Search found 6292 matches

by alex_686
Thu Jul 09, 2020 11:59 am
Forum: Personal Investments
Topic: Monte Carlo Simulations: Pros, Cons and Value
Replies: 35
Views: 1272

Re: Monte Carlo Simulations: Pros, Cons and Value

Although I do value backtesting a lot, Monte-Carlo simulations always left me cold. ... I just find extremely hard to believe that the simplifying assumptions of such models are representative enough of the real world. I know people I respect view Monte-Carlo in a more positive light, but well, I t...
by alex_686
Thu Jul 09, 2020 10:32 am
Forum: Personal Investments
Topic: What does it mean that Amazon owns 7% of my company’s stock?
Replies: 21
Views: 1776

Re: What does it mean that Amazon owns 7% of my company’s stock?

So if Amazon used to hold warrants, what does it mean now that they have decided to convert to shares? It is a option - just with a fancy name. You have a right to buy X shares at $Y (strike price) by Z date. How deep do you want to go into option pricing? If the public trading price of the stock i...
by alex_686
Thu Jul 09, 2020 10:27 am
Forum: Non-US Investing
Topic: USD currency risk as a non-US investor
Replies: 15
Views: 551

Re: USD currency risk as a non-US investor

p.s. the comments on currency seem reasonable, surely the volatility of equities trumps the volatility of currencies? Annual volatility for equities ranges anywhere form 7% to 15% depending on where you are looking. 100+ years, 20+ countries. Volatility is not bracketed and is not mean reversion. A...
by alex_686
Thu Jul 09, 2020 10:22 am
Forum: Personal Investments
Topic: What does it mean that Amazon owns 7% of my company’s stock?
Replies: 21
Views: 1776

Re: What does it mean that Amazon owns 7% of my company’s stock?

Here is the previous year’s Proxy Statement, Amazon does not show up. It has been years since I have had to do this, but I don't think warrants would show up. Warrants, for those who don't know, are a option to buy shares that is stapled (sometimes literally) to a bond. Instead of offering a higher...
by alex_686
Thu Jul 09, 2020 8:56 am
Forum: Non-US Investing
Topic: USD currency risk as a non-US investor
Replies: 15
Views: 551

Re: USD currency risk as a non-US investor

As all the companies are highly globalized and thus currency risk is very complex (revenues made of 100+ differenct currencies from all around the world), it still leaves me with the question what and if I should do anything about it. There is very little currency risk in equity investing, and that...
by alex_686
Wed Jul 08, 2020 8:58 am
Forum: Personal Finance (Not Investing)
Topic: Found a $10,000 Bond from 1987 sitting in my moms paperwork
Replies: 16
Views: 3376

Re: Found a $10,000 Bond from 1987 sitting in my moms paperwork

I had a somewhat similar experience when handling my FIL's affairs after he had a stroke. Whoever has the power of attorney for mom needs to take a copy of the POA and the bond to a brokerage office of say Charles Schwab or Merrill Lynch. If mom has a brokerage account he/she should go there. The b...
by alex_686
Wed Jul 08, 2020 7:30 am
Forum: Personal Investments
Topic: Portfolio and Future investing plans review
Replies: 10
Views: 438

Re: Portfolio and Future investing plans review

1. Whats the point of bonds for someone in my situation? I actually don't see using my portfolio significantly through my life time. I mostly see a lot of my net worth eventually being passed down to my heirs at death. We're both not big spenders, our life is very comfortable, but we only buy thing...
by alex_686
Wed Jul 08, 2020 7:22 am
Forum: Personal Investments
Topic: What happens to fractional shares after a stock split?
Replies: 6
Views: 381

Re: What happens to fractional shares after a stock split?

Home Depot has a Investor Relations page on their web site along with a Shareholder Services info. What I would do it simply dial the PHONE NUMBER there and talk to the person who answers and get them to help me. They should either point me to the answer on their web site where info on this particu...
by alex_686
Wed Jul 08, 2020 6:28 am
Forum: Investing - Theory, News & General
Topic: Does minimum volatility give better returns?
Replies: 61
Views: 6588

Re: Does minimum volatility give better returns?

I am a proponent of minimum volatility. Not so much that they give better returns. Either as higher returns or higher risk-adjusted returns. I favor it because its characteristics are better align with my goals. Steadier returns. It makes sense, but what would you do if minimum volatitly underperfo...
by alex_686
Tue Jul 07, 2020 6:02 pm
Forum: Personal Finance (Not Investing)
Topic: Found a $10,000 Bond from 1987 sitting in my moms paperwork
Replies: 16
Views: 3376

Re: Found a $10,000 Bond from 1987 sitting in my moms paperwork

Are their any coupons still attached? Normally you would cash in the physical bond. The Great Gatsby plot revolves around this.

I would assume that the bond has been turned over to the state, and that the state has claimed it as abounded property.
by alex_686
Tue Jul 07, 2020 2:36 pm
Forum: Investing - Theory, News & General
Topic: Who still invests in load funds?
Replies: 13
Views: 971

Re: Who still invests in load funds?

I am just curious about the profile of people who invest in front-load or back-load funds. They are still out there. The same people who pay people 1%+ AUM to manage their money... No No No. This would be a major volition. You can either charge commissions such as a front load or you can charge a f...
by alex_686
Tue Jul 07, 2020 1:30 pm
Forum: Investing - Theory, News & General
Topic: Help me understand this on real estate investing
Replies: 29
Views: 2620

Re: Help me understand this on real estate investing

2. Property taxes 3. Maintenance (I've seen estimates ~1% of property value!) You can strike both #2 and #3. These are real expenses that are born by the owner. Landlords are not going to eat these costs. They will pass these costs along to you, the renter. Sure, it is bundled up in your rental pay...
by alex_686
Tue Jul 07, 2020 1:26 pm
Forum: Investing - Theory, News & General
Topic: Help me understand this on real estate investing
Replies: 29
Views: 2620

Re: Help me understand this on real estate investing

What does he mean by "I make sure to constantly take all of the equity out."? He is talking about cheap leverage. As a former margin clerk, I can tell you that leverage is dangerous. Home loans not so much. A mortgage is a negative bond. By choosing to take out a mortgage on your home instead of pa...
by alex_686
Tue Jul 07, 2020 6:57 am
Forum: Investing - Theory, News & General
Topic: Fidelity Active ETFs
Replies: 20
Views: 1109

Re: Fidelity Active ETFs

There is a fair amount out there, mostly behind academic paywalls that I don't have access right now. There is a positive correlation between a portfolio manager's expense and its return. IIRC, the average active portfolio manager brings about 1.2% in extra gross return. i.e., before expenses. So m...
by alex_686
Tue Jul 07, 2020 6:39 am
Forum: Personal Investments
Topic: Why no Admiral Shares in my Target Date fund?
Replies: 29
Views: 2073

Re: Why no Admiral Shares in my Target Date fund?

I get that it's like buying in bulk, but those folks with several hundred thousand dollars are kinda getting screwed. Former mutual fund accountant here. So they are not getting screwed - maybe. This is not about the expense ratio, it is about disclosure. The Expense Ratio = Fund's Expense Ratio + ...
by alex_686
Mon Jul 06, 2020 4:32 pm
Forum: Investing - Theory, News & General
Topic: Bond valuation - expected to go down?
Replies: 21
Views: 1480

Re: Bond valuation - expected to go down?

I'm sympathetic to your viewpoint relating to stocks. It's not a crazy viewpoint at all. The Economist Mohamed El-Erian said as recently as a week ago that "he’s waiting to put cash to work until the market finds another reason to go higher". So while it may be a perfectly reasonable perspective, I...
by alex_686
Mon Jul 06, 2020 2:39 pm
Forum: Investing - Theory, News & General
Topic: Fidelity Active ETFs
Replies: 20
Views: 1109

Re: Fidelity Active ETFs

Any data to back that up? How do you identify the "better fund managers" ahead of time? Doing so after the fact does not help one invest. As a analogy, consider the Major League Baseball draft. 1st round picks tend to be better performers and bettered paid verse the 8 round pick. Data is only going...
by alex_686
Mon Jul 06, 2020 12:58 pm
Forum: Investing - Theory, News & General
Topic: Fidelity Active ETFs
Replies: 20
Views: 1109

Re: Fidelity Active ETFs

I can see a pump & dump advantage to an ETF showing what it is investing in. If there are copy cat investors they will buy after the ETF does and pump the price; if they sell after the ETF does they will fulfill the dump. I doubt Fidelity's stock pickers have a secret sauce and many people don't li...
by alex_686
Mon Jul 06, 2020 12:55 pm
Forum: Investing - Theory, News & General
Topic: Fidelity Active ETFs
Replies: 20
Views: 1109

Re: Fidelity Active ETFs

'Cheap' tends to lead to poor returns The success of several Vanguard actively managed mutual funds don't seem to line up with that statement. Which ones are you thinking about? I will tend to agree, but that is mostly because Vanguard tends to chose areas where the markets and indexes are ineffici...
by alex_686
Mon Jul 06, 2020 12:23 pm
Forum: Investing - Theory, News & General
Topic: Fidelity Active ETFs
Replies: 20
Views: 1109

Re: Fidelity Active ETFs

If you like active management, it's on the cheaper side, though not as cheap as Vanguard's active funds. How will these funds actually work though? Don't ETF's have to reveal their entire holdings more frequently than mutual funds? Active ETFs have to disclose their holdings quarterly and their NAV...
by alex_686
Fri Jul 03, 2020 2:56 pm
Forum: Personal Investments
Topic: Vanguard Digital Advisor "algorithm change"
Replies: 57
Views: 4807

Re: Vanguard Digital Advisor "algorithm change"

To extend a bit more, I was going over a presentation yesterday. The author argued that long term treasuries offer no current diversification benefit due to their real negative rates. Still parse the data and argument, but it seems reasonable. That doesn't sound reasonable, if by "reasonable" you m...
by alex_686
Fri Jul 03, 2020 2:34 pm
Forum: Personal Finance (Not Investing)
Topic: Major factors for changing mortgage rates?
Replies: 5
Views: 381

Re: Major factors for changing mortgage rates?

Am I correct that the 10 year treasury is possibly changes daily? If the 10 year treasury is .67% a year from now, would that likely indicate that the 15 & 30 year rates will also be nearly exactly the same rates as offered today? Eh - mostly. Treasury yields are extraordinarily low. There are host...
by alex_686
Fri Jul 03, 2020 2:20 pm
Forum: Personal Finance (Not Investing)
Topic: Major factors for changing mortgage rates?
Replies: 5
Views: 381

Re: Major factors for changing mortgage rates?

Actually, predicting Fed Funds rate is part of my job. And a boring one at that in the current environment. Here is a excellent tool extracting predictions from market activity. https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html And it is currently saying.... Fed Funds have a 100...
by alex_686
Thu Jul 02, 2020 3:55 pm
Forum: Personal Investments
Topic: Is wealthfront Stock Level investing under appreciated by Boglehead community?
Replies: 47
Views: 2827

Re: Is wealthfront Stock Level investing under appreciated by Boglehead community?

I honestly do not understand what point you are trying to make with 5). What magic? You either pay taxes now or pay them later. If you lower your tax basis now by doing tax loss harvesting you will have higher capital gains later on. If you can work it out well it might be in a time where you have ...
by alex_686
Thu Jul 02, 2020 12:38 pm
Forum: Personal Investments
Topic: Is wealthfront Stock Level investing under appreciated by Boglehead community?
Replies: 47
Views: 2827

Re: Is wealthfront Stock Level investing under appreciated by Boglehead community?

1) 0.25% fee by wealthfront. Eventually with a large portfolio this will be a large amount ... 4) $3000 limit on capital loss deduction against ordinary income. 5) TLH is essentially tax deferral - Eventually resulting in a lower cost basis with eventually a higher tax bill. This bit of analysis is...
by alex_686
Thu Jul 02, 2020 12:16 pm
Forum: Investing - Theory, News & General
Topic: The magic of stock indices
Replies: 29
Views: 2003

Re: The magic of stock indices

marcopolo wrote:
Thu Jul 02, 2020 12:09 pm
The index is cap weighted, so while all companies count, bigger companies count a lot more.
You also have to figure that a decent amount of change was due to name changes, spin offs, and mergers.
by alex_686
Thu Jul 02, 2020 10:38 am
Forum: Investing - Theory, News & General
Topic: The magic of stock indices
Replies: 29
Views: 2003

Re: The magic of stock indices

a) the index has to churn the companies in the index. This dynamic nature of indexing is what makes it partially work (I think). I'm now quite convinced that 50years later the top cos in US will be mostly different than what we have today and some of the top cos in the future SP500 do not yet exist...
by alex_686
Thu Jul 02, 2020 10:21 am
Forum: Personal Investments
Topic: Vanguard Digital Advisor "algorithm change"
Replies: 57
Views: 4807

Re: Vanguard Digital Advisor "algorithm change"

Terms like "aggressive" and "conservative" only have meaning in relation to some benchmark, and that benchmark can be very different for different investors. To extend, risk is time varying. Low risk assets can morph into high risk ones over time. To extend a bit more, I was going over a presentati...
by alex_686
Wed Jul 01, 2020 4:45 pm
Forum: Investing - Theory, News & General
Topic: The magic of stock indices
Replies: 29
Views: 2003

Re: The magic of stock indices

Yes. That's essentially my question. Does SP500 do well because the committee that select the companies that go in the index do well? Does SP500 do well because they nailed down the formulas/algorithms/methodologies of weighting correctly? The committee really does not do much. Free-Float Market Ca...
by alex_686
Wed Jul 01, 2020 2:22 pm
Forum: Investing - Theory, News & General
Topic: The magic of stock indices
Replies: 29
Views: 2003

Re: The magic of stock indices

Is there truth in this? Or am I missing something here? Not exactly sure what you are trying to say. I would not use the DJIA index. It is a horrid index. It has 2 advantages. You could calculate the index in a few minutes using a chalk board and a slide rule. This was important 100 years ago. Seco...
by alex_686
Wed Jul 01, 2020 2:01 pm
Forum: Investing - Theory, News & General
Topic: Tesla becomes most valuable car company in the world
Replies: 59
Views: 4644

Re: Tesla becomes most valuable car company in the world

So this morning Tesla has officially overtaken Toyota as the worlds most valuable car manufacturer. I have sat on the sidelines while several friends of mine have made buckets on money on this company. I understand that stocks are valued based on expected future earnings. My question is at what poi...
by alex_686
Tue Jun 30, 2020 8:27 pm
Forum: Investing - Theory, News & General
Topic: Total Returns Beats Dividend Focus
Replies: 17
Views: 1570

Re: Total Returns Beats Dividend Focus

Dividend stocks typically have less volatility.... I am not so sure about this. A good chunk of dividend stocks lay on the "Value Factor" side of things, and value tends to be more risky. That being said, a good chunk also lays on "Quality Factor" side - where this is kind of true. Or better yet, i...
by alex_686
Tue Jun 30, 2020 7:58 pm
Forum: Investing - Theory, News & General
Topic: Total Returns Beats Dividend Focus
Replies: 17
Views: 1570

Re: Total Returns Beats Dividend Focus

Is $1 in dividend returns more valuable than $1 in capital? Of course not, a dollar is a dollar is a dollar. The math on this is pretty tight. I am not sure you are going to find a white paper. Total Returns are deeply embedded in investment theory. You could start with Miller & Modigliani's "Capita...
by alex_686
Tue Jun 30, 2020 2:07 pm
Forum: Forum Issues and Administration
Topic: For every "YES" there are 10 "No's" and Vice Versa?
Replies: 28
Views: 1910

Re: For every "YES" there are 10 "No's" and Vice Versa?

Investment Theory falls under Economics, so a Social Science.

There are no fundamental flaws of human nature as their is in the hard sciences. Data is rarely clear and unambiguous. Human society evolves, so relationships evolves.
by alex_686
Tue Jun 30, 2020 1:22 pm
Forum: Personal Investments
Topic: Vanguard Digital Advisor "algorithm change"
Replies: 57
Views: 4807

Re: Vanguard Digital Advisor "algorithm change"

vineviz wrote:
Tue Jun 30, 2020 1:04 pm
Terms like "aggressive" and "conservative" only have meaning in relation to some benchmark, and that benchmark can be very different for different investors.
To extend, risk is time varying. Low risk assets can morph into high risk ones over time.
by alex_686
Tue Jun 30, 2020 11:15 am
Forum: Investing - Theory, News & General
Topic: Current PE ratios on Vanguard ETFs?
Replies: 15
Views: 1201

Re: Current PE ratios on Vanguard ETFs?

Keep in mind that P/E ratios are affected by a (hopefully) temporary drop in earnings due to the recent pandemic. Keep your eye on forward earnings estimates. At the moment, forward earning estimates are dependent on the course of the pandemic and the reaction to that course. The spike of cases in ...
by alex_686
Mon Jun 29, 2020 4:19 pm
Forum: Investing - Theory, News & General
Topic: Understanding the “ETF of ETFs” structure
Replies: 15
Views: 990

Re: Understanding the “ETF of ETFs” structure

I think you are implying and assuming things you should not. I could buy the mutual fund class of the ETF and always get NAV at the close. I used to do that until the ETFs became one bases point less expensive. Let me emphasis that you get the NAV price, with is just a accountant's estimate. Or you ...
by alex_686
Mon Jun 29, 2020 3:43 pm
Forum: Investing - Theory, News & General
Topic: Who would buy a Target Fund whose date had passed?
Replies: 17
Views: 1810

Re: Who would buy a Target Fund whose date had passed?

First, you don't need to sell it to anybody. You put in your sale order, the underlying assets are liquidated from the fund. Few extra steps with a ETF, but the principle is the same. Vangaurd's solution is to merge their target date fund into their Retirement Income Fund(?). Not sure of the name, b...
by alex_686
Mon Jun 29, 2020 2:28 pm
Forum: Personal Investments
Topic: Vanguard Digital Advisor "algorithm change"
Replies: 57
Views: 4807

Re: Vanguard Digital Advisor "algorithm change"

2) I selected the "moderate" risk profile because the asset allocation was what I was looking for (65/35). They unilaterally changed the definition of "moderate" I don't think this is what happened. I think that the market has changed the definition of what "moderate" is. Bond yields have fallen wh...
by alex_686
Mon Jun 29, 2020 12:24 pm
Forum: Investing - Theory, News & General
Topic: Pros and cons of quality factor at this time.
Replies: 13
Views: 644

Re: Pros and cons of quality factor at this time.

How is the "quality factor" officially defined and who defines it? Is there any actual standard that fund companies have to adhere to if they slap that label on a fund? It works just like the Value Factor. You define your universe. Define what percentage is going to fall into that factor. 1/2, 1/3,...
by alex_686
Mon Jun 29, 2020 12:16 pm
Forum: Investing - Theory, News & General
Topic: Understanding the “ETF of ETFs” structure
Replies: 15
Views: 990

Re: Understanding the “ETF of ETFs” structure

Having worked with prices in this area, your comment is a bit off: The only difference is ETFs have Authorized Participant, arborators, who keep the ETF's value the same as the NAF of the securities it holds. I wonder about these , they take value from the ETF yet the ETFs value stays very close the...
by alex_686
Mon Jun 29, 2020 12:05 pm
Forum: Personal Investments
Topic: Vanguard Dividend Growth
Replies: 12
Views: 883

Re: Vanguard Dividend Growth

Vanguard Dividend Growth (VDIGX) usually performs well during downturns in the market. Not this year. Any thoughts? Why would you think it would do well? Having formally studied the subject I can't think of a reason why. Dividends are a notoriously bad factor. It is intuitive, but it indicates noth...
by alex_686
Mon Jun 29, 2020 11:28 am
Forum: Investing - Theory, News & General
Topic: Pros and cons of quality factor at this time.
Replies: 13
Views: 644

Re: Pros and cons of quality factor at this time.

The problem seems to me to lie in how you define "Quality." ... This is the same problem with so called "value" funds and ETFs, which, because they use a limited number of formulas applied to financial statements mix in failing companies whose price reflects what they are really worth with the elus...
by alex_686
Mon Jun 29, 2020 11:17 am
Forum: Investing - Theory, News & General
Topic: Understanding the “ETF of ETFs” structure
Replies: 15
Views: 990

Re: Understanding the “ETF of ETFs” structure

I was just commenting on how Vanguard's ETF are just a different class of shars in the mutual fund. Vanguard has a patent on combining the two. What you are posting is true. And the sky is blue. It is just it is irrelevant to the OPs question. What is relevant is that it is a fund, and funds are pa...
by alex_686
Mon Jun 29, 2020 9:43 am
Forum: Investing - Theory, News & General
Topic: Bond funds - Why no bonds under 1 year.
Replies: 12
Views: 797

Re: Bond funds - Why no bonds under 1 year.

Because bonds with a duration of less than 1 year are no longer bonds but cash. One could debate exactly why this arbitrary line has been drawn at 1 year. Probably because 1 year is a nice round number. But generally you buy bonds for returns, to get returns you need to take some risk, and in this ...
by alex_686
Mon Jun 29, 2020 9:41 am
Forum: Investing - Theory, News & General
Topic: Bond funds - Why no bonds under 1 year.
Replies: 12
Views: 797

Re: Bond funds - Why no bonds under 1 year.

When an instrument has less than 1 year to maturity (technically, in US dollars, usually 360 days because they use a 360 day year) it is Money Market Instrument. (not sure if it is exactly 1 year to maturity?). They have redefined this recently so the maximum average maturity is 60 days. Technicall...
by alex_686
Mon Jun 29, 2020 9:39 am
Forum: Investing - Theory, News & General
Topic: Bond funds - Why no bonds under 1 year.
Replies: 12
Views: 797

Re: Bond funds - Why no bonds under 1 year.

Bond funds make a lot of their money by "rolling down the yield curve" i.e making roll return. I thought about that. But the roll down yield effect is often greatest when the short end is in the three plus year range. I didn't think there was much effect in the 3 to 1 range. But maybe that's the an...
by alex_686
Mon Jun 29, 2020 8:42 am
Forum: Investing - Theory, News & General
Topic: Bond funds - Why no bonds under 1 year.
Replies: 12
Views: 797

Re: Bond funds - Why no bonds under 1 year.

Because bonds with a duration of less than 1 year are no longer bonds but cash. One could debate exactly why this arbitrary line has been drawn at 1 year. Probably because 1 year is a nice round number. But generally you buy bonds for returns, to get returns you need to take some risk, and in this c...
by alex_686
Mon Jun 29, 2020 8:09 am
Forum: Personal Finance (Not Investing)
Topic: What is it like to work with an ETF
Replies: 15
Views: 1584

Re: What is it like to work with an ETF

Not being in the world of finance I have a wolf of Wall Street picture but obviously it can’t be like that. 95% of people in asset management is dominated by operations. Accountants, IT, business annalists, etc. Boring routine work that has to accomplished every day. Less than 5% work as portfolio ...
by alex_686
Mon Jun 29, 2020 7:17 am
Forum: Personal Finance (Not Investing)
Topic: What is it like to work with an ETF
Replies: 15
Views: 1584

Re: What is it like to work with an ETF

As I said, I understand that you aren't being employed by a financial asset. I said "work with an ETF". What specifically do you want to know? I worked at a mutual fund company that had both. The short answer is not much. Most of the functionality and work duties are the same. The Portfolio Manager...