Search found 683 matches

by HerbertSitz
Tue Jun 29, 2010 2:30 pm
Forum: Investing - Theory, News & General
Topic: Asset Allocation for a Centenarian
Replies: 17
Views: 2301

Disagree. "Need" to take risk reflects the investor's need for certain rates of return in order to meet his/her goals. The most important goals are tied to age. "I want x dollars by the time I retire." OR "I want to retire at age 55 and have x dolalrs per year to spend for ...
by HerbertSitz
Tue Jun 29, 2010 1:48 pm
Forum: Investing - Theory, News & General
Topic: Asset Allocation for a Centenarian
Replies: 17
Views: 2301

Age has something to do with it from a correlation standpoint, but not a causation standpoint. Yes, as age increases, risk tolerance generally decreases, but it isn't because you are suddenly one year older. First, that's not entirely clear to me. Age seems pretty fundamental to me, if I were sudde...
by HerbertSitz
Tue Jun 29, 2010 12:52 pm
Forum: Investing - Theory, News & General
Topic: Asset Allocation for a Centenarian
Replies: 17
Views: 2301

Age has nothing to do with target allocation. To quote (i.e. ripoff) Larry, a suitable allocation is a function of an investor's need, willingness, and ability to take risk. Just like a 30-year old may determine an allocation of 90% fixed income, a 100-year old may determine an allocation of 90% eq...
by HerbertSitz
Wed May 26, 2010 12:06 pm
Forum: Investing - Theory, News & General
Topic: P/E ratio of current stock market
Replies: 61
Views: 9642

I think this article by Bill Bernstein, http://www.efficientfrontier.com/ef/703/timer.htm , is supportive of a measured, graduated use of PE10 and similar long-range measures of valuation (S&P/nominal GNP, for example) in setting equity allocations. [. . .] [... ]This means I'm shifting conside...
by HerbertSitz
Fri May 21, 2010 1:34 pm
Forum: Personal Investments
Topic: Why to select Low Cost Funds
Replies: 16
Views: 2542

The statement is, however, also just a matter of fact mention of the obvious, which is that investments that have a cost drag have to have superior performance simply to break even. dbr -- I don't disagree with your major points at all, was just trying to draw attention to the fact that your post w...
by HerbertSitz
Fri May 21, 2010 1:12 pm
Forum: Personal Consumer Issues
Topic: Router
Replies: 25
Views: 3634

Nothing has worked and I have tried most all the suggestions with exception of running separate cable. Just going to use a verizon wireless card. The wireless router is just one component in the equation. One other major part is your computer's internal wireless card. 300 feet is a long distance, a...
by HerbertSitz
Fri May 21, 2010 12:26 am
Forum: Personal Investments
Topic: Do costs really matter that much?
Replies: 26
Views: 3299

I also have heard ETF's are more tax efficient than MF index counterparts is this correct? No, this is not correct. Index ETFs are typically more tax-efficient than actively-managed mutual funds and the same tax-efficiency as their MF index counterparts. That's true, I think, only if you're talking...
by HerbertSitz
Tue May 18, 2010 3:56 pm
Forum: Investing - Theory, News & General
Topic: Passive works because active doesn’t
Replies: 150
Views: 20183

Re: Rick says, costs don't matter.

[Rick, despite your analysis, costs do matter. In active management, costs only matter in the highest cost funds because they tend to be in the bottom quartile. All else is up for grabs. There is no evidence that low cost active funds outperform average cost active funds. Show me some comprehensive...
by HerbertSitz
Tue May 18, 2010 3:23 pm
Forum: Personal Investments
Topic: Why to select Low Cost Funds
Replies: 16
Views: 2542

Why would anyone think they would be ahead when giving away a fraction of their wealth every year compared to not giving away their wealth? Is this a serious question? For Bogleheads it appears to be merely rhetorical, with the answer contained within the question. But that presupposes a lot of sha...
by HerbertSitz
Wed May 12, 2010 3:10 pm
Forum: Personal Investments
Topic: Help with investing inheritance
Replies: 46
Views: 5530

You can minimize time wasting and risk by charging them for interviews. If you do this, you will automatically rule out both bad and good advisers. [. . .] I can safely say that none of them will return your call if you suggest charging them for the privilege of interviewing you (and would you real...
by HerbertSitz
Sun May 02, 2010 7:01 pm
Forum: Investing - Theory, News & General
Topic: Hoarding in response to negative real interest rates
Replies: 75
Views: 12163

Re: Hoarding in response to negative real interest rates

Adjusting for the effect of taxes, 5-year Treasuries do not offer a positive real return: [. . . ] Buying stuff today that will increase in cost at the rate of inflation, then storing it for up to 5 years, offers a better return than Treasuries. Is it time to think about including hoarding as an in...
by HerbertSitz
Sun May 02, 2010 3:55 pm
Forum: Investing - Theory, News & General
Topic: index vs active performance stats
Replies: 15
Views: 1933

Re: index vs active performance stats

Where can I find statistics on the percentage of active funds that beat index funds (after costs) over various periods of time (5 years, 10 years, 20 years, etc) ? I'm mainly curious to see the last 10 - 20 years for large cap US stock funds (vs S&P 500). Bogle's "Common Sense on Mutual Fu...
by HerbertSitz
Thu Apr 01, 2010 10:49 am
Forum: Investing - Theory, News & General
Topic: Book for starting a small business?
Replies: 8
Views: 1162

Re: Book for starting a small business?

I'd like to pick the Bogleheads' hive mind again and ask if their recommendations for a book on starting a small business. If the book goes into what is tax deductible as well, that would be great. My business will have expenses related to traveling abroad, and I've heard it is complex to tax deduc...
by HerbertSitz
Fri Feb 19, 2010 4:40 pm
Forum: Personal Investments
Topic: 529 Plans - Which plan should I choose?
Replies: 14
Views: 3512

You might want to look into using a ROTH to fund college. It would provide a lot more flexibility. Maybe it would if infants, children, or teenagers had earned income they could use to fund a Roth. Roths must be funded with income earned by the child. As child becomes teenager maybe there's an oppo...
by HerbertSitz
Thu Feb 18, 2010 6:35 pm
Forum: Investing - Theory, News & General
Topic: Advisor fee structures
Replies: 30
Views: 3330

The concept that large advisor fees may be worth paying as the advisor will return many times the fee in benefit to the customer is a red herring in that almost all advisors almost all the time will do great harm to the investor rather than even marginal good. Hmm, not sure about that statement in ...
by HerbertSitz
Tue Jul 14, 2009 7:58 pm
Forum: Personal Investments
Topic: Limited Liability Company
Replies: 19
Views: 3260

LLCs are companies not corporations, a very common mistake. LLCs protect the members from outside liability, but not personal negligence. Professionals ( lawyers, doctors, accountants)cannot protect themselves from personal liability with a LLC. This is another bit of misinformation, or if not that...
by HerbertSitz
Mon Jul 13, 2009 4:50 pm
Forum: Investing - Theory, News & General
Topic: Distinction efficient/rational markets
Replies: 46
Views: 6202

Re: Distinction efficient/rational markets

. . . Otherwise, what do want to call the $50Bn portfolio (slightly less than half of BRK's market cap) that he has in minority stock positions of publicly traded companies?: Buffet is buying AND MANAGING companies - he's not the typical passive investor in a stock (passive in the sense of not bein...
by HerbertSitz
Mon Jul 13, 2009 2:20 pm
Forum: Investing - Theory, News & General
Topic: Distinction efficient/rational markets
Replies: 46
Views: 6202

Re: Distinction efficient/rational markets

Why is Warren Buffet typically brought into the active management discussions? He's not a portfolio manager, he's a business owner (who happens to own many different businesses). Generic term. Like, 'hand me a Kleenex' when you are asking for a tissue. Seriously, everyone knows the point I'm making...
by HerbertSitz
Sat Jul 11, 2009 3:05 pm
Forum: Investing - Theory, News & General
Topic: Distinction efficient/rational markets
Replies: 46
Views: 6202

Could someone please define an: efficient market? I don't think there is a single absolute definition. See this wikipedia article, which clarifies that there are least four distinct senses in which a financial market can be called "efficient": http://en.wikipedia.org/wiki/Financial_market...
by HerbertSitz
Thu Jul 09, 2009 9:47 am
Forum: Personal Finance (Not Investing)
Topic: Negotiating my rent
Replies: 21
Views: 3355

Re: Negotiate

From a Landlord point of view, costs are not down. The suggestion that it might be reasonable to accept a lower rent has nothing to do with thinking a landlord's costs are down. It has to do with pointing out that everyone is suffering: employees are losing jobs or taking pay cuts, businesses are m...
by HerbertSitz
Thu Jul 02, 2009 3:49 pm
Forum: Personal Finance (Not Investing)
Topic: Life insurance trust, anyone using one?
Replies: 15
Views: 2328

Re: ILIT

Trusts do not pay estate tax. Yes, they pay income tax. No, but the assets in a trust, and the proceeds payable from an insurance policy held by a trust, may still be includible in a person's estate. Assets in an irrevocable trust are generally _not_ includible in a settlor's estate upon their deat...
by HerbertSitz
Fri Jun 26, 2009 2:40 pm
Forum: Investing - Theory, News & General
Topic: Distinction efficient/rational markets
Replies: 46
Views: 6202

If someone is going to make the claim that the stock market was not efficient prior to the 1970's, or that individual investors were beating the market prior to the 1970s, let's see the vastness of the evidence. It was Charles Ellis who made the claim. I assume he has "the vastness of the evid...
by HerbertSitz
Thu Jun 25, 2009 6:22 pm
Forum: Investing - Theory, News & General
Topic: IRS shoots down new Roth ploy
Replies: 7
Views: 1799

Is this scheme actually illegal under the tax laws? It seems like the IRS is making up the laws instead of executing them. The IRS is not Congress -- can they just write up whatever they want? Under our system of government, shouldn't the IRS have to go to court to have the law interpreted? This IR...
by HerbertSitz
Thu Jun 25, 2009 12:26 pm
Forum: Investing - Theory, News & General
Topic: Comparison of S&P 600 SC vs. Russell 2000 SC
Replies: 7
Views: 4733

Re: Comparison of S&P 600 SC vs. Russell 2000 SC

Conclusion We analyze a widely documented event in the small-cap investment universe: the S&P SmallCap 600 outperforming the Russell 2000 over the last 15 years. The analysis shows that the July reconstitution effect alone does not account for the excess return of the S&P SmallCap 600 over ...
by HerbertSitz
Wed Jun 24, 2009 12:54 pm
Forum: Investing - Theory, News & General
Topic: Market Timing Paradox?
Replies: 100
Views: 10102

Re: Market Timing Paradox?

Assuming a real return of 1% on risk- free assets, historically a timing policy of exiting equities when 1/PE10 fell below 4% and not re-entering until the yield hit 6% would have outperformed a buy-and-hold strategy with the same average equity exposure. But how did you know ahead of time to set t...
by HerbertSitz
Mon Jun 22, 2009 6:51 pm
Forum: Investing - Theory, News & General
Topic: Zvi Bodie articles -- Bonds, TIPS and Stocks....Which one?
Replies: 44
Views: 8331

Re: Zvi Bodie articles -- Bonds, TIPS and Stocks....Which on

Bodie doesn't believe in a 50/50 approach between inflation-linked bonds and regular or nominal bonds. He sees no point in taking inflation risk with regular bonds. "Why take that risk? it's not like nominal bonds offer a risk premium the way equities do." Not sure what that's talking abo...
by HerbertSitz
Mon Jun 22, 2009 1:54 pm
Forum: Personal Finance (Not Investing)
Topic: Making kids unequal beneficiaries in will
Replies: 14
Views: 3362

Re: Making kids unequal beneficiaries in will

She is considering leaving the estranged child (estranged by his choice not hers) a lesser amount in her will. I understand there may be legal problems with that along with the obvious moral problem of favoring one child over another. What is the Boglehead take on this? The legal issue is fairly tr...
by HerbertSitz
Mon Jun 22, 2009 11:08 am
Forum: Personal Consumer Issues
Topic: Security risks Public Wifi hotspots
Replies: 41
Views: 6588

Question for technical experts. Is there any security advantage in booting from Linux CD for use in public network situations (WI-FI or wired)? I normally keep a Linux rescue disk with my laptop. No advantage for the main issue that's being discussed in this thread, which is ability of other users ...
by HerbertSitz
Sat Jun 20, 2009 9:36 pm
Forum: Investing - Theory, News & General
Topic: Bogle: avoid stocks if you can't lose money
Replies: 29
Views: 5045

Re: DCA

The idea is based on marginal utility theory in economics, which says that people generally value the incremental unit of something less. Even if there's an equal probability of gains and losses, psychologically, the losses generally sting more than the gains feel good. Thus, minimizing losses mini...
by HerbertSitz
Mon Jun 15, 2009 4:24 pm
Forum: Investing - Theory, News & General
Topic: The Future of Markets - Q&A with Eugene Fama
Replies: 33
Views: 4671

I have watched this sort of analysis being posted frequently, but no one has pointed out that the uninformed bets are arbitrated [/b] by the informed bettors until they both are back to break even . . . Don't you mean "arbitraged", not "arbitrated"? In any case, the arbitraging ...
by HerbertSitz
Mon Jun 15, 2009 12:57 pm
Forum: Investing - Theory, News & General
Topic: The Future of Markets - Q&A with Eugene Fama
Replies: 33
Views: 4671

The market works therfore EMH must be true is not a very compelling argument. No, but EMH doesn't stand by itself like some pie-in-the-sky theory. There are many statistical analyses of historical return data that show that the number of those who outperform is no greater than predicted by chance, ...
by HerbertSitz
Sun Jun 14, 2009 3:45 pm
Forum: Personal Finance (Not Investing)
Topic: Question about a trust
Replies: 29
Views: 3854

I realize RLT's are somewhat oversold, but in planning them, drafting them and administering them for over 40 years I've concluded there is no better means of protecting oneself against disability and disposing of one's estate. John I think RLT's are great, and for all the reasons you mention. All ...
by HerbertSitz
Sun Jun 14, 2009 1:48 pm
Forum: Personal Finance (Not Investing)
Topic: Question about a trust
Replies: 29
Views: 3854

I realize RLT's are somewhat oversold, but in planning them, drafting them and administering them for over 40 years I've concluded there is no better means of protecting oneself against disability and disposing of one's estate. John I think RLT's are great, and for all the reasons you mention. All ...
by HerbertSitz
Sun Jun 14, 2009 1:44 pm
Forum: Investing - Theory, News & General
Topic: My personal micro cap index fund
Replies: 36
Views: 5639

Even if expected return is the same, holding the market guarantees you the market return, while holding a subset subjects you to risk that your actual return will differ, perhaps substantially, from the expected return. I think this is the same thing as what we normally call "tracking error&qu...
by HerbertSitz
Sun Jun 14, 2009 11:58 am
Forum: Investing - Theory, News & General
Topic: My personal micro cap index fund
Replies: 36
Views: 5639

Herbert, I think I've seen a Bernstein page on this but does he give a precise estimate of the likely underperformance of portfolios by size (and/or control for equal-weight vs. cap-weight)? The issue Bernstein talks about is not "likely underperformance", since at level of 20+ stocks or ...
by HerbertSitz
Sun Jun 14, 2009 11:07 am
Forum: Personal Finance (Not Investing)
Topic: Question about a trust
Replies: 29
Views: 3854

Re: Lifetime Benefits

The ability for a trustee to step into the grantor's shoes and essentially manage his total financial life is unique to the RLT. This is indeed lifetime protection, often one of the overlooked advantages of a RLT. John I don't see much practical difference between having ability to designate a succ...
by HerbertSitz
Sun Jun 14, 2009 10:56 am
Forum: Investing - Theory, News & General
Topic: My personal micro cap index fund
Replies: 36
Views: 5639

Re: My personal micro cap index fund

I wanted to test was how I would react psychologically to the fortunes of these stocks. The true test was a day last week when one of them was the biggest gainer in the entire US stock market (+50%). If I hadn’t chosen that stock randomly I would be thinking I was a stock picking genius, and having...
by HerbertSitz
Sat Jun 13, 2009 11:05 pm
Forum: Personal Finance (Not Investing)
Topic: Question about a trust
Replies: 29
Views: 3854

Re: Lifetime Benefits

The ability for a trustee to step into the grantor's shoes and essentially manage his total financial life is unique to the RLT. This is indeed lifetime protection, often one of the overlooked advantages of a RLT. John I don't see much practical difference between having ability to designate a succ...
by HerbertSitz
Sat Jun 13, 2009 6:09 pm
Forum: Personal Finance (Not Investing)
Topic: Question about a trust
Replies: 29
Views: 3854

A trust can offer lifetime protection and simplicity of estate administration regardless of size. That is spoken like a practiced seller of trusts. JW Thank you. I also administered many trusts, and saw all too many situations that would have been a disaster had not a revocable living trust been in...
by HerbertSitz
Sat Jun 13, 2009 5:58 pm
Forum: Personal Investments
Topic: Need help with CFP's AA plan
Replies: 53
Views: 6903

Re: Need help with CFP's AA plan

CFP proposed AA - Stock - 50% Mega300 - MGC - 6.10% Lg Gr - VUG - 4.45% Lg Val - VTV - 4.45% Mid Gr - VOT - 2.5% Mid Val - VOE - 2.5% Sm Gr - VBK - 2.5% Sm Val - VBR - 2.5% Health - VHT - 2.5% Energy - VDE - 2.5% REIT - VNQ - 5% Emerg Mkt - VWO - 5% Euro Pac - VEA - 5% All World Ex US Sm - VSS - 2....
by HerbertSitz
Sat Jun 13, 2009 1:58 pm
Forum: Investing - Theory, News & General
Topic: The Future of Markets - Q&A with Eugene Fama
Replies: 33
Views: 4671

Further on this, it is also certainly possible that errors that "uninformed" investors make cancel out and that would happen if they are random It is highly unlikely because uninformed investors chase performance in herd behavior creating bubbles. They do not have access to or use the inf...
by HerbertSitz
Sat Jun 13, 2009 1:33 pm
Forum: Investing - Theory, News & General
Topic: The Future of Markets - Q&A with Eugene Fama
Replies: 33
Views: 4671

What if there are a whole bunch of uniformed investors determining stock prices?! Further on this, it is also certainly possible that errors that "uninformed" investors make cancel out and that would happen if they are random. Example of this is in horse race betting. My mother always bet...
by HerbertSitz
Fri Jun 12, 2009 12:03 pm
Forum: Personal Investments
Topic: how do I fix this mess? take losses now or wait till no loss
Replies: 43
Views: 7447

DSInvestor, my reaction would be that a cost is a cost and risk is risk. The argument would be that due to the fees the investor has a higher need to take risk. I thought DSInvestor was asking purely an asset location issue, i.e, whether it's better to have stocks located in the high fee VA and mov...
by HerbertSitz
Tue Jun 09, 2009 10:33 pm
Forum: Personal Finance (Not Investing)
Topic: Living Trusts
Replies: 18
Views: 2957

What I meant when I said "cookie cutter" was that he did not use a fill-in-the-blank form like you might get from Nolo or a store-bought software. I fully understood that he used a base form which certain choices or phrases were crossed out because they did not affect me. That's good. I w...
by HerbertSitz
Tue Jun 09, 2009 3:15 pm
Forum: Personal Finance (Not Investing)
Topic: Living Trusts
Replies: 18
Views: 2957

Re: Living Trusts

Has anyone had any experience, good or bad, with ordering or downloading blank forms and taking a shot at preparing a Living Trust yourself, without going to a lawyer and paying $2000-3000? "The Living Trust Advisor" is an excellent book discussing just about all aspects of using a living...
by HerbertSitz
Tue Jun 09, 2009 2:57 pm
Forum: Personal Finance (Not Investing)
Topic: Living Trusts
Replies: 18
Views: 2957

. . . He did not use a cookie cutter form. He asked us for the appropriate data, interviewed us, and supplied rough drafts. We reviewed and made additions and corrections. He sent another draft. We reviewed that and made a couple of changes. We then received the final copy for a final review. . . ....
by HerbertSitz
Tue Jun 09, 2009 12:28 pm
Forum: Investing - Theory, News & General
Topic: How Vulnerable is Your Portfolio to a Black Swan?
Replies: 30
Views: 4348

If it's 1% annually, then even a 70 year long investment career (longer than most, I suspect) only has a 50% of at least one black swan happening. So that seems like a reasonable choice. We've got some funky stuff going on here. Milevsky's example (contrary to what I said before) was not assuming o...
by HerbertSitz
Mon Jun 08, 2009 10:53 pm
Forum: Investing - Theory, News & General
Topic: How Vulnerable is Your Portfolio to a Black Swan?
Replies: 30
Views: 4348

A 1% chance is no "black swan," either; it's greater than the chances of drawing a straight in five-card stud. Identfying some particular event that has a 1% chance of occurring over next 3 years would not be identifying a black swan. But saying that some as yet unidentifiable black swan ...
by HerbertSitz
Mon Jun 08, 2009 8:31 pm
Forum: Investing - Theory, News & General
Topic: How Vulnerable is Your Portfolio to a Black Swan?
Replies: 30
Views: 4348

So either a) I don't understand Taleb, and what I just said is wrong, or b) Milevsky doesn't understand Taleb, or c) Milevsky does understand Taleb but likes to use the trendy phrase "black swan" anyway. I think that what you said is a fair account of Taleb and that Milevsky understands p...
by HerbertSitz
Mon Jun 08, 2009 4:01 pm
Forum: Investing - Theory, News & General
Topic: How Vulnerable is Your Portfolio to a Black Swan?
Replies: 30
Views: 4348

Re: How Vulnerable is Your Portfolio to a Black Swan?

. . . . Suggests a stress test of your portfolio for low-probability future performance. While I don't think the SORDEX ratio Milevsky talks about is worthless, I don't think knowing it is any panacea that will magically help people plan for the future in ways they couldn't without it. It is obviou...