Search found 7768 matches

by richard
Fri Jan 09, 2015 6:51 pm
Forum: Investing - Theory, News & General
Topic: Vanguard's stockpickers outperform.... [news article]
Replies: 61
Views: 6078

Re: At Vanguard Active beats Passive

kenschmidt wrote:Funds that basically cost the same also basically perform the same. That gets forgotten by some who only look at "index in the fund name means it's good and everything else is bad".<>
You have to be careful about cost. In addition to the expense ratio, there are possible tax costs (if you hold in taxable), trading costs (bid-ask spreads).
by richard
Fri Jan 09, 2015 6:45 pm
Forum: Personal Investments
Topic: Why is it wrong to think individual bonds are safer vs funds
Replies: 30
Views: 3085

Re: Why is it wrong to think individual bonds are safer vs f

Put another way, if you hold a 10 year bond and a 10 year bond fund for 4 years, you have a 6 year bond and a 10 year bond fund. The bond is less risky due to shorter maturity / duration. This is not because individual bonds are safer, but because you now have a shorter instrument.
by richard
Fri Jan 09, 2015 5:49 pm
Forum: Investing - Theory, News & General
Topic: Do volatile equities have similar risk to long term bonds?
Replies: 4
Views: 994

Re: Do volatile equities have similar risk to long term bond

Even if you hold an equity for a very long time, there's no guarantee you'll get a good return or even avoid a loss.

If you hold a bond to maturity, you're guaranteed to get periodic interest plus par at maturity (assuming it's a treasury or other bond without credit risk).

Are you asking if returns are uncorrelated and therefore you'd get benefit from one zigging when the other is zagging if you hold both? The answer to that is "maybe". Diversification is good thing, but no guarantee.

Does any of this answer your question?
by richard
Fri Jan 09, 2015 5:43 pm
Forum: Investing - Theory, News & General
Topic: "Vanguard Group execs say deflation a real risk..."
Replies: 61
Views: 8480

Re: "Vanguard Group execs say deflation a real risk..."

abuss368 wrote:Should this be a "TIP": avoid TIPS!
Why would you want to avoid TIPS? The provide a guaranteed real rate of return, come rain or shine. There are technical issues such as taxes and buying with a built-in inflation factor only to see deflation, but they give you what they promise. You gain protection against inflation at the cost of not getting a bonus for deflation.
by richard
Fri Jan 09, 2015 5:40 pm
Forum: Investing - Theory, News & General
Topic: "Vanguard Group execs say deflation a real risk..."
Replies: 61
Views: 8480

Re: "Vanguard Group execs say deflation a real risk..."

Browser wrote:Deflation isn't just a "risk" - it's an actuality in terms of falling energy and commodity prices. That's sorta what deflation is, correct?
Deflation is a general fall in prices, not just in energy and commodity prices. At low inflation, it's almost always the case that some prices are rising and some falling.

Deflation is a risk factor for the economy - it's bad for the economy, as well as a sign the economy is weak.
by richard
Fri Jan 09, 2015 2:53 pm
Forum: Investing - Theory, News & General
Topic: Refining bond/equity formula in the expensive-bond era
Replies: 17
Views: 2289

Re: Refining bond/equity formula in the expensive-bond era

Why are you looking at bond yields, but no stock earnings yields (inverse of p/e)?

The best predictor of a bond's return is it's current yield (YTM). Use 10 year treasuries if your bond portfolio looks like 10 year treasuries.

The best predictor of stock returns is earnings yield (either straight e/p or Shiller 10 year version).

Neither of these are very good - they are best in the sense that alternatives are worse.

I regard the enterprise as an exercise in market timing.
by richard
Fri Jan 09, 2015 2:16 pm
Forum: Personal Finance (Not Investing)
Topic: TD Over the Limit Contribution, NOW WHAT ?
Replies: 3
Views: 832

Re: TD Over the Limit Contribution, NOW WHAT ?

You don't contribute to a treasury direct account, you buy savings bonds through a TD account. There are annual limits on the purchase of savings bonds. See https://www.treasurydirect.gov/indiv/re ... s_0406.htm and https://www.treasurydirect.gov/indiv/re ... angeqa.htm

The treasury should either allow the purchase or return your money. What does TD show is in your account?
by richard
Fri Jan 09, 2015 1:44 pm
Forum: Personal Finance (Not Investing)
Topic: Net Worth Survey, 2015 Edition
Replies: 144
Views: 61219

Re: Net Worth Survey, 2015 Edition

A reminder that if you're concerned about privacy, it's best not to post here immediately after completing the survey, so others don't link it by your timestamps. Even just a little information about you can narrow it down pretty quickly. As an aside, while I know the present value of social security payments is an important part of one's assets, it really and truly messes up the data, especially at the younger end. So far, a large majority of those in their 20's put zero, as did about a third of those in their 30s. It's also obvious a lot of people are not converting to future dollars, which has a huge impact. The numbers seem to start getting reasonable once people hit their 50s, but just aren't reliable for inter-generational comparison...
by richard
Fri Jan 09, 2015 12:54 pm
Forum: Investing - Theory, News & General
Topic: An interesting take on economic progress
Replies: 10
Views: 1640

Re: An interesting take on economic progress

TwoByFour wrote:
richard wrote:growing population: economic growth per capita could be more important than total economic growth.
If you are an economist, you are right. But as an investor it is total growth (growth per person * total # of people) that pumps up my portfolio.
More total growth likely means more money available to invest, leading to more competition for investments, leading to higher prices leading to a less pumped portfolio than one might hope Some years ago BIll Bernstein wrote "GDP rises are good for stock prices only when they come from increases in individual productivity, as measured by per-capita GDP; they are bad when caused predominantly by population growth."
by richard
Fri Jan 09, 2015 12:20 pm
Forum: Investing - Theory, News & General
Topic: An interesting take on economic progress
Replies: 10
Views: 1640

Re: An interesting take on economic progress

growing population: economic growth per capita could be more important than total economic growth.
by richard
Fri Jan 09, 2015 12:09 pm
Forum: Investing - Theory, News & General
Topic: small cap & Junk bonds under performing?
Replies: 20
Views: 2339

Re: small cap & Junk bonds under performing?

Investerguy wrote:I know we're not market timers here but I had a thought. Over the past year small cap stocks have under performed large cap and junk bonds have under performed investment grade. Could this be a sign of trouble to come?
Underperformance one year usually leads to either underperformance or outperformance the next year, except for the times it leads to equal performance.
by richard
Fri Jan 09, 2015 11:38 am
Forum: Investing - Theory, News & General
Topic: "Vanguard Group execs say deflation a real risk..."
Replies: 61
Views: 8480

Re: "Vanguard Group execs say deflation a real risk..."

nisiprius wrote:<>does a New York Times columnist with a Nobel price outscore the president of a Federal Reserve bank [Kocherlakota}?<>
One thing that's interesting about Kocherlakota is that he used to advocate for tighter monetary policy, then spent some time looking at the data and changed course.

The NY Times columnist with a Nobel prize I'm thinking of and Kocherlakota agree that the Fed should not tighten anytime soon. No need to decide which one has a higher score.
nisiprius wrote:or tune out the noise, even if the noise is coming from Malvern.
Yep. The better course is not to let your views on the economy, let alone "the noise", affect your investments, even for those of us who enjoy macro policy discussions.
by richard
Fri Jan 09, 2015 11:27 am
Forum: Investing - Theory, News & General
Topic: Vanguard's stockpickers outperform.... [news article]
Replies: 61
Views: 6078

Re: At Vanguard Active beats Passive

What of the other 10 funds?
by richard
Fri Jan 09, 2015 10:41 am
Forum: Investing - Theory, News & General
Topic: "Vanguard Group execs say deflation a real risk..."
Replies: 61
Views: 8480

Re: "Vanguard Group execs say deflation a real risk..."

In thinking about inflation and deflation, you might want to consider what is causing prices to move the way they're moving. Taking deflation as a given and trying to figure out what happens as a result is not likely to be as fruitful.

Also, of course, remember that Mr Market has been thinking about these issues and that you are unlikely to profit from things Mr Market has already taken into account.
by richard
Fri Jan 09, 2015 10:36 am
Forum: Investing - Theory, News & General
Topic: "Vanguard Group execs say deflation a real risk..."
Replies: 61
Views: 8480

Re: "Vanguard Group execs say deflation a real risk..."

abuss368 wrote:TIPS and Inflation Bonds: How does this impact the "need" for holding them and placement in a well diversified portfolio?

TIPS have only been around since 1997 so they are "new" and have not been tested in a multitude of environments.
Buying insurance against inflation at a time when inflation is not a major concern could make sense.
by richard
Fri Jan 09, 2015 10:35 am
Forum: Investing - Theory, News & General
Topic: "Vanguard Group execs say deflation a real risk..."
Replies: 61
Views: 8480

Re: "Vanguard Group execs say deflation a real risk..."

livesoft wrote:Did they say what to do in order to benefit from deflation? Or at least how to take advantage of deflation?
Long term nominal treasuries are the classic way to take advantage of (unexpected) deflation, or lower than expected inflation / interest rates.
by richard
Fri Jan 09, 2015 3:41 am
Forum: Investing - Theory, News & General
Topic: I see rental properties as bonds. Am I completely off base?
Replies: 28
Views: 3866

Re: I see rental properties as bonds. Am I completely off b

I see bonds as tradeable, liquid securities that seldom change very much in value, that have a fixed maturity (bond funds do not), that reliably increase yield if they drop in value, that do not require much in the way of management and that can easily be used to rebalance with equities.

Rental property may be desirable, but it doesn't seem to have these properties. As stlutz writes, they're a business.
by richard
Thu Jan 08, 2015 8:52 pm
Forum: Personal Finance (Not Investing)
Topic: TurboTax '14 Deluxe (Desktop) Excludes Schedule D
Replies: 223
Views: 63591

Re: TurboTax '14 Deluxe (Desktop) Excludes Schedule D

Blues wrote:
joe8d wrote:About time for the IRS to offer a Free Complete Tax Program online.
Maybe instead of a box on the 1040 asking if one wants to contribute to Presidential election campaign funds we can elect to put tax dollars toward accomplishing that very goal.
As explained above, the reason the IRS doesn't do this is http://www.propublica.org/article/how-t ... tax-filing
by richard
Thu Jan 08, 2015 2:08 pm
Forum: Personal Investments
Topic: Remind me: why am I holding VG's longer-term TIPS fund?
Replies: 31
Views: 4984

Re: Remind me: why am I holding VG's longer-term TIPS fund?

nisiprius wrote:There's always something to hate about bonds. If they fluctuate downward, you can hate them because they're down. If they fluctuate upward, you can hate them because they have low yield to maturity.
I once started a thread claiming bonds are always good. If they fluctuate upwards, you have a larger principal. If they fluctuate downward, you have a higher yield.
by richard
Thu Jan 08, 2015 1:56 pm
Forum: Investing - Theory, News & General
Topic: TIPS spread as inflation prediction
Replies: 22
Views: 3609

Re: TIPS spread as inflation prediction

Spread between 30 year TIPS and 5 year TIPS

Image
by richard
Thu Jan 08, 2015 1:50 pm
Forum: Investing - Theory, News & General
Topic: Beware of Investing Based on Rising Rates
Replies: 22
Views: 2955

Re: Beware of Investing Based on Rising Rates

skepticalobserver wrote:It's been widely reported that one reason US rates have been depressed is due to purchases by Europeans who live with even lower rates and seek higher yields with treasuries. But with currency differentials (higher Dollar/lower Euro), are European purchasers gaining any yield advantage when buying treasuries in their own currency?
"The crucial point here is that German bonds are denominated in euros, while U.S. bonds are denominated in dollars. And what that means in turn is that higher U.S. rates don’t reflect fear of default; they reflect the expectation that the dollar will fall against the euro over the decade ahead."
http://krugman.blogs.nytimes.com/2015/0 ... nd-yields/
by richard
Thu Jan 08, 2015 10:48 am
Forum: Investing - Theory, News & General
Topic: Can assuming more risk, increase returns?
Replies: 41
Views: 3785

Re: Can assuming more risk, increase returns?

Conversely, why would you think you'd get higher returns on a diversified portfolio without taking more risk?
by richard
Thu Jan 08, 2015 9:15 am
Forum: Investing - Theory, News & General
Topic: Can assuming more risk, increase returns?
Replies: 41
Views: 3785

Re: Can assuming more risk, increase returns?

lazyday wrote:<>You do need to construct the portfolio so that risk is expected to be rewarded. <>
One has to be careful with the word "expected".

The typical use in finance is expected return, which means probability weighted return. For example, if you have a 1% chance of making $100,00 and a 99% chance of making $0, your expected return is $1,000, but most people wouldn't expect to make $1,000 given those odds.
by richard
Thu Jan 08, 2015 9:12 am
Forum: Investing - Theory, News & General
Topic: Can assuming more risk, increase returns?
Replies: 41
Views: 3785

Re: Can assuming more risk, increase returns?

Birdman10687 wrote:
richard wrote:You take risk in the hope of higher returns. Risk means there's a chance of lower returns, perhaps substantially lower.
I'm not sure this paints a complete picture. Risk really means there is a chance of lower returns for some arbitrary period of time. I think that distinction is important.
What other periods of time are there?
by richard
Thu Jan 08, 2015 8:35 am
Forum: Investing - Theory, News & General
Topic: Can assuming more risk, increase returns?
Replies: 41
Views: 3785

Re: Can assuming more risk, increase returns?

i read that a young person who has a multi decade time horizon, can assume more risk. I don't mean single stocks, but with low cost index funds. When one assums more risk, does that typically mean higher long term returns? When I read about risk levels I would assume risk is another way to say concern for people who may prematurely sell a more volatile investment. Is this true? Or does risk also mean there is a 'risk' or 'chance' of lower returns? You take risk in the hope of higher returns. Risk means there's a chance of lower returns, perhaps substantially lower. There are many posters who say risk is really just the chance you'll sell at the wrong time. While this is a risk, it shouldn't obscure the fact that risk means the real chance ...
by richard
Thu Jan 08, 2015 5:47 am
Forum: Personal Investments
Topic: Why REITs not good for income in 2015?
Replies: 20
Views: 3352

Re: Why REITs not good for income in 2015?

richard wrote:
livesoft wrote:REITs are leveraged which means they borrow money. When interest rates drop as they have this year so far and all through 2014, then REITs go up. But if interest rates rise, then it costs them more money to borrow money, so they drop in value.
That's a large part of it, but I'd expect the strength of commercial real estate to have something to do with their income and value.
Here's a thread to the effect that there's not much correlation between REITs and interest rates viewtopic.php?f=10&t=155024&newpost=2325301 It links to an article with a very apt conclusion: "Using predictions of future interest rates to further make predictions of future REIT performance seems doubly silly."
by richard
Thu Jan 08, 2015 5:43 am
Forum: Investing - Theory, News & General
Topic: TIPS spread as inflation prediction
Replies: 22
Views: 3609

Re: TIPS spread as inflation prediction

richard, #cruncher, The usual method is to look at the spread between nominals and TIPS for the relevant time period. If you want a 5 year inflation forecast, subtract 5 year TIPS from 5 year treasuries. Isn't there a bit of a problem with this, especially for a short TIPS like 5 years or less, because of the delay in CPI? If I remember right, either the CPI adjustment is not for the exact same time period as the TIPS issue date to maturity date, or there is some other way the timing is off. So you might be able to look up one month's CPI change that isn't yet reflected, or at least you could estimate a month that isn't yet official, by looking at actual prices. This would make it into the market price of TIPS, but when inflation changes q...
by richard
Wed Jan 07, 2015 8:25 pm
Forum: Investing - Theory, News & General
Topic: TIPS spread as inflation prediction
Replies: 22
Views: 3609

Re: TIPS spread as inflation prediction

toto238 wrote:I took a class in college on interest rate swaps, so I know there's a mathematical way to take those yields and translate it into an inflation prediction for each year. I just don't remember how to do it.

Anyone else remember how to do that calculation? Or am I the only one who took advanced finance classes?
The usual method is to look at the spread between nominals and TIPS for the relevant time period. If you want a 5 year inflation forecast, subtract 5 year TIPS from 5 year treasuries. See for example my initial post and #cruncher's reply.
by richard
Wed Jan 07, 2015 8:23 pm
Forum: Investing - Theory, News & General
Topic: TIPS spread as inflation prediction
Replies: 22
Views: 3609

Re: TIPS spread as inflation prediction

AndrewXnn wrote:While nominal interest rates are falling, real interest rates are rising.<>
Where are you seeing evidence of real rates rising or different directions for nominal and real? Here's a chart of 10 year treasuries, nominal and real, over the past year.
Image
by richard
Wed Jan 07, 2015 2:06 pm
Forum: Investing - Theory, News & General
Topic: TIPS spread as inflation prediction
Replies: 22
Views: 3609

TIPS spread as inflation prediction

The Fed on the TIPS spread (nominal minus TIPS) as a predictor of inflation. Unlike many market participants, the Fed can actually do something about interest rates and inflation. "Participants generally anticipated that inflation was likely to decline further in the near term, reflecting the reduction in oil prices and the effects of the rise in the foreign exchange value of the dollar on import prices. Most participants saw these influences as temporary and thus continued to expect inflation to move back gradually to the Committee's 2 percent longer-run objective as the labor market improved further in an environment of well-anchored inflation expectations. Survey-based measures of longer-term inflation expectations remained stable, ...
by richard
Wed Jan 07, 2015 12:37 pm
Forum: Investing - Theory, News & General
Topic: The Bond King says cycle closing and Cash is King
Replies: 22
Views: 4518

Re: The Bond King says cycle closing and Cash is King

I agree with previous. Where Gross is saying (as PIMCO under the Gross/El Erian dual monarchy was saying for some years) that expected returns are low, I think he's right. It's in line with what Jack Bogle says (though not that both can't be wrong). And it's worth thought for people who still put multi-decade averages of equity returns into their planning models when yields, including risky yields, are so much lower than historical. Yields have been this low before... 10-year treasuries were in the 2%-3% range in the 1950s, and 30-year returns were still very good... I keep seeing a lot of postings here about how "This time it's different" It's not different. Yep, it's exactly the same. WWII ended recently. p/e is close to 10x an...
by richard
Wed Jan 07, 2015 12:26 pm
Forum: Personal Investments
Topic: Why REITs not good for income in 2015?
Replies: 20
Views: 3352

Re: Why REITs not good for income in 2015?

livesoft wrote:REITs are leveraged which means they borrow money. When interest rates drop as they have this year so far and all through 2014, then REITs go up. But if interest rates rise, then it costs them more money to borrow money, so they drop in value.
That's a large part of it, but I'd expect the strength of commercial real estate to have something to do with their income and value.
by richard
Wed Jan 07, 2015 8:17 am
Forum: Personal Finance (Not Investing)
Topic: Do you generally spend more when using credit cards?
Replies: 71
Views: 5417

Re: Do you generally spend more when using credit cards?

<>Having a CC with me enables me to take advantage of unexpected sales of the most expensive item I buy - boneless chicken. A few large packs of that item when it is on sale allows me to save at least $20 and avoid a somewhat embarrassing situation which once happened in the 1980s (when most supermarkets took only cash) when I grabbed a few on-sale packages but didn't check my wallet to see if I had enough extra cash with me when it came time to pay for it. The cashier had to undo part of my purchase and I could not buy those extra on-sale items. Now, with a CC (or a debit card), I never have to worry about that happening again (hence my answer to the poll, I spend slightly more). My definition of a "large purchase" is considerab...
by richard
Wed Jan 07, 2015 8:01 am
Forum: Personal Finance (Not Investing)
Topic: Net Worth Survey, 2015 Edition
Replies: 144
Views: 61219

Re: Net Worth Survey, 2015 Edition

I have a workbook with both of our earnings history and the calculations to determine what I'll have earned and what that payment will be, in 2014 dollars, based on my assumptions. But the thing is, I don't know when I'll retire, or what my earnings will be between now and then, what the inflation rates will be, what factor the SSA will use to inflate my prior year earnings, etc. My payment could be anything between 20k and 30k a year in 2014 dollars, starting between 27 and 35 years from now, and lasting anything from zero to 40+ years. How is anyone supposed to get a meaningful result from that type of data? This is why some of us ignore the columns that include Social Security in Net Worth. The information is there for those who believe...
by richard
Tue Jan 06, 2015 6:45 pm
Forum: Personal Finance (Not Investing)
Topic: Do you generally spend more when using credit cards?
Replies: 71
Views: 5417

Re: Do you generally spend more when using credit cards?

I resign. I resign from this thread and I resign from the "typical Boglehead" status. Please don't. If nothing else, your posts are interesting. I find threads with disagreement (polite disagreement) more interesting than threads with total agreement. I admit that I have experienced all listed types of "pain of paying" under various circumstances. For example: I'm not sure "admit" is the right word for being subject to a common behavioral phenomenon. 1. pain of paying is higher when you pay with cash than a credit card VF: As I noted earlier in the thread, I have experienced clear differences between cash and credit when leaving tips and when spending money during foreign travel. In the case of purchases, the ...
by richard
Tue Jan 06, 2015 6:29 pm
Forum: Personal Finance (Not Investing)
Topic: Do you generally spend more when using credit cards?
Replies: 71
Views: 5417

Re: Do you spend more when using credit cards?

<>From the video about pain of paying : 1. pain of paying is higher when you pay with cash than a credit card 2. pain of paying is higher when your charge is based on use than a fixed amount (e.g., paying for telecommunications services) 3. prepaying causes less pain than postpaying (e.g., for a cruise) 4. pain of paying is higher when you see the advancing charge than when it's invisible to you (e.g., paying for gasoline where you see the amount increasing vs. paying for electricity where you don't see the meter and get a monthly bill) Victoria 1. Not for me. I'll usually round up restaurant tips if I'm paying cash, but that goes in the opposite direction. 2. This doesn't come up very often for me, so I'm not sure 3. I notice the payment ...
by richard
Tue Jan 06, 2015 5:54 pm
Forum: Personal Finance (Not Investing)
Topic: Do you generally spend more when using credit cards?
Replies: 71
Views: 5417

Re: Do you spend more when using credit cards?

VictoriaF wrote:<>As for $10 being $10, compare a $10 bill with a $10 coupon. Let's say that you have a $10 coupon for your local grocery store that expires today. You go to the grocery store but forget to take the coupon with you, and thus you lose the opportunity to reduce your bill by $10. In an alternative scenario, you lose a $10 bill. Would you be equally upset?

Victoria
Presuming that I'm spending more than $10, I'd be equally upset. Otherwise, a $10 bill is obviously more valuable than a $10 coupon, in the same way a store gift card is less generally useful than cash.
by richard
Tue Jan 06, 2015 5:11 pm
Forum: Personal Finance (Not Investing)
Topic: Do you generally spend more when using credit cards?
Replies: 71
Views: 5417

Re: Do you spend more when using credit cards?

That's because there's an emotional pain associated with handing over hard currency that curbs spending, as opposed to mindless purchasing when forking over plastic. Am I the only one who regards this as bizarre? Don't people realize that $10 is $10, whether it's in the form of a paper bill, a credit card payment, a pile of quarters or whatever? Do people really ignore (or pay less attention to) price when paying with a credit card? I didn't find it bizarre exactly. It is simply someone trying to "create" an explanation for the behavior they observed. If that statement were included (and it is difficult to tell from the quotation) as part of the "study," that would be the point at which I tossed it into the trash can. T...
by richard
Tue Jan 06, 2015 4:06 pm
Forum: Investing - Theory, News & General
Topic: Aren't we in the midst of a deflationary downturn?
Replies: 20
Views: 2778

Re: Aren't we in the midst of a deflationary downturn?

FBN2014 wrote:The CPI excludes energy, food and housing prices so who really knows.
No it doesn't, as a few moments of research would reveal.
by richard
Tue Jan 06, 2015 4:05 pm
Forum: Investing - Theory, News & General
Topic: Aren't we in the midst of a deflationary downturn?
Replies: 20
Views: 2778

Re: Aren't we in the midst of a deflationary downturn?

Grt2bOutdoors wrote:Low inflation, not outright deflation. That is a buy signal for equities.
When yields are below 5%, rising rates are generally associated with rising stock prices. See page 11 of https://www.jpmorganfunds.com/blobconte ... lebook.pdf

There's a similar relation between inflation and equities.
by richard
Tue Jan 06, 2015 3:30 pm
Forum: Personal Finance (Not Investing)
Topic: Do you generally spend more when using credit cards?
Replies: 71
Views: 5417

Re: Do you generally spend more when using credit cards?

fposte wrote:I was trying to buy a new wallet recently, and I was intrigued to see how difficult it was to find wallets with coin pockets on US sites. They were much more common on amazon.ca and amazon.co.uk, presumably because coins have sufficient value in those countries that people actually want to carry them around.
I find coins to be annoying and avoid carrying them if at all possible.
by richard
Tue Jan 06, 2015 3:25 pm
Forum: Personal Finance (Not Investing)
Topic: Do you generally spend more when using credit cards?
Replies: 71
Views: 5417

Re: Do you spend more when using credit cards?

That's because there's an emotional pain associated with handing over hard currency that curbs spending, as opposed to mindless purchasing when forking over plastic.
Am I the only one who regards this as bizarre? Don't people realize that $10 is $10, whether it's in the form of a paper bill, a credit card payment, a pile of quarters or whatever? Do people really ignore (or pay less attention to) price when paying with a credit card?
by richard
Tue Jan 06, 2015 12:52 pm
Forum: Personal Finance (Not Investing)
Topic: Do you generally spend more when using credit cards?
Replies: 71
Views: 5417

Re: Do you generally spend more when using credit cards?

I only use cash for very small purchases and vendors who don't take credit cards. I use ACH or wire transfers for large amounts when the recipient doesn't take credit cards or charges a fee. I use credit cards for just about everything else.

Does that mean I spend more when using credit cards?
by richard
Tue Jan 06, 2015 12:48 pm
Forum: Investing - Theory, News & General
Topic: JD Mellberg 8% Lifetime Return Claim - Legitimate?
Replies: 43
Views: 36065

Re: JD Mellberg 8% Lifetime Return Claim - Legitimate?

Mute buttons on remote controls are effective at blocking the sound from commercials.
by richard
Tue Jan 06, 2015 12:45 pm
Forum: Investing - Theory, News & General
Topic: Asness response to value redundancy
Replies: 47
Views: 9070

Re: Asness response to value redundancy

Fama's appears to have:
- salary as tenured professor at Chicago
- promise of a Chicago pension
- some interest in DFA. We don't know if it's wages, equity or something else
- TIPS
- cap weighted market equities

We don't know anything about the value of any of these relative to the others.

We do know he recommends a cap weighted portfolio, doesn't recommend any particular tilt and regards a decision to tilt as a matter of taste, so long as the tilt is diversified.
by richard
Tue Jan 06, 2015 10:47 am
Forum: Investing - Theory, News & General
Topic: Good day to buy! (Or not!)
Replies: 25
Views: 3286

Re: Good day to buy! (Or not!)

Of course you're trying to time the market. Either the downward trend of this week will continue or the prior upward trend will re-emerge. There's no way to know which. I sometimes try to guess the direction of the market based on recent noticeable moves. My record is not much different than chance. How's your record on these things?

Stick to your plan.
by richard
Tue Jan 06, 2015 10:45 am
Forum: Investing - Theory, News & General
Topic: Aren't we in the midst of a deflationary downturn?
Replies: 20
Views: 2778

Re: Aren't we in the midst of a deflationary downturn?

We're in the midst of low inflation rather than deflation. Inflation is a measure of overall prices. Some prices change more than others. There's no real economic significance to the difference between a small increase in general price levels and a small decrease. At very low inflation, some prices are decreasing. Prices are going down because of inadequate demand (relative to supply) due to slow economies. Interest rates are low because bond prices are high and bond prices are high because supply isn't adequate to meet demand. If, for example, governments or companies produced more bonds, it's rather likely prices would decrease and rates increase. If they used the proceeds from such increased bond production to buy things or increase outp...
by richard
Mon Jan 05, 2015 4:22 pm
Forum: Investing - Theory, News & General
Topic: Vanguard sets record funds inflow, has $3.1 trillion assets
Replies: 39
Views: 4420

Re: Vanguard sets record funds inflow, has $3.1 trillion ass

Toons wrote:Can someone help me wrap my brain around what 3 trillion looks like :happy
Here are some things to use for comparison:

The market value of all US listed stocks is about $22 trillion dollars. The market value of all US bonds (private and public) is about $30 to $40 trillion, depending on what source you use. Worldwide values are, of course, higher.

The US GDP is about $17 trillion. GDP is the total value of all goods and services produced in a year. You might think of it as national spending or national income.
by richard
Mon Jan 05, 2015 12:17 pm
Forum: Personal Consumer Issues
Topic: question regarding restrictive covenant in "at will" state
Replies: 16
Views: 2130

Re: question regarding restrictive covenant in "at will" sta

Yes, being in a right to work state makes it much more likely the terms of an noncompete will be honored "Right to work" and "at will" are two different things. "At will" is the doctrine that you can quit or be fired at any time, absent a contract, and it's the law in 49 out of 50 states (Montana being the exception, and even there it's limited). "Right to work" is about forbidding a requirement that employees be union members. I'm not a lawyer, but I don't see how either of them would affect a non-compete--those are usually governed by relevant state statutes or court decisions, especially being in an at-will state since that is the norm in the US<> It's quite possible there is a correlation between...