Search found 3746 matches

by peter71
Mon Aug 08, 2011 11:13 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing bad for society?
Replies: 18
Views: 1965

This is often discussed here, and a case can be made, but days like today remind us that the alternative to passive investing isn't so much graham and dodd poring over company business plans as it is computer algos and runs on hedge funds . . .
by peter71
Mon Aug 08, 2011 7:13 pm
Forum: Investing - Theory, News & General
Topic: Anyone else buy equities today?
Replies: 102
Views: 12114

No tactical buying for me. Just stick with the IPS. Can overconfidence affect bogleheads, too? I think the risks of "overconfidence" in a risky asset allocation are directly proportional to that asset allocation. Put another way, it doesn't seem to me to matter whether you started the month at 55% ...
by peter71
Mon Aug 08, 2011 6:09 pm
Forum: Investing - Theory, News & General
Topic: Tempted to buy stocks now...but sticking to my plan
Replies: 3
Views: 602

My thinking is that "sticking to the plan" of buying on Aug 1 and Sep 1 is ideal for the overwhelming majority of people who aren't hanging out on an internet forum talking about whether to buy early . . . the bottom line is that it's not going to matter much either way . . . but if you're hanging o...
by peter71
Mon Aug 08, 2011 5:55 pm
Forum: Investing - Theory, News & General
Topic: What is Your Rationale For Buying Stocks Now?
Replies: 52
Views: 4735

I understand why advisors and fund companies don't like "one-off" buying, and I understand why it's not practical for people who don't enjoy following the market as a hobby, but does anyone have any horror stories that go something like this: "Back in XXXX, I thought I was going to be a value buyer...
by peter71
Mon Aug 08, 2011 5:34 pm
Forum: Investing - Theory, News & General
Topic: What is Your Rationale For Buying Stocks Now?
Replies: 52
Views: 4735

I understand why advisors and fund companies don't like "one-off" buying, and I understand why it's not practical for people who don't enjoy following the market as a hobby, but does anyone have any horror stories that go something like this: "Back in XXXX, I thought I was going to be a value buyer ...
by peter71
Mon Aug 08, 2011 4:20 pm
Forum: Investing - Theory, News & General
Topic: What is Your Rationale For Buying Stocks Now?
Replies: 52
Views: 4735

When I buy stocks I want a share of future earnings. The absolute cost of owning those future earnings now looks "fair" to me (see my detailed previous posts on P/E 10 vs. P/E 1 for details). As others have suggested, the opportunity cost of owning those future earnings also continues to improve. I ...
by peter71
Mon Aug 08, 2011 2:44 pm
Forum: Investing - Theory, News & General
Topic: Anyone else buy equities today?
Replies: 102
Views: 12114

Yeah. I'm going to move a bit out of TIAA Traditional and into stocks. Just muddling through, as always . . .

Best,
Pete
by peter71
Sun Aug 07, 2011 5:41 pm
Forum: Investing - Theory, News & General
Topic: futures market down huge
Replies: 58
Views: 6354

Down 292 on the Dow? Not quite in "lost decade" territory yet. :D

http://www.bloomberg.com/markets/stocks/futures/
by peter71
Sun Aug 07, 2011 9:45 am
Forum: Investing - Theory, News & General
Topic: Israeli market falls over 6%
Replies: 77
Views: 7391

Here's some more data -- Saudi Arabia is open today too with more modest losses, and some other Arab states have relatively modest (1%-3%) losses too. http://www.emirates247.com/markets/stocks/gulf-stocks-drop-after-us-credit-downgrade-2011-08-07-1.411758 Btw, I agree that while there's often "troub...
by peter71
Sat Aug 06, 2011 9:59 pm
Forum: Investing - Theory, News & General
Topic: U.S. loses AAA credit rating from S&P
Replies: 286
Views: 30899

Buffett weighs in against S&P's downgrade:

http://www.bloomberg.com/news/2011-08-0 ... ssion.html

Particularly interesting in that Berkshire is the biggest shareholder in Moody's.
by peter71
Sat Aug 06, 2011 2:13 pm
Forum: Investing - Theory, News & General
Topic: U.S. loses AAA credit rating from S&P
Replies: 286
Views: 30899

Hmm . . .the argument in that link seems to be, "investors know S&P is dumb but they can't act on that knowledge because they've set up legal-mechanical rules forcing them to heed S&P's opinion." The rejoinder is pretty obvious -- i.e., "then it was kinda dumb to set up those legal-mechanical rules....
by peter71
Sat Aug 06, 2011 1:09 pm
Forum: Investing - Theory, News & General
Topic: Best way to do Monte Carlo simulations?
Replies: 190
Views: 19205

I suppose my view is that investors have a variety of time-frames. Prices cannot be efficient for all time-frames simultaneously, so the shorter ones dominate, making the market efficient for them, but not for the longer term. Which means long-term predictability is possible) Hi CJ, I'm with you on...
by peter71
Sat Aug 06, 2011 11:47 am
Forum: Investing - Theory, News & General
Topic: U.S. loses AAA credit rating from S&P
Replies: 286
Views: 30899

Ok, a silly question. Will the stock market be affected by this downgrade? Or is it only going to affect the Bond Market? Only evidence so far is that Saudi stocks went down 5.46%, though presumably even non-Petrochemical stocks in SA are correlated with Petrochemical stocks and those went down 6.6...
by peter71
Sat Aug 06, 2011 10:54 am
Forum: Investing - Theory, News & General
Topic: U.S. loses AAA credit rating from S&P
Replies: 286
Views: 30899

Re: Svariance

Now that after the oncoming aerobatic thrill team jets avoided collision by feet, perhaps S&P should have backed off on the downgrade and waited to pass judgment on how Congress actually performs on implementing the debt reductions embodied in the bill. Pro S&P: It's always tough to do something un...
by peter71
Sat Aug 06, 2011 9:14 am
Forum: Investing - Theory, News & General
Topic: U.S. loses AAA credit rating from S&P
Replies: 286
Views: 30899

Grades are always subjective In conjunction with the Generation Y comments on this thread, this made me think of a stereotypical Millennial reaction to a professor giving her a C on a paper: shrug, well, that's just your opinion I suspect many will just give the S&P a collective shrug. (I won't tho...
by peter71
Sat Aug 06, 2011 8:58 am
Forum: Investing - Theory, News & General
Topic: U.S. loses AAA credit rating from S&P
Replies: 286
Views: 30899

Thoughtful and informative thread! A few quick thoughts I don't think have yet been put out there: Grades are always subjective, and one wonders if institutions could gear to something less so -- e.g., our bonds must be ultra-short term, in the bottom x% of yields, etc. Although US public debt/GDP c...
by peter71
Fri Aug 05, 2011 5:09 pm
Forum: Investing - Theory, News & General
Topic: If ever there were a moment to market time, this is it.
Replies: 92
Views: 14035

I remain skeptical of both deductive and econometric models. Having said that: 1) All else equal, cheap seems good both in theory and in practice. 2) All else equal, downward momentum seems bad both in theory and in practice. 3) Opportunity costs matter both in theory and in practice. 1 and 2 are in...
by peter71
Thu Aug 04, 2011 10:08 pm
Forum: Investing - Theory, News & General
Topic: Stocks better value than two weeks ago?
Replies: 60
Views: 7355

Better value, but momentum seems to matter too.
by peter71
Fri Jul 29, 2011 9:16 am
Forum: Investing - Theory, News & General
Topic: This is your Brain; This is your Brain on Equities
Replies: 7
Views: 1945

Some interesting stuff in there . . . given I've often seen Ritholz on CNBC I was pleasantly surprised to see him lead off with the "articulate incompetents" point (a phrase I hadn't heard before). In addition to all the "nature" that works against people I think "nurture" makes us want to follow th...
by peter71
Thu Jul 28, 2011 4:04 pm
Forum: Investing - Theory, News & General
Topic: Risk =/= Beta
Replies: 102
Views: 9999

Hi All, I can't get involved in this one but my conclusion based on the below-linked lecture is that you can also make a Sharpe ratio/tangency portfolio based case for "tilting" away from VTSMX insofar as you argue that your tilted portfolio better proxies "all assets we can invest in . . . stocks, ...
by peter71
Thu Jul 28, 2011 11:19 am
Forum: Personal Finance (Not Investing)
Topic: Malthusians & Cornucopians: the Ehrlich-Simon Bet
Replies: 45
Views: 3859

Hi Rod, I think our posts may have crossed but yeah, I am more optimistic in that I think we're already 50 years into a slow turnaround that's been accompanied by increasing education, declining starvation, infant mortality, etc. It's not really my area either but this is sometimes called "demograph...
by peter71
Thu Jul 28, 2011 11:13 am
Forum: Personal Finance (Not Investing)
Topic: Malthusians & Cornucopians: the Ehrlich-Simon Bet
Replies: 45
Views: 3859

I think the point is that human behavior curves shift over time . . . if ever people took a simple "exponential" model of population growth seriously, not even the highest projections do so now . . . OK, but from the pov of resources, pollution etc it is the product of population x gdp that is impo...
by peter71
Thu Jul 28, 2011 11:04 am
Forum: Personal Finance (Not Investing)
Topic: Malthusians & Cornucopians: the Ehrlich-Simon Bet
Replies: 45
Views: 3859

Hi Rod, FWIW, current projections and, perhaps more importantly, the past 50 years of slowing growth rates, support a "smooth landing" rather than a "crash" or "bubble pop" for global population (from the wiki link above) . . . The highest rates of growth—increases above 1.8% per year—were seen brie...
by peter71
Thu Jul 28, 2011 10:42 am
Forum: Personal Finance (Not Investing)
Topic: Malthusians & Cornucopians: the Ehrlich-Simon Bet
Replies: 45
Views: 3859

I think the point is that human behavior curves shift over time . . . if ever people took a simple "exponential" model of population growth seriously, not even the highest projections do so now . . .

http://en.wikipedia.org/wiki/World_population
by peter71
Thu Jul 28, 2011 9:58 am
Forum: Personal Finance (Not Investing)
Topic: Malthusians & Cornucopians: the Ehrlich-Simon Bet
Replies: 45
Views: 3859

I've never met any self-styled "scientist" (natural or behavioral) who found grand paradigmatic taxonomies like "Malthusians vs. Cornucopians" of much use. But a good scientist or skeptic of any stripe can spot a self-promoting megalomaniac like Ehrlich . . . speaking of which, Grantham's own facile...
by peter71
Thu Jul 28, 2011 9:03 am
Forum: Personal Finance (Not Investing)
Topic: Malthusians & Cornucopians: the Ehrlich-Simon Bet
Replies: 45
Views: 3859

Ehrlich is to "we are beginning to run out of resources" as DOW 36,000 is to "stocks should continue to generate positive returns." :D
by peter71
Wed Jul 27, 2011 10:58 pm
Forum: Investing - Theory, News & General
Topic: breakdown of us debt
Replies: 26
Views: 4572

The linked site below tracks both public debt and public + private external debt, and it's interesting to note that US external debt has been going DOWN all summer (and should soon cross back under the 100% mark).

http://www.usdebtclock.org/world-debt-clock.html

Best,
Pete
by peter71
Wed Jul 27, 2011 9:37 pm
Forum: Investing - Theory, News & General
Topic: Amidst all the sound and fury - Shiller PE10 still too high
Replies: 12
Views: 2552

Re: Amidst all the sound and fury - Shiller PE10 still too h

I have to admit that it looks like a buying opportunity if one wants to bet that our dysfunctional elected representatives can manage a moment of sanity in DC. However, I'm one who refuses to take the bait because PE10 is still bouncing off the ceiling IMO. Any relief rally will be a short-lived op...
by peter71
Tue Jul 26, 2011 4:38 pm
Forum: Investing - Theory, News & General
Topic: Are Frontier Markets really riskier?
Replies: 24
Views: 2271

I think there's been discussion on here of Van Eck or someone filing to bring out a low-to-medium cost globally-diversified FM fund, and insofar as one is putting no more than 10% in any one country that's obviously going to limit country-specific tail risk . . . note also that there's a lot of coun...
by peter71
Mon Jul 25, 2011 9:32 am
Forum: Investing - Help with Personal Investments
Topic: fair price for a financial planner
Replies: 21
Views: 2920

He wants to charge 1.5% of assets a bit under 200k. I'm ready to drop him and do it myself, but in a strange way it is hard to move the money. The interesting part is I helped my friend start his retirement savings using vanguard funds a few years ago. I just have not made the plunge myself. You mi...
by peter71
Sun Jul 24, 2011 11:48 pm
Forum: Investing - Help with Personal Investments
Topic: fair price for a financial planner
Replies: 21
Views: 2920

Re: fees

It just depends. I think I've said 25 to 50 basis points for a "good" advisor in the past, but that wouldn't apply to, e.g., anyone who invokes the DALBAR studies . . .
by peter71
Sun Jul 24, 2011 2:02 pm
Forum: Investing - Theory, News & General
Topic: Does indexing have intrinsic worth?
Replies: 39
Views: 3528

Re: Wells Fargo, the first indexers

Wells Fargo in 1971 totally screwed up indexing. They decided to hold an equal dollar amount of all 1500 stocks on the NYSE. It required constant rebalancing and was very tax inefficient. You could look it up. Thus I stated generally, not intrinsically. Yeah, there are some expensive index funds. I...
by peter71
Sun Jul 24, 2011 1:40 pm
Forum: Investing - Theory, News & General
Topic: Latest interview with Bill Bernstein from IndexUniverse
Replies: 97
Views: 12896

After reading thru this thread again, I am certain that at least one group of Bogleheads have cashed in, severed all ties, and moved into the bunker for the pending crash: our moderators ; o/w this thread would have been lock down long ago. :lol: I think it's gone OK though! Seems like the Boglehea...
by peter71
Sun Jul 24, 2011 1:06 pm
Forum: Investing - Theory, News & General
Topic: Does indexing have intrinsic worth?
Replies: 39
Views: 3528

Hey MT, Can't figure out whether you're making a trippy critique of cap-weighting or a trippy defense of cap-weighting, but my own thoughts on the matter are entirely banal . . . :D Was suggesting a quantitative measure that supports cap-weighting as achieving the greatest diversification. Conditio...
by peter71
Sun Jul 24, 2011 12:31 pm
Forum: Investing - Theory, News & General
Topic: Does indexing have intrinsic worth?
Replies: 39
Views: 3528

By contrast, I can't think of any straightforward "quantitative" measure of diversification that is maximized by cap-weighting. How about entropy? http://en.wikipedia.org/wiki/Maximum_entropy_probability_distribution Hey MT, Can't figure out whether you're making a trippy critique of cap-weighting ...
by peter71
Sun Jul 24, 2011 11:25 am
Forum: Investing - Theory, News & General
Topic: Does indexing have intrinsic worth?
Replies: 39
Views: 3528

I believe that given a common technical quantitative definition of "diversification." cap-weighted index funds achieve maximum diversification, period . Hi Nisi, Without getting into a second-order debate about the semantics of "quantitative," if one wants to maximize diversification in the ordinar...
by peter71
Sat Jul 23, 2011 9:57 pm
Forum: Investing - Theory, News & General
Topic: Latest interview with Bill Bernstein from IndexUniverse
Replies: 97
Views: 12896

Cumulative (under 5 mortality) is around 0.1% in the US. Thus, while other countries may be better, the US still has excellent care. While I agree that, relative to the differences between developed and developing countries, the differences between developed countries are small, I think 0.1% is off...
by peter71
Sat Jul 23, 2011 4:53 pm
Forum: Investing - Theory, News & General
Topic: Latest interview with Bill Bernstein from IndexUniverse
Replies: 97
Views: 12896

Re: Thanks All

The current top tax bracket starts at $379K adding some higher tax brackets above that and letting rates for those over $250K rise a bit is all that anyone has suggested. The average hard working professional is not at those income levels. The real alternative to higher taxes on the highest incomes...
by peter71
Fri Jul 22, 2011 9:54 pm
Forum: Personal Finance (Not Investing)
Topic: Why Most Market Forecasters Get it Wrong
Replies: 5
Views: 994

Good piece. Here's an older piece with a more detailed discussion of Tetlock for those interested: http://www.newyorker.com/archive/2005/12/05/051205crbo_books1 It is the somewhat gratifying lesson of Philip Tetlock’s new book, “Expert Political Judgment: How Good Is It? How Can We Know?” (Princeton...
by peter71
Fri Jul 22, 2011 9:33 pm
Forum: Investing - Help with Personal Investments
Topic: Shiller quote of the day
Replies: 20
Views: 3442

I hate to say it but I think Schiller has it pegged right. So what's the trade, and how did it work with say, Japan, when it crossed over the 100% public debt to GDP ratio ages ago? For that matter, what's the trade now with Japan close to 200%? The general government net debt for Japan is estimate...
by peter71
Fri Jul 22, 2011 9:19 pm
Forum: Investing - Theory, News & General
Topic: Latest interview with Bill Bernstein from IndexUniverse
Replies: 97
Views: 12896

The EU isn't simple and the complex relationship between growth and equity prices is unlikely to be reducible to some algorithm Bernstein worked out with Rob Arnott. Only time will tell, but whether Bernstein's turned into a good pundit or a bad pundit it's clear he's moving towards punditry . . . B...
by peter71
Fri Jul 22, 2011 7:04 pm
Forum: Investing - Help with Personal Investments
Topic: Shiller quote of the day
Replies: 20
Views: 3442

Hi Dumbmoney, Here's some specific passages I object to: Economists like to talk about thresholds that, if crossed, spell trouble. Usually there is an element of truth in what they say. But the public often overreacts to such talk . . . Questions: Are we talking about the general public here or the ...
by peter71
Fri Jul 22, 2011 5:19 pm
Forum: Investing - Help with Personal Investments
Topic: Shiller quote of the day
Replies: 20
Views: 3442

Uninvested wrote:I hate to say it but I think Schiller has it pegged right.
So what's the trade, and how did it work with say, Japan, when it crossed over the 100% public debt to GDP ratio ages ago? For that matter, what's the trade now with Japan close to 200%?
by peter71
Fri Jul 22, 2011 5:08 pm
Forum: Investing - Theory, News & General
Topic: John Bogle didn't have all the data!
Replies: 29
Views: 4212

The OP shouldn't have bothered. Although I am intrinsically a follower of the boglehead philosophy, I recognize that there are likely some groups that can outperform the market. Why does this strike such a chord in everybody? The world is not black and white. Hi Uninvested, While I understand your ...
by peter71
Fri Jul 22, 2011 4:44 pm
Forum: Investing - Theory, News & General
Topic: John Bogle didn't have all the data!
Replies: 29
Views: 4212

On the one hand, I wouldn't be surprised if even a non-cherry-picked sample of big endowment managers outperformed . . . But nor would I be surprised if some clueless committee at Penn or Stanford made the mistake of hiring a self-promoting idiot like the author of this piece: :D I learned of this b...
by peter71
Fri Jul 22, 2011 2:52 pm
Forum: Investing - Help with Personal Investments
Topic: Shiller quote of the day
Replies: 20
Views: 3442

Hi John, hi Richard, If only because you both are on Shiller's side this time I'll give this particular piece a thumbs down. :D To me the ubiquity of the 90% figure is itself evidence that few are attaching any particular import to a simplistic round figure like 100%, and it's also just not clear to...
by peter71
Mon Jul 18, 2011 8:26 pm
Forum: Investing - Theory, News & General
Topic: Diversification - How many stocks?
Replies: 31
Views: 4135

Oops, didn't see you guys were already discussing Bernstein and agreed the period isn't ideal.

FWIW here's a more academic paper that looks at 1962-1995:

http://www.rotman.utoronto.ca/kent.woma ... ewness.pdf

Best,
Pete
by peter71
Mon Jul 18, 2011 11:08 am
Forum: Investing - Help with Personal Investments
Topic: indentifying inefficiencies in an efficient market
Replies: 95
Views: 5865

Looks like there may be some pension issues with Corning too, related to complications from the Dow-Corning bankruptcy: http://www.google.com/search?sourceid=chrome&ie=UTF-8&q=corning+pension+obligations You can always make a case for buying value on a down day, but I'd personally rather buy diversi...
by peter71
Sun Jul 17, 2011 7:23 am
Forum: Investing - Theory, News & General
Topic: More Bad News for Market Timers
Replies: 44
Views: 5141

Here's a link to some data on how the hedge fund index Rick discusses (and others) have performed over the longer-term. https://www.hedgefundresearch.com/mon_register/index.php?fuse=login_bd For the past 5 years: Surviving* Macro hedge funds= 5.95% Vanguard Balanced Index Fund = 5.24% *This was the...