Search found 696 matches

by Park
Sat Jun 22, 2019 10:18 am
Forum: Investing - Theory, News & General
Topic: Small Value vs Multifactor
Replies: 58
Views: 5478

Re: Small Value vs Multifactor

A stock, or stocks in general, can be underpriced or overpriced. Eventually, the market gets it right. But my impression is that the market has greater trouble with overpricing than underpricing. When it's underpriced, buy. When it's overpriced, sell. But you can only sell what you own. If you reall...
by Park
Sat Jun 22, 2019 9:12 am
Forum: Investing - Theory, News & General
Topic: Small Value vs Multifactor
Replies: 58
Views: 5478

Re: Small Value vs Multifactor

Some comments, for what they're worth. If you keep on adding factors, couldn't you end up with a slightly more expensive market cap index fund? When I look at the data for value, it's persuasive. The data for small cap, less so. But the data for small value versus large value gets my attention. The ...
by Park
Sun Jun 16, 2019 10:38 pm
Forum: Investing - Theory, News & General
Topic: Can You Get A Meaningful Factor Tilt With Present Investment Products?
Replies: 26
Views: 1570

Re: Can You Get A Meaningful Factor Tilt With Present Investment Products?

I tried to add this to my previous post, but that didn't work. https://www.factorresearch.com/wp-content/uploads/Value-Smart-Beta-Factor-Correlations-1-Year-to-the-SP-500.png The above link shows the 1 year correlations of three large value funds (IWD iShares Russell 1000 Value ETF, IVE iShares S&P5...
by Park
Sun Jun 16, 2019 8:59 pm
Forum: Investing - Theory, News & General
Topic: Sweet Spot Between Short and Intermediate Term Bonds
Replies: 0
Views: 586

Sweet Spot Between Short and Intermediate Term Bonds

https://www.nytimes.com/2016/07/02/your-money/the-goldilocks-strategy-for-long-term-investment.html?rref=collection%2Ftimestopic%2FStocks%20and%20Bonds&action=click&contentCollection=your-money®ion=stream&module=stream_unit&version=latest&contentPlacement=31&pgtype=collection David A. Levine is a...
by Park
Sun Jun 16, 2019 3:24 pm
Forum: Investing - Theory, News & General
Topic: Can You Get A Meaningful Factor Tilt With Present Investment Products?
Replies: 26
Views: 1570

Re: Will You Get Increased Return From Your Factor Tilt?

With regard to the past, funds like Vanguard's small-cap value fund (VISVX) have generated higher returns than the market over their lifespan, in that particular case, by over 2% over the last 20 years. Since its inception in May 21/98, $10K in VISVX would have grown on a pretax basis to $53,155. T...
by Park
Sun Jun 16, 2019 1:29 pm
Forum: Investing - Theory, News & General
Topic: Can You Get A Meaningful Factor Tilt With Present Investment Products?
Replies: 26
Views: 1570

Re: Will You Get Increased Return From Your Factor Tilt?

Smart beta seems dumb. If you want to tilt toward the 'mainstream' factors, you can do so easily and inexpensively without such funds. But no one knows if YOU will experience increased returns from tilting your portfolio over your investing time frame. And if you do tilt, we can say with a high deg...
by Park
Sun Jun 16, 2019 1:22 pm
Forum: Investing - Theory, News & General
Topic: Can You Get A Meaningful Factor Tilt With Present Investment Products?
Replies: 26
Views: 1570

Can You Get A Meaningful Factor Tilt With Present Investment Products?

https://www.factorresearch.com/research-smart-beta-vs-factor-returns "We’re going to focus on the largest smart beta ETFs in the US focused on Value and Growth. All of these have more than 10 years of trading history and at least $4bn in AUM. We calculate the excess returns for each smart beta ETF b...
by Park
Thu Jun 13, 2019 10:28 am
Forum: Investing - Theory, News & General
Topic: Karsten (Early Retirement Now) Pens a Challenge to Merriman and the Small/Value Premium
Replies: 68
Views: 6932

Re: Karsten (Early Retirement Now) Pens a Serious Challenge to Merriman and the Small/Value Premium

Fama/French won the Nobel prize for this discovery. The Nobel. Prize. Fama won a Nobel prize, French did not. The prize was not awarded for the Fama/French three-factor model, it was awarded for the efficient market hypothesis. The Royal Swedish Academy of Sciences press release: Beginning in the 1...
by Park
Tue May 28, 2019 7:55 am
Forum: Investing - Theory, News & General
Topic: Factor ETFs For Diversification Or “Diworsification”
Replies: 126
Views: 7710

Re: Factor ETFs For Diversification Or “Diworsification”

There are those who question whether factor investing will continue to be as profitable in the future, as it has in backtesting. This is based on a conclusion, which I think is correct, that a large part (good majority?) of factor returns are behavioral in origin and not risk based. My guess is tha...
by Park
Sun May 26, 2019 5:53 pm
Forum: Investing - Theory, News & General
Topic: Factor ETFs For Diversification Or “Diworsification”
Replies: 126
Views: 7710

Re: Factor ETFs For Diversification Or “Diworsification”

There are those who question whether factor investing will continue to be as profitable in the future, as it has in backtesting. This is based on a conclusion, which I think is correct, that a large part (good majority?) of factor returns are behavioral in origin and not risk based. My guess is that...
by Park
Fri May 24, 2019 8:55 am
Forum: Investing - Theory, News & General
Topic: Any option traders?
Replies: 41
Views: 3586

Re: Any option traders?

This is an option traders thread, so I'm hoping to get some feedback. I invested some time learning about options, and came to the following conclusions. Option can serve three functions: 1)generate income. Right now, I don't need income from my portfolio. However, I came to the conclusion that if ...
by Park
Thu May 23, 2019 8:58 am
Forum: Investing - Theory, News & General
Topic: Any option traders?
Replies: 41
Views: 3586

Re: Any option traders?

This is an option traders thread, so I'm hoping to get some feedback. I invested some time learning about options, and came to the following conclusions. Option can serve three functions: 1)generate income. Right now, I don't need income from my portfolio. However, I came to the conclusion that if ...
by Park
Thu May 23, 2019 12:22 am
Forum: Investing - Theory, News & General
Topic: Any option traders?
Replies: 41
Views: 3586

Re: Any option traders?

This is an option traders thread, so I'm hoping to get some feedback. I invested some time learning about options, and came to the following conclusions. Option can serve three functions: 1)generate income. Right now, I don't need income from my portfolio. However, I came to the conclusion that if I...
by Park
Mon May 20, 2019 9:52 pm
Forum: Investing - Theory, News & General
Topic: Factor ETFs For Diversification Or “Diworsification”
Replies: 126
Views: 7710

Re: Factor ETFs For Diversification Or “Diworsification”

https://seekingalpha.com/instablog/71810-mitch-tuchman/91667-buffett-99-percent-of-investors-should-buy-index-funds Warren Buffett: "If you are not a professional investor, if your goal is not to manage money in such a way that you get a significantly better return than world, then I believe in extr...
by Park
Mon May 20, 2019 7:33 pm
Forum: Investing - Theory, News & General
Topic: Factor ETFs For Diversification Or “Diworsification”
Replies: 126
Views: 7710

Re: Factor ETFs For Diversification Or “Diworsification”

In any case, if size and value explain 90% of returns for diversified portfolios, then why is a portfolio (as suggested in this thread) of 25% size/value, 25% momentum, 25% low volatility and 25% quality called "diversification"? Why have 75% of your portfolio in the factors that explain 10% of ret...
by Park
Mon May 20, 2019 7:15 pm
Forum: Investing - Theory, News & General
Topic: Factor ETFs For Diversification Or “Diworsification”
Replies: 126
Views: 7710

Re: Factor ETFs For Diversification Or “Diworsification”

OTOH, how much does one want to invest in 3% of the total stock market? Although you're diversifying among factors in that 3%, there is a loss of diversification, when you ignore the other 97%. This is a common misconception: diversification benefits accrue from correlation and variance, neither of...
by Park
Mon May 20, 2019 4:30 pm
Forum: Investing - Theory, News & General
Topic: Factor ETFs For Diversification Or “Diworsification”
Replies: 126
Views: 7710

Re: Factor ETFs For Diversification Or “Diworsification”

https://i.imgur.com/a2ls30p.png The sources of risk can represent anything investor demands compensation to bear: that could be negative skew or positive excess kurtosis, but it could also be something more economically fundamental (Cochrane uses "recession risk" as an example, but it could be "inf...
by Park
Mon May 20, 2019 4:24 pm
Forum: Investing - Theory, News & General
Topic: Factor ETFs For Diversification Or “Diworsification”
Replies: 126
Views: 7710

Re: Factor ETFs For Diversification Or “Diworsification”

My greatest fear as an investor is a secular bear market. How can one mitigate the risk of a secular bear market? By investing less of one's portfolio in the stock market. It's so simple and so obvious, but it shouldn't be overlooked. It's effective. It's reliable. I don't think you can get the equ...
by Park
Mon May 20, 2019 12:29 pm
Forum: Investing - Theory, News & General
Topic: Factor ETFs For Diversification Or “Diworsification”
Replies: 126
Views: 7710

Re: Factor ETFs For Diversification Or “Diworsification”

My greatest fear as an investor is a secular bear market. How can one mitigate the risk of a secular bear market? Periodic investing helps. I've seen data that in the secular bear markets that started in 1966 and 2000, tilting to value helped. And I've seen data from overseas markets ( Japanese secu...
by Park
Sun May 12, 2019 8:29 am
Forum: Investing - Theory, News & General
Topic: Asset Location
Replies: 11
Views: 1736

Asset Location

"There is rarely a cookie cutter solution for implementing asset location strategies, but generally, it's best to hold stocks in taxable accounts since the dividends and capital gains realized from these investments are taxed a lower rate than investments generating ordinary income... Holding stocks...
by Park
Wed May 08, 2019 12:24 am
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 72
Views: 12056

Re: Visualizing the devastating impact of fees

Assume you pay 0.5% in expenses each year when investing. In the first year, you pay 0.5%, so your return is decreased that year by 0.5%. In the second year, you pay 0.5% in expenses. However, your return is decreased by more than 0.5% in the second year. That's because the 0.5% that you paid in the...
by Park
Tue May 07, 2019 9:27 am
Forum: Investing - Theory, News & General
Topic: Diversifying beyond stock and bonds
Replies: 19
Views: 1881

Re: Diversifying beyond stock and bonds

About diversifying beyond stocks/bonds/cash, there's been some sensible advice here: 1)delay retirement to maintain human capital 2)home ownership, somewhat akin to a nontaxable Treasury bond that is indexed to the cost of housing 3)maximizing Social Security 4)possibly factor investing From what I...
by Park
Mon May 06, 2019 8:17 am
Forum: Investing - Theory, News & General
Topic: Diversifying beyond stock and bonds
Replies: 19
Views: 1881

Re: Diversifying beyond stock and bonds

About diversifying beyond stocks/bonds/cash, there's been some sensible advice here:
1)delay retirement to maintain human capital
2)home ownership, somewhat akin to a nontaxable Treasury bond that is indexed to the cost of housing
3)maximizing Social Security
4)possibly factor investing
by Park
Wed Apr 10, 2019 8:57 am
Forum: Investing - Theory, News & General
Topic: Growth More Popular Than Value?
Replies: 8
Views: 1401

Re: Growth More Popular Than Value?

https://www.morningstar.com/articles/922787/value-investors-are-vexed.html "Exhibit 2 plots trailing 12-month flows of investor capital into and out of value and growth mutual funds and ETFs, across large-, mid-, and small-cap stocks dating back to the beginning of 1994." https://im.morningstar.com/...
by Park
Tue Apr 09, 2019 6:16 pm
Forum: Investing - Theory, News & General
Topic: Growth More Popular Than Value?
Replies: 8
Views: 1401

Growth More Popular Than Value?

https://www.factorresearch.com/research ... -beta-etfs

"The assets under management in growth products eclipsed those in value last year"
by Park
Sun Apr 07, 2019 6:38 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Expected Vs. Realized Returns
Replies: 77
Views: 6468

Re: Larry Swedroe: Expected Vs. Realized Returns

https://alphaarchitect.com/2016/07/12/the-folly-of-stock-market-forecasting/ For nonadvanced investors like myself, here is some background on the dividend discount model and CAPE. I agree with Larry when he says "It’s impossible to build an investment plan without estimating the return to stocks (a...
by Park
Sat Mar 09, 2019 1:04 am
Forum: Investing - Theory, News & General
Topic: Lifecycle Investing - Leveraging when young
Replies: 782
Views: 66172

Re: Lifecycle Investing - Leveraging when young

https://awealthofcommonsense.com/2019/03/averages-are-clean-actual-results-are-messy/ The following is from Ben Carlson, and he uses S&P real return and 5 year Treasury real returns from 1926-2018. https://awealthofcommonsense.com/wp-content/uploads/2019/03/Capture-5.png About time diversification, ...
by Park
Sun Feb 10, 2019 7:13 pm
Forum: Investing - Theory, News & General
Topic: How Investing Ability Changes With Age --blog post
Replies: 33
Views: 2820

Re: How Investing Ability Changes With Age --blog post

https://www.dementiastatistics.org/wp-content/uploads/2016/12/statistic-graph-784.png https://www.dementiastatistics.org/statistics/prevalence-by-age-in-the-uk/ This is prevalence rates of dementia in the UK from a 2014 publication. I doubt it's that different elsewhere. In the link, no definition ...
by Park
Sun Feb 10, 2019 6:19 pm
Forum: Investing - Theory, News & General
Topic: How "Safe" is Your Bond Fund?
Replies: 43
Views: 4658

Re: How "Safe" is Your Bond Fund?

I'm not sure I understand what you are saying re how safety and a sufficiently long holding period are related. Many new investors bought Total Bond a year ago and started complaining here on Bogleheads that their Total Bond investments had lost value, so they were asking about selling Total Bond a...
by Park
Sun Feb 10, 2019 3:15 pm
Forum: Investing - Theory, News & General
Topic: How Investing Ability Changes With Age --blog post
Replies: 33
Views: 2820

Re: How Investing Ability Changes With Age --blog post

A corollary of the decline in investing ability as one ages is that it may be better to learn about personal finance before the age of 60. How well will you learn, as you advance in years? I'm assuming that as you age, you will retain what you learned earlier.
by Park
Sun Feb 10, 2019 3:08 pm
Forum: Investing - Theory, News & General
Topic: Is Index Investing Just Betting on The U.S Economy?
Replies: 46
Views: 5681

Re: Is Index Investing Just Betting on The U.S Economy?

billthecat wrote: Why can’t Japan fix itself? Subsequently they became zombie banks unable to lend money even for worthy enterprises. In the mid 1990s this dire situation drove the Japanese government to try belatedly to stimulate the economy with deficit spending. Governmental debt which was only ...
by Park
Sun Feb 10, 2019 2:50 pm
Forum: Investing - Theory, News & General
Topic: How Investing Ability Changes With Age --blog post
Replies: 33
Views: 2820

Re: How Investing Ability Changes With Age --blog post

This is an important topic, especially on a board that looks favorably upon DIY investing and whose viewers are probably skewed towards those are at least nearing retirement. "Compounding the cognitive aging issue is overconfidence. Michael Finke, John Howe and Sandra Huston, authors of the study “O...
by Park
Sun Feb 10, 2019 12:39 am
Forum: Investing - Theory, News & General
Topic: Why borrow money in RE but not Stocks?
Replies: 39
Views: 4501

Re: Why borrow money in RE but not Stocks?

An obvious point, but one worth pointing out is that there is embedded leverage in stocks, but not in RE. And as stocks are corporations, a stockowner is not personally liable for the debts of those stocks. There's not many forms of debt where you can say that. Corporations often can get debt at low...
by Park
Sun Jan 27, 2019 10:34 pm
Forum: Investing - Theory, News & General
Topic: Unconventional investment choices
Replies: 86
Views: 7881

Re: Unconventional investment choices

Ooooh. This is fun. My confession:. I think IPS are a silly behavioral finance ploy. I do not have one. Yes, an IPS is meant to be a beavioural ploy. It is meant to help you stay the course. Well aware. For me, an IPS is about as valuable as a sheet of paper that says "don't panic". Your mileage ma...
by Park
Sun Jan 27, 2019 11:29 am
Forum: Investing - Theory, News & General
Topic: Unconventional investment choices
Replies: 86
Views: 7881

Re: Unconventional investment choices

I see cash/fixed income as a way to manage the risk of a cyclical bear markets. So I don't see a need for more than a few years of required income in cash/fixed income. When it comes to cash/fixed income, HISAs and CDs work well. I also believe in factor investing. That's not to increase returns, bu...
by Park
Tue Jan 08, 2019 10:32 am
Forum: Investing - Theory, News & General
Topic: A Test of Warren Buffett's 90:10 Retirement Portfolio
Replies: 33
Views: 6211

Re: A Test of Warren Buffett's 90:10 Retirement Portfolio

"The first change [T1] relates to the annual withdrawal to the behavior of the stock market in the previous year. If stocks have gone up, the retiree takes the annual withdrawal from stocks and then rebalances the portfolio back to the 90/10 allocation. Conversely, if stocks have gone down, the ret...
by Park
Tue Jan 08, 2019 10:25 am
Forum: Investing - Theory, News & General
Topic: A Test of Warren Buffett's 90:10 Retirement Portfolio
Replies: 33
Views: 6211

Re: A Test of Warren Buffett's 90:10 Retirement Portfolio

... The author then discusses two modified 90:10 strategies (T1 and T2), which are dynamic allocation strategies ( market timing? ). "The first change [T1] relates to the annual withdrawal to the behavior of the stock market in the previous year. If stocks have gone up, the retiree takes the annual...
by Park
Thu Jan 03, 2019 11:30 am
Forum: Personal Investments
Topic: Opinions sought $3.5 M Net Worth
Replies: 76
Views: 9725

Re: Opinions sought $3.5 M Net Worth

The following is for the Topic Author, but really, it's also for myself and many others on this board. When you retire, you no longer generate income from your labor, but you still need income. Apart from pensions, your income is going to come from your capital. So in reality, you don't retire: you ...
by Park
Sun Dec 30, 2018 5:37 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Are Corp Bonds Worth Risk?
Replies: 66
Views: 6456

Re: Larry Swedroe: Are Corp Bonds Worth Risk?

Currently you can replace treasuries with corporates in a 50/50 portfolio and pick up 90bps in expected return. In today's interest rate environment that is really valued added. Another way to look at this based upon how much % wise in return do you pick up from the switch. In the 2000 & 2007, you ...
by Park
Sun Dec 30, 2018 5:17 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Are Corp Bonds Worth Risk?
Replies: 66
Views: 6456

Re: Larry Swedroe: Are Corp Bonds Worth Risk?

the DFA Five-Year Global Fixed Income Portfolio DFGBX is currently 55.55% corporates, compared to 25.97% for the category average. The following is from Expected Returns by Antti Ilmanen: "There is one exception to the disappointing performance of credit. In the U.S. credit markets, the highest vol...
by Park
Sun Dec 30, 2018 5:06 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Are Corp Bonds Worth Risk?
Replies: 66
Views: 6456

Re: Larry Swedroe: Are Corp Bonds Worth Risk?

One point that has no one has brought up is the point that current yields of bonds are good proxies for expected returns & the current yields provided by each type of investment. That is true of Treasuries but not stocks (i.e. stocks typically benefit from capital appreciation, whereas Treasuries d...
by Park
Sun Dec 30, 2018 3:34 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Are Corp Bonds Worth Risk?
Replies: 66
Views: 6456

Re: Larry Swedroe: Are Corp Bonds Worth Risk?

the DFA Five-Year Global Fixed Income Portfolio DFGBX is currently 55.55% corporates, compared to 25.97% for the category average. The DFA VA Global Bond Fund has no ticker symbol and isn't listed in Morningstar, but it contains bonds issued by Coca-Cola, Microsoft, Shell, Toyota, Pfizer, Apple, et...
by Park
Sun Dec 30, 2018 1:27 pm
Forum: Personal Investments
Topic: Opinions sought $3.5 M Net Worth
Replies: 76
Views: 9725

Re: Opinions sought $3.5 M Net Worth

Based on your income, I would guess that your job requires a good amount of skill. If you haven't worked in several years, would you still have the skill required to do the job? That should be considered, when one decides whether to retire or work part time. A decision to retire may effectively be i...
by Park
Sun Dec 30, 2018 11:54 am
Forum: Investing - Theory, News & General
Topic: Dividend Stocks Mitigate Secular Bear Markets?
Replies: 43
Views: 3309

Re: Dividend Stocks Mitigate Secular Bear Markets?

Once again, from Larry Swedroe's above article: "Now, again using Ken French’s data, let’s look at how the size and value premiums performed during those same three periods. 14 Years (1929-1943) U.S. Market Beta: down 0.7%; Size: up 5.8%; Value: up 3.2% 15 Years (1969-1983) U.S. Market Beta: down 0....
by Park
Sun Dec 30, 2018 11:00 am
Forum: Investing - Theory, News & General
Topic: Dividend Stocks Mitigate Secular Bear Markets?
Replies: 43
Views: 3309

Re: Dividend Stocks Mitigate Secular Bear Markets?

What interests me most is what I can do to decrease the impact of a secular bear market on my portfolio. That's my greatest concern as an investor. Someone who retired in 1929 or 1968 or 2000 had a problem. As mentioned previously, my plan is to use cash/fixed income to decrease the impact of a cycl...
by Park
Sat Dec 29, 2018 7:47 pm
Forum: Investing - Theory, News & General
Topic: Dividend Stocks Mitigate Secular Bear Markets?
Replies: 43
Views: 3309

Re: Dividend Stocks Mitigate Secular Bear Markets?

When I look over the data that I"ve found, my conclusion is that in a tax advantaged account, dividends modestly decrease the impact of secular bear markets and usually modestly decrease the impact of cyclical bear markets.
by Park
Sat Dec 29, 2018 5:13 pm
Forum: Investing - Theory, News & General
Topic: Dividend Stocks Mitigate Secular Bear Markets?
Replies: 43
Views: 3309

Re: Dividend Stocks Mitigate Secular Bear Markets?

did it take into account taxes on the dividends if in a taxable acct No, it didn't. I share the concerns expressed by others of dividend stocks presently being overpriced. However, dividends don't tend to go down as much as prices, during a cyclical or secular bear market. That plays an important r...
by Park
Sat Dec 29, 2018 5:01 pm
Forum: Investing - Theory, News & General
Topic: Dividend Stocks Mitigate Secular Bear Markets?
Replies: 43
Views: 3309

Re: Dividend Stocks Mitigate Secular Bear Markets?

https://www.heartlandadvisors.com/Insights/White-Papers/Dividends-A-Review-of-Historical-Returns Here's some data on the US stock market from Jan 1928 to Dec 2017. The authors "determined all periods during which the market declined a cumulative 10% or more in consecutive negative months. We then ca...
by Park
Sat Dec 29, 2018 12:28 pm
Forum: Investing - Theory, News & General
Topic: Dividend Stocks Mitigate Secular Bear Markets?
Replies: 43
Views: 3309

Re: Dividend Stocks Mitigate Secular Bear Markets?

CTL (Century Link) yield 14.15%. I'm sure they will never cut that. But when they do their stock price will take a hit. Just looking at how they maintain their physical plant around here (they are the landline and an internet provider) shows me where they are getting the cash to maintain that divid...
by Park
Sat Dec 29, 2018 12:06 pm
Forum: Investing - Theory, News & General
Topic: Global PE10 and PS summary: Research Affiliates, Barclays, StarCapital
Replies: 74
Views: 10230

Re: International and US CAPE

.... At a high level, a direct application of cape to the investing process likely de-optimized one's portfolio. While these 10 year outlooks may be directionally indicative (not sure I buy that entirely), the pathway to get there is incredibly unpredictable. Staying the course has generated strong...