Search found 1248 matches

by packer16
Fri Nov 08, 2019 1:19 pm
Forum: Investing - Theory, News & General
Topic: REITS no longer cheap
Replies: 63
Views: 10007

Re: REITS no longer cheap

The bond aspect of real estate is present when there are long term leases (10 year plus) the real estate aspect is when the leases/rentals or shorter term. The value of the long term leased real estate is the maximum of the cash flows from the leases (the bonds) or the value of the real estate to o...
by packer16
Thu Nov 07, 2019 9:36 pm
Forum: Investing - Theory, News & General
Topic: REITS no longer cheap
Replies: 63
Views: 10007

Re: REITS no longer cheap

The bond aspect of real estate is present when there are long term leases (10 year plus) the real estate aspect is when the leases/rentals or shorter term. The value of the long term leased real estate is the maximum of the cash flows from the leases (the bonds) or the value of the real estate to ot...
by packer16
Thu Nov 07, 2019 7:36 pm
Forum: Investing - Theory, News & General
Topic: REITS no longer cheap
Replies: 63
Views: 10007

Re: REITS no longer cheap

One aspect that gets lost when looking at REITs as group is they are hybrids of real estate and other leased property and bonds of their lessors. NNN lease REITs are closest to bonds as they have long term leases whose value is based upon the healthiness of the lessors (like bonds). Some of the newe...
by packer16
Thu Oct 17, 2019 9:53 pm
Forum: Investing - Theory, News & General
Topic: REITs or investment property?
Replies: 70
Views: 5020

Re: REITs or investment property?

One aspect many REIT index fund investors forget is the REIT index fund is a fund of funds. What is cheap is your top level fund expenses your underlying fund expenses can be very high. The last time I checked the look through expense ratio for the Vanguard REIT was on the order of 5%, 4.7% on the ...
by packer16
Tue Oct 15, 2019 5:45 pm
Forum: Investing - Theory, News & General
Topic: REITs or investment property?
Replies: 70
Views: 5020

Re: REITs or investment property?

Maybe your first question should be: "do I really need real estate in my portfolio?" What are you trying to achieve that a classic 3-fund portfolio can't give you? #justsayin Stability of cashflows. This argument is fallacious in many ways. In the vast majority of cases, you don't care about cashfl...
by packer16
Tue Oct 15, 2019 9:05 am
Forum: Investing - Theory, News & General
Topic: REITs or investment property?
Replies: 70
Views: 5020

Re: REITs or investment property?

For those who have direct interest in properties, what do you estimate your unlevered and levered returns to be? TIA

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by packer16
Tue Oct 15, 2019 7:37 am
Forum: Investing - Theory, News & General
Topic: REITs or investment property?
Replies: 70
Views: 5020

Re: REITs or investment property?

One aspect many REIT index fund investors forget is the REIT index fund is a fund of funds. What is cheap is your top level fund expenses your underlying fund expenses can be very high. The last time I checked the look through expense ratio for the Vanguard REIT was on the order of 5%, 4.7% on the ...
by packer16
Mon Oct 14, 2019 3:13 pm
Forum: Investing - Theory, News & General
Topic: REITs or investment property?
Replies: 70
Views: 5020

Re: REITs or investment property?

One aspect many REIT index fund investors forget is the REIT index fund is a fund of funds. What is cheap is your top level fund expenses your underlying fund expenses can be very high. The last time I checked the look through expense ratio for the Vanguard REIT was on the order of 5%, 4.7% on the ...
by packer16
Mon Oct 14, 2019 11:20 am
Forum: Investing - Theory, News & General
Topic: REITs or investment property?
Replies: 70
Views: 5020

Re: REITs or investment property?

REITs. My REIT funds won't call me at 3 a.m. to report a plugged toilet. My tenants don’t call me, either. They call the people I pay to take that call. but then paying others reduces your profits. And in the event the people you pay to take the calls don't do as good a job as you would, or you wou...
by packer16
Mon Oct 14, 2019 10:45 am
Forum: Investing - Theory, News & General
Topic: Adjusting AA based on equity risk premium
Replies: 52
Views: 3705

Re: Adjusting AA based on equity risk premium

The problem with valuation based models is they assume a stable mean and equities do not have a stable mean (in part due the value of the optionality (unlimited upside & limited downside) changing over time). Bill Bernstein is the first guy I have heard discuss this. As a result, valuation based AA ...
by packer16
Mon Oct 14, 2019 10:37 am
Forum: Investing - Theory, News & General
Topic: REITs or investment property?
Replies: 70
Views: 5020

Re: REITs or investment property?

One aspect many REIT index fund investors forget is the REIT index fund is a fund of funds. What is cheap is your top level fund expenses your underlying fund expenses can be very high. The last time I checked the look through expense ratio for the Vanguard REIT was on the order of 5%, 4.7% on the u...
by packer16
Sat Oct 12, 2019 9:59 am
Forum: Investing - Theory, News & General
Topic: Optionality of Equities
Replies: 0
Views: 199

Optionality of Equities

One aspect of stocks I rarely see discussed is the optionality that stocks have versus bonds. The optionality comes from the unlimited upside that is associated with stocks versus the limited upside for bonds. Look at in this light it may explain the relative flatness of stock returns versus the dec...
by packer16
Sun Sep 29, 2019 6:41 am
Forum: Investing - Theory, News & General
Topic: How many Bogleheads do Real Estate Investing (not REITs)
Replies: 16
Views: 1620

Re: How many Bogleheads do Real Estate Investing (not REITs)

My real estate investing is more on the lower risk end via NNN REITs. These firms have long-term leases (10 - 14 years) with various renters. What you have is a diversified set of increasing coupon (above inflation) loans that are collateralized by real estate. These are priced today (17 to 22x AFFO...
by packer16
Fri Sep 27, 2019 7:08 pm
Forum: Investing - Theory, News & General
Topic: Bonds returns are on par with Stocks?
Replies: 98
Views: 5947

Re: Bonds returns are on par with Stocks?

You have to remember that the US was an emerging market during much of the 19th century & early 20th century & now we are not so expecting bonds to perform the same as the 19th century is pretty aggressive. If you look at these returns you will see that what has changes has been that bond returns ha...
by packer16
Fri Sep 27, 2019 3:36 pm
Forum: Investing - Theory, News & General
Topic: Bonds returns are on par with Stocks?
Replies: 98
Views: 5947

Re: Bonds returns are on par with Stocks?

I think you need to consider the stock market before the 1930s was a lightly regulated place for folks to gamble. There was stock manipulation that was unchecked by regulation. Folks who invested, invested in bonds. Also, you have to consider that as time goes on the "optionality" of stocks becomes ...
by packer16
Fri Sep 27, 2019 6:02 am
Forum: Investing - Theory, News & General
Topic: Swedroe Advocates: LENDX, SRRIX, AVRPX, QRPRX/QSPRX
Replies: 119
Views: 7842

Re: Swedroe Advocates: LENDX, SRRIX, AVRPX, QRPRX/QSPRX

One observation is that these alternatives have a capped upside so in essence they have very little optionality to the upside. Equities have substantial upside optionality & thus this optionality needs to be incorporated when comparing asset that have very little (the alts) and those that have subst...
by packer16
Thu Sep 12, 2019 5:48 pm
Forum: Investing - Theory, News & General
Topic: Multifactor vs specialized factor funds
Replies: 15
Views: 992

Re: Multifactor vs specialized factor funds

One disadvantage of multi-factor funds is the timing of when will "show up" and if your fund is positioned for this. These funds become like active funds with lots of decisions that need to be made. It may be easier to invest in the more persistent factors than can be purchased for low cost, like SC...
by packer16
Thu Sep 12, 2019 3:22 pm
Forum: Investing - Theory, News & General
Topic: is real estate dead as a diversifier?
Replies: 52
Views: 6020

Re: is real estate dead as a diversifier?

If you look at triple-net lease REITs (STOR, O, NNN) they are more like bonds as they have claims to long term leases that are like bonds with increasing coupons collateralized with real estate. They also recovered quite quickly in 2008 as their bond like characteristics shone through.

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by packer16
Thu Sep 12, 2019 7:58 am
Forum: Investing - Theory, News & General
Topic: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns
Replies: 14
Views: 800

Re: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns

An interesting point about above average profits is there is some evidence out there that it may be sustainable if we enter a new area of innovation. Joe Davis at Vanguard thinks this may be the case. He tracks patent filings & the subsequent advances in technology/investment opportunities & thinks ...
by packer16
Thu Sep 12, 2019 7:36 am
Forum: Investing - Theory, News & General
Topic: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns
Replies: 14
Views: 800

Re: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns

Thanks for the references. It appears that the buybacks in US are modeled but what appears to be missing is the dilution in EM & foreign markets. This appears to have a material influence on why EM markets are lagging DMs, according to Net Buybacks & the Seven Dwarfs (Jean-François L’Her, Tarek Masm...
by packer16
Wed Sep 11, 2019 2:52 pm
Forum: Investing - Theory, News & General
Topic: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns
Replies: 14
Views: 800

Re: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns

Given the large impact found in the study, it would be interesting to see if they had a raw forecast based upon let say valuation & how much that was adjusted by the "buyback" factor. The study results could imply that "buyback" factor could more than overcome the valuation differences between the U...
by packer16
Wed Sep 11, 2019 1:57 pm
Forum: Investing - Theory, News & General
Topic: Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns
Replies: 14
Views: 800

Why Do Historic Share Dilution/Buybacks Not Factor into US & Foreign Expected Returns

One recent study (Net Buybacks & the Seven Dwarfs) showed that one of the most significant factors in cross sectional international returns was stock buybacks. It was almost 10x more important than any other factor over the period studied (1997 - 2017). However, this point is not included in any of ...
by packer16
Sat Sep 07, 2019 8:13 am
Forum: Investing - Theory, News & General
Topic: Index Funds Bubble? [Michael Burry article]
Replies: 242
Views: 27730

Re: Index Funds Bubble? [Michael Burry article]

One point that I think is valid in his argument is the increase in the liquidity premium that index funds is imposing on market prices. Now this is somewhat diluted by the market cap weighted indices as the largest purchases typically have higher liquidity to begin with. Where a mismatch may occur i...
by packer16
Sat Sep 07, 2019 6:39 am
Forum: Investing - Theory, News & General
Topic: REITS no longer cheap
Replies: 63
Views: 10007

Re: REITS no longer cheap

One point about NAVs for REITs is they will lag changes in interest rates that drive real estate cap rates. So for example if there is large decline interest rate (like there has been this year), the public prices of the REITs will reflect the corresponding change in cap rates while the NAV will lag...
by packer16
Thu Sep 05, 2019 8:55 pm
Forum: Investing - Theory, News & General
Topic: Episode 013: Bogleheads on Investing - guest Dr. Bill Bernstein, host Rick Ferri
Replies: 36
Views: 5086

Re: Episode 013: Bogleheads on Investing - guest Dr. Bill Bernstein, host Rick Ferri

Thanks for a great podcast Rick & asking the question about expected returns. Although true, I was a little disappointed with Bill's statistical response to the equity return question. I thought Bill may have some insight given his studies in financial history but maybe he saw no connection to the f...
by packer16
Thu Sep 05, 2019 12:37 pm
Forum: Investing - Theory, News & General
Topic: REITS no longer cheap
Replies: 63
Views: 10007

Re: REITS no longer cheap

This rate of return appears to be tracking BBB rates plus 180bp pretty closely (see post above on this methodology). Implied current cap rate of 4.97% (3.17% + 1.8%) of 20.12x vs 15.4x FFO ratio at the beginning of the year or a 30% rise in value.

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by packer16
Wed Sep 04, 2019 4:54 pm
Forum: Investing - Theory, News & General
Topic: Index Funds Bubble? [Michael Burry article]
Replies: 242
Views: 27730

Re: Index Funds Bubble? [Michael Burry article]

This is one of the shortfalls of concentrated ownership, they can be lobbied by groups who do not represent the views of the fund holders. IMO at some point the cost savings which are pretty small at a certain scale may not be worth the ability of some to lobby the fiduciaries to implement their age...
by packer16
Wed Sep 04, 2019 1:01 pm
Forum: Investing - Theory, News & General
Topic: Index Funds Bubble? [Michael Burry article]
Replies: 242
Views: 27730

Re: Index Funds Bubble?

" Buying a total stock market index fund does not create relative shortages. An indexer who wants to buy more Apple is forced to eat their Johnson & Johnson broccoli too, it all part of the apple-and-broccoli pie." On average and if the buying is done over a typical time this is the case but I think...
by packer16
Wed Sep 04, 2019 9:57 am
Forum: Investing - Theory, News & General
Topic: Index Funds Bubble? [Michael Burry article]
Replies: 242
Views: 27730

Re: Michael Burry: Index Funds are like Subprime CDOs

My take-away was the potential dislocation issue, if alot of money is pulled from index funds at one time, the liquidity of the less liquid securities in the index would cause selling at below fair value due to the short-term supply/demand imbalance. The implicit assumption for index fund liquidity ...
by packer16
Tue Sep 03, 2019 4:23 pm
Forum: Investing - Theory, News & General
Topic: 60/40 VS 30/70 "Center Of Gravity"@@ Allocation for Retirees ??? Bernstein VS Ferri ?? -- What Would You Do?
Replies: 189
Views: 20138

Re: 60/40 VS 30/70 "Center Of Gravity"@@ Allocation for Retirees ??? Bernstein VS Ferri ?? -- What Would You Do?

One risk with the 30/70 portfolio is the re-investment return risk. Once your bonds expire you need to re-invest at the then current interest rate. With this rate at 2.5% nominal and falling this may make many bond investments lose value over time due to inflation. We have not seen this in much of t...
by packer16
Tue Sep 03, 2019 8:27 am
Forum: Investing - Theory, News & General
Topic: Portfolio Strategy
Replies: 28
Views: 4039

Re: Portfolio Strategy

I also agree with Taylor that valuation based expected return forecasts sound good but have a dubious record in practice. Look at the early 2000s forecasts that overestimated bond returns & foreign stock returns significantly & underestimated US stock returns to date. One solution is to examine bot...
by packer16
Mon Sep 02, 2019 12:16 pm
Forum: Investing - Theory, News & General
Topic: Portfolio Strategy
Replies: 28
Views: 4039

Re: Portfolio Strategy

I am excited to read your book also. A few comments. One area that I think this leads into which is important is risk management which includes both Human Capital & insurance. Human Capital will influence your portfolio strategy as its unique to each person. It will influence both asset allocation (...
by packer16
Mon Sep 02, 2019 11:59 am
Forum: Investing - Theory, News & General
Topic: Dr. Bill Bernstein: Next "Bogleheads on Investing" podcast guest
Replies: 56
Views: 5918

Re: Dr. Bill Bernstein: Next "Bogleheads on Investing" podcast guest

The one question I have for Bill Bernstein is does he have some thoughts on the systematic errors in many returns forecasts in the early 2000s. His own forecasts in 2002 were LC US real returns of 3.5%, LTB was 3.5% and Large Foreign was 4%. The resulting real returns to June 2019 was 7.7% for LC US...
by packer16
Mon Aug 26, 2019 11:51 am
Forum: Investing - Theory, News & General
Topic: Overweight China and Emerging Markets? (Ray Dalio)
Replies: 34
Views: 3876

Re: Overweight China and Emerging Markets? (Ray Dalio)

The other factor is how much of the GDP growth will accrue to minority shareholders of firms in a given country. The reason the US & UK have larger than GDP weights is due to these countries having conditions that transfer much of the GDP gains from their own countries & where their firms operate ar...
by packer16
Sun Aug 25, 2019 7:29 pm
Forum: Investing - Theory, News & General
Topic: Overweight China and Emerging Markets? (Ray Dalio)
Replies: 34
Views: 3876

Re: Overweight China and Emerging Markets? (Ray Dalio)

IMO the increase in EM funds weighting in China is adding the risk of profit capture to half of the index. The implicit assumption by Mr. Dalio & other market participants is China will become more like Western markets. The implied trend to free markets in China IMO has taken a detour in the past fe...
by packer16
Sun Aug 25, 2019 7:07 am
Forum: Investing - Theory, News & General
Topic: Overweight China and Emerging Markets? (Ray Dalio)
Replies: 34
Views: 3876

Re: Overweight China and Emerging Markets? (Ray Dalio)

My concern is not that China will not be a large economy in the world but will you as a foreigner investing in China be able to obtain the economic fruits of the ownership like in the US. IMO part of the Western values that China is rejecting is the concept of minority shareholders having property r...
by packer16
Tue Aug 13, 2019 7:44 am
Forum: Investing - Theory, News & General
Topic: Ratio of earnings decline for each percentage decline in interest rates
Replies: 2
Views: 210

Ratio of earnings decline for each percentage decline in interest rates

I have heard stated that a decline in interest rates is the result of lower expected earnings growth. I generally agree with this statement. We are also seeing is a wider ERP as interest rates are falling, see Damodaran's data. This would imply that lower interest rates are more than offset by lower...
by packer16
Mon Aug 12, 2019 12:05 pm
Forum: Investing - Theory, News & General
Topic: Negative Interest Rates in U.S.
Replies: 249
Views: 22405

Re: Negative Interest Rates in U.S.

Rather, my takeaway is that interest rates were quite volatile throughout almost the entire period. And negative rates, while certainly not common, are far from unprecedented; there were at least eight distinct periods where they occurred during that period. Quite right. But I believe the unique co...
by packer16
Mon Aug 12, 2019 8:12 am
Forum: Investing - Theory, News & General
Topic: Negative Interest Rates in U.S.
Replies: 249
Views: 22405

Re: Negative Interest Rates in U.S.

Someone posted a link here a while back that I can't find about how global interest rates have been declining for 600 years. Negative interest rates could be the natural result of that trend. 700 Years of Falling Interest Rates, 1310-2018 Yes, one interesting finding of this historical research, do...
by packer16
Mon Aug 12, 2019 7:51 am
Forum: Investing - Theory, News & General
Topic: Negative Interest Rates in U.S.
Replies: 249
Views: 22405

Re: Negative Interest Rates in U.S.

IMO the the 1980s rates were driven by Communism (which at the time much of the World's economies were based upon) which generate much less economic supply than capitalism but did not reduce demand. This lead to inflation & higher interest rates. The anomaly was this system being present in a large ...
by packer16
Sun Aug 11, 2019 7:27 pm
Forum: Investing - Theory, News & General
Topic: Negative Interest Rates in U.S.
Replies: 249
Views: 22405

Re: Negative Interest Rates in U.S.

For those not convinced that negative interest rates could show up in the U.S. at some point, PIMCO has an article this month discussing the drivers behind the long-term decline in global rates: Interest Rates: Naturally Negative? We believe central banks are not the villains but rather the victims...
by packer16
Sun Aug 11, 2019 11:49 am
Forum: Investing - Theory, News & General
Topic: Negative Interest Rates in U.S.
Replies: 249
Views: 22405

Re: Negative Interest Rates in U.S.

The trends that got us here, lack of capital destroying event (war, famine & epidemic) & technological innovation, are not slowing down. The last time we had this situation the 19th century (after the Napoleonic Wars) lasted nearly 100 years & we have been in this situation since the end of the Cold...
by packer16
Sun Aug 11, 2019 9:11 am
Forum: Personal Finance (Not Investing)
Topic: Social Security -- Take it at 62, 67 or 70
Replies: 329
Views: 28225

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

I think there are more cases where you do not need longevity insurance, like if you have a pension, so SS can be looked at as an investment. In each case, everyone needs to look at what they have in their portfolio of assets & determine if they need longevity insurance or not, like life insurance. M...
by packer16
Sat Aug 10, 2019 11:03 pm
Forum: Personal Finance (Not Investing)
Topic: Social Security -- Take it at 62, 67 or 70
Replies: 329
Views: 28225

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

Current research supports the view that longevity is only about 10% or 15% heritable, down from previous estimates of 30%. So, DNA data isn't going to tell you much if anything. This appears to be a pretty general statement & dependent upon the genetic condition you have, no? If this is an average ...
by packer16
Sat Aug 10, 2019 8:32 pm
Forum: Personal Finance (Not Investing)
Topic: Social Security -- Take it at 62, 67 or 70
Replies: 329
Views: 28225

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

Has anyone used one of the genetic testing outfits to get an idea of life expectancy & use to determine the best age to claim? I think this would have the biggest effect if the tests are accurate. Packer Current research supports the view that longevity is only about 10% or 15% heritable, down from...
by packer16
Sat Aug 10, 2019 8:13 pm
Forum: Personal Finance (Not Investing)
Topic: Social Security -- Take it at 62, 67 or 70
Replies: 329
Views: 28225

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

Has anyone used one of the genetic testing outfits to get an idea of life expectancy & use to determine the best age to claim? I think this would have the biggest effect if the tests are accurate. Packer Current research supports the view that longevity is only about 10% or 15% heritable, down from...
by packer16
Sat Aug 10, 2019 7:55 pm
Forum: Personal Finance (Not Investing)
Topic: Social Security -- Take it at 62, 67 or 70
Replies: 329
Views: 28225

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

Has anyone used one of the genetic testing outfits to get an idea of life expectancy & use to determine the best age to claim? I think this would have the biggest effect if the tests are accurate.

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by packer16
Mon Aug 05, 2019 7:11 am
Forum: Investing - Theory, News & General
Topic: So it’s pointless to invest in tech funds because expectations are already factored into price?
Replies: 17
Views: 1279

Re: So it’s pointless to invest in tech funds because expectations are already factored into price?

One consideration is where is your human capital? If it is in an industry/skill that will be disrupted by technology buying a technology fund as a hedge against the loss of your human capital is rational. One item you need to examine is the incremental cost to obtain this exposure. The large cap-wei...
by packer16
Tue Jul 23, 2019 7:00 am
Forum: Investing - Theory, News & General
Topic: Is there a High Tech Bubble in S&P 500 & Total Market?
Replies: 152
Views: 10673

Re: Is there a High Tech Bubble in S&P 500 & Total Market?

I think these firms do have competitive advantage & the market has given them credit for the advantage before it has been proven. That is where the danger lies. Look at Netflix for example. They have only raised their fees by 30% and have customer defections already. This is with little competition....
by packer16
Sun Jul 21, 2019 8:52 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Next "Bogleheads on Investing" podcast guest
Replies: 61
Views: 6979

Re: Larry Swedroe: Next "Bogleheads on Investing" podcast guest

Another questions for Larry - You have stated that paying fees for value-add can be worth it for access to specific asset classes/tilts. What is a reasonable fee as % of value add if it structured as a fixed fee? If it is structured as a value-add above a benchmark? Thanks.

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