Search found 620 matches

by ThrustVectoring
Fri Dec 07, 2018 9:40 pm
Forum: Investing - Help with Personal Investments
Topic: 30 years old, 250k portfolio allocation?
Replies: 17
Views: 2279

Re: 30 years old, 250k portfolio allocation?

For example, let's say I have $11,000 to invest, and I want to put $5,500 in a bond fund (BND) and $5,500 in a stock fund (VTI). Because the max annual contribution to my Roth IRA is $5,500, my Roth IRA only has space for BND or VTI. Fifty years later, let's say VTI is now worth $500,000. BND is wo...
by ThrustVectoring
Fri Dec 07, 2018 4:30 pm
Forum: Investing - Help with Personal Investments
Topic: 30 years old, 250k portfolio allocation?
Replies: 17
Views: 2279

Re: 30 years old, 250k portfolio allocation?

(2) It can also make sense to place assets with higher expected future growth (like VTI/VXUS) in your Roth IRA to avoid paying capital gains taxes down the road. This argument has never made sense to me: the logic implies you should be putting the lower-yielding assets nowhere. Adding leverage is b...
by ThrustVectoring
Fri Dec 07, 2018 3:33 pm
Forum: Investing - Help with Personal Investments
Topic: 30 years old, 250k portfolio allocation?
Replies: 17
Views: 2279

Re: 30 years old, 250k portfolio allocation?

If you want higher returns, just add riskier bonds. Adding leverage is better than adding riskier bonds for increasing your returns (up to the Kelley limit, of course). The bond market is full of participants who want more yield but cannot use leverage to get it, so the riskier bonds have a worse r...
by ThrustVectoring
Fri Dec 07, 2018 2:29 pm
Forum: Investing - Help with Personal Investments
Topic: 30 years old, 250k portfolio allocation?
Replies: 17
Views: 2279

Re: 30 years old, 250k portfolio allocation?

Hey all, I've recently sold nearly all my positions and consolidated my portfolio to VTI +VXUS at a 60/40 split. With 25k worth of space (~10% of portfolio) in my Roth IRA I was wondering whether I should allocate to VTI, VXUS, or a bond fund like BND? I believe that IRA's have tax advantages, so i...
by ThrustVectoring
Thu Dec 06, 2018 3:24 pm
Forum: Investing - Theory, News & General
Topic: (NEW) WisdomTree 90/60 U.S. Balanced Fund
Replies: 172
Views: 12686

Re: (NEW) WisdomTree 90/60 U.S. Balanced Fund

I evaluated investing in Treasury futures directly, since I don't really need a fund to do that for me. My conclusion is that buying Treasury futures provide most of the interest rate risk with only a small yield, with the yield curve as flat as it is right now. I don't think this fund should be ow...
by ThrustVectoring
Thu Dec 06, 2018 3:13 pm
Forum: Investing - Theory, News & General
Topic: The risks of equities when saving for retirement
Replies: 38
Views: 3452

Re: The risks of equities when saving for retirement

Health issues can also be a factor. I don't think it's a good idea to ever have a plan that requires one to work until 65. This risk is highly insurable. If your plan requires you to work until age 65, you should have solid own-occupation disability insurance that replaces enough lost income should...
by ThrustVectoring
Thu Dec 06, 2018 3:05 pm
Forum: Investing - Theory, News & General
Topic: The risks of equities when saving for retirement
Replies: 38
Views: 3452

Re: The risks of equities when saving for retirement

Well, it's not so easy. One could make a convincing argument that as long as one can tolerate stocks' volatility , investors could be 100% stocks until 20 years out from retirement, maybe even 10. This is the conclusion that Paul Merriman came to as well. A 40 year old who isn't planning on retirin...
by ThrustVectoring
Thu Dec 06, 2018 2:19 pm
Forum: Investing - Theory, News & General
Topic: Why buying homes with mortgages is good but buying stocks on margin is bad
Replies: 36
Views: 2977

Re: Why buying homes with mortgages is good but buying stocks on margin is bad

Buying a home with a mortgage is often a good idea because the imputed or actual rents offset the mortgage payments. The asset you're buying on margin acts a lot like the loan you're taking out to finance it, so the actual risk of the position is significantly lower. Any sort of offsetting position ...
by ThrustVectoring
Thu Dec 06, 2018 2:07 pm
Forum: Investing - Theory, News & General
Topic: Tips breakevens and illiquidity premia
Replies: 75
Views: 4931

Re: Tips breakevens and illiquidity premia

I think what is happening is that there is increasing doubt that the Fed can keep inflation up to its target of 2% (PCE). The five year break-even inflation rate has dropped from 2.00% on 10/17 to 1.74% on 12/4. It would appear that concern is rising about the onset and severity of the next recessi...
by ThrustVectoring
Wed Dec 05, 2018 8:04 pm
Forum: Investing - Theory, News & General
Topic: VMVFX & low volatility performance
Replies: 13
Views: 1816

Re: VMVFX & low volatility performance

Or is the outperformance Temporary? There's very good theoretical arguments to suggest that minimum volatility funds will outperform the stock market as a whole on a risk-adjusted basis. Specifically, the idea of "Bet Against Beta": high risk/reward assets are preferentially bought by investors see...
by ThrustVectoring
Wed Dec 05, 2018 7:34 pm
Forum: Investing - Theory, News & General
Topic: Why buying homes with mortgages is good but buying stocks on margin is bad
Replies: 36
Views: 2977

Re: Why buying homes with mortgages is good but buying stocks on margin is bad

Mortgage borrowing is shorting 'long term bonds' but borrowing on margin or using stock index futures is shorting 0-3mo 'bonds'. Along the riskless curve long term bonds have been a generally superior investment to overnight-3mo 'bonds'. IOW the realized term premium has generally been positive. Ma...
by ThrustVectoring
Wed Dec 05, 2018 5:27 pm
Forum: Investing - Theory, News & General
Topic: The risks of equities when saving for retirement
Replies: 38
Views: 3452

Re: The risks of equities when saving for retirement

There's a limit on how pessimistic your future predictions can be before your plans should stop relying on market mechanisms altogether. If the 30-year real return on global cap-weighted equities is negative, that basically implies widespread societal collapse. If you think this is a real possibili...
by ThrustVectoring
Wed Dec 05, 2018 2:23 pm
Forum: Investing - Theory, News & General
Topic: The risks of equities when saving for retirement
Replies: 38
Views: 3452

Re: The risks of equities when saving for retirement

There's a limit on how pessimistic your future predictions can be before your plans should stop relying on market mechanisms altogether. If the 30-year real return on global cap-weighted equities is negative, that basically implies widespread societal collapse. If you think this is a real possibilit...
by ThrustVectoring
Wed Dec 05, 2018 2:16 pm
Forum: Investing - Theory, News & General
Topic: Why buying homes with mortgages is good but buying stocks on margin is bad
Replies: 36
Views: 2977

Re: Why buying homes with mortgages is good but buying stocks on margin is bad

A 30-year fixed rate mortgage effectively shorts long-term bonds, while buying stocks on margin is borrowing at a floating rate. Long-term bonds are terrible investments, so shorting them is a fantastic choice. And as a bonus, you get an embedded call option to close out the short position via refin...
by ThrustVectoring
Tue Dec 04, 2018 5:13 pm
Forum: Investing - Theory, News & General
Topic: Any thoughts about defined outcome ETFs?
Replies: 11
Views: 755

Re: Any thoughts about defined outcome ETFs?

These are pretty pointless. If you want to buy downside protection for the S&P 500, the market for this is extraordinarily liquid. You just buy S&P 500 put options at the desired timeframe and strike price, and there's no shortage of sellers. That said, you have to pay for the positive skew. On ave...
by ThrustVectoring
Tue Dec 04, 2018 5:01 pm
Forum: Investing - Theory, News & General
Topic: Yield Curve Inversions — Any Benefit from Market Timing?
Replies: 18
Views: 1427

Re: Yield Curve Inversions — Any Benefit from Market Timing?

IMHO there's no need to do anything on the stock side based off the yield curve, not when the treasury futures market is available and so liquid. You can take out a "steepener" position (long the higher yielding short-term contract, short the lower-yielding long-term contract, at a ratio such that a...
by ThrustVectoring
Tue Dec 04, 2018 4:32 pm
Forum: Investing - Theory, News & General
Topic: Rules of thumb for allocation/exposure
Replies: 29
Views: 2266

Re: Rules of thumb for allocation/exposure

Age based rules are simplifications when you have to give one simple piece of advice that's taken by many different people with different retirement expenses, different amounts saved, and vastly different financial sophistication. My advice is to own zero bonds until you have at least 10 times your ...
by ThrustVectoring
Tue Dec 04, 2018 4:13 pm
Forum: Investing - Theory, News & General
Topic: Any thoughts about defined outcome ETFs?
Replies: 11
Views: 755

Re: Any thoughts about defined outcome ETFs?

These are pretty pointless. If you want to buy downside protection for the S&P 500, the market for this is extraordinarily liquid. You just buy S&P 500 put options at the desired timeframe and strike price, and there's no shortage of sellers. That said, you have to pay for the positive skew. On aver...
by ThrustVectoring
Tue Dec 04, 2018 4:05 pm
Forum: Investing - Theory, News & General
Topic: Older Dads - how do you plan for your own retirement while still raising kids?
Replies: 38
Views: 5191

Re: Older Dads - how do you plan for your own retirement while still raising kids?

A lot of child raising expenses are really not mandatory - they're more "keeping up with the Joneses" type stuff. Especially if you're living in the Bay Area in California. College expenses are the big one, but that can be planned around. Essentially, income, taxable savings and real estate will con...
by ThrustVectoring
Tue Dec 04, 2018 3:52 pm
Forum: Personal Finance (Not Investing)
Topic: What to negotiate in offers
Replies: 45
Views: 3281

Re: What to negotiate in offers

You basically take whatever is standard for the position, especially when it's a significant pay bump for you that you don't expect other places to match. My standard advice on negotiating, in order: Ask for more time to consider the offer - you generally want at least two weeks, especially if you'r...
by ThrustVectoring
Tue Dec 04, 2018 3:36 pm
Forum: Personal Finance (Not Investing)
Topic: Local credit union offered me a $7600 credit card I spend $800 a month on a credit card is the limit high enough?
Replies: 25
Views: 1646

Re: Local credit union offered me a $7600 credit card I spend $800 a month on a credit card is the limit high enough?

Go for it. If you pay off the credit card in full each month, pretty much every card you take out will help your score eventually. What hurts your score is using "too much" of one or more revolving lines of credit, having too many accounts that are too new, and having negative information reported. ...
by ThrustVectoring
Tue Dec 04, 2018 2:57 pm
Forum: Investing - Help with Personal Investments
Topic: Is this 401k fund okay for 100% allocation?
Replies: 7
Views: 332

Re: Is this 401k fund okay for 100% allocation?

Haven't heard of it. Did some brief research, looks like it does a good job of matching the benchmark within a few basis points, so it ought to be fine. If it's another 35 basis points to get into any other fund, 100%-ing the S&P 500 is absolutely fine. There's a hell of a lot of investment strategi...
by ThrustVectoring
Tue Dec 04, 2018 2:50 pm
Forum: Investing - Help with Personal Investments
Topic: Out of Stocks to Pay Off Mortgage
Replies: 73
Views: 5194

Re: Out of Stocks to Pay Off Mortgage

This is just not correct. You don't "get an extra $45 per year until the mortgage is paid off." You realize ZERO ACTUAL savings until the mortgage is paid in full, because the payment does not change month to month or year to year. The savings is in the future, in inflated dollars, so it's actually...
by ThrustVectoring
Tue Dec 04, 2018 1:59 pm
Forum: Investing - Help with Personal Investments
Topic: Out of Stocks to Pay Off Mortgage
Replies: 73
Views: 5194

Re: Out of Stocks to Pay Off Mortgage

This is just not correct. You don't "get an extra $45 per year until the mortgage is paid off." You realize ZERO ACTUAL savings until the mortgage is paid in full, because the payment does not change month to month or year to year. The savings is in the future, in inflated dollars, so it's actually...
by ThrustVectoring
Mon Dec 03, 2018 7:17 pm
Forum: Investing - Help with Personal Investments
Topic: Out of Stocks to Pay Off Mortgage
Replies: 73
Views: 5194

Re: Out of Stocks to Pay Off Mortgage

Please post the mortgage term and how many years remaining. Without that information we have no idea how much of what you are paying each month is interest versus principal. This is crucial info to help determine if the savings is worthwhile. How many years remaining is crucial for the exact opposi...
by ThrustVectoring
Mon Dec 03, 2018 3:58 pm
Forum: Investing - Help with Personal Investments
Topic: What is the lowest 'safe' emergency fund we should have?
Replies: 40
Views: 3972

Re: What is the lowest 'safe' emergency fund we should have?

You're young, physically healthy, have in-demand skills, have a dual income household, and have a very healthy sized taxable account. You only need as much money in your checking account as you need to ensure that you don't have to worry about NSF penalties. Skip the personal loan, always get the ch...
by ThrustVectoring
Mon Dec 03, 2018 3:22 pm
Forum: Investing - Help with Personal Investments
Topic: Out of Stocks to Pay Off Mortgage
Replies: 73
Views: 5194

Re: Out of Stocks to Pay Off Mortgage

Please post the mortgage term and how many years remaining. Without that information we have no idea how much of what you are paying each month is interest versus principal. This is crucial info to help determine if the savings is worthwhile. How many years remaining is crucial for the exact opposi...
by ThrustVectoring
Sun Dec 02, 2018 2:06 pm
Forum: Investing - Theory, News & General
Topic: Stock Buybacks Don't Increase Share Prices
Replies: 33
Views: 2821

Re: Stock Buybacks Don't Increase Share Prices

At least when done properly, stock buybacks do not increase share prices. The market cap goes down by the amount spent on the buyback, and the float gets decreased by the same amount. So the value per share is the same after the buyback. It is exactly the same as with a reinvested dividend (except ...
by ThrustVectoring
Fri Nov 30, 2018 2:47 pm
Forum: Investing - Theory, News & General
Topic: Why are REITS a separate asset class but healthcare is not?
Replies: 55
Views: 3116

Re: Why are REITS a separate asset class but healthcare is not?

US real estate is very roughly worth $30 trillion, with $15 trillion in mortgages. The US stock market is also worth very roughly $30 trillion. Most real estate is privately held and thus not included in the total US stock market - it's roughly 2% REITs. There's an argument to be made that the total...
by ThrustVectoring
Thu Nov 29, 2018 12:29 am
Forum: Investing - Theory, News & General
Topic: How to place windfall into stocks
Replies: 6
Views: 1135

Re: How to place windfall into stocks

Roll a die. On a 1 or a 2, you successfully avoid a bear market and come out ahead. 3-6 the stock market climbs to yet new heights before you can get your money in. Do you feel lucky?
by ThrustVectoring
Tue Nov 27, 2018 4:01 pm
Forum: Investing - Theory, News & General
Topic: Leverage Success Stories
Replies: 68
Views: 8440

Re: Leverage Success Stories

Here's the treasury futures curve: December March Symbol Quote Volume Symbol Quote Volume ULA18 151-140 486155 ULAH19 152-070 401120 <--- 30 year USA18 139-290 673222 USAH19 139-090 473121 <--- 20 year TYA18 119-065 2893808 TYAH19 119-025 1925526 <--- 10 year FVAZ8 112-262 2763424 FVAH19 112-250 21...
by ThrustVectoring
Tue Nov 27, 2018 3:12 pm
Forum: Investing - Theory, News & General
Topic: Leverage Success Stories
Replies: 68
Views: 8440

Re: Leverage Success Stories

Swelfie I have read your posts with great interest in multiple threads and have pieced together some of the method you have used. But I was wondering if you were willing to write a longer post where you more explicitly lay out your investments and decision making process. Thank you QJ Having been d...
by ThrustVectoring
Mon Nov 26, 2018 6:12 am
Forum: Investing - Theory, News & General
Topic: Bitcoin in Freefall
Replies: 191
Views: 25356

Re: Bitcoin in Freefall

? *shorting* crypto would be a good hedge for Nvidia? In that Nvidia and crypto go in the same direction? Other way around, I think. Shorting Nvidia is likely one of the best plays for crypto bears. There's no good mechanism to short crypto directly without exposing yourself to massive counter-part...
by ThrustVectoring
Wed Nov 21, 2018 12:57 pm
Forum: Investing - Theory, News & General
Topic: % cash allocation for real-estate
Replies: 6
Views: 512

Re: % cash allocation for real-estate

Percentage-based allocation for real estate is a lot trickier than stocks and bonds. For one, transaction costs are enormous, so you don't want to be making sales and purchases regularly to keep things balanced. Also, valuation isn't as straightforward as for more liquid securities, and houses don't...
by ThrustVectoring
Mon Nov 19, 2018 8:17 pm
Forum: Investing - Theory, News & General
Topic: I thought rebalancing was supposed to control risk - but it hasn't since 2000
Replies: 13
Views: 2718

Re: I thought rebalancing was supposed to control risk - but it hasn't since 2000

Rebalancing stabilizes risk near a certain level, and does not allow it to fluctuate as market prices fluctuate. You picked a start date that was near a market peak, and so I suspect the rebalancing portfolios have significantly more equity exposure during the first bear market. Had you picked a sta...
by ThrustVectoring
Mon Nov 19, 2018 8:13 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Munis Increasingly Risky
Replies: 94
Views: 9183

Re: Larry Swedroe: Munis Increasingly Risky

Thanks for posting this. I have invested in individual munis for many years. My recent strategy to counter the rising risk from underfunded pension obligations, etc, is to invest in AAA rated private university muni bonds like Stanford, MIT, etc. I figure the massive endowments behind these institu...
by ThrustVectoring
Mon Nov 19, 2018 3:59 am
Forum: Investing - Theory, News & General
Topic: Ratio of stocks to bonds
Replies: 11
Views: 1269

Re: Ratio of stocks to bonds

A strategy for discussion. Assuming you have more then 25x your annual expenses saved. Why wouldn't you set asside 2-7 years worth of assets to cash / other safe assets such as a ladder of treasuries. Then keep the rest invested in the market. 7 years would allow you to ride out a very long bear ma...
by ThrustVectoring
Sat Nov 17, 2018 3:42 pm
Forum: Investing - Theory, News & General
Topic: TIPS yield curve oddity
Replies: 22
Views: 1513

Re: TIPS yield curve oddity

Have TIPS proven to be a worthy long term investment? It feels like I have reading recommendations for TIPS as a major portfolio component forever but I still don't have a sense of their value in a normal, say, 3 fund portfolio with just stock and total-bond-market index funds. All bonds are very p...
by ThrustVectoring
Thu Nov 15, 2018 11:15 pm
Forum: Investing - Theory, News & General
Topic: Annuities
Replies: 26
Views: 3104

Re: Annuities

Actual numbers make a difference. I can tell you what I did. When I retired from Megacorp, I had a choice of a lump sum that could be rolled into an IRA or an annuity. I went with the latter. I get a better payout than buying an SPIA on the open market for the same initial sum. That's 40k/year, pre...
by ThrustVectoring
Thu Nov 15, 2018 5:30 pm
Forum: Investing - Theory, News & General
Topic: Can someone explain specifically how the "bucket" approach to retirement withdrawals is supposed to work?
Replies: 75
Views: 5159

Re: Can someone explain specifically how the "bucket" approach to retirement withdrawals is supposed to work?

So, I just did a little analysis. Let's assume the investor started with $20K allocated 50% in TSM and 50% in intermediate term Treasuries and exactly caught the stock market decline at the beginning of 2000. He was following the 4% rule, and began taking inflation-adjusted annual withdrawals of $8...
by ThrustVectoring
Thu Nov 15, 2018 1:36 pm
Forum: Investing - Theory, News & General
Topic: 2 Fund Ports: Everything You NEED?
Replies: 32
Views: 4009

Re: 2 Fund Ports: Everything You NEED?

I’ve started directing new money to the Globalist portfolio (i.e., VT+BNDW). M1 Finance makes funding and portfolio management a breeze. If you're at M1 Finance anyhow, you can get slightly lower expense ratios with very little hassle by replacing VT with the lower-fee US and international componen...
by ThrustVectoring
Thu Nov 15, 2018 1:13 pm
Forum: Investing - Theory, News & General
Topic: Annuities
Replies: 26
Views: 3104

Re: Annuities

If the global corporate economy is working in any reasonable sense, your stocks are going to be worth enough money to pay for things. If the global corporate economy isn't working, then the investment company you purchased the annuity from is likely to become insolvent or other such market issues. ...
by ThrustVectoring
Wed Nov 14, 2018 6:51 pm
Forum: Investing - Theory, News & General
Topic: Can someone explain specifically how the "bucket" approach to retirement withdrawals is supposed to work?
Replies: 75
Views: 5159

Re: Can someone explain specifically how the "bucket" approach to retirement withdrawals is supposed to work?

What about for a portfolio 55/45 with a withdrawal rate of 2%? I am hoping to be able to do that in 7 years when I'm 65. I assume the income from the portfolio will fund the withdrawal rate (spending) without having to sell assets. I'm guessing that I'll need a 6 month cushion, at least for a few y...
by ThrustVectoring
Wed Nov 14, 2018 12:50 pm
Forum: Investing - Theory, News & General
Topic: Annuities
Replies: 26
Views: 3104

Re: Annuities

I'm a big fan of having an inflation-adjusted SPIA to cover the income you need that isn't covered by Social Security. Trying to cover necessary expenses with investments that will probably work out (e.g. the 4% rule) is risky. Markets could crater and go Japanese for a few decades, interest rates ...
by ThrustVectoring
Tue Nov 13, 2018 9:53 pm
Forum: Investing - Theory, News & General
Topic: online trade order limit?
Replies: 3
Views: 285

Re: online trade order limit?

VTSAX has 756 billion dollars of assets under management. A millionth of that is 756k. If you're not slinging around millions of dollars, Vanguard won't even notice. At the most, you'll need to do a wire transfer due to limits on ACH transfer sizes imposed by either Vanguard or your bank. And at any...
by ThrustVectoring
Tue Nov 13, 2018 9:08 pm
Forum: Investing - Theory, News & General
Topic: Treasury term premium estimate: negative in most of 2017, now 2018 too (NY Fed Adrian, Crump, Moench model)
Replies: 51
Views: 5919

Re: Treasury term premium estimate: negative in most of 2017, now 2018 too (NY Fed Adrian, Crump, Moench model)

Shorting is risky and maybe not a good option for something that might be a long-term trade with relatively limited upside. This would be kind of like trying to short the stock market when it's expensive, though there are some differences. Getting the timing right is hard, and you can lose a lot in...
by ThrustVectoring
Tue Nov 13, 2018 8:52 pm
Forum: Investing - Theory, News & General
Topic: Annuities
Replies: 26
Views: 3104

Re: Annuities

So, the short of annuities: There's exactly one good annuity product. That's a single-premium immediate annuity. You pay money now, get money each month until you die. These are generally priced rather fairly considering the average life expectancy of annuitants as a group. There's a healthy competi...
by ThrustVectoring
Mon Nov 12, 2018 7:04 pm
Forum: Investing - Theory, News & General
Topic: Feedback on "auto pilot" strategy
Replies: 6
Views: 825

Re: Feedback on "auto pilot" strategy

M1 Finance does exactly this already. If you want 60% VTI / 40% VXUS, and you have $500 in each and want to invest another $1000, M1 Finance will correctly buy $700 of VTI and $300 of VXUS, and will purchase partial shares to keep you fully invested. Probably better to use existing off-the-shelf too...
by ThrustVectoring
Mon Nov 12, 2018 1:49 pm
Forum: Investing - Theory, News & General
Topic: Treasury term premium estimate: negative in most of 2017, now 2018 too (NY Fed Adrian, Crump, Moench model)
Replies: 51
Views: 5919

Re: Treasury term premium estimate: negative in most of 2017, now 2018 too (NY Fed Adrian, Crump, Moench model)

Curious that Agency 10's at par are yielding 4% today, very much in line with these averages. Agencies have an additional risk that you may not be taking into account. A lot of these are mortgage backed securities, which sell an embedded call option via refinancing in falling rate environments. Als...
by ThrustVectoring
Sun Nov 11, 2018 2:20 pm
Forum: Investing - Theory, News & General
Topic: SWAN ETF - 10% Leaps / 90% Treasuries
Replies: 24
Views: 2085

Re: SWAN ETF - 10% Leaps / 90% Treasuries

Are there any tax benefits to a strategy like this in an ETF wrapper vs. doing it myself? If I have to roll LEAP contracts myself that's quite the tax drag. Yeah, the tax drag definitely makes the fund the wrong way to go. If you have the cash on hand required to not need the leverage of the call o...