Search found 2780 matches

by Random Walker
Fri May 17, 2013 2:29 pm
Forum: Investing - Theory, News & General
Topic: The new profitability factor, US and int'l evidence
Replies: 172
Views: 17208

Re: The new profitability factor, US and int'l evidence

Crake, Yes you are on the same page of the play book as me for the most part. Small and value do have higher expected returns and there correlations provide excellent diversification benefit. The above posts indicate that this new profitability premium is negatively correlated to value. So that make...
by Random Walker
Fri May 17, 2013 2:20 pm
Forum: Investing - Theory, News & General
Topic: The new profitability factor, US and int'l evidence
Replies: 172
Views: 17208

Re: The new profitability factor, US and int'l evidence

And I agree with Roy :happy . Although human behavior is amazingly consistent over generations, I have a lot more faith in risk stories than behavioral ones. Although I do think a behavioral component can only help the value story. Of course the longer the period demonstrating a source of return, ev...
by Random Walker
Fri May 17, 2013 1:55 pm
Forum: Investing - Theory, News & General
Topic: The new profitability factor, US and int'l evidence
Replies: 172
Views: 17208

Re: The new profitability factor, US and int'l evidence

Crake, Under your case #1, I believe there is a huge difference between taking on more risk by adding more of the same risk versus adding some of a different risk. There is benefit to diversifying across risk factors. For example, for tilters the benefit of small and value is not just increased expe...
by Random Walker
Fri May 17, 2013 11:55 am
Forum: Investing - Theory, News & General
Topic: The new profitability factor, US and int'l evidence
Replies: 172
Views: 17208

Re: The new profitability factor, US and int'l evidence

So in the old VG versus DFA debate, does this new factor affect any individual investors thoughts? On the one hand it appears DFA will incorporate this new factor into its screens. On the other hand, this factor appears negatively correlated with value and might make some people more adamant TSMers....
by Random Walker
Tue May 14, 2013 9:11 am
Forum: Investing - Theory, News & General
Topic: The new profitability factor, US and int'l evidence
Replies: 172
Views: 17208

Re: The new profitability factor, US and int'l evidence

A few questions: Will a value fund that incorporates profitability and / or momentum be able to stay as "valuey"? If a single fund incorporates value, profitability, momentum doesn't it risk becoming a fancy version of a plain vanilla whole market index fund that is more expensive? If earnings quali...
by Random Walker
Sun May 12, 2013 9:17 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting - what am I missing?
Replies: 19
Views: 1704

Re: Tax Loss Harvesting - what am I missing?

Calm Man, You are correct. There is a potential benefit if you are in a lower tax bracket in the future. Even if you are not though, there is still an advantage to TLH. You have delayed paying the tax and have the benefit of that money staying invested for you instead of paying the tax. This is why ...
by Random Walker
Sun May 12, 2013 4:29 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting - what am I missing?
Replies: 19
Views: 1704

Re: Tax Loss Harvesting - what am I missing?

Calm Man, When deciding on an advisor, I looked at the AUM fees and the increased ERs of DFA funds. I then tried to quantify the potential benefits of going the advisor route. I feel TLH can yield 0.5-0.7% annually and my AUM fee is about the same. So TLH was a factor that sort of put me over the ad...
by Random Walker
Sun May 12, 2013 4:16 pm
Forum: Investing - Theory, News & General
Topic: taxable acct: tilt anyway?
Replies: 25
Views: 2210

Re: taxable acct: tilt anyway?

I went through the same thought process as Grabiner but came to a different result. I agree; the increased costs are certain and the increased expected returns are only potential and the result of a risk premium. For me tilting isn't just a function of returns, it is also a function of increased por...
by Random Walker
Sun May 12, 2013 2:38 pm
Forum: Investing - Theory, News & General
Topic: New editions of 2 Investing Classics
Replies: 4
Views: 936

Re: New editions of 2 Investing Classics

I agree, I would love to see an update to Bernstein's Intelligent Asset Allocator. I think 4 Pillars came out after IAA and 4 Pillars subsequently came out with an updated portion. My guess is that WB got a much better response on 4Pillars than IAA and feels the audience is too small for an update t...
by Random Walker
Sat May 11, 2013 11:08 pm
Forum: Investing - Theory, News & General
Topic: New editions of 2 Investing Classics
Replies: 4
Views: 936

New editions of 2 Investing Classics

I just saw that Gibson has a new 2013 5th edition of his book Asset Allocation: Balancing Financial Risk for sale now. This is an outstanding book on the benefits of multi asset class investing. It doesn't really go much into soecific asset classes, but teaches the reader how to evaluate the potenti...
by Random Walker
Sat May 11, 2013 11:01 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting - what am I missing?
Replies: 19
Views: 1704

Re: Tax Loss Harvesting - what am I missing?

Question for bsteiner, I agree the 3K offset against current income is not such a big deal. But how bout accumulating carry over losses through accumulation phase, then during decumulation in retirement offsetting all those gains from buying and holding for many years against the losses. More money ...
by Random Walker
Sat May 11, 2013 10:30 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting - what am I missing?
Replies: 19
Views: 1704

Re: Tax Loss Harvesting - what am I missing?

I don't think you are missing anything at all. TLH I believe is very important and should be done throughout the year. Of course it shouldn't be done so frequently when the losses are too small that the trading costs outweigh the TLH benefits. I don't know how to determine when a loss is large enoug...
by Random Walker
Thu May 09, 2013 12:41 pm
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

All the above efficient frontier graphs are relevant. But for the purposes of this discussion I think what matters is how increasing the number of asset classes in the equity portion of the portfolio gets one closer to the northwest corner for any given stock/bond split. Please refer to the link to ...
by Random Walker
Wed May 08, 2013 9:18 pm
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

Tfb, True that good diversifiers are hard to find. But please see my post above regarding the correlations between market, value, small. Diversifying across risk factors on the equity side is about as potent as it gets. Btw, I believe that international small value is an even more potent diversifier...
by Random Walker
Wed May 08, 2013 5:22 pm
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

I feel several posters are missing the big point. Volatility of individual asset classes is certainly good, especially in a CAPM world where risk is measured by standard deviation. But what matters to the investor is dampening portfolio volatility by combining risky assets to improve portfolio effic...
by Random Walker
Wed May 08, 2013 12:15 pm
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

I don't know the answer, but I would not be surprised if an 80/20 portfolio tilted to small and value has a higher forward looking expected return than a 100% growthy TSM portfolio. I am certain the 80/20 tilted portfolio will be more efficient. Actual past returns of the two portfolios will certain...
by Random Walker
Wed May 08, 2013 11:30 am
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

UAL, Yes, one must accept volatility for increased returns. But one wants to increase the efficiency of a portfolio by maximizing its return per unit of volatility. By adding volatile weakly or non correlated asset classes to a portfolio, the overall portfolio volatility can be dampened, its efficie...
by Random Walker
Wed May 08, 2013 9:03 am
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

All that matters is what happens at the portfolio level. Volatility of an individual asset class within the portfolio can be either good or bad, depending on how it mixes with the other portfolio components. Portfolio effect of an individual asset class depends on its returns, volatility, correlatio...
by Random Walker
Wed May 08, 2013 2:32 am
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

The above benefits of multi asset class investing are also why I believe that true diversification includes diversifying across the risk factors of size and value because of their weak correlation to the market and to each other. Compared to a TSM type portfolio with a higher equity allocation, a ti...
by Random Walker
Wed May 08, 2013 2:10 am
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

Not lots of funds, but lots of less than perfectly correlated asset classes. The return of a portfolio depends on the returns of its individual components, their individual volatilities, and their correlations. Most all of Gibson's book comes down to one or two charts. He also shows the benefit of m...
by Random Walker
Wed May 08, 2013 2:01 am
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 5718

Re: "Less volatility = more wealth, all else being equal"

Agree with above. First saw it best in first edition of ferri's All About AA. Key is bringing compounded annualized return as close as possible to average annual return. That's why multi asset class investing is a winner. Also well demonstrated in Gibson's Asset Allocation.

Dave
by Random Walker
Mon May 06, 2013 11:51 am
Forum: Investing - Help with Personal Investments
Topic: Don't want to TLH. Is this a bad idea? [Tax Loss Harvest]
Replies: 38
Views: 2856

Re: Don't want to TLH. Is this a bad idea?

No you wouldn't pay all taxes up front. You would use previous capital losses to offset gains as early as possible and delay the tax hit until later when you have no more losses to offset gains.

Dave
by Random Walker
Mon May 06, 2013 10:35 am
Forum: Investing - Help with Personal Investments
Topic: Don't want to TLH. Is this a bad idea? [Tax Loss Harvest]
Replies: 38
Views: 2856

Re: Don't want to TLH. Is this a bad idea?

So many people consider TLH to be like an interest free loan from the government. It is true that if you TLH your cost basis becomes lower. But when you enter decumulation phase, the gains in the first shares one sells will be offset by accumulated losses. So the investor will pay no taxes. He doesn...
by Random Walker
Fri May 03, 2013 5:28 pm
Forum: Investing - Help with Personal Investments
Topic: Don't want to TLH. Is this a bad idea? [Tax Loss Harvest]
Replies: 38
Views: 2856

Re: Don't want to TLH. Is this a bad idea?

Assumer,
Your reasoning looks sound. Let me do a little reading and get back to you :happy
Dave
by Random Walker
Fri May 03, 2013 2:34 pm
Forum: Investing - Help with Personal Investments
Topic: Don't want to TLH. Is this a bad idea? [Tax Loss Harvest]
Replies: 38
Views: 2856

Re: Don't want to TLH. Is this a bad idea?

I believe with TLH, you can offset 3000 current income every year on your taxes. But this is not the huge benefit as I see it. If one does TLH throughout the accumulation years he will accumulate losses to offset gains when he sells during the decumulation retirement years. I think this is a potenti...
by Random Walker
Sat Apr 27, 2013 8:01 pm
Forum: Investing - Theory, News & General
Topic: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump Van
Replies: 73
Views: 7269

Re: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump

Steve net, I think your thought process is pretty sound. Of course we can differ on the inputs: increased return of DFA portfolio, AUM fees, difference in ER. But I think your numbers are in the right ballpark. There are other variables to consider that are even harder to quantify: improved portfoli...
by Random Walker
Sat Apr 27, 2013 3:54 pm
Forum: Investing - Theory, News & General
Topic: Poll: Owning bonds and having debt
Replies: 10
Views: 1182

Re: Poll: Owning bonds and having debt

I've been pretty aggressive @ 80/20 tilted to small and value. I just took some bonds to pay dad's mortgage off. That will take me to about 90/10. Probably will take me about a year and a half to return to my target AA unless the market rebalances for me :shock:

Dave
by Random Walker
Sat Apr 27, 2013 3:46 pm
Forum: Investing - Theory, News & General
Topic: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump Van
Replies: 73
Views: 7269

Re: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump

With regard to investor behavior, I think it is critical to initially set up an AA that the individual rock solid believes in so that he doesn't deviate in the bad times. A good question to ask oneself is "after this portfolio has tanked, will I want to make any changes?" . If the answer is yes, it'...
by Random Walker
Sat Apr 27, 2013 3:36 pm
Forum: Investing - Theory, News & General
Topic: Poll: Interest rates and debts worth paying off
Replies: 8
Views: 1054

Re: Poll: Interest rates and debts worth paying off

I think a Person's answer is so individualized depending on net worth relative to the debt, the AA stock/bond split, and accumulation/decumulation stage. For me, I'm pretty aggressive, so I would rather take from bonds to erase interest bearing debt. Then return to my AA as fast as possible.

Dave
by Random Walker
Sat Apr 27, 2013 3:03 pm
Forum: Investing - Theory, News & General
Topic: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump Van
Replies: 73
Views: 7269

Re: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump

Afan, I think the study you obliquely refer to is relevant. I think that study showed that the only fund company where investors did better than the funds they were invested in was DFA. And that can be attributed to dollar weighted returns and good investor behavior. On a population basis the invest...
by Random Walker
Sat Apr 27, 2013 12:06 pm
Forum: Investing - Theory, News & General
Topic: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump Van
Replies: 73
Views: 7269

Re: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump

Stevenet and Lois C, It was my comment about taxes at the bottom of my last post. I'll elaborate. I'm am among the most ardent believers in market efficiency and passive investing. I also believe in diversifying across risk factors while I believe there is no free lunch. I have the mental capacity, ...
by Random Walker
Sat Apr 27, 2013 12:40 am
Forum: Investing - Theory, News & General
Topic: A Quiz to Teach Boglehead Principles
Replies: 19
Views: 2225

Re: A Quiz to Teach Boglehead Principles

I agree with Lady Geek that one does not need to know a lot. I think Warren Buffet in reference to simple indexing said something to the effect that "when naive investors realize they are naive, they quickly behave very intelligently". But I really feel knowledge is necessary somewhat to put togethe...
by Random Walker
Fri Apr 26, 2013 3:49 pm
Forum: Investing - Theory, News & General
Topic: A Quiz to Teach Boglehead Principles
Replies: 19
Views: 2225

Re: A Quiz to Teach Boglehead Principles

Bourg,
I agree. When I mention to people retiring on about 3-4% of accumulated assets annually they look at me like I'm crazy! But "what % of your savings do you want to withdraw to live off per year" can start an enlightening conversation

Dave
by Random Walker
Fri Apr 26, 2013 3:44 pm
Forum: Investing - Theory, News & General
Topic: Two Questions
Replies: 11
Views: 843

Re: Two Questions

I think it is a pretty significant jump from The Bogleheads Guide to The Right Financial Plan. I might recommend first reading Bernstein's Four Pillars of Investing or Swedroe's Wise Investing Made Simple before moving to Swedroe's Right Financial Plan. All the books by Ferri, Bernstein, Swedroe are...
by Random Walker
Fri Apr 26, 2013 3:36 pm
Forum: Investing - Theory, News & General
Topic: A Quiz to Teach Boglehead Principles
Replies: 19
Views: 2225

A Quiz to Teach Boglehead Principles

I've actually been thinking about this for a while now. The current thread on the FINRA investor quiz got me thinking I should post on this. When I start talking investing to non Bogleheads, I frequently think to myself that one way to get them to realize the importance of Boglehead concepts would b...
by Random Walker
Fri Apr 26, 2013 11:47 am
Forum: Investing - Theory, News & General
Topic: Can You Ace FINRA's Financial Literacy Quiz?
Replies: 111
Views: 9310

Re: Can You Ace FINRA's Financial Literacy Quiz?

Scary sign that FINRA considers this a reasonable test. Imagine the test Bogleheads would generate. It would consist of meaningful, important, and relevant questions. Just a few examples: What's a fair ER? What % S&P 500 is large cap? When stocks go down, which way does expected return go? How much ...
by Random Walker
Fri Apr 26, 2013 11:28 am
Forum: Investing - Theory, News & General
Topic: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump Van
Replies: 73
Views: 7269

Re: Your Move, Bogleheads: Advisor Finds DFA’s Returns Trump

The DFA v. VG / advisor v. No advisor issue can be more complex than just comparing ERs and AUM fees. And I think this is especially true for taxable investors. Because DFA small and value funds are more small and more valuey than their VG counterparts, an investor needs less of these relatively mor...
by Random Walker
Tue Apr 23, 2013 1:32 pm
Forum: Investing - Theory, News & General
Topic: Why do investors chase dividend paying strategies
Replies: 439
Views: 55791

Re: Why do investors chase dividend paying strategies

Does DFA incorporate quality at all into their core funds? I know they are tilted to value and I believe they account for momentum with patient buying and selling.

Dave
by Random Walker
Mon Apr 22, 2013 10:19 pm
Forum: Investing - Theory, News & General
Topic: Choosing among ten ways to calculate cost basis
Replies: 3
Views: 531

Re: Choosing among ten ways to calculate cost basis

I believe specific lot identification is the best. This way an individual can choose which shares to use for different purposes. For example TLH or minimizing a cap gain would probably use HIFO. But other specific lots might be desirable when you only want to experience long term gains and not short...
by Random Walker
Mon Apr 22, 2013 10:09 pm
Forum: Investing - Theory, News & General
Topic: Why do investors chase dividend paying strategies
Replies: 439
Views: 55791

Re: Why do investors chase dividend paying strategies

How does DFA screen for value: P/B only or multiple screens? Do they incorporate quality into their core funds? Is core fund approach the best way to incorporate quality into a value approach? At some point doesn't incorporating quality and momentum turn a value fund into a blend fund? Thanks. Dave
by Random Walker
Mon Apr 22, 2013 1:35 pm
Forum: Investing - Theory, News & General
Topic: Charlie Ellis & Burton Malkiel say 0% bonds OK under 50
Replies: 155
Views: 25827

Re: Charlie Ellis & Burton Malkiel say 0% bonds OK under 50

FWIW, I think it is very worthwhile for even the youngest most aggressive investor to hold a small amount of bonds. It will help the investor develop the discipline to rebalance and stick to a plan when crises hit and correlations go to 1. Over the long run I think building these financial muscles w...
by Random Walker
Mon Apr 22, 2013 12:41 pm
Forum: Investing - Theory, News & General
Topic: Charlie Ellis & Burton Malkiel say 0% bonds OK under 50
Replies: 155
Views: 25827

Re: Charlie Ellis & Burton Malkiel say 0% bonds OK under 50

Don't know where you can read a study, but I do remember Rick Ferri once writing something to the effect "anything more aggressive than 80/20 just isn't efficient". Hopefully he'll join in with more.

Dave
by Random Walker
Sun Apr 21, 2013 10:29 pm
Forum: Investing - Theory, News & General
Topic: Standard Deviation of Passive Portfolios? (where to find?)
Replies: 11
Views: 1044

Re: Standard Deviation of Passive Portfolios? (where to find

Try looking at Mark Hebner's book Index Funds. He's a big believer in tilting and diversification. He shows data for a variety of portfolios ranging from all equities down to conservative retirement portfolios. I think the returns and SDs are all listed there. Also Larry Swedroe has a chart in one o...
by Random Walker
Sat Apr 20, 2013 4:18 pm
Forum: Investing - Theory, News & General
Topic: Any Reason Not to Invest in a 529?
Replies: 53
Views: 4287

Re: Any Reason Not to Invest in a 529?

All the above thoughts are about what I thought. We live in a state with no state income tax, so tax deductibility is not an issue. We've been using the West Virginia plan because of the DFA access. We've been using all equity since the kids are so young. Just gotta get her to see the light to conti...
by Random Walker
Sat Apr 20, 2013 12:37 pm
Forum: Investing - Theory, News & General
Topic: Any Reason Not to Invest in a 529?
Replies: 53
Views: 4287

Re: Any Reason Not to Invest in a 529?

I'm talking specifically about apples to apples comparison such as investing the money in the same investments either inside a 529 or outside in a personal taxable account. Thanks

Dave
by Random Walker
Sat Apr 20, 2013 11:18 am
Forum: Investing - Theory, News & General
Topic: Any Reason Not to Invest in a 529?
Replies: 53
Views: 4287

Any Reason Not to Invest in a 529?

Wife and I having conflict over whether to invest in 529. We have two children ages 4 and 6. I want to invest as much as possible as early as possible and let it grow. Wife says "none of the smart people I know invest in those things". I'm pretty sure there is no good reason for us to not invest. We...
by Random Walker
Thu Apr 04, 2013 2:30 pm
Forum: Investing - Theory, News & General
Topic: What's the difference? [Advantages of a Wealth Manager?]
Replies: 44
Views: 4586

Re: What's the difference? [Advantages of a Wealth Manager?]

Above EDN mentioned money managers versus wealth managers and their associated costs. He stated that one difference between the two is in tax management of the portfolio. I believe the difference in cost between the two levels of service can easily be covered by compulsive specific lot basis TLH by ...
by Random Walker
Thu Apr 04, 2013 2:17 pm
Forum: Investing - Theory, News & General
Topic: Does paying off your mortgage affect your asset allocation?
Replies: 24
Views: 2260

Re: Does paying off your mortgage affect your asset allocati

For me a huge benefit of paying off the mortgage was psychological. With mortgage paid off, I felt more financially strong to withstand the ups and downs of an aggressive asset allocation. To me it didn't really make sense to be paying higher interest on a mortgage than the bond portion of my portfo...
by Random Walker
Tue Mar 26, 2013 5:07 pm
Forum: Investing - Theory, News & General
Topic: Adding regular new money to portfolio - DCA vs rebalance
Replies: 19
Views: 2567

Re: Adding regular new money to portfolio - DCA vs rebalance

Keith,
We agree. There is no difference between what I said and what you said best I can tell. For purchasing, doesn't matter whether taxable or tax deferred
by Random Walker
Tue Mar 26, 2013 4:16 pm
Forum: Investing - Theory, News & General
Topic: Adding regular new money to portfolio - DCA vs rebalance
Replies: 19
Views: 2567

Re: Adding regular new money to portfolio - DCA vs rebalance

Since you are only talking about how to buy funds in order to maintain AA, rather than rebalancing by both buying and selling, I do not think it matters whether this is taxable or tax deferred money. In taxable accounts it is usually (if not always) preferable to rebalance with new purchases rather ...