Search found 466 matches

by Dominic
Mon Mar 15, 2021 11:07 pm
Forum: Personal Finance (Not Investing)
Topic: Assessing Long Term Disability Insurance Plans
Replies: 10
Views: 1194

Re: Assessing Long Term Disability Insurance Plans

Self-insuring is usually cheaper than paying for insurance, and 6-12 months is a short enough period of time that you can draw from your emergency fund or savings to wait out the elimination period. (You might also have short-term disability insurance via your state or employer to cover the first few months.) I'm not an expert, but it looks like it's an own-occupation policy and covers the partial disability situation that the wiki's checklist is referring to. I would think that own-occupation riders don't add much to the cost for people in "low-risk" occupations. I don't think that coverage past 65 is necessary, since 60% of your income should be enough to cover expenses and savings. I do think it's worth shopping around. I'm in ...
by Dominic
Fri Mar 12, 2021 10:37 pm
Forum: Investing - Theory, News & General
Topic: Have commodities been fully debunked?
Replies: 37
Views: 4551

Re: Have commodities been fully debunked?

In theory, you have three components of return with a CCF fund: 1) Roll yield - Futures contracts should appreciate as they approach expiration. This makes sense whether you look at the contract as a bond approaching maturity, or as an insurance product for producers where risk decreases with time horizon. 2) Collateral yield - Return on cash held as collateral for the futures contracts. 3) Changes in spot price - The speculative component of return. There are some obvious issues with all of these: 1) A lot of commodities have upward sloping futures curves. Maybe consumers are hedging more than producers, or maybe speciation has broken these markets. Supposedly the ratio of speculators to hedgers hasn't really changed, but I find that hard ...
by Dominic
Fri Mar 05, 2021 11:21 pm
Forum: Personal Consumer Issues
Topic: How to make strong coffee equivalent to Starbucks for cheaper?
Replies: 149
Views: 20564

Re: How to make strong coffee equivalent to Starbucks for cheaper?

Regarding light vs. dark roast, I suspect that contrary to popular belief, dark roasts have higher caffeine than light roasts. However, the effect is marginal. Suppose I take two identical bags of coffee, and roast one light and one dark. More roasting removes more water content, and also causes more expansion of the coffee. Therefore, the light roast is heavier and smaller in volume. However, caffeine is stable at high temperatures, so the caffeine content is essentially identical. Coffee is usually made by mass. If I take 20g of each roast, I will need more dark roast beans than light roast beans. More beans means more caffeine. That said, the difference in mass isn't enough that people would notice the change in caffeine content. If you ...
by Dominic
Thu Mar 04, 2021 9:11 pm
Forum: Personal Investments
Topic: Mega Roth w/ high ER vs Taxable Account
Replies: 10
Views: 842

Re: Mega Roth w/ high ER vs Taxable Account

You're currently in the 15% capital gains tax bracket, and the dividend yield is projected to be 1.5%. Between taxes on dividends and the expense ratio, Vanguard total stock market index is going to cost you about 0.25% per year, and you'll pay capital gains taxes on the sale. In the mega backdoor Roth, you'll pay 0.45%, but only until you change employers and roll over to an IRA, where you'll pay 0.03% on the Vanguard fund. On top of that, you won't have to pay taxes when you withdraw. With respect to performance, it looks like Columbia Large Cap Index is an S&P 500 fund, and Columbia Small Cap Index is an S&P 600 fund. Not as diversified as Vanguard's total stock market index, but at least you're getting high-quality passive funds...
by Dominic
Tue Mar 02, 2021 7:57 pm
Forum: Investing - Theory, News & General
Topic: How crazy is it to hold 100% equities until retirement? (ERN)
Replies: 540
Views: 32587

Re: How crazy is it to hold 100% equities until retirement? (ERN)

willthrill81 wrote: Tue Mar 02, 2021 10:36 am It's not crazy. The math supports it.

The problem is investor behavior.
The math even supports leverage.

I know that I "should" be at least 100% equities, but I keep a small bond allocation just to keep my irrational brain happy.
by Dominic
Mon Mar 01, 2021 7:55 pm
Forum: Personal Finance (Not Investing)
Topic: What are your Lean FIRE, FIRE, and Fat FIRE numbers?
Replies: 307
Views: 36437

Re: What are your Lean FIRE, FIRE, and Fat FIRE numbers?

I'm currently in a low-cost of living area. That said:

Current spending: ~$38,000 annually
Lean: ~$32,000 (cut back on food and car expenses substantially)
Fat: ~$50,000 (travel a lot more)
Normal: ~$42,000 (resume travel and in-restaurant dining post-COVID)
by Dominic
Sun Feb 28, 2021 12:35 am
Forum: Personal Investments
Topic: TLH Partner for EDV?
Replies: 7
Views: 954

Re: TLH Partner for EDV?

occambogle wrote: Sun Feb 28, 2021 12:27 am I was looking to maybe TLH some EDV losses... so are we sure that EDV vs GOVZ does not constitute a wash sale?
GOVZ holds 25-30 year STRIPS, while EDV holds 20-30 year STRIPS. The difference in maturity/duration should be enough to avoid a wash sale.

For what it's worth, ZROZ also targets 25-30 year, so GOVZ and ZROZ might not be safe to TLH with each other.
by Dominic
Thu Feb 25, 2021 6:11 pm
Forum: Personal Consumer Issues
Topic: Cleaning out laptop dust
Replies: 17
Views: 1367

Re: Cleaning out laptop dust

$20 doesn't sound bad especially since thermal paste isn't free.

It's a Thinkpad, so if the technician is even remotely competent, the odds of him messing it up are low.
by Dominic
Thu Feb 25, 2021 6:29 am
Forum: Investing - Theory, News & General
Topic: Why do Treasury Zeros Yield Higher than Regular Treasuries?
Replies: 5
Views: 1070

Re: Why do Treasury Zeros Yield Higher than Regular Treasuries?

Regular Treasuries pay a coupon and return their face value at maturity. The coupon payments reduce the duration.

STRIPS return their face value at maturity, and that's it. Therefore, the duration on a STRIPS is equal to its maturity.

The extra duration demands a higher yield.
by Dominic
Tue Feb 23, 2021 7:48 pm
Forum: Personal Investments
Topic: New Boglehead looking for advice - decisions need to be made
Replies: 4
Views: 499

Re: New Boglehead looking for advice - decisions need to be made

One nitpick before I get to the questions: what's the expense ratio on that target date fund in your 401k? If I don't see "Vanguard" or "index," I assume it's 0.5% or higher. 1) Roth IRA is better than a brokerage. If you're worried about exceeding the limit, either use the backdoor Roth or wait until your annual income is known before contributing. You're allowed to contribute for the previous year any time before taxes are due (so you can make a 2020 contribution until April 2021). 2) First thing, choose an asset allocation for your entire portfolio. Once you've done that, you can either prioritize the higher expected return assets in Roth accounts OR you can just use the same asset allocation everywhere. I do the latt...
by Dominic
Tue Feb 23, 2021 6:37 pm
Forum: Investing - Theory, News & General
Topic: VTI not doing its job?
Replies: 20
Views: 4455

Re: VTI not doing its job?

What does the author think the job of a total market index fund is? Its job isn't to behave differently from the S&P 500. Its job is to match the returns of the entire publicly traded US equity market, ~80% of which is the S&P 500. It did exactly as advertised.

If you want a diversifier, buy something meaningfully different.
by Dominic
Sun Feb 21, 2021 9:06 pm
Forum: Investing - Theory, News & General
Topic: don't want to buy I bonds; what ETF will mimic?
Replies: 39
Views: 4144

Re: don't want to buy I bonds; what ETF will mimic?

There is no such thing.

I Bonds provide:

- A 0% real rate and a minimum 0% composite rate for any 6 month period. TIPS real yields are negative, and TIPS adjust downward when deflation occurs.

- The ability to redeem at any time after 5 years with no penalty, and after 1 year with a 3 penalty of 3 months interest. TIPS can be sold before maturity, but there's a risk of loss if real rates change.

- Tax deferral until redemption. You can defer taxes on TIPS, but then you're using precious tax-advantaged space.

The closest thing would be a 30-year TIPS coupled with long-term put options that don't exist.
by Dominic
Sun Feb 21, 2021 7:24 pm
Forum: Investing - Theory, News & General
Topic: Is too much saving a zero sum game ?
Replies: 72
Views: 8747

Re: Is too much saving a zero sum game ?

For every buyer, there's a seller.

Bidding up the price of stocks may help retirees spend more as they sell their equities. Buying more bonds drives interest rates down, which allows governments and companies to put more money into the economy today.
by Dominic
Fri Feb 19, 2021 9:34 pm
Forum: Personal Consumer Issues
Topic: Credit Score / Credit Cards - College Freshman
Replies: 16
Views: 1290

Re: Credit Score / Credit Cards - College Freshman

I got a credit card as a freshman. Like her, I was a responsible budgeter and saver. If she maintains her good habits and pays the card every month, it will help her credit profile by giving her a longer history and more accounts.

In the shorter term, she might get some benefits from the card that she doesn't get with her debit card, such as cashback and improved warranties.
by Dominic
Fri Feb 19, 2021 6:08 pm
Forum: Investing - Theory, News & General
Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
Replies: 2297
Views: 258108

Re: Bonds in free fall

abuss368 wrote: Fri Feb 19, 2021 6:06 pm
vineviz wrote: Fri Feb 19, 2021 2:31 pm
NoRegret wrote: Fri Feb 19, 2021 12:38 pm All the more reason to understand that stock/bond negative correlation is not given. Last flip was 1997/98. If/when this thing flips again, A LOT of money will be off-sides.
There's no need for the stock/bond correlation to be negative in order to get a diversification benefit from bonds.
Because this is diversification across asset classes correct? How much, if any, that the asset classes are correlated to each other is a different matter.

Am I on the right track?

Tony
The positive correlation between LTTs and equities was relatively low (~0.4). At that level, there's still a significant diversification benefit.
by Dominic
Thu Feb 18, 2021 9:18 pm
Forum: Personal Investments
Topic: SWAN, JEPI, QYLD ETFs: Using options to buffer drawdowns, generate income
Replies: 12
Views: 3519

Re: SWAN, JEPI, QYLD ETFs: Using options to buffer drawdowns, generate income

annu wrote: Thu Feb 18, 2021 9:09 pm Is it possible to know what kind of options these fnd buy, for e.g. SWAN buy SPY LEAPS, do they have to disclose what date options they buy?
Most ETFs are required to disclose their holdings on a fairly regular basis. SWAN's holdings are listed here.

Looks like they have June calls at a strike price of $265 and December calls at a strike price of $324.
by Dominic
Thu Feb 18, 2021 5:38 pm
Forum: Investing - Theory, News & General
Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
Replies: 2297
Views: 258108

Re: Bonds in free fall

In a bond fund that has an average duration of 20 years, a 1% rate increase will result in a 20% NAV drop. Is that correct? I've never really given it much thought, as I've been an ignorant 3 fund investor for 14 years. That's what the "rule of thumb" predicts, yes. So my holding, VGLT, with an average duration of 18.4 years, is something I expect to get absolutely clobbered in a rising rate environment, in the short run. I'm not sure what "absolutely clobbered" looks like to other people, but I suspect many people don't have very accurate intuition about what performance would look like if yields rise. One exercise that I find sometimes help is to simply imagine a "rewind" scenario: what would happen if the n...
by Dominic
Tue Feb 16, 2021 8:54 pm
Forum: Investing - Theory, News & General
Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
Replies: 2297
Views: 258108

Re: Bonds in free fall

000 wrote: Tue Feb 16, 2021 7:51 pm I have trouble understanding the argument that long term interest rate movements aren't relevant when long term interest rates have been widely cited as a justification for stock valuations.

When LT rates are low, we hear that stocks are fairly valued due to low LT rates.

When LT rates creep up, we hear that LT rates don't matter unless you have an individual position in LT bonds.
This is an interesting point. Stocks are way up over the last year, and nominal 30-year yields are basically identical. I will note that 30-year real yields are at -0.1% now vs. ~0.3% this time last year.
by Dominic
Tue Feb 16, 2021 8:48 pm
Forum: Investing - Theory, News & General
Topic: Avoiding actively managed indices (e.g., S&P 500/Tesla) but for international/world/global/ex-US?
Replies: 11
Views: 964

Re: Avoiding actively managed indices (e.g., S&P 500/Tesla) but for international/world/global/ex-US?

I don't think that there's any other major index family that has an S&P 1500-style committee to decide whether or not an individual stock is eligible for inclusion. (Even then, Tesla is about the only occasion I know of where the S&P 500 was missing a mega-cap company for a long time.)

The list that whodidntante provided has some interesting questions, but any index will have a yes or no answer to those questions. Pick an index that includes Canada; decide whether or not you want China A-shares; and if you split developed and emerging, make sure that you use funds from the same provider so that you don't exclude or double-count South Korea.
by Dominic
Tue Feb 16, 2021 7:22 pm
Forum: Investing - Theory, News & General
Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
Replies: 2297
Views: 258108

Re: Bonds in free fall

You find this alarming? Source https://imgur.com/9IoYCbG.png It's a pretty staggering decline for long term Treasuries, but ( hopefully ) everyone who owns those knew what they were getting into. I knew that I was taking on the risk of a steep short term decline when I bought EDV. Didn't expect yields to climb this quickly, but oh well. Higher yields will pay off eventually. For the total bond crowd, the short end of the Treasury yield curve and corporate bonds are keeping things steady. Losing 0.44% in a single day and 1.74% YTD on a fund with an annual yield of 1.10% seems like a bad risk-reward tradeoff to me. Meanwhile, cash in a HYSA is yielding 0.50% with no principal risk. And if the US's yield curve starts looking like Japan's or G...
by Dominic
Sat Feb 13, 2021 12:29 pm
Forum: Personal Investments
Topic: Bonds for Emergency Fund Investing?
Replies: 24
Views: 2165

Re: Bonds for Emergency Fund Investing?

I Bonds are a great emergency fund asset. They are backed by the Treasury, track inflation, federal taxes are deferred, and state taxes don't apply. You can't redeem them for a year, and redeeming before 5 years costs 3 months of interest. The catch is that you can only buy $10,000 per person per year.

Beyond that, I like the idea of overfunding the emergency fund and investing in a low-risk portfolio.
by Dominic
Wed Feb 10, 2021 8:15 pm
Forum: Investing - Theory, News & General
Topic: If you are investing in a traditional 401(k) or traditional IRA, do you have a good reason for doing this?
Replies: 156
Views: 11879

Re: If you are investing in a traditional 401(k) or traditional IRA, do you have a good reason for doing this?

I'm making some traditional contributions for a handful of reasons: 1) Traditional withdrawals and Social Security are probably going to be my only sources of income in retirement. I aim to have a large enough balance in traditional accounts that I max out the standard deduction and lower federal tax brackets, rather than paying 24% in federal taxes today. 2) I live in NY. If I leave NY, it is almost definitely going to be for a lower tax state. If I stay in NY, the state excludes $20,000 of traditional withdrawals from income. Either way, I am lowering my state tax burden by using a traditional account. 3) There will likely be a decade or longer where I'm retired but not collecting Social Security. That window will allow me to make Roth co...
by Dominic
Mon Feb 08, 2021 6:59 pm
Forum: Investing - Theory, News & General
Topic: TSLA: What Changed?
Replies: 1158
Views: 138289

Re: TSLA: What Changed?

The downside risk of Tesla (i.e. massive debt load, constant inability to deliver cars on time) isn't where it was at the end of 2019.

The market is pricing Tesla as a tech company rather than as a car manufacturer. Tesla is getting to a point where they'll be able to finance solar/battery/AI R&D with sales rather than more debt.

I still think the stock is overpriced, but there's nothing I can do about that.
by Dominic
Mon Feb 08, 2021 6:43 pm
Forum: Personal Investments
Topic: Should I invest in 401k with no employer match?
Replies: 36
Views: 3107

Re: Should I invest in 401k with no employer match?

smallHead wrote: Sun Feb 07, 2021 10:22 am Probably a stupid question but I just want to ask - who knows what my life would be like by the time I am 60 yo. Maybe, I'm even dead. Isn't your 20s and 30s the best time to "enjoy your life". What good it would be to keep on saving money for the future?
With your income and expenses, you can afford to save quite a lot, even while splurging on vacations and the like.
by Dominic
Sun Feb 07, 2021 1:08 pm
Forum: Personal Investments
Topic: Best way to add international
Replies: 13
Views: 1284

Re: Best way to add international

Thanks for the responses so far. One thought I had about international funds is: Is there an international fund that focuses on a few areas (china, etc) vs a total international fund? It seems like there must be some international areas that have more opportunities instead of ALL international. Hopefully I worded that in a way that makes sense. If such a fund does exist, I think i'd be more interested in a focused international fund vs total international. Maybe an emerging markets index is what you're looking for? These include China, Russia, Brazil, India, South Africa, a handful of other emerging economies, and might also include Taiwan or South Korea. People expect emerging markets to have lower correlations with the US than developed ...
by Dominic
Sat Feb 06, 2021 7:09 pm
Forum: Personal Investments
Topic: Using leverage in my retirement account.
Replies: 15
Views: 1563

Re: Using leverage in my retirement account.

It doesn't make that much sense to use both leverage and bonds; you are borrowing and lending at the same time, with the associated costs. why not? the efficient frontier requires a combination of stocks and bonds. 100% stocks or 100% bonds is not efficient. so pick your mix and leverage it up. pretty much every back test involving leveraged balanced funds trounce unleveraged 100% stock portfolios. This is because backtests cover a period in which interest rates declined. The effect of leveraging a balanced portfolio is that you hold, say, 100% stock, X% bonds, and -X% cash. If rates fall, you come out ahead of 100% stock and no bonds. If rates rise, you come out behind. In addition, the OP's funds have significant costs for the leverage; ...
by Dominic
Thu Feb 04, 2021 3:20 pm
Forum: Non-US Investing
Topic: What is the real risk in having all of your fixed income locally if the local government can print money to repay?
Replies: 18
Views: 1715

Re: What is the real risk in having all of your fixed income locally if the local government can print money to repay?

In nominal terms, it's nearly risk-free. Being able to print money effectively converts default risk into inflation risk.
by Dominic
Tue Feb 02, 2021 10:59 pm
Forum: Personal Investments
Topic: Aggressive Fund(s) for my son
Replies: 13
Views: 1685

Re: AGGRESSIVE FUND(S) for my son

Regarding fund choices, I'd keep it simple: a total world stock index, or some combination of total US and total international stock index funds.

A 529 ABLE account might be beneficial if you're not already using one.
by Dominic
Tue Feb 02, 2021 12:56 pm
Forum: Personal Investments
Topic: Where are you storing your emergency fund money?
Replies: 109
Views: 16692

Re: Where are you storing your emergency fund money?

Currently, I have 8 months of expenses in a high yield savings account, and 1 month in EE Bonds.

My goal is to move most of the fund to I Bonds. Between purchase limits and the 1-year lock-in, this won't be a quick process.
by Dominic
Mon Feb 01, 2021 11:29 pm
Forum: Investing - Theory, News & General
Topic: Is the Wilshire 4500 good for diversification to Small/Mid Cap?
Replies: 1
Views: 403

Re: Is the Wilshire 4500 good for diversification to Small/Mid Cap?

I'd look at S&P 500 + Wilshire 4500 as a replica of a total US stock market fund.

If you are confident that you want small-cap value, you will have to get your exposure to it in an IRA or a taxable account.
by Dominic
Mon Feb 01, 2021 9:16 pm
Forum: Personal Investments
Topic: my asset allocation
Replies: 18
Views: 1968

Re: my asset allocation

I don't think it's necessary to use this many funds. You can drop large-cap value and small-cap blend (you get the small and value premiums from small-cap value anyway). If you really want total US bond market and total international bond market at 10% each, you can get pretty close by using a total world bond fund at 20%.

I like vineviz's five fund portfolio as a simple, factor-tilted portfolio. You might consider taking that portfolio, adding TIPS, and calling it a day. (I personally tinkered with the international holdings.)
by Dominic
Mon Feb 01, 2021 8:15 pm
Forum: Personal Finance (Not Investing)
Topic: Covid Treatment Costs
Replies: 9
Views: 1352

Re: Covid Treatment Costs

COVID tends to be more severe as age increases, so those hospitalized are likely to have Medicare. Medicare's hospitalization deductible is relatively low.

I'm sure that COVID-related medical expenses are a problem for many Americans, but it's not widespread enough to get coverage amidst the other issues.
by Dominic
Mon Feb 01, 2021 5:37 pm
Forum: Personal Investments
Topic: Vanguard patented tax method
Replies: 1
Views: 464

Re: Vanguard patented tax method

This applies at any brokerage.

The reason that people recommend holding Vanguard funds at Vanguard is that there are no commissions there. Most, if not all, other brokerages will charge a commission on Vanguard's funds.

Vanguard's mutual funds avoid capital gains distributions by using ETF redemptions to unload appreciated shares. Since distributions (dividends plus capital gains) are given to all shareholders, the benefits apply to anyone who holds a Vanguard fund, regardless of what brokerage they're using.
by Dominic
Mon Feb 01, 2021 4:31 pm
Forum: Personal Finance (Not Investing)
Topic: Doomsday gold/silver holders: why not foreign fiat as well?
Replies: 20
Views: 1656

Re: Doomsday gold/silver holders: why not foreign fiat as well?

I imagine that if the USD collapsed, you'd have a much easier time finding someone who is willing to accept gold or even silver than Euros or Yen in the US.

Also, if any major fiat currency collapsed, I'd expect it to have a negative impact on its peers (regardless of reserve status). If the Yen collapsed, people would lose trust in the USD and Euro.

With that said, I don't hold any precious metals.
by Dominic
Mon Feb 01, 2021 3:36 pm
Forum: Personal Finance (Not Investing)
Topic: Is there harm in maxing out credit card?
Replies: 27
Views: 1820

Re: Is there harm in maxing out credit card?

It shouldn't affect your credit score, unless your purchase happens to be on the same day that the bank reports your utilization to the credit reporting agencies.

For what it's worth, I've seen a change from 3% utilization to 9% utilization tank my VantageScore by 20 points. Utilization doesn't seem to have any history as far as score calculations are concerned, so even if you're unlucky enough to have this reported, it'll fall off by the next month.
by Dominic
Sun Jan 31, 2021 12:15 pm
Forum: Personal Investments
Topic: Less diversification, more tech (NASDAQ)?
Replies: 29
Views: 2442

Re: Less diversification, more tech (NASDAQ)?

The US stock market is already tech-heavy. Total stock funds have ~25% of their assets in the tech sector, and that's not all inclusive. Facebook, Alphabet, and Netflix are considered communications services companies, while Amazon and Tesla are in the consumer cyclical sector. In my eyes, those companies are technology companies even if they're not classified as such.
by Dominic
Fri Jan 29, 2021 3:31 pm
Forum: Personal Investments
Topic: Too conservative for 30s?
Replies: 23
Views: 2448

Re: Too conservative for 30s?

Your asset allocation looks a little conservative, but that's okay. You said you don't spend a lot, you're maxing your retirement accounts, and you already have 15-20x expenses saved. It would be a mistake to take more risk even though you know that you don't have the need or the tolerance for it.
by Dominic
Wed Jan 27, 2021 11:52 pm
Forum: Investing - Theory, News & General
Topic: Is the Gamestop mania the small value premium finally making a comeback?
Replies: 29
Views: 3492

Re: Is the Gamestop mania the small value premium finally making a comeback?

jhsu802701 wrote: Wed Jan 27, 2021 8:28 pm Given that GameStop was losing big, how could it be a value stock? Even if it had been a value stock before, how could it be a value stock now given that the price has multiplied so many times with no improvement whatsoever in the fundamentals?
At this point it's not a value stock, but some indices reconstitute on a schedule, so GameStop might hang around in funds that track those indices.
by Dominic
Wed Jan 27, 2021 11:50 pm
Forum: Investing - Theory, News & General
Topic: Has Bogleheads lost its direction?
Replies: 325
Views: 49848

Re: Has Bogleheads lost its direction?

I haven't been here for too long, but I've seen similar posts for the entire time I've been here. (Not about the stock you're talking about, but about timing the market, overweighting sectors, etc.)
by Dominic
Wed Jan 27, 2021 6:33 pm
Forum: Personal Investments
Topic: I-Bonds - purchase now or May
Replies: 14
Views: 1973

Re: I-Bonds - purchase now or May

The earlier you purchase, the earlier you can redeem them.

I don't think we'll see negative real rates on I-Bonds just yet, but the rate is certainly not going to go up in May.
by Dominic
Wed Jan 27, 2021 6:28 pm
Forum: Personal Investments
Topic: Are Emergency Funds Part of Asset Allocation?
Replies: 29
Views: 2717

Re: Are Emergency Funds Part of Asset Allocation?

I would argue that the answer depends on where you are in terms of your career and savings.

I have a 9 month emergency fund in cash and savings bonds. It represents about a third of my assets. I think it would be absurd to say that my portfolio is 60% stocks, 30% cash, and 10% bonds. I look at the emergency fund as insurance against a loss of income rather than an investment.

If you're nearing retirement, it's reasonable to consider the emergency fund in the context of the rest of your portfolio. At that point, a loss of income is more like early retirement.

That said, I don't think there can be a "correct" answer to this question, though. It comes down to personal opinion.
by Dominic
Wed Jan 27, 2021 5:58 pm
Forum: Investing - Theory, News & General
Topic: Is the Gamestop mania the small value premium finally making a comeback?
Replies: 29
Views: 3492

Re: Is the Gamestop mania the small value premium finally making a comeback?

It may be evidence that there is mispricing in the small-cap value segment of the market, but this isn't the risk premium we're looking for. This is a relatively small, unprofitable company whose valuation is getting inflated by a coordinated short squeeze.
by Dominic
Wed Jan 27, 2021 5:23 pm
Forum: Investing - Theory, News & General
Topic: Is the craziness going on the markets indicating that traditional valuation methods may be obsolete given new dynamics?
Replies: 26
Views: 2244

Re: Is the craziness going on the markets indicating that traditional valuation methods may be obsolete given new dynami

The names that are going up 50x or whatever are junky small-cap companies. These short squeezes aren't moving the market in a way that any total market indexer would notice.

Maybe it eventually comes back to bite the small-cap value funds that are getting heavy in e.g. GameStop, but investors in those kinds of funds are knowingly taking on risk.
by Dominic
Mon Jan 25, 2021 10:12 pm
Forum: Investing - Theory, News & General
Topic: Is the 5G market truly set to explode and where to invest to take advantage
Replies: 30
Views: 2520

Re: Is the 5G market truly set to explode and where to invest to take advantage

5G is coming, and yes, your Internet speed will be faster. It will especially get faster in crowded areas such as stadiums and dense city centers thanks to mmWave. A little bit further down the road, I'm hopeful that 5G will be cheaper and faster than fixed broadband in many parts of the US, but this is probably already possible with 4G LTE. However, I don't think there's any big money to be made here. It's being deployed by the usual suspects (Verizon, AT&T, and T-Mobile), and the hardware is being manufactured by the usual suspects (Qualcomm, Huawei, Samsung, Nokia, and others). Better yet, there are about 100,000 patent applications for 5G. The manufacturers I mentioned each have over 1,000 of those, and there are plenty of other com...
by Dominic
Sun Jan 24, 2021 3:12 pm
Forum: Personal Investments
Topic: Dividends from Treasury funds taxable?
Replies: 10
Views: 755

Re: Dividends from Treasury funds taxable?

Regarding account type, it depends on the investor's needs. Some people try to avoid receiving coupon payments (federally taxable) in a taxable account; others are willing to accept the taxes so that they can invest more aggressively in their tax-advantaged accounts. If you're in NJ or CA, Treasuries make sense in HSAs because those states tax HSA earnings, and Treasuries are exempt. Are they generally held in a taxable acct or tax deferred? Depends on what à person has available. All our investments are tax deferred. Depending on the amount to invest, I would consider I-bonds, and even EE bonds. You don't tie up any tax-deferred space. Limits are low, for some. Broken Man 1999 Series I Savings Bonds are great. I use them as a tier of my em...
by Dominic
Sat Jan 23, 2021 11:33 pm
Forum: Personal Investments
Topic: A lot of bubble talk lately...how would you invest?
Replies: 21
Views: 3751

Re: A lot of bubble talk lately...how would you invest?

Ignore the noise and stick to my 90/10 allocation. Even in the US, the implied equity risk premium isn't far from the historical average. Valuations look high because interest rates are near historic lows, and earnings are expected to increase as the pandemic slows. I don't think we're in a bubble. If we are, then this could grow a lot more before it pops. Even if US total stock market is in a bubble, it's 40% of my asset allocation, and I have plenty of time before retirement. No sense in getting fancy with market timing. If you know the stock market is going to pop, how would you invest today? Gold? Emerging markets? Bitcoin? If I **knew** thd stock market was going to pop, I would invest ALL my money in the Direxion 3x bull fund: https:/...
by Dominic
Wed Jan 20, 2021 6:20 pm
Forum: Personal Investments
Topic: Potential interest rate increase [which Vanguard funds would benefit]
Replies: 5
Views: 772

Re: Potential interest rate increase [which Vanguard funds would benefit]

If inflation rises and real rates don't rise, TIPS funds would get an immediate boost in value.

Cash wouldn't be impacted in value but would immediately benefit from increased yields.

Beyond those, all bonds lose value when rates rise. Shorter duration bond funds don't lose as much value.
by Dominic
Tue Jan 19, 2021 8:55 am
Forum: Personal Investments
Topic: Throw rocks at my experimental portfolio (tilt-o-rama)
Replies: 10
Views: 3321

Re: Throw rocks at my experimental portfolio (tilt-o-rama)

Do you need US large cap value? I recall AVUS being very conservative about its tilts since it's meant as a core holding. I would either get rid of it or use a total market index in that spot. I'm also not convinced that AVUV is superior to VIOV/SLYV/IJS. Those funds have lower expenses and higher liquidity, and it's my understanding that S&P uses multiple metrics to measure value rather than Avantis's single metric. (I could be wrong on that last point.) Granted, Avantis also targets profitability, which isn't explicit in the S&P 600. It's possible that long-term TIPS won't help much in a heavily value-tilted equity portfolio. Value has historically tended to outperform during inflationary periods, and the theory behind it is sound...
by Dominic
Sun Jan 17, 2021 6:55 pm
Forum: Investing - Theory, News & General
Topic: Total US market “Index” fund concerns?
Replies: 20
Views: 3344

Re: Total US market “Index” fund concerns?

The thing I was most concerned with was the statement on the use of derivatives and futures contracts. Wonder how much of their portfolio consists of such things? Mutual funds and ETFs are required to disclose their holdings quarterly. You can see exactly how many shares of each stock they own, how much of each bond issue they own, etc. These holdings reports also include futures and swaps contracts. I looked at an annual report for Vanguard's total stock market fund. As of the end of 2019, the fund held 99.7% of its assets in actual stocks, and 0.6% in cash/money markets. However, they include a footnote stating that the cash reserves are invested in index futures/swaps to provide a 100% investment in "stock" and a 0.3% position...
by Dominic
Sun Jan 17, 2021 6:30 pm
Forum: Personal Investments
Topic: Where would you tell a 20 yo to invest 5000$
Replies: 59
Views: 5192

Re: Where would you tell a 20 yo to invest 5000$

livesoft wrote: Sun Jan 17, 2021 5:27 pm Go to Fidelity. Use a Fidelity Freedom Index fund.
They're excellent funds, but (non-Vanguard) mutual funds throw off capital gains distributions which is tax inefficient. Better to go with ETFs or Vanguard mutual funds in taxable. Also not a fan of funds-of-funds in taxable.

If this is long-term (i.e. the person in question has an emergency fund), $3000 in a total US stock market index and $2000 in a total international stock market index is what I'd do. At that dollar amount, it'll have to be an ETF. Vanguard and iShares both have good offerings.