Search found 6184 matches

by mptfan
Sat Jun 02, 2007 4:30 am
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

No, I don't believe the market index provides the optimal return. I could have had much better returns if I picked only certain stocks that did well this past year. I just didn't know which ones to pick. Do you believe that every stock should have the same market to fundamental ratio? Why buy any o...
by mptfan
Fri Jun 01, 2007 9:48 pm
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

veeru, as I explained above, you are assuming that the optimal portfolio consists of holding all stocks in the market with market capitalization weights. I believe this assumption, while appealing in its simplicity, is false. Fama/French have already proven that you can consistently earn higher than...
by mptfan
Fri Jun 01, 2007 7:41 pm
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

Fundamental index is not a true market index as it does not represent the “market”. It over weights some stocks and under weights others based on some criteria (fundamental!). veeru By your logic, the DJIA (30 stocks) is not an index, and the S&P500 (500 stocks) is not an index, and the Russell...
by mptfan
Fri Jun 01, 2007 6:47 pm
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

Test, that is a very good point, Dave is making an apples to oranges comparison.
by mptfan
Fri Jun 01, 2007 6:40 pm
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

Hey Dave, I thought you had better things to do with your time? :lol:

By the way, I don't recall anyone suggesting that there was anything "magical" about fundamental indexing, just that there was sound theory to support it.
by mptfan
Fri Jun 01, 2007 6:30 pm
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

Adam, you are assuming that the market return is the optimal return. If that assumption is correct, then I agree, buy and hold a cap weighted index. However, in my opinion, after reading the literature, this appears to be a flawed assumption. There appears to be an optimal return that is greater tha...
by mptfan
Fri Jun 01, 2007 1:05 pm
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

Dave, what is the source of your figures? Vanguard's total stock market fund has an ER of .19%, and the Powershares RAFI FTSE 1000 fund has an ER of .60%, You can purchase the ETF version of Total Market (VTI) for .07%. The actual ER of the RAFI fund is actually .76% according to M* and Bloomberg. ...
by mptfan
Fri Jun 01, 2007 12:59 pm
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

Didn't John Bogle face the same criticism/disbelief from the investment community when he introduced the first index fund in the 1970's? Wasn't it called "Bogle's folly" because there was disbelief that a passively managed fund which tracked the S&P500 could actually perform as well as...
by mptfan
Fri Jun 01, 2007 10:43 am
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

Dave, what is the source of your figures? Vanguard's total stock market fund has an ER of .19%, and the Powershares RAFI FTSE 1000 fund has an ER of .60%, which is about 3 times greater, not 10 times. Also, Schwab has just introduced funds which track the RAFI fundamental indexes, and if you invest ...
by mptfan
Fri Jun 01, 2007 10:29 am
Forum: Investing - Theory, News & General
Topic: Is Fundamental Indexing superior to Cap Weighted indexing?
Replies: 107
Views: 48989

Kevin, this article suggests that fundamental indexing is more than simply value indexing (see page 36). One of the reasons given is that the fundamental index portfolio holds almost the entire universe of stocks (for the given range of capitalization, ie large cap vs. small cap), whereas a value ti...
by mptfan
Thu May 31, 2007 4:19 pm
Forum: Investing - Theory, News & General
Topic: CFP board makes it official
Replies: 17
Views: 5757

That sounds nice, but what does it really mean in practice?? What if a CFP recommends a variable annuity? A front end load mutual fund? A product with a commission so that he or she gets a kickback?A fund with a high expense ratio? Would any of these specific actions violate this nice sounding fiduc...
by mptfan
Thu May 31, 2007 4:13 pm
Forum: Investing - Theory, News & General
Topic: What factors have the greatest impact on portfolio size?
Replies: 19
Views: 6110

$20 per month invested at 10% from age 18 to 65 would result in an ending portfolio of $256,385 on only $11,280 worth of total savings. Yes, but in present value dollars, that isn't a whole lot of money. I'm not arguing that starting early is not important, of course it is, it's very important, we ...
by mptfan
Thu May 31, 2007 1:44 pm
Forum: Investing - Theory, News & General
Topic: What factors have the greatest impact on portfolio size?
Replies: 19
Views: 6110

I think all of your factors are very important and it is hard to prioritize them. But I think the time you start your saving and investing program is extremely important. In other words, the earlier you start, the less you need to save and invest (and vice-versa). So my temptation would be to place...
by mptfan
Thu May 31, 2007 1:39 pm
Forum: Investing - Theory, News & General
Topic: What factors have the greatest impact on portfolio size?
Replies: 19
Views: 6110

EmergDoc, all of the items on your list are either included on my list, or are subsumed by the items on my list. Your number 1 and 3 are subsumed into my number 1 because they allow you to save and invest more. It doesn't matter how you get there, as long as you save and invest more than the average...
by mptfan
Wed May 30, 2007 3:07 pm
Forum: Personal Investments
Topic: Farewell Larry and Hans
Replies: 5
Views: 2340

Re: Farewell Larry and Hans

Dumped my position in KAUFX today (ER 1.95% .. yes, that is 195bp). :shock: Please tell me you bought that fund before you joined this board. :P I just looked on Federated's site...they have 6 keys to succesful investing...not suprisingly avoiding high expenses is not on the list! :lol: http://www....
by mptfan
Wed May 30, 2007 1:43 pm
Forum: Investing - Theory, News & General
Topic: Avoid the S&P500 altogether?
Replies: 35
Views: 10904

Let's not forget that the phrase "value stocks" is a relative term which refers to those stocks with a BtM ratio in the lower half of all stocks, as compared to those in the upper half referred to as growth stocks. So the term "overvalued" or "undervalued" used in this ...
by mptfan
Wed May 30, 2007 1:28 pm
Forum: Investing - Theory, News & General
Topic: Avoid the S&P500 altogether?
Replies: 35
Views: 10904

I get frustrated by the amount of performance chasing I see in this forum at the sub-asset class level. Historical data is analyzed in fine detail, with the implicit assumption that the calculated returns and correlations have great predictive value. Ken, by your definition, investing in equities o...
by mptfan
Wed May 30, 2007 1:22 pm
Forum: Investing - Theory, News & General
Topic: Avoid the S&P500 altogether?
Replies: 35
Views: 10904

Re: Avoid the S&P500 altogether?

Your logic is flawed. Just because a company has a large capitalization, does not mean that it is overvalued. It could be undervalued and be worth even more, and yet still have a large capitalization. (so called "large cap value")
by mptfan
Wed May 30, 2007 11:03 am
Forum: Investing - Theory, News & General
Topic: What factors have the greatest impact on portfolio size?
Replies: 19
Views: 6110

Random, you are correct, my list assumes that the investment inputs are made at the same time. That assumption was not made explicit. By the way, my list was meant to define the value of one's portfolio, not one's net worth. There are addtional variables that would have to be considered to determine...
by mptfan
Wed May 30, 2007 10:40 am
Forum: Investing - Theory, News & General
Topic: What factors have the greatest impact on portfolio size?
Replies: 19
Views: 6110

LH, you are correct that I am assuming that the portfolio is broadly diversified, and I made that assumption explicit in the first sentence after the list.
by mptfan
Wed May 30, 2007 10:15 am
Forum: Investing - Theory, News & General
Topic: What factors have the greatest impact on portfolio size?
Replies: 19
Views: 6110

What factors have the greatest impact on portfolio size?

I think sometimes we get too focused on the finer points of advanced investment theory (which are important), but we lose track of the big picture. In my opinion, the following things have the most impact on the size of someone's investment portfolio, in order of importance: 1) How much you save and...
by mptfan
Wed May 30, 2007 9:55 am
Forum: Personal Investments
Topic: When to jump in
Replies: 30
Views: 10396

Re: AA

pkcrafter wrote:Of course, if a good correction occurs, get the remainder invested.

Paul
Tell me Paul, how would you know when the correction was over? The market might drop 10%, and you say "ah hah, here it is!" and you jump in, and then it drops another 15%..... Of course it might not. :lol:
by mptfan
Wed May 30, 2007 8:57 am
Forum: Personal Investments
Topic: When to jump in
Replies: 30
Views: 10396

Re: When to jump in

thekubiaks wrote:
... if the market corrects 25%, I am still well ahead if I jump in at that time.
There are a lot of "ifs" in that sentence. :o "If I had ham, I would have ham and eggs, if I had eggs."
by mptfan
Wed May 30, 2007 7:53 am
Forum: Personal Investments
Topic: asset allocation from vanguard planner
Replies: 11
Views: 2931

It's pretty clear that the Vanguard philosophy is to own the entire stock market at market weights. They never indicate that one should overweight value or small cap or anything else. Once you know the Vanguard philosophy the Vanguard "financial plan" becomes a no brainer, boilerplate, th...
by mptfan
Wed May 30, 2007 7:43 am
Forum: Personal Investments
Topic: asset allocation from vanguard planner
Replies: 11
Views: 2931

Re: asset allocation from vanguard planner

I thought they wold recommend a broadly diversified portfolio that would have included small cap value, value index, emerging markets and reits etc. Andy, since their recommended portfolio includes the total stock market fund and the diversified equity fund, it is very broadly diversified indeed, a...
by mptfan
Wed May 30, 2007 7:30 am
Forum: Personal Investments
Topic: When to jump in
Replies: 30
Views: 10396

Re: When to jump in

Lastly, I'm waiting for a big correction before I jump back into the market, does anyone else think a big correction is coming?? Yes, I think a big correction is coming. By the way, in the last year while you were sitting out waiting for the big correction, the U.S. market has been up more than 15%.
by mptfan
Tue May 29, 2007 10:37 pm
Forum: Investing - Theory, News & General
Topic: Size and consistency of the small cap premium
Replies: 41
Views: 21079

Is there a reason you hold those Schwab funds? Those ERs are outrageous for cap-weighted index funds. also, i doubt Fama-French would support total bond marke for bond allocations based... I think they try to keep bonds high credit and short term. Yes, there is a reason. My employer sponsored SIMPL...
by mptfan
Tue May 29, 2007 7:39 pm
Forum: Investing - Theory, News & General
Topic: Size and consistency of the small cap premium
Replies: 41
Views: 21079

SmallHi, here are my proposed funds:

10% SNXFX (LCB)
10% VTV (LCV)
10% SWSMX (SCB)
10% VBR (SCV)
10% IWC (Microcap)
10% SWINX (Int'l LCB) (I know I said value earlier)
10% DLS (Int'l SCV)
10% VWO (EM)
20% SWLBX (Total Bond)

As you can tell, most of my funds are at Schwab.
by mptfan
Tue May 29, 2007 12:08 pm
Forum: Investing - Theory, News & General
Topic: Size and consistency of the small cap premium
Replies: 41
Views: 21079

SmallHi, I have done quite a bit of study regarding the French/Fama three factor model lately, and I am pretty convinced that a small / value tilted portfolio which includes U.S. and international equities is the way to go. I am considering using the following allocation: 10% U.S. LCB 10% U.S. LCV 1...
by mptfan
Fri May 25, 2007 7:36 am
Forum: Investing - Theory, News & General
Topic: How to determine a fund's value or size loading factor?
Replies: 1
Views: 1284

How to determine a fund's value or size loading factor?

I am learning more and more about the Fama/French three factor model, and I am intrigued by the concept of targeting specific size (SmB) and value (HmL) loads for my portfolio based on the level of risk and return that I expect. However, while I understand the size and value loading factors in theor...
by mptfan
Wed May 23, 2007 8:18 pm
Forum: Personal Investments
Topic: From 14 fund S&D to 4 funds
Replies: 25
Views: 6990

Remember that the TR funds are designed for the average investor who is clueless, and doesn't understand risk and beta and tracking error and standard deviations, etc., so the people who manage the TR funds design them so that they are somewhat conservative in their allocations (ie less risky and m...
by mptfan
Wed May 23, 2007 5:43 pm
Forum: Personal Investments
Topic: From 14 fund S&D to 4 funds
Replies: 25
Views: 6990

Don, I understand the desire to keep things simple, I struggle with that myself versus the desire to slice and dice. As far as getting a TR fund and "letting them do the tilting", while it is a simple solution, in my opinion, it's not the best solution for those of us who live and breathe ...
by mptfan
Wed May 23, 2007 3:41 pm
Forum: Personal Investments
Topic: Asset allocation for my little sister
Replies: 50
Views: 18312

Would it be possible, please, to help evaluate my hypothetical portfolios on their own merit and trust that I will not mistreat my only and dear sibling with whom I have a good and communicative relationship? Thank you. No one is suggesting that you will mistreat your sister. We are suggesting that...
by mptfan
Wed May 23, 2007 3:37 pm
Forum: Personal Investments
Topic: Asset allocation for my little sister
Replies: 50
Views: 18312

Boy, tough crowd. I can see that any proposal other than Target Retirement is going to get no love from this audience. If TR is the only acceptable solution, then why did I read all those books from our esteemed forum member author persons? Their books should be one page long: Target Retirement--Th...
by mptfan
Wed May 23, 2007 3:33 pm
Forum: Investing - Theory, News & General
Topic: The dangers of an undiversified portfolio
Replies: 32
Views: 10093

Index Fan, I too am amazed at how little the average person knows or cares about personal finance. To me, it is vitally important because the more I know, the more I can save and invest and earn, and the quicker I will become financially independent. The fact that others don't see it that way is ama...
by mptfan
Wed May 23, 2007 3:28 pm
Forum: Personal Investments
Topic: Slightly OT: Switch small biz from 401(k) to SIMPLE IRA?
Replies: 7
Views: 3416

I work for a small company that has a SIMPLE IRA administered (for free) by Schwab, and my company switched from an expensive 401k about 7 years ago. My company does not have to pay anything for the SIMPLE IRA, and we get a 3% match, and I get decent options at Schwab for funds, with no fees and low...
by mptfan
Tue May 22, 2007 3:20 pm
Forum: Investing - Theory, News & General
Topic: The dangers of an undiversified portfolio
Replies: 32
Views: 10093

The dangers of an undiversified portfolio

http://money.cnn.com/2007/05/22/magazin ... 2007052212

This couple bought two investment properties in Florida last year, just as the housing bubble began to pop. Now they are in deep d**die.
by mptfan
Mon May 21, 2007 9:21 pm
Forum: Investing - Theory, News & General
Topic: Anti-Diehard?
Replies: 44
Views: 19162

Murr44 First if the P/E rises like that then one should be reducing equity exposure simply by the process of rebalancing. Not necessarily. If the "E" part of the equation falls, but the "P" stays the same, the P/E multiple would increase, while the price remains constant, so the...
by mptfan
Fri May 18, 2007 12:31 pm
Forum: Personal Investments
Topic: IRA for newborn
Replies: 20
Views: 7493

This is something I have given thought to as well since I have young kids. In my opinion, you should invest for your own retirement before you worry about your kid's investments or their retirement. You should take advantage of whatever tax deferred plans you have access to(ie 401k, 403b, SIMPLE IRA...
by mptfan
Thu May 17, 2007 9:11 pm
Forum: Investing - Theory, News & General
Topic: What is the consensus on High Yield Bond Funds?
Replies: 111
Views: 23796

psteinx wrote:But do your homework -
Why do you think I posted on here? :wink: This board has some of the finest personal finance minds, and it's the best "study group" for doing personal finance homework!
by mptfan
Thu May 17, 2007 9:06 pm
Forum: Investing - Theory, News & General
Topic: What is the consensus on High Yield Bond Funds?
Replies: 111
Views: 23796

What is the consensus on High Yield Bond Funds?

Are high yield bond funds worth the extra relative risk to get a higher return? For example, Vanguard's High Yield Corporate Bond Fund is VWEHX, and it's 5 year avg return is 7.7%, compared to the total bond fund's 5 year return of 4.65%. I understand that the fund has bonds with a lower average cre...
by mptfan
Thu May 17, 2007 7:38 am
Forum: Investing - Theory, News & General
Topic: Why not ETF's, if the expenses are lower?
Replies: 41
Views: 18777

Si, that's an incomplete answer. That only applies if you limit yourself to taking dividends as distributions. Considering that the average dividend yield for U.S. stocks is about 1 to 2%, if you can live off of that, then terrific, you are doing very well. But most people need to withdraw more than...
by mptfan
Wed May 16, 2007 6:31 pm
Forum: Investing - Theory, News & General
Topic: Why not ETF's, if the expenses are lower?
Replies: 41
Views: 18777

But you can't replicate the broad diversification of a lifestrategy or a target retirement fund with two ETFs, and you certainly don't get the benefit of automatic rebalancing.
by mptfan
Wed May 16, 2007 6:11 pm
Forum: Investing - Theory, News & General
Topic: Why not ETF's, if the expenses are lower?
Replies: 41
Views: 18777

Another disadvantage to ETFs is that you don't have the option of buying a balanced fund with instant diversification, whereas with a mutual fund, you do. For example, Vanguard's lifestrategy funds, or the target retirement funds, or the Star fund. All of these funds offer instant diversification ac...
by mptfan
Wed May 16, 2007 4:52 pm
Forum: Investing - Theory, News & General
Topic: Why not ETF's, if the expenses are lower?
Replies: 41
Views: 18777

John, 1) the bid/ask spread of the ETF is in addition to the bid/ask spread on the underlying stocks. So you pay TWO bid ask spreads. You only pay it once with a mutual fund. 2) Most people don't use Wells Fargo. 3) see 2. 4) see 2. 5) That's true. But I think there might be a delay in the reinvestm...
by mptfan
Wed May 16, 2007 4:33 pm
Forum: Investing - Theory, News & General
Topic: Why not ETF's, if the expenses are lower?
Replies: 41
Views: 18777

I can think of several reasons why mutual funds are better than ETFs: 1) ETFs have a bid/ask spread, and mutual funds do not. 2) You must pay a commission to purchase an ETF, but not a mutual fund. 3) You must pay a commission to sell an ETF, but not a mutual fund. 4) If you want to rebalance out of...
by mptfan
Tue May 15, 2007 8:23 pm
Forum: Investing - Theory, News & General
Topic: Has the REIT bubble popped?
Replies: 32
Views: 10211

Has the REIT bubble popped?

Three months ago, Vanguard's REIT ETF (VNQ) reached a peak of $87.44. It closed today at $77.60, a drop of 11.25% in just three months.
by mptfan
Mon May 14, 2007 10:04 pm
Forum: Personal Investments
Topic: Agent Authorization Revelation
Replies: 43
Views: 16177

Re: Agent Authorization forms

EyeDee wrote:The more I study this issue the more it seems that for spouses that the Agent Authorization forms do not provide the access needed by spouses and a verbal contract between the spouses giving password and account access consent is much more important.
EyeDee, you have become very enlightened. :D