Search found 8073 matches

by Doc
Fri Oct 24, 2008 6:35 pm
Forum: Investing - Theory, News & General
Topic: TIPS rally
Replies: 157
Views: 28544

Why can't you buy tips and sell bond fund on the same day? They both settle on the next business day. You can as long as you don't use Vanguard for your entire portfolio. The movement form VBS to Vanguard the fund house takes 1 to 3 days. It should take only 1 to 3 minutes (shorter if you type fast...
by Doc
Thu Oct 23, 2008 3:18 pm
Forum: Investing - Theory, News & General
Topic: 2 questions on bond fund duration
Replies: 18
Views: 3488

If the bond fund paid out all the principle of maturing bonds At some point, it seems like such a fund should be able to have a guaranteed total return. Given today's bond portfolio and no defaults the time you are looking for is the duration. But tomorrow the duration will be different even if the...
by Doc
Thu Oct 23, 2008 2:49 pm
Forum: Investing - Theory, News & General
Topic: 2 questions on bond fund duration
Replies: 18
Views: 3488

Intuitively, I think 2 X duration should be an upper bound. Is there any way to model or prove something like this? Applying intution to the first derivative of a complicated cash flow analysis might lead one to erroneous conclusions. :wink: If the bond fund paid out all the principle of maturing b...
by Doc
Thu Oct 23, 2008 2:29 pm
Forum: Investing - Theory, News & General
Topic: 2 questions on bond fund duration
Replies: 18
Views: 3488

Another way to say it is maturity is the time it takes for you to get back your money and duration is the time to get back your money considering the time value of money ie. discounted. This is reflected in Gummys equations aand TFB's comment. Obviously for a single bond this definition doesn't lite...
by Doc
Thu Oct 23, 2008 2:03 pm
Forum: Investing - Theory, News & General
Topic: What does "Treasury/Agency" mean in fund portfolio
Replies: 4
Views: 1337

Taxation at the state level can be different for the two.
by Doc
Thu Oct 23, 2008 1:09 pm
Forum: Investing - Theory, News & General
Topic: TIPS - Inflation Indexed Income for Uncle Sam
Replies: 12
Views: 1878

Even more unfair in my opinion is that the cost basis for computing capital gains is not adjusted for inflation when computing capital gains tax. With regard to TIPS the inflation adjustment is taxed annually as "Original Interest Discout" OID and is ordinary income just like nominal bond coupon pa...
by Doc
Thu Oct 23, 2008 12:48 pm
Forum: Investing - Theory, News & General
Topic: Do TIPS smell deflation?
Replies: 26
Views: 6781

Do TIPS smell deflation? NO. (Short term TIPS excepted.) The recent run up in TIPS yield or decrease in price or decrease in spread between nominal treasuries and TIPS or TIPS “expected inflation calculation” are all different ways to describe the same thing. The market is unsure and there has been ...
by Doc
Wed Oct 22, 2008 3:00 pm
Forum: Investing - Theory, News & General
Topic: When to invest in TIPS
Replies: 21
Views: 3922

Sidney wrote: I suspect the ....
No need to just "suspect". They are not comparable.

The 30 day yield is used to compare similar funds returns over the last month. YTM is the discounted rate of return of indvidual bonds in the future.
by Doc
Tue Oct 21, 2008 10:31 am
Forum: Investing - Theory, News & General
Topic: Any corporate bond yield shoppers out there?
Replies: 1
Views: 619

I bought some ishares Leyman intermediate credit bond ETF (pure corporates) earlier this moth. It was a purchase planed for January when I had a treasury maturing. I just made the move early because of the spike in credit spread due to the crisis. I'm not changing my allocation plan based on these s...
by Doc
Tue Oct 21, 2008 10:21 am
Forum: Investing - Theory, News & General
Topic: TIPS- Phantom Income vs. Deflation-Taxes
Replies: 5
Views: 1301

This happened to me a couple of years ago with an individual note. The 1099 DID NOT reflect the loss. The amount was too small to worry about so I didn't. The brokerage tax statements that I am familiar with have a caveat regarding this type of incomce something to the effect of "your actual income ...
by Doc
Mon Oct 20, 2008 12:22 pm
Forum: Investing - Theory, News & General
Topic: Why am I buying TIPS?
Replies: 40
Views: 6239

You always get the inflation adjusted coupon payment but never less than the stated coupon.

At maturity you always get the inflation adusted principle but never less than the face value. If you have bought on the secondary market the principle at maturity may be more or less than what you paid.
by Doc
Mon Oct 20, 2008 12:15 pm
Forum: Investing - Theory, News & General
Topic: Tips- Bonds, Funds, ETF's?
Replies: 3
Views: 1063

Depending on which fund/etf you are thinking of you could save $30 to $100 a year or so with a ladder. In my opinion that's not worth the hassel. On the other hand if you time frame is 20 years (or five) you might not find a fund/etf that meets you needs. You could also do both. Buy some long term b...
by Doc
Mon Oct 20, 2008 11:28 am
Forum: Investing - Theory, News & General
Topic: Tips- Bonds, Funds, ETF's?
Replies: 3
Views: 1063

Re: Tips- Bonds, Funds, ETF's?

What are the advantages and disadvantages of each for the small investor? You need to define "small" to get a definitive answer. The main difference between a portfolio of individual TIPS (in a ladder for example) on the one hand and a fund or ETF on the other is that with the former you get to cho...
by Doc
Sat Oct 18, 2008 11:40 am
Forum: Investing - Theory, News & General
Topic: Declining TIPS Principal
Replies: 14
Views: 2514

I have to think through the question of whether a TIPS bond ladder is really any different from a fund, even though you're holding the TIPS to maturity. ... The major difference between a TIPS ladder and a fund is that with the ladder you get to choose the duration and with the fund the fund manage...
by Doc
Sat Oct 18, 2008 11:19 am
Forum: Investing - Theory, News & General
Topic: Bloomberg: TIPS over 3.1%
Replies: 172
Views: 39012

Isn't this a good thing for those of us that are "smaller investors"? We have about 25% of our total portfolio in TIPS. Seeing their value go down by 10% during the current "liquidity" crisis when short term treasuries barely moved I wouldn't consider a "good thing". As a small investor I hold trea...
by Doc
Fri Oct 17, 2008 3:30 pm
Forum: Investing - Theory, News & General
Topic: Bloomberg: TIPS over 3.1%
Replies: 172
Views: 39012

Liquidity

Re liquidity.

The 3 month treasury yield was up 37 basis points today. I would expect that the great TIPS yield will be disapearing soon. Assuming that the current high yield is due to liquidity of course.
by Doc
Fri Oct 17, 2008 12:02 pm
Forum: Investing - Theory, News & General
Topic: Bloomberg: TIPS over 3.1%
Replies: 172
Views: 39012

TIPS Liquidity Valuethinker wrote: “The general flight to short term liquidity in all assets has hit TIPS, which are quite illiquid: a small amount of selling goes a long way.” Larry wrote: “TIPS are in fact VERY HIGHLY LIQUID You can buy and sell on very thin spreads in large amounts, just not as l...
by Doc
Wed Oct 15, 2008 1:09 pm
Forum: Investing - Theory, News & General
Topic: Bloomberg: TIPS over 3.1%
Replies: 172
Views: 39012

Liqidity Issues

How old is this anyway? The top of the page says: "Wednesday, October 15, 2008" but the byline has "Published: October 16, 1997" as was pointed out by several people. I went back to my original source and the lead is "ARTICLES ABOUT DERIVATIVES (FINANCIAL INSTRUMENTS)" I guess it's my bad but who wo...
by Doc
Wed Oct 15, 2008 12:02 pm
Forum: Investing - Theory, News & General
Topic: Bloomberg: TIPS over 3.1%
Replies: 172
Views: 39012

Liquidity Issues

Larry mentioned a few days ago that the reduced spread between nominal treasuries and TIPS might be partially due to the lower liquidity of TIPS in this uncertain market. The New York Times has an article in today’s business section about a proposed accounting rule change regarding TIPS that might a...
by Doc
Fri Sep 28, 2007 7:08 pm
Forum: Investing - Help with Personal Investments
Topic: Fund placement error in Investment Planning Sticky?
Replies: 49
Views: 13419

Re: Here's the change

I edited the post in question. Here's the new wording: Here's is part of the old wording: Investing Priority The general rule of thumb for investing priority is: 1. 401k/403b up to the company match 2. Max out Roth 3. Max out 401k/403b 4. Taxable Investing Gee whiz it is still there. Note: I have r...
by Doc
Fri Sep 28, 2007 10:45 am
Forum: Investing - Help with Personal Investments
Topic: Fund placement error in Investment Planning Sticky?
Replies: 49
Views: 13419

I'm surprised by your comment. You made a big issue over this and now you don't want to offer any suggestions when someone is listening? Alex is not looking for solutions, just suggestions. Now is your chance. If you look at Taylor's post you will see that there is a large gap in the two sides. You...
by Doc
Fri Sep 28, 2007 10:16 am
Forum: Investing - Help with Personal Investments
Topic: Fund placement error in Investment Planning Sticky?
Replies: 49
Views: 13419

Taylor has a post above titled “Experts Agree with Laura” The general rule of thumb for investing priority is: 1. 401k/403b up to the company match 2. Max out Roth 3. Max out 401k/403b 4. Taxable Investing He then goes on to list several sources. On the other side we have this: Factors Favoring a Tr...
by Doc
Thu Sep 27, 2007 5:43 pm
Forum: Investing - Help with Personal Investments
Topic: Fund placement error in Investment Planning Sticky?
Replies: 49
Views: 13419

We are willing to modify the section in question. If you feel the wording is inaccurate, please post your preferred alternative. I don't think this is a good solution at the present time. There is no consensus as to what the words or the math mean. It needs some debate. It needs a lot of debate. Wh...
by Doc
Thu Sep 27, 2007 8:27 am
Forum: Investing - Help with Personal Investments
Topic: Fund placement error in Investment Planning Sticky?
Replies: 49
Views: 13419

Just shoot the messenger.

First, I did not call Laura “Big Brother”. It is the administrators of this site that put the “lock” on Laura’s post. It is them that I have the beef with. The “Rules” are controversial and it was the administrators that chose to make them non debatable not Laura. My first comment was in praise of L...
by Doc
Wed Sep 26, 2007 7:02 pm
Forum: Investing - Theory, News & General
Topic: CDs at Vanguard - 5.15% for 3 months, 6 months
Replies: 13
Views: 3172

Ken Schwartz wrote:
Efficient markets theory doesn't apply, because a banker's decision has nothing to do with a market. A perfectly safe bank could choose to pay high interest rates to gather assets, not for immediate profit.
Ken, thanks to you also.
by Doc
Wed Sep 26, 2007 6:59 pm
Forum: Investing - Help with Personal Investments
Topic: Fund placement error in Investment Planning Sticky?
Replies: 49
Views: 13419

Fund placement error in Investment Planning Sticky?

Note: I have retitled this post to better reflect the content of the thread - site admin Alex Frakt Laura recently published an excellent post on Investment Planning Unfortunately it has a section entitled “Portfolio Construction” that contains the following: 4-Step Rule for Tax Efficient Fund Plac...
by Doc
Wed Sep 26, 2007 6:28 pm
Forum: Investing - Theory, News & General
Topic: CDs at Vanguard - 5.15% for 3 months, 6 months
Replies: 13
Views: 3172

Valuethinker wrote:
It's an asymmetry that a small investor can exploit.
:oops: It was just the other day that I was opining on free lunch in the bond market due to what you are calling asymmetry. My bad.

Thanks for setting me straight.
by Doc
Wed Sep 26, 2007 2:57 pm
Forum: Investing - Theory, News & General
Topic: CDs at Vanguard - 5.15% for 3 months, 6 months
Replies: 13
Views: 3172

These CD vs. bond questions always bother me. Do we all believe in efficient market theory or not? If a CD is paying a higher rate than a Treasury (after correcting for state income tax) it is because the risk is higher. It may be something other than credit risk but it is something.
by Doc
Wed Sep 26, 2007 2:49 pm
Forum: Investing - Theory, News & General
Topic: Collect Call Number for Vanguard?
Replies: 11
Views: 2172

I will be moving outside of USA for ever and will maintain my IRA with Vanguard. There are restrictions to selling domestic securites to non-residents. I don't know if this applies to US citizens permanently living abroad. (It does not apply to US citizens temporarily living abroad but I think you ...
by Doc
Wed Sep 26, 2007 2:41 pm
Forum: Investing - Theory, News & General
Topic: Best way to invest in TIPS
Replies: 13
Views: 3456

Re: Buy Both TIPS and Fund

If the rates shoot up between auctions, buy in the secondary market to lock in good rates. However there are spreads and commissions. Also with individual TIPS it is hard to reinvest the interest, so... Another advantage of the Vanguard TIPS funds are the automatic reinvestment of dividends in the ...
by Doc
Wed Sep 26, 2007 11:42 am
Forum: Investing - Theory, News & General
Topic: Best way to invest in TIPS
Replies: 13
Views: 3456

Re: Best way to invest in TIPS

I really hate watching the NAV vary in a bond fund. Then don't buy individual bonds through a broker either because they have the "bad" habit of reporting the market price of the bonds on your monthly statements. I don't think the Treasury gives you periodic statements so you won't have to watch th...
by Doc
Wed Sep 26, 2007 11:36 am
Forum: Investing - Theory, News & General
Topic: Sell level in Larry's TIPS strategy?
Replies: 80
Views: 21404

Sure, but do you mean TIP, the TIPS ETF, or individual TIPS? Larry says control duration therefore use individual TIPS. Rick says forgetaboutit - it doesn't matter in which way you make the purchase. TIPS are one of the cheapest securities to trade and therefore TIPS funds have some of the lowest e...
by Doc
Tue Sep 25, 2007 4:02 pm
Forum: Investing - Theory, News & General
Topic: Best way to invest in TIPS
Replies: 13
Views: 3456

Depending on how much time you want to spend on your portfolio you might want to buy TIPS individually and match the maturity schedule outlined by Larry http://diehards.org/forum/viewtopic.php?p=71454#71454 using Mel's purchasing method. You want to have an average maturity that is somewhat the same...
by Doc
Tue Sep 25, 2007 11:24 am
Forum: Investing - Help with Personal Investments
Topic: Bond Funds for 35 year old - advice please
Replies: 19
Views: 3690

Vanguard might not, by iShares has about 6-7 ETFs dedicated just to Treasury indexes of varying maturities. Watchnerd, have you been buying any of these? What's your experience with premiums and spreads? I bought some of the relatively new 1-10 Credit Bond shares last week and the spread was neglib...
by Doc
Tue Sep 25, 2007 11:07 am
Forum: Investing - Theory, News & General
Topic: Larry, Mel, others? TIPS in secondary market
Replies: 14
Views: 3214

Zigkelton wrote: - then, is the 5% premium claimed as loss proportionally over life of bond, or only at time of maturity, or some other way? Yes. The premium is amortized over the remaining life of the bond and deducted as an adjustment to income on I think schedule B. It’s called “amortized bond pr...
by Doc
Mon Sep 24, 2007 7:06 pm
Forum: Investing - Theory, News & General
Topic: Larry, Mel, others? TIPS in secondary market
Replies: 14
Views: 3214

Doc, Could you perhaps provide a numbers / math example that shows how this tax effect works? For those of who are in decumulation phase and don't have lots of room in tax-deferred, what you pointed out about taxes seems very relevant. Thanks! Zig First let me say that although Larry and I live in ...
by Doc
Mon Sep 24, 2007 11:54 am
Forum: Investing - Help with Personal Investments
Topic: Tax Managed Small Cap and High Turnover Ratio
Replies: 14
Views: 2633

Re: Tax Managed Small Cap and High Turnover Ratio

The Mutual Fund Investor wrote: Higher turnover does not always result in high capital gains distributions and tax inefficiency.
I think the concern might be higher transaction costs due to the high turnover. Just guessing. :D
by Doc
Mon Sep 24, 2007 11:03 am
Forum: Investing - Theory, News & General
Topic: Larry, Mel, others? TIPS in secondary market
Replies: 14
Views: 3214

ProfH wrote:Also, does it make any difference if the yield is greater than or less than the coupon?
That difference is what drives the premium or discount.
by Doc
Mon Sep 24, 2007 11:01 am
Forum: Investing - Theory, News & General
Topic: Larry, Mel, others? TIPS in secondary market
Replies: 14
Views: 3214

Having said that all else is not always equal. You have different maturity dates too. In your first example the maturity difference is only three months--so I would go with the higher yielding bond, even though longer and rates relatively low--but maturity difference is very small. You get four bp ...
by Doc
Sun Sep 23, 2007 2:57 pm
Forum: Investing - Theory, News & General
Topic: I hate I-bonds
Replies: 24
Views: 6634

Mel Lindauer wrote:
FYI, I haven't been recommending I Bonds for quite some time now, since, as you say, there definitely has been a sea change from the good old days.
I knew that. I think some people still haven't realized the change in the current.
by Doc
Sun Sep 23, 2007 2:32 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Funds for 35 year old - advice please
Replies: 19
Views: 3690

watchnerd wrote:This is going to sound heretical, but:
If you want to stick to Treasuries and TIPS, I agree, index all the way.
I don't know if you are a heretic or not but Vanguard does not offer a Treasury index fund. :P
by Doc
Sun Sep 23, 2007 2:25 pm
Forum: Investing - Theory, News & General
Topic: I hate I-bonds
Replies: 24
Views: 6634

... some of my I Bonds are actually paying around the same or even more than my TIPS, and I think that's what you were getting at. Hi Mel, That's what I thought. The spread was small or even reversed when these instruments were first introduced as well as having real rates far above the market rate...
by Doc
Sun Sep 23, 2007 1:08 pm
Forum: Investing - Theory, News & General
Topic: Foreign Funds-Index versus Active
Replies: 29
Views: 7425

I have done very well ... Indexing is easy and lets one concentrate on other things in life. How did you define "very well", by total return? :D I wholeheartedly agree with the second part of your statement. It is easy and it let's you do other things. Most people will do very well investing in low...
by Doc
Sun Sep 23, 2007 12:40 pm
Forum: Investing - Theory, News & General
Topic: Foreign Funds-Index versus Active
Replies: 29
Views: 7425

Your comment about active funds that don't necessarily try to beat their index but protect assets in a down market intrigues me. Could you elaborate on that a little? Maybe you are referring to long/short funds. I would really be interested in hearing about some of the active funds you like. Most f...
by Doc
Sun Sep 23, 2007 11:15 am
Forum: Investing - Theory, News & General
Topic: I hate I-bonds
Replies: 24
Views: 6634

Mel Lindauer wrote: PS - I love my truckload of risk-free I Bonds!
OK Mel, if I had all those high coupon I-bonds I would love them too. But just out of curiosity, what was the coupon on TIPS when you bought the Ibonds? :)
by Doc
Sun Sep 23, 2007 11:05 am
Forum: Investing - Theory, News & General
Topic: Foreign Funds-Index versus Active
Replies: 29
Views: 7425

Re: Index vs managed funds

I would like to point out that it your statement is not exactly correct and it is not a mathematical certainty as you suppose. Hi Edge. Taylor and I usually have a different take on what the original Sharpe quote implies but in this case I agree with Taylor. Sharpe carefully defined his comments su...
by Doc
Sat Sep 22, 2007 4:38 pm
Forum: Investing - Theory, News & General
Topic: I hate I-bonds
Replies: 24
Views: 6634

JDCPAEsq is from
Location: Southwest Florida
John, just where is southwest Florida? On my map to go west you have to be north. :?
by Doc
Fri Sep 21, 2007 7:31 pm
Forum: Investing - Theory, News & General
Topic: Foreign Funds-Index versus Active
Replies: 29
Views: 7425

Taylor wrote: It is mathematically certain that the average index fund will have higher returns than the average managed fund in ANY asset class using the same stocks or bonds. Taylor is absolutely correct: "higher returns than the average managed fund in ANY asset class using the same stocks or bon...
by Doc
Fri Sep 21, 2007 1:53 pm
Forum: Investing - Theory, News & General
Topic: Foreign Funds-Index versus Active
Replies: 29
Views: 7425

Re: Foreign Funds-Index versus Active

I wish I knew who started the myth that certain asset classes are less efficient and therefore more appropriate for actively-managed funds. I think it was because most of the actively managed small value funds "beat" the Russell 2000 Value Index for many years. (Maybe it was all of the small cap fu...
by Doc
Fri Sep 21, 2007 1:40 pm
Forum: Investing - Theory, News & General
Topic: Foreign Funds-Index versus Active
Replies: 29
Views: 7425

Re: Foreign Funds-Index versus Active

So I am curious are there many of you who subscribe to the belief that you can beat the market....over time....in foreign active funds or US small cap funds? Why does everybody think that the only purpose of active funds is to "beat the market"? Vanguard has dozens of bond funds yet only a few are ...