Search found 733 matches

by rbaldini
Wed Oct 04, 2017 12:07 pm
Forum: Investing - Help with Personal Investments
Topic: How much should an 18 year old keep in bonds?
Replies: 28
Views: 1393

Re: How much should an 18 year old keep in bonds?

"should" is a tricky word. But as another data point, I'm 30 and I have about 10% in bonds. Ultimately the question is: how bad would it be for you if we hit a big recession at some point in the next few years, and you were only invested in stock? If this would be a very bad thing for you, then own ...
by rbaldini
Mon Oct 02, 2017 4:07 pm
Forum: Investing - Theory, News & General
Topic: How do you avoid bad market timing for lump sum investments?
Replies: 67
Views: 6744

Re: How do you avoid bad market timing for lump sum investments?

It seems to me that if I do just a single large purchase, at an unlucky moment, I could end up doing worse than the market. If you're invested in the market from time A to time B, and you're using a (perfect) index, then you can't "end up doing worse than the market" even if it's right before a big...
by rbaldini
Mon Oct 02, 2017 10:13 am
Forum: Investing - Theory, News & General
Topic: Marketing be damned: I am a speculator!
Replies: 6
Views: 1212

Re: Marketing be damned: I am a speculator!

I've never heard anyone define "speculation" or "investment" in a way that made them mutually exclusive. For example, Investopedia says: Investing: "Investing is the act of committing money or capital to an endeavor (a business, project, real estate, etc.) with the expectation of obtaining an additi...
by rbaldini
Wed Sep 27, 2017 2:23 pm
Forum: Investing - Help with Personal Investments
Topic: Help?! My 70 year old father is 100% invested in equities
Replies: 79
Views: 7310

Re: Help?! My 70 year old father is 100% invested in equities

From what I've read on this board and in books, a 100% AA for a 70-year old is crazy. I don't know a ton else, but my sense is that my dad relies on his investment portfolio for about 50% of his annual income (he also has a pension and Social Security) and utilizes a 3% withdrawal rate from the por...
by rbaldini
Tue Sep 26, 2017 2:33 pm
Forum: Personal Finance (Not Investing)
Topic: Bay Area Real Estate
Replies: 154
Views: 14212

Re: Bay Area Real Estate

Any recommendations on making it out here in this crazy market? I'm doing various buy vs. rent analyses and can't seem to make sense of buying (am I missing something obvious?) No, you are probably not missing anything. I left silicon valley partly because I wanted to be able to buy a house (also s...
by rbaldini
Tue Sep 26, 2017 2:24 pm
Forum: Personal Consumer Issues
Topic: The Rolex and The Boglehead
Replies: 274
Views: 11051

Re: The Rolex and The Boglehead

How many Bogleheads out there own and wear a Rolex (or similar)? Those that do, any regrets? I'd like to one day own a nice watch but for right now I just admire them all. DW might not ever sign off on a watch that expensive but still I'm curious what other Bogleheads have to say. What will a Rolex...
by rbaldini
Tue Sep 26, 2017 2:22 pm
Forum: Personal Consumer Issues
Topic: The Rolex and The Boglehead
Replies: 274
Views: 11051

Re: The Rolex and The Boglehead

I figure the purpose of paying lots of money for a show piece is that other people will notice, thereby increasing your prestige in their eyes. But only very particular people would actually notice your watch and be able to distinguish it from cheaper ones, and care about it. I'm not one of those pe...
by rbaldini
Mon Sep 25, 2017 7:24 pm
Forum: Personal Consumer Issues
Topic: Tipping question....Applebees
Replies: 87
Views: 6804

Re: Tipping question....Applebees

TomatoTomahto wrote:
Sun Sep 24, 2017 8:19 pm
Sure, they’re computing a tip on tax.
And thereby increasing the total cost of your meal by about 1%, or about 50 cents in this case.
by rbaldini
Mon Sep 25, 2017 12:06 pm
Forum: Investing - Theory, News & General
Topic: Research Affiliated Model Portfolios: ZERO % US stocks
Replies: 46
Views: 4664

Re: Research Affiliated Model Portfolios: ZERO % US stocks

I'm no expert, but here's my take: there's no way they're accounting for full uncertainty in the estimates. The predictive power of PE10 isn't good enough to recommend all-or-nothing kind of predictions.
by rbaldini
Mon Sep 25, 2017 12:03 pm
Forum: Investing - Help with Personal Investments
Topic: I don't understand investing beyond retirement
Replies: 11
Views: 1143

Re: I don't understand investing beyond retirement

Are you asking something like this: "Okay - I've done all the Boglehead checklist items: I'm contributing my preferred amount to tax-advantaged retirement accounts, I have an emergency account, my debt is either 0 or under control. But I still have all this cash lying around. What do I do with it?" ...
by rbaldini
Mon Sep 25, 2017 9:35 am
Forum: Personal Finance (Not Investing)
Topic: Is it a stupid financial decision to rent for another year?
Replies: 13
Views: 881

Re: Is it a stupid financial decision to rent for another year?

The NY Times calculator thinks we would basically break even financially either way. The NY Times calculator (https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) is what I usually recommend, so you're ahead of the curve. I assume you played with the numbers to best fit your in...
by rbaldini
Mon Sep 25, 2017 9:03 am
Forum: Investing - Theory, News & General
Topic: What is the main purpose of rebalancing?
Replies: 59
Views: 4760

Re: What is the main purpose of rebalancing?

Note: If you believe the stock and bond markets are an independent random walk (with positive drift), then rebalancing is *not* a method for buying low and selling high. It is not a method for boosting risk-adjusted return. It is simply a way of maintaining your preferred asset allocation. I have t...
by rbaldini
Mon Sep 25, 2017 8:56 am
Forum: Investing - Help with Personal Investments
Topic: Are all investments compound interest?
Replies: 50
Views: 3006

Re: Are all investments compound interest?

Are all investments compound interest? Most boglehead-type investments are thought of as compounding: stocks, bonds, savings accounts, real estate property value. What wouldn't be? I think the rent income from investing in real estate would not count as compounding, because you get some fixed amoun...
by rbaldini
Tue Sep 19, 2017 2:50 pm
Forum: Investing - Theory, News & General
Topic: What is the main purpose of rebalancing?
Replies: 59
Views: 4760

Re: What is the main purpose of rebalancing?

Note: If you believe the stock and bond markets are an independent random walk (with positive drift), then rebalancing is *not* a method for buying low and selling high. It is not a method for boosting risk-adjusted return. It is simply a way of maintaining your preferred asset allocation.
by rbaldini
Tue Sep 19, 2017 10:51 am
Forum: Investing - Theory, News & General
Topic: Data-driven individual stock approach
Replies: 28
Views: 1515

Re: Data-driven individual stock approach

As a (I think) similarly skilled data scientist, I'd wonder if its worth the time. Could you spend those hours coding up something else that might advance your career and earning potential? Or working harder on your day job? If you do a good job, it's totally possible that you could beat the market ...
by rbaldini
Tue Sep 19, 2017 8:40 am
Forum: Investing - Theory, News & General
Topic: What is the main purpose of rebalancing?
Replies: 59
Views: 4760

Re: What is the main purpose of rebalancing?

You decided at some point that your preferred stock/bond allocation is X/Y. You decided this was the best risk/reward tradeoff for you. Market forces have moved your actual allocation to (X+d)/(Y-d). You are now taking on either too much risk or gaining too little reward. The purpose of rebalancing ...
by rbaldini
Mon Sep 18, 2017 3:32 pm
Forum: Personal Consumer Issues
Topic: Getting (young) kids interested in coding
Replies: 81
Views: 5039

Re: Getting (young) kids interested in coding

I doubt it matters much at age 6, to be honest. Unless they're *very* bright for their age, they're not going to learn anything at the age of 6 that they can't catch up on *much* faster in their teenage years (or later, like myself). And if they don't have a natural knack for it, IMO they won't have...
by rbaldini
Mon Sep 18, 2017 3:25 pm
Forum: Investing - Theory, News & General
Topic: International Equity: Are managed funds better than Index funds?
Replies: 35
Views: 2299

Re: International Equity: Are managed funds better than Index funds?

The formulation leads to the useful intuition that the passive part of the market owns the market return (minus very small costs), and the active part of the market collectively owns the market return (minus higher costs), among other things. But it is not exact in reality. Just close enough for ma...
by rbaldini
Mon Sep 18, 2017 1:49 pm
Forum: Investing - Theory, News & General
Topic: International Equity: Are managed funds better than Index funds?
Replies: 35
Views: 2299

Re: International Equity: Are managed funds better than Index funds?

Right, but I think the point is it's not possible to define active and passive simultaneously in the same investment universe. Due to the issues lack_ey describes, active managers have more flexibility than passive managers. I think you can define them just fine. E.g. passive = "the total amount in...
by rbaldini
Mon Sep 18, 2017 1:42 pm
Forum: Investing - Theory, News & General
Topic: International Equity: Are managed funds better than Index funds?
Replies: 35
Views: 2299

Re: International Equity: Are managed funds better than Index funds?

If investing skill or some other attributes give certain groups an edge over others, then actively managed funds as a group could easily be better than index funds, even the best-in-breed index funds. It just requires a group of losers who are underperforming, i.e. the active funds taking alpha fro...
by rbaldini
Mon Sep 18, 2017 1:39 pm
Forum: Personal Finance (Not Investing)
Topic: Worth buying an excessive priced house?
Replies: 43
Views: 3995

Re: Worth buying an excessive priced house?

Mortgage of 2-3x annual income sounds totally fine. I wouldn't call that excessive, especially given your apparently good financial standing. Unless you're expecting a dip in income, or you can think of something you'd much rather do with the money (more savings and investing? family vacations? earl...
by rbaldini
Mon Sep 18, 2017 1:32 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Vanguard Debunks Dividend Myth
Replies: 112
Views: 11883

Re: Larry Swedroe: Vanguard Debunks Dividend Myth

I guess I continue to misunderstand this whole topic. IMO, I didn't need a historical study of data to know this. All I need to know is that (1) when a dividend occurs, the stock price drops by about the same amount, so my total wealth stays the same, and (2) dividends are taxed higher than (long-te...
by rbaldini
Mon Sep 18, 2017 1:22 pm
Forum: Investing - Help with Personal Investments
Topic: math on determining rebalancing bands?
Replies: 6
Views: 460

Re: math on determining rebalancing bands?

Presumably there's a tradeoff between setting too small and too large a band. If the former, you're constantly rebalancing, which means selling and buying stock, which means paying more short-term capital gains taxes (let me know if I'm getting that wrong). If the latter, you're letting your AA get ...
by rbaldini
Mon Sep 18, 2017 12:51 pm
Forum: Investing - Theory, News & General
Topic: Are long-term market returns reliable?
Replies: 38
Views: 4073

Re: Are long-term market returns reliable?

But it is the people in the latter stage of their investing horizon who have accumulated a substantial nestegg at this point who really need to be paying attention. For instance, check out the 1978-2007 period, during which a monthly investment in the S&P 500 of $100 would have grown to $330,842 ov...
by rbaldini
Mon Sep 18, 2017 12:47 pm
Forum: Investing - Theory, News & General
Topic: International Equity: Are managed funds better than Index funds?
Replies: 35
Views: 2299

Re: International Equity: Are managed funds better than Index funds?

nisiprius wrote:
Sat Sep 16, 2017 6:29 pm
I take that to mean "across the board." Generally better. By and large, are you better off picking a managed fund over an index fund?
Isn't the answer to this question *necessarily* no? No data needed? https://web.stanford.edu/~wfsharpe/art/ ... active.htm
by rbaldini
Sun Sep 17, 2017 7:32 pm
Forum: Investing - Theory, News & General
Topic: Are long-term market returns reliable?
Replies: 38
Views: 4073

Re: Are long-term market returns reliable?

So, when fishing around for comparative data, make sure you are comparing apples-to-apples. The most realistic data are represented in the article because it is real returns that count, and just about everybody invests periodically not with a single lump sum, and just about everybody loses some of ...
by rbaldini
Sat Sep 16, 2017 11:03 pm
Forum: Investing - Theory, News & General
Topic: Are long-term market returns reliable?
Replies: 38
Views: 4073

Re: The myth about long-run stock returns

Two thoughts. 1. Folks have suggested this is misleading, so I've checked the numbers myself. See S&P 500 numbers here from 1928: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html Of all the contiguous 30-year periods shown here, the smallest total return is a factor of 9.98...
by rbaldini
Thu Sep 14, 2017 11:05 am
Forum: Investing - Theory, News & General
Topic: Ted Seides "Why I lost My Bet With Warren Buffett" - Bloomberg
Replies: 94
Views: 12130

Re: Ted Seides "Why I lost My Bet With Warren Buffett" - Bloomberg

It's safe to say that Ted Seides is no Warren Buffett. True, but it's not like Buffett used his oracle magic to pick the winners here. He just picked the S&P 500. Easy. Any Boglehead would have won this bet ... had they the money to put down. The lesson isn't "Buffett is amazing!" It's "indexing wo...
by rbaldini
Tue Sep 12, 2017 11:19 am
Forum: Personal Consumer Issues
Topic: Is it really Worth it to brown bag your lunch at work?
Replies: 313
Views: 18312

Re: Is it really Worth it to brown bag your lunch at work?

I'm suspicious that saving a few bucks per day in meals might subconsciously encourage me to spend a few extra bucks per day on something else. That being said, on the whole I think it can't hurt. I try to bring lunch at least half the time. Save money, and have greater control over your diet. On th...
by rbaldini
Mon Sep 11, 2017 1:49 pm
Forum: Investing - Help with Personal Investments
Topic: What index funds that will benefit from resent disasters
Replies: 21
Views: 1777

Re: What index funds that will benefit from resent disasters

But on the whole, lots of property has just been destroyed. That's a bad thing. If anything, shouldn't we expect economic productivity and therefore returns to decrease, if only by a small amount? Or am I fundamentally missing something here? That property mostly in private hands wasn't doing too m...
by rbaldini
Mon Sep 11, 2017 1:24 pm
Forum: Investing - Help with Personal Investments
Topic: What index funds that will benefit from resent disasters
Replies: 21
Views: 1777

Re: What index funds that will benefit from resent disasters

Agreed with others that it's too late: this is the epitome of public knowledge. Unless you can better predict Irma's future path and effect on the industry than the rest of the market (and evidently you can't, which is why you're asking in a public forum), you won't be able to take much advantage of...
by rbaldini
Thu Sep 07, 2017 6:44 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

Short search of some literature seems to show that empirical tests have focused on Hypothesis 2. E.g. Malkiel talks about Jensen's work here: http://www.e-m-h.org/Fama70.pdf (p. 412). The comparison is on risk-adjusted return: http://www.investopedia.com/terms/j/jensensmeasure.asp "In 89 out of 115 ...
by rbaldini
Thu Sep 07, 2017 6:15 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

To me, what "beat the market" ought to mean--and what I think novice investors assume it means when they hear somebody say they can do it--is to just plain do better than Vanguard Total Stock Market Index Fund: The same or lower risk by any metric higher returns over every calendar year (and thus, ...
by rbaldini
Thu Sep 07, 2017 5:50 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

There are different ideas about risk and return out there in the real world, but one of the important frameworks comes out of academia in the form of factors (factor investing), which seeks to explain what drives stock returns. These include the size tilts (to small caps), value, etc. that were men...
by rbaldini
Thu Sep 07, 2017 4:28 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

As I said in the non-quoted part of my reply, it depends on your definition of "the market." In addition, I don't think #2 says "can systematically beat the market." It says, if you do beat the market, it is likely because you took more risk than "the market." Thus, #1 says you can't beat the marke...
by rbaldini
Thu Sep 07, 2017 4:26 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

If everyone thought that all you have to do is take more risk to beat the market, it would not work, would it. If it is true that there is variation of stocks within the overall market, such that some are higher-risk and higher-return than others, then one can always choose the riskier set than the...
by rbaldini
Thu Sep 07, 2017 4:22 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

Change "One can likely beat the market in the long run, but only by taking on more risk." To "One can possibly beat the market in the long run, but only by taking on more risk". Less than the market is also a very real possibility. No. The first is what I mean: that one can systematically beat the ...
by rbaldini
Thu Sep 07, 2017 4:19 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

No, for a couple of reasons. The first is volatility drag. As volatility increases your gains decrease. A portfolio can have a higher average annual return but still have a lower overall performance over a 10 year period thanks to volatility drag. Second, what you are saying kinds of remind of a Ma...
by rbaldini
Thu Sep 07, 2017 12:42 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

I have a hard time agreeing with No. 2. If it is as easy as simply taking more risk, then more investors should beat indexing, but that presents a problem as well. If everyone took more risk, market returns would be higher across the board (maybe) and the market would capture the increase--more inv...
by rbaldini
Thu Sep 07, 2017 12:38 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

I think both are true. I don't think they can both be true. (1) says that you can't really ever beat the market except by dumb luck. (2) says you can systematically beat the market in the long run by choosing to invest in high-risk high-reward stocks - but you have to pay the cost of high volatilit...
by rbaldini
Thu Sep 07, 2017 12:33 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

Really neither. My version is: It is impossible to the weighted average return over all investors in a market to beat the average return of the market. Boiled down this says that X is not greater than X. The last part of the sentence is the return of a total market index fund (TMIF) before costs, a...
by rbaldini
Thu Sep 07, 2017 12:28 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

You are going to have to define what you mean by 'indexing' and 'actively-managed stock fund'. As written, I think both 1 and 2 are correct statements and that they don't contradict one another. Total market index: market cap weighted stock index fund, like VTSMX. The alternative is anything else. ...
by rbaldini
Thu Sep 07, 2017 12:07 pm
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

Re: What does "beat the market" mean?

And there are plenty of index funds (non-total-market-index) that track groups of stocks that have certain kinds of higher risk and some think should have higher return. There are a lot of ideas about which risks, characteristics more broadly, or even mispricings, might lead to better returns over ...
by rbaldini
Thu Sep 07, 2017 12:04 pm
Forum: Investing - Theory, News & General
Topic: Is international a momentum investment?
Replies: 18
Views: 2070

Re: Is international a momentum investment?

nisiprius wrote:
Sat May 27, 2017 12:01 pm
[Did you include the assumption that the yearly samples are independent?
This is months late, but yes.
by rbaldini
Thu Sep 07, 2017 11:54 am
Forum: Investing - Theory, News & General
Topic: What does "beat the market" mean?
Replies: 40
Views: 1825

What does "beat the market" mean?

Folks, We've all heard that it's hard to beat the market, in the long run. But I'm not sure exactly what is meant by this phrase. To me, there are two possibilities that are consistent with theory that I've read: (1) Over a long time period (say, 40 years), it is very unlikely that an actively-manag...
by rbaldini
Fri Sep 01, 2017 2:13 pm
Forum: Local Chapters and Bogleheads Community
Topic: [Are the Bogleheads] getting less interesting?
Replies: 255
Views: 17020

Re: [Are the Bogleheads] getting less interesting?

I think what's happening is that the novelty has worn off. Most likely, there's not much more you need to know for your personal finance, at the moment.

Bogleheads in general aren't that interesting. That's not a bad thing.
by rbaldini
Wed Aug 23, 2017 12:07 pm
Forum: Investing - Help with Personal Investments
Topic: Are US S&P 500 Index funds speculative investments?
Replies: 63
Views: 4427

Re: Are US S&P 500 Index funds speculative investments?

Beware semantic arguments that never define their terms! IMO investing broadly construed means "putting money aside now toward some purpose with the intent/hope/expectation of receiving more money in the future." Investopedia defines speculation thusly: "Speculation is the act of trading in an asset...
by rbaldini
Sat Jul 08, 2017 4:44 pm
Forum: Investing - Help with Personal Investments
Topic: Help family member with finances
Replies: 19
Views: 1438

Re: Help family member with finances

If she was married to her ex for 10 years or more, she will be able to collect half of his SS. I believe she has to wait until he starts collecting or she becomes Full Retirement Age (67 and a few months??). Meanwhile she should find out what her own SS benefit is and possibly collect that at age 6...
by rbaldini
Sat Jul 08, 2017 3:29 pm
Forum: Investing - Help with Personal Investments
Topic: Help family member with finances
Replies: 19
Views: 1438

Re: Help family member with finances

As others have said, I think the first thing to do is understand what happens to the pension if her ex-husband dies and what type of Social Security benefit she will have. The pension continues to pay after he dies. She handled that with a lawyer. Also, what is she spending yearly, taking into acco...