fully grasp the Kelly criterion. Your rolling 10 year dispersion are based on which years? From 1967 to 201 7 Also how can one use the Kelly criterion to decide what percentage of assets to assign to a leveraged ...
by pezblanco
Thu Mar 21, 2019 8:55 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Why The Size Premium Should Persist
Replies: 62
Views: 4076

Re: Larry Swedroe: Why The Size Premium Should Persist

Might read my factor book which talks about these things Larry I had a series of PMs with Larry about a previous thread. In those messages he also suggest I buy his "factor book". Which I plan on not doing. Ignorance is bliss ... I recommend instead Andrew Ang's book, much better imo. :greedy I'll ...
by pezblanco
Thu Mar 21, 2019 8:53 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Why The Size Premium Should Persist
Replies: 62
Views: 4076

Re: Larry Swedroe: Why The Size Premium Should Persist

Might read my factor book which talks about these things Larry I had a series of PMs with Larry about a previous thread. In those messages he also suggest I buy his "factor book". Which I plan on not doing. Ignorance is bliss ... Of course I am ignorant and it is why I had a long 1-on-1 interaction...
by pezblanco
Thu Mar 21, 2019 6:25 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Why The Size Premium Should Persist
Replies: 62
Views: 4076

Re: Larry Swedroe: Why The Size Premium Should Persist

knpstr wrote:
Thu Mar 21, 2019 6:12 pm
pezblanco wrote:
Thu Mar 21, 2019 10:22 am
Might read my factor book which talks about these things
Larry
I had a series of PMs with Larry about a previous thread. In those messages he also suggest I buy his "factor book". Which I plan on not doing.
Ignorance is bliss ...
by pezblanco
Thu Mar 21, 2019 10:22 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Why The Size Premium Should Persist
Replies: 62
Views: 4076

Re: Larry Swedroe: Why The Size Premium Should Persist

I wish that Larry had made some comment on the recent article suggesting that there isn't a size effect at all. It is so prominent that I have to believe he must be aware of it: Fact, Fiction, and The Size Effect by Alquist et al (two AQR researchers and a Yale professor) https://poseidon01.ssrn.co...
by pezblanco
Thu Mar 21, 2019 9:44 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Why The Size Premium Should Persist
Replies: 62
Views: 4076

Re: Larry Swedroe: Why The Size Premium Should Persist

I wish that Larry had made some comment on the recent article suggesting that there isn't a size effect at all. It is so prominent that I have to believe he must be aware of it: Fact, Fiction, and The Size Effect by Alquist et al (two AQR researchers and a Yale professor) https://poseidon01.ssrn.com...
by pezblanco
Tue Mar 19, 2019 2:35 pm
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

Yes. But in this thread, we've been considering setting "reasonable" amounts of leverage for long term buy/hold. So, the leverage values of interest are from 1 to 3 more or less .... The Kelly criterion would be telling us something in the range of 1.2 to 1.5 so 21.36 is way out of the orbit of wha...
by pezblanco
Sun Mar 17, 2019 2:32 pm
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

Just use futures. Simpler and cheaper. The main problem for small retail investors I think is the size of the contract. An e-mini 500 contract is 141K today. If you want a leverage of 1.5 say, then you need to come up with around 91K. So, as the market rises and falls, it's hard to reset your lever...
by pezblanco
Fri Mar 15, 2019 7:33 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 423
Views: 27616

Re: Lifecycle Investing - Leveraging when young

I think there's a strong case to be made for using call options instead of straight leverage for the very early portion of lifecycle investing. By capping your maximum option losses to your monthly investment amount, you can afford significantly more leverage without risk of ruin. For example, http...
by pezblanco
Fri Mar 15, 2019 2:53 pm
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

Just use futures. Simpler and cheaper. The main problem for small retail investors I think is the size of the contract. An e-mini 500 contract is 141K today. If you want a leverage of 1.5 say, then you need to come up with around 91K. So, as the market rises and falls, it's hard to reset your lever...
by pezblanco
Fri Mar 15, 2019 2:37 pm
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

Alex, I think that one way to interpret all this is to note that you actually are buying the dividends. The dividends are huge here in the context of calculating the true borrowing costs. The greeks of the options are almost superfluous for this application of buying deep in the money LEAPS and hol...
by pezblanco
Fri Mar 15, 2019 11:42 am
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

A couple of points. If you are interested in going down this route, I would urge you to read up on the formal theory of option pricing. Focus on pricing volatility, such as the VIX. Then focus on the Greeks - delta, gamma, theta, and vega. Next, ignore dividends. They are just not that germane to y...
by pezblanco
Fri Mar 15, 2019 11:39 am
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

What is usually suggested is to not try to play the option gambling game and buy options (LEAPS) that are DEEP in the money. So, for example, the SPDR S&P 500 ETF is at around 280 right now. If you wanted about 2 to 1 leverage you would buy an option with strike price of around 140. Right this seco...
by pezblanco
Fri Mar 15, 2019 11:33 am
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

What is usually suggested is to not try to play the option gambling game and buy options (LEAPS) that are DEEP in the money. So, for example, the SPDR S&P 500 ETF is at around 280 right now. If you wanted about 2 to 1 leverage you would buy an option with strike price of around 140. Right this seco...
by pezblanco
Thu Mar 14, 2019 4:49 pm
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

You paying for and getting something extra with the 280 strike price ... most obviously you're getting lots of downside protection. That has to be paid for. Can you walk me through you calculations? What you are saying does not square with the more formal models that I have been trained - like Blac...
by pezblanco
Thu Mar 14, 2019 4:34 pm
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

Lets take a look at the Jan 15, 2021 SPDR LEAP with strike 140. Data on last trade: Date of Last Trade: 2/26/2019 Option Price of Last Trade: 139.36 Index value on that date: High 280.3 Low 278.9 %I just take the average of these = (279.6) Implied Amount Borrowed (iab): IndexValue - OptionPrice: 140...
by pezblanco
Thu Mar 14, 2019 2:52 pm
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

What is usually suggested is to not try to play the option gambling game and buy options (LEAPS) that are DEEP in the money. So, for example, the SPDR S&P 500 ETF is at around 280 right now. If you wanted about 2 to 1 leverage you would buy an option with strike price of around 140. Eh - Maybe. The...
by pezblanco
Thu Mar 14, 2019 11:19 am
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

The only problem is, I don't really understand how LEAPS work. I just know that they are some kind of call option. And how long? Can you get them for 10 or 20 years? ... :?: What I don't get is how is buying options the same as borrowing money to buy stocks? I don't see how this two things are equa...
by pezblanco
Wed Mar 13, 2019 8:02 pm
Forum: Investing - Theory, News & General
Topic: On Leverage
Replies: 184
Views: 14810

Re: On Leverage

That could be a thread by itself to debate whether high inflation is off the table because of a paradigm shift in monetary policy. This would interest a lot of Bogleheads considering that its commonly recommended that half of bonds should be inflation-indexed bonds. I'm sure grok would be glad to h...
by pezblanco
Wed Mar 13, 2019 3:43 pm
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]
Replies: 3353
Views: 262412

Re: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]

Been running some portfolio backtesting. Looks like TQQQ instead of UPRO offered superior returns. Anyone have any thoughts on this? So far the portfolio I find most fondest for is 40% TQQQ, 30% TMF, 30% EDV. I also came across this article today: http://ddnum.com/articles/leveragedETFs.php . Looks...
by pezblanco
Mon Mar 11, 2019 6:35 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 423
Views: 27616

Re: Lifecycle Investing - Leveraging when young

No problem ... it's just that I'm embarrassed by my cringingly bad Matlab code .... people used to laugh at me for it. :D

I'll send it to you via PM ....
by pezblanco
Mon Mar 11, 2019 5:53 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 423
Views: 27616

Re: Lifecycle Investing - Leveraging when young

Just some more data on the expected returns to be followed by leveraging and having a regular contribution stream figured in. This is not the authors' system .... just some data about leveraging with an income stream. Assumptions: 1) The last 51 years of real stock, real long term bonds, and real 1-...
by pezblanco
Sun Mar 10, 2019 6:59 pm
Forum: Investing - Theory, News & General
Topic: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]
Replies: 3353
Views: 262412

Re: HEDGEFUNDIE's excellent adventure [risk parity strategy using 3x leveraged ETFs]

Can you run a MC simulation using all the data and block (3-7) or (5-10) bootstrap?....Thx :greedy LOL, you need to ask somebody else. Monte-Carlo isn't exactly my thing.. :wink: I recommend you transition from excel to python ....skip R. You can also use PV for a generic solution , just as simple ...
by pezblanco
Fri Mar 08, 2019 8:08 pm
Forum: Investing - Theory, News & General
Topic: Simulating Returns of Leveraged ETFs
Replies: 210
Views: 16654

Re: Simulating Returns of Leveraged ETFs

From what I can tell, the great recession wouldn't have killed any of the imaginary 3X funds mentioned. The only thing that can "kill" a 3x leveraged fund is a single-day 33.34% decline in the underlying index. To date, the single largest daily decline in the emerging markets index is about 12%. Be...
by pezblanco
Fri Mar 08, 2019 8:03 pm
Forum: Investing - Theory, News & General
Topic: What did you learn from 2018 in the markets?
Replies: 114
Views: 8316

Re: What did you learn from 2018 in the markets?

1. Market timing may be foolish, but you can have a better chance of success if you do not follow the herd but instead recognize when averages are extremely above or below historical figures . It was really tough to step aside during the runups in late 2017/early 2018, but doing so allowed me to co...
by pezblanco
Fri Mar 08, 2019 6:50 pm
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 423
Views: 27616

Re: Lifecycle Investing - Leveraging when young

I just got the book and have been skimming it. The philosophy seems reasonable to me although I don't still understand all the rationale. I still don't understand Ben's statements about the discount rate should be that of stocks ... why not inflation? But anyway, I must work on this. By the way, the...
by pezblanco
Thu Mar 07, 2019 11:46 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 423
Views: 27616

Re: Lifecycle Investing - Leveraging when young

Maybe you could explain as if to a small child, why maximizing the geometric mean is a bad idea??? I'm not an economist, so maybe it's just my basic ignorance of the code words here. .... As for maximizing a utility function, I think that would be a splendid idea if we could agree on what utility f...
by pezblanco
Thu Mar 07, 2019 11:42 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 423
Views: 27616

Re: Lifecycle Investing - Leveraging when young

Maybe you could explain as if to a small child, why maximizing the geometric mean is a bad idea??? I'm not an economist, so maybe it's just my basic ignorance of the code words here. This is what Samuelson would say to a small child: http://www.nccr-finrisk.uzh.ch/media/pdf/Samuelson_JBF1979.pdf Wo...