Search found 4147 matches

by alex_686
Wed Jan 16, 2019 11:01 am
Forum: Investing - Theory, News & General
Topic: What do futures really leverage exposure to?
Replies: 26
Views: 1413

Re: What do futures really leverage exposure to?

another interesting hedge I just thought of is that anyone who works in the oil industry probably ought to be short oil futures. If oil prices drop, you're likely to lose your job as oil fields shut down due to unprofitability, and so in a sense everyone whose employment is contingent on oil prices...
by alex_686
Wed Jan 16, 2019 8:54 am
Forum: Investing - Help with Personal Investments
Topic: More S&P500 or add QQQ
Replies: 3
Views: 383

Re: More S&P500 or add QQQ

First, why QQQ? It is badly constructed and not a tech ETF.

Second, why tech? If you point to its growth, I will point to the high P/E ratios and tell you that the growth is already backed inti its price.
by alex_686
Tue Jan 15, 2019 5:04 pm
Forum: Investing - Help with Personal Investments
Topic: Super Aggressive MF or ETFs?
Replies: 19
Views: 927

Re: Super Aggressive MF or ETFs?

To throw in my 2 cents, about as supper aggressive a passive investor can go is 70% equities in a passive index. Anything above that is going to require skill, either in the macro sense or the micro sense. If you want to go supper aggressive, I would suggest investing in individual stocks. It takes ...
by alex_686
Tue Jan 15, 2019 3:04 pm
Forum: Investing - Theory, News & General
Topic: What do futures really leverage exposure to?
Replies: 26
Views: 1413

Re: What do futures really leverage exposure to?

*futures on forward interest rates, like Eurodollar or Fed Funds futures, do have a lot to do with market expectation of rate movements... This is not true. Once again it is just the forward price discounted by time. I can see why one would think that, but the market expectations are already baked ...
by alex_686
Tue Jan 15, 2019 2:53 pm
Forum: Personal Finance (Not Investing)
Topic: Lowering Interest?
Replies: 7
Views: 378

Re: Lowering Interest?

First, yes, you would be lowering the amount going to interest and increasing the amount going to principle. Second, step back and look at the big picture. You currently have a negative bond of $110,000 at 3.99 fixed. In your asset allocation, where would 30k have the biggest bang? Equities in tax d...
by alex_686
Tue Jan 15, 2019 1:32 pm
Forum: Investing - Theory, News & General
Topic: What do futures really leverage exposure to?
Replies: 26
Views: 1413

Re: What do futures really leverage exposure to?

Try "Fundamentals of Futures and Options". It is free for the Kindle. I have not read it, but it is from the CFA Institute and they stuff they put out tends to be of high quality, if a bit technical - it is aimed at the working professionals. https://smile.amazon.com/Fundamentals-Futures-Options-Rog...
by alex_686
Tue Jan 15, 2019 10:48 am
Forum: Investing - Theory, News & General
Topic: What do futures really leverage exposure to?
Replies: 26
Views: 1413

Re: What do futures really leverage exposure to?

Forgetting arbitrage, it made intuitive sense to me that the hedger would be unenthusiastic about futures if it meant losing out on expected upside -- their goal is to avoid unexpected downside (even if it means giving up unexpected upside ). Similarly, the speculator would mostly be interested in ...
by alex_686
Tue Jan 15, 2019 10:39 am
Forum: Investing - Theory, News & General
Topic: What do futures really leverage exposure to?
Replies: 26
Views: 1413

Re: What do futures really leverage exposure to?

Buy $100k worth of SPY Buy $100k worth of SPY on (say) 20% margin, putting the other 80% in a money market account. Buy S&P 500 futures contracts worth $100k on (say) 20% margin, putting the other 80% in a money market account, rolling the contracts every quarter. Would the above three tend to have...
by alex_686
Mon Jan 14, 2019 2:53 pm
Forum: Investing - Theory, News & General
Topic: What do futures really leverage exposure to?
Replies: 26
Views: 1413

Re: What do futures really leverage exposure to?

Your question is a bit meandering. Maybe follow up with some more specific questions? It might help to distinguish between leverage and margin. Leverage means that a 1% move in the market gets multiplied by some factor, x1.5, x10, x80, whatever. Margin is a type of loan, I will pay 50% for the stock...
by alex_686
Mon Jan 14, 2019 1:46 pm
Forum: Investing - Theory, News & General
Topic: Super Short Term Bond Risks
Replies: 16
Views: 1371

Re: Super Short Term Bond Risks

I am not sure what Asset-Backed bonds really are and their risk profile? Asset backed bonds are pooled instruments of other smaller loans. Car loans, HELOC, credit card debit, trailer homes, etc. The are like Mortgage Backed Securities (MBS), but not. They tend to be safe. Rarely does something lik...
by alex_686
Mon Jan 14, 2019 1:29 pm
Forum: Investing - Theory, News & General
Topic: Are index fund managers forced to sell stocks when incurring greater trading?
Replies: 28
Views: 1951

Re: Are index fund managers forced to sell stocks when incurring greater trading?

How would this result be explained? For a start, you are really not comparing anything are you? They are the 2 different share classes of the same fund, with the same expense ratio. Of course you are going to get the same results. In theory Vanguard could chose to offer its ETF at a lower expense r...
by alex_686
Mon Jan 14, 2019 12:36 pm
Forum: Investing - Help with Personal Investments
Topic: TLH is called "Murky"
Replies: 17
Views: 2058

Re: TLH is called "Merky"

But the key question here, is how similar can these two securities be? According to long-standing IRS rules, you cannot use a loss for tax purposes if you sell and rebuy the same security – stock or index fund or ETF – within 30-days. That’s called a “wash sale.” This is a often debated point here....
by alex_686
Mon Jan 14, 2019 11:45 am
Forum: Investing - Theory, News & General
Topic: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)
Replies: 126
Views: 7013

Re: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)

nedsaid wrote:
Mon Jan 14, 2019 11:34 am
This is what I have been trying to tell the quants.
Actually, I was getting my information from the quants, so I assume they already know.
by alex_686
Mon Jan 14, 2019 11:26 am
Forum: Investing - Theory, News & General
Topic: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)
Replies: 126
Views: 7013

Re: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)

A big reason that companies are mostly valued as a multiple of their earnings and not property, plant, equipment, and bank accounts on the balance sheet. How do you value intangibles like patents? Or the franchise value of Microsoft Office? To extend on this, the explanatory power of P/B has been f...
by alex_686
Sun Jan 13, 2019 10:10 pm
Forum: Investing - Theory, News & General
Topic: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)
Replies: 126
Views: 7013

Re: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)

I know indexes are creations of companies that then sell the rights to use those indexes to market funds and ETFs. Of course, you missed the point. If we are going to pick and choose which countries are included in widely used and touted indexes, then there is nothing inherently "wrong" if some ind...
by alex_686
Sun Jan 13, 2019 12:25 pm
Forum: Investing - Theory, News & General
Topic: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)
Replies: 126
Views: 7013

Re: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)

Could you provide a few examples? Chinese companies have the perception of being manipulated by their government behind the scenes. This would be quite educational. Lenovo - when I last checked which was a few years ago, so things may have drifted. It has a US headquarters. It has a sponsored ADR s...
by alex_686
Sun Jan 13, 2019 12:13 pm
Forum: Investing - Theory, News & General
Topic: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)
Replies: 126
Views: 7013

Re: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)

Good points. What I wanted to point out is that there is not a universal agreement about the definition of Emerging Markets or agreement about which countries should be included. Still hard for me to rate the number two economy in the world as an Emerging Market but given your arguments I too would...
by alex_686
Sun Jan 13, 2019 11:41 am
Forum: Investing - Theory, News & General
Topic: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)
Replies: 126
Views: 7013

Re: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)

China, which has the second largest economy in the world, how can that be an Emerging market? It is not about the country, nor the companies. It is because the market is of poor quality. Market regulators, institutions, reporting standards, independency of boards, etc. are weak. There are issues wi...
by alex_686
Sun Jan 13, 2019 11:04 am
Forum: Investing - Help with Personal Investments
Topic: Vanguards recommends investors to increase international (non-US) stock holdings to 40% ?
Replies: 74
Views: 6646

Re: Vanguards recommends investors to increase international (non-US) stock holdings to 40% ?

l1am wrote:
Fri Jan 11, 2019 6:19 pm
Past performance is not an indicator to future results - but how far do you take this?

US vs INTL
Sectors have about twice the explanatiory power as country. So i would say you are running your chart on the wrong parameters,
by alex_686
Sun Jan 13, 2019 10:42 am
Forum: Investing - Theory, News & General
Topic: Opinion: Half of investment-grade bonds are only one step away from junk status
Replies: 23
Views: 2359

Re: Opinion: Half of investment-grade bonds are only one step away from junk status

There is a incentive to be either AAA or BBB. If you are a CFO you want maxium cheap leverage to turbocharge your equity returns. So you issue bonds right up to the edge.
by alex_686
Sat Jan 12, 2019 6:15 pm
Forum: Investing - Theory, News & General
Topic: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)
Replies: 126
Views: 7013

Re: Emerging markets cannot be fairly valued and investors are better off elsewhere: Change my mind :)

ignition wrote:
Sat Jan 12, 2019 5:33 pm
Aren't most of the firms in emerging markets audited by the Big Four? The same Big Four that audits firms in developed markets?
Not sure about that, but most have sponsored ADR, which means they must file audited reports under US standards, reviewed by the SEC.
by alex_686
Fri Jan 11, 2019 9:45 pm
Forum: Investing - Theory, News & General
Topic: Low-volatility ETFs have beaten S&P indexes while cutting risk
Replies: 12
Views: 1215

Re: Low-volatility ETFs have beaten S&P indexes while cutting risk

hdas wrote:
Fri Jan 11, 2019 12:23 pm
Yes, go ahead and pile on at the worst possible time. :twisted: :greedy
Why would you say this was the worst possible time?
by alex_686
Fri Jan 11, 2019 5:56 pm
Forum: Investing - Theory, News & General
Topic: PG&E Bonds
Replies: 48
Views: 4648

Re: PG&E Bonds

By all means buy a high-yield bond fund if that's your desire. I think you are missing my point. Let me ask you this - what wisdom descends from heaven, moving a child of 17 years and 364 days, to a person mature enough to vote the next day? None that I know of. It is an arbitrary line drawn in the...
by alex_686
Fri Jan 11, 2019 5:27 pm
Forum: Investing - Theory, News & General
Topic: PG&E Bonds
Replies: 48
Views: 4648

Re: PG&E Bonds

The bond gets droped by the index, then the fund has to sell. It is a valid criticism of bond index funds. As opposed to spending money trying to recover some portion of the value in bankruptcy court. I make no prediction about Pacific Gas and Electric's bonds or stock. PJW The credit spreads are w...
by alex_686
Fri Jan 11, 2019 3:27 pm
Forum: Investing - Theory, News & General
Topic: Are index fund managers forced to sell stocks when incurring greater trading?
Replies: 28
Views: 1951

Re: Are index fund managers forced to sell stocks when incurring greater trading?

If this was a "major advantage", ETFs tracking the same index as a mutual fund would outperform over time. Do you see ETFs outperforming similarly indexed mutual funds? Yes they do. Only by a few bps, but every bps counts. I know savings millions when running trillions of AUM does not sound like a ...
by alex_686
Fri Jan 11, 2019 3:03 pm
Forum: Investing - Help with Personal Investments
Topic: Help with asset allocation for two different goals
Replies: 6
Views: 426

Re: Help with asset allocation for two different goals

The other choice leads you to "mental accounting", which will be less efficient. See, for me it's the other way around. In my head, the two things are so differentiated that if I had just one big bucket with a global AA, I would do mental accounting until my head exploded. Not to mention different ...
by alex_686
Fri Jan 11, 2019 2:55 pm
Forum: Investing - Help with Personal Investments
Topic: Securities Exchange Commishion fee queston.
Replies: 16
Views: 526

Re: Securities Exchange Commishion fee queston.

Vanguard would only have to swap stock in the mutual funds and they would have all night to do it. It doesn't make sense to buy and sell ten million shares of stock when the funds share count only changes by a few hundred thousand. I have done this for a living, and that is now how it works. I unde...
by alex_686
Fri Jan 11, 2019 2:46 pm
Forum: Investing - Help with Personal Investments
Topic: Securities Exchange Commishion fee queston.
Replies: 16
Views: 526

Re: Securities Exchange Commishion fee queston.

How much trading does Vanguard do internally without having to sell securities. With four trillion under management they should be able to do some. Not as much as you think. First, you would need funds with cross flows of trades. Second, the SEC frowns on internal cross trades. There have been a fa...
by alex_686
Fri Jan 11, 2019 1:56 pm
Forum: Investing - Help with Personal Investments
Topic: Securities Exchange Commishion fee queston.
Replies: 16
Views: 526

Re: Securities Exchange Commishion fee queston.

It is only charged on the sale of exchange-traded securities. That is good to know. That is another reason to be an investor and not a trader. I will point out that as a mutual fund investor, you still pay this fee - just indirectly. The mutual fund needs to run its own trading desk, they have to t...
by alex_686
Fri Jan 11, 2019 1:36 pm
Forum: Investing - Theory, News & General
Topic: Is snp charging too much fees for indexing? [Standard-n-Poor index]
Replies: 18
Views: 1186

Re: Is snp charging too much fees for indexing?

To put this in a bit of context, Vanguard hired CRSP to create the indexes. The scuttlebutt was to put pressure on the S&P (not snp) to keep their fees low. It was one of the higher fixed expenses that Vanguard had.
by alex_686
Fri Jan 11, 2019 10:11 am
Forum: Investing - Theory, News & General
Topic: Are index fund managers forced to sell stocks when incurring greater trading?
Replies: 28
Views: 1951

Re: Are index fund managers forced to sell stocks when incurring greater trading?

Jesteroftheswamp wrote:
Thu Jan 10, 2019 9:46 pm
Does this out index funds at a major disadvantage vs. ETFs?
I would not consider it a major disadvantage, but the cost structure does favor ETFs. You just have to look at the trend lines in terms of cash flows and expense ratios to see the industry favors ETFs.
by alex_686
Thu Jan 10, 2019 9:42 pm
Forum: Investing - Theory, News & General
Topic: PG&E Bonds
Replies: 48
Views: 4648

Re: PG&E Bonds

The bond gets droped by the index, then the fund has to sell. It is a valid criticism of bond index funds.
by alex_686
Thu Jan 10, 2019 9:33 pm
Forum: Investing - Theory, News & General
Topic: Are index fund managers forced to sell stocks when incurring greater trading?
Replies: 28
Views: 1951

Re: Are index fund managers forced to sell stocks when incurring greater trading?

When there are cash flows in or out, funds need to buy or sell. Does not matter if it is a mutual fund or a ETF.

That being said, the redemption / creation process for ETFs are more efficient than running trades through a trading desk - most of the time. There are exceptions.
by alex_686
Thu Jan 10, 2019 8:41 pm
Forum: Investing - Theory, News & General
Topic: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]
Replies: 145
Views: 8336

Re: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]

As a modest counterargument, I will point to this tread: Portfolio of Leveraged Exchange Traded Funds https://www.bogleheads.org/forum/viewtopic.php?f=10&t=269194 Which argues that one can build a safer portfolio with leveraged funds. It does require monthly dynamic re balancing, but still - very mu...
by alex_686
Thu Jan 10, 2019 4:04 pm
Forum: Investing - Theory, News & General
Topic: how to evaluate an ETF's trading volume
Replies: 7
Views: 323

Re: how to evaluate an ETF's trading volume

Is it accurate to say that as long as the bid/ask spread is low, does not matter what the trading volume is? It is a low secondary concern. Low volume indicates that the ETF is not healthy, a signal it may be shut down. Also, low volume ETFs can freeze up during times of crisis. Or maybe not. More ...
by alex_686
Thu Jan 10, 2019 3:47 pm
Forum: Investing - Help with Personal Investments
Topic: Help with asset allocation for two different goals
Replies: 6
Views: 426

Re: Help with asset allocation for two different goals

The technically correct answer is to integrate your goals into a single AA. It will get your either lower risk, higher returns, or some combination of the 2. The other choice leads you to "mental accounting", which will be less efficient. Integrating your goals is a bit more intellectually demanding...
by alex_686
Thu Jan 10, 2019 3:00 pm
Forum: Investing - Theory, News & General
Topic: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]
Replies: 145
Views: 8336

Re: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]

The market maker is taking on risk because it needs to internalize flow to provide price improvement. Inverse/leveraged securities can be more costly to hedge than vanilla securites. Additionally, the inverse/leveraged instruments are usually used by more informed traders, who are more costly to ha...
by alex_686
Thu Jan 10, 2019 12:40 pm
Forum: Investing - Help with Personal Investments
Topic: Help me Built a Dividend Growth Investment Portfolio
Replies: 19
Views: 1439

Re: Help me Built a Dividend Growth Investment Portfolio

Some of the best economists, investors, and advisers comprise the index, and when they add and/or remove a company from the index you can choose to follow suit or not based on potential tax implications. I will point out that that the primary value of the DJIA, according to Dow Jones, is its long h...
by alex_686
Wed Jan 09, 2019 6:25 pm
Forum: Investing - Theory, News & General
Topic: Portfolio of Leveraged Exchange Traded Funds
Replies: 33
Views: 1733

Re: Portfolio of Leveraged Exchange Traded Funds

It is not gambling nor rebalancing. It is about creating a synthetic exposure to equities. It is not exactly Bogleheads because it is complex. This does not mean it is wrong or that it is a active strategy. I didn't say that it is wrong. People can do whatever they want with their money. I think mo...
by alex_686
Wed Jan 09, 2019 5:08 pm
Forum: Investing - Theory, News & General
Topic: Portfolio of Leveraged Exchange Traded Funds
Replies: 33
Views: 1733

Re: Portfolio of Leveraged Exchange Traded Funds

Leveraged exchange traded funds (LETFs) are marketed as short-term trading vehicles that magnify the daily returns of an underlying index. Short-term trading is gambling, not investing. It doesn't make sense to write than sentence, and then talk about 10 year returns, or reducing downside risk. It ...
by alex_686
Wed Jan 09, 2019 3:06 pm
Forum: Investing - Help with Personal Investments
Topic: Help me Built a Dividend Growth Investment Portfolio
Replies: 19
Views: 1439

Re: Help me Built a Dividend Growth Investment Portfolio

I will warn you away from a value strategy. Value has higher returns and higher risks than total market. I will also warn you away from a dividend strategy. The theory behind it is weak. Historical it has worked fine until it doesn't, and then you find yourself in a pit of pain. The simple answer is...
by alex_686
Wed Jan 09, 2019 1:27 pm
Forum: Investing - Theory, News & General
Topic: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]
Replies: 145
Views: 8336

Re: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]

One reason why a low-cost platform like Vanguard might want to ban trading in certain products is because they need to send the orders to a market maker for handling. That market maker doesn't want to handle toxic flow because it costs them money, and part of their agreement with Vanguard is likely...
by alex_686
Wed Jan 09, 2019 1:17 pm
Forum: Investing - Help with Personal Investments
Topic: Bond fund question - relationship between duration, yield, and actual return.
Replies: 9
Views: 439

Re: Bond fund question - relationship between duration, yield, and actual return.

I get that. However, isn't it true that most bogleheads like to take their risk on the equity side? And if that is the case, why do most bogleheads use the total bond fund (VBTLX) instead of treasury funds (VFIUX or VSIGX)? Yes. However I do feel that this answers is somewhere between trying to kee...
by alex_686
Wed Jan 09, 2019 10:44 am
Forum: Investing - Theory, News & General
Topic: Past result is not an indicator for future performance
Replies: 29
Views: 2023

Re: Past result is not an indicator for future performance

I saw some BHs comments that they are content with the certainty of outcome of index fund 20-year down the road. Isn't that misleading too? I personally think this is abuseive backtesting. There are people who want 100% equities. If you stretch the time frame long enough then equities beat bonds, s...
by alex_686
Tue Jan 08, 2019 10:21 pm
Forum: Investing - Theory, News & General
Topic: Past result is not an indicator for future performance
Replies: 29
Views: 2023

Re: Past result is not an indicator for future performance

For example, people often cite that equity yields some 8% to 12% over the long term. Isn't this statement also a result of projecting into the future what has happened in the past? Appreciate input, thank you =) :beer Yeah, past returns of the S&P don’t indicate future returns. Backtesting is fraug...
by alex_686
Tue Jan 08, 2019 3:28 pm
Forum: Investing - Theory, News & General
Topic: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]
Replies: 145
Views: 8336

Re: More Nanny State From Vanguard

Come on, this statement is simply false. And it's easy to show. Look at UPRO vs. SPY over this most recent downturn. Since 9/1/18 SPY is down 12%, UPRO is down 35%. Ah, anecdotal evidence. I can find fact patters where the S&P is up and the leverage fund is down. The mathematical relationship betwe...
by alex_686
Tue Jan 08, 2019 2:15 pm
Forum: Investing - Theory, News & General
Topic: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]
Replies: 145
Views: 8336

Re: More Nanny State From Vanguard

Many brokerages do not offer many specific mutual funds from other companies, even if they are legitimately registered. For example, you cannot buy the world's oldest mutual fund, MFS Massachusetts Investors Trust, retail class A, MITTX, at Vanguard. At one time, yes, you could; not now. Meanwhile,...
by alex_686
Tue Jan 08, 2019 12:25 pm
Forum: Investing - Theory, News & General
Topic: [Vanguard to stop accepting purchases in Leveraged or Inverse mutual funds]
Replies: 145
Views: 8336

Re: More Nanny State From Vanguard

Lifecycle investing is a legitimate strategy that uses leverage to smooth out risk. Leveraged ETFs are a cheaper and safer way of accessing leverage than margin. No. Leveraged ETFs are for tactical used. Becase leverage ETFs rebalance daily, their returns are path dependent. Correlations decay to a...
by alex_686
Tue Jan 08, 2019 11:55 am
Forum: Investing - Help with Personal Investments
Topic: Index fund with variable annual expense?
Replies: 3
Views: 186

Re: Index fund with variable annual expense?

All mutual funds have expenses, most are variable. Portfolio management expense must be negotiated yearly. Vanguard is going to be no different than Fidelity in this aspect.
by alex_686
Mon Jan 07, 2019 12:48 pm
Forum: Investing - Theory, News & General
Topic: Are “REIT bonds” distinct from REITS?
Replies: 6
Views: 442

Re: Are “REIT bonds” distinct from REITS?

I would suggest to contact the OP over on Reddit. First, we can only speculate on what they mean by REIT bonds. Second, and more importantly, what is their logic and reasoning for coming up with this mixture. It does not fit into any standard model that I know of.