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by nisiprius
Wed Jun 13, 2018 2:41 pm
Forum: Personal Finance (Not Investing)
Topic: Anyone regret paying off mortgage early?
Replies: 447
Views: 99224

Re: Anyone regret paying off mortgage early?

No, we've never regretted paying off our mortgage early. Housing security is worth a lot.
by nisiprius
Wed Jun 13, 2018 10:45 am
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

Vineviz, how did you access the Ibbotson Associates data in PortfolioVisualizer? I'm going to present some data that partly supports, partly contradicts my point of view. Here's the thing. Yes, of course it is true that under some circumstances, and using the MPT/CAPM framework, you can get portfoli...
by nisiprius
Wed Jun 13, 2018 8:22 am
Forum: Investing - Theory, News & General
Topic: Can dividends be "lost" during transition period of a rollover IRA?
Replies: 4
Views: 346

Re: Can dividends be "lost" during transition period of a rollover IRA?

No. I've made in-kind transfers a number of times. I have no idea what goes on behind the scenes, it is obviously complicated, but dividends are not lost, although they can be temporarily invisible. It's almost a nuisance. What happens in practice is that in a transfer from custodian X to custodian ...
by nisiprius
Wed Jun 13, 2018 8:05 am
Forum: Investing - Theory, News & General
Topic: Schwab's market predictions next 10 years
Replies: 20
Views: 2666

Re: Schwab's market predictions next 10 years

I don't think people should waste their time on things like this. The chances that you'll remember to check in ten years is small. And selective memory guarantees that we are all have a bias toward remembering successful predictions and forgetting failed ones. In April of 2014 Bloomberg polled 67 ec...
by nisiprius
Wed Jun 13, 2018 7:18 am
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

...You still haven’t answered why you compared the Russell 2000 index to the S&P 500 index... That wasn't me. I never made any such comparison. Whoops... sorry. Got confused trying to type the response out on my phone. Thought you were OP? My eyes are getting bad and I’m getting old... either way m...
by nisiprius
Wed Jun 13, 2018 7:13 am
Forum: Investing - Help with Personal Investments
Topic: Why don't we index the Nasdaq too?
Replies: 16
Views: 1990

Re: Why don't we index the Nasdaq too?

midareff, seriously: why would someone want "a NASDAQ tilt" rather than "a tech tilt?" That is, why would one invest in a NASDAQ-tracking fund or ETF rather than an information technology sector ETF like VGT? Can you articulate some reasons? Do you personally feel that the tech companies that list o...
by nisiprius
Wed Jun 13, 2018 7:11 am
Forum: Investing - Help with Personal Investments
Topic: Why don't we index the Nasdaq too?
Replies: 16
Views: 1990

Re: Why don't we index the Nasdaq too?

Just wondering.. we index the TSM, the S&P500, the TISM.. why not the Nasdaq? Fidelity has a fund that does that FWIW. In your own statement, you gave an example of an index fund that does. So quite obviously people do. $66 billion in QQQ. ($1.79 billion in ONEQ, Fidelity NASDAQ Composite ETF. A re...
by nisiprius
Wed Jun 13, 2018 7:04 am
Forum: Investing - Theory, News & General
Topic: Why does CAPM make sense?
Replies: 23
Views: 1030

Re: Why does CAPM make sense?

I quote Sharpe ratios a lot. 1) It makes sense to me that you absolutely need to take risk into account as well as return when you are comparing two investments. Personally, regardless of how any other investors act, I am not willing to take extra risk unless I have a conviction that there is a like...
by nisiprius
Wed Jun 13, 2018 6:13 am
Forum: Investing - Theory, News & General
Topic: 1 Year Rule - Not allowed to execute new investment strategy until 1 year has passed
Replies: 27
Views: 2415

Re: 1 Year Rule - Not allowed to execute new investment strategy until 1 year has passed

I think something like this is a good idea. I've done something similar, although not as complicated and not as strict, myself. In my case, it took two forms. First, I try to wait a month (just a month!) between deciding to do something and actually doing it. And, second: I have a rule that I make n...
by nisiprius
Tue Jun 12, 2018 10:11 pm
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

So? The probability of success is one of the most important pieces of information you need when evaluating uncertain events (like stock market returns). Payoff and costs are the other two big ones. But, by your own chosen metric, leveraged large-caps would have been superior to small-caps. If "succ...
by nisiprius
Tue Jun 12, 2018 10:09 pm
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

...Small caps have still outperformed large caps in 64 of the 73 rolling 20-year periods since 1926... So? The probability of success is one of the most important pieces of information you need when evaluating uncertain events (like stock market returns). Payoff and costs are the other two big ones...
by nisiprius
Tue Jun 12, 2018 9:50 pm
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

Culbretd wrote:
Tue Jun 12, 2018 9:27 pm
nisiprius wrote:(things)
...You still haven’t answered why you compared the Russell 2000 index to the S&P 500 index...
That wasn't me. I never made any such comparison.
by nisiprius
Tue Jun 12, 2018 8:49 pm
Forum: Investing - Help with Personal Investments
Topic: Why don't we index the Nasdaq too?
Replies: 16
Views: 1990

Re: Why don't we index the Nasdaq too?

There is also a Fidelity ETF--yes, there are Fidelity ETFs--that tracks the NASDAQ composite index (as opposed to the NASDAQ 100). It's named ONEQ. The March 2018 factsheet shows it holding 985 stocks. Which is odd because NASDAQ says the index includes over 3,000 stocks. I'm too lazy to check the p...
by nisiprius
Tue Jun 12, 2018 8:29 pm
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

...Small caps have still outperformed large caps in 64 of the 73 rolling 20-year periods since 1926... So? The probability of success is one of the most important pieces of information you need when evaluating uncertain events (like stock market returns). Payoff and costs are the other two big ones...
by nisiprius
Tue Jun 12, 2018 4:41 pm
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

...Small caps have still outperformed large caps in 64 of the 73 rolling 20-year periods since 1926... So? Large-cap stocks have had a positive return in all 73 of the 73 rolling 20-year periods since 1926. It follows that leveraged large-cap stocks would have outperformed large-cap stocks in 73 ou...
by nisiprius
Tue Jun 12, 2018 12:30 pm
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

...I can't easily check the 1926 to 1929 period... Here's the data I used. I get: bills, µ = 3.40% large-company stocks, µ = 12.056%, σ = 19.688%, Sharpe ratio = 0.440 small-company stocks, µ = 16.516%, σ = 31.515%, Sharpe ratio = 0.416 I'm not surprised that you got different numbers starting at 1...
by nisiprius
Tue Jun 12, 2018 7:55 am
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

e) According to Jeremy Siegel, all of the outperformance of small-caps is attributable to one single time period of nine years: 1975-1983. A small-cap investor obtained no benefit at all from any holding period that didn't include those years. Are you saying that is what Jeremy Siegel says, or that...
by nisiprius
Tue Jun 12, 2018 6:48 am
Forum: Investing - Theory, News & General
Topic: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]
Replies: 127
Views: 9767

Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

...I wonder if the antipathy toward DR apparently felt by many on this forum means no one really listens to what he is actually saying... serie1926 introduced the video by saying we should pay attention to what he said "Re beating the market." So I was paying attention to what he said about beating...
by nisiprius
Tue Jun 12, 2018 6:36 am
Forum: Investing - Theory, News & General
Topic: Do Small Caps Outperform?
Replies: 61
Views: 3857

Re: Do Small Caps Outperform?

Three points. 1) Be careful of your verb tenses. A common sin in investing is unconsciously drifting from "did" to "do." For any supposed characteristic of asset classes, always ask whether it is really a fixed, robust, persistent characteristic; it was true in the past, but how much confidence do y...
by nisiprius
Mon Jun 11, 2018 9:32 pm
Forum: Investing - Theory, News & General
Topic: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]
Replies: 127
Views: 9767

Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

are his boasts all anecdotal, or has he ever provided audited statements ?? 1210 Boasts about what? If referring to fund returns he is only quoting the returns directly off of American funds website. He ought to show, not that there was one American Fund that achieved a 12% CAGR and outperformed th...
by nisiprius
Mon Jun 11, 2018 8:47 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: What Makes Factors Endure
Replies: 55
Views: 3417

Re: Larry Swedroe: What Makes Factors Endure

...Taylor is mistaken to say that factors are "also known as 'smart beta'"... Definitions are slippery and elusive. "Smart beta" is even more slippery and elusive than many. I do not believe that Taylor is mistaken. Investopedia quotes Andrew Ang, of Blackrock's Factor Based Strategy group, as sayi...
by nisiprius
Mon Jun 11, 2018 7:57 pm
Forum: Investing - Theory, News & General
Topic: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]
Replies: 127
Views: 9767

Re: Interesting video from Ramsey today [How Ramsey Outperforms The Stock Market]

With regard to what he says at 4:13, first of all, not that it matters, but he is simply wrong on a fact. It happens to be a very unimportant fact. AIVSX. the American Funds Investment Company of America, inception 1/2/1934, is not "the oldest fund out there." It's a very, very old fund. However, th...
by nisiprius
Mon Jun 11, 2018 6:15 pm
Forum: Personal Finance (Not Investing)
Topic: Explanation of free credit scores
Replies: 16
Views: 1664

Re: Explanation of free credit scores

I wouldn't fuss about it too much. My Capital One Creditwise score (said to be "VantageScore 3.0" from Transunion) fluctuates for no obvious reason. I rather suspect they deliberately include what are essentially sources of random noise so that the score will fluctuate--so that the people they sell ...
by nisiprius
Mon Jun 11, 2018 1:05 pm
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 659
Views: 151669

Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

...One thing I've noticed about most discussions of the permanent portfolio is that they almost always get reduced to a discussion about the wisdom of holding gold in a portfolio, not whether the whole portfolio works or not... That's because, if you look at my chart, compared to a traditional port...
by nisiprius
Mon Jun 11, 2018 11:23 am
Forum: Investing - Help with Personal Investments
Topic: How to convince my co-worker to invest more?
Replies: 47
Views: 3243

Re: How to convince my co-worker to invest more?

It's great that he has some kind of automatic savings set up. Don't push. Praise him for what he's gotten done. It's easy to increase an automatic savings plan if you have one. Let it rest for a year or so. If he mentions getting a raise, you could suggest that whenever you get a raise is a good tim...
by nisiprius
Mon Jun 11, 2018 8:24 am
Forum: Investing - Help with Personal Investments
Topic: Strategy for a prolonged bear market
Replies: 65
Views: 5339

Re: Strategy for a prolonged bear market

Interesting question since we really don’t have prolonged bear markets. Since World War 2 there have only been two calendar year periods where the stock market has returned negative returns In consecutive years 1973-1974 and 2000-2002. 2008 is merely a blip in 15 years of positive returns. I don't ...
by nisiprius
Mon Jun 11, 2018 6:54 am
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 9372

Re: Yes, you can diversify a market portfolio

The maximum diversification portfolio takes no account of the risk-free rate of return. I understand that it isn't trying to. But from the point of view of an investor making decisions in the real world, does it really make sense that you would ignore it? I personally remember back in 2007, I was do...
by nisiprius
Mon Jun 11, 2018 6:29 am
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 9372

Re: Yes, you can diversify a market portfolio

It does not appear to come out of MPT/CAPM, nor does it correspond to the "global market portfolio" (either for the world or for the United States alone). I'm just a fly on the wall here reading and trying to follow along on this thread. Much is way over my head. Please do not take this comment as ...
by nisiprius
Sun Jun 10, 2018 3:46 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 9372

Re: Yes, you can diversify a market portfolio

...And neither one looks very much like the 60/40 portfolio that most investors might think of as "balanced"... I have been trying for years to understand the origin of the "60/40" ratio. I have not been able to find any quantitative reasoning or theory behind it. It is not theory. It is just "wisd...
by nisiprius
Sun Jun 10, 2018 12:35 pm
Forum: Investing - Help with Personal Investments
Topic: Websites As Investment Vehicles?
Replies: 13
Views: 908

Re: Websites As Investment Vehicles?

How so? I can acquire a website for a year through Godaddy for a $12 risk. No, you can't. That's just for the domain name. Hosting is going to run you on the rough order of $150/year for something really low-end, capable of running a not-for-money personal or club site. If you don't want everyone t...
by nisiprius
Sun Jun 10, 2018 10:09 am
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 9372

Re: Yes, you can diversify a market portfolio

...Your calculations are definitely incorrect... I've double-checked them. I made one ludicrous but inconsequential error: in the definition of the diversification ratio I got the numerator and denominator swapped, because I was thinking in terms of "risk reduction." The ratio is sensibly defined s...
by nisiprius
Sun Jun 10, 2018 9:55 am
Forum: Investing - Theory, News & General
Topic: Factors From Scratch
Replies: 11
Views: 892

Re: Factors From Scratch

Senior author Jesse Livermore? That requires some explanation. Who is he? He's not identified in the article nor, apparently, on the O'Shaughnessy website. (Jesse Livermore 1877-1940 was legendary speculator and stock manipulator, who made and lost fortunes several times, first in the "bucket shops,...
by nisiprius
Sun Jun 10, 2018 9:02 am
Forum: Personal Consumer Issues
Topic: Source of objective assessment of Medicare B,C,D
Replies: 33
Views: 1902

Re: Source of objective assessment of Medicare B,C,D

The most obvious issue, but I don't have a way to assess it objectively, is the "network." For traditional Medicare (often parts A, B, D, and a supplemental Medigap plan) the network is "doctors that accept Medicare assignment." For Medicare Advantage (the private option, aka Part C), it is "the pl...
by nisiprius
Sat Jun 09, 2018 8:41 pm
Forum: Investing - Theory, News & General
Topic: Multi-Asset vs. Simple Portfolio, 1970-2017
Replies: 37
Views: 3016

Re: Multi-Asset vs. Simple Portfolio, 1970-2017

1926-1998, 1922-2007, 1926-2009, 1929-2008. Four periods of time. The shortest is 73 years long, and they have 70 years of overlap. And yet the average return of the US stock market over those four periods of time varied from 9% to 11%, depending on just a few years' change in endpoints. We shouldn'...
by nisiprius
Sat Jun 09, 2018 6:41 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 9372

Re: Yes, you can diversify a market portfolio

...Nothing in classic MPT suggests that the market portfolio should be or must be the most diversified possible portfolio... A Google search turns up authorities that say that the market portfolio is the most diversified possible portfolio. It is not a straw man. According to one of these authoriti...
by nisiprius
Sat Jun 09, 2018 4:06 pm
Forum: Investing - Theory, News & General
Topic: Benjamin Graham's lesson on timing
Replies: 23
Views: 2751

Re: Benjamin Graham's lesson on timing

Graham (later in his career): “ In the short term, the market is a voting machine; in the long term it is a weighing machine.” In his books, he did say, in more than one place, that in the short term, the market is a voting machine, not a weighing machine. According to Jason Zweig, nobody has been ...
by nisiprius
Sat Jun 09, 2018 3:18 pm
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 659
Views: 151669

Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

One important issue about the Permanent Portfolio is that it has evolved and changed and gone through different versions. The original Permanent Portfolio was embodied in the Permanent Portfolio mutual fund, PRPFX. I think it is a fair example of "the" Permanent Portfolio--in real life, not in backt...
by nisiprius
Sat Jun 09, 2018 10:53 am
Forum: Personal Finance (Not Investing)
Topic: Are you including SS in your planning model? Are the benefits really that high?
Replies: 148
Views: 11106

Re: Are you including SS in your planning model? Are the benefits really that high?

...I have not used social security in any retirement planing model since I began modeling back in my 20s. Just today I tried an SSA calculator to estimate my benefits. I told it I would stop earning at 54 and entered my yearly earnings up to this year. I'm 44. The result was a monthly benefit of $1...
by nisiprius
Fri Jun 08, 2018 4:55 pm
Forum: Investing - Theory, News & General
Topic: S&P 500 Compromised - Committee Chooses to Break Their Own Rules
Replies: 5
Views: 1404

Re: S&P 500 Compromised - Committee Chooses to Break Their Own Rules

In this forum, I don't think very many people "trust" the S&P 500 to be the best of all possible proxies for the US stock market. I think the most common recommendation is to use a total stock market index, such as the Vanguard Total Stock Market Index Fund, the Fidelity Total Market Index Fund, the...
by nisiprius
Fri Jun 08, 2018 4:09 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 9372

Re: Yes, you can diversify a market portfolio

Note that as I understand it, Vineviz is advocating for minimum Diversification Ratio®, aka Maximum Diversification®. This is different from the MPT optimum. I suspect that the difference is not very important in real life, but I assume that vineviz, and the commercial firm that developed the appro...
by nisiprius
Fri Jun 08, 2018 3:25 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 9372

Re: Yes, you can diversify a market portfolio

With MPT, imagine the yellow line swinging like a gate, with the hinge at the blue dot, which represents the return available from a "riskless" (zero standard deviation) asset. You swing it down until it just touches the efficient frontier (black curve), and the point where it touches, the yellow do...
by nisiprius
Fri Jun 08, 2018 2:22 pm
Forum: Investing - Theory, News & General
Topic: Yes, you can diversify a market portfolio
Replies: 190
Views: 9372

Re: Yes, you can diversify a market portfolio

I think too many people are focusing on historical past performance in this thread. And sectors and individual stocks miss the point. What is significant is modern portfolio theory, how investments with unique sources of return mix in a portfolio, correlations, standard deviations, compounded retur...
by nisiprius
Fri Jun 08, 2018 2:16 pm
Forum: Investing - Theory, News & General
Topic: What is the cap-weighted AA?
Replies: 4
Views: 418

Re: What is the cap-weighted AA?

There have been various discussions of this off and on, and the buzzword you might be looking for is "the global market portfolio," because the people who are interested in investing in this way are mostly interested in doing it globally. Thus, this thread discusses this paper . SimpleGift created t...
by nisiprius
Fri Jun 08, 2018 9:36 am
Forum: Investing - Theory, News & General
Topic: Unnecessary Complexity? Your thoughts please.
Replies: 13
Views: 1203

Re: Unnecessary Complexity? Your thoughts please.

The debate will never end, but we can talk about the decision process for choosing simpler versus more complex portfolios. There are three elements: 1) We can look at past returns over appropriately long time periods. 2) We can look at variability and uncertainty of past returns when we choose diffe...
by nisiprius
Fri Jun 08, 2018 6:51 am
Forum: Personal Consumer Issues
Topic: Boston trip with small kids
Replies: 15
Views: 1236

Re: Boston trip with small kids

I think you're aware that Edaville is a LOOOOONNNNNNG way from Boston, sixty miles, hour-and-a-half drive. It would work well as a combination with Plimoth Plantation--probably not on the same day. Plimoth which is not for little kids but I think they could tolerate it. (Plimoth Plantation is sensat...
by nisiprius
Fri Jun 08, 2018 6:35 am
Forum: Investing - Help with Personal Investments
Topic: Should i continue my investments even with low savings?
Replies: 5
Views: 806

Re: Should i continue my investments even with low savings?

$8,000 isn't a fortune, but it's definitely an achievement. You are better off than most Americans: Most Americans can't cover a $1,000 emergency. The most important thing, in my opinion, is that you both keep saving and investing regularly, if possible automatically , even if it is only a small amo...
by nisiprius
Thu Jun 07, 2018 4:28 pm
Forum: Investing - Theory, News & General
Topic: Will the real MSCI EAFE index please stand up?
Replies: 13
Views: 626

Re: Will the real MSCI EAFE index please stand up?

I want a general-purpose all-round data set that I can use in discussions of the "benefits of international diversification." As I added to my remarks while you were replying, the Ibbotson SBBI yearbook uses the "gross" numbers--without any explanation or discussion--so I guess that's what they thi...
by nisiprius
Thu Jun 07, 2018 4:23 pm
Forum: Investing - Theory, News & General
Topic: The Global Market Portfolio, 1959-2015
Replies: 18
Views: 1564

Re: The Global Market Portfolio, 1959-2015

Is there such a thing as a "global market portfolio" if there isn't a single, unified global market? I could place an order with my broker in the next 15 minutes for ETFs that will provide access to every asset class the paper describes. Using only my iPhone. So, I'd say "yes, there is a global mar...
by nisiprius
Thu Jun 07, 2018 3:41 pm
Forum: Investing - Theory, News & General
Topic: The Global Market Portfolio, 1959-2015
Replies: 18
Views: 1564

Re: The Global Market Portfolio, 1959-2015

Is there such a thing as a "global market portfolio" if there isn't a single, unified global market? The argument for indexing is based on the idea of a portfolio that mirrors the market portfolio of a market in which assets are traded freely, rapidly, and frictionlessly, allowing economists to talk...
by nisiprius
Thu Jun 07, 2018 3:28 pm
Forum: Investing - Theory, News & General
Topic: Will the real MSCI EAFE index please stand up?
Replies: 13
Views: 626

Re: Will the real MSCI EAFE index please stand up?

Also, since I am generally arguing that the historical benefits from international diversification have been small, the gross index should be slightly more favorable to international stocks than the net index, and would therefore be the conservative choice. And of course my final reason is that I do...