Search found 1192 matches

by Stormbringer
Mon Mar 04, 2024 8:26 am
Forum: Investing - Theory, News & General
Topic: Dot.Com Era/AI Era?
Replies: 311
Views: 29926

Re: Dot.Com Era/AI Era?

So an AI superintelligence will be able to form new insights from existing scientific data, like another Einstein. That will be super exciting and freak out scientists. But then it will hit a wall, and be limited by new data. Kinda like how LLMs, when they were finally fed the entire internet of data (at the cost of billions of $ of compute) gave us ChatGPTx. But now future breakthroughs will require MORE DATA. Where is that going to come from? Probably some combination of synthetic data, simulations and reward functions. Consider how Deep Mind tackled chess. They simply taught the AI the basic rules of chess and let it play millions of games against an adversarial AI. The reward function was a checkmate. Fast forward two days, and the AI ...
by Stormbringer
Sun Mar 03, 2024 6:03 am
Forum: Personal Investments
Topic: Market Timing = Always Bad?
Replies: 35
Views: 4203

Re: Market Timing = Always Bad?

I think we need a better collective understanding of what "market timing" is. People often seem to think that anything other than robotically making regular contributions towards a target asset allocation is market timing. At its core, this view seems to be based on a belief that markets are generally efficient, or at least know more than you do, which is demonstrably and obviously untrue at times.

In my view, market timing is like the roulette player who bets on black because the last six spins were red. It is a form of gambling, based on some sort of hunch about what is going to happen next.

To me that is entirely different from recognizing when something is cheap, or expensive, and acting on it.
by Stormbringer
Sat Feb 24, 2024 1:29 pm
Forum: Investing - Theory, News & General
Topic: LMP/TIPS Ladder Pros & Cons Master Thread
Replies: 71
Views: 6038

Re: LMP/TIPS Ladder Pros & Cons Master Thread

Being a year or two or five from early retirement, we ho'd and hum'd for a few months before finally laying down a 30 years TIPS ladder in October. It was a big relief to do so, knowing that our basic spending needs will be covered in about as risk-free a way as possible.
by Stormbringer
Wed Jan 31, 2024 1:03 pm
Forum: Investing - Theory, News & General
Topic: NewRetirement output seems counter to my own math
Replies: 35
Views: 3402

Re: NewRetirement output seems counter to my own math

I honestly don't trust that thing at all. I've had it give me enough strange, unexplainable results that I stopped using it. For example, it shows me with $265K+ per year in long-term care expenses in my final years, yet the HSA balance just grows and grows. Instead, it is pulling money out of the taxable brokerage account.

It should provide better diagnostics to help explain the choices and assumptions it makes. Also, it only shows nominal dollar amounts, which I find useless for multi-decade planning. I find myself always having to manually deflate numbers to make sense of what they mean.
by Stormbringer
Thu Jan 25, 2024 1:34 pm
Forum: Investing - Theory, News & General
Topic: Do Bond Funds Really Make Sense for the Long Run?
Replies: 399
Views: 39314

Re: Do Bond Funds Really Make Sense for the Long Run?

Kevin K wrote: Sat Jan 20, 2024 10:17 am Don’t get me wrong: bonds have their place. A LADDER of bonds, in which individual bonds mature year by year, is an excellent means of locking in a certain income stream (the best ladders will use Treasury Inflation-Protected Securities).
This is precisely what I did. I carved off a chunk of our portfolio to create a layer of inflation-protected stream "income" on top of Social Security, enough to cover our basic needs in retirement. I don't even consider those bonds to be part of the risk portfolio anymore. Rather, I have them in the same mental bucket as Social Security.

Having done that, the risk portfolio is earmarked to fund discretionary spending and legacy, so taking a bit more risk with that is acceptable.
by Stormbringer
Mon Dec 18, 2023 10:12 pm
Forum: Investing - Theory, News & General
Topic: Calculating how TIPS payout
Replies: 5
Views: 1021

Re: Calculating how TIPS payout

You should receive your final interest payment as well.
by Stormbringer
Thu Dec 14, 2023 5:06 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2953
Views: 623601

Re: Now that long TIPS yields are 60 bp off their highs I will…

...bask in the glory of having built my ladder in October!
by Stormbringer
Sun Dec 10, 2023 5:29 am
Forum: Investing - Theory, News & General
Topic: Reporter doing story on retirees who are shifting to bonds for today's higher yields
Replies: 11
Views: 3213

Re: Reporter doing story on retirees who are shifting to bonds for today's higher yields

A shift to bonds is not necessarily market timing. Bernstein's WSJ article where he said "if you've the game, stop playing" is apropos here. If you have achieved a goal, locking in that achievement by switching to less risky assets is completely rational, and perhaps wise.
by Stormbringer
Tue Dec 05, 2023 7:50 am
Forum: Investing - Theory, News & General
Topic: Should you buy I bonds if Retired
Replies: 51
Views: 8426

Re: Should you buy I bonds if Retired

drzzzzz wrote: Mon Dec 04, 2023 5:31 pm Also not sure how easy it is for heirs to deal with I bonds at time of death.
On the TreasuryDirect.gov website, you can register your I-Bonds as "payable on death" to another person. However, you can't make it POD to a trust or to multiple people, so you need to plan accordingly. If you don't register it this way, the bonds just become part of your estate and your heirs will need to work with the Treasury to settle them.
by Stormbringer
Thu Nov 30, 2023 4:13 pm
Forum: Investing - Theory, News & General
Topic: What non-index fund investment made you a lot of money?
Replies: 141
Views: 26750

Re: What non-index fund investment made you a lot of money?

Rental properties account for about half our net worth.
by Stormbringer
Thu Nov 30, 2023 3:10 pm
Forum: Investing - Theory, News & General
Topic: Firecalc.com - What is acceptable percentage?
Replies: 77
Views: 9973

Re: Firecalc.com - What is acceptable percentage?

bg5 wrote: Tue Nov 28, 2023 8:16 am My wife and I are both teachers who will get pretty nice pensions and our state does allow us to collect SS as well so we will be in really good shape just with pensions and SS.
I think the answer depends on whether you have legacy goals for some of that money, or if you consider money not spent as being wasted.

Using historical data, the most likely outcome of applying the 4% rule to a $1M portfolio is that you die with much more than $1M in the bank. For those who want to leave money behind, that is usually just fine.

However, if you want to use that money to maximize spending in retirement, there are probably more efficient ways to spend it down than the 4% rule.
by Stormbringer
Mon Nov 27, 2023 6:44 am
Forum: Investing - Theory, News & General
Topic: Longevity Risk
Replies: 64
Views: 7846

Re: Longevity Risk

I'm somewhat partial to a TIPS ladder with a fat final rung that can be used to purchase a SPIA when it matures. That way you have 30 years of inflation protection followed by an annuity with a rather high payout rate that provides longevity protection, and fewer years for inflation to grind down the purchasing power of the annuity.
by Stormbringer
Wed Nov 15, 2023 8:41 am
Forum: Investing - Theory, News & General
Topic: Questions about how TIPS work
Replies: 9
Views: 1497

Re: Questions about how TIPS work

tcrez wrote: Wed Nov 15, 2023 8:00 am I read the principal adjusts daily to inflation. How is it that precise when inflation numbers come out monthly?
It is not precise. The daily index is an estimate, based on the trending CPI-U numbers.
by Stormbringer
Fri Nov 10, 2023 7:09 am
Forum: Investing - Theory, News & General
Topic: 8% SWR!
Replies: 112
Views: 13293

Re: 8% SWR!

One thought-provoking question Ramsey asks is: if stocks return 12% and you only spend 4%, what happens to the other 8%?

The answer isn't at all intuitive to most people, and I'm sure that makes his message attractive to many people. And if we are honest, in most cases that 8% simply accumulates and compounds, leaving a pile of unspent money behind. Except, of course, in the small number of cases when it doesn't.
by Stormbringer
Thu Nov 09, 2023 7:44 am
Forum: Investing - Theory, News & General
Topic: Late Boomers (born 1960-65) study on having so little wealth...
Replies: 103
Views: 15604

Re: Late Boomers (born 1960-65) study on having so little wealth...

In early 2009, my friend's brother who was born in 1965:
  1. Panicked and cashed out his 401(k), paying the taxes and penalties.
  2. Drove across two states for a meeting at corporate HQ, where he was fired as part of a massive downsizing. They took the keys to his company car, his company phone, and security marched him to the door, stranding him two states from home.
  3. Was divorced by his wife, who took half what little was left.
Unsurprisingly, he never really recovered from that.
by Stormbringer
Wed Nov 08, 2023 7:29 am
Forum: Investing - Theory, News & General
Topic: Can passive index investing beat active AI investing
Replies: 96
Views: 9930

Re: Can passive index investing beat active AI investing

Interesting, although your statements (I boldfaced) invite your reasoning: _What is their "nascent ability" and how do they "clearly exhibit" that ability to reason? Dr. Geoffrey Hinton (the so-called "godfather of AI") can explain it better than I can: https://youtu.be/qrvK_KuIeJk?t=496 _Why is it "more likely" they will think differently and better than we do and how would they achieve "perfect recollection"? Rarely do humans build machines that do things the way we do them, and that is because there is almost always a better way to do the job. Humans used to dig ditches with shovels until we built hydraulic backhoes to do the job more efficiently. We used to travel using muscle power and...
by Stormbringer
Tue Nov 07, 2023 9:12 am
Forum: Investing - Theory, News & General
Topic: Is investing the best way to hedge against the risk of my job being replaced by AI?
Replies: 22
Views: 2785

Re: Is investing the best way to hedge against the risk of my job being replaced by AI?

In the short to medium term, the best way to preserve your job is to learn to work with AI as your co-pilot.

Over time, AI and robots will be:
  • Better
  • Faster
  • Cheaper
  • Safer
This will benefit businesses who can lower costs and improve quality, so I would expect them be more profitable, at least until they compete those excess profits away.

You want to own the companies that own the machines.
by Stormbringer
Tue Nov 07, 2023 8:55 am
Forum: Investing - Theory, News & General
Topic: Can passive index investing beat active AI investing
Replies: 96
Views: 9930

Re: Can passive index investing beat active AI investing

Please explain what kind of human intelligence is manifested by your example. As far as I can tell, it is knowledge base search. I am convinced that Artificial Stupidity by the human being using AI will mess things up when it matters. Hence, passive indexing will win. KlangFool Well, in my experience as a software developer who uses AI daily across multiple domains, all I can say is that these things clearly exhibit a nascent ability to reason. It goes way beyond a knowledge base search. Is that the same as "human intelligence"? Probably not, and we don't really fully understand human intelligence in any event. Nor is it at all clear that the best AI will think like precisely like a human any more than the best airplane would fly...
by Stormbringer
Tue Nov 07, 2023 8:17 am
Forum: Investing - Theory, News & General
Topic: Can passive index investing beat active AI investing
Replies: 96
Views: 9930

Re: Can passive index investing beat active AI investing

nisiprius wrote: Mon Nov 06, 2023 12:22 pm At the moment, the AI models that are getting all the attention clearly are not exhibiting "intelligence" similar to human-style intelligence, and cannot deal with novel situations they didn't encounter during their training.
Sure about that?

Image
by Stormbringer
Mon Nov 06, 2023 3:22 pm
Forum: Investing - Theory, News & General
Topic: M* article "We Need to Talk About Your Retirement Spending"
Replies: 27
Views: 4296

Re: M* article "We Need to Talk About Your Retirement Spending"

afan wrote: Mon Nov 06, 2023 2:41 pm So they do not spend from their taxable portfolio or their RMDs. Do they live on SS and/or pensions?
My mom and stepdad mostly live on their combined SS benefits, plus about 2% from their retirement accounts (which are over $1M combined). He gets a tiny ($100/mo) pension from a previous job. They are just hitting RMD age now.

They live in a rural community and own their home, so their expenses are very low. They do take one big vacation per year plus a few smaller driving vacations. Otherwise, their retirement mostly consists of shaking their fists at the 24/7 news channels. I wish they would get out more.
by Stormbringer
Mon Nov 06, 2023 1:31 pm
Forum: Investing - Theory, News & General
Topic: M* article "We Need to Talk About Your Retirement Spending"
Replies: 27
Views: 4296

Re: M* article "We Need to Talk About Your Retirement Spending"

My mom is a good example of underspending in retirement. She withdraws about 2% of her 60/40 portfolio every year. I try to get her to spend more (on herself) but she doesn't want to because she is afraid of running out of money.

This is why I think people are better off, from a behavioral standpoint, having more guaranteed income during retirement. Markets make retirees feel anxious and insecure.
by Stormbringer
Mon Nov 06, 2023 6:27 am
Forum: Investing - Theory, News & General
Topic: Tax Optimization Strategies
Replies: 7
Views: 2219

Re: Tax Optimization Strategies

For 2022, we worked with our CPA to do a cost segregation study on our real estate portfolio. The rationale for this was that inflation was eating away at the future value of all those straight-line depreciation deductions, so it was better to pull as much of it forward as possible. That combined with the usual deductions (HSA, 401k, etc.) gave us an effective federal tax rate of about 5% in 2022.

As a kicker, it reduced our adjustable gross income enough to get a health insurance subsidy.
by Stormbringer
Sun Nov 05, 2023 3:14 pm
Forum: Personal Finance (Not Investing)
Topic: Home Sellers Win $1.8 Billion After Jury Finds Conspiracy Among Realtors
Replies: 421
Views: 47260

Re: Home Sellers Win $1.8 Billion After Jury Finds Conspiracy Among Realtors

I suspect that what happens next is a wave of lawsuits will sweep across the country as lawyers try to cash in this. I worry that many small businesses -- independent brokers and franchisees who were just following the rules imposed on them by their local MLS -- will be wiped out by a tidal wave of litigation.
by Stormbringer
Tue Oct 31, 2023 6:35 am
Forum: Investing - Theory, News & General
Topic: How volatile are long TIPS?
Replies: 65
Views: 8753

Re: How volatile are long TIPS?

IMO, long TIPS aren't great as an investment, but outstanding for asset-liability matching. As an investment, they are going to be volatile, and assuming a positive equity-risk premium, the returns are expected to be far lower than equities over multiple decades. However, if you ladder them and hold them to maturity, you can lay down a reliable stream of inflation-adjusted purchasing power for up to 30 years.
by Stormbringer
Sun Oct 29, 2023 11:04 am
Forum: Investing - Theory, News & General
Topic: Beat Inflation Handily, and Risk-Free - Allan Roth
Replies: 73
Views: 14352

Re: Beat Inflation Handily, and Risk-Free - Allan Roth

This technique could be used to backstop a 30-year TIPS ladder, providing a chunk of money just as the last rung runs out.
by Stormbringer
Fri Oct 27, 2023 6:52 am
Forum: Investing - Theory, News & General
Topic: Beat Inflation Handily, and Risk-Free - Allan Roth
Replies: 73
Views: 14352

Re: Beat Inflation Handily, and Risk-Free - Allan Roth

Joey Jo Jo Jr wrote: Fri Oct 27, 2023 6:41 am I understand the TIPS make up the lost stock principal, but what if there was inflation at the same time as the equities became worthless?
What he is showing is that if you start with $100K, you end up with $100K (inflation-adjusted) even if stocks go to zero. You cannot lose spending power so long as the government doesn't default on its debt. And of course, barring a global apocalypse, the entire world stock market can't really go to zero.
by Stormbringer
Tue Oct 24, 2023 8:11 am
Forum: Investing - Theory, News & General
Topic: Which risks exist? Bonds (Credit, duration). Factors (Small, value, momentum, etc.) What else?
Replies: 8
Views: 957

Re: Which risks exist? Bonds (Credit, duration). Factors (Small, value, momentum, etc.) What else?

larsnyborgpedersen wrote: Tue Oct 24, 2023 4:36 am Which risks exist in investing that I can be compensated for?
Longevity risk (i.e., living beyond your life expectancy).

There is only one way to get compensated for this, which is by pooling longevity risk with others and living beyond the life expectancy of the risk pool -- those who live longer are compensated by those who die sooner. So, eat your broccoli.

Examples of risk-pooled options include social security, pensions, annuities, and tontines.
by Stormbringer
Wed Oct 18, 2023 3:40 pm
Forum: Investing - Theory, News & General
Topic: High TIPS Yields are a Retiree's Best Friend - John Reckenthaler
Replies: 62
Views: 10003

Re: High TIPS Yields are a Retiree's Best Friend - John Reckenthaler

Not sure I would dedicate the majority of my portfolio to an investment product whose return is tied to an index which has been changed numerous times over the years, and, from what I gather, has consistently lowered the "official" rate of inflation. (Product substitution, for example, introduced to the 1980s was always in suspect IMHO for those who wished to maintain a constant basket of goods rather than lower the standard of living through substitution.) OER has been debated many times. YMMV https://www.bls.gov/cpi/additional-resources/historical-changes.htm More broadly, there is the question of whether CPI-U is a good proxy for your own personal inflation rate during retirement or not. We all consume a different backet of go...
by Stormbringer
Wed Oct 18, 2023 5:33 am
Forum: Investing - Theory, News & General
Topic: High TIPS Yields are a Retiree's Best Friend - John Reckenthaler
Replies: 62
Views: 10003

Re: High TIPS Yields are a Retiree's Best Friend - John Reckenthaler

er999 wrote: Wed Oct 18, 2023 12:39 am Very interesting point that a relatively small 100% stock allocation has a good chance, if left untouched, to reach a substantial sum 30 years on when the tips ladder expires. Usually a tips ladder is framed as giving up returns for certainty but if it allows you to keep a 100% stock allocation untouched for 30 years perhaps not. This isn’t a point I’ve read in the other tips threads.
I haven't seen this point raised in TIPS threads, but the concept is sometimes discussed in the context of annuities. Either way, it makes intuitive sense that if your spending needs are covered, then what remains for legacy purposes can be invested based on your children's time horizon rather than your own.
by Stormbringer
Tue Oct 17, 2023 8:23 pm
Forum: Investing - Theory, News & General
Topic: High TIPS Yields are a Retiree's Best Friend - John Reckenthaler
Replies: 62
Views: 10003

Re: High TIPS Yields are a Retiree's Best Friend - John Reckenthaler

TipsQuestions wrote: Tue Oct 17, 2023 7:28 pm The only question, is how much of your portfolio to devote to such a ladder?
We are laddering enough so that, when combined with Social Security, our basic retirement expenses are covered. It just seems like such a no-brainer.

We can then be more aggressive with the rest.
by Stormbringer
Mon Oct 16, 2023 10:39 am
Forum: Investing - Theory, News & General
Topic: earnings yield plus inflation - most straight forward stock return estimate?
Replies: 90
Views: 7735

Re: earnings yield plus inflation - most straight forward stock return estimate?

Assuming market multiples don't change, I like:

Code: Select all

Expected Return = % Shareholder Yield + % Growth in Shareholder Yield

Shareholder yield = (Dividends + Buybacks) / Earnings
If you think multiples will change, you will need to adjust accordingly.
by Stormbringer
Mon Oct 16, 2023 9:31 am
Forum: Investing - Theory, News & General
Topic: What Fraction of Retirement Assets in TIPS Ladder?
Replies: 80
Views: 13873

Re: What Fraction of Retirement Assets in TIPS Ladder?

Sticking 99% of your fixed income into a TIPs ladder is ridiculous. It would leave you basically at 100/0 for the rest of the portfolio. Why is that necessarily a problem? If the TIPS ladder is covering essential living expenses, that leaves the stocks as a risk portfolio for discretionary spending. The only thing that makes it a problem is that you need to plan for year 31 and beyond. Once the last rung was depleted, you would be at 0% bonds and 100% stocks. Whatever isn't in the ladder needs to be on some sort of glide path so that you arrive at the end of the ladder with a sensible asset allocation. What's the big deal about that? As you go along, you can sell your stocks to buy more rungs on the ladder, if you so choose. It isn't a big...
by Stormbringer
Mon Oct 16, 2023 7:32 am
Forum: Investing - Theory, News & General
Topic: What Fraction of Retirement Assets in TIPS Ladder?
Replies: 80
Views: 13873

Re: What Fraction of Retirement Assets in TIPS Ladder?

watchnerd wrote: Mon Oct 16, 2023 6:51 am
randomguy wrote: Fri Sep 15, 2023 4:30 pm Sticking 99% of your fixed income into a TIPs ladder is ridiculous. It would leave you basically at 100/0 for the rest of the portfolio.
Why is that necessarily a problem?

If the TIPS ladder is covering essential living expenses, that leaves the stocks as a risk portfolio for discretionary spending.
The only thing that makes it a problem is that you need to plan for year 31 and beyond. Once the last rung was depleted, you would be at 0% bonds and 100% stocks. Whatever isn't in the ladder needs to be on some sort of glide path so that you arrive at the end of the ladder with a sensible asset allocation.
by Stormbringer
Tue Oct 10, 2023 3:11 am
Forum: Investing - Theory, News & General
Topic: Bengen: "There is no guidance for SWR for those retiring today"
Replies: 231
Views: 21251

Re: Bengen: "There is no guidance for SWR for those retiring today"

Ocean77 wrote: Mon Oct 09, 2023 9:20 pm
JoMoney wrote: Mon Oct 09, 2023 9:42 am Fortunately, for those without the willingness to take stock risks you can guarantee a 30 year 4.7% + CPI withdrawal rate with a TIPS ladder at current rates.
It also guarantees that the money is gone after those 30 years, right?
Yes, which is why you can't realistically ladder your entire portfolio. A TIPS ladder doesn't solve for longevity risk.

There are options, such as:
  • Adding enough money to the final rung so that when it matures you can fund additional rungs.
  • Maintain a portfolio invested with with a 30-year time horizon that will fund retirement after the ladder has run off.
by Stormbringer
Mon Oct 09, 2023 2:23 pm
Forum: Investing - Theory, News & General
Topic: Bengen: "There is no guidance for SWR for those retiring today"
Replies: 231
Views: 21251

Re: Bengen: "There is no guidance for SWR for those retiring today"

ScubaHogg wrote: Mon Oct 09, 2023 11:00 am Since today TIPS alone will provide a higher SWR than the Bengen 4% rule has there hardly been a better time to retire?
The SWR of a 30-year TIPS ladder should be the floor for any 30-year SWR discussion. It literally has 100% chance of success over 30 years for any state of the world that wouldn't also obliterate the assumptions baked into just about every other SWR analysis. The hedge for a TIPS ladder is ammunition and canned goods.

If people aren't comfortable with the 30-year SWR offered by a TIPS ladder, then they probably aren't really looking for a 30-year SWR. More likely they are either looking for a longer time period or are concerned about leaving a legacy.
by Stormbringer
Sun Oct 08, 2023 1:36 pm
Forum: Investing - Theory, News & General
Topic: submit ?s: Dr. Bernstein on 'The Four Pillars of Investing'
Replies: 30
Views: 6302

Re: submit ?s: Dr. Bernstein on 'The Four Pillars of Investing'

In prior books the Equity Risk Premium was calculated using Gordon's equations (for the expected returns of stocks). Since share buybacks have become such a significant factor lately, does using gordon's equation which utilizes the dividend yield only remain your preferred method for calculating the ERP. Do you use something else now to calculate the expected returns of stocks? I think relying on Gordon is a serious error in Bernstein's analysis. The S&P 500 spends double on buybacks what it does on dividends. A modern version of the formula should use shareholder yield, not dividend yield. The tax code incentivizes share repurchases over dividends. Using Gordon, the expected return of Berkshire Hathaway has been 0% for the last 70 yea...
by Stormbringer
Fri Oct 06, 2023 3:51 pm
Forum: Investing - Theory, News & General
Topic: My Dream Annuity by Nathan Dutzmann
Replies: 93
Views: 9143

Re: My Dream Annuity by Nathan Dutzmann

Someone could build a TIPS ladder out until their life expectancy, and then add a chunk of extra money onto the final rung to purchase a SPIA. So, let's say you are retiring at 65 and based on your mortality table of choice, have a life expectancy of 82: Buy a TIPS ladder with 17 rungs. Add extra money to the final rung. Live off your inflation-adjusted TIPS as each rung matures. If you die early, your family gets everything that is left. If you are still around at age 82, use the final inflation-adjusted lump sum to buy a SPIA at that time. For the first 17 years, it eliminates the complaints most people have about annuities. By deferring the SPIA until later, the benefits of risk pooling are more meaningful, and the inflation risk is lowe...
by Stormbringer
Sun Oct 01, 2023 6:57 pm
Forum: Investing - Theory, News & General
Topic: the last "double" prior to retirement
Replies: 21
Views: 4111

Re: the last "double" prior to retirement

sambb wrote: Sun Oct 01, 2023 3:48 pm How did those who retired handle their last working 7-10 years, where you are looking for the last "double" of your portfolio, so you can retire? It seems like so much is devoted to that last double, and that the portfolio has the last large step to take, despite it being just mathematical. I presume this is the phase where investments are become larger than annual savings. So much depends on it not being a "lost decade", correct?
The problem is that you should be de-risking in the years prior to retirement, making it harder to double. Banking on a doubling sets yourself up for a sequence of returns disaster.
by Stormbringer
Sat Sep 23, 2023 9:20 am
Forum: Investing - Theory, News & General
Topic: Bill Ackman: "Long-term rates will rise further"
Replies: 84
Views: 13303

Re: Bill Ackman: "Long-term rates will rise further"

Hola wrote: Sat Sep 23, 2023 7:43 am Someone who benefits from bonds crashing. Do you see his motivation for putting out statements like these?
Exactly. Ackman is the guy who shorted the market and then went on CNBC to warn everyone that C19 would be the end of the world as we know it. He should have gotten an academy award for that performance.
by Stormbringer
Tue Sep 05, 2023 8:44 pm
Forum: Investing - Theory, News & General
Topic: What Fraction of Retirement Assets in TIPS Ladder?
Replies: 80
Views: 13873

Re: What Fraction of Retirement Assets in TIPS Ladder?

I'm curious why the 20-25% limit. Where is the risk in a TIPS ladder, such that one would need to diversify into other bonds?
by Stormbringer
Sat Aug 19, 2023 4:13 am
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2953
Views: 623601

Re: Now that long TIPS have cracked 2.00% again I will…

gwu11 wrote: Sat Aug 19, 2023 1:29 am Curious for those who hold substantial (50%?) of their assets in TIPS, do you mitigate the risk of deflation? My understanding is that deflation is the one killer scenario for TIPS?
If you think of TIPS as a way to preserve purchasing power, then deflation isn't really a threat. If prices go down, TIPS go down, but you can still buy the same amount of stuff with them.

Also, with TIPS yielding 2%, deflation would need to be at -2% before they start to lose value.
by Stormbringer
Thu Aug 17, 2023 3:57 pm
Forum: Investing - Theory, News & General
Topic: Is there a sort of easy way to decide when TIPS rates are worth backing the truck up on?
Replies: 116
Views: 11447

Re: Is there a sort of easy way to decide when TIPS rates are worth backing the truck up on?

Statistical wrote: Thu Aug 17, 2023 3:31 pm
Stormbringer wrote: Thu Aug 17, 2023 2:17 pm
Northern Flicker wrote: Thu Aug 17, 2023 2:14 pm Where do you get 4.5% real?
I got that using #cruncher's TIPS ladder builder (https://eyebonds.info/downloads/index.html) using the current TIPS prices from the WSJ (https://www.wsj.com/market-data/bonds/t ... _tips_full).

Paste those prices into the sheet and tell it you want $45,000 per year. It gives me a price of $999,008 for the cost of the ladder.
That isn't 4.5% real. It is $45k in cashflow on $1M meaning it includes spending the principal. The end result is $0 in assets not the original $1M plus $45k a year income. TIPS yields from 1 to 30 years are 2% to 4% so a 4.5% real return is not possible.
Right. It's a bond ladder. It provides $45K real spending each year for 30 years.
by Stormbringer
Thu Aug 17, 2023 2:17 pm
Forum: Investing - Theory, News & General
Topic: Is there a sort of easy way to decide when TIPS rates are worth backing the truck up on?
Replies: 116
Views: 11447

Re: Is there a sort of easy way to decide when TIPS rates are worth backing the truck up on?

Northern Flicker wrote: Thu Aug 17, 2023 2:14 pm Where do you get 4.5% real?
I got that using #cruncher's TIPS ladder builder (https://eyebonds.info/downloads/index.html) using the current TIPS prices from the WSJ (https://www.wsj.com/market-data/bonds/t ... _tips_full).

Paste those prices into the sheet and tell it you want $45,000 per year. It gives me a price of $999,008 for the cost of the ladder.
by Stormbringer
Thu Aug 17, 2023 2:10 pm
Forum: Investing - Theory, News & General
Topic: Is there a sort of easy way to decide when TIPS rates are worth backing the truck up on?
Replies: 116
Views: 11447

Re: Is there a sort of easy way to decide when TIPS rates are worth backing the truck up on?

Right now, $1 million will get you $45,000 real per year for 30 years. That's getting tempting.
by Stormbringer
Wed Aug 16, 2023 7:39 pm
Forum: Investing - Theory, News & General
Topic: "Mortgage is a negative bond" - please help me understand
Replies: 352
Views: 27631

Re: "Mortgage is a negative bond" - please help me understand

The S&P 500 companies owe trillions. Every share of stock comes with its own "negative bond" if you want to go down that rabbit hole.
by Stormbringer
Tue Aug 15, 2023 6:22 pm
Forum: Investing - Theory, News & General
Topic: How much gold should you hold in your portfolio?
Replies: 195
Views: 18211

Re: How much gold should you hold in your portfolio?

RationalWalk wrote: Tue Aug 15, 2023 4:59 pm just how much gold should you hold?
Enough to bribe the border guards.
by Stormbringer
Sun Aug 13, 2023 11:03 am
Forum: Investing - Theory, News & General
Topic: How are LMP/TIPS ladder folks allocating their Risk Portfolio?
Replies: 40
Views: 4262

Re: How are LMP/TIPS ladder folks allocating their Risk Portfolio?

I'm wondering: how much is too much?

We can cover all our basic retirement expenses with TIPS ladders and social security, with a fair bit left over. Is that too many eggs in one basket?
by Stormbringer
Sat Aug 12, 2023 3:59 pm
Forum: Investing - Theory, News & General
Topic: Tips ladder vs Tips ETF
Replies: 24
Views: 3260

Re: Tips ladder vs Tips ETF

jeffyscott wrote: Sat Aug 12, 2023 11:51 am There are no TIPS maturing in 2033-2039, so there would be a 7 year period of the 30 with some uncertainty, that's nearly 1/4 of the ladder.
There is a treasury auction scheduled for September 14th that will include 10 year TIPS that mature in 2033.

https://home.treasury.gov/system/files/ ... hedule.pdf
by Stormbringer
Sat Aug 12, 2023 9:01 am
Forum: Investing - Theory, News & General
Topic: New tool for building a TIPS ladder
Replies: 426
Views: 81354

Re: New tool for building a TIPS ladder

Two bugs, both related to going back to the parameters page after creating a ladder: 1) After viewing the ladder, if you hit the Back button and change the annual amount, it resets the last year to be funded to current year plus 10. 2) If you specify an amount year by year and then go back to it, the "Specified for each year" is still selected, but the year by year annual amount fields are missing. If you click on the Create Ladder button, you get an error: Inconsistent parameters for IncomeRequirement.Lumpy Lastly, a feature request: As an option, rather than specify an income, it would be nice to be able to specify how much you have to invest and for the tool to figure out how much income you can generate from that investment. F...