Search found 327 matches

by privatefarmer
Mon Jan 30, 2017 6:16 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 11910

Re: Risk tolerance when you meet your number1

I guess I just don't understand the rational behind most people's thinking here. We know to be true : 1) historically, across the global economy over as long a period of time that we can trace, equities outperform fixed income because of their higher volatility/risk 2) even if you are retired, or h...
by privatefarmer
Mon Jan 30, 2017 2:04 am
Forum: Investing - Theory, News & General
Topic: Risk tolerance when you meet your number
Replies: 106
Views: 11910

Re: Risk tolerance when you meet your number

I guess I just don't understand the rational behind most people's thinking here. We know to be true : 1) historically, across the global economy over as long a period of time that we can trace, equities outperform fixed income because of their higher volatility/risk 2) even if you are retired, or ha...
by privatefarmer
Sun Jan 15, 2017 2:16 am
Forum: Investing - Theory, News & General
Topic: leverage and beating the market
Replies: 45
Views: 5042

Re: leverage and beating the market

If you're a buy & hold investor that has been able to weather downturns before in the past and doesn't have a need to touch investments for 30+ years, is there any issue in holding a bit of leverage to increase returns and avoid margin calls? In my early 30s and would like to find a smart way to do...
by privatefarmer
Fri Jan 13, 2017 9:27 am
Forum: Investing - Theory, News & General
Topic: How Much To Tilt To Small Value?
Replies: 227
Views: 35926

Re: How Much To Tilt To Small Value?

I have 100% of my US equity in VBR. reason being : 1) as Larry has pointed out, diversify across factors vs "asset classes". Being in small value gives you exposure to three factors, so that if one or two of the factors are not presently "working", hopefully the third one is. 2) an ETF like VBR sti...
by privatefarmer
Fri Jan 13, 2017 8:27 am
Forum: Investing - Theory, News & General
Topic: How Much To Tilt To Small Value?
Replies: 227
Views: 35926

Re: How Much To Tilt To Small Value?

I have 100% of my US equity in VBR. reason being : 1) as Larry has pointed out, diversify across factors vs "asset classes". Being in small value gives you exposure to three factors, so that if one or two of the factors are not presently "working", hopefully the third one is. 2) an ETF like VBR stil...
by privatefarmer
Wed Jan 04, 2017 12:41 am
Forum: Investing - Theory, News & General
Topic: Thoughts on ishares multifactor ETFs?
Replies: 16
Views: 3188

Re: Thoughts on ishares multifactor ETFs?

Thanks for the replies!
by privatefarmer
Tue Jan 03, 2017 3:46 am
Forum: Investing - Theory, News & General
Topic: Thoughts on ishares multifactor ETFs?
Replies: 16
Views: 3188

Thoughts on ishares multifactor ETFs?

Would love to get everyone's thoughts on iShares multifactor ETF SMLF. Larry, if you happen to read this, would especially love your thoughts. Should this ETF effectively "capture" all four premiums it seeks to capture? Does this make sense or is it just complicating things too much? I see the ER is...
by privatefarmer
Tue Jan 03, 2017 2:18 am
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting - Is it worth it?
Replies: 85
Views: 10179

Re: Tax Loss Harvesting - Is it worth it?

dumb question, I apologize, but how exactly do we "carry over" an investment loss for TLH from previous years? I use taxact but do not remember it "asking" me if I had investment losses from prior years. and how/who tracks all this? how does the IRS know when we've "exhausted" all our losses from pr...
by privatefarmer
Fri Dec 30, 2016 7:54 am
Forum: Investing - Theory, News & General
Topic: Bond Allocation if you don't care about Volatility
Replies: 26
Views: 1871

Re: Bond Allocation if you don't care about Volatility

Here we go again with the >100% equity posts. Bear market on the way. I hope so! Because if we are 100%+ in equities that means we have a very very long horizon. So nothing would be better than a bear market, buy stocks on sale! If one does use margin one should definitely understand the risks of m...
by privatefarmer
Fri Dec 30, 2016 12:31 am
Forum: Investing - Theory, News & General
Topic: Bond Allocation if you don't care about Volatility
Replies: 26
Views: 1871

Re: Bond Allocation if you don't care about Volatility

Or I guess a better question: how do I mimic leverage using options trading? I've tried figuring this out myself. It seems that one would need to use LEAPS. However it seems more speculative to me as the predicted future volatility of the market is factored into the price of the options contract, s...
by privatefarmer
Thu Dec 29, 2016 11:55 pm
Forum: Investing - Theory, News & General
Topic: Bond Allocation if you don't care about Volatility
Replies: 26
Views: 1871

Re: Bond Allocation if you don't care about Volatility

Nope. But why stop at 100%? You can borrow from interactive brokers at <2% interest. I'm currently at 125% equities. Volatility only matters if you don't have an understanding of market history. I expect a 60% decline in the future. But I expect it to be temporary and over the long haul do much bett...
by privatefarmer
Mon Dec 05, 2016 8:41 am
Forum: Investing - Theory, News & General
Topic: Nice short Vanguard videos on factor based investing
Replies: 31
Views: 4013

Re: Nice short Vanguard videos on factor based investing

Larry - I apologize if this is in your book (I am currently in the middle of the newest one), but what factor premium would you expect after one has already maxed out the beta/small/value factors? If one were to add additional factors beyond these three (ie momentum, profitability, quality, etc) wha...
by privatefarmer
Sun Dec 04, 2016 1:04 am
Forum: Investing - Theory, News & General
Topic: active, passive, and factor investing
Replies: 40
Views: 3541

Re: active, passive, and factor investing

stlutz Here's a very different perspective. TSM is the most diversified by NUMBER of stocks and that's it. It's much more concentrated in individual securities for example. And most importantly it leaves one with exposure to only a single factor when there are other well known factors that have str...
by privatefarmer
Sat Dec 03, 2016 2:31 am
Forum: Investing - Theory, News & General
Topic: active, passive, and factor investing
Replies: 40
Views: 3541

Re: active, passive, and factor investing

There are hundreds of factors in the literature. But even with just three factors you can already explain most diversified portfolio returns fairly well (high R^2, more or less). There are diminishing returns in adding more, especially after four or so, and most of the hundreds are more or less exp...
by privatefarmer
Sat Dec 03, 2016 1:21 am
Forum: Investing - Theory, News & General
Topic: active, passive, and factor investing
Replies: 40
Views: 3541

active, passive, and factor investing

I hope I have not made too many posts on this subject. I have been spending much time studying the various factors (size, value, profitability, momentum, etc etc) and although the data is compelling I am now wondering if, as we discover more and more factors, we will eventually get to a point where ...
by privatefarmer
Thu Dec 01, 2016 4:06 pm
Forum: Investing - Theory, News & General
Topic: The "purity" of small value
Replies: 12
Views: 1728

Re: The "purity" of small value

Thanks Larry! That sums it up pretty concisely. Now bridgeway funds - do they only come with an advisor or are they available on the retail market? Thanks again
by privatefarmer
Thu Dec 01, 2016 3:06 pm
Forum: Investing - Theory, News & General
Topic: The "purity" of small value
Replies: 12
Views: 1728

The "purity" of small value

am curious as to what everyone would guess the difference in a more "pure" small cap value fund vs less pure fund would be in performance. For example, comparing a more pure find like DFA vs a less pure small value fund from vanguard. Specifically, if small cap value has out performed the S/P 500 by...
by privatefarmer
Wed Nov 23, 2016 12:28 am
Forum: Investing - Theory, News & General
Topic: small cap value? overplayed?
Replies: 30
Views: 5054

Re: small cap value? overplayed?

That said, I read one of your articles on ETF.com where you compared various brands (for lack of a better work) of small value index funds. Sounded like you were a bit down on the Vanguard option (VISVX). For those of us who dont want to go through an adviser to get access to DFA or Bridgeway ... d...
by privatefarmer
Tue Nov 22, 2016 8:13 am
Forum: Investing - Theory, News & General
Topic: DFA vs Vanguard (I know, I know)
Replies: 34
Views: 5865

Re: DFA vs Vanguard (I know, I know)

Thanks for the insight everyone. I have been contemplating paying an advisory service for DFA access. But with the fee plus the increased ER of DFA funds, I would be paying almost a full 1% over vanguard for more "pure" SCV exposure. I am 100% equities, 65% of that is SCV and 35% is emerging market...
by privatefarmer
Tue Nov 22, 2016 12:53 am
Forum: Investing - Theory, News & General
Topic: DFA vs Vanguard (I know, I know)
Replies: 34
Views: 5865

Re: DFA vs Vanguard (I know, I know)

Thanks for the insight everyone. I have been contemplating paying an advisory service for DFA access. But with the fee plus the increased ER of DFA funds, I would be paying almost a full 1% over vanguard for more "pure" SCV exposure. I am 100% equities, 65% of that is SCV and 35% is emerging markets...
by privatefarmer
Mon Nov 21, 2016 9:47 am
Forum: Investing - Theory, News & General
Topic: DFA vs Vanguard (I know, I know)
Replies: 34
Views: 5865

Re: DFA vs Vanguard (I know, I know)

Private Farmer, glad you are enjoying the book and finding it helpful. The book provides all the information you need to answer your questions--and it's all in the tables I've presented here. With that said, few thoughts for you to consider. First there has been negative value premium for last 9 ye...
by privatefarmer
Mon Nov 21, 2016 7:13 am
Forum: Investing - Theory, News & General
Topic: DFA vs Vanguard (I know, I know)
Replies: 34
Views: 5865

Re: DFA vs Vanguard (I know, I know)

This article, by Larry, pretty much answers my question : http://www.cbsnews.com/news/dfa-vs-vanguard-another-take/ I guess my only concern is will DFA continue to be significantly more pure when it comes to capturing the factor premiums, enough so to overcome their higher ERs? We probably have no w...
by privatefarmer
Mon Nov 21, 2016 7:03 am
Forum: Investing - Theory, News & General
Topic: DFA vs Vanguard (I know, I know)
Replies: 34
Views: 5865

Re: DFA vs Vanguard (I know, I know)

...over the last 10 years or so there seems to not have been much difference between vanguards small value fund vs DFA, at least domestically (in actuality, vanguard has outperformed DFA but this could just be due to lack of value/small premium)... DFSVX has an average market-cap of $1,468Mil, and ...
by privatefarmer
Mon Nov 21, 2016 4:12 am
Forum: Investing - Theory, News & General
Topic: DFA vs Vanguard (I know, I know)
Replies: 34
Views: 5865

DFA vs Vanguard (I know, I know)

I know this has probably been discussed ad nauseam so please forgive me. However, after reading Larry's books and countless articles including Vanguard's own article on smart beta, I strongly believe in the small/value factor premiums. My question is, and I assume Larry could answer this as well as ...
by privatefarmer
Wed Sep 28, 2016 8:15 am
Forum: Investing - Help with Personal Investments
Topic: determining roth contributions vs earnings
Replies: 5
Views: 666

Re: determining roth contributions vs earnings

Hello all - if someone reaches financial independence before age 59 1/2 and they want to start taking withdrawals from their portfolio, and want to start w/ the roth contributions, who exactly is responsible for providing the documentation regarding how much contributions one has made over the cour...
by privatefarmer
Wed Sep 28, 2016 6:18 am
Forum: Investing - Help with Personal Investments
Topic: determining roth contributions vs earnings
Replies: 5
Views: 666

determining roth contributions vs earnings

Hello all - if someone reaches financial independence before age 59 1/2 and they want to start taking withdrawals from their portfolio, and want to start w/ the roth contributions, who exactly is responsible for providing the documentation regarding how much contributions one has made over the cours...
by privatefarmer
Thu Sep 15, 2016 2:50 am
Forum: Investing - Theory, News & General
Topic: Bogleheads' Rule of Thumb - Stocks vs Bonds
Replies: 103
Views: 14841

Re: Bogleheads' Rule of Thumb - Stocks vs Bonds

stocks outperform bonds over the long term.

100% stocks 100% of the time, until my time horizon is <10 years.
by privatefarmer
Mon Sep 05, 2016 7:29 pm
Forum: Investing - Theory, News & General
Topic: Ric Edelman's The Truth about Retirement on PBS
Replies: 142
Views: 17281

Re: Ric Edelman's The Truth about Retirement on PBS

No mortgage in retirement lowers your fixed costs. Maybe by a lot. This allows you to keep more in stocks, because you can more easily weather a drop in the market. Best is to arrive at retirement with a paid-off house AND substantial investments. this simply isn't true. Having a mortgage is exactl...
by privatefarmer
Fri Aug 26, 2016 5:26 am
Forum: Investing - Theory, News & General
Topic: Looking ahead to 2030.
Replies: 11
Views: 2234

Re: Looking ahead to 2030.

Let's say in 2030 the S+P500 is at approx. 3000, which is plausible (to me at least). That would mean that from 2000 (when the S+P was 1500) for 30 years, you would have only doubled your money, plus you would have the compounded dividends, which, let's say, gave you another 80%. So over 30 years w...
by privatefarmer
Sun Aug 21, 2016 5:39 pm
Forum: Investing - Theory, News & General
Topic: Are there other reasons besides volatility to avoid 100% equities?
Replies: 115
Views: 10029

Re: Are there other reasons besides volatility to avoid 100% equities?

Yes, but you are a Washington St. fan and are thus used to severe disappointment so you can handle huge stock losses. :D Full disclosure. I went to Cal, my brother-in-law went to WSU and I've been to Pullman for Cal-WSU football games many times. It's one of my favorite places to go and my second f...
by privatefarmer
Sun Aug 21, 2016 5:37 pm
Forum: Investing - Theory, News & General
Topic: Are there other reasons besides volatility to avoid 100% equities?
Replies: 115
Views: 10029

Re: Are there other reasons besides volatility to avoid 100% equities?

To me, this is a similar argument one could make when choosing a career path. Why choose to become a doctor, lawyer, engineer, or any other profession that HISTORICALLY has made good money? Why not choose to work at McDonalds? Because HISTORICALLY the other professions have done far better. We don't...
by privatefarmer
Sun Aug 21, 2016 5:19 pm
Forum: Investing - Theory, News & General
Topic: Are there other reasons besides volatility to avoid 100% equities?
Replies: 115
Views: 10029

Re: Are there other reasons besides volatility to avoid 100% equities?

if you have a long time horizon (ie 20+ years) there is really no sense in holding anything other than stocks. It is that simple. Nobody knows the future but we all have to make an educated guess on what is going to happen over the next 20-30 years etc and with the evidence we have why would we not ...
by privatefarmer
Sat Aug 13, 2016 1:17 am
Forum: Personal Finance (Not Investing)
Topic: stupid question [Sustainable withdrawal rate]
Replies: 15
Views: 2184

Re: stupid question [Sustainable withdrawal rate]

thanks all! So although the long-term CAGR of a portfolio may be X%, one cannot simply withdraw that amount each year and expect the portfolio to be unchanged at the end. Paul Merriman has a table from 1970-2016 that shows that a flexible withdrawal of 6%/year in a globally diversified 100% equity p...
by privatefarmer
Fri Aug 12, 2016 7:05 am
Forum: Personal Finance (Not Investing)
Topic: stupid question [Sustainable withdrawal rate]
Replies: 15
Views: 2184

Re: stupid question

No. CAGR [compound annual growth rate] is an average of actual returns over a given time period. It's not the actual growth rate for any individual year. It's possible and quite likely for a 30 year period to have a positive CAGR in which some years had a negative growth rate (I.e. In which the por...
by privatefarmer
Fri Aug 12, 2016 7:00 am
Forum: Personal Finance (Not Investing)
Topic: stupid question [Sustainable withdrawal rate]
Replies: 15
Views: 2184

Re: stupid question

No. CAGR [compound annual growth rate] is an average of actual returns over a given time period. It's not the actual growth rate for any individual year. It's possible and quite likely for a 30 year period to have a positive CAGR in which some years had a negative growth rate (I.e. In which the por...
by privatefarmer
Fri Aug 12, 2016 6:18 am
Forum: Personal Finance (Not Investing)
Topic: stupid question [Sustainable withdrawal rate]
Replies: 15
Views: 2184

stupid question [Sustainable withdrawal rate]

stupid question - if your portfolio's CAGR is 8% real, inflation adjusted, could you withdraw 8% of your portfolio's value at the end of each year indefinitely, w/o decreasing the value of your portfolio? I understand the withdrawals will fluctuate in size based on the size of the portfolio, but if ...
by privatefarmer
Thu Aug 04, 2016 12:07 am
Forum: Investing - Theory, News & General
Topic: New JB interview [John Bogle says industry needs to change]
Replies: 11
Views: 2044

Re: "9 Landmark Smart Beta ETFs"

Bogleheads: ETF.com website features an article about 9-landmark "Smart-Beta" ETFs. Only five of the nine have 5-year Morningstar returns (IWB; PWC; RSP; DUY; PRF). On 08/02/2016 these five Smart-Beta ETFs had an average 5-year return of 6.98% . Meanwhile Total Stock Market Index Fund (VTSAX) had a...
by privatefarmer
Sun Jul 31, 2016 2:14 am
Forum: Investing - Theory, News & General
Topic: portfoliovisualizer/max drawdown
Replies: 3
Views: 518

Re: portfoliovisualizer/max drawdown

Ohhh okay thanks! So the 38% drawdown on the asset backtest is probably the worst one-year drawdown, from Jan-December? That makes sense.
by privatefarmer
Sun Jul 31, 2016 1:36 am
Forum: Investing - Theory, News & General
Topic: portfoliovisualizer/max drawdown
Replies: 3
Views: 518

portfoliovisualizer/max drawdown

why is it that when backtesting on portfoliovisualizer if you backtest an actual ETF (ie SPY) it shows the max drawdown during the recession as ~51%, however if you backtest the "asset allocation" (ie large cap blend) it shows the max drawdown as only ~38%?? Which is accurate? I am pretty sure the S...
by privatefarmer
Sat Jul 30, 2016 1:57 am
Forum: Investing - Theory, News & General
Topic: How can markets keep going up ?
Replies: 131
Views: 13615

Re: How can markets keep going up ?

[quote="HomerJ"]Human capital. Every day, billions of people do work that adds to the wealth of the world.[/quote] This. When one is born one has essentially ~50 years of potential capital that they have yet to release into the world. For example, someone turning 18 years of age today has potentiall...
by privatefarmer
Sat Jul 23, 2016 12:50 pm
Forum: Investing - Theory, News & General
Topic: LCG vs LCV over the last 23 years
Replies: 32
Views: 3811

Re: LCG vs LCV over the last 23 years

thanks for the replies! while I agree that even a ~25bp increase in CAGR is significant, it came at a lower (albeit essentially the same) std. deviation so the increase in CAGR wouldn't be explained by increase risk. It could just be random chance. I think I am coming to realize that the risk premiu...
by privatefarmer
Sat Jul 23, 2016 11:14 am
Forum: Investing - Theory, News & General
Topic: LCG vs LCV over the last 23 years
Replies: 32
Views: 3811

LCG vs LCV over the last 23 years

This threw me by surprise. When backtesting VGRIX (vangaurd's LCG index fund) vs VIVAX (LCV) since inception on portfoliovisualizer.com, theyve essentially got the same CAGR (9.08% for VIVAX and 8.85% for VGRIX) but LCG actually has a slightly higher std. deviation (15.81% vs 14.96%). All in all, th...
by privatefarmer
Wed Jul 20, 2016 11:43 pm
Forum: Investing - Theory, News & General
Topic: cost of turnover in a retirement account
Replies: 4
Views: 460

Re: cost of turnover in a retirement account

It would depend on the bid/ask spread. For big funds it is a penny, which is practically zero. For smaller ones it can be more. If you are good with excel you can use Yahoo data import to find the bid and ask prices of your particular ETF, then compute (ask-bid)/price. That would give you the round...
by privatefarmer
Wed Jul 20, 2016 11:18 pm
Forum: Investing - Theory, News & General
Topic: cost of turnover in a retirement account
Replies: 4
Views: 460

cost of turnover in a retirement account

Hello, I understand that the general consensus is that for every 100% of turnover one can expect about 1% added expenses. However, what if the ETF/fund is in a retirement account? There would not be capital gains, however there still would be a bid/ask spread on all the trading. Anyone have any data...
by privatefarmer
Mon Jul 18, 2016 1:08 am
Forum: Investing - Theory, News & General
Topic: cost of borrowing vs inflation
Replies: 11
Views: 1326

Re: cost of borrowing vs inflation

You are overthinking this. Suppose you take a $1M loan at 1.8%, and invest in VCSH, which currently has a yield of 2.01%. Over the course of a year, you will pay $1,800 in interest, and collect $2,010 in dividends (assuming that the current payout continues). This gives you a profit of $210. Only t...
by privatefarmer
Mon Jul 18, 2016 12:57 am
Forum: Investing - Theory, News & General
Topic: cost of borrowing vs inflation
Replies: 11
Views: 1326

Re: cost of borrowing vs inflation

You are overthinking this. Suppose you take a $1M loan at 1.8%, and invest in VCSH, which currently has a yield of 2.01%. Over the course of a year, you will pay $1,800 in interest, and collect $2,010 in dividends (assuming that the current payout continues). This gives you a profit of $210. Only t...
by privatefarmer
Mon Jul 18, 2016 12:52 am
Forum: Investing - Theory, News & General
Topic: cost of borrowing vs inflation
Replies: 11
Views: 1326

Re: cost of borrowing vs inflation

You are overthinking this. Suppose you take a $1M loan at 1.8%, and invest in VCSH, which currently has a yield of 2.01%. Over the course of a year, you will pay $1,800 in interest, and collect $2,010 in dividends (assuming that the current payout continues). This gives you a profit of $210. Only t...
by privatefarmer
Sun Jul 17, 2016 11:56 pm
Forum: Investing - Theory, News & General
Topic: cost of borrowing vs inflation
Replies: 11
Views: 1326

cost of borrowing vs inflation

this may seem like a dumb question so I appologize, however I am having trouble wrapping my head around this. I invest via margin loan at interactive brokers (I know, I know). The cost to borrow is 1.8%, but it is variable and tied to the federal fund rate. I think I have been mistaken in thinking t...
by privatefarmer
Tue Jul 05, 2016 8:00 am
Forum: Investing - Theory, News & General
Topic: stocks + oil = same return w/ less stand. deviation??
Replies: 26
Views: 2029

Re: stocks + oil = same return w/ less stand. deviation??

i have always stayed away from commodities Why did you stay away from commodities (or for that matter, any asset class)? Because companies earn profits and share those profits with shareholders. Equities historically have been the best performing asset class while commodities have performed terribl...
by privatefarmer
Tue Jul 05, 2016 7:37 am
Forum: Investing - Theory, News & General
Topic: stocks + oil = same return w/ less stand. deviation??
Replies: 26
Views: 2029

Re: stocks + oil = same return w/ less stand. deviation??

...i have always stayed away from commodities but if we can get the same return w/ less volatility why would we not? Because that's a big "if." It's one thing to show how mixtures of investments with specific past returns, standard deviations, and correlations would have done in the past... and how...