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by Lbill
Tue May 08, 2012 7:08 pm
Forum: Investing - Theory, News & General
Topic: bond markets defy experts
Replies: 96
Views: 10102

Re: bond markets defy experts

I rationalized my dive into Treasuries by purchasing STRIPS that will mature (as best I could figure) roundabout when I plan to start spending the money. The worst that can happen if rates go up, I reasoned, is that I missed the opportunity to purchase Treasuries with a higher yield down the road. I'll get my money back plus the interest minus whatever the dollar is actually worth when this thing matures. Somehow that seemed "safer" to me than buying a treasury bond fund or ETF, but it's probably just an illusion.
by Lbill
Tue May 08, 2012 4:57 pm
Forum: Investing - Theory, News & General
Topic: Buffett: "I would totally avoid buying [bonds]."
Replies: 40
Views: 6581

Re: Buffett: "I would totally avoid buying [bonds]."

Nice post gw. Well reasoned and well balanced (between equities and either cash or bonds). :D
by Lbill
Tue May 08, 2012 4:53 pm
Forum: Investing - Theory, News & General
Topic: bond markets defy experts
Replies: 96
Views: 10102

Re: bond markets defy experts

As I pointed out in this thread only 2% of the experts at the 2012 Bespoke Roundtable were bullish on bonds, while 81% were bearish. So, I promptly went out and bought me a buncha treasury bonds. Nothing like an expert consensus to inform you what to invest in (whatever they were bearish on). Of course, 2012 isn't over yet. Maybe they'll be right yet....
by Lbill
Tue May 08, 2012 4:00 pm
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 19887

Re: The Rise and Fall of Shiller PE/10

This is simple and widely understood, but also useless. Nobody knows for certain which outcome will happen. What is certain is that if the Fed had not intervened massively then PE10 < 10 would have been seen in 2009.
And boy, I was there with open arms waiting for it. On the exact day in March, 2009 when the market hit bottom I started back in but I was holding off firing the big guns until I saw the whites of their eyes. But that lovely single digit benchmark got snatched away. I'm still there with open arms if it gets back down there, but it would be one hellava drop from 23. :shock:
by Lbill
Tue May 08, 2012 3:55 pm
Forum: Investing - Theory, News & General
Topic: Buffett: "I would totally avoid buying [bonds]."
Replies: 40
Views: 6581

Re: Buffett: "I would totally avoid buying [bonds]."

Buying bonds has never been a BRK thing. Buffett has always operated BRK like an endowment with an infinite time horizon. If that's your model, you are an equity investor or an investor in alternative asset classes like real estate, timber, private equity, hedge funds, anything but bonds. Unfortunately, the rest of us can't operate like an endowment because our time horizon is finite and short. We have to own bonds, and putting it all into cash or short term bonds just doesn't cut it even these days. Experts have been screaming from the rooftops for at least 2 years that bonds were a suicidal investment and all you have done is make money by being in bonds, the longer duration the better. When the 10-year Japanese bond first fell below 2%, ...
by Lbill
Tue May 08, 2012 1:31 pm
Forum: Investing - Theory, News & General
Topic: Why not just make bond allocation 100% inflation-indexed?
Replies: 12
Views: 2768

Re: Why not just make bond allocation 100% inflation-indexed

Swensen recommends a 50/50 split between nominal treasuries and TIPS. You might want to read what he has to say.
by Lbill
Tue May 08, 2012 11:39 am
Forum: Investing - Theory, News & General
Topic: Buffett: "I would totally avoid buying [bonds]."
Replies: 40
Views: 6581

Re: Buffett: "I would totally avoid buying [bonds]."

Buffett is a nice guy and an investing legend. But, if you live long enough, just about everybody finally hits stall speed. Jim Cramer on BRK: I didn't want to write this piece. I think the world of Warren Buffett, and he has made money for hundreds of thousands of people, including many who are now millionaires. It's been a fabulous run. But right now the company has neither growth nor dividend and is, alas, worth more dead than alive. That's right, the breakup value of Berkshire Hathaway well exceeds its current value. Without a breakup, which is clearly not in the cards right now, there's not much hope for appreciation. The stock has underperformed the market drastically, and judging by the talks this weekend, it will continue to do so, ...
by Lbill
Tue May 08, 2012 11:19 am
Forum: Forum Issues and Administration
Topic: bogleheads.org attacked - some accounts hijacked
Replies: 107
Views: 21206

Re: bogleheads.org under attack - may cause login problems

Is HACKER an acceptable password? :happy
by Lbill
Tue May 08, 2012 11:13 am
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 15979

Re: Gold is ready to fall

Gold down about $37/oz. today to $1,600. A gift, so I picked up another 100 shares of IAU. If it goes down tomorrow, I'll pick up another 100. As long as there are central banks creating monopoly money out of thin air, gold is a winning investment, IMO. Even if it isn't, the competition isn't exactly burning up the track.
by Lbill
Tue May 08, 2012 9:37 am
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 19887

Re: The Rise and Fall of Shiller PE/10

One of the primary problems with P/E10 timing as generally put forth is you cannot price an investment in isolation. The price of competing investments must be taken into account. Jumping from stocks to bonds at P/E10 = x when bonds are returning 2% real is different from when bonds are returning -2% real, for example. This is the general problem of doing statistical analysis without understanding proper context. How do you actually know this - have you done the research? Studies such as Pfau's have investigated changing allocations between stocks and cash, not bonds. The results of these studies should be carefully evaluated both for validity and for applicability to one's situation, rather than dismissing them with a wave of the hand, IMO.
by Lbill
Mon May 07, 2012 10:31 pm
Forum: Investing - Theory, News & General
Topic: If rich people don't buy funds or ETFs why should you?
Replies: 79
Views: 9602

Re: If rich people don't buy funds or ETFs why should you?

I'm a very rich man and I'm offered an opportunity to invest in something that might pay off, but it seems that every so often it might unpredictably lose 50% or more and there have been periods as long as 20 years when this investment lost money or didn't make any at all. I think I'd look for a better offer. Since I'm actually not a rich man, I guess this is the best deal I can get. :oops:
by Lbill
Mon May 07, 2012 9:49 pm
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 15979

Re: Gold is ready to fall

If you're investing in dollar-denominated investments, then you're investing in the dollar. You better hope it's worth something in 100 years; otherwise, your $10 million dollars in equity won't buy you a Starbucks. I'll take an ounce of gold and let you take $1650 in U.S. stocks and meet you in 100 years at Starbucks to compare results. Just don't buy Starbucks stock or you won't be diversified.
by Lbill
Mon May 07, 2012 9:38 pm
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 19887

Re: The Rise and Fall of Shiller PE/10

The apple sellers were emblematic of the Depression and got so much press coverage precisely because they were often white-collar workers who'd had good jobs. I saw some old news items that indicated that apple sellers made around $22/month, equivalent to $330/month today. I don't think they were buying much in the way of stocks.
But the shoe shine boys were apparently buying stocks right up until the yellow brick road went off the cliff. :shock:
by Lbill
Mon May 07, 2012 12:13 pm
Forum: Investing - Theory, News & General
Topic: If rich people don't buy funds or ETFs why should you?
Replies: 79
Views: 9602

Re: If rich people don't buy funds or ETFs why should you?

A related question: How many people ever actually became wealthy owning stocks, and were able to hold onto it (besides Warren Buffett)? Actually, I'd be willing to bet that a lot more became wealthy by owning and managing real assets such as land, real estate, or a business. Actually, Warren Buffett is regarded by many as having made his money from taking a major stake in businesses and participating in their management - he wasn't a passive buy-and-hold guy either. If you got rich not being a retail customer for Wall Street, what are the chances you're going to do that when you've accumulated your wealth? Why settle for the crumbs when you can have the cake?
by Lbill
Mon May 07, 2012 11:20 am
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 19887

Re: Withdrawal Rates, Savings Rates, and Valuation-Based Ass

Here is a recent article in the Journal of Financial Planning pertaining to allocation according to PE 10 http://www.fpanet.org/journal/WithdrawalRatesSavingsRatesandValuation/ This article provides favorable evidence based on the historical record for clients to obtain improved retirement planning outcomes (lower savings rates, higher withdrawal rates) using dynamic valuation-based asset allocation strategies. This is illustrated with a specific example comparing a 50/50 fixed allocation strategy to the Graham and Dodd valuation-based strategy with a stock allocation of 25 percent, 50 percent, or 75 percent, determined by the value of PE10 with respect to its rolling median value. Thanks for the link to the article by Wade Pfau. Interesti...
by Lbill
Mon May 07, 2012 10:56 am
Forum: Investing - Theory, News & General
Topic: If rich people don't buy funds or ETFs why should you?
Replies: 79
Views: 9602

If rich people don't buy funds or ETFs why should you?

Most interesting, however, are the differences between the affluent, rich and superrich. More than two thirds of respondents worth between $500,000 and $1 million invest in exchange-traded funds. And more than half of them invest in mutual funds.

Yet only 1% of respondents worth $5 million to $10 million invest in mutual funds. And only 17% invest in ETFs. The trend continues higher up the wealth ladder — among those worth $20 million or more, NONE invest in mutual funds and less than one percent invest in ETFs.
How The Rich Invest
by Lbill
Mon May 07, 2012 10:20 am
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 15979

Re: Gold is ready to fall

Here's an interesting question posed by Richard Russell: If you had a chance to leave something for your descendants to be opened 100 years from now, would you leave them a wad of dollar bills or some gold coins? I might even include some shares of GM as another choice. There's a pretty good chance that the gold would represent value and purchasing power in 100 years, because it has for the last 1000 years. Dollars? Won't be worth the paper they're printed on if dollar currency even still exists. GM stock - if GM even exists 100 years from now, I'll buy you a Starbucks. Oh, I forgot, Starbucks won't be around either (come to think of it, neither will I).
by Lbill
Mon May 07, 2012 10:04 am
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 19887

Re: The Rise and Fall of Shiller PE/10

I realized I hadn't accounted for dividends in calculating the returns of the S&P over these periods of declining PE/10. If I did it right, here are the total returns (including dividends). Returns are real (inflation adjusted) over the entire period, not annual returns: 6/1901 - 12/1920: +2.4% 9/1929 - 6/1932: -72.1% 2/1937 - 4/1942: -43.7% 1/1966 - 7/1982: -22.9% 12/1999 - 3/2009: -47.0% Dividends help, but it's still pretty clear that these downcycles in PE/10 are associated with some pretty significant real equity losses, or at best no real gains. It makes a difference when these periods occur in an investor's lifecycle. Sequence of returns has a different impact for early accumulators vs. late accumulators and retirees. For accumul...
by Lbill
Sun May 06, 2012 7:30 pm
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 19887

Re: The Rise and Fall of Shiller PE/10

I was interested in how money invested in the S&P500 fared over these periods from the peak of PE/10 until the single digit low was finally hit. These are real (inflation adjusted) returns. Suffice it to say you would have been a lot better off with the money under the mattress: 6/1901 - 12/1920: -68.9% (real) 9/1929 - 6/1932: -80.65% (real) 2/1937 - 4/1942: -62.1% (real) 1/1966 - 7/1982: -61.7% (real) 12/1999 - 3/2009: -58.1% (real) 12/1999 - 5/2012: -29.7% (real) Unfortunately, it is the buy-and-hold, long term equity investors who are hurt the most by these multi-decade trips from the peak to the valley. We're still in the midst of the current one, PE/10 is getting closer to nosebleed territory again, and investors in LC equities are...
by Lbill
Sun May 06, 2012 12:46 pm
Forum: Investing - Theory, News & General
Topic: The Rise and Fall of Shiller PE/10
Replies: 46
Views: 19887

The Rise and Fall of Shiller PE/10

Looking at the chart of the monthly values for the Shiller PE/10 (CAPE) metric, one can see that every previous peak in PE/10 was eventually followed by a low in the single digits many years later, before the index started back up on a sustainable path. Here they are: 6/1901....25.24 12/1920....4.78 18 yrs, 6 mos. 9/1929....32.56 6/1932.....5.57 2 yrs., 9 mos. 2/1937....22.24 4/1942....8.54 4 yrs, 2 mos. 1/1966....24.06 7/1982.....6.64 16 yrs, 6 mos And the Mother of All Peaks 12/1999....44.20 Lowest value so far: 3/2009.....13.32 9 yrs, 6 mos Current value: 5/4/2012....22.83 Is this time different, or will we eventually see another single-digit low in PE/10 before it heads back up over a multi-year period again???? PE/10 data obtained here...
by Lbill
Sat May 05, 2012 4:29 pm
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 5409

Re: Commodities: Positive Returns = Inconclusive

It's true that nobody can guarantee that an allocation to commodities or gold will deliver when it's supposed to. In addition to not investing in commodities, one could decide to not invest dead money into auto or home insurance and invest that money in stocks instead. After all, how often does your house burn down? And sometimes insurance companies don't pay claims when they're supposed to anyway. People who had hurricane insurance in New Orleans didn't get paid because the insurance companies said their house were demolished by flooding and not the hurricane, and they didn't have flood insurance. You just never know. But let's say that I invested $100,000 in 1972 and put 5% ($5,000) in gold, and split the rest between the S&P and Tota...
by Lbill
Sat May 05, 2012 3:27 pm
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 5409

Re: Commodities: Positive Returns = Inconclusive

When there was high inflation in the 1970s gold was a much better portfolio hedge than commodities. For example, the real compound annual return of gold from 1972-1980 was 22.5%, and for commodities it was 8.8%. An investment divided between the S&P500 and commodities or gold required twice the allocation to commodities as to gold in order to neutralize stock losses and produce a 0% real return over that period (7% vs. 3%). Likewise, during the period of 2001-2011 an investment divided between the S&P500 and gold or commodities required twice the allocation to commodities as to gold to neutralize stock returns and produce a 0% real return. I find this interesting because it suggests that, when you needed real asset diversification t...
by Lbill
Sat May 05, 2012 2:07 pm
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 5409

Re: Commodities: Positive Returns = Inconclusive

LBill, the volatility of CCF and gold are way too high to be good inflation hedge in short term like quarterly or annually. As I showed the correlation for CCF and inflation rises over time, as one would expect as commodities are component of inflation, an input in production. Gold is not, There really is no logical reason for gold to hedge inflation. Just a belief. There is no very long period where CCF went way down and inflation went way up like there is with gold. Gold lost about 70% of its NOMINAL value while inflation was rising at about 4% a year for 24 years. Which is why IMO it is just wrong to consider it a good inflation hedge. Though I agree it has provided hedges against other risks, but not inflation. Yeh, I know it seems mor...
by Lbill
Sat May 05, 2012 10:24 am
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 5409

Re: Commodities: Positive Returns = Inconclusive

There seem to be three time periods in which gold and commodities acted differently relative to stocks and bonds: 1972-1980 (inflationary), 1981-2000 (deflationary), and 2001-2011 (mixed). The first of these was one of rising inflation and interest rates. Stocks and bonds fared poorly, while gold and commodities had positive returns. The second period was one of declining inflation and interest rates. Stocks and bonds both did well, commodities also had positive returns, while gold declined. In the third period, stocks have been flat, bonds have had positive returns, and both gold and commodities have had positive returns. When we examine the correlation between commodities and gold with the CPI-U during these periods, we find some interest...
by Lbill
Fri May 04, 2012 6:24 pm
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 5409

Re: Commodities: Positive Returns = Inconclusive

Gold fell about 70% in value while inflation was running at 4% a year for about 25 years, so IMO that rules out gold as inflation hedge. We don't see that with commodities. From 1981-2005 (25 years) gold did have a compound annual real return of -4%, so it did lag CPI on average by 4% per year. Interest rates have fallen since 1981, from about 15% on the 10-year to about 2% currently. Gold will not do well during a period of falling real interest rates, while stocks, bonds, and commodities will. An important question for investors is where real interest rates are headed from here. Are we likely to see another quarter century of falling rates? If so, then stocks, bonds, and commodities will do well. If not, then maybe not so much. A problem...
by Lbill
Fri May 04, 2012 11:32 am
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 5409

Re: Commodities: Positive Returns = Inconclusive

Even though gold (and commodities) are not good short-term CPI inflation hedges, the price of gold is correlated 0.48 with CPI-U over the time period 1972-2011 (Simba), while commodity futures (DJ-AIG) is correlated 0.22, base on annual returns. So there's no basis for claiming that gold is not as good an inflation hedge as CCFs, IMO. This long term correlation of annual returns with CPI is confirmed in a paper by McCown & Zimmerman In addition, the authors found there was statistically significant evidence at the .05% level of co-integration between the price of gold and consumer prices; i.e., that there is evidence of a common stochastic trend. Abstract: Gold shows the characteristics of a zero-beta asset. It has approximately the sam...
by Lbill
Fri May 04, 2012 10:54 am
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 5409

Re: Commodities: Positive Returns = Inconclusive

Lbill Not true at all. While I have no problem with people owning an allocation to gold, gold DOES NOT HEDGE inflation it is not a factor in inputs to inflation. Thus IMO broader based CCF is a better alternative, but to each his own. Best wishes Larry One tactic of skilled debaters is to shift the topic: so now we're on the subject of inflation hedging instead of the original topic. Couple points: > If you want an inflation hedge, buy TIPs. Neither gold nor commodities are as effective. > Not everyone regards "inflation" as increases in the consumer price index. Many people regard inflation as increases in the money supply, and gold is an effective hedge for that. >There's a big difference between the spot price of commodities a...
by Lbill
Fri May 04, 2012 9:54 am
Forum: Personal Finance (Not Investing)
Topic: Penfed Credit Card breached (again)!
Replies: 3
Views: 1685

Re: Penfed Credit Card breached (again)!

Banks replace "compromised" cards everyday. It doesn't necessarily mean your information was even stolen. Basically, a merchant or card processor will notify Visa and MasterCard when they think their database of card numbers was breached. Visa and MasterCard then pass along those numbers to the banks that issued them. The bank that issued your card will then send you a new card with a new number just in case. We recently replaced about 10% of our customers' debit cards because of the breach at Global Payments earlier this year. However, we never had a single one of those customers report any fraud attempts as a result of the breach. From the timing, I would say your card was involved in the Global Payments breach... http://krebso...
by Lbill
Fri May 04, 2012 9:48 am
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 15979

Re: Gold is ready to fall

Fat lady ain't singing yet.
I've noticed they aren't that fat these days. Looking pretty good - how about the one on "Dancing with the Stars"? Za-zoom!
by Lbill
Fri May 04, 2012 9:45 am
Forum: Personal Consumer Issues
Topic: IPad 3 top-rated and can fry eggs too
Replies: 3
Views: 1282

IPad 3 top-rated and can fry eggs too

Consumer Reports labs rates IPad 3 tops, has the best screen they've ever seen, and heats up to 120-degrees for serious gamers. Entertainment and egg fryer all in one - very useful.
http://money.msn.com/money-video?vid=d1 ... Pools_OPRD
by Lbill
Fri May 04, 2012 9:17 am
Forum: Personal Finance (Not Investing)
Topic: Penfed Credit Card breached (again)!
Replies: 3
Views: 1685

Penfed Credit Card breached (again)!

I just received an email from PenFed alerting me that my rewards credit card has once again been breached. This happened just over a year ago and my card was replaced. I guess this is becoming an annual event. Dear Member: Visa Fraud Control has notified us that your Pentagon Federal Credit Union (PenFed) credit card may have been compromised in a security breach at a 3rd party company. We ask that you review the PenFed Online account to review the credit card statements for any unauthorized transactions. Information regarding your replacement account is also available at PenFed Online at http://www.PenFed.org. Although we have taken immediate and prompt action, please remain vigilant over the next months. Promptly report any incidents of s...
by Lbill
Fri May 04, 2012 9:07 am
Forum: Investing - Theory, News & General
Topic: Commodities: Positive Returns = Inconclusive
Replies: 46
Views: 5409

Re: Commodities: Positive Returns = Inconclusive

Unfortunately for CCFs, everything Larry says about commodities applies even better to owning gold (portfolio diversification benefit). And yet we are told that investing in gold is only for people who wear tin hats.
by Lbill
Fri May 04, 2012 9:00 am
Forum: Investing - Theory, News & General
Topic: Last of series on diversification, sector/country funds
Replies: 21
Views: 1900

Re: Last of series on diversification, sector/country funds

Larry-

In your article you say:
Investors are rewarded with higher expected returns (risk premiums) for taking systematic risks, risks which can't be diversified away. With stocks, there are three types of risk:

Beta (exposure to the overall stock market)
Size (exposure to small-cap stocks)
Value (exposure to stocks with high book-to-market or low P/E ratios)
And yet, in their 1992 paper "The Cross-Section of Expected Stock Returns", Fama & French state that when size is accounted for, Beta (market risk exposure) is unrelated to returns. What is the explanation of this apparent contradiction?
by Lbill
Thu May 03, 2012 9:05 pm
Forum: Investing - Theory, News & General
Topic: Gold is ready to fall
Replies: 157
Views: 15979

Re: Gold is ready to fall

I firmly believe that gold will go up in price, unless it goes down. I would strongly advise to buy in the case of the former and sell in the case of the latter.
by Lbill
Wed May 02, 2012 6:48 pm
Forum: Investing - Theory, News & General
Topic: I just found out I'm invested in Farmland!
Replies: 2
Views: 1024

I just found out I'm invested in Farmland!

Investments in farmland provide attractive total returns. Between 1970 and 2009, agricultural land values, as measured by the USDA’s ERS database, have outperformed both domestic stocks and bonds on an annualized basis, returning an annual average of 10.25% vs. 6.24% for the S&P 500 and 7.3% for 10-year Treasuries.
TIAA-CREF is one of the largest institutional owners of farmland in the world, with approximately $2.5 billion of investments across the United States, Australia, South America and Europe as of December 31, 2011. We have been investing in farmland and agriculture-related assets since 2007.
http://www.tiaa-cref.org/public/advice- ... m_063.html
by Lbill
Wed May 02, 2012 6:07 pm
Forum: Investing - Theory, News & General
Topic: What safe return would you take to forego stocks?
Replies: 29
Views: 2655

Re: What safe return would you take to forego stocks?

Leif Eriksen wrote:LBill - Nominal or real? You don't say, so I don't know how to respond. Looks like a blown poll.
Nominal
by Lbill
Wed May 02, 2012 3:57 pm
Forum: Investing - Theory, News & General
Topic: What safe return would you take to forego stocks?
Replies: 29
Views: 2655

Re: What safe return would you take to forego stocks?

Looks like most respondents so far wouldn't be willing to give up their high-risk stocks for less than a minimum 5%-6%% low-risk return. Given that the expected return from stocks going forward from many experts is in the same neighborhood, I guess that proves the "lottery effect" is alive and well.
by Lbill
Wed May 02, 2012 9:19 am
Forum: Investing - Theory, News & General
Topic: What safe return would you take to forego stocks?
Replies: 29
Views: 2655

What safe return would you take to forego stocks?

How much would you have to earn from low-risk investments (nominal), such as CDs, these days in order to invest in them rather than stocks?
by Lbill
Tue May 01, 2012 8:05 pm
Forum: Investing - Theory, News & General
Topic: Alternatives to Long Term Care Insurance
Replies: 21
Views: 3306

Re: Alternatives to Long Term Care Insurance

I suspect that most who at end of life choose when to die are not classified suicides. I've limited data, but this is true of the handful of specifics I'm aware of. It has to be way more than 12 in 100,000. Trusted medical professionals and family members help out. Re LTCI - seems to me like dental pre-payment plan "insurance" LTCI isn't a true insurance product. With limits of how much and for how long it doesn't protect against the most catastrophic events . I'd reserve insurance for circumstances where the pooled risk protects perticipating parties against uncommon but possible calamities - like a house fire, a debilitating accident or big time medical expenses. In a recent thread someone posted the suggestion of a LTC insuran...
by Lbill
Tue May 01, 2012 6:34 pm
Forum: Investing - Theory, News & General
Topic: Alternatives to Long Term Care Insurance
Replies: 21
Views: 3306

Re: Alternatives to Long Term Care Insurance

LTCI isn't all you need - you need to be sure there's someone who can activate it in the event you need LTC because your marbles fall out of your head. How ironic if you planned and paid and never got the benefits because there was no-one around to call the insurance company, eh? I'm sure they'd be broken-hearted.
by Lbill
Tue May 01, 2012 5:12 pm
Forum: Investing - Theory, News & General
Topic: Burton Malkiel on CNBC
Replies: 12
Views: 2407

Re: Burton Malkiel on CNBC

You gotta take a ticket to get in line with all the experts who hate bonds. That makes them a screaming buy, IMO.
by Lbill
Tue May 01, 2012 5:08 pm
Forum: Investing - Theory, News & General
Topic: Greenspan "Stocks are Cheap"
Replies: 25
Views: 2829

Re: Greenspan "Stocks are Cheap"

We followed easy Al off the cliff once, and once is enough.
by Lbill
Tue May 01, 2012 10:00 am
Forum: Investing - Theory, News & General
Topic: Alternatives to Long Term Care Insurance
Replies: 21
Views: 3306

Alternatives to Long Term Care Insurance

The costs of elderly healthcare (including assisted living and nursing home care) may be the greatest single challenge faced by retirees affecting their financial planning. One approach is to purchase long term care insurance, but many don't feel comfortable with this option because of high premiums, especially if LTCI isn't purchased at an age well in advance of when it might be needed. This creates other worries, such as concern about whether the insurance company will be there to deliver 20-25 years in the future and the uncertainty of rapidly rising premium rates, which has recently been happening. The vast majority of retirees have either passively or actively decided to "self insure" or hope that they won't have to incur hug...
by Lbill
Mon Apr 30, 2012 10:05 am
Forum: Investing - Theory, News & General
Topic: Retirees: How to add $340,000 to retirement savings
Replies: 77
Views: 12318

Re: Retirees: How to add $340,000 to retirement savings

I think it's a good idea to own a home for retirement. After all, it's a well-known fact that real estate never loses value. :oops:
by Lbill
Sun Apr 29, 2012 5:09 pm
Forum: Investing - Theory, News & General
Topic: Retirees: How to add $340,000 to retirement savings
Replies: 77
Views: 12318

Re: Retirees: How to add $340,000 to retirement savings

Since retirees aren't making a dime on their savings these days, Scott has been promoting ideas for retirees to effectively "add" to their portfolio net worth by looking for ways to find money, such as trading cars The Jumbo CD in your garage, reverse mortgages Reverse mortgages - their time has come, and now liberating the dead money tied up in a home and renting instead.
by Lbill
Sat Apr 28, 2012 8:37 pm
Forum: Investing - Theory, News & General
Topic: Retirees: How to add $340,000 to retirement savings
Replies: 77
Views: 12318

Retirees: How to add $340,000 to retirement savings

Scott Burns reports a simple way for some retirees to add the equivalent of $340,000 to their retirement savings - become a renter: In my new book with economist Laurence J. Kotlikoff (“The Clash of Generations,” MIT Press) we show that a retiring middle income couple can have lifetime discretionary spending— spending after income taxes, Medicare premiums and shelter— of about $15,000 a year if they stay in their home. They can increase it to $28,600 by selling their home and becoming renters. And they can boost it to $38,800 by becoming fulltime RVers. Just the difference from owning to renting, $13,600 a year is the same as adding about $340,000 to their savings. http://assetbuilder.com/blogs/scott_burns/archive/2012/04/27/good-personal-d...
by Lbill
Sat Apr 28, 2012 11:49 am
Forum: Investing - Theory, News & General
Topic: Article that highest risk is not highest reward
Replies: 45
Views: 3939

Re: Article that highest risk is not highest reward

Not exactly a new finding that risk (defined as market risk, or beta) is not related to returns. Fama & French found this in 1992: Our tests do not support the central production of the [CAPM], that average stock returns are positively related to beta. http://www.bengrahaminvesting.ca/Research/Papers/French/The_Cross-Section_of_Expected_Stock_Returns.pdf This was discussed by Bill Bernstein in 2002: Ten years ago this month, Eugene Fama and Kenneth French fired the shot heard ’round the world. Its echoes still plainly reverberate today in boardrooms and trading floors. {snip] The corollary of their work was that once one considered the size and value factor "loadings" of a diversified U.S. all-stock portfolio, the market loadi...
by Lbill
Sat Apr 28, 2012 10:27 am
Forum: Investing - Theory, News & General
Topic: Article that highest risk is not highest reward
Replies: 45
Views: 3939

Re: Article that highest risk is not highest reward

larryswedroe wrote:FWIW
Spoke with a leading researcher on this issue other day, though in limited light. Was related to small value. Once you used multiple screens for value, not just BtM, screening for low beta added no value at all
Larry
What about the reverse?
by Lbill
Fri Apr 27, 2012 10:04 am
Forum: Personal Consumer Issues
Topic: Top five regrets of the dying
Replies: 83
Views: 12158

Re: Top five regrets of the dying

If you had the choice between dying with regret, or having the regret squeezed out of you from suffering, which would you choose?
by Lbill
Fri Apr 27, 2012 9:55 am
Forum: Investing - Theory, News & General
Topic: [Poll] My philosophy on SPIAs
Replies: 65
Views: 5337

Re: [Poll] My philosophy on SPIAs

One concern not listed in the poll, and frankly the primary one that is causing me to delay annuitizing, is the naming of a joint annuitant. I'm presently single but may not remain so, and I'd want something to go to my spouse if I die. My understanding is that you're locked into the annuity option and joint annuitant that are chosen at the outset. If I marry later, there's no way to add this person as a joint annuitant. If I could figure out how to handle this, I'd probably go ahead and annuitize a portion of my portfolio.