Search found 518 matches

by EDN
Tue Apr 16, 2013 2:46 pm
Forum: Investing - Help with Personal Investments
Topic: international: small value or emerging markets?
Replies: 13
Views: 1215

Re: international: small value or emerging markets?

I wouldn't put a lot of weight on Morningstar data and those crude style boxes. What are the size breakpoints? Here is what DFA lists as the breakdown for their Int'l small value fund: DISVX Intl MKT Large Growth 0.00 13.95 Large Blend 0.00 34.63 Large Value 0.00 15.80 Medium Growth 0.31 6.81 Medium...
by EDN
Tue Apr 16, 2013 1:34 pm
Forum: Investing - Help with Personal Investments
Topic: international: small value or emerging markets?
Replies: 13
Views: 1215

Re: international: small value or emerging markets?

Hi folks. Five percent of my portfolio is currently in VSS. The goal was a small value tilt, however, VSS isn't really small value. It's a small/medium blend. I'm considering replacing that 5% with EM. Thoughts? Thanks. That's a good question. There is no pure "Int'l small value or World exUS small...
by EDN
Tue Apr 16, 2013 11:48 am
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

EDN You clearly showed that HY added to portfolio in all environments (both rising and falling rates) was not the most effective way to build a portfolio. And that doesn't even take into account the location of risk issue. But it won't matter as I have learned- Best wishes Larry Right, At some poin...
by EDN
Tue Apr 16, 2013 11:38 am
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

High yield bonds have only been an asset class since the late 1970s. The market has it's birth during a period of historically high interest rates. We've seen interest rates fall from 20% down to 4% for on corporate bonds, and we've seen what the total return has been for different fixed income cat...
by EDN
Tue Apr 16, 2013 11:14 am
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

Yup! YTD Vanguard Int Treasury = +0.8% Vanguard Int Corporate = +1.3% Vanguard HY = +2.3% Eric, As you have shown Vanguard’s HY has outperformed all other bond funds YOU have chosen to compare it with. Also, IF you had chosen to use the more meaningful 10 year data you would have seen that VWEAX, V...
by EDN
Mon Apr 15, 2013 9:05 pm
Forum: Investing - Theory, News & General
Topic: Why Bonds?
Replies: 16
Views: 1892

Re: Why Bonds?

Bogleheads: We don't have any "Why Bonds?" posts today. :wink: Selected Vanguard funds: -2.25% Total International -2.49% Total Stock Market -7.23% Precious Metals and Mining +.09% Total Bond Market Best wishes. Taylor Funny, Two thoughts come to mind for me: 1. Sector funds carry a lot of unnecess...
by EDN
Mon Apr 15, 2013 8:19 pm
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

Bradley wrote:One day's results are meaningless in the long run
Yup!

Eric

PS-

YTD
Vanguard Int Treasury = +0.8%
Vanguard Int Corporate = +1.3%
Vanguard HY = +2.3%
Vanguard Mid VL = +11.7%
Vanguard SV = +8.8%
by EDN
Mon Apr 15, 2013 8:02 pm
Forum: Investing - Theory, News & General
Topic: "Bond Fund Duration: An Art, Not a Science"
Replies: 22
Views: 1746

Re: "Bond Fund Duration: An Art, Not a Science"

I don't know if there is any "art" to it, you just have to be appling the proper measures to appropriate situation. Gravity is based on science, but it doesn't work on the moon ... Too funny! I'm gonna go out on a limb and guess you are not a physics major. This is absolutely the funniest thing I'v...
by EDN
Mon Apr 15, 2013 7:51 pm
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

So let's review: 1. FF model still works 2. Size premium still exists 3. Vanguard HY still disappointing (underperformed SV and bonds) Eric I'm going to laugh the day that DFA comes out with a HY bond fund. Never say never, because advisers were shocked after DFA panned commodities and mid-caps and...
by EDN
Mon Apr 15, 2013 4:12 pm
Forum: Investing - Theory, News & General
Topic: "Fundamentals matter" but they are not determinant.
Replies: 49
Views: 3975

Re: "Fundamentals matter" but they are not determinant.

RM, When you rebalance, if Int'l has gone down or stayed flat (only real way to have low valuations), you will be buying more of it. The question is, do you go beyond your target allocation? I say no need -- why? The target allocation assumes that it will achieve the returns you need to be successfu...
by EDN
Mon Apr 15, 2013 4:00 pm
Forum: Investing - Theory, News & General
Topic: "Bond Fund Duration: An Art, Not a Science"
Replies: 22
Views: 1746

Re: "Bond Fund Duration: An Art, Not a Science"

I don't know if there is any "art" to it, you just have to be appling the proper measures to appropriate situation. Gravity is based on science, but it doesn't work on the moon...Does that mean figuring out how gravity works is an "art"? :wink: Echoing other poster comments, there are two risks in t...
by EDN
Mon Apr 15, 2013 3:45 pm
Forum: Investing - Theory, News & General
Topic: "Fundamentals matter" but they are not determinant.
Replies: 49
Views: 3975

Re: "Fundamentals matter" but they are not determinant.

I am in the camp that says you adopt a broadly diversified asset class portfolio (US and Foreign stocks, large/small and growth/value; high quality bonds if so desired), then rebalance as necessary. At some points your portfolio will have higher valuations/fundamentals (lower expected returns), at o...
by EDN
Mon Apr 15, 2013 2:25 pm
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

Eric, Using your same start date for VWEHX, the small-stock premium doesn't exist: Jan 1979 to Mar 2013 Russell 1000 index (large cap) = 11.71% annually Russell 2000 index (small cap) = 11.64% annually So, you're saying that the FF-3 factor model doesn't work either because there was no small-cap p...
by EDN
Mon Apr 15, 2013 11:55 am
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

I love all the know-it-alls around here. If I follow Larry's advice, then I guess I should sue Rick for financial advisor malpractice. Hey Rick, how's your liability coverage these days? Frankly, I doubt Rick stays awake at night worrying about such things. I think it would be difficult to sue me f...
by EDN
Mon Apr 15, 2013 10:20 am
Forum: Investing - Theory, News & General
Topic: Bogle again calls for a total corporate bond fund
Replies: 26
Views: 5053

Re: Bogle again calls for a total corporate bond fund

Can anyone explain to me why John Bogle seems so confident in the utility of holding an increased weighting in the debt of smaller and more value oriented companies (these are the ones that have higher bond yields/costs of capital and issue lower grade bonds) to increase expected returns but sees it...
by EDN
Mon Apr 15, 2013 10:00 am
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

I love all the know-it-alls around here. If I follow Larry's advice, then I guess I should sue Rick for financial advisor malpractice. Hey Rick, how's your liability coverage these days? Frankly, I doubt Rick stays awake at night worrying about such things. Hey guys, I have a brain, and I sometimes...
by EDN
Mon Apr 15, 2013 9:30 am
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

Look, real simply, there are 3 issues with high yield: 1. Does it add value to an existing balanced stock and bond portfolio beyond simply adding a combo of small value and more bonds? 2. Is Vanguard High Yield a good fund to target the HY asset class? 3. When are you adding it? I won't rehash #1, I...
by EDN
Sun Apr 14, 2013 1:09 pm
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

Theses moves are labeled as "comfortable", "seem like a good move", etc.... all changes that a good IPS would explicitly prohibit without more concrete rationale. Does that mean one never make changes? Of course not. What it means is changes are made with the emphasis on targeting an explicit retur...
by EDN
Sun Apr 14, 2013 11:40 am
Forum: Investing - Theory, News & General
Topic: How to choose FF Factor Weightings
Replies: 46
Views: 10283

Re: How to choose FF Factor Weightings

Also, I'm wondering how well 5-factor model explains returns of individual stocks? My understanding is that much of the motivation behind the original CAPM was to allow financial guys to determine cost of capital for individual firms, which they use to make real business decisions, like whether or ...
by EDN
Sun Apr 14, 2013 11:25 am
Forum: Investing - Theory, News & General
Topic: Vanguard High Yield
Replies: 139
Views: 11170

Re: Vanguard High Yield

Sorry to be a Debbie Downer, but it's the little tweaks like this along with the major wholesale changes that often occur around turning points in market cycles that lead to most investors drastically underperforming their portfolio. If you'll notice, these "upgrades" almost always entail selling wh...
by EDN
Sat Apr 13, 2013 11:55 am
Forum: Investing - Theory, News & General
Topic: Charles Ellis says stay out of bonds
Replies: 122
Views: 13563

Re: Charles Ellis says stay out of bonds

I object to a sort of double standard I see in stock advocates, shown in this quotation from Ellis: "The yield on a 10-year Treasury bond is under 2%. When yields go back to their historical average of 5.5%, an intermediate bond fund could go down 25% in value. People who are putting their retireme...
by EDN
Sat Apr 13, 2013 7:56 am
Forum: Investing - Theory, News & General
Topic: What is the lowest possible Expense Ratios could go?
Replies: 26
Views: 2301

Re: What is the lowest possible Expense Ratios could go?

The reason why the pursuit of lower expense ratios in traditional index funds is important is because, traditionally, the return of an index fund is just the index minus the ER and the cost to track the index. But ERs have gotten to the point where implementation costs matter more than expense ratio...
by EDN
Fri Apr 12, 2013 2:01 pm
Forum: Investing - Theory, News & General
Topic: EDV up 2.01% vs BND up 0.13% 4/12 AM
Replies: 5
Views: 881

Re: EDV up 2.01% vs BND up 0.13% 4/12 AM

From mid December 2008 through April of 2010, EDV lost over 50% of its value, a bigger decline than the S&P 500 from November 2007 through Feb 2009. BND over this same period (08-10), actually gained value . If you own EDV you had better be down on your knees praying the negative correlation between...
by EDN
Fri Apr 12, 2013 1:17 pm
Forum: Personal Finance (Not Investing)
Topic: most common retirement planning mistakes
Replies: 27
Views: 3981

Re: most common retirement planning mistakes

Outdoors & Learning, Thank you. I totally agree. I have stated many times that a SPIA, or some similar strategy (say a TIPS ladder), would be a good option to act like a pension for those who don't have one. If you can forego the inflation credits and period certain options, there are ways you can g...
by EDN
Fri Apr 12, 2013 12:48 pm
Forum: Personal Finance (Not Investing)
Topic: most common retirement planning mistakes
Replies: 27
Views: 3981

Re: most common retirement planning mistakes

RE: Spending in retirement, on average it depends on the amount of income in working years. One study from DFA puts it at the following: <25K Replacement is about 85% (and SS is 60%) 25K to 50K? Replacement is about 75% (and SS is 40%) 50K to 75K Replacement is about 65% (and SS is 30%) 75K + Replac...
by EDN
Thu Apr 11, 2013 1:34 pm
Forum: Investing - Theory, News & General
Topic: Are you adding more risk (in order to get more return)?
Replies: 30
Views: 3057

Re: Are you adding more risk (in order to get more return)?

It feels like there's a general consensus that major asset classes, whatever direction they go in, may return less over the medium term. This isn't just a regular media thing -- the Vanguard Bonds discussion I listened in on a couple of weeks ago suggested that they were modeling lower than histori...
by EDN
Thu Apr 11, 2013 1:01 pm
Forum: Investing - Theory, News & General
Topic: Are you adding more risk (in order to get more return)?
Replies: 30
Views: 3057

Re: Are you adding more risk (in order to get more return)?

It is not even "more risk, more expected return," or, at least, that implies a technical meaning of the word "expected." I'd prefer to state it as "more risk, more potential return." You might take the risk and not get the return. If that were not true, there wouldn't really be any risk. bobcat2 qu...
by EDN
Wed Apr 10, 2013 11:07 pm
Forum: Investing - Theory, News & General
Topic: Why do investors chase dividend paying strategies
Replies: 439
Views: 55975

Re: Why do investors chase dividend paying strategies

In my opinion, many in this thread are drawing conclusions from the Fama and French model that are not appropriate. Right. Fama-French 3-factor Model is not all that good a fit for dividend stocks. Last year I ran the numbers to get the factor loading for Vanguard Utilities ETF (VPU). See http://ww...
by EDN
Wed Apr 10, 2013 7:55 pm
Forum: Investing - Theory, News & General
Topic: The different types of financial planners
Replies: 33
Views: 3126

Re: The different types of financial planners

A question for the group, and I won't reply so Im just asking: How much of this newfound interest in SPIAs and the Lifecycle approach that believes stocks and balanced portfolios are too risky for retirees is due to a "TSM perspective" whereby your primary stock holding has had 0% real returns since...
by EDN
Wed Apr 10, 2013 6:58 pm
Forum: Investing - Theory, News & General
Topic: The different types of financial planners
Replies: 33
Views: 3126

Re: The different types of financial planners

I don't think I engaged in any advisor bashing. So do you think I'm off base with my statement that hourly-fee advisors are less likely to say negative things about lifetime annuities? That really has been what I've seen, but my experience is obviously just anecdotal. And, just in case you do agree...
by EDN
Wed Apr 10, 2013 6:20 pm
Forum: Investing - Theory, News & General
Topic: The different types of financial planners
Replies: 33
Views: 3126

Re: The different types of financial planners

my discussion yesterday exemplifies a choice that anyone with substantial retirement savings will have to make when they leave the workforce. Do we maintain our current standard of living as best we can, or risk making it worse for an opportunity to make it better? Assuming that there are advisors ...
by EDN
Wed Apr 10, 2013 6:05 pm
Forum: Investing - Theory, News & General
Topic: The different types of financial planners
Replies: 33
Views: 3126

Re: The different types of financial planners

In finance risk is defined as uncertainty that is consequential (nontrivial). ============================= You are attempting to reach the goal without taking excessive risk to get there. That is not the same thing as always taking minimal risk. ============================= You can significantly ...
by EDN
Wed Apr 10, 2013 5:05 pm
Forum: Investing - Theory, News & General
Topic: The different types of financial planners
Replies: 33
Views: 3126

Re: The different types of financial planners

my discussion yesterday exemplifies a choice that anyone with substantial retirement savings will have to make when they leave the workforce. Do we maintain our current standard of living as best we can, or risk making it worse for an opportunity to make it better? Assuming that there are advisors ...
by EDN
Wed Apr 10, 2013 4:39 pm
Forum: Investing - Theory, News & General
Topic: The different types of financial planners
Replies: 33
Views: 3126

Re: The different types of financial planners

I don't see much reason to continue to try and discuss topics with the SPIA crowd. It's not even much of a discussion, it is just a series of random quotes from Robert Merton and these arbitrary comparisons to try and spice up immediate annuities. We cannot even discuss the risk of stocks, all you g...
by EDN
Wed Apr 10, 2013 11:43 am
Forum: Investing - Help with Personal Investments
Topic: What to do with Bonds?
Replies: 22
Views: 2337

Re: What to do with Bonds?

I think most would agree that sooner or later the Fed will stop propping up Bonds and they will fall. I am retired and 66 years old with a decent pension with no current need to tap into these IRA funds. My Bond allocation is 67% of total funds with 26% in Vanguard Total Bond Market Index (Admiral)...
by EDN
Wed Apr 10, 2013 11:16 am
Forum: Investing - Theory, News & General
Topic: So, when the eventual bond rate increase begins…
Replies: 49
Views: 4831

Re: So, when the eventual bond rate increase begins…

It's quite a bit different Eric. In 2008 the Vanguard Short Term Index the NAV had at one point dropped 4.5% and the yield dropped from 3.89% in January to 2.67% in December. CD's I buy, just don't do that! Lets be specific here, from September through October 2008, the height of the credit crisis,...
by EDN
Wed Apr 10, 2013 11:09 am
Forum: Investing - Theory, News & General
Topic: So, when the eventual bond rate increase begins…
Replies: 49
Views: 4831

Re: So, when the eventual bond rate increase begins…

Claiming short term gains as justification for choosing an investment is foolish. If you had put that same money into stocks you would have earned a lot more. Does that mean you made a mistake with your ST bond fund? Of course not. They have a different risk profile and you chose bonds to reduce ri...
by EDN
Wed Apr 10, 2013 10:39 am
Forum: Investing - Theory, News & General
Topic: So, when the eventual bond rate increase begins…
Replies: 49
Views: 4831

Re: So, when the eventual bond rate increase begins…

Comparing bank CD's to Short Term Bond Index is misleading. CD's are full faith instruments and the Short Term Bond Index has 30% in corporate and foreign holdings. Not really, inside a fund with thousands of holdings, it's not much different. Even if some corporates default in times of distress (a...
by EDN
Wed Apr 10, 2013 10:04 am
Forum: Investing - Theory, News & General
Topic: So, when the eventual bond rate increase begins…
Replies: 49
Views: 4831

Re: So, when the eventual bond rate increase begins…

By the way, on the topic of CDs, which is very popular around here...I went back into the archives of 2010 and 2011. Here is a link to the revered Penn Fed CD rates from almost 3 years ago: http://www.depositaccounts.com/blog/2010/09/penfed-lowers-cd-rates-but-some-rates-remain-competitive.html Look...
by EDN
Wed Apr 10, 2013 8:43 am
Forum: Investing - Theory, News & General
Topic: So, when the eventual bond rate increase begins…
Replies: 49
Views: 4831

Re: So, when the eventual bond rate increase begins…

I'm not a CD fan. I think too much is made of trying to squeeze a few basis points out of bonds/fixed income, and the reason why many people are even trying this is they have too much in fixed income to begin with (so they are searching for the proverbial free lunch). The argument for FDIC-insured ...
by EDN
Tue Apr 09, 2013 9:05 pm
Forum: Investing - Theory, News & General
Topic: What percentage of stocks beat their index?
Replies: 7
Views: 959

Re: What percentage of stocks beat their index?

Does anyone know if there have been any studies on, for example, the percentage of S&P 500 stocks that beat the S&P 500's return in any given year? Stated another way: if you randomly chose an S&P 500 stock on January 1st and held it for the entire year (reinvesting dividends), what's the probabili...
by EDN
Tue Apr 09, 2013 8:44 pm
Forum: Investing - Theory, News & General
Topic: Why invest in stocks at all?
Replies: 24
Views: 2801

Re: Why invest in stocks at all?

When you buy the market, you are just buying a share of global econonomic growth and productivity. Free markets are competitive and exist to generate profits by producing goods and services that individuals place a value on. Companies require and compete for capital to operate (and produce these pro...
by EDN
Tue Apr 09, 2013 7:59 pm
Forum: Investing - Help with Personal Investments
Topic: Asset Allocation w/ Questions (Emerg Mkts Sm vs Value, etc)
Replies: 10
Views: 1203

Re: Asset Allocation w/ Questions (Emerg Mkts Sm vs Value, e

These 2% and 3% positions will be the death of you. Want a healthy size and value tilt? Do this: 30% Vanguard TSM 30% DFA US Small 30% DFA Int'l Core 10% DFA EM Value Hard to do much better than that. Unless you can get DFA US Core 2 and DFA World exUS Core (launched today) added, then you can just ...
by EDN
Tue Apr 09, 2013 4:07 pm
Forum: Investing - Theory, News & General
Topic: So, when the eventual bond rate increase begins…
Replies: 49
Views: 4831

Re: So, when the eventual bond rate increase begins…

FWIW, I'm not a CD fan. I think too much is made of trying to squeeze a few basis points out of bonds/fixed income, and the reason why many people are even trying this is they have too much in fixed income to begin with (so they are searching for the proverbial free lunch). If I'm trying to minimize...
by EDN
Tue Apr 09, 2013 1:13 pm
Forum: Investing - Theory, News & General
Topic: Active vs Passive in 2012 and longer term
Replies: 6
Views: 627

Re: Active vs Passive in 2012 and longer term

Active Int'l SC funds tend to hold a mix of developed and international, whereas the index is just developed. In the 5yrs through 3/2013, Int'l SC earned +2.2%, EM SC earned +6.2%. Controlling for regional exposure would have caused the amount of active Int'l SC funds that outperformed to plunge. An...
by EDN
Tue Apr 09, 2013 12:30 pm
Forum: Investing - Help with Personal Investments
Topic: Small Cap Value in Taxable?
Replies: 24
Views: 2417

Re: Small Cap Value in Taxable?

I'm not so sure the S&P 600 Value index is a layup in taxable accounts and especially not for tax deferred accounts. Since 1999, the S&P 600 Value index has had about -0.5% per year lower 3F alpha (underperformed its exposure to market, small, and value by 0.5% more than Vanguard SV) than the Vangua...
by EDN
Tue Apr 09, 2013 10:13 am
Forum: Investing - Help with Personal Investments
Topic: Driving the Bus off the Cliff?
Replies: 34
Views: 3396

Re: Driving the Bus off the Cliff?

No, it's not true that active managers are better positioned to weather bear markets, beyond the fact that they must hold fairly large amounts of cash to meet unexpected redemptions (you too can hold cash, or bonds, or whatever). As a matter of fact, it is just the opposite. Because they hold more c...
by EDN
Tue Apr 09, 2013 12:42 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri's Interview - Own Stocks to Offset Low Rates
Replies: 130
Views: 14772

Re: Reaching financial goals

We first assume you have a financial goal that you actually want to reach , such as a particular level of real income in retirement, or simply a level of real financial wealth at retirement. (BTW generating portfolio withdrawals of 3-4% per year adj. for inflation for about 30 years is not a financ...
by EDN
Tue Apr 09, 2013 12:12 am
Forum: Investing - Theory, News & General
Topic: Rick Ferri's Interview - Own Stocks to Offset Low Rates
Replies: 130
Views: 14772

Re: Rick Ferri's Interview - Own Stocks to Offset Low Rates

Bobcat, In just a few short sentences, I explained the scenerio where your approach works (where low return assets arent risky) and we can define stocks or relatively high stock allocations as "risky" (it was investor #2). Basically your entire last post I already covered. If your goals are minuscul...
by EDN
Mon Apr 08, 2013 4:16 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri's Interview - Own Stocks to Offset Low Rates
Replies: 130
Views: 14772

Re: Rick Ferri's Interview - Own Stocks to Offset Low Rates

EDN writes. If it is (2)*, then stocks are safer, because they have a greater probability of producing returns that will exceed the return target. It's true that stocks have a greater probability of producing returns that will exceed the return target. That doesn't make them safer, because as Rober...