Search found 5058 matches

by alex_686
Sat Nov 09, 2019 12:19 pm
Forum: Investing - Theory, News & General
Topic: optimal strategy for exploiting robo-advisors
Replies: 33
Views: 2544

Re: optimal strategy for exploiting robo-advisors

Lets assume an account exists for 30 years, and has regular contributions. After 30 years, wouldn't it be the case that some of the holdings have such a low cost basis that its highly unlikely that particular purchase lot would be a part of TLH? With individual stocks, anyone can go bankrupt at any...
by alex_686
Sat Nov 09, 2019 11:47 am
Forum: Investing - Theory, News & General
Topic: optimal strategy for exploiting robo-advisors
Replies: 33
Views: 2544

Re: optimal strategy for exploiting robo-advisors

I wonder if there are any academic studies regarding aggressive tax loss harvesting and investment returns. This strategy involves lots of turnover to generate the tax losses and I am wondering if this is creating a friction with bid/ask spreads and incorrect sell/buy decisions. This strategy shoul...
by alex_686
Sat Nov 09, 2019 11:26 am
Forum: Investing - Theory, News & General
Topic: optimal strategy for exploiting robo-advisors
Replies: 33
Views: 2544

Re: optimal strategy for exploiting robo-advisors

Yes, poorly worded on my part. I should have said there is less opportunity when not contributing (because over time the market tends to go up, so older dollars in general would have a lower cost basis, and so it would generally take a more significant market decline to have TLH on older investment...
by alex_686
Sat Nov 09, 2019 11:14 am
Forum: Personal Investments
Topic: Vanguard asking for personal financial information
Replies: 16
Views: 1616

Re: Vanguard asking for personal financial information

sport wrote:
Sat Nov 09, 2019 10:52 am
When answering such questions, how does one define "income"? Is it taxable income? What about tax free income? What about growth in a taxable account? In a TIRA? In Roth IRA?
What does your tax form say?
by alex_686
Sat Nov 09, 2019 10:55 am
Forum: Investing - Theory, News & General
Topic: optimal strategy for exploiting robo-advisors
Replies: 33
Views: 2544

Re: optimal strategy for exploiting robo-advisors

On a large portfolio (i.e. when new contributions are a small percentage of account balance), TLH can't do much for the portfolio overall The 1/4% fee is outrageous on large balances The first assumption is wrong. TLH can reduce or eliminate unrealized long term capital gains. It does not matter if...
by alex_686
Sat Nov 09, 2019 10:30 am
Forum: Personal Investments
Topic: Vanguard asking for personal financial information
Replies: 16
Views: 1616

Re: Vanguard asking for personal financial information

HomeStretch wrote:
Sat Nov 09, 2019 10:24 am
Vanguard is likely asking the questions under the “know your customers” (KYC) and anti-laundering regulations.
To extend a bit, banks have to follow KYC and anti-laundering regs. Brokers have to follow these regs and suitability requirements. So they have to ask more detailed questions.
by alex_686
Sat Nov 09, 2019 10:28 am
Forum: Personal Investments
Topic: Vanguard asking for personal financial information
Replies: 16
Views: 1616

Re: Vanguard asking for personal financial information

For context, I used to work in compliance. Brokers are required to monitor the suitability of client's investments. i.e., grandma can't gamble her social security check in penny stocks. Exactly what this means is not specified. There is no checklist given by the regulators. The brokerage has to come...
by alex_686
Sat Nov 09, 2019 9:11 am
Forum: Personal Investments
Topic: Windfall
Replies: 21
Views: 2111

Re: Windfall

That is a hard one. Mortgages ate negative bonds, and few bonds will get that rate, especially after tax. So, here is a question, based on the assumption that you are maximizing your tax advantage space. This modest windfall increase your ability to take risk. Does increase wealth increase your will...
by alex_686
Thu Nov 07, 2019 9:19 pm
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

whodidntante wrote:
Thu Nov 07, 2019 9:15 pm
This is a long thread considering the premise is wrong.
Are you not entertained? Are you not informed? :happy
by alex_686
Thu Nov 07, 2019 9:05 pm
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

If I understand this correctly, it also explains why CITs never post dividends: since they're only available in tax-advantaged accounts, there's no need and no point. To be a bit more precise, they are only available in employee sponsored retirement plans so they fall only under the Department of L...
by alex_686
Thu Nov 07, 2019 8:48 pm
Forum: Personal Investments
Topic: Investment Ideas
Replies: 56
Views: 3579

Re: Investment Ideas

... as a result of 3.5% refinancing and making his loan ... This is the crux of the issue. He now has a negative bond at 3.5%. In order to come out ahead he needs a investment that generates more than 3.5% after tax. So what is he going to invest that 100k that is going to get that yield? The stand...
by alex_686
Thu Nov 07, 2019 3:54 pm
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

I may be misunderstanding. If a company (held in a fund) pays a dividend, the fund collects the dividend, and the fund will either reinvest the dividend or pay the fund shareholder. Agree there is zero impact at that moment in time (accounting and not economic). If the fund holds on the dividend an...
by alex_686
Thu Nov 07, 2019 1:35 pm
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

I did have one thought though that maybe you can answer, alex_686. I wonder if mutual fund companies know and keep statistics on what percent of shares are set to reinvest dividends versus take them as cash. It seems the higher that percentage is, the more aggressive the fund could be at reinvestin...
by alex_686
Thu Nov 07, 2019 12:57 pm
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

Either way, this has such a negligible effect on returns that I don't believe it's worth mentioning. However, what I'm more concerned about is Capital Gains distributions, which FZROX distributes once a year as well. This makes FZROX less tax efficient than VTSAX. I am not following at all, and I c...
by alex_686
Thu Nov 07, 2019 11:43 am
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

This is really good and thanks for sharing. I guess that could work two ways correct? Reinvesting dividends quarterly (in place of annually) in a down market could accelerate losses but one is reinvesting and lowering cost basis. No. Dividends payments are reinvested back into the fund. There is no...
by alex_686
Thu Nov 07, 2019 11:32 am
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

I have always thought if Vanguard will ever end up paying dividends each month (instead of quarterly or yearly)? Why? Paying dividends is a drag on performance. The accounting is tricky, so extra accountants are needed. If not done correctly one could blow up the fund. Assets have to be liquidated ...
by alex_686
Thu Nov 07, 2019 11:30 am
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

This is really good and thanks for sharing. I guess that could work two ways correct? Reinvesting dividends quarterly (in place of annually) in a down market could accelerate losses but one is reinvesting and lowering cost basis. No. Dividends payments are reinvested back into the fund. There is no...
by alex_686
Thu Nov 07, 2019 10:42 am
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

If the dividend just lowers the NAV, why do index funds pay dividends? They could just retain all dividends and be more tax-efficient. That would be great for investors, bad for the tax man. The law requires mutual funds to distribute dividends. To extend, if mutual funds did not distribute taxable...
by alex_686
Thu Nov 07, 2019 10:05 am
Forum: Investing - Theory, News & General
Topic: The hidden cost of Fidelity’s ZERO funds
Replies: 66
Views: 5620

Re: The hidden cost of Fidelity’s ZERO funds

Hey! I have been invited to comment on this thread. I used to work in mutual fund administration in accounting. The theory behind this is bunk. Cash management is a core utility function of funds and everybody that I know that does this tries really hard to keep "Cash Drag" of performance to a minim...
by alex_686
Wed Nov 06, 2019 5:38 pm
Forum: Personal Investments
Topic: Is the effective interest rate of a loan higher when it’s early in amortization period?
Replies: 42
Views: 1609

Re: Is the effective interest rate of a loan higher when it’s early in amortization period?

So all US consumer debt amortizes as I illustrated in the first option? I’ve seen the second option with a small business loan. I think fixed principal might be common with floating interest rates. The vast majority of debt, both personal or business. Any debt will "amortize" as you define it if th...
by alex_686
Wed Nov 06, 2019 5:34 pm
Forum: Personal Investments
Topic: Is the effective interest rate of a loan higher when it’s early in amortization period?
Replies: 42
Views: 1609

Re: Is the effective interest rate of a loan higher when it’s early in amortization period?

Thanks for the help, all. Probably could have been a little clearer in the product type I was referencing. Better off paying amortizing loan before a fixed principal loan it looks like. ... The difference is driven by different cash flows, not "amortizing loan" vs. "fixed principal". So, here is my...
by alex_686
Wed Nov 06, 2019 4:55 pm
Forum: Personal Investments
Topic: Vanguard suggesting I move to ETF's
Replies: 40
Views: 3648

Re: Vanguard suggesting I move to ETF's

ETFs are less expensive and more tax efficient to operate, and can easily be held at a different brokerage. I’ve come to opinion that Vanguard would prefer other brokerages have the customer service / brokerage responsibility. To extend a bit, I am pretty confident that it cheaper for Vanguard's br...
by alex_686
Wed Nov 06, 2019 4:30 pm
Forum: Personal Investments
Topic: Investment Ideas
Replies: 56
Views: 3579

Re: Investment Ideas

Thanks for your respond. Wouldn’t you be happy to get good refinancing rate and have worth of $100,000 home equity on your hand? He doesn’t wanna put that money all in stock market and expose himself to the high risk. That was opportunity for him to get lump sum on the hand with no effect on his mo...
by alex_686
Wed Nov 06, 2019 3:05 pm
Forum: Personal Investments
Topic: Is the effective interest rate of a loan higher when it’s early in amortization period?
Replies: 42
Views: 1609

Re: Is the effective interest rate of a loan higher when it’s early in amortization period?

Term loan = fixed P&I per payment (think personal loans I believe) If P&I is fixed, than you can't make early payments so this question is more or less moot. May I ask where you live? I somebody who has worked in banking compliance this is externally rare in the US for personal loans. It has been a...
by alex_686
Wed Nov 06, 2019 2:46 pm
Forum: Personal Investments
Topic: Is the effective interest rate of a loan higher when it’s early in amortization period?
Replies: 42
Views: 1609

Re: Is the effective interest rate of a loan higher when it’s early in amortization period?

Clarice wrote:
Wed Nov 06, 2019 2:32 pm
Term loans do not amortize.
Are you thinking about a revolving line of credit which has no fixed end date? Much like a credit card?

If so - the answer is still no. The math still holds. After all, one only needs an interest rate and a cash flow. Interest paid will remain the same.
by alex_686
Wed Nov 06, 2019 2:14 pm
Forum: Personal Investments
Topic: Is the effective interest rate of a loan higher when it’s early in amortization period?
Replies: 42
Views: 1609

Re: Is the effective interest rate of a loan higher when it’s early in amortization period?

Is it a better decision to pay off one loan vs. another when everything about those two loans is the same ASIDE from the fact that one loan is term and one loan is amortizing, and we are early in amort period? Sorry, the answer is still "no" - there is no difference. The math is ironclad on this. N...
by alex_686
Wed Nov 06, 2019 1:44 pm
Forum: Personal Investments
Topic: Is the effective interest rate of a loan higher when it’s early in amortization period?
Replies: 42
Views: 1609

Re: Is the effective interest rate of a loan higher when it’s early in amortization period?

If I have two loans with the same interest rate starting at exactly the same time, the amortizing loan has more interest dollars up front - so i would be better off paying that loan first.... no? No. You need to compare apples to apples. This means you must keep the cash flows the same under both a...
by alex_686
Wed Nov 06, 2019 1:27 pm
Forum: Personal Investments
Topic: Is the effective interest rate of a loan higher when it’s early in amortization period?
Replies: 42
Views: 1609

Re: Is the effective interest rate of a loan higher when it’s early in amortization period?

Same question goes for if both rates are the same - what if one loan is amortizing and one loan is a term loan? If you pay down a 4% loan you are paying down at a effective rate of 4%. It does not matter if it is day 1 or the 29th year of a 30 year mortgage. Same for 5%. The correct answer is prett...
by alex_686
Wed Nov 06, 2019 10:06 am
Forum: Investing - Theory, News & General
Topic: Why shouldn't I buy a Dow Jones index fund instead of TSM or the S&P?
Replies: 20
Views: 1291

Re: Why shouldn't I buy a Dow Jones index fund instead of TSM or the S&P?

Can you tell me why you are getting these results? Luck? Data Mining? Nobody likes the DJIA, not even Dow Jones. They have publicly said that the best - and only - good thing about the index is its long history. It is a very poorly constructed index. It was built the way it was built because you cou...
by alex_686
Tue Nov 05, 2019 7:58 pm
Forum: Investing - Theory, News & General
Topic: Saudi Aramco, a microcosm of International Equities issues.
Replies: 28
Views: 1772

Re: Saudi Aramco, a microcosm of International Equities issues.

1.5 Trillion is 3.69% of the World Equity Portfolio if you were to hold at global market cap--Vanguard World. It would be a whopping 8.09% of your international equity allocation, if held at market weight. Nope. Indexes are based on free float. They are floating only about 1% of the company. So it ...
by alex_686
Tue Nov 05, 2019 7:49 pm
Forum: Investing - Theory, News & General
Topic: Are Monopolies efficient?
Replies: 10
Views: 466

Re: Are Monopolies efficient?

monopolies are incredibly efficient at running competitors out of business (legally and otherwise) and making huge profits. Maybe - I will point to AT&T as a counter example. They had a natural monopoly, so no competition to run out. They kept prices artificially low to ensure they could not be sue...
by alex_686
Tue Nov 05, 2019 1:31 pm
Forum: Investing - Theory, News & General
Topic: confused by yield, expense ratio, and taxes
Replies: 11
Views: 531

Re: confused by yield, expense ratio, and taxes

Let's say there is an etf with one stock in it. Widgets Inc. Widgets Inc pays a 10 percent dividend. Let's say the etf has an expense ratio of 10 percent. Would the etf distribute the 10 percent dividend? And then I pay tax on the 10 percent dividend, plus the fund goes down in value by 10 percent ...
by alex_686
Tue Nov 05, 2019 1:04 pm
Forum: Investing - Theory, News & General
Topic: confused by yield, expense ratio, and taxes
Replies: 11
Views: 531

Re: confused by yield, expense ratio, and taxes

It matters because by saying that the fund takes its expenses from the yield may induce a non-expert investor to think that it operates like some sort of partnership, where the yield is apportioned part to the investor and part to the fund administrator. This is not correct. Even with zero (or nega...
by alex_686
Tue Nov 05, 2019 12:39 pm
Forum: Investing - Theory, News & General
Topic: confused by yield, expense ratio, and taxes
Replies: 11
Views: 531

Re: confused by yield, expense ratio, and taxes

So the fund gets it's expenses by selling stock? How do I know if the yield listed on yahoo finance may be net of expenses? I picked a high fee and high yield fund as an example because I thought it would make the issue clearer. By SEC regs, yields MUST be net of expenses. No ifs, ands, or buts. Th...
by alex_686
Tue Nov 05, 2019 11:18 am
Forum: Investing - Theory, News & General
Topic: confused by yield, expense ratio, and taxes
Replies: 11
Views: 531

Re: confused by yield, expense ratio, and taxes

Expense ratio is pulled out of the total ETF capital on a daily basis. It is not subtracted from its dividend yield. You will be taxed on all the dividends paid to you . It is a huge expense ratio, it is subtracted from the yield. For prospective, I used to be a mutual fund accountant. The 8% worri...
by alex_686
Mon Nov 04, 2019 2:52 pm
Forum: Personal Investments
Topic: What goes into Vanguards "Investment Returns"?
Replies: 10
Views: 1033

Re: What goes into Vanguards "Investment Returns"?

Knowing this...is there a more concrete way to find your return that doesnt take into consideration contributions? These formulas are not closed deterministic things. They are open iterative curve fitting calculations. The can be more than one return that solves. So very short time periods and heav...
by alex_686
Mon Nov 04, 2019 1:13 pm
Forum: Personal Consumer Issues
Topic: Less expensive alternative to Soda Stream for home-made / "no name" Cola?
Replies: 10
Views: 671

Re: Less expensive alternative to Soda Stream for home-made / "no name" Cola?

adamthesmythe wrote:
Mon Nov 04, 2019 1:08 pm
It is not clear whether OP is after carbonated water or cola.
Maybe that want to carbonate the scotch?

On a more serious note, another vote to go to your local brewing store. My preference is for homemade ginger beer for Moscow mules, but each to their own.
by alex_686
Sun Nov 03, 2019 4:24 pm
Forum: Personal Investments
Topic: What goes into Vanguards "Investment Returns"?
Replies: 10
Views: 1033

Re: What goes into Vanguards "Investment Returns"?

How long has this account been open? Under 18 months? Have you made any large contributions/ withdrawals as a percentage of the total account? Return formulas tend to be highly sensitive to small changes under these circumstances.
by alex_686
Sun Nov 03, 2019 4:10 pm
Forum: Investing - Theory, News & General
Topic: Stock Duration Help
Replies: 14
Views: 803

Re: Stock Duration Help

I never know how VIX is calculated. I have some simple example: If stock drop 2 days in a row with 10% loss each, then next 2 days in a row with 10% gain each day. With 4 days, VIX should shoot up high due to high volatility, but for stock is zero sum gain/loss for 4 days, no change. Will it predic...
by alex_686
Sun Nov 03, 2019 3:09 pm
Forum: Investing - Theory, News & General
Topic: Stock Duration Help
Replies: 14
Views: 803

Re: Stock Duration Help

I seriously doubt VIX mattes here at all. I never look at VIX price my whole investment life, but I do ponder frequently if there is bear market coming, how long it will take to recover my loss. That is how stock duration concept come. It is actually half measure only on the downside compared with ...
by alex_686
Sun Nov 03, 2019 2:11 pm
Forum: Investing - Theory, News & General
Topic: Stock Duration Help
Replies: 14
Views: 803

Re: Stock Duration Help

HenrySouthernCal wrote:
Sun Nov 03, 2019 1:45 pm
I personally have pondered for a long time how stock market can have some measure of duration like bond. I applaud the guy coming up some sort of simple solution, even though not rigorous enough.
Volatility. VIX is the most popular measure.
by alex_686
Sun Nov 03, 2019 1:26 pm
Forum: Investing - Theory, News & General
Topic: Stock Duration Help
Replies: 14
Views: 803

Re: Stock Duration Help

You can’t find any formulas because there ate no formulas. Duration calculations’ assumptions are very specific to bonds and interest rates. Very rigorous. Dividend investing, on the other hand, are based on some pretty weak assumption. Its is vaguely right, very low rigor. You can only do some vagu...
by alex_686
Sat Nov 02, 2019 8:31 pm
Forum: Investing - Theory, News & General
Topic: How do you explain individual stock risk (idiosyncratic) vs. stock market risk (systematic) in a simple, intuitive way?
Replies: 21
Views: 1205

Re: How do you explain individual stock risk (idiosyncratic) vs. stock market risk (systematic) in a simple, intuitive w

My favorite example is about a guy who invested all of his money (retirement and taxable) with his employer, a nice publicly regulated energy utility, for 30 years. He had good solid returns and retired from his physically demanding job at 55. Within 2 years of retirement, the utility had been bough...
by alex_686
Sat Nov 02, 2019 7:39 pm
Forum: Investing - Theory, News & General
Topic: If Charles Schwab et al. drop commissions to zero, can we build our own index funds?
Replies: 68
Views: 7243

Re: If Charles Schwab et al. drop commissions to zero, can we build our own index funds?

What I don't like is when they juice the earnings per share by using corporate buybacks, which triggers a bonus in their options (you can buy the stock at X dollars per share once it $50 share etc.), then selling those options pretty soon thereafter. If they truly care about the long-term future of...
by alex_686
Sat Nov 02, 2019 11:05 am
Forum: Investing - Theory, News & General
Topic: When someone says “X is a $120 million dollar company” what does that mean?
Replies: 20
Views: 2283

Re: When someone says “X is a $120 million dollar company” what does that mean?

Maybe... Imagine you have a company with $1,100 in the bank and 11 shares outstanding valued at $100 a share. If the company takes $100 from the bank and eliminates 1 share, you now have a $1,000 company divided by 10 shares. The future value comes from what your expectations for that company are g...
by alex_686
Sat Nov 02, 2019 11:01 am
Forum: Investing - Theory, News & General
Topic: When someone says “X is a $120 million dollar company” what does that mean?
Replies: 20
Views: 2283

Re: When someone says “X is a $120 million dollar company” what does that mean?

Depends on context. Market cap is popular. “Enterprise Value” is also common. This would be market cap + debt + a few other adjustments. After all, market cap can be adjusted by either issuing new shares or doing a stock buy back. However enterprise value should not change with these actions. Can m...
by alex_686
Fri Nov 01, 2019 9:44 pm
Forum: Investing - Theory, News & General
Topic: When someone says “X is a $120 million dollar company” what does that mean?
Replies: 20
Views: 2283

Re: When someone says “X is a $120 million dollar company” what does that mean?

Depends on context. Market cap is popular. “Enterprise Value” is also common. This would be market cap + debt + a few other adjustments. After all, market cap can be adjusted by either issuing new shares or doing a stock buy back. However enterprise value should not change with these actions.
by alex_686
Fri Nov 01, 2019 7:59 pm
Forum: Personal Investments
Topic: Reduce individual stocks allocation by switching to call options
Replies: 5
Views: 447

Re: Reduce individual stocks allocation by switching to call options

How much do you know about option pricing? Start with the put-call parity. There is no such thing as a free lunch. Depending on which call you are using, I suspect you are gearing up your portfolio. i.e. using (indirectly) leverage.
by alex_686
Fri Nov 01, 2019 6:24 pm
Forum: Personal Investments
Topic: Reduce individual stocks allocation by switching to call options
Replies: 5
Views: 447

Re: Reduce individual stocks allocation by switching to call options

No. If you did this you are not changing you asset allocation or risk exposure. You are just changing how you get that exposure.
by alex_686
Fri Nov 01, 2019 12:11 pm
Forum: Personal Investments
Topic: I’m done with index funds
Replies: 201
Views: 20528

Re: I’m done with index funds

"Aggressive" and "theoretical" suggests pretty strongly to me that the $50,000 tax savings per $1,000,000 invested is possible but probably not realistic. Remember, the goal was not to offset gains within the stock portfolio but to offset gains elsewhere from company stock/stock options. The proble...