Search found 3746 matches

by peter71
Tue Oct 11, 2011 7:38 am
Forum: Investing - Theory, News & General
Topic: Risk - A Primer
Replies: 33
Views: 4409

Hi Bob, That's an interesting assortment of some subfield textbooks and a "valuations yearbook", but what stood out for me is that the usage appears entirely informal in the three top-selling and searchable general textbooks: Mankiew: http://www.amazon.com/Principles-Economics-N-Gregory-Mankiw/dp/03...
by peter71
Mon Oct 10, 2011 10:48 pm
Forum: Investing - Theory, News & General
Topic: Risk - A Primer
Replies: 33
Views: 4409

Thank you, Bob, what you've written does seem to cover the academic definition of risk, but here's the problem: Finally, the definition of risk in economics is neither a specific risk, nor is it a measure of risk. Academics use countless definitions of risk, and in fairness to Bob he's never sugges...
by peter71
Mon Oct 10, 2011 7:09 am
Forum: Personal Consumer Issues
Topic: math major
Replies: 61
Views: 5580

We're moving forward with the notion that he has to get in to college as an engineering major because that is the most competitive program. From what we've learned it's better to get into engineering and change majors because it's nearly impossible to get into the engineering schools down the road....
by peter71
Wed Oct 05, 2011 9:58 pm
Forum: Investing - Theory, News & General
Topic: Five Dumbest Statement in Investing.
Replies: 11
Views: 2214

Re: High Growth = Low returns

Quote: "Emerging market stocks will do best since that’s where the most economic global growth will come from." I don't think this is a dumb statement. LazyNihilist: Allan's a very smart guy and he's probably right. It's a "dumb statement." Based on decades of data from 53 countries, Prof. Elroy Di...
by peter71
Wed Oct 05, 2011 8:53 pm
Forum: Investing - Theory, News & General
Topic: Five Dumbest Statement in Investing.
Replies: 11
Views: 2214

Nobody knows nuthin' re how EM will perform, least of all advisor-bloggers reading journalists interpreting correlation coefficients. I do, however, find the analogy between growth stocks and EM countries pretty dumb -- especially when it's as confidently-stated as Roth states it here: The phenomeno...
by peter71
Wed Sep 28, 2011 9:48 pm
Forum: Personal Consumer Issues
Topic: Amazon's new Kindle Fire looks good
Replies: 58
Views: 8501

Does anyone have thoughts on the "experimental browser" associated with the KindleKeyboard . . . I'd love to be sitting outside while posting on Bogleheads :D Experimental Features WebKit-Based Browser KindleKeyboard features an experimental web browser based on WebKit to provide a better web browsi...
by peter71
Sun Sep 25, 2011 8:36 pm
Forum: Investing - Theory, News & General
Topic: Barber & Odean (June 2011) paper
Replies: 8
Views: 1524

Looks like they review several recent papers that cast individual traders in a less negative light . . . haven't read this one but it sounds like it would be of interest to Bogleheads:

"How Wise Are Crowds?"

http://papers.ssrn.com/sol3/papers.cfm? ... id=1668706

Best,
Pete
by peter71
Sun Sep 25, 2011 10:04 am
Forum: Investing - Theory, News & General
Topic: A novel approach: “The FleeceWare Conspiracy”
Replies: 69
Views: 7903

Hi Pete, Whether you like it or not risk is commonly defined as non-trivial uncertainty in economics. You are certainly correct that it is a complete waste of time to debate your not liking the definition. BobK Agreed. Samuelson is an extremely important economist, and his definitions are "commonly...
by peter71
Sun Sep 25, 2011 9:43 am
Forum: Investing - Theory, News & General
Topic: A novel approach: “The FleeceWare Conspiracy”
Replies: 69
Views: 7903

Hi Bob, I suppose it depends what one means by "non-trivial uncertainty" . . . A development economist studying "risk of famine" might doubt that your "non-trivial" criterion is doing much work in the "risk of not winning the lottery" example . . . But as long as we're defining "non-trivial" broadly...
by peter71
Sun Sep 25, 2011 8:25 am
Forum: Investing - Theory, News & General
Topic: A novel approach: “The FleeceWare Conspiracy”
Replies: 69
Views: 7903

I think one problem with semantic debates about operational definitions of risk in finance is that the concept is much bigger than finance: This risk/return relationship permeates all of life . . . You decide to bet on number 36 in roulette not on red. You bet on a long shot in a horse race. You dec...
by peter71
Sun Sep 25, 2011 8:02 am
Forum: Investing - Theory, News & General
Topic: An interesting finance paper
Replies: 20
Views: 3120

I think "returns are predictable" has been used by Campbell and Shiller before and really just means, "you can put independent variables into a regression and uncover statistically significant predictors of returns."
by peter71
Sat Sep 24, 2011 11:53 pm
Forum: Investing - Theory, News & General
Topic: An interesting finance paper
Replies: 20
Views: 3120

I didn't read it carefully, but here's a synopsis . . . 1) valuations matter 2) there are lots of market-level factors beyond size and value 3) every individual has different preferences for these market level factors 4) it may be rational to pay a skilled advisor to help you exploit these market le...
by peter71
Thu Sep 22, 2011 8:31 pm
Forum: Personal Consumer Issues
Topic: Mensa Be Brilliant Coupon
Replies: 72
Views: 8136

What's the benefit of joining? - Belonging to a social group whose members are in the top 2% of the Intelligence Quotient. If I want to go slumming, I'm sure I can find a sports bar somewhere. I just found this group that is about 50x more exclusive: http://www.triplenine.org/main/admission.asp Lot...
by peter71
Fri Sep 16, 2011 11:04 pm
Forum: Investing - Theory, News & General
Topic: 'Indexing Extremists"
Replies: 134
Views: 12050

Drip Guy wrote: Sorry, I myself was unclear -- I meant I disagreed with your [Taylor] apparent endorsement of the article.... Taylor did not endorse this article either. Paul I also took Taylor's closing "thank you" to the author as an "apparent endorsement," and I think Drip Guy's already gone way...
by peter71
Wed Sep 14, 2011 10:04 pm
Forum: Personal Finance (Not Investing)
Topic: Is Larry Swedroe saying NOT to own Emerging Markets?
Replies: 57
Views: 10501

Larry is an expert and looks at facts, not opinions with regards to investing. You know I once suggested to a neighbor that he should quit letting his stock broker put him in various exotic investments. And that was his response, almost word for word. Nick +1. IMO the most interesting and least bia...
by peter71
Wed Sep 14, 2011 7:02 am
Forum: Personal Consumer Issues
Topic: 2011 College Ranking by U.S. News
Replies: 58
Views: 6375

They change the weightings between categories every year so that each year there's some "news" as schools shuffle around. What a crock. I think this was truer 20 years ago than it is now . . . in any case, it seems like a long time since my wife has neglected to remind me that her alma mater was ra...
by peter71
Sat Sep 10, 2011 10:32 am
Forum: Investing - Theory, News & General
Topic: Stock:Bond correlations are nearly at 1
Replies: 13
Views: 2232

Hi Bongleur, Investors/speculators look at all manner of relationships between prices, returns and derivatives thereof, but I think what Lbill and I are both trying to explain is that bonds have done well while stocks have done badly . So the take-home for people who want bonds to go up when stocks ...
by peter71
Sat Sep 10, 2011 9:17 am
Forum: Investing - Theory, News & General
Topic: Stock:Bond correlations are nearly at 1
Replies: 13
Views: 2232

Looks like the correlation is between stock prices and bond yields , so no need to start worrying about "correlations go to 1 in bear markets" so far. And while bonds zigging up a little most every day that stocks zag down isn't going to erase anyone's stock losses unless they're pretty heavily in b...
by peter71
Thu Sep 08, 2011 11:15 pm
Forum: Investing - Theory, News & General
Topic: Indexing and market timing both have their place?
Replies: 29
Views: 3005

Re: A fair measure of market timing risk

Remember that you want to trade off risk and return. A portfolio which is in the market only half the time should have less volatility than a portfolio which is in the market all the time; if the market timing is random, the market-timing portfolio should have .71 times the standard deviation. (One...
by peter71
Thu Sep 08, 2011 10:35 pm
Forum: Investing - Theory, News & General
Topic: All risk adjusted prices rise at long term interest rate
Replies: 29
Views: 2110

Wasn't there just a thread on here about looking at supply/demand (for/of investments) as well as risk/reward? That's in any case always been my view . . . i.e., absent any supply/demand shocks, every asset would always be priced right, but all bets are off when there's a shock to demand . . . ironi...
by peter71
Sat Sep 03, 2011 6:12 pm
Forum: Investing - Theory, News & General
Topic: "Death of Equities" watch
Replies: 35
Views: 3923

I think this type of polling makes the situation look worse than it actually is. they're polling a random sample of people from the US, not self-identified investors or people endorsing long-term investing as a strategy for retirement saving. as much as I hate to say it, US citizens are going to co...
by peter71
Thu Sep 01, 2011 10:24 pm
Forum: Investing - Theory, News & General
Topic: Most misleading statements in investing
Replies: 57
Views: 5105

The BRIC countries are growing way faster than the US and other advanced countries, therefore the stocks will perform better. There is some truth to it. If one country consistently grows at around 9%, and the other at 2%. The stocks from the former should outperform in the long run. But aren't you ...
by peter71
Thu Sep 01, 2011 9:39 pm
Forum: Personal Consumer Issues
Topic: College grads waiting out the job market
Replies: 69
Views: 10277

Um, I'm just a liberal arts major but I do know how to do word problems with basic fractions . . . anyone else getting 2/5ths for the proportion of liberal arts majors on that list? :D I don't dispute the general principle of liberal arts doesn't pay -- but it's interesting to me if biz and advertis...
by peter71
Wed Aug 31, 2011 9:00 pm
Forum: Investing - Theory, News & General
Topic: Redefining risk
Replies: 261
Views: 30827

bobcat2 wrote:No, Pete, it was meant to point out the huge difference between cj and posters like yourself. :lol:

You have done a terrific job of making my point. Thank you.

BobK
Serenity Now. :D

http://www.youtube.com/watch?v=5513mXmQbw4
by peter71
Wed Aug 31, 2011 8:47 pm
Forum: Investing - Theory, News & General
Topic: Redefining risk
Replies: 261
Views: 30827

Hi Bob,

I took it as more of a faux-magnanimous victory lap than a "good deed," but I suppose it's all semantics. :D

In any case, agreed that it would be bad to accumulate a huge pile in the US in the 1950's and then time travel forward to Japan in the 2000's just before retirement. :D

Best,
Pete
by peter71
Wed Aug 31, 2011 5:48 pm
Forum: Investing - Theory, News & General
Topic: Redefining risk
Replies: 261
Views: 30827

Then in this case Pete you have always been wrong :cry:, because the risk is not trivial. Why I am I not surprised that in this case you have always been wrong? :lol: BobK Hi Bob, Nope, I assure you that modeling a 16-year investment period in which 8 years of relentless 10% gains are followed by 8...
by peter71
Wed Aug 31, 2011 5:11 pm
Forum: Investing - Theory, News & General
Topic: Redefining risk
Replies: 261
Views: 30827

Hi Bob, We can't all be cjking . . . though most of us do manage to avoid the "I defy anyone who has looked at Table 1. . . " construction. :D I didn't actually express a prior view on the sequence-of-return issue in particular, but rest assured that (at least on this narrow point) I've never doubte...
by peter71
Wed Aug 31, 2011 4:10 pm
Forum: Investing - Theory, News & General
Topic: Redefining risk
Replies: 261
Views: 30827

Re: I wish the rest of us were more like cjking

cjking you are the best poster on this thread. Hardly anyone ever changes their mind on these threads when presented with contrary evidence, it takes a big person to do that. You have done just that. My hat's off to you :!: :sharebeer Best, BobK CJ is a good man for changing his mind, but as soon a...
by peter71
Sat Aug 27, 2011 8:46 am
Forum: Investing - Theory, News & General
Topic: Redefining risk
Replies: 261
Views: 30827

Re: Redefining risk

Most long-term investors have an incorrect view of risk. They define risk as a loss of principal when the real risk to a long-term investor is the loss of purchasing power over time. With this in mind, all asset classes BUT equities are extremely risky. Equities are the only asset class with a leng...
by peter71
Thu Aug 25, 2011 11:09 pm
Forum: Investing - Theory, News & General
Topic: If FDIC Accounts Are Safe As Treasury Bills then Why...?
Replies: 96
Views: 9124

Let's take a step back here. People are debating the question of whether the FDIC is "truly" backed by the full faith and credit of the U.S., or whether it's not really and the government is just misleading us when it says so. When you think about it, that's a strange issue to argue over. Because t...
by peter71
Thu Aug 25, 2011 4:46 pm
Forum: Investing - Theory, News & General
Topic: larry swedroe article: statistical signficance of results?
Replies: 54
Views: 7763

It's true that sketchy stats have been used to over-hype market-beating portfolios, but so too have sketchy deductive models been used to over-hype total market investing . . . So you can basically place your bets on a diversified pile of "whatever" and hope that the micro efficiency of markets mean...
by peter71
Wed Aug 24, 2011 10:23 pm
Forum: Investing - Help with Personal Investments
Topic: Boomers May Stall Stocks for Decades: Fed
Replies: 20
Views: 4869

I agree with random musings. The Fed does not have a good record at predicting much of anything if they just move out more than 3 or 4 months from the present. I remember when Mr Ben said we'd be getting 2% next year. 0.2% later... :lol He's not the only eejit out there either, pic related: http://...
by peter71
Mon Aug 22, 2011 9:18 am
Forum: Investing - Theory, News & General
Topic: The Case for Equities
Replies: 61
Views: 5665

The previous post hints at an interesting difference between countries and individuals: namely, countries don't die "natural" deaths and leave a debit/credit balance to their heirs. So provided the terms of debt service are favorable and total debt remains in line with GDP (obviously two big ifs) co...
by peter71
Mon Aug 22, 2011 1:13 am
Forum: Investing - Theory, News & General
Topic: Stocks are attractive based on forward P/E - or are they?
Replies: 54
Views: 6781

Hi James, Did you read the CXO advisory analysis posted upthread? I wouldn't call it "anecdotal." Both he and Hussman are selling something but I personally think he does slightly better/more objective quant work than Hussman. In any case, as someone else has posted upthread the P/E 1 forward vs. P/...
by peter71
Sat Aug 20, 2011 3:11 pm
Forum: Investing - Theory, News & General
Topic: Stocks are attractive based on forward P/E - or are they?
Replies: 54
Views: 6781

Hi Bongleur, No shortage of previous threads on volatility here . . . I don't like it either, and there's a good chance that posting on here on a weekend after a drop selects for especially disliking it . . . again, if you have options that look better than stocks, bonds, commodities and cash right ...
by peter71
Sat Aug 20, 2011 2:50 pm
Forum: Investing - Theory, News & General
Topic: Stocks are attractive based on forward P/E - or are they?
Replies: 54
Views: 6781

Hi Mike, While it's often remarked that corporate balance sheets look better and leverage looks less bad than in 2008, there's always lots of known and unknown possibilities . . . to expand on the relative value proposition a bit, though, here's some additional perspective: 1) Stocks have done a lot...
by peter71
Sat Aug 20, 2011 12:43 pm
Forum: Investing - Theory, News & General
Topic: Stocks are attractive based on forward P/E - or are they?
Replies: 54
Views: 6781

Let's assume that stocks are either reasonably priced based on short term earnings or expensive based on the 10 year average. Let's take the average of that to be stocks are slightly expensive. What are the catalysts for stocks to move higher. I think it is wrong to assume that earnings will remain...
by peter71
Sat Aug 20, 2011 7:05 am
Forum: Investing - Theory, News & General
Topic: Stocks are attractive based on forward P/E - or are they?
Replies: 54
Views: 6781

Hi Grayfox, Yeah, I think that IF they didn't data mine/overfit their model then an R-squared of .15 is what they say it is: "some information" that explains about 15% of a complex story . . . but I haven't looked into whether all the inflation-stuff and within-quarter decay stuff is over-fitting or...
by peter71
Fri Aug 19, 2011 9:33 pm
Forum: Investing - Theory, News & General
Topic: Stocks are attractive based on forward P/E - or are they?
Replies: 54
Views: 6781

I keep waiting and hoping for someone to come forth with any credible data that shows 1-year forward P/E (or trailing 1 year P/E for that matter) is anything but noise - and in any way, shape, or fashion should inform my decisions about investing in stocks. I have an open mind on this issue, but no...
by peter71
Fri Aug 19, 2011 9:00 am
Forum: Investing - Theory, News & General
Topic: U.S. stocks in freefall
Replies: 7954
Views: 1619149

According to news reports, ordinary investors are leaving the stock market in droves in their 401(k)s and IRAs. They've found out why there is an equity risk premium - it's because there is actual RISK involved. As Ed Easterling wrote: "risk is not a knob" that you turn to produce higher returns. S...
by peter71
Thu Aug 18, 2011 10:19 pm
Forum: Investing - Theory, News & General
Topic: Bill Gross Interview
Replies: 15
Views: 2117

Hi Mike, Yep, no doubt that the direction is lower, but Germany is probably a good example of how tough it is to get to the two consecutive negative quarters threshold in that they still had a positive quarter (0.1%) even though it was much less positive than expected (0.5%) . . . so it's possible t...
by peter71
Thu Aug 18, 2011 9:43 pm
Forum: Investing - Theory, News & General
Topic: Bill Gross Interview
Replies: 15
Views: 2117

Hi Mike, Sure, we all begin life as children and grow up relying on the confidently-yelled commands of our parents, e.g., HOT--DON'T TOUCH! But the question is whether confidence and certitude is a positive or a negative indicator of ability to make predictions about things like economics, and so fa...
by peter71
Thu Aug 18, 2011 8:40 pm
Forum: Investing - Theory, News & General
Topic: Is Buy&Hold a Flawed Concept?
Replies: 16
Views: 2343

Momentum exists, but Faber (the paper author) likes it more than most . . . I think we've discussed this one in the 200 day moving average thread (along with some contrary papers that say buying on VIX spikes is actually good). Also keep in mind that whether or not they're on SSRN none of these pape...
by peter71
Tue Aug 16, 2011 8:05 pm
Forum: Investing - Theory, News & General
Topic: Do you like polls?
Replies: 14
Views: 1453

Awesome poll!

Fans of 42 and of critiquing other people's research methodologies may also want to check out a newish econometrics textbook.

http://www.mostlyharmlesseconometrics.com/

Best,
Pete
by peter71
Tue Aug 16, 2011 7:00 pm
Forum: Investing - Theory, News & General
Topic: "The Smartest Portfolio You'll Ever Own" -- A Gem
Replies: 60
Views: 18190

Re: The Efficient Portfolio

Yes I think a tilted portfolio is riskier, warranting a higher expected return. But isn't it fair to say that it is also more efficient since the risk factors it has more exposure to are weakly correlated? More return per unit risk, better sharpe ratio, brings annualized return closer to average an...
by peter71
Mon Aug 15, 2011 7:29 pm
Forum: Investing - Theory, News & General
Topic: The Smartest Bogleheads Post You'll Ever Read
Replies: 13
Views: 2241

I think the greatest hype is the claim that this approach to investing is for the average guy. This is only true if the average guy hands his assets to someone else to follow this approach, and he remains clueless. For those that do not want to remain clueless, but wish to follow the approach, whic...
by peter71
Mon Aug 15, 2011 6:41 pm
Forum: Investing - Theory, News & General
Topic: The Smartest Bogleheads Post You'll Ever Read
Replies: 13
Views: 2241

Thanks, Victoria! But for now the only thing I'd put in a magnum opus thread would be, "nobody knows nuthin' . . . muddle through!" :D

Best,
Pete
by peter71
Mon Aug 15, 2011 6:35 pm
Forum: Investing - Theory, News & General
Topic: Thousands of TSP participants move to safety of G Fund
Replies: 32
Views: 4104

Most spooked participants are fleeing to the G Fund, which are backed by government securities and have never decreased in value. Participants transferred more than $5.5 billion into the G Fund in July, which Chief Investment Officer Tracey Ray said was a one-month record. And with the nearly $1.8 ...
by peter71
Mon Aug 15, 2011 6:12 pm
Forum: Investing - Theory, News & General
Topic: The Smartest Bogleheads Post You'll Ever Read
Replies: 13
Views: 2241

but I have no idea what would happen if we removed the "hype and marketing stimulus" from the system . . . Best, Pete Are you talking about removing bread and circuses? It seems like people watch / listen / read the media only for entertainment these days. No, I mean the passive investing "hype" in...
by peter71
Mon Aug 15, 2011 6:05 pm
Forum: Investing - Theory, News & General
Topic: The Smartest Bogleheads Post You'll Ever Read
Replies: 13
Views: 2241

The truth must be repeated over and over because lies are constantly being told. I think I half agree with you, but I think what I'd say is that the situation has actually gotten better (fund fees going down, VG gaining market share) under conditions in which passive investing marketing and hype ha...