Search found 3618 matches

by alex_686
Fri Aug 10, 2018 2:02 pm
Forum: Investing - Theory, News & General
Topic: Why does TBM have such high turnover?
Replies: 13
Views: 1479

Re: Why does TBM have such high turnover?

Are there any bond funds that have low turnover - in other words tend to keep bonds to maturity? Yeah - but they can't be index funds. There is a good history of "semi-active" bond funds beating index funds. See my above post about the issues with index funds. "Semi-active" buys bonds that are simi...
by alex_686
Fri Aug 10, 2018 1:58 pm
Forum: Investing - Theory, News & General
Topic: Why does TBM have such high turnover?
Replies: 13
Views: 1479

Re: Why does TBM have such high turnover?

This high turnover seems to be true of all bond index funds. So, there is a problem in constructing bond indexes. A good investable index should be liquid. Lots of high quality pricing data, ability for fund managers to buy or sell to reconstruct their portfolio. For stocks this is no problem. Each...
by alex_686
Fri Aug 10, 2018 11:30 am
Forum: Investing - Theory, News & General
Topic: Arbitrage on collecting dividend
Replies: 29
Views: 1627

Re: Arbitrage on collecting dividend

Why is record date just 1 day after ex-div date ? Not sure why. My mind is pretty much wired for T+3 because, like I alluded to before, I was stuck researching many odd-ball edge cases. I have not had to do this since we have moved to T+2. I was trying to execute this technique https://sixfigureinv...
by alex_686
Thu Aug 09, 2018 5:02 pm
Forum: Investing - Theory, News & General
Topic: Illiquidiity scenarios for Mutual Funds/ETFs
Replies: 21
Views: 1152

Re: Illquidiity scenarios for Mutual Funds/ETFs

Fund sponsors have certainly been willing to let closed end funds trade at discounts to NAV -- could ETF sponsors decide to do the same ? Many of the counter-arguments mentioned here about reputational risk to the sponsors are quite convincing, so I'm probably just being excessively nervous. To ext...
by alex_686
Thu Aug 09, 2018 4:15 pm
Forum: Investing - Theory, News & General
Topic: Arbitrage on collecting dividend
Replies: 29
Views: 1627

Re: Arbitrage on collecting dividend

Has anyone has practical experience of happening otherwise ? Yeah, I do. Not to blow my own horn, but I have worked broker support (answering fiddly detailed technical questions that brokers did not know), Custody & Transfer, and the options desk. So I spent a fair amount of time cleaning up issues...
by alex_686
Thu Aug 09, 2018 2:44 pm
Forum: Investing - Theory, News & General
Topic: Illiquidiity scenarios for Mutual Funds/ETFs
Replies: 21
Views: 1152

Re: Illiquidiity scenarios for Mutual Funds/ETFs

My thought on this is that since MFs have a regulatory requirement to allow redemptions daily, they are more likely to aggressively take steps to maintain liquidity or at the very least to ensure some money gets returned to shareholders in a liquidiation (ike the Third Avenue Value fund I mentioned...
by alex_686
Thu Aug 09, 2018 2:25 pm
Forum: Investing - Theory, News & General
Topic: Arbitrage on collecting dividend
Replies: 29
Views: 1627

Re: Arbitrage on collecting dividend

Fair enough. Remove saturday from above, so could exercising on 8/10 , would give them the stock on Monday 8/13 ? (Even though I had the stock on ex dividend date ) Yep. Remember, everything is driven by record date. Ex-dividend date is a artificial construct based on local factors. It is not a law...
by alex_686
Thu Aug 09, 2018 2:04 pm
Forum: Investing - Theory, News & General
Topic: Arbitrage on collecting dividend
Replies: 29
Views: 1627

Re: Arbitrage on collecting dividend

Now to a more complex scenario with weekends in between. Settlement dates are based on days the market is open, not on calendar days. So you don't count Saturday, Sunday, or any other day the market is closed - like Good Friday. So don't count those - just skip to the next working day. Another wren...
by alex_686
Thu Aug 09, 2018 1:37 pm
Forum: Investing - Theory, News & General
Topic: Illiquidiity scenarios for Mutual Funds/ETFs
Replies: 21
Views: 1152

Re: Illiquidiity scenarios for Mutual Funds/ETFs

I should point out that ETFs can sell their underlying securities like a mutual fund, and a mutual fund can do the creation unit trick like ETFs. It is not their normal business processes but if things get sticky it is a option. Both happened during the 2008 liquidity crisis. I think a mutual fund h...
by alex_686
Thu Aug 09, 2018 12:56 pm
Forum: Investing - Theory, News & General
Topic: Arbitrage on collecting dividend
Replies: 29
Views: 1627

Re: Arbitrage on collecting dividend

This should be it , but I am not fully understanding it. Let's say the ex-dividend date is Friday 8/10 ( in a new example) and I sold the covered call much prior. So, I own the stock. Let's say the record date is 8/13. As long as I own the stock on 8/10 (option holder does not call the stock by 8/9...
by alex_686
Thu Aug 09, 2018 12:32 pm
Forum: Investing - Theory, News & General
Topic: Arbitrage on collecting dividend
Replies: 29
Views: 1627

Re: Arbitrage on collecting dividend

Another thing you may be missing is that options settle T+1 while stocks settle T+2. Ex-date is calculated by the number of settlement days between trade and record date. Without looking at the numbers here I would guess that the arbitrage trade for the option holder is to call the stock on the day ...
by alex_686
Wed Aug 08, 2018 4:28 pm
Forum: Investing - Theory, News & General
Topic: True Risk-Adjuted Returns
Replies: 17
Views: 1134

Re: True Risk-Adjuted Returns

On the other hand, I am sure quite sure that that the people who run Calpers and similar funds know exactly what they are doing, but that is a pure cynicism trade: "well, the regulators let us assume 7.5% for equities? Are we going to look good by by buying TIPS at 1% real?" Actually, one can make ...
by alex_686
Wed Aug 08, 2018 3:39 pm
Forum: Investing - Theory, News & General
Topic: True Risk-Adjuted Returns
Replies: 17
Views: 1134

Re: True Risk-Adjuted Returns

Just to add and clarify 2 points. The great thing about the Sharpe ratio is that I can take any asset for any time for any time frame and crank out a number that does a decent job of explaining what is happening. It is a great mechanical way to crunch out data. In theory, all assets should have the ...
by alex_686
Wed Aug 08, 2018 3:18 pm
Forum: Personal Finance (Not Investing)
Topic: reserve currency and real household income
Replies: 3
Views: 358

Re: reserve currency and real household income

One could use the World Bank's Purchasing Power Parity. The US currency has been consistently overvalued at 20%. I think this would be your best bet. That being said, I could drive a truck though this argument. PPP adjustments tend to be slow. The impact of loss of the reserve currency status would ...
by alex_686
Wed Aug 08, 2018 1:52 pm
Forum: Investing - Theory, News & General
Topic: Question about share dilution
Replies: 26
Views: 1545

Re: Question about share dilution

No the share price will decrease due to dilution, with the market cap unchanged. I imagine the cap could actually decrease temporarily when it is known or even presumed that a company will be issuing additional shares, but prior to it occurring. This is common with start-ups but with private stock ...
by alex_686
Wed Aug 08, 2018 1:40 pm
Forum: Investing - Theory, News & General
Topic: Question about share dilution
Replies: 26
Views: 1545

Re: Question about share dilution

... Then comes the reverse split which is really bad. Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them? I will second that. I can't think of any real downside to splits, either forwards or backwards. Of course if a c...
by alex_686
Sat Aug 04, 2018 2:36 pm
Forum: Investing - Help with Personal Investments
Topic: Transferring UTMA Account to Beneficiary
Replies: 7
Views: 562

Re: Transferring UTMA Account to Beneficiary

Contact Vanguard. I believe they will then send paper work to you and your grandson - he needs to open a new account under his name. Then the assets will transfer across. Should take a week or two depending on fast the paperwork is processed. Transfer is a non-taxable event.
by alex_686
Wed Jul 25, 2018 10:33 pm
Forum: Investing - Theory, News & General
Topic: If financial markets shut down, temporarily...
Replies: 42
Views: 3023

Re: If financial markets shut down, temporarily...

During WW1 markets were shutdown for, what, five months? During which people still received dividends & interest (and Social Security and pension and rent from tenants and whatever other sources of income they have). I don't think any Social Security were sent out. After all S.S. was only signed in...
by alex_686
Wed Jul 25, 2018 10:31 pm
Forum: Investing - Theory, News & General
Topic: If financial markets shut down, temporarily...
Replies: 42
Views: 3023

Re: If financial markets shut down, temporarily...

During 9/11 check clearing was imperiled because they couldn't fly checks around the country to clear them due to flights being grounded. The Fed bailed out the banks by giving them a 5x increase in margin for a few weeks (I think the Fed may have actually told them it was unlimited if they needed ...
by alex_686
Wed Jul 25, 2018 9:47 pm
Forum: Investing - Theory, News & General
Topic: If financial markets shut down, temporarily...
Replies: 42
Views: 3023

Re: If financial markets shut down, temporarily...

Back in 1914, most folks had paper share certificates (though not always in their own custody of course). How are you going to get a solid "curb" market going when ownership information primarily resides with DTC? Ownership information is with the transfer agent, not with DTC. I am assuming we are ...
by alex_686
Wed Jul 25, 2018 9:42 pm
Forum: Investing - Theory, News & General
Topic: If financial markets shut down, temporarily...
Replies: 42
Views: 3023

Re: If financial markets shut down, temporarily...

So, my thinking has me, in part, thinking of holding a bit more than we do now in local banks. Not a huge amount, certainly as a percentage of our portfolio, but somewhat more. The problem is that local (physical) banks seem to pay low interest rates, so there's a cost to this "insurance policy" of...
by alex_686
Wed Jul 25, 2018 4:35 pm
Forum: Personal Finance (Not Investing)
Topic: owning a home can't be replicated in markets?
Replies: 10
Views: 797

Re: owning a home can't be replicated in markets?

I would question some of your choices. For example, I would not subtract out tax, insurance, and maintenance. Renters do pay for these things - it is just buried in their rent payment. I might revisit your home's value and monthly rental - I think either the home value is too low or the rental price...
by alex_686
Wed Jul 25, 2018 2:47 pm
Forum: Investing - Theory, News & General
Topic: Difference between S&P 500 and. NASDAQ
Replies: 8
Views: 706

Re: Difference between S&P 500 and. NASDAQ

S&P 500 is the 500 larges US companies, regardless of the exchange.

NASDAQ as a historic fluke has lots of technology companies. Technology has done very well recently. Will it continue? Besides, if you want to invest in technology, then invest in a technology sector fund.
by alex_686
Wed Jul 25, 2018 2:19 pm
Forum: Investing - Help with Personal Investments
Topic: Invest in guaranteed return or stock market?
Replies: 73
Views: 3269

Re: Invest in guaranteed return or stock market?

Sorry, you keep talking about mortgages. But mortgages have nothing at all to do with this decision. Nor do car loans. Nor do student loans, payments to 529s, cable tv bills, real estate taxes, etc. What if you had a paid off mortgage? Then what would factor into the decision? Are you trying to say...
by alex_686
Wed Jul 25, 2018 1:34 pm
Forum: Investing - Help with Personal Investments
Topic: Invest in guaranteed return or stock market?
Replies: 73
Views: 3269

Re: Invest in guaranteed return or stock market?

It doesn't imply that at all. Mortgage payments have nothing to do with this investment decision. It does. What you must do is compare apples to apples. There are a number of ways to slice this situation. If you have cash flows from income making your mortgage payment, then to keep the apples to ap...
by alex_686
Wed Jul 25, 2018 12:32 pm
Forum: Investing - Help with Personal Investments
Topic: Invest in guaranteed return or stock market?
Replies: 73
Views: 3269

Re: Invest in guaranteed return or stock market?

If I understand correctly, for the worst 20-year period the S&P 500 has still returned over 6% and for 30 year periods it's 8% per year. Yes, but I would discount those findings heavily. First, it implies that you won't need any cash-flow from these investments for the next 20 years. However this a...
by alex_686
Wed Jul 25, 2018 12:15 pm
Forum: Investing - Help with Personal Investments
Topic: Invest in guaranteed return or stock market?
Replies: 73
Views: 3269

Re: Invest in guaranteed return or stock market?

But for a risk adverse person or somebody who can't take risks - like somebody who is retired and has a sufficient - 9 times out of 10 is not good enough. Thanks! I don't understand this sentence. Seems like a word or two is missing? Under what conditions would 9 times out of 10 not be good enough?...
by alex_686
Wed Jul 25, 2018 11:58 am
Forum: Investing - Help with Personal Investments
Topic: Invest in guaranteed return or stock market?
Replies: 73
Views: 3269

Re: Invest in guaranteed return or stock market?

I can't say. Risk and return are linked. I can say with some confidence that a equities will outperform 4% over the next 10 years. That is the return side. I can't say that a equities are the right choice for you. First, take a step back and fill out a Investment Policy Statement. Specially, what ar...
by alex_686
Wed Jul 25, 2018 8:24 am
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 42
Views: 5069

Re: Is SEC yield of any value?

With the Fed very clear on their intentions for the last two years and at least the next year or so of raising the Fed funds rates, I would expect the capital component to be non-positive for at least that time frame and longer term to be a very small part of short-term bond fund return. The cool t...
by alex_686
Wed Jul 25, 2018 6:33 am
Forum: Investing - Theory, News & General
Topic: Is "tax alpha" a thing?
Replies: 2
Views: 438

Re: Is "tax alpha" a thing?

There is such a thing as "Tax Alpha" but it is not what you are referring to. A (minor) issue with passive investing is that you tend to hold positions for a long time and thus build up unrealized taxable gains which triggers large taxes upon sale - a.k.a. "tax drag". Tax Alpha is meant to minimize ...
by alex_686
Tue Jul 24, 2018 8:44 pm
Forum: Personal Consumer Issues
Topic: What investment/finance book to read next
Replies: 21
Views: 1213

Re: What investment/finance book to read next

CFA curriculum

Good solid well integrated coursework on investment theory. It is congruent with Bogleheads philosophy. It is a bit of a doorstop. You should be able to pick up old copies on e-bay for cheap.
by alex_686
Tue Jul 24, 2018 1:40 pm
Forum: Investing - Theory, News & General
Topic: Peak Oil, Reloaded?
Replies: 45
Views: 3752

Re: Peak Oil, Reloaded?

Let me say no for 2 reasons. The first is that there is a low correlation between the performance of extraction industries and the underlying commodity. Often companies will hedge prices for years. Even over a decade. So you shouldn't bet on the oil producers for the short term - but by short term I...
by alex_686
Tue Jul 24, 2018 12:30 pm
Forum: Investing - Theory, News & General
Topic: Question about share dilution
Replies: 26
Views: 1545

Re: Question about share dilution

... Then comes the reverse split which is really bad. Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them? I will second that. I can't think of any real downside to splits, either forwards or backwards. Of course if a c...
by alex_686
Tue Jul 24, 2018 12:29 pm
Forum: Investing - Theory, News & General
Topic: Question about share dilution
Replies: 26
Views: 1545

Re: Question about share dilution

Say a company is trading at $100 a share. The company has 10 million shares outstanding (giving the company a market cap of $1 billion) and you hold 10,000 shares giving you a 0.1% stake in the company ($1 million). If the company issues another 1 million shares, you would own $1 million of the com...
by alex_686
Mon Jul 23, 2018 11:10 am
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 42
Views: 5069

Re: Is SEC yield of any value?

First, if you are driving a car, would you rather drive by the rear-view mirror that gives you 20/20 vision (distribution yield) or would you rather drive looking out the front window into a fog bank (SEC Yield)? Second, you want to estimate "expenses distributions from a bond fund might cover in th...
by alex_686
Sat Jul 21, 2018 5:33 pm
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 42
Views: 5069

Re: Is SEC yield of any value?

Did you mean a "disconnect" between taxable and economic income or a "discount" and what is it? My original point was a search for a metric giving a reasonable approximation of a what a bond fund will pay out in interest (dividends) in the near term to fund expenses. With a bond fund, it seems unre...
by alex_686
Sat Jul 21, 2018 7:39 am
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 42
Views: 5069

Re: Is SEC yield of any value?

Can you explain this further, how does amortized income from discount bonds or zero coupon bonds get classified as capital gains, unless you mean from bonds being sold, but then as one would expect the negative impacts on bond prices from rises in short-term interest rates would wash out the positi...
by alex_686
Fri Jul 20, 2018 8:30 pm
Forum: Investing - Theory, News & General
Topic: How does the Fed purchase bonds
Replies: 12
Views: 924

Re: How does the Fed purchase bonds

The Treasury Department, which is part of the government, issues bonds . The Fed, which is kind of independent of the government, buys the bonds. They physically buy bonds the same you do. They phone up on of their brokers and buy the bonds. Technically they use a Bloomberg terminal like other insti...
by alex_686
Fri Jul 20, 2018 6:05 pm
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 42
Views: 5069

Re: Is SEC yield of any value?

The difference, as I have said before, comes from the difference between economic and accounting income. Without looking at the fund, I am going to assume the 2% comes from ordinary income. i.e. coupon income. The other .81% is coming from expected capital gains. i.e., Amortized income from discount...
by alex_686
Fri Jul 20, 2018 4:27 pm
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 42
Views: 5069

Re: Is SEC yield of any value?

SEC yield is a high quality number. It is the forward looking economic yield of the fund. i.e., the excepted total return.

Distribution yield is a low quality number. It is a rearward looking number based on accounting income used for tax reporting.
by alex_686
Fri Jul 20, 2018 1:44 pm
Forum: Investing - Theory, News & General
Topic: Index-ish fund that lacks FAANG?
Replies: 42
Views: 4087

Re: Index-ish fund that lacks FAANG?

Does there exist such a beast? A fund that tracks a broad index, but purposefully omits the current high-flyers of the time? No. And why would you want one? There is a discount between theory and objective metrics on one hand, and whatever you are trying to do on the other. So, you really don't wan...
by alex_686
Fri Jul 20, 2018 1:15 pm
Forum: Investing - Theory, News & General
Topic: The other side of stock buybacks
Replies: 24
Views: 2245

Re: The other side of stock buybacks

Don’t we Bogleheads always tell people to sell their shares as soon as they vest? Then why should it be any different for CEOs? Bingo. I guess CEOs aren’t allowed to be Bogleheads. My wife is down a level or two from CEO; is she allowed to sell on vesting? Sheesh! Seems like it could be a good argu...
by alex_686
Fri Jul 20, 2018 12:33 pm
Forum: Investing - Help with Personal Investments
Topic: Should I Dump a Pile of Money on Young Son?
Replies: 157
Views: 13308

Re: Should I Dump a Pile of Money on Young Son?

Another vote to give him the money. However, in my experience giving money and responsibility is a maturing event. Give him control and then they have to think about financial planning, which means thinking about budgeting, goals, risk tolerances, etc. I am assuming he has some basic knowledge, like...
by alex_686
Fri Jul 20, 2018 9:32 am
Forum: Personal Finance (Not Investing)
Topic: Financial transparency
Replies: 19
Views: 941

Re: Financial transparency

Is it even worth letting your significant other know your net worth? Because then they may start thinking your a cheapo and demanding things because you can “afford it” and looking at you differently. It’s my biggest fear in settling down with a woman. Yes, for 2 reasons. The first is they are supp...
by alex_686
Thu Jul 19, 2018 9:03 pm
Forum: Investing - Help with Personal Investments
Topic: Option Puts on SPY [SPDR S&P 500 ETF]
Replies: 8
Views: 598

Re: Option Puts on SPY [SPDR S&P 500 ETF]

Welcome to the forum. We at Bogleheads tend to discourage market timing. The history here is poor. We have stacks and stacks of studies. It requires a combination of luck and skill. I could go on. It is not for amateurs. Trying to short the market has a even worse history. I have seen lots of very b...
by alex_686
Thu Jul 19, 2018 4:48 pm
Forum: Personal Consumer Issues
Topic: Possible Knob & Tube in an older home.
Replies: 29
Views: 2441

Re: Possible Knob & Tube in an older home.

Plus I would imagine if they DID go through the trouble of having the whole house re-wired, they would have some kind of paper work saying as much? Probably not. What would the paperwork say? You might get lucky and get a 1 page work order from a electrician from 50 years ago. But it would say some...
by alex_686
Thu Jul 19, 2018 12:41 pm
Forum: Investing - Help with Personal Investments
Topic: I'm about to inherit a single stock with a worth of just over 7 figures....
Replies: 103
Views: 8845

Re: I'm about to inherit a single stock with a worth of just over 7 figures....

One word: Enron Why do you want to hold a single concentrated position? There are arguments for it, but those arguments center around on why you think that the stock is currently undervalued, that it has a low costs basis that needs some fancy handling, etc. Not for emotional reasons. I am with thos...
by alex_686
Wed Jul 18, 2018 5:55 pm
Forum: Investing - Theory, News & General
Topic: Help me understand TIPS.
Replies: 64
Views: 4466

Re: Help me understand TIPs.

I have a hard time recommending TIPS. Risk and return are linked and this is one of the safest investments out there. The only case where they would beat normal treasuries are in a situation where inflation increased unexpectedly. I'm pretty much just amusing myself here with semantics, but I'm sur...
by alex_686
Wed Jul 18, 2018 10:31 am
Forum: Investing - Help with Personal Investments
Topic: When to invest 100000?
Replies: 36
Views: 2682

Re: When to invest 100000?

Hi there, let's say right now I have 100000 and I want to invest them all into VTI. The bull market has been running for 10 years now and I am 100% sure that a crash (35-50%) is coming. In that situation, should I still dump my money into the stock market knowing that a crisis is not far away? Or s...
by alex_686
Tue Jul 17, 2018 9:20 pm
Forum: Investing - Theory, News & General
Topic: Help me understand TIPS.
Replies: 64
Views: 4466

Re: Help me understand TIPs.

TIPS receive 2 different types of income. The first is the normal interest payment, no different from any other Treasury. The other is a inflation principle adjustment - i.e., the principle is adjusted to reflect inflation. The trick to this one is that you are taxed on this each year like it is OID...