Search found 248 matches

by DaufuskieNate
Tue Aug 14, 2018 7:19 am
Forum: Investing - Theory, News & General
Topic: Massive small cap tilt with low equity AA - anybody do this?
Replies: 33
Views: 2982

Re: Massive small cap tilt with low equity AA - anybody do this?

My equity allocation is entirely SCV for U.S. and Developed Markets, and a tilt toward SVC in Emerging markets. I do this because I find the evidence of long term returns on these factors to be compelling. I accept the risk of returns not matching other benchmarks for long periods of time. I am maki...
by DaufuskieNate
Thu Jun 07, 2018 7:32 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 10495

Re: Yes, you can diversify a market portfolio

When did I say value had anything to do with profitability? Value and investment are approximately the same. Quality and profitability are approximately the same. Quality/profitability doesn't indicate whether a stock has growth story behind it or is a lottery stock. Value metrics vary, but they al...
by DaufuskieNate
Thu Jun 07, 2018 7:04 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 10495

Re: Yes, you can diversify a market portfolio

You seem to be confusing value with quality. They are independent factors. No, not really. High Investment/Low Profitability = Junk. Low Investment/High Profitability = Quality. No, not really. If you look at Fama's paper, the correlation between value and profitability is 0.08 for 2x3 sorts and 0....
by DaufuskieNate
Thu Jun 07, 2018 6:08 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 10495

Re: Yes, you can diversify a market portfolio

golfCaddy wrote:
Thu Jun 07, 2018 5:55 pm

You seem to be confusing value with quality. They are independent factors.
No, not really. High Investment/Low Profitability = Junk. Low Investment/High Profitability = Quality.
by DaufuskieNate
Thu Jun 07, 2018 9:30 am
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 10495

Re: Yes, you can diversify a market portfolio

quality - There's no risk or behavioral explanation for why quality should beat junk. Quality should be less risky than junk by any reasonable definition of the term. On the behavioral side, no one says I want to buy stocks that are absolute, complete junk. Individual investors have shown a prefere...
by DaufuskieNate
Wed Jun 06, 2018 3:14 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 10495

Re: Yes, you can diversify a market portfolio

Totally agree with SimpleGift's observation about individual risk preferences. Would only add that these preferences can be determined by understanding one's need, willingness and ability to take risk.
by DaufuskieNate
Fri Jun 01, 2018 8:48 am
Forum: Investing - Theory, News & General
Topic: Best comprehensive Larry Swedroe book?
Replies: 23
Views: 1524

Re: Best comprehensive Larry Swedroe book?

Your Complete Guide to Factor-Based Investing: The Way Smart Money Invests Today is a good follow-up to Black Swans. It goes into a bit more detail on factors.
by DaufuskieNate
Sun May 27, 2018 8:14 am
Forum: Investing - Theory, News & General
Topic: Strengths/Weaknesses of Market Cap and Value Strategies
Replies: 21
Views: 2321

Re: Strengths/Weaknesses of Market Cap and Value Strategies

I'm uncertain what % market cap and what % value I should use. 100% market cap? 100% value? Somewhere in between? Your post demonstrates that you have invested time studying these strategies. Now you are asking the critical question. Some suggestions: 1) How concerned are you with tracking error? I...
by DaufuskieNate
Wed May 23, 2018 6:12 pm
Forum: Investing - Theory, News & General
Topic: Why do "traditional slice-and-dice" portfolios split 50/50 between value and blend?
Replies: 13
Views: 1140

Re: Why do "traditional slice-and-dice" portfolios split 50/50 between value and blend?

50/50 is likely a way to introduce some tilt, but not go all-in 100%. Perceived benefits may include less tracking error and lower ER than a full-tilt portfolio.
by DaufuskieNate
Sun May 20, 2018 6:35 pm
Forum: Investing - Theory, News & General
Topic: [Book: Living off Your Money, by M. McClung (Prime Harvesting)]
Replies: 437
Views: 89125

Re: [Book: Living off Your Money, by M. McClung (Prime Harvesting)]

I don't believe VPW uses valuation metrics to determine initial withdrawal rates. Prime harvesting both lowers the initial withdrawal rates and the range of the initial rates in "tilts" are compressed at higher initial valuations. I assume today we are at the higher end of valuations according to t...
by DaufuskieNate
Sun May 13, 2018 11:01 am
Forum: Investing - Theory, News & General
Topic: Withdrawal Rates – Part 24: Flexibility Myths vs. Reality
Replies: 98
Views: 11214

Re: Withdrawal Rates – Part 24: Flexibility Myths vs. Reality

A million dollars in 1982 was a lot more money than it is today. Very true. Just to build on that thought, while it is very common to inflation-adjust numbers, it is less common to adjust retirement nest eggs based on valuation. On January 1, 1982, the S&P 500 CAPE was 7.39. Eighteen years later, o...
by DaufuskieNate
Fri May 11, 2018 9:41 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Thinking In Bets
Replies: 22
Views: 2539

Re: Larry Swedroe: Thinking In Bets

Those "rules of thumb" are nice, but kind of squishy. Why 85%? Is 90% conservative enough? You see the point. The reality is that the analysis will be run a number of times during a retirement and the answer to the question "How much can I safely spend?" will evolve. I do not think it's wise to run ...
by DaufuskieNate
Fri May 11, 2018 9:24 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Thinking In Bets
Replies: 22
Views: 2539

Re: Larry Swedroe: Thinking In Bets

Good article and a great reminder about why it makes no sense to judge a strategy by it's recent results. I am also a fan of MC analysis. However, I do find it difficult to decide on an acceptable probability of success. For longer retirement projections, I believe 100% is too conservative but I'm a...
by DaufuskieNate
Tue May 08, 2018 4:16 pm
Forum: Investing - Theory, News & General
Topic: VBINX/VBIAX vs LifeStrategy (3 years to life 'car fund')
Replies: 10
Views: 1369

Re: VBINX/VBIAX vs LifeStrategy (3 years to life 'car fund')

guyesmith - Yes, my car reserve fund is in a taxable brokerage account. Maxed out in my tax-deferred space with longer term investments. I also want to have ready access to the funds as needed, so taxable account makes sense to me. Frankly, I also consider bank savings accounts, CD's, and muni bond ...
by DaufuskieNate
Tue May 08, 2018 1:52 pm
Forum: Investing - Theory, News & General
Topic: VBINX/VBIAX vs LifeStrategy (3 years to life 'car fund')
Replies: 10
Views: 1369

Re: VBINX/VBIAX vs LifeStrategy (3 years to life 'car fund')

You need to define for yourself what this means: "this fund needs to be safe enough that if I suddenly need a car the money will be there." A 60:40 balanced fund can drop 30%. Are you okay if you suddenly need the money and can only buy a car that costs 70% of what you may have been counting on? Not...
by DaufuskieNate
Tue May 08, 2018 11:00 am
Forum: Investing - Theory, News & General
Topic: Peer-to-peer lending as an investment?
Replies: 67
Views: 8218

Re: Peer-to-peer lending as an investment?

I have a position in LENDX, and agree with Larry that it is a superior way to get exposure to P2P lending. I also have a much smaller direct investment in Lending Club notes. I did this primarily to learn more about P2P lending. The limited duration of the notes is attractive. Clearly, one hopes tha...
by DaufuskieNate
Sun May 06, 2018 11:29 am
Forum: Investing - Theory, News & General
Topic: Agressive factor Investing
Replies: 44
Views: 4599

Re: Agressive factor Investing

So what if i were to integrate a multifactor etf into the portfolio? How much percent of stocks does it need to represent for it to make a difference? Should I also include small caps? You can get a lot of different responses to these questions. For the most part, the responses will tell you what o...
by DaufuskieNate
Thu May 03, 2018 10:21 am
Forum: Investing - Theory, News & General
Topic: Agressive factor Investing
Replies: 44
Views: 4599

Re: Agressive factor Investing

Daufuskienate Nate, Overall agree with most all of your post. It’s a good argument for diversifying across factors, tilting to SV, and decreasing overall equity exposure. I do disagree with two points though. 1. SV is a form of systematic risk. It is not idiosyncratic: cannot be diversified away. 2...
by DaufuskieNate
Thu May 03, 2018 9:04 am
Forum: Investing - Theory, News & General
Topic: Agressive factor Investing
Replies: 44
Views: 4599

Re: Agressive factor Investing

But my statement is generally correct looking forward. The point is simply that a more diversified portfolio, diversified across uncorrelated sources of return, will pretty much definitionally have less drag on the compounded return compared to the simple average return. Dave Let's look at two port...
by DaufuskieNate
Thu May 03, 2018 6:13 am
Forum: Personal Finance (Not Investing)
Topic: Pay $2500 in rent or continue living at home
Replies: 91
Views: 6962

Re: Pay $2500 in rent or continue living at home

Live every moment as if it is your last. Imagine someone in your situation, except this ends up being the last year of their life. How would they want to live that last year? Does this mean you should go on a wild spending spree? Of course not. That misses the point entirely. The point is that one c...
by DaufuskieNate
Tue May 01, 2018 3:13 pm
Forum: Investing - Theory, News & General
Topic: Everything You Need to Know on an Index Card
Replies: 33
Views: 4336

Re: Everything You Need to Know on an Index Card

Commit to lifelong learning, saving and risk-taking.
by DaufuskieNate
Sun Apr 29, 2018 12:04 pm
Forum: Investing - Theory, News & General
Topic: Why even hold bonds?
Replies: 19
Views: 2540

Re: Why even hold bonds?

Why Bother With Bonds by Rick Van Ness is a good read on this particular question.
by DaufuskieNate
Sun Apr 29, 2018 11:43 am
Forum: Investing - Help with Personal Investments
Topic: Is McClung "slice and dice" worth the complication?
Replies: 42
Views: 3570

Re: Is McClung "slice and dice" worth the complication?

Since you are willing to devote time and brainpower to good books, might I recommend the new 2018 version of Reducing the Risk of Black Swans by Larry Swedroe and Kevin Grogan. It is very much on point with your specific question.
by DaufuskieNate
Sat Apr 28, 2018 9:37 am
Forum: Investing - Theory, News & General
Topic: Four Noble Truths, investment version
Replies: 9
Views: 1394

Re: Four Noble Truths, investment version

Another version: 1. We crave and cling to material possessions. 2. This craving leads to an endless cycle of never having enough which is a form of suffering. 3. To end this perpetual cycle one needs to break the attachment to material things. 4. The Boglehead investment philosophy gets us there: "I...
by DaufuskieNate
Thu Apr 05, 2018 2:15 pm
Forum: Investing - Theory, News & General
Topic: New Tax Law- Out of State 529 Plans
Replies: 11
Views: 1026

Re: New Tax Law- Out of State 529 Plans

It seems to me that rolling your money from NY to the Utah 529, then waiting a year or two, should take care of the issue. Nope. Doesn't work. This from the NY 529 website: Rollovers are subject to New York State tax on earnings A rollover of assets from your Direct Plan account to a 529 plan in an...
by DaufuskieNate
Sun Dec 24, 2017 3:10 pm
Forum: Investing - Theory, News & General
Topic: What ever happened to the Larry portfolio?
Replies: 120
Views: 14544

Re: What ever happened to the Larry portfolio?

Early next year, Larry is publishing a new edition of Reducing the Risk of Black Swans. I'm pretty sure his latest thinking on the Larry Portfolio will be covered in detail.
by DaufuskieNate
Thu Dec 07, 2017 10:53 am
Forum: Investing - Theory, News & General
Topic: AQR/Asness - You Can Have Your Momentum Factor and Eat it Too
Replies: 21
Views: 2219

Re: AQR/Asness - You Can Have Your Momentum Factor and Eat it Too

in_reality - Very short timeframe for drawing conclusions. But since you asked, let's see what, if anything, we can learn. AQR has their own formulation of the value factor, known as HmL Devil, which they consider to be superior. Book Value has a time lag as it is an accounting number. Market is bas...
by DaufuskieNate
Thu Dec 07, 2017 8:05 am
Forum: Investing - Theory, News & General
Topic: AQR/Asness - You Can Have Your Momentum Factor and Eat it Too
Replies: 21
Views: 2219

Re: AQR/Asness - You Can Have Your Momentum Factor and Eat it Too

Let's look at the performance of AQR's 2 MOM funds which presumably over a significant time period will reflect this outperformance. Let's compare their returns to funds which operate in the same market arena, growth, and in the same cap weight segment. That seems to be the appropriate comparison, ...
by DaufuskieNate
Tue Dec 05, 2017 7:01 am
Forum: Investing - Theory, News & General
Topic: Fama - Embrace passive management already
Replies: 16
Views: 2814

Re: Fama - Embrace passive management already

Real world fund managers are more interested in results and common sense than semantics. Large funds can get in their own way by cramming trades into an illiquid security. Even Vanguard understands this and doesn't slavishly follow an index. TSM and TBM both employ index sampling. They avoid stocks ...
by DaufuskieNate
Sun Dec 03, 2017 5:30 pm
Forum: Investing - Theory, News & General
Topic: Fama - Embrace passive management already
Replies: 16
Views: 2814

Re: Fama - Embrace passive management already

Please explain to me how DFA can do "patient trading" without doing any "timing." This is about being a provider of liquidity. If one is concerned about tracking error and slavishly following an index, trades can be forced into a market when liquidity is lacking, increasing market impact costs. Thi...
by DaufuskieNate
Sat Nov 11, 2017 4:13 pm
Forum: Investing - Theory, News & General
Topic: Paul Merriman: The One Fund Every Investor Should Own
Replies: 122
Views: 22111

Re: Paul Merriman: The One Fund Every Investor Should Own

In my opinion, the factors are caused by human nature and human behavior. In other words, it is almost hard wired into investors to make the same behavior errors over and over again. If you believe the behavioral explanation, it would be logical to believe that the factors will persist into the fut...
by DaufuskieNate
Sat Nov 11, 2017 11:02 am
Forum: Investing - Theory, News & General
Topic: Right Bond Allocation - Government v. Credit?
Replies: 22
Views: 2714

Re: Right Bond Allocation - Government v. Credit?

I don't understand this obsession with what happened over a short period of time in 2008 in determining what kind of bonds one will own long term. Yes, corporate bonds dropped more than treasuries in 2008 but then they recovered and surpassed them in 2009 and afterwards. If you are the type to sell...
by DaufuskieNate
Sat Nov 11, 2017 10:48 am
Forum: Investing - Theory, News & General
Topic: What percentage in state municipal bonds?
Replies: 9
Views: 1270

Re: What percentage in state municipal bonds?

I believe there is merit to diversification and high quality in municipal bonds. My own IPS calls for no more than 25% of muni bonds from one state and no less than a AAA/AA rating.
by DaufuskieNate
Sat Nov 11, 2017 10:34 am
Forum: Investing - Theory, News & General
Topic: David Blanchett: Liability Driven Investing Misapplied
Replies: 16
Views: 1745

Re: David Blanchett: Liability Driven Investing Misapplied

Thank you, AlohaJoe, for posting a link to this article and giving us some very well thought out observations. There are some very solid points made in the article. Here are a few that I think will resonate with Bogleheads: 1) When inflation has an impact on future consumption, cash is no longer a r...
by DaufuskieNate
Fri Nov 10, 2017 3:21 pm
Forum: Investing - Theory, News & General
Topic: Investment Books & Your Library
Replies: 36
Views: 3308

Re: Investment Books & Your Library

Dabbu - My library currently stands at 42 books. Far less than Taylor's, and not likely of interest to everyone. I'll send you a PM.
by DaufuskieNate
Fri Nov 10, 2017 9:45 am
Forum: Investing - Theory, News & General
Topic: How much does diligent rebalancing add to a portfolio?
Replies: 35
Views: 2895

Re: How much does diligent rebalancing add to a portfolio?

Portfolio Visualizer allows you to look at a portfolio that is re-balanced periodically vs one that is not re-balanced. Granted, this is not the same as the example of continuing to invest annually at the original allocation. However, the results can be instructive nonetheless. Period 1972-2017 Star...
by DaufuskieNate
Fri Nov 10, 2017 7:39 am
Forum: Investing - Theory, News & General
Topic: DFA access
Replies: 30
Views: 4022

Re: DFA access

It has been a tough time for SCV and certainly things may change going forward. On the other hand, the factor argument that says yes, we've been down for a decade now, but at some indefinite point in the future we are destined to outperform because the story is good and academic studies of the past...
by DaufuskieNate
Wed Nov 08, 2017 11:45 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Slaughtering The High Dividend Sacred Cow
Replies: 192
Views: 15738

Re: Larry Swedroe: Slaughtering The High Dividend Sacred Cow

What would the market value of JNJ be today if it had never paid dividends? Trillions? There are at least a couple of ways to look at this hypothetical question. Assuming that JNJ had never paid dividends or bought back shares: 1) If the cash was invested in expanding the business through R&D, buil...
by DaufuskieNate
Sun Nov 05, 2017 4:41 pm
Forum: Investing - Theory, News & General
Topic: Asset Allocation without the heartburn
Replies: 10
Views: 1885

Re: Asset Allocation without the heartburn

This article has a pretty significant inconsistency. Here is a quote: "Finding the diversifying mix a client is comfortable living with over the long term is crucial to a diversifying strategy’s success." The article then goes on to describe an approach to asset allocation based on the current valua...
by DaufuskieNate
Sun Nov 05, 2017 3:14 pm
Forum: Investing - Theory, News & General
Topic: Investment Books & Your Library
Replies: 36
Views: 3308

Re: Investment Books & Your Library

I think it's easy to have a bookshelf that is full, but basically you are reading the same book over and over again. The authors and titles may change, but the information content is the same. I agree that this kind of reading gets boring quickly and has diminishing returns. Another approach is to a...
by DaufuskieNate
Mon Oct 30, 2017 5:42 pm
Forum: Investing - Theory, News & General
Topic: Vanguard GNMA Fund Versus Total Bond Market Index Fund
Replies: 19
Views: 3661

Re: Vanguard GNMA Fund Versus Total Bond Market Index Fund

GNMA funds have negative convexity. This makes them higher risk to investors leading to the higher yields. You can learn more here: https://www.vanguard.com/pdf/icrddc.pdf?2210045720 I am going to quibble a bit with this. First, the negative convexity does not mean higher risk - it means a differen...
by DaufuskieNate
Mon Oct 30, 2017 3:52 pm
Forum: Investing - Theory, News & General
Topic: Vanguard GNMA Fund Versus Total Bond Market Index Fund
Replies: 19
Views: 3661

Re: Vanguard GNMA Fund Versus Total Bond Market Index Fund

GNMA funds have negative convexity. This makes them higher risk to investors leading to the higher yields. You can learn more here:

https://www.vanguard.com/pdf/icrddc.pdf?2210045720
by DaufuskieNate
Tue Oct 24, 2017 6:05 pm
Forum: Investing - Theory, News & General
Topic: Fellow TDA bogleheads [TDA dropping Vanguard ETFs from commission-free list]
Replies: 566
Views: 68434

Re: Fellow TDA bogleheads [TDA dropping Vanguard ETFs from commission-free list]

For what it's worth, I think this is excellent news for Vanguard shareholders. It means Vanguard isn't willing to play that game and pay brokers for access. Vanguard is a big enough player where they don't need to do that and it doesn't really serve the shareholders' interests. I hope this translat...
by DaufuskieNate
Thu Oct 19, 2017 5:53 am
Forum: Investing - Theory, News & General
Topic: Bogle himself is saying we will expect like 3% for the next decades
Replies: 141
Views: 18678

Re: Bogle himself is saying we will expect like 3% for the next decades

I'm very sure that most people here that criticize Bogle for his prediction, or are saying that his prediction can be completely different to what may happen, have never read his book Common Sense Investing where he shows you details about the one decade predictions and how fairly accurate they can...
by DaufuskieNate
Wed Oct 18, 2017 7:30 pm
Forum: Investing - Theory, News & General
Topic: Fellow TDA bogleheads [TDA dropping Vanguard ETFs from commission-free list]
Replies: 566
Views: 68434

Re: Fellow TDA bogleheads

After doing some more research, I've determined that HealthEquity, despite that institutional fund access to Vanguard, is still a worse deal due to a 0.03% monthly asset fee. Sticking with HSABank/TDA is a better deal with its fixed fees, so I'll be exchanging BND for SPAB and seeing how it goes. I...
by DaufuskieNate
Sun Oct 15, 2017 2:10 pm
Forum: Investing - Theory, News & General
Topic: My Favorite Alternative Funds
Replies: 209
Views: 31995

Re: My Favorite Alternative Funds

Boy, it sounds like High Yield Bonds would do a lot of the things we are expecting from Alternatives. These bonds are somewhere in between Stocks and Investment Grade Bonds. High Yield Bond funds load up pretty heavily on Beta, Term and Credit Risk. Same stuff you get in regular ole stock and bond ...
by DaufuskieNate
Sun Oct 15, 2017 4:58 am
Forum: Investing - Theory, News & General
Topic: My Favorite Alternative Funds
Replies: 209
Views: 31995

Re: My Favorite Alternative Funds

Garland, Couple of thoughts. I do not view alternatives as bond-like risk. Volatility-wise, most of them are somewhat lower than stocks and somewhat higher than bonds. Some strategies also have tail risks that need to be understood. Being risky investments, alternatives also benefit from diversifica...
by DaufuskieNate
Thu Oct 12, 2017 5:42 am
Forum: Investing - Theory, News & General
Topic: My Favorite Alternative Funds
Replies: 209
Views: 31995

Re: My Favorite Alternative Funds

The costs are the big issue here. You pay 2% for something you can get from some of the best insurance risk managers in the world for a few basis points. The portfolio would have a more than a 1.75% cost advantage per year coming out of the gate. Packer BRK has Selling, General and Administrative e...
by DaufuskieNate
Sun Oct 08, 2017 9:19 am
Forum: Investing - Theory, News & General
Topic: The Stock Market Is "Fully Valued," Says Vanguard's Jack Bogle 10/7/17
Replies: 87
Views: 13896

Re: The Stock Market Is "Fully Valued," Says Vanguard's Jack Bogle 10/7/17

It is logically (& mathematically) impossible for Bogle to consider the market fully valued today if he didn't think they were undervalued 12-18 months ago. He gives interviews repeatedly but never in 2016 did he say that markets were undervalued. Let's test your logic here. If valuations go up, th...
by DaufuskieNate
Sun Oct 08, 2017 8:47 am
Forum: Investing - Theory, News & General
Topic: The Stock Market Is "Fully Valued," Says Vanguard's Jack Bogle 10/7/17
Replies: 87
Views: 13896

Re: The Stock Market Is "Fully Valued," Says Vanguard's Jack Bogle 10/7/17

I have a 2007 edition of Mr. Bogle's The Little Book of Common Sense Investing . Here is a quote: ...the mostly likely investment return on stocks would be in the range of 7 to 8 percent. I'll be optimistic and project an annual investment return (a bit nervously!) averaging 8 percent. This was a pr...