Search found 5922 matches

by market timer
Sun Sep 16, 2007 4:48 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

Re: Going broke..

Whenever you hear stories about people going completely broke with their investments it usually involves investing with borrowed money and/or leverage. Your comment is relevant in that it typifies the innate distrust most people have of debt and leverage. For people unwilling to educate themselves ...
by market timer
Sun Sep 16, 2007 4:33 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

How is this different than what the 2X S&P 500 funds are trying to do (rather unsuccessfully, I might add.) 2x S&P 500 funds use a constant rate of leverage. This implies that they will buy stocks as the market rises and sell them as the market falls. When the market is volatile without direction, ...
by market timer
Sun Sep 16, 2007 4:26 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

watchnerd, I don't know your exact circumstances (age, net worth, etc.), but I could imagine someone in tech startups benefitting from my plan. Imagine someone who has just graduated with an engineering degree from Stanford, and who decides to accept a startup job in Silicon Valley. This person has ...
by market timer
Sun Sep 16, 2007 3:46 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

Interesting concept. I believe it carries an assumption that risky assets will outperform risk-less instruments over my investing horizon, no? I'm not sure I'm willing to risk everything on that assumption. No, the reason for leverage is to smooth risk taking over time. It requires no assumptions o...
by market timer
Sun Sep 16, 2007 3:43 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

If the debt was 0%, inflation rate, or risk-free-return rate, then it would seem more of a no brainer. Most people have an aversion to borrowing, so they do not closely monitor their credit options. Moreover, the options market allows borrowing at interest rates that are close to the risk-free rate...
by market timer
Sun Sep 16, 2007 3:37 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

Re: ?

Hasn't this been already tried..?? I think it was called hedge funds, aka leveraged quant deals that blew up in everybody's face. Leverage always looks good when you make just one initial assumption about future returns. Tim This is a problem of a margin call resulting in forced liquidation. There ...
by market timer
Sun Sep 16, 2007 3:23 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

Maybe I'm not understanding exactly what you're advocating. Can you dumb it down a bit for me using a concrete example. No problem. Suppose you've recently graduated from med school, earned your first $10,000, and have no debt. What percentage should you invest in stocks? I'm saying that this decis...
by market timer
Sun Sep 16, 2007 3:09 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

I can't come up with $13K per month, but I shouldn't have any problem at all hitting $2 Million in real dollars in 30 years. This is a cash flow problem. It is solved by effectively issuing zero coupon debt. Buying a LEAP is a way to implement this solution, since you are not required to make any i...
by market timer
Sun Sep 16, 2007 2:57 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

I think the main problem with your plan is costs (which we all know sink investment returns.) If you are servicing debt at 8% and only making 9%, you're not going to get very far. Yes, it is clear that costs are an important consideration. As the cost of borrowing increases above the risk-free rate...
by market timer
Sun Sep 16, 2007 2:51 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

Re: Interesting but I think not

I think your proposal comes down to monetizing future income before you earn it. This is exactly the point. Even conservative assumptions on future income can lead to large improvements in risk-return. I think the old adage that you should have your age in bonds . . . basically reflects the point y...
by market timer
Sun Sep 16, 2007 12:51 pm
Forum: Investing - Theory, News & General
Topic: A different approach to asset allocation
Replies: 1444
Views: 628608

A different approach to asset allocation

Summary: Econ grad student applies Mortgage Your Retirement theory at the top of the last bull market, starting around 2x leverage, loses $210K of borrowed money, and is forced is to sell what's left of his portfolio at S&P 821 in November 2008. The complete wipeout results in a reflective period wh...
by market timer
Sun Sep 16, 2007 10:52 am
Forum: Investing - Theory, News & General
Topic: Howard Gardner: capping income and wealth
Replies: 30
Views: 7953

Oh, I just realized he's a psychologist.
by market timer
Fri Sep 14, 2007 8:50 pm
Forum: Investing - Theory, News & General
Topic: Intelligently taking on risk to (hopefully) increase return?
Replies: 27
Views: 4849

Sell your bond fund. Invest the proceeds into stocks. It's probably worthwhile investing a small portion (5-10%) in both CCFs and REITs.
by market timer
Fri Aug 31, 2007 10:42 am
Forum: Investing - Help with Personal Investments
Topic: Am I maximizing tax efficiency?
Replies: 4
Views: 1382

Thanks for the comments. Rhino, based on your suggestion, I'm going to move TSM from my Roth and replace it with Dec 2009 SPY LEAPS. I'll also reduce leverage in my taxable account by selling SPY. I chose EFA for my taxable account because of its liquidity over international alternatives. I'm thinki...
by market timer
Fri Aug 31, 2007 12:38 am
Forum: Investing - Help with Personal Investments
Topic: Am I maximizing tax efficiency?
Replies: 4
Views: 1382

Am I maximizing tax efficiency?

I'm in my 20s and have just realized the importance of minimizing taxes. At the moment, I'm a student, and therefore have a very low marginal tax rate, but I plan to be in a high tax bracket in two years. I'm wondering if there is anything I should do in the interim to position my assets for a futur...
by market timer
Tue Aug 28, 2007 4:23 am
Forum: Investing - Theory, News & General
Topic: Research paper database
Replies: 4
Views: 1590

I use jstor. It's free electronically through many university libraries.
by market timer
Wed Aug 22, 2007 7:50 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Market Neutral Fund
Replies: 45
Views: 12151

Index fund + long/short fund = active management fund.

Anyone who wants in on this fund, why not just sell your indexes and buy an active fund?
by market timer
Tue Aug 21, 2007 10:48 pm
Forum: Investing - Help with Personal Investments
Topic: What's the ideal portfolio to DCA into a home?
Replies: 2
Views: 873

What's the ideal portfolio to DCA into a home?

Buying a home is the biggest lump sum investment that most of us will ever make. Some suggest saving for a home through conservative investments, such as bonds or money market accounts. I think this is actually riskier than buying a diversified basket of assets correlated with the price of real esta...
by market timer
Tue Aug 21, 2007 6:46 pm
Forum: Personal Finance (Not Investing)
Topic: What Kind of Car Do You Drive and Why?
Replies: 100
Views: 32679

I sold my car 7 years ago. Now I bus, taxi, or walk.
by market timer
Tue Aug 21, 2007 2:52 am
Forum: Investing - Help with Personal Investments
Topic: Please help me diversify my portfolio
Replies: 17
Views: 4115

Why do you have so much money in cash and bonds that offer less interest than your mortgage? It seems like an obvious improvement to me just to liquidate your bond funds and pay off your mortgage. The best way to do this is to sell stocks in your taxable account, convert bond funds to stock funds in...
by market timer
Tue Aug 21, 2007 2:40 am
Forum: Investing - Theory, News & General
Topic: Prosper.com - get loans or loan money yourself
Replies: 42
Views: 11806

I've been lending on Prosper for over a year and earn over 10% net. If I could do this sort of lending in a retirement account, I'd scale up my operation considerably.
by market timer
Tue Aug 21, 2007 1:47 am
Forum: Investing - Theory, News & General
Topic: Stocks quite but still panic?
Replies: 10
Views: 2621

Are there any good ways for small time investors to profit from the current spread between short term Treasuries and investment grade debt?