Search found 23 matches

by JBB
Fri Aug 08, 2014 1:58 am
Forum: Personal Investments
Topic: Bank as bond manager and fees
Replies: 3
Views: 841

Bank as bond manager and fees

A bank I use in California is pushing to have them manage an individual bond portfolio for me. I currently principally use the Vanguard funds. They have tried to make a case (it's been covered here many times in the past) that holding individual bonds will be less susceptible to NAV fluctuations when interest rates rise, etc. etc. They want to charge 50 b.p., about 5x the fee structure of Vanguard. But even on a portfolio of $1M or larger, the amount of fees they would garner doesn't seem to be in line with how hard they are working to capture the business. I'm curious as to how else they plan to make money using my bonds. They have stated emphatically that since they are NOT a broker, they cannot get a spread on the buy/sell of a bond. I k...
by JBB
Wed May 22, 2013 11:52 am
Forum: Personal Investments
Topic: Bond Funds vs. Purchasing Individual Bonds
Replies: 4
Views: 757

Bond Funds vs. Purchasing Individual Bonds

I have had a sizable amount of money (seven figures) split between the Vanguard Intermediate-Term Tax-Exempt and the Vanguard Short-Term Tax-Exempt funds for a number of years. They have done well, and I am happy with Vanguard. I am a California resident. I have a portion of my investible assets in bonds for all the standard reasons, including and especially having a stable pool of money to draw upon if I need to when stocks are down. Obviously the thought of interest rates going up and their effect on my bond allocation has come to mind. I have recently been approached by a bank that manages "custom bond allocations" for high net worth investors. They have advocated my switching from the fund approach to individual issuances. The...
by JBB
Sat Sep 26, 2009 5:41 pm
Forum: Personal Consumer Issues
Topic: How to get a prenup?
Replies: 72
Views: 10489

For the people who have been saying "you don't need an expensive attorney to draft one", use Quicken Contracts or otherwise do it yourself, let me say once again: many prenups have been INVALIDATED upon divorce by a family court judge on the grounds that one party was in an unequal bargaining position when it was signed, didn't understand it, the prenup was unfair, etc. This become especially acute when the spouses are in unequal financial or career circumstances when the prenup is signed (and that's when most people want one, anyway). For example, the man is a highly educated CEO and the woman is a cocktail waitress. With different attorneys representing both parties, later on the judge will not let the cocktail waitress say she ...
by JBB
Wed Sep 23, 2009 12:28 am
Forum: Personal Consumer Issues
Topic: How to get a prenup?
Replies: 72
Views: 10489

Here is some sage advice. If you feel you need the prenup, don't skimp on you having a lawyer – and, most importantly – your wife having a lawyer that FULLY negotiates, explains and vets the prenup. The money you spend now will seem like peanuts compared to what happens if she tries to invalidate later on the grounds that you rammed it down her throat, wouldn't ler her consult an attorney, or forced her to just use a cheap attorney to sign off on it as opposed to one who would really represent her, explain it to her, and negotiate for her. Trust me, it is a miserable experience to go through and you do not want that to happen. I realize that's not what you're trying to do, but that will be the way it gets played out in divorce court with a ...
by JBB
Thu Apr 02, 2009 2:21 am
Forum: Personal Consumer Issues
Topic: First Speeding Ticket - Help!
Replies: 55
Views: 12074

Best way: submit a discovery request to the police department asking for the copy of the reverse side of the ticket. They often write notes on the back in case it goes to court. Here in California the Highway Patrol will usually comply, but city agencies will not, usually out of ignorance and arrogance. It is grounds to have the charges dismissed when you show up for trial, even if the police officer does show up. It all depends on whether the judge (which it won't be in California, at least, unless you move to disqualify the magistrate or traffic referee) believes in due process. You are entitled to review all the evidence against you prior to the commencement of your trial.
by JBB
Sat Feb 28, 2009 1:52 am
Forum: Investing - Theory, News & General
Topic: Siegel's Wall St. Journal Column
Replies: 115
Views: 15635

What I get from his article is:

1. Notwithstanding Wikipedia, P/E = sum(all market caps in index) / sum(all earnings in index)
2. IF you believe that a few companies with aberrant earnings are unfairly contributing to the P/E due to small market caps, yet having their full contribution to the denominator, it's appropriate to market weight.

I see a logic in this, but I think it can be more efficiently and perhaps fairly accomplished by using the concept of a trimmed mean in statistics, and dropping the companies with the x% lowest P/Es and x% highest P/Es from the overall index computation (without market weighting). It might be interesting to run this computation with perhaps x = 2.5% or 5% on the S&P 500.
by JBB
Tue Jan 27, 2009 1:38 am
Forum: Personal Finance (Not Investing)
Topic: Asset Protection from Creditors - 401k vs IRA
Replies: 11
Views: 7767

I believe that 401(k)s are protected if they are ERISA plans.

Keep in mind that judges -- at least in California -- keep coming out with new decisions that pierce what had been considered sacred cows of asset protection. For example, IRAs in California used to be considered protected, but then a judge decided that only that portion of the IRA he deemed required for retirement was, and the rest exempt. Limited Partnerships had been considered good asset protection devices, but then a judge in California granted a creditor remedy beyond the usual "charging order".
by JBB
Mon Dec 08, 2008 12:53 am
Forum: Personal Consumer Issues
Topic: Mediterranean or Alaska cruise? Can't decide........
Replies: 37
Views: 12687

This past summer I splurged on a cruise to the Mediterranean and loved it. It left Barcelona, then made three stops in Italy, two of the Greek Isles, Egypt, Israel and Turkey. We are accompanied by an armed caravan in Egypt the entire time. The guide in Israel said the security is definitely there but more subtle, and there has never been an attack on a tourist bus. Of course, you could limit your Mediterranean cruise to just continental Europe and still have a great time. There are probably particularly good deals you can get right now since the industry must be somewhat in the dumps (at least I think so, as they keep sending me better and better offers to book another one). It cost a lot of money, but it was worth it. I'd love to go to Al...
by JBB
Fri Nov 28, 2008 10:32 pm
Forum: Investing - Theory, News & General
Topic: Nightmares for market timers
Replies: 234
Views: 46014

Taxes

I've read the posts on this thread and the 200 day MA thread. I really think taxes need to be taken into account for those of us who have large holdings in taxable accounts. The tax effects will get more pronounced with the upcoming administration, whether in 2010 or sooner. I'd love to see the after-tax analysis.
by JBB
Wed Oct 29, 2008 11:49 pm
Forum: Investing - Theory, News & General
Topic: Haven't killed "stocks for the long term" mentalit
Replies: 23
Views: 4118

I'm not sure I agree with his notion that people from the depression bought stocks. I've met quite a few from my grandparents' generation that never trusted stocks again after that experience and would only hold bank accounts or treasuries.
by JBB
Thu Oct 16, 2008 1:47 am
Forum: Investing - Theory, News & General
Topic: indexing
Replies: 21
Views: 6326

Taxes

They also have an incredible advantage over investors who can't have all their portfolio in a tax-deferred account: no taxes. This is normally one of the largest costs of an actively-managed strategy and will probably be going up if the current election polls are accurate.
by JBB
Sat Oct 11, 2008 1:17 am
Forum: Investing - Theory, News & General
Topic: Lehman Auction and Mark to Market
Replies: 2
Views: 1067

Lehman Auction and Mark to Market

First, let me start off by saying that I have not deviated from my investment plan nor do I feel we are heading for armageddon. I believe the market will recover. However, I am curious about today's Lehman CDS auction and mark to market. I am no expert, but thought the impact of mark to market accounting on this market is that once one entity sells illiquid securities in a fire sale (and Merrill Lynch's fire sale over the summer was far less of a fire sale than the pricing Lehman got), all other firms holding those securities need to re-price them at this new low price, resulting in collateral calls to bring cash up to levels that are compatible with certain ratios, etc., leading to a horrible downward spiral. I didn't see anybody comment t...
by JBB
Wed Sep 17, 2008 1:03 am
Forum: Investing - Theory, News & General
Topic: What if buy and hold is not the way?
Replies: 363
Views: 64277

Something to think about

I think there are two things to think about:

1. Can we actively time the market to pull out to cash when it's clear we're headed for a walloping? Not many would have thought back this spring that oil would now be at $90. The market could go up from here or go down; there are many rational arguments on both sides.

2. Given money is not kept in cash, how should it be invested? That is the debate of active vs. passive management and has received a lot of attention.

Are there any further studies about #1?
by JBB
Wed Apr 30, 2008 10:57 am
Forum: Personal Investments
Topic: Vanguard Asset Management Services vs. Fisher Investments
Replies: 30
Views: 33243

I read the book "The Only Three Questions that Count" as well, and the theory that if you know something others don't, you can out-perform. I agree, but I don't agree that Fisher can systematically know things others don't. I think this amounts to insider information, which is illegal. Positing various theories of why growth stocks should outperform value in a given cycle because of interest rates, etc. is data mining that may or may not prove accurate. I continue to believe that his S&P500 out-performance can be beaten (especially on an after tax basis) by a well-constructed, diversified index portfolio, and that index allocation should be the benchmark he's measured against, not the S&P500.
by JBB
Tue Apr 29, 2008 7:07 pm
Forum: Personal Investments
Topic: Vanguard Asset Management Services vs. Fisher Investments
Replies: 30
Views: 33243

Fisher uses a combination of market timing (he's proud of his call to get into cash in early 2000; when I asked their salesperson what they said to prospective clients [i.e., "come back later"] during that period I didn't really get an answer) and sector rotations to try to outperform. He writes a column in Forbes magazine. They sell to new clients very aggressively. He doesn't believe in adding bonds to a portfolio if you're not quite old (I disagree). His performance numbers, posted here, are good, but even if they were assumed to continue in perpetuity, I doubt they would out-perform an index based strategy on an after-tax basis. If you're investing through a retirement account, it's something to possibly consider. I believe yo...
by JBB
Sat Apr 26, 2008 2:23 pm
Forum: Personal Investments
Topic: REIT: ETF vs. Annuity
Replies: 2
Views: 1770

REIT: ETF vs. Annuity

I do not have enough room in my IRA for the REIT position I want/need and am pondering whether to use the Vanguard VNQ ETF or set up an Vanguard annuity. Morningstar has this to say about the tax efficiencies of various REIT funds and ETF's: Vanguard VNQ ETF: 3-year pre-tax/tax-adj returns are 11.74/10.06 potential cap gains exposure is blank - I don't know whether this means "0" or it hasn't been calculated yet tax cost ratio is 1.5 (% of returns lost to taxes) Vanguard VGSLX fund: 3-year pre-tax/tax-adj returns are 11.73/9.93 5-year pre-tax/tax-adj returns are 17.85/15.82 potential capital gains exposure is 13.5% tax cost ratio is 1.61% DFA DFREX fund: 3-year pre-tax/tax-adj returns are 11.01/9.32 5-year pre-tax/tax-adj returns ...
by JBB
Fri Apr 25, 2008 2:29 pm
Forum: Personal Finance (Not Investing)
Topic: Whole House Audio - Sonos vs Creston
Replies: 6
Views: 3423

Did you check out Elan also?
by JBB
Fri Apr 25, 2008 12:36 am
Forum: Investing - Theory, News & General
Topic: MVO math question...
Replies: 5
Views: 1465

More than two...

I think the more interesting case is when you want to model more than two, say X1...Xn. To do this, you need to input the covariance matrix (where the (i,j) element = Cov(Xi,Xj)) and then find a matrix C such that CC' equals this covariance matrix (Cholesky decomposition - you can google this, but in fact there are simpler formulas when you're dealing with a covariance matrix and I can send these to you if you e-mail me, but I'd need to look this up). If you then generate n standard normal variables Z1...Zn, your random variables with the desired covariance structure are Y = CZ.
by JBB
Fri Apr 18, 2008 5:58 pm
Forum: Personal Investments
Topic: REIT Questions: DFA vs. Vanguard
Replies: 4
Views: 3176

REIT Questions: DFA vs. Vanguard

I would like to set up a REIT allocation. I don't have room in my tax-deferred account. Currently I am considering:

DFA REIT's: Domestic DFREX and International DFITX.

Vanguard ETF: VNQ

Question #1: Does anyone have an opinion on splitting up the REIT allocation in a domestic vs. international fashion, presumably to mirror the same split one chose for equities?

Question #2: Aside from lower expenses (and very similar performance for DFREX and VNQ's parent VGSIX), is the presumed tax benefit of VNQ being an ETF quite worthwhile? Enough to offset the benefit of the domestic vs. international diversification one could obtain via DFA?
by JBB
Fri Apr 18, 2008 5:55 pm
Forum: Investing - Theory, News & General
Topic: Active vs. Passive: argument I hadn't heard before
Replies: 11
Views: 6387

Active vs. Passive: argument I hadn't heard before

One of my "full service" brokers came up with an interesting argument about active vs. passive management that I hadn't heard before. To wit, the indexing argument that the past performance of best performing funds is not prologue to future performance (and in fact can often be the opposite) is misguided because very often the best performing actively-managed mutual funds are sector funds. Of course the sectors rotate in and out of favor, so the sector that was the best last year or for the past three years won't continue to perform this way going forward. This shouldn't imply that one wouldn't be better served by picking a great active manager in a non-sector market component rather than using an index. This would indicate that a...
by JBB
Tue Apr 15, 2008 9:31 am
Forum: Personal Investments
Topic: Bond Allocation
Replies: 14
Views: 3668

Sorry...to clarify, my table shows the returns, not yields.
by JBB
Tue Apr 15, 2008 12:30 am
Forum: Personal Investments
Topic: Bond Allocation
Replies: 14
Views: 3668

Taylor et al., I attempted to analyze the various yields and tax-equivalent yields from the various Vanguard bond funds (below, assumes 10% Calif. tax rate and the highest 35% federal tax rate). It shows, for 1-, 3- and 5-year periods, the yield and tax-equivalent yields separated by "/". I understand why it makes sense not to put everything into Calif. munis., but based on this analysis, why would one buy the short-term tax exempt instead of the total bond index or the intermediate-term bond index? (And the advantage gets even larger if the tax bracket is reduced). Am I missing something? <tt> ..........................................................1-yr.............3-yr...........5-yr.... VBTLX.....Total.Bond.Market...............
by JBB
Sun Apr 13, 2008 12:56 am
Forum: Personal Investments
Topic: Bond Allocation
Replies: 14
Views: 3668

Bond Allocation

I would like to create a (sizeable) bond allocation using Vanguard funds. I live in California and am in the highest tax bracket. The size of my IRA is only about 15% of the total funds I would like to place in bonds. I believe, therefore, that a large part of the (taxable) portfolio should be in the Calif. Intermediate Tax-Exempt Fund (VCADX). For the IRA, I can choose amongst the total bond fund (VBTLX), Intermediate-Term Bond Fund (VBILX) or TIPS (VAIPX). I am leaning toward TIPS. I have also considered the high-yield fund but I have seen this is a controversial issue on this message board. My question: would there be any benefit to me to have the 85% taxable allocation in more than just the munis? The 15% tax-deferred in more than just ...