Search found 1783 matches

by cjking
Mon Jun 18, 2018 5:33 am
Forum: Investing - Theory, News & General
Topic: You Can Market Time At Valuation Extremes
Replies: 36
Views: 3809

Re: You Can Market Time At Valuation Extremes

In my early days of exploring using CAPE, I tested timing strategies (that switched in and out of low return safe assets) which showed that in back-testing you could could get somewhere between 0.5% and 1% extra return for a given volatility. (Or equivalently, lesser volatility for given return.) (F...
by cjking
Mon Jun 18, 2018 4:21 am
Forum: Investing - Theory, News & General
Topic: A different theoretical view of SWR
Replies: 63
Views: 3598

Re: A different theoretical view of SWR

I do something similar, including the expected returns model, but: - I would be more conservative about life expectancy, the actuarial life expectancy is a probabilistic midpoint, and you don't want to expose yourself to longevity risk (notably if you're healthy and have parents or grandparents who...
by cjking
Mon Jun 18, 2018 3:20 am
Forum: Investing - Theory, News & General
Topic: A different theoretical view of SWR
Replies: 63
Views: 3598

Re: A different theoretical view of SWR

I find it more comforting to ask myself what is the relationship between market returns and underlying inflation? And to be sure, my approach is not free from beliefs either. I believe the capitalist system helps stock and bond returns sit on top of inflation. And to be “safe“ I assume returns simp...
by cjking
Sun Jun 17, 2018 7:38 am
Forum: Investing - Theory, News & General
Topic: A different theoretical view of SWR
Replies: 63
Views: 3598

Re: A different theoretical view of SWR

So a worked example Current balance: $1 million Portfolio: 60% world index, (E10/P)-[fund charges] = 3.5%, 40% bond fund guesstimated return 1% real. Expected real return: 60%*3.5%+40%*1% = 2.5% Anticipated real return: 50% * 2.5% = 1.25% Current actuarial life expectancy: 30 years This years income...
by cjking
Sun Jun 17, 2018 7:28 am
Forum: Investing - Theory, News & General
Topic: A different theoretical view of SWR
Replies: 63
Views: 3598

Re: A different theoretical view of SWR

A weakness with this method is that we don't really know how long we will live. I would make "n" current actuarial life expectancy, and recalculate each year. Once life-expectancy falls below 15 years, if it looked at that point like finances are going to be tight, I would start converting to annui...
by cjking
Thu Jun 14, 2018 4:28 am
Forum: Investing - Theory, News & General
Topic: You Can Market Time At Valuation Extremes
Replies: 36
Views: 3809

Re: You Can Market Time At Valuation Extremes

The way to market-time is not to switch into cash when the market is expensive and wait for a fall. Because it's entirely possible than even expensive equities will return more than cash over the amount of time you spend waiting for that fall. What you need to do, if you want to time, is change your...
by cjking
Mon Mar 19, 2018 3:52 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

There is one bit of that paper Grayfox linked to that is blowing my mind, even as someone who is now comfortable with the idea that individual banks can create money out of thin air. https://www.sciencedirect.com/science/article/pii/S1057521914001434 Since banks invent money as fictitious deposits, ...
by cjking
Sat Mar 17, 2018 3:50 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

How does this chart not support the multiplier theory? The chart is the ratio of a measure of the money supply, M2, to the amount of reserve balances banks have at the Fed. The fractional reserve theory claims that ratio is fixed. The chart shows that the ratio is not fixed. Ron I've tried to find ...
by cjking
Sat Mar 17, 2018 3:16 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

As soon as the customer takes that 10K out of thier checking account, wouldn't the bank need to subtract 10K from their cash on the asset side? There may not be a difference between the method you are describing and what has been traditionaly understood where after a loan the bank writes a check an...
by cjking
Fri Mar 16, 2018 5:34 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

As I recall Paul Samuelson Econ 101 - so many decades ago - banks indivudually do not create money - the system does. Yup, I had the same text in the same time period. The "reserve requirements" are what set the multiplier. If banks must keep 20% reserves, the money supply will increase by $5 for e...
by cjking
Fri Mar 16, 2018 4:27 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

Here is an example from CNBC web site about how a new bank could create money out of thin air by lending to its first customer. In order to avoid quoting most of the article, I've omitted much of the detail of how, after making it's first loan, it meets the reserve and capital requirements the loan ...
by cjking
Thu Mar 15, 2018 3:07 pm
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

No individual bank or credit union can lend mich more than 100% of its deposits and borrowings - letalone 1000%. So many folks posting on this have no clue about this business. I agree I'm clueless, I'm merely extrapolating aloud from what I've read in the various links, quite possibly wrongly. Wha...
by cjking
Thu Mar 15, 2018 11:02 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

If a bank can just create money from thin air, what would stop them from just lending as much money as possible? A quote from the investopedia link I posted earlier, which addresses this question. What Really Affects Banks’ Ability to Lend So if bank lending is not restricted by the reserve require...
by cjking
Thu Mar 15, 2018 9:57 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

Imagine you start a new bank with a million dollars capital. You sell 800,000 dollars (held in government bonds) to the central bank, who credit your account with them with 800,000 dollars of "reserves", created at a push of a button. The 800,000 did not come from anywhere, the central bank compute...
by cjking
Thu Mar 15, 2018 6:20 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

I don't think that creation of money by retail banks is the same as creation of money by the Fed (U.S.). I've learned there are generally three kinds of money, "reserves", "cash" and "deposits." "Cash" (notes and coins) is created centrally and is of least interest. "Reserves" are also created cent...
by cjking
Wed Mar 14, 2018 7:36 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

I wondered what google had to say about that. I don't know if this page I found helps. https://bizfluent.com/facts-5723394-reserve-requirements-vs--capital-requirements.html Reserve Requirements Depository institutions, such as banks and credit unions, must hold reserves in the form of cash in their...
by cjking
Tue Mar 13, 2018 7:09 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

Just a side-note, I remembered a comment somewhere that not all central banks require commercial banks to hold reserves, so I googled the following. https://en.wikipedia.org/wiki/Reserve_requirement Canada, the UK, New Zealand, Australia, Sweden and Hong Kong[11] have no reserve requirements. This d...
by cjking
Mon Mar 12, 2018 6:59 am
Forum: Investing - Theory, News & General
Topic: Why International again?
Replies: 224
Views: 20937

Re: Why International again?

I've just seen there is a "WORLD AC" entry I could have used instead of "developed markets" but at CAPE=25.2 instead of 26.4 it would have given results only slightly more favourable to my argument.
by cjking
Mon Mar 12, 2018 6:56 am
Forum: Investing - Theory, News & General
Topic: Why International again?
Replies: 224
Views: 20937

Re: Why International again?

Note that in that link, you can sort the table by column headings. On the CAPE metric, the US is more expensive than everywhere except Ireland and Denmark. Even Japan is slightly cheaper. (I'm also underweight Japan.)
by cjking
Mon Mar 12, 2018 6:52 am
Forum: Investing - Theory, News & General
Topic: Why International again?
Replies: 224
Views: 20937

Re: Why International again?

To go back to the original question, if you look at this link https://www.starcapital.de/en/research/stock-market-valuation/ You will see CAPE for USA (at end January) at 32.1 and for "developed markets" at 26.4. If we take the US to be roughly 50% of developed markets, that implies world-ex-US is a...
by cjking
Sun Mar 11, 2018 1:50 pm
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

Banks are merely intermediaries between savers and borrowers. Deposits fund loans, period. Can you say why the statements to the contrary in the various links are wrong? Wikipedia also appears to disagree with you. https://en.wikipedia.org/wiki/Money_creation Most of the money supply[who?] is in th...
by cjking
Sun Mar 11, 2018 5:26 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

As I recall Paul Samuelson Econ 101 - so many decades ago - banks indivudually do not create money - the system does. My interpretation is that this is the "fractional reserve" theory of how money is created. The paper linked subsequently says that was popular from the 1930's to the late 1960's, wh...
by cjking
Sun Mar 11, 2018 5:15 am
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

That paper seems to be both a serious academic publication, and (to me at least) rather funny. (Did we, in 2014, really not know how money was created? And did we have to conduct a physical experiment inside a bank to find out?) Summary, he reviews three different theories of how money is created, t...
by cjking
Sat Mar 10, 2018 1:54 pm
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

Unless I am missing something, when a bank or credit union makes a loan - the balance sheet (assets and liabilities) bottom line stays the same. I think that's right, two things of equal value are created, which offset each other. But only one of the two things is money, therefore the amount of mon...
by cjking
Sat Mar 10, 2018 1:41 pm
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

Here is the article https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf Quote from the introduction, with my bold. In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misund...
by cjking
Sat Mar 10, 2018 12:44 pm
Forum: Investing - Theory, News & General
Topic: How banks create money, not from deposits
Replies: 132
Views: 11451

Re: How banks create money, not from deposits

I was reading this recently on the Bank of England web site. How most money is created: at the point a bank credits x dollars from a new loan to a customer account, x dollars have just been created out of thin air.
by cjking
Thu Mar 08, 2018 10:24 am
Forum: Investing - Theory, News & General
Topic: Using a 5y moving average to smooth withdrawals in VPW?
Replies: 70
Views: 6224

Re: Using a 5y moving average to smooth withdrawals in VPW?

I usually also can't stand cash sitting around. I was hoping to use that emotion to goad me into greater spending. My psychological trick (of having "savings" distinct from "investments") has worked too well though, causing me to not think of savings as investments in low-returning assets at all, so...
by cjking
Thu Mar 08, 2018 9:42 am
Forum: Investing - Theory, News & General
Topic: Using a 5y moving average to smooth withdrawals in VPW?
Replies: 70
Views: 6224

Re: Using a 5y moving average to smooth withdrawals in VPW?

For me the answer to smoothing is to have a buffer between withdrawals and spending. That buffer is called savings, and it's contents are held in cash or cash-proxies. Savings are not part of my asset allocation, and they are not part of the balance on which the withdrawal algorithm operates. Unlike...
by cjking
Thu Mar 01, 2018 3:04 am
Forum: Investing - Theory, News & General
Topic: What if you only live off dividends?
Replies: 316
Views: 35213

Re: What if you only live off dividends?

Even in that context, spending dividends is still a reduction of your capital. Dividends are not qualitatively different from a capital perspective than capital appreciation. It's not a reduction from the current balance that is being avoided, it's a reduction from the initial balance. Anyone who h...
by cjking
Wed Feb 28, 2018 6:55 am
Forum: Investing - Theory, News & General
Topic: What if you only live off dividends?
Replies: 316
Views: 35213

Re: What if you only live off dividends?

my larger point was that tying SWR to dividend payouts is a bit strange. I see no obvious link between the two. The link is that if you want to live off shares without "spending your capital", the equivalent of living only on rents from properties, without selling properties, or the produce of your...
by cjking
Tue Feb 27, 2018 1:45 pm
Forum: Investing - Theory, News & General
Topic: Putting money aside for a future big item
Replies: 19
Views: 1505

Re: Putting money aside for a future big item

To extrapolate my answer to what I presume is the implied wider question, according to a a page I've just googled, 70% of the worlds population live on less than $10,000 per year. Whatever an initial sum of over a million dollars in an equity index is worth after ten years, even after sensible annua...
by cjking
Tue Feb 27, 2018 1:34 pm
Forum: Investing - Theory, News & General
Topic: Putting money aside for a future big item
Replies: 19
Views: 1505

Re: Putting money aside for a future big item

I would leave all my money in a world equity index. If the index were down 50% in ten years time, I would give up on the idea of the Camry and maybe buy whatever I liked at a 12K price-point. If the index had done better than expected, I might look at something more expensive than the Camry.
by cjking
Sat Feb 24, 2018 7:14 am
Forum: Investing - Theory, News & General
Topic: What if you only live off dividends?
Replies: 316
Views: 35213

Re: What if you only live off dividends?

I realise no-one will be with me on this, but if I were a US investor looking to live on dividend yield, I'd maybe go 100% VYMI, at least until US valuations improved. According to Yahoo finance the dividend yield is just over 3%. I estimate that smoothed earnings yield 1/PE10 = 5.1% for world-ex-US...
by cjking
Sun Feb 18, 2018 6:44 am
Forum: Investing - Help with Personal Investments
Topic: Genius Needed -- Thoughts on My Asset Allocation? [UK]
Replies: 26
Views: 1760

Re: Genius Needed -- Thoughts on My Asset Allocation? [UK]

I think wanting to currency-hedge shares is a consequence of looking at things the wrong way round. I see a world index of shares as the most secure store of value, on average over a long period of time. If the value of that holding changes dramatically and permanently for better or worse, when expr...
by cjking
Tue Feb 13, 2018 10:36 am
Forum: Investing - Theory, News & General
Topic: What if you only live off dividends?
Replies: 316
Views: 35213

Re: What if you only live off dividends?

For major indices, the dividend yield is generally about half the smoothed earnings yield, so you could take a bit more and still not run down your capital. On a previous thread about perpetual income I reckoned you could aim for up to 80% of the smoothed earnings yield. Having said that, if this is...
by cjking
Fri Feb 02, 2018 8:54 am
Forum: Investing - Help with Personal Investments
Topic: UK Investing - Pension - three fund portfolio help!
Replies: 12
Views: 702

Re: UK Investing - Pension - three fund portfolio help!

I'm a UK investor, I don't overweight the UK due to domestic bias, however I may be eccentric. At some point in the past several years I read that UK insurance companies had revised their view of the optimum UK-foreign split downwards to 30% UK equities. My wife's pension choices reflect this, one o...
by cjking
Thu Feb 01, 2018 10:36 am
Forum: Investing - Theory, News & General
Topic: Wow: Shiller PE is 34.52
Replies: 52
Views: 6777

Re: Wow: Shiller PE is 34.52

Doesn't answer my question though. What action are you taking? Dump 100% of US and go 100% ex-US? Hmm. If the only options were being 100% US or 100% world-ex-us, I would absolutely choose the latter. Even if I were a US investor, which I'm not. As it is, I invest a cap-weighted proportion of half ...
by cjking
Thu Feb 01, 2018 9:59 am
Forum: Investing - Theory, News & General
Topic: Wow: Shiller PE is 34.52
Replies: 52
Views: 6777

Re: Wow: Shiller PE is 34.52

The problem with using CAPE, or anything, for market timing is that it is a losing game. OK, you say CAPE is too high now. What action does that dictate? Using figures in my spreadsheet, which might differ slight from those quoted here, by inverting CAPE I get an expected return of 3.2% for US equi...
by cjking
Tue Dec 26, 2017 11:39 am
Forum: Investing - Help with Personal Investments
Topic: Should I preserve parents’ risky portfolio? Or “disobey” them?
Replies: 74
Views: 5412

Re: Should I preserve parents’ risky portfolio? Or “disobey” them?

I’m leaning towards cashing everything out for a 3-fund portfolio, for simplicity’s sake. I don’t have the bandwidth to watch hundreds of individual stocks. If they have hundreds of stocks, it sounds like they are diversified, and there's no need to watch the stocks. When we invest in an index, com...
by cjking
Thu Dec 21, 2017 5:11 am
Forum: Investing - Theory, News & General
Topic: Quite a few people I know in real life that normally don't mess with finances have brought up investing in bitcoin
Replies: 74
Views: 7518

Re: Quite a few people I know in real life that normally don't mess with finances have brought up investing in bitcoin

There is a nearly 300-page long thread on another site I'm on where people are discussing their cryptocurrency trading. (Site for people who work in IT.) Someone quoted a story about a mutual fund that had returned 16% a year for over a decade as an example of the pathetic/inferior returns of equiti...
by cjking
Fri Dec 08, 2017 4:12 am
Forum: Investing - Theory, News & General
Topic: bitcoin - is there any real value here or is it a pure Ponzi scam?
Replies: 236
Views: 23144

Re: bitcoin - is there any real value here or is it a pure Ponzi scam?

I get that you don't value the privacy of your financial transactions, but many people do, even if they're not doing anything illegal. I'm not explaining why you should use Bitcoin, I'm explaining why other people might want to. I literally can't think of a scenario where a non-criminal person in a...
by cjking
Wed Dec 06, 2017 10:42 am
Forum: Investing - Theory, News & General
Topic: bitcoin - is there any real value here or is it a pure Ponzi scam?
Replies: 236
Views: 23144

Re: bitcoin - is there any real value here or is it a pure Ponzi scam?

See my various previous posts above. Inflation is not a problem if you are holding small amounts for a short time to facilitate spending, so the cryptodollar should be a perfectly fine currency for on-line purchases, in a world where the dollar as we know it still exists. However the possibility of ...
by cjking
Wed Dec 06, 2017 10:27 am
Forum: Investing - Theory, News & General
Topic: bitcoin - is there any real value here or is it a pure Ponzi scam?
Replies: 236
Views: 23144

Re: bitcoin - is there any real value here or is it a pure Ponzi scam?

Cryptodollars would be useful for traders, but would make a poor long term holding due to inflation. I think the introduction of cryptodollars would make the bitcoin market even stronger. The most annoying part about bitcoin right now is dealing with the fiat, trading crypto to crypto is much easie...
by cjking
Wed Dec 06, 2017 10:03 am
Forum: Investing - Theory, News & General
Topic: bitcoin - is there any real value here or is it a pure Ponzi scam?
Replies: 236
Views: 23144

Re: bitcoin - is there any real value here or is it a pure Ponzi scam?

Actually, if there were a plethora of asset-backed cryptocurrencies, then presumably I could have bank-account denominated in one of them. I could pay my electricity bill from a bank account denominated in CPI_adjusted_cryptopounds, for example. Governments issue inflation-linked bonds, so why not i...
by cjking
Wed Dec 06, 2017 9:54 am
Forum: Investing - Theory, News & General
Topic: bitcoin - is there any real value here or is it a pure Ponzi scam?
Replies: 236
Views: 23144

Re: bitcoin - is there any real value here or is it a pure Ponzi scam?

The argument is made that the original bitcoin has a hard limit of 21 million. Subtract off "lost" bitcoins, factor in the increasing difficulty of generating new ones, the effective actual supply is perhaps 17 million? Less? So that's clearly an attraction if you are a believer in the concept. No ...
by cjking
Wed Dec 06, 2017 9:35 am
Forum: Investing - Theory, News & General
Topic: bitcoin - is there any real value here or is it a pure Ponzi scam?
Replies: 236
Views: 23144

Re: bitcoin - is there any real value here or is it a pure Ponzi scam?

I think there have been some people on the thread who have argued the merits of bitcoin. However, without going back to check, I reckon most claimed merits could apply to most cryptocurrencies anyone might decide to invent. All bitcoin has going for it is being first. That might count for a lot, if ...
by cjking
Tue Dec 05, 2017 10:53 am
Forum: Investing - Theory, News & General
Topic: The "petro," a Venezuelan oil-backed cryptocurrency
Replies: 32
Views: 2642

Re: The "petro," a Venezuelan oil-backed cryptocurrency

I was reading up on cryptocurrencies yesterday. My conclusion was I still wouldn't touch bitcoin, but asset-backed cryptocurrencies might one day be worthwhile. There are a few out there. One in particular had chosen the US dollar, Gold and bitcoin as their first three assets, which all make sense. ...
by cjking
Sun Nov 19, 2017 5:50 am
Forum: Investing - Help with Personal Investments
Topic: Approximating Total World Stock to avoid exchange risk
Replies: 8
Views: 1154

Re: Approximating Total World Stock to avoid exchange risk

Edit: I didn't read the thread properly before posting below, possibly not even the OP properly, so apologies if some of it is redundant, or missing the actual issue raised. (I have a bit of a knee-jerk response to people worrying about currency risk.) As a non-US investor, I invest globally and I d...
by cjking
Fri Nov 17, 2017 3:50 am
Forum: Investing - Theory, News & General
Topic: Fixed percentage withdrawal of maximum portfolio value?
Replies: 14
Views: 1500

Re: Fixed percentage withdrawal of maximum portfolio value?

If a constant income given by a fixed percentage p of initial balance is low enough to survive whatever n-year retirement OP has in mind, then increases to the same percentage of a higher balance encountered along the way will be OK, because by definition percentage p is safe for n years, therefore ...