Search found 6689 matches

by lack_ey
Sun Nov 17, 2019 12:56 pm
Forum: Investing - Theory, News & General
Topic: Clarification about the maturity of bond funds
Replies: 11
Views: 1232

Re: Clarification about the maturity of bond funds

Maturity stats for most bond funds like that are a weighted average over the holdings. This is one measure that can tell you about the kinds of bonds the fund has and the overall sensitivity to interest rates and so on. The bond fund itself does not mature and pay out an amount at maturity. Individual bonds that the fund holds may mature, but the fund would then turn around and buy new bonds with any cash lying around. (Actually, for a total bond market index fund like BND, because the index mostly excludes bonds with less than 1 year remaining, it may be selling most bonds before maturity anyway.) The bond fund is just a perpetual entity that pays out dividends over time from the underlying interest payments. The fund manager does all the ...
by lack_ey
Sun Oct 27, 2019 1:14 pm
Forum: Personal Consumer Issues
Topic: Is this new to engineering job hunting?
Replies: 33
Views: 5110

Re: Is this new to engineering job hunting?

Companies may have more restrictions on hiring full-time (policy or trying to maintain a leaner base of full-time people to keep long term) so they may use a fleet of contractors/consultants to help get projects completed. And then not have a high head count to pay full benefits for, especially if the workload drops down later. It's a lower-risk way of getting people in the door to help on immediate needs. Once they've proven themselves, the best and most important people might be hired full time. Or maybe the company can just squeeze more out of these people while they're feeling the pressure and incentive to perform.

It's not great for the workers but this is how things are in a lot of companies and departments these days.
by lack_ey
Sun Oct 27, 2019 12:19 pm
Forum: Personal Investments
Topic: I’m done with index funds
Replies: 239
Views: 40528

Re: I’m done with index funds

Shouldn't the title of your post be "I'm done with MUTUAL funds"? The original title implies a negative feeling towards indexing when in reality it seems that your intent is to convey to the readers that you would rather buy individual securities instead of a mutual fund, indexed or not. Well, it does say index funds . So it could readily be the index part or the fund part, or both. Clearer would be "I'm done with index funds [SMA instead for tax-loss harvesting]", I guess (or done with mutual funds). There are robo-advisers who do this. Where there are statistics on indexing as a percentage of the total market, I wonder if that captures money invested with this kind of style, near-indexing that's not really seeking to ...
by lack_ey
Sat Sep 28, 2019 10:26 am
Forum: Investing - Theory, News & General
Topic: Jonathan Clements: About half your retirement accumulation is just the dollars you put in
Replies: 92
Views: 19832

Re: Jonathan Clements: About half your retirement accumulation is just the dollars you put in

Clements makes reasonable assumptions about forward returns, but FWIW historically the returns have been higher, so a greater percentage could have been from investment returns and not contributions. And there could be significant difference based on realized returns over the accumulation phase (getting lucky with 8% real returns over the last decade vs. -3%), or rolling the dice and being heavy in some more speculative investments and/or individual stocks that happen to make a big difference one way or the other. But yes, in the average scenario that sounds about right, and it could end up being an even higher percentage if returns aren't so cooperative. If you take another step back, if the target is a dollar amount based on how much spen...
by lack_ey
Sat Aug 31, 2019 9:17 am
Forum: Personal Finance (Not Investing)
Topic: Investing in my Company Stock Plan (ESPP) - is it worth it?
Replies: 39
Views: 3118

Re: Investing in my Company Stock Plan (ESPP) - is it worth it?

Given that it's immediately vested, you should immediately sign up (for the $1500). Of course a single stock has risks, but the return is too high to pass up. You're basically getting $1500 minus taxes for reweighting your asset allocation a little bit. Every stock on the market is approximately worth its market value (based on known information at the time). Other market participants would love to be able to buy in at the current price and get two shares for the price of one, rather than one for the price of one like. On the other hand, stock of your employer is less valuable than stock of other companies because of the risk concentration with your salary and job prospects, but the extra risk is acceptable given the returns unless maybe th...
by lack_ey
Sat Aug 24, 2019 9:29 pm
Forum: Personal Investments
Topic: 3 Stocks Are > 16% of Portfolio
Replies: 9
Views: 1621

Re: 3 Stocks Are > 16% of Portfolio

Also, is there a rule of thumb for how much one should have of any one equity in their portfolio? I think they are all good companies, but one never knows! Not a rule of thumb per se but in general the factors that affect this are the volatility of the stock, the volatility of the stock's sector, and the correlation of the stock with the market. I made a Google Sheet that is an experimental tool for calculation the maximum safe position size for a stock based on these factors. You're welcome to try it if you'd like: https://docs.google.com/spreadsheets/d/1KCywt7NNgN_unUupJVqYOKq85E9JbqtRCmPbAdOu3bs/edit?usp=sharing And then of course the sectors of the three stocks in question. Three megacap stocks at 6% weighting, each in different sector...
by lack_ey
Wed Aug 21, 2019 9:34 pm
Forum: Personal Finance (Not Investing)
Topic: White collars- How much is your work downtime?
Replies: 204
Views: 22783

Re: White collars- How much is your work downtime?

Percentage? It's hard to say but including lunch, I guess 10% of the about 45-55 hours a week typically. There's perpetually weeks' worth of work waiting in the backlog that needs to eventually be done by someone on the team. Everybody on the scrum team keeps busy. That's all for one project; I'm also supposed to be spending about 10% time on another project but that tends to get deprioritized. Nobody I deal with directly seems to have over 20% of downtime, whether they're at job grades above or below me (though I don't directly observe the full day of people outside tech, they all seem to be working most of the time), and all are working 40-55 hours or so. Doesn't matter if it's a junior IC, a more senior IC, senior manager with directs, d...
by lack_ey
Wed Aug 07, 2019 10:55 pm
Forum: Personal Finance (Not Investing)
Topic: Taking a graduate data science job offer, or doing a MSc in Statistics
Replies: 34
Views: 3108

Re: Taking a graduate data science job offer, or doing a MSc in Statistics

I would get more information about career paths at the company (and maybe for other employers, as maybe it's different across the pond and everything below is wrong), and also assess the feasibility of getting the M.S. later. In a lot of orgs the data science path (as distinct from data analyst roles) is not even available to people without graduate degrees. How high up would you want to go in terms of role in a technical capacity? The degree is likely a bottleneck and you probably also want a Ph.D. to get into the upper levels down the line, which of course would also be contingent on a lot of other factors. If getting more into management, then maybe it's not as much an issue. Also, maybe most relevantly: what are the responsibilities of ...
by lack_ey
Tue Aug 06, 2019 9:17 pm
Forum: Investing - Theory, News & General
Topic: International Investing Question
Replies: 9
Views: 1035

Re: International Investing Question

I'm not going to address the investment thesis there, so moving on (dangerously?) to implementation, I gather that you're looking for something east / southeast Asia ex-Japan, ex-China? FWIW Taiwan and South Korea have pretty high GDP per capita, and I don't think manufacturing is particularly going towards there. Taiwan does a lot of its manufacturing in China. Maybe some of it is coming back? This is kind of a niche target. There are some emerging markets ex-China and Asian emerging markets funds, which is maybe in the range of what you're attempting to target. For example, iShares MSCI Emerging Markets ex China ETF (EMXC) and iShares MSCI Emerging Markets Asia ETF (EEMA). Though keep in mind that the top firms you get in EM indexes look ...
by lack_ey
Thu Jul 18, 2019 7:43 pm
Forum: Personal Investments
Topic: Bond Strategy Input Appreciated
Replies: 16
Views: 1626

Re: Bond Strategy Input Appreciated

That falls in the range of "well within the mainstream" and is cheap, so not much to say.

Given the stock-heavy allocation it doesn't matter a huge amount what you're doing in the bonds unless going to some extreme, which this is not. I'd pay more attention to the stock/bond split and what's going on there.

Some TIPS may be arguably better for a retiree, but impact and need is lower given the relatively high equity allocation.
by lack_ey
Mon Jul 15, 2019 10:37 pm
Forum: Investing - Theory, News & General
Topic: Agree? Article: Tracking the Agg? Why the Bond Index May Not Work.
Replies: 14
Views: 2530

Re: Agree? Article: Tracking the Agg? Why the Bond Index May Not Work.

The Agg is weighted toward the companies and agencies that have the most debt What they fail to see is that bonds trade on an open market in which the most desirable bonds are the ones that are bought the most. The index fund simply tracks the proportion of bonds that the market wants. On the stock side if Apple does well, i.e. had good fundamentals, a good plan for the future, good management, yada, yada -- all of the characteristics that make people want to buy it, then it gets bought. Supply and demand might drive up the price. Intake of capital might help the company to succeed to an even larger extent. Apple market share grows larger and larger. The index captures this by holding the ratio of Apple market cap versus the rest of the st...
by lack_ey
Mon Jul 15, 2019 9:29 pm
Forum: Personal Investments
Topic: VIHAX
Replies: 1
Views: 533

Re: VIHAX

International High Dividend Yield Index Fund Admiral Shares (VIHAX) tracks the FTSE All-World ex US High Dividend Yield Index. How are you defining value in (international) stocks? By holdings, it has nontrivially lower price/earnings, price/book, price/sales, etc. and higher dividend yield than a total market-oriented fund, in line with what 3rd-party sources like Morningstar categorize as a value fund. By returns it's had a nontrivially positive regression coefficient on the value factor in the 3-factor model for ex-US stocks. If this is really what you want, it seems potentially worth the purchase and redemption fee. That said, you can just buy the ETF shares (VYMI) and not have either of those fees, though now and sometimes it may trade...
by lack_ey
Sun Jul 14, 2019 9:36 pm
Forum: Investing - Theory, News & General
Topic: Will you buy Total Bond with a negative yield?
Replies: 112
Views: 15493

Re: Will you buy Total Bond with a negative yield?

but international bonds (some countries of which have negative yields) have done better than U.S. total bond fund this year so far: total U.S. bond index +5.72% total international bond index +6.16% source: https://i.postimg.cc/VkpQMLYb/Capture.jpg This doesn't have much to do with the topic, especially given that bond returns over short periods are dominated by yield changes (price movement) and not yield. Also, international bonds having negative yields returning a certain amount in USD after hedging returns back to USD is not like USD bonds having negative yields. The yield after accounting for hedge return on those international bonds (owing to differences in short-term rates) is and I think was higher than that of total bond. That's i...
by lack_ey
Sun Jul 14, 2019 7:25 pm
Forum: Investing - Theory, News & General
Topic: Will you buy Total Bond with a negative yield?
Replies: 112
Views: 15493

Re: Will you buy Total Bond with a negative yield?

I'd probably not use total bond at 0%, but it depends on what credit spreads are, what the composition of total bond is at the time, how steep the yield curve is, the relationship between term and equity risk, etc. And most importantly, what banks and maybe credit unions are offering on savings accounts and CDs. So again it depends on all of those kinds of things as to whether it's worthwhile at 1% or anything else. Back when short rates were basically zero, I suggested using savings accounts at ~1% rather than short-term bonds, and (for those who can be bothered and want to optimize very slightly), not using total bond but rather a combination of cash and then intermediate/long bonds. That's not because short bond yields were shocking, but...
by lack_ey
Sat Jul 13, 2019 10:49 pm
Forum: Personal Investments
Topic: Any downside to buying vanguard mutual funds through 3rd party brokers?
Replies: 3
Views: 859

Re: Any downside to buying vanguard mutual funds through 3rd party brokers?

It used to be that it was rare to be able to get admiral shares at other brokerages, but I haven't checked how that is now and especially after the changes with the share classes.

Also, a number of the Vanguard funds (many or all of which you may not care about) may not be available on other platforms.
by lack_ey
Sat Jul 13, 2019 10:45 pm
Forum: Personal Investments
Topic: Canada as an EM substitute
Replies: 11
Views: 1540

Re: Canada as an EM substitute

First of all, correlation in of itself doesn't necessarily mean that much. The net movement of the stock market over the course of years is a small fraction of the total movement through all the ups and downs, even at a monthly (or yearly) level. You can easily have two highly correlated assets going in different directions in net. EM could do well and Canada not as much, even if on any given day they're likely to go in the same direction. It's still possible that this adds up to 10% a year up for one and -5% for the other. In fact, if you look at relatively recent history, the US stock market did go up at the same time the Canadian market went down in USD terms, despite fairly high monthly returns correlation: https://www.portfoliovisualiz...
by lack_ey
Fri Jul 05, 2019 12:49 pm
Forum: Personal Investments
Topic: question concerning Total International Bond Fund bond
Replies: 2
Views: 448

Re: question concerning Total International Bond Fund bond

Yields are down YTD overall, meaning the prices of the underlying holdings are up, so fund NAV is higher. NAV changes over the course of months for a fund like that are primarily about yield changes. A higher or lower SEC yield doesn't imply anything directly about NAV changes, but has more to do with distributions. (In general on average you should not expect the much movement in NAV.) The above holds for most bond funds, but there are additional complications in the case of defaults (and credit downgrades), though that's a small factor for most total international bond funds unless maybe you mean some fund I don't know about that's not an index fund that perhaps takes more credit risk. There's also an important distinction between differe...
by lack_ey
Fri Jul 05, 2019 11:02 am
Forum: Personal Investments
Topic: REITS: Domestic and International
Replies: 5
Views: 1041

Re: REITS: Domestic and International

The REIT structure is not always seen in other markets (and can have different regulations), and as such Vanguard Global ex-U.S. Real Estate ETF (VNQI) is not a REIT fund, with over half the holdings being other real estate-related stocks. I would think that the answer would depend on your rationale as to why to overweight REITs. Does the above distinction matter to you? You also need to think about your goals and expectations behind diversification and what you think that means, as overweighting equity sectors or subsectors does not seem to fit with that goal unless you have some other motivation or rationale. In any case, if on some level you're wanting to invest in global stocks and want some real estate-related tilt, it may be reasonabl...
by lack_ey
Thu Jul 04, 2019 12:14 pm
Forum: Personal Investments
Topic: How to find current weighting of index funds
Replies: 8
Views: 804

Re: How to find current weighting of index funds

There's no one universal cutoff between what constitutes a large cap vs. medium or small, or emerging vs. developed market, so any answer you get may not be the one you're specifically looking for. Furthermore, there can be some ambiguity as to the country a company should be tagged with when the country of main listing exchange, place of legal incorporation, headquarters, and primary country of operations can diverge. For somebody else's answer, you can frequently look at the fund sponsor's webpage, the index provider's webpage if applicable, and 3rd-party information sources such as Morningstar. Some of these may not have all the breakdowns you want. e.g. https://investor.vanguard.com/mutual-funds/profile/portfolio/vtiax https://www.ishar...
by lack_ey
Thu Jul 04, 2019 9:13 am
Forum: Personal Finance (Not Investing)
Topic: How to interpret different raise percents?
Replies: 41
Views: 3486

Re: How to interpret different raise percents?

The baseline level varies significantly between industries and companies, and I don't think many are explicitly starting off from inflation or are thinking in those terms, even if they should.

So I would say that in some cases that sounds about right, but would frequently be too optimistic or too pessimistic.
by lack_ey
Thu Jul 04, 2019 9:07 am
Forum: Personal Investments
Topic: Switch dad's muni fund from Columbia COLTX to iShares MUB
Replies: 5
Views: 690

Re: COLTX or MUB

Dump it unless maybe you have some very high confidence in that manager specifically for whatever reasons, want to gamble on said manager, and want to reach for yield in muni bonds with somewhat lower credit quality than the norm for the category. It's been riskier than the index (S&P National AMT-Free Municipal Bond) by a fair margin, though keep in mind that the index is biased towards large issuers and screens out junk, and is thus less risky than the true muni market overall. MUB and Vanguard's equivalent VTEB follow that index. There are other ways to get that risk exposure, though I don't think going that route would be a standard recommendation anyway. On another note, if you're talking about consolidating down to three funds and...
by lack_ey
Wed Jul 03, 2019 8:48 am
Forum: Personal Investments
Topic: Vanguard Global Credit Bond Fund (VGCIX)?
Replies: 7
Views: 1948

Re: Vanguard Global Credit Bond Fund (VGCIX)?

Looks like a nice fund. Curious -- why not just go for a fund such as Vanguard Ultra-Short-Term Bond Fund Admiral Shares (VUSFX) https://investor.vanguard.com/mutual-funds/profile/portfolio/vusfx ? Same managers, about the same yield and much lower duration. Just want to diversify to some international bonds? Read above. Or below as I've copied again. It has a 2.37% yield. It's up 9.33% YTD. Actively managed. 6.5 years duration - so it looks like an intermediate term duration bond fund. The United States comprises 49.3% of the fund and is diversified globally. This fund is hedged to the USD. For those not immediately seeing the implication of those sentences together, the SEC yield understates expected return because it doesn't include hed...
by lack_ey
Tue Jul 02, 2019 9:23 pm
Forum: Personal Investments
Topic: Vanguard Global Credit Bond Fund (VGCIX)?
Replies: 7
Views: 1948

Re: Vanguard Global Credit Bond Fund (VGCIX)?

Interesting fund, looks like the Vanguard equivalent of PIMIX Maybe, also in the Vanguard sense of (1) having a lower expense ratio, (2) sticking to less exotic instruments overall including not using leverage and not making currency bets, and (3) hewing closer to a given benchmark risk exposure and doing minimal market timing of risks. So far the realized volatility and returns have been higher than that of PIMCO Income, largely from taking more systemic risk--higher loads on credit and term risk factors, which have been additive since inception. Looks like of reasonably safe, a similar risk profile as intermediate-term corporate bond funds but better diversified. Having more currencies involved means the term risk is in practice not quic...
by lack_ey
Mon Jul 01, 2019 8:37 am
Forum: Investing - Theory, News & General
Topic: Why isn't the distribution yield a valuable number? (for VWIUX)
Replies: 37
Views: 3684

Re: Why isn't the distribution yield a valuable number? (for VWIUX)

My point was that the distribution payout you're getting that's above the SEC yield is essentially a return of capital. Thanks venkman! I've never heard about "the return of capital" part". Is that in any VWIUX official documents? Don't confuse it for distributions paid out by funds that are actually marked as return of capital. What venkman and a number of posters have alluded to is just the way bonds work, not something specific to bond funds or this specific bond fund. The return comes from both interest payments and change in price. If you have a bond priced at $108 and maturing in 4 years at $100, you're going to lose almost 2% a year in price changes on average (NAV reduction) as it goes to maturity... which is offset ...
by lack_ey
Sun Jun 30, 2019 9:01 pm
Forum: Investing - Theory, News & General
Topic: Why do so many stocks in defensive sectors increase in value despite little to no improvements in fundamentals?
Replies: 25
Views: 2787

Re: Why do so many stocks in defensive sectors increase in value despite little to no improvements in fundamentals?

A significant portion of that could probably be explained by discount rates generally: risk preferences and pricing, perceived forward risk, value of money, expected future growth / inflation / interest rates. People are willing to pay more now.

For those stocks in particular there are of course additional factors specific to them, which I don't personally know about. There could be a significant shift in expectations of future earnings and value relative to current metrics (compared with the same ten years ago), different positioning in the market with regards to M&A and competitors, lines of business, etc. I'm sure there are some indications in annual reports and analyst opinions.
by lack_ey
Sun Jun 30, 2019 8:57 am
Forum: Investing - Theory, News & General
Topic: Why isn't the distribution yield a valuable number? (for VWIUX)
Replies: 37
Views: 3684

Re: Why isn't the distribution yield a valuable number? (for VWIUX)

Question: There have been many discussions that conclude that distribution yield isn't a valuable number. Distribution yield is valuable for telling you about distributions, just not as valuable for returns. VWIUX (Vang. Intermed. Muni) is my $100,000 rental house. It's projected to pay me .0182% per year (SEC Yield)....$1820 per year I think you mean 1.82%. The rent payments do not change the NAV or share price in any way. It's an interest payment not a dividend; there's no drop in NAV. The first and most important point here is that the fund has premium bonds overall, with value above par. That's why distributions are higher than SEC yield. And that also means that as these bonds go towards maturity or towards getting called, they are go...
by lack_ey
Sat Jun 15, 2019 10:26 am
Forum: Personal Investments
Topic: Vanguard Dividend ETF Offerings: VIG, VYM, VYMI
Replies: 7
Views: 2706

Re: Vanguard Dividend ETF Offerings: VIG, VYM, VYMI

I forgot what the tickers were, so... VIG - Vanguard Dividend Appreciation ETF (cap-weighted US stocks with increasing dividends over last 10 years) VYM - Vanguard High Dividend Yield ETF (cap-weighted US stocks ex-REITS with sufficiently high dividend yields) VYMI - Vanguard International High Dividend Yield ETF (cap-weighted ex-US stocks with sufficiently high dividend yields) I would say that these are significantly different as far as large-cap-oriented stock funds go, though not quite as different as many of the non-Vanguard and more targeted funds in the space might be. Dividend appreciation is more about stable financials and tends to be not as value oriented, whereas high dividend yield is a pseudo value measure given that there's p...
by lack_ey
Sat Jun 08, 2019 10:18 pm
Forum: Personal Consumer Issues
Topic: Costco or Sam's Club?
Replies: 134
Views: 13496

Re: Costco or Sam's Club?

HEDGEFUNDIE wrote: Sat Jun 08, 2019 9:55 pm Costco makes more money on membership fees than on actual merchandise. According to the latest quarterly filing the contribution profit was 70% fees / 30% merchandise.

So they have a clear incentive to pack the stores.
Membership income should be a significant focus of profits for any membership-based warehouse retailer. Most retail is top-line oriented and particularly for this line of business, and company strategy is to lower costs and profits to get more members, not so much to make profits on merchandise.

If you've checked, have you seen otherwise in filings for Walmart (is it broken down sufficiently by segment to get that info for Sam's Club?) or BJ's?
by lack_ey
Tue Jun 04, 2019 8:24 pm
Forum: Personal Consumer Issues
Topic: Costco or Sam's Club?
Replies: 134
Views: 13496

Re: Costco or Sam's Club?

If you're at Sam's, get the app and use Scan & Go, especially on a busy day. Scanning items with your phone as you go and skipping checkout is pretty rad, though there may still be a little bit of a bottleneck out the door. It's also handy to keep tabs on what you're buying and the cumulative price as you're filling the cart. Tire/battery service and some other misc. things have gotten better. The experience is improving, maybe. Produce quality and general assortment I'm going to assume will vary somewhat by location and the supply chains, etc. Costco tends to aim a little more upmarket in certain areas, but probably varies significantly by location as well, and what competitors are selling, given the demographics and footprint relative...
by lack_ey
Sun Jun 02, 2019 9:08 am
Forum: Personal Consumer Issues
Topic: Cutting The Cord
Replies: 24
Views: 3072

Re: Cutting The Cord

One of the key differentiators with the streaming services is the coverage or lack thereof of the broadcast networks, and which you can get depends on the specific market. There's also a difference in regional sports networks, in addition to specific sports channels that may be more obvious such as NFL Network, NBA TV, ESPN channels way down the list, college conference-oriented channels like ACC Network, etc. On news as well, check the channel listings. Some are rather barebones here and I don't know how much you'd watch Bloomberg for example. I'm going to assume with Prime, Netflix, and HBO, you're not really looking for more on-demand shows as a bonus. Keep in mind that in most locations some ~$30 antenna would get you ABC, CBS, FOX, NBC...
by lack_ey
Fri May 31, 2019 6:49 pm
Forum: Personal Investments
Topic: Adventures in Paranoia: Fidelity core positions
Replies: 3
Views: 1471

Re: Adventures in Paranoia: Fidelity core positions

The funds own the Treasuries underlying the repo agreements until the seller buys them back again at the end of the term (and the market value of the collateral for a repo should be higher than the amount of cash borrowed). If the seller never comes back, the fund has gotten Treasuries out of the deal at a discount.

So I don't see the issue.

I would go for the "get professional help paranoid" option. :P
by lack_ey
Thu May 30, 2019 9:09 pm
Forum: Personal Investments
Topic: Newbie Question on Vanguard Bond funds
Replies: 10
Views: 2985

Re: Newbie Question on Vanguard Bond funds

If there were four bond funds given and two were suggested for higher yield, based on what I think I remember reading here from others' interactions with Vanguard, it's Vanguard Total Bond Index Vanguard Total International Bond Index Vanguard Short-Term Investment Grade Vanguard Intermediate-Term Investment Grade i.e. a little more weighting in investment-grade corporate bonds (and other bonds of reasonably high credit quality, but lower than the average you see in the first two funds) I don't particularly think that advice makes a lot of sense, but the resulting allocation would definitely fall within the mainstream. Nothing really objectionable. Don't think too much of what Vanguard might have said; it's not like it's rigorously determin...
by lack_ey
Mon May 27, 2019 8:49 pm
Forum: Personal Finance (Not Investing)
Topic: Need to go back to school, but afraid to stop working?
Replies: 8
Views: 1119

Re: Need to go back to school, but afraid to stop working?

This is the right forum. Savings rates and "schedules" are rough heuristics that are not suitable when scenario planning like this. Financially, moving to administration is better in the medium term and much better in the long term, even if it costs a couple years. Compounding is frequently overrated. Even if you saved $25k over 3 years and had that go up to $40k in a lucky market run, and then was able to compound that over the next 40 years at say 4% real, that's under $200k in today's dollars all those decades later in a very favorable scenario. That's not going to compare to being able to save $10k, $20k extra a year, if not more, on a higher salary over the course of a couple decades (and have that amount compound over time)....
by lack_ey
Sun May 19, 2019 5:18 pm
Forum: Investing - Theory, News & General
Topic: Quadratic Interest Rate Volatility & Inflation Hedge ETF
Replies: 10
Views: 1477

Re: Quadratic Interest Rate Volatility & Inflation Hedge ETF

I'm trying to figure out what it's actually holding and its strategy. At first I didn't find much on Quadratic's site at all. They say that the fund Seeks to hedge the risk of rising long-term interest rates, an increase in inflation and inflation expectations, and an increase in interest rate volatility, while providing inflation-protected income. Seems like the firm is based around options overlays over assets, where this one holds TIPS + options. And that's long options, being long vol and positive skewness (which generally carries a negative expected return, on top of the almost 1% expense ratio). Now, given that the options are actively managed, they could claim to have some strategy, trading scheme, or some kind of market timing abili...
by lack_ey
Sun May 19, 2019 3:11 pm
Forum: Investing - Theory, News & General
Topic: Why does the stock market grow faster than the economy?
Replies: 28
Views: 6224

Re: Why does the stock market grow faster than the economy?

Thanks all for your answers! I was not specifically having the US in mind when asking, and I don't think the fact that US companies derive some profit from abroad changes anything. The accounting point applies to the whole world as well. Replace "how can the US stock market grow faster than the US economy" by "how can the global stock market grow faster than the world economy". I once read where Gus Sauter made a comment that there is little to no correlation between stock prices and the economy. That made a huge impression on me and ever since then pay little to no attention to economic news. Direct quote from Sauter, "The interesting thing is that markets are not correlated with economic growth. I think a lot of ...
by lack_ey
Wed May 15, 2019 10:33 pm
Forum: Investing - Theory, News & General
Topic: How to interpret price of BND?
Replies: 5
Views: 1317

Re: How to interpret price of BND?

It's the price that the market last traded at for that security, which now and usually is pretty close to the market value of the underlying holdings of the fund divided by the number of shares outstanding (okay, there's some further wrinkles because the underlying fund has mutual fund share classes too). It's pretty close in part as a result of explicit and commonplace arbitrage mechanisms, and the fact that shares can readily be created or destroyed. As always you would prefer the lower price when buying, but if the price is $80.38 one day and $81.19 the next, that's a reflection of the value of the holdings changing. If the price is $80.38 now and $81.19 five years later, that's harder to judge as bonds cycle in and out, it's no longer t...
by lack_ey
Sun May 12, 2019 3:56 pm
Forum: Investing - Theory, News & General
Topic: Asset allocation-- "splitting" VTSAX and VTIAX?
Replies: 5
Views: 2035

Re: Asset allocation-- "splitting" VTSAX and VTIAX?

This is not splitting total (US) stock or total international stock into its constituent pieces. There's little point to doing that if you want to keep the weightings the same as those broader funds*. Instead, this is about shifting the allocation to re-weight the holdings, owning a higher percentage of some stocks relative to others. The characteristics will thus be different in some way, for better or worse. *it could be slightly useful for tax-loss harvesting, in case one part of the split allocation goes down while the whole does not. If you're reading an older book, keep in mind that total international stock funds used to not exist. Also, lower-cost and passive international value stock funds used to not really exist (Vanguard still d...
by lack_ey
Sun May 12, 2019 3:33 pm
Forum: Personal Investments
Topic: Direction of interest rates
Replies: 19
Views: 2538

Re: Direction of interest rates

Direction of short rates should not be as hard to predict as the stock market especially in the current regime with telegraphed intentions by the central banks, known mandates, etc. Especially if we're looking say 1 month before a FOMC in the US; in the last few years there's often been a 90%+ chance (as implied by the futures market) of a certain move—up or same—and yes, the market expectation has come to fruition at a rate far higher than you'd hit if guessing blindly. Farther out, economic conditions and other input variables are more difficult to know, and uncertainty increases. But still there may be some limited predictability. The thing is that short-term interest rates are effectively set according to desired policy, and knowing the...
by lack_ey
Sun May 05, 2019 1:14 pm
Forum: Personal Finance (Not Investing)
Topic: Realistic Comp Increase with Doubling Job Responsibilities
Replies: 37
Views: 3603

Re: Realistic Comp Increase with Doubling Job Responsibilities

Out of curiosity (and maybe to help explain context), what does your one direct report do? Many people above find it strange to have only one direct report; my limited experience is that this is not strange but normally some kind of scenario where the one direct is an analyst or other kind of supporter providing assistance to certain key aspects of the senior role. That's not so much management as being able to delegate certain tasks in a workload that's too large for a single person. On the other hand, for that small team of three: what do they do? I assume their manager also did some "real" work themselves, not just managing the three. In any case, I'm not quite sure I understand the expectation by the business. Is the work outp...
by lack_ey
Tue Apr 30, 2019 6:46 pm
Forum: Personal Investments
Topic: MM equivalent ETFs..
Replies: 13
Views: 3756

Re: MM equivalent ETFs..

Nothing will have an actually stable value, equivalent to a money market fund not breaking the buck. And there could be some frictions on bid/ask. Maybe you lose a penny or two on average in the round trip, per share. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) - ER = 0.14%, most like money market, being short-term T-bills; over $100M daily volume and underlying T-bills obviously liquid iShares Short Treasury Bond ETF (SHV) - ER = 0.15%, more term risk than BIL, using T-bills through 12 months maturity, but still very low; over $200m daily volume iShares Ultra Short-Term Bond ETF (ICSH) - ER = 0.08%, includes some small credit risk but less than most of its peers; generally keeps relatively low term and credit risk but only has $10M+...
by lack_ey
Sun Apr 28, 2019 8:30 pm
Forum: Investing - Theory, News & General
Topic: Why so many Vanguard Funds and ETFs if their motto is simplicity and to hold.
Replies: 19
Views: 2100

Re: Why so many Vanguard Funds and ETFs if their motto is simplicity and to hold.

I don't think that simplicity is that much a foundational principle for Vanguard. That's more a Bogle and a Bogleheads thing.

Vanguard's principles for investment success, which they mention on the site and in annual reports and so on, are as follows:
  • Goals - Create clear, appropriate investment goals
  • Balance - Develop a suitable asset allocation using broadly diversified funds
  • Cost - Minimize cost
  • Discipline - Maintain perspective and long-term discipline
https://about.vanguard.com/what-sets-va ... g-success/
by lack_ey
Sun Apr 28, 2019 7:01 pm
Forum: Investing - Theory, News & General
Topic: Bond Fund Nominal vs Real Average Duration
Replies: 5
Views: 949

Re: Bond Fund Nominal vs Real Average Duration

I think that would generally be the real duration (sensitivity to changes in real interest rates) for TIPS funds unless otherwise specified.

The nominal duration for a TIPS fund would have to be estimated or inferred based on past behavior. Or I'm sure there are some papers out there with some methods for that.

Vanguard lists a Bloomberg Barclays TIPS index as a reference for their TIPS fund and list average duration of 7.1 years at the end of Q1:
https://investor.vanguard.com/mutual-fu ... olio/vaipx

So that seems to be confirmation that the durations there are real duration.
by lack_ey
Sat Apr 27, 2019 1:10 pm
Forum: Personal Investments
Topic: Bond choice in 401K - DEBTM vs DODIX
Replies: 4
Views: 956

Re: Bond choice in 401K - DEBTM vs DODIX

It's a collective investment trust (CIT). These are fairly common in 401k plans. These are usually like mutual funds from an investment point of view, but maybe have lesser reporting requirements and less apparatus around managing shareholders as the underlying investors are institutional (like a 401k plan). As such they are cheaper to operate and may have a bit lower fees. What you have there is a total bond-style index fund offered in CIT format. So similar to Vanguard Total Bond Index Fund, Fidelity U.S. Bond Index Fund, iShares Core U.S. Aggregate Bond ETF, and such, except you're getting it with an ER of 0.04%. Dodge & Cox Income is a bit riskier, with a significantly higher average exposure to credit risk. If you're a particular b...
by lack_ey
Fri Apr 26, 2019 5:46 pm
Forum: Personal Investments
Topic: Stock Dilution
Replies: 2
Views: 595

Re: Stock Dilution

There will be more shares, but the company will have more assets than before, possibly better long-term efficiency and market positioning than the two entities separately, etc. (in general, it could be lower, or the market perceive such a move as a negative sign or positive sign, depending) Why should it have an automatic negative impact on per-share value? It's not like they're taking the cash from the new stock issuance and burning it all. If they burned all the cash, then sure, the company wouldn't be worth any more, and there would be more shares outstanding, so of course each share would be worth less. More generally, if everybody knows the stock price is going to move in a certain direction, why wouldn't there be price pressure alread...
by lack_ey
Sun Apr 21, 2019 11:06 am
Forum: Investing - Theory, News & General
Topic: Re-Examining an assumption: 45% bonds in retirement?
Replies: 95
Views: 13892

Re: Re-Examining an assumption: 45% bonds in retirement?

Some notes: 1. Broadly, the distribution of potential future returns conditioned on lower starting yields is probably less favorable (higher likelihood of lower returns). Especially so for bonds. So yes, it's a concern, and you shouldn't ignore it. Now, the solution or the conclusion you're tending towards based on the above doesn't necessarily follow from that, and I'm not saying to run out and make big changes. 2. Equity yields are not amazingly high either. (You probably shouldn't just look at dividend yield, but some kind of price/earnings, or dividends+buybacks yield may be somewhat reasonable) 3. Look at real yields (adjust for inflation), not nominal yields. Real yields are not that amazing but not so low. 4. Stocks and bonds are not...
by lack_ey
Sat Apr 20, 2019 6:29 pm
Forum: Investing - Theory, News & General
Topic: Bond fund duration
Replies: 7
Views: 1202

Re: Bond fund duration

What do you take as the rationale behind that suggestion, to use a bond fund with duration similar to the holding time until the money is needed? This is important so we can understand how to extend the results to your regular contributions case. To me the advice doesn't particularly make much sense other than a vague guideline in some scenarios or if you're changing the allocation over time. What if you have a 20-year holding period and select a fund with a duration of 20, and then keep on with this through year 19? You'd then have significant risk exposure near the end. A way to minimize term risk is to adjust the duration down regularly as the clock counts down. You can do this by shifting money between funds or just start off and use Tr...
by lack_ey
Sat Apr 13, 2019 8:46 am
Forum: Personal Investments
Topic: Secondary market CD's
Replies: 6
Views: 938

Re: Secondary market CD's

AAA wrote: Sat Apr 13, 2019 7:33 am
tfb wrote: Fri Apr 12, 2019 6:22 pmYou pay the higher "ask" price when you buy (someone is "asking" you to pay that price). When you do, you will get the associated 2.461% yield, before commission.
If you pay the ask price, what is the reason for displaying the bid price?
Well, if you're selling, you would get the lower bid price.

It's relevant to display both so you can get a sense of the spread and how much you'd be losing in these frictions if you had to turn around and sell the CD early. Treasuries are a whole lot better in this regard in that the spreads are a lot lower.
by lack_ey
Fri Apr 12, 2019 7:34 pm
Forum: Personal Investments
Topic: How to categorize rental property as an asset?
Replies: 10
Views: 1160

Re: How to categorize rental property as an asset?

Real estate is very much not like stocks or bonds. It's another category, just as something like gold would be another category. I'd consider all of the property value as part of the real estate category, and then the mortgage separately as a fixed income liability (negative fixed income). It's the full value of the property that may go up or down in a market. If you have $500k in properties, it's $500k that could go up to $600k or down to $400k depending on the housing market and so on, whether or not you have $350k in mortgages on them or $100k. Doesn't make sense to consider it as $150k or $400k. Also you can think of how much the real estate is worth relative to the stocks and bonds you own and what that means with respect to diversific...
by lack_ey
Sun Apr 07, 2019 10:14 am
Forum: Investing - Theory, News & General
Topic: real estate vs commodities as inflation hedge
Replies: 23
Views: 2470

Re: real estate vs commodities as inflation hedge

A long run fixed rate mortgage is an inflation hedge. Property might, or might not, be an inflation hedge. Because rents rise with inflation so too do real estate prices over the long run. However we can find endless examples where this did not happen. Detroit for example. Buffalo as a city used to have the most millionaires of any city in North America, supposedly. Real estate is a real-valued asset. Expected value should increase with inflation. The examples you bring up like Detroit are about realized returns falling short of expected returns. That's more about investment risk or price volatility or downside, rather than whether or not it's a real asset. The first line is interesting because I was going to focus on something related. To...
by lack_ey
Wed Apr 03, 2019 7:07 pm
Forum: Personal Finance (Not Investing)
Topic: Considerations for Rent v Buying for 4-year stay
Replies: 16
Views: 1856

Re: Considerations for Rent v Buying for 4-year stay

There's places where you could find a comparable house that would be more like $200k relative to that kind of rent with considerably lower HOA. It's not common, but the tail end of the distribution exists.

So you could break even in 3 years or less, after frictions and opportunity costs are taken into account on the house, assuming typical levels of house appreciation and (stock and bond) investment gains as a baseline case.

It's just not so much with more typical pricing.

What are the chances you end up staying in Madison?