Search found 4597 matches

by alex_686
Sun Jun 23, 2019 10:37 pm
Forum: Investing - Theory, News & General
Topic: Does investing in US stocks mean investing in US Dollar?
Replies: 18
Views: 1243

Re: Does investing in US stocks mean investing in US Dollar?

Do you have a source? Because your 5% (out of 100%) claim appears to contradict what Mr. Bogle is quoted as saying above: Not at work, so I can't pull up the specific source tonight, but here are 2 good reads. Financial Market History: Reflections on the Past for Investors by David Chambers. Factor...
by alex_686
Sun Jun 23, 2019 12:10 pm
Forum: Investing - Theory, News & General
Topic: Does investing in US stocks mean investing in US Dollar?
Replies: 18
Views: 1243

Re: Does investing in US stocks mean investing in US Dollar?

You are never going to see anything in investing clearer or more consistent than that. "US stock market investments are dollar investments" may not be the 100% whole truth, but it's most of the truth. Unfortunately, this is true. Human brains are built for pattern matching, and will find patters ev...
by alex_686
Sun Jun 23, 2019 11:27 am
Forum: Personal Consumer Issues
Topic: what was your worst major purchase? mine is a 2019 mazda3
Replies: 139
Views: 9889

Re: what was your worst major purchase? mine is a 2019 mazda3

On the flip side, I consider my 2004 Mazda Portagee (which is effectively the 3) as one of the best things that I bought. Efficient and effective. Low maitiance and low cost of ownership. Sporty and fugal. Only in the past year has rust started showing up.
by alex_686
Sun Jun 23, 2019 10:00 am
Forum: Investing - Theory, News & General
Topic: Does investing in US stocks mean investing in US Dollar?
Replies: 18
Views: 1243

Re: Does investing in US stocks mean investing in US Dollar?

It's not universal, but many U.S. listed companies hedge their foreign earnings back to U.S. dollars. Their quarterly earnings reports are calculated in U.S. dollars, hedging the foreign income helps stabilize things and makes earnings less unpredictable (at least in the currency they're reporting ...
by alex_686
Sun Jun 23, 2019 9:20 am
Forum: Investing - Theory, News & General
Topic: Does investing in US stocks mean investing in US Dollar?
Replies: 18
Views: 1243

Re: Does investing in US stocks mean investing in US Dollar?

I believe that it would be advisable to diversify by having at least EUR and USD in a portfolio. EURO bonds count as EUR, USD bonds counts as USD. If US stocks do not "count" as USD (at least to some extent) then why they are funds that hedge currency? Because fear, uncertainty, and doubt make good...
by alex_686
Sun Jun 23, 2019 9:15 am
Forum: Investing - Theory, News & General
Topic: Does investing in US stocks mean investing in US Dollar?
Replies: 18
Views: 1243

Re: Does investing in US stocks mean investing in US Dollar?

No, not really. In general, a stock's value is tied to its economically productive assets, and those assets tend to be good hedges against inflation. Consider a rental property as a very simple example. Inflation spikes to 10%. Thus rent spikes by 10%, so now the property is worth 10% more. No real ...
by alex_686
Sat Jun 22, 2019 9:22 pm
Forum: Personal Investments
Topic: Seeking practical help understanding “bid-ask spread” for ETFs
Replies: 52
Views: 2140

Re: Seeking practical help understanding “bid-ask spread” for ETFs

You put in your limit order and you hope the market moves towards you. Selling liquidity in this way can be a profitable strategy, possibly, but I wouldn't categorize it as avoiding the bid/ask spread. Yes, the market MIGHT move toward you. Or the bid/ask spread MIGHT narrow while your limit order ...
by alex_686
Sat Jun 22, 2019 8:29 pm
Forum: Personal Investments
Topic: Seeking practical help understanding “bid-ask spread” for ETFs
Replies: 52
Views: 2140

Re: Seeking practical help understanding “bid-ask spread” for ETFs

There are some instances at bogleheads.org of investors selling shares in one account and buying them in another account for the same price. Thus, no spread. There is ALWAYS a spread. And you can NEVER avoid paying it. Not true if the shares are created out of thin air for you by the AP While there...
by alex_686
Sat Jun 22, 2019 2:19 pm
Forum: Personal Investments
Topic: Seeking practical help understanding “bid-ask spread” for ETFs
Replies: 52
Views: 2140

Re: Seeking practical help understanding “bid-ask spread” for ETFs

The spread at the opening cross is zero: $0.00, so the above statement is not quite true. So the bid/ask spread is a implicit cost, which can never be directly seen. It is the drag from trading. You are technically correct - the observed cost of trading at the open is zero. That does not mean there...
by alex_686
Thu Jun 20, 2019 3:36 pm
Forum: Investing - Theory, News & General
Topic: How to calculate stock picking performance?
Replies: 34
Views: 1358

Re: How to calculate stock picking performance?

After you calculated your return, next calculate your risk adjusted return. i.e. Beta/Alpha. For the past 10 years it had been easy to outperform the market- all you had to do was pile on risk - no skill needed, just luck.
by alex_686
Wed Jun 19, 2019 7:40 pm
Forum: Investing - Theory, News & General
Topic: Indexing VS. buying Berkshire Hathaway stock?
Replies: 34
Views: 2730

Re: Indexing VS. buying Berkshire Hathaway stock?

BRK acts more like an insurance company than the market - so no, don’t do it.
by alex_686
Sat Jun 15, 2019 1:33 pm
Forum: Investing - Theory, News & General
Topic: good example US vs UK returns
Replies: 20
Views: 1644

Re: good example US vs UK returns

In the past 20 years we have seen a major structural change, where market cap indexs are dominated by multinational companies. It used to be stocks loaded on regional, sector, and then world factors. Now it is just the opposite - world, sector l, then regional factors.
by alex_686
Tue Jun 11, 2019 2:45 pm
Forum: Investing - Theory, News & General
Topic: Help me understand "inflation risk" for bond funds
Replies: 24
Views: 796

Re: Help me understand "inflation risk" for bond funds

To be clear, I'm not looking to understand what "drives" returns per se. Rather, to understand what it means for bonds to be more subject to inflation risk. It's still not clear to me, though dbr seems to suggest that it amounts to little more than saying "but remember that inflation happens." It m...
by alex_686
Tue Jun 11, 2019 2:16 pm
Forum: Investing - Theory, News & General
Topic: Help me understand "inflation risk" for bond funds
Replies: 24
Views: 796

Re: Help me understand "inflation risk" for bond funds

First, on bonds. Not sure what time period you are running your tests, but inflation has been pretty tame for the past 30 years for the US. Low and predictable. Inflation risks tend to be more obvious when you run it for longer time periods and different countries. Second, stocks tend to be a good h...
by alex_686
Tue Jun 11, 2019 11:10 am
Forum: Investing - Theory, News & General
Topic: [Why did my fund suddenly drop in value?]
Replies: 228
Views: 181899

Re: [Why did my fund suddenly drop in value?]

That is interesting, so if you remove the market noise, who assigns the drop due to the distribution? The market. From a strategic level the company's value must fall by exactly as much as distributed. From a tactical level there are a number of arbitrage trades one can do to make risk free money i...
by alex_686
Tue Jun 11, 2019 10:56 am
Forum: Investing - Theory, News & General
Topic: Pay Growth vs Stock Market Returns
Replies: 26
Views: 1691

Re: Pay Growth vs Stock Market Returns

Expecting your income to grow is kind of besides the point. You should treat your income as human capital. What really matters is how accurately you can predict your income. If you have a union government job you can accurately predict your income, thus you can treat it as "bond like" asset, and hav...
by alex_686
Tue Jun 11, 2019 10:46 am
Forum: Personal Consumer Issues
Topic: Tips for new pet owner [puppy]
Replies: 71
Views: 3808

Re: Tips for new pet owner

These questions are better answered by your breeder. Are you going with a quality one? Under 4 bitches, registration papers are in order, litters spaced 2 to 3 years apart, only 2 to 4 litters per bitch. If the dog is "limited registered", ask why. Don't skip on vaccines when they are young! I don't...
by alex_686
Tue Jun 11, 2019 10:30 am
Forum: Investing - Theory, News & General
Topic: Index filter false market cap?
Replies: 13
Views: 669

Re: Index filter false market cap?

Was basically wondering if indexes filter out stocks with a high percentage of short interest. There are some stocks out there with real high short interest. I've seen some with over 30%. A lot of these also have high volatility. Seems like a way to filter out those stocks that are going to be unpr...
by alex_686
Tue Jun 11, 2019 10:28 am
Forum: Investing - Theory, News & General
Topic: Index filter false market cap?
Replies: 13
Views: 669

Re: Index filter false market cap?

There are companies that may or may not be “financially viable”, among other things, in the TSM that are not included in the SP 500. Tesla is one of them. "Financially Viable" means the company has declared bankruptcy, has stooped paying on its debt, can't get the auditor and exchange to sign off o...
by alex_686
Mon Jun 10, 2019 9:08 pm
Forum: Investing - Theory, News & General
Topic: Insights From a Long Call With Vanguard Reps Today
Replies: 74
Views: 12020

Re: Insights From a Long Call With Vanguard Reps Today

The ER differences between ETFs and OEFs (in my opinion) are minor. Is it possible that ETFs are being pushed because VG may make money lending them? I don't believe OEFs are optionable. Just a thought.. Probably not. There are conflicts of interest here, which would minimize the push and limit pro...
by alex_686
Mon Jun 10, 2019 4:24 pm
Forum: Investing - Theory, News & General
Topic: Tax efficiency of mutual fund vs ETF for bonds
Replies: 11
Views: 780

Re: Tax efficiency of mutual fund vs ETF for bonds

ETFs still win, but the affects are muted. The ETF structure allows you to avoid capital gains from the fund trading. Bond funds do trade and do generate capital gains. So you get to sidestep most of this. However, most of the income generated by bond funds come from interest - be it coupon, OID, ac...
by alex_686
Mon Jun 10, 2019 12:40 pm
Forum: Investing - Theory, News & General
Topic: Insights From a Long Call With Vanguard Reps Today
Replies: 74
Views: 12020

Re: Insights From a Long Call With Vanguard Reps Today

So, for every ETF the expenses associated with managing it were exactly the same as those for the Admiral shares from the day the first Vanguard ETF (VIPER) was created. Vanguard did nothing to make this happen, it was all just coincidence. Then suddenly within the last year, these same expenses fo...
by alex_686
Mon Jun 10, 2019 12:08 pm
Forum: Investing - Theory, News & General
Topic: Index filter false market cap?
Replies: 13
Views: 669

Re: Index filter false market cap?

Yes for the SP500 no for the TSM. Tesla is not in the SP500. It is in the TSM. It is certainly one of the 500 largest American companies. SP500 is chosen by committee. Why does it matter that the S&P 500 is chosen by committee? TSM is based on CRSP, which is also done by committee. If fact, all ind...
by alex_686
Mon Jun 10, 2019 11:08 am
Forum: Investing - Theory, News & General
Topic: Insights From a Long Call With Vanguard Reps Today
Replies: 74
Views: 12020

Re: Insights From a Long Call With Vanguard Reps Today

Well, they said "encouraging", so it's really just semantics. What's clear is that they changed how expenses are assigned recently to the benefit of the ETF investors. Until recently the expense ratios were the same between Admiral shares and ETFs, Vanguard chose to change that. I will disagree wit...
by alex_686
Sun Jun 09, 2019 10:09 am
Forum: Investing - Theory, News & General
Topic: Insights From a Long Call With Vanguard Reps Today
Replies: 74
Views: 12020

Re: Insights from Vanguard

Is it a misconception, though? I believe that Vanguard can choose how to allocate expenses to the different share classes, to at least some extent. I posted the following in another discussion of ETF vs. mutual fund ERs, perhaps you have an explanation as to why in one case the difference in expens...
by alex_686
Fri Jun 07, 2019 4:52 pm
Forum: Personal Investments
Topic: Consideration for Maxing 401K with awful fee structure
Replies: 12
Views: 601

Re: Consideration for Maxing 401K with awful fee structure

There are tax drag formulas out there, where you can input your specific and expected marginal tax rates and market return expectations. My gut is telling me that you are better contributing to the max. The higher fees are probably lower than the tax drag in taxable. I will echo DarkHelmetII, but as...
by alex_686
Fri Jun 07, 2019 1:15 pm
Forum: Investing - Theory, News & General
Topic: short question
Replies: 15
Views: 1692

Re: short question

And just like a margin call, the short can be called if the stock skyrockets taking your house with it? Well, if you bet the house, and lose the bet, then yes, you lose the house. I used to work on the margin desk. Yes, if you short a stock and it goes up we will force you into bankruptcy. Did that...
by alex_686
Fri Jun 07, 2019 1:12 pm
Forum: Investing - Theory, News & General
Topic: Economics Question
Replies: 8
Views: 651

Re: Economics Question

My question is this - if indicators are flashing this, why don't the economy masterminds just do things to prevent it from happening? Why do stock corrections and crashes and economic recessions need to happen in order for the economy to continue being strong? Like what? Lots of time indicators fla...
by alex_686
Fri Jun 07, 2019 12:29 pm
Forum: Investing - Theory, News & General
Topic: REIT yields and real estate cap rates
Replies: 16
Views: 861

Re: REIT yields and real estate cap rates

Raising capital via new shares is not the only way to raise capital. They can take on debt - I’m not sure why you ignored that option. I’m not saying no REITs raise capital by selling shares - I’m saying that option isn’t always the best if you have a deal you need to move quickly on. Getting debt ...
by alex_686
Fri Jun 07, 2019 12:13 pm
Forum: Investing - Theory, News & General
Topic: REIT yields and real estate cap rates
Replies: 16
Views: 861

Re: REIT yields and real estate cap rates

If you’re suggesting the REIT should sell common shares to buy more deals - it is not that easy. If there are deals out there that are worthwhile they usually aren’t on the market long and diluting shares is not a short process. No, this happens all of the time. First, not sure what you mean by "di...
by alex_686
Thu Jun 06, 2019 3:57 pm
Forum: Investing - Theory, News & General
Topic: REIT yields and real estate cap rates
Replies: 16
Views: 861

Re: REIT yields and real estate cap rates

The cap rate on the property and the yield on the security aren't the same thing. Say I've got a $1M building that is throwing off 6% in cash ($60,000). Now if I securitize it into a REIT, and the market bids up those shares to $2M in value, that same $60,000 will only be a 3% yield. Their is a fai...
by alex_686
Thu Jun 06, 2019 1:52 pm
Forum: Personal Finance (Not Investing)
Topic: Forgiveness of Investment Fees - Taxable Income?
Replies: 7
Views: 304

Re: Forgiveness of Investment Fees - Taxable Income?

probably for regulatory purposes must actually charge first for the service before forgiving. I can't think of any regulation on this. More likely a operational / marketing plow. I expect that the game plan is to waive the fee for a period of time then reinstate. And now that I think about it, that...
by alex_686
Thu Jun 06, 2019 1:48 pm
Forum: Investing - Theory, News & General
Topic: Is an active mutual fund ever appropriate?
Replies: 21
Views: 1793

Re: Is an active mutual fund ever appropriate?

There are 2 reasons to own active funds. The first is you think you have identified a superior portfolio manager. We know the issues here. The second is that there are exploitable issues with the index. This is more common than you expect. Most of the issues center around liquidity. Investable index...
by alex_686
Thu Jun 06, 2019 12:51 pm
Forum: Personal Finance (Not Investing)
Topic: Forgiveness of Investment Fees - Taxable Income?
Replies: 7
Views: 304

Re: Forgiveness of Investment Fees - Taxable Income?

Why is the investment fee being waived? I am mostly with Jags4186 here. If you go into a store and buy a item that is on sale for 50%, is that 50% savings taxable income? No. Like that oriental carpet store that has been selling carpets for 50% due to "going out of business" for the past 10 years, w...
by alex_686
Wed May 29, 2019 1:40 pm
Forum: Personal Finance (Not Investing)
Topic: Why don't small businesses for sale list their earnings AFTER taxes?
Replies: 6
Views: 473

Re: Why don't small businesses for sale list their earnings AFTER taxes?

Yeah. Some taxes are purely business (i.e. you need to pay 1% of sales to the state, .5% of assets to the city as property tax) but when you try to pass profits off to the owner, you have choices about where the taxes are paid. Paying out as salary, pass through, or distributions all have different...
by alex_686
Thu May 23, 2019 11:43 am
Forum: Investing - Theory, News & General
Topic: Age in Bond Vs Target date funds
Replies: 9
Views: 433

Re: Age in Bond Vs Target date funds

To extend abit, Bogleheads really simplifies investment theory to what a layperson can easily understand. Age in bonds, as others have mentioned, is a very simple rule of thumb. There is no theory behind it. On the other hand, target date funds actually hire people to figure out the right answer- fo...
by alex_686
Wed May 22, 2019 9:18 pm
Forum: Personal Investments
Topic: vusxx buy at end of month
Replies: 7
Views: 540

Re: vusxx buy at end of month

It is called “buying the dividend”, and brokers have been fined and fired for suggesting this.

The stock or fund drops by the amount of the dividend, so it is a wash. The exploits around this are razor thin. This is a highly efficient part of the market.
by alex_686
Mon May 20, 2019 9:00 pm
Forum: Personal Investments
Topic: Is an emergency just mental accounting?
Replies: 70
Views: 5665

Re: Is an emergency just mental accounting?

... and even in the case of people who prefer to use "mental accounting" in creating accounts with a specific named purpose... I don't see the harm in it. Some people budget better with buckets. I will note that Mental Accounting falls into the “Cognitive Load” class of cognitive errors, and it tak...
by alex_686
Mon May 20, 2019 8:12 pm
Forum: Personal Investments
Topic: Is an emergency just mental accounting?
Replies: 70
Views: 5665

Re: Is an emergency just mental accounting?

"Mental accounting" always seemed a curious phrase ... How about a liability-matching retirement income strategy? “Mental accounting” is a specific term in behavioral economics. It is well defined. Maybe it is unfortunately named, but there it is. Liability Matching is a specific investment therory...
by alex_686
Mon May 20, 2019 7:26 pm
Forum: Personal Investments
Topic: Is an emergency just mental accounting?
Replies: 70
Views: 5665

Re: Is an emergency just mental accounting?

It is mental accounting. The more correct answer is for this to be a goal. i.e. “Have 2 years worth of liquid living expenses”. Take that goal, merge tgat with your other goals, and incorporate it into your AA. This is the rational way to optimize your AA. However it is more abstract and requires a ...
by alex_686
Sun May 19, 2019 10:08 am
Forum: Investing - Theory, News & General
Topic: Will ETFs Replace Traditional Funds
Replies: 87
Views: 4932

Re: Will ETFs Replace Traditional Funds

To go back to the original title of this thread, I compiled some data from Investment Company Institute that publishes annual data about the industry in the US. ... Obviously popularity of indexing and essentially commission-free trading will be positive factors for ETFs. But until retirement plans...
by alex_686
Sat May 18, 2019 3:19 pm
Forum: Investing - Theory, News & General
Topic: Will ETFs Replace Traditional Funds
Replies: 87
Views: 4932

Re: Will ETFs Replace Traditional Funds

Great analysis, there's an assumption that Vanguard's primary competitor is Fidelity. It is not, their #1 competitor is Blackrock. Um, no. Almost the exact opposite. I pointed out that they are almost in 2 separate industries. Vanguard is in Asset Management, Fidelity is about brokerage. And, as yo...
by alex_686
Sat May 18, 2019 8:03 am
Forum: Investing - Theory, News & General
Topic: Will ETFs Replace Traditional Funds
Replies: 87
Views: 4932

Re: Will ETFs Replace Traditional Funds

What about the fact that mutual funds are not as portable? There is a reason why Fidelity doesn't offer their zero cost funds as ETFs. A interesting response, because that was the answer 30 years ago. I don't think it is true anymore. I'm sorry, I must be misunderstanding what you are trying to say...
by alex_686
Fri May 17, 2019 3:59 pm
Forum: Investing - Theory, News & General
Topic: Bond funds without mortgage backed part?
Replies: 26
Views: 3277

Re: Bond funds without mortgage backed part?

So this "negative convexity" thing...is it any worse than the higher default rate of corporate bonds or the lower yield of a treasury due to state tax deductions? No. The very short answer is that move in the opposite direction than normal bonds. When interest rates fall then bonds rise. Unless the...
by alex_686
Fri May 17, 2019 12:15 pm
Forum: Investing - Theory, News & General
Topic: Help me design a 401k fund menu
Replies: 29
Views: 1495

Re: Help me design a 401k fund menu

I totally agree and certainly Vanguard has a number of well run low cost active options. The thing is, if we make this move, I’ll have no plan advisor. If I choose some active funds, how would I document my annual monitoring process? I can't tell you that. My position was to generate reports for th...
by alex_686
Fri May 17, 2019 12:06 pm
Forum: Investing - Theory, News & General
Topic: Help me design a 401k fund menu
Replies: 29
Views: 1495

Re: Help me design a 401k fund menu

It’s not that I don’t like active funds. It’s that, as an ERISA fiduciary, I would be required to monitor these funds against their peers on a regular basis and make changes in the fund lineup if necessary. I’m trying to avoid that and the legal liability associated with that. Buying yesterday's wi...
by alex_686
Fri May 17, 2019 11:26 am
Forum: Investing - Theory, News & General
Topic: Help me design a 401k fund menu
Replies: 29
Views: 1495

Re: Help me design a 401k fund menu

Most people investing in 401k are not sophisticated, so it is a good idea to limit yourself to a dozen choices to limit confusion and cognitive load. 3 bond funds - money market, long term government, and a total bond. TIPS would be a easy choice to drop. 3 to 5 equity funds. You will want exposure ...
by alex_686
Fri May 17, 2019 11:14 am
Forum: Investing - Theory, News & General
Topic: Bond funds without mortgage backed part?
Replies: 26
Views: 3277

Re: Bond funds without mortgage backed part?

The "problem" with MBS is their negative convexity. First, when you are looking at the statement of holdings, realize that there is a difference between Fannie Mae and Freddie Mac debt and MBS that have been issued by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac debt works like any other ...
by alex_686
Fri May 17, 2019 11:01 am
Forum: Investing - Theory, News & General
Topic: Argument against Target Fund
Replies: 32
Views: 2522

Re: Argument against Target Fund

not to derail too much, but I'm always thinking that holding equity is an insurance against hyperinflation scenario. I wouldn't want to have my money in bonds and then the government prints its way to oblivion. And the next thing is my Starbucks is now costs $1k per cup :shock: Well, TIPS will prot...
by alex_686
Fri May 17, 2019 10:51 am
Forum: Investing - Theory, News & General
Topic: Will ETFs Replace Traditional Funds
Replies: 87
Views: 4932

Re: Will ETFs Replace Traditional Funds

What about the fact that mutual funds are not as portable? There is a reason why Fidelity doesn't offer their zero cost funds as ETFs. A interesting response, because that was the answer 30 years ago. I don't think it is true anymore. The carrot: You can either build a internal facing network, whic...