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by ddb
Wed Mar 07, 2007 10:27 am
Forum: Personal Investments
Topic: AA if tracking error and risk tolerance not a factor
Replies: 19
Views: 7457

BrianTH wrote:ddb,

That doesn't sound all that cheap to me: exactly how does one go about buying EM stocks not listed on US exchanges? Also, you would have to update the basket as some of your stocks migrated out of the SV category.
Yeah, you're right. I just looked at the list of DFA Emerging Small Cap holdings (as of 11/30/2006), and there are no ADRs on there. See page 190 of the following file:

http://www.dfaus.com/downloads/pub/pdf/ ... report.pdf

- DDB
by ddb
Wed Mar 07, 2007 9:55 am
Forum: Personal Investments
Topic: AA if tracking error and risk tolerance not a factor
Replies: 19
Views: 7457

EM SV

BrianTH wrote:Currently I think that would probably be US SV, unless you could find a cheap way to invest in EM SV (I don't know of any such vehicle).
Well, you could build your own portfolio of EM SV stocks. Just get ahold of the DFA Emerging Small Cap Fund annual report and buy some of the holdings reported there. I'd think that 30-50 of the holdings would be sufficient to reduce unsystematic risk to an acceptable level.

- DDB
by ddb
Wed Mar 07, 2007 9:12 am
Forum: Personal Investments
Topic: AA if tracking error and risk tolerance not a factor
Replies: 19
Views: 7457

Re: AA if tracking error and risk tolerance not a factor

Hammy:

Setting aside your contradictory assumptions (unlimited risk tolerance, yet ruling out speculative strategies, etc.), and ignoring tax efficiency, my favorite high-return, all-weather portfolio based on backtesting is the following:

20%-40% International Small Cap stocks (better yet, emerging market small caps stocks)
remainder in TIPs

You have two asset classes with low correlation, one of which should give very high long-term returns, and one which provdes good portfolio protection. The portfolio should have very high tracking error with the US equity market, but who cares?

- DDB
by ddb
Wed Mar 07, 2007 8:41 am
Forum: Investing - Theory, News & General
Topic: WSJ: Bogle Sees Tough Times Ahead
Replies: 15
Views: 7396

why the inconsistency?

Why is Bogle such a staunch advocate of cap weighting one's investments when it comes to US investing, but not with anything else? He suggests no more than 20% of equities be held overseas, even though far more than 20% of the world's equity market cap lies outside the US (I've seen estimate ranging from 40% to 60% recently). Further, invest 50% of your international equity position in emerging markets? This is nowhere NEAR appropriate if you believe in cap-weighting your holdings.

Color me confused...

- DDB
by ddb
Tue Mar 06, 2007 4:48 pm
Forum: Investing - Theory, News & General
Topic: Just beating the market is too easy
Replies: 7
Views: 3567

I'm astounded

Wow, those are some of the most idiotic comments I've read in an investing article in quite a while.

My favorite part is how the author insists on using "the market" and "S&P 500" as interchangeable terms. Apparently, "The Market" does not include small companies, international stocks, or fixed income.
by ddb
Mon Mar 05, 2007 3:09 pm
Forum: Investing - Theory, News & General
Topic: Exerpts from Jack Bogle's latest book
Replies: 20
Views: 10528

Re: Exerpts from Jack Bogle's latest book

Taylor Larimore wrote:..."The Little Book of Common Sense Investing."... is full of sound advice from one of our most knowledgeable and practical investment authorities.
Taylor: Does the book have any new and/or useful information, or is it directed towards the novice investor? In other words, for someone who has read most or all of the DH-recommended books and already buys into the passive/low-cost/diversification philosophy, is this book worth the money? What's different about it?
Having gone cold turkey on the M* forum, I'm resisting the temptation to click on the link!

- DDB
by ddb
Mon Mar 05, 2007 12:32 pm
Forum: Personal Investments
Topic: Vanguards Fees and refusal of Admiral Shares in 403 b accoun
Replies: 6
Views: 4527

Re: why?

tfb wrote:If Vanguard still beats everywhere else, then why complain?
That's a dangerous philosophy. The US is the greatest country in which to live, in my opinion, but I'll still complain when the US government does something with which I disagree.

- DDB
by ddb
Wed Feb 28, 2007 2:24 pm
Forum: Personal Investments
Topic: How much risk do I need to take?
Replies: 20
Views: 10783

another consideration

Not yet mentioned in this thread is the option of using some of your assets to purchase an immediate annuity. It may be worth looking at using 10%-50% of your nest egg to purchase an inflation-adjusted income stream for the rest of your life.

- DDB
by ddb
Wed Feb 28, 2007 8:51 am
Forum: Investing - Theory, News & General
Topic: How to become a top Smith Barney producer
Replies: 6
Views: 4444

ha, funny post

Unfortunately, as the years go on, the performance reports from SmithBarney (assuming it's some sort of fee-based manage account) will confirm increasing underperformance compared to a relevent blended benchmark. I know a guy who has his company's $20 million pension plan with Merrill Lynch, invested in three separately-managed account (US Large Value, US Large Blend, and Fixed Income). The firm is paying 0.75% per year for this investment wisdom, and the performance reports show them trailing a benchmark of 70% S&P 500/30% Lehman Bond Aggregate Bond by 4% per year for the past 5 years, net of costs. This doesn't even factor in the severe opportunity costs they've experienced by not having any exposure to small cap or foreign stocks. Ou...
by ddb
Tue Feb 27, 2007 10:36 am
Forum: Investing - Theory, News & General
Topic: What % of current income for retirement?
Replies: 19
Views: 10182

need to quantify the question

Personally, I'd like my 'take-home' retirement income to be as much as my 'take-home' employment income.

Take-home employment income is equal to gross wages minus FICA taxes minus retirement plan/IRA savings minus personal savings minus federal taxes minus state taxes.

Take-home retirement income is equal to SS payments plus investment withdrawals plus pension payments minus federal taxes minus state taxes.

Frankly, I would like the retirement figure to be greater than the employment figure, because of having all the extra time to spend the money.

- DDB