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by Northern Flicker
Sun Apr 18, 2021 2:03 am
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

1. Most forum members here loose total return by allocating to bonds. If the bonds stops them from worrying about financial trouble, it is worth is. The same can be said for dividends. If the regular dividend payments reduce your stress during downturns, it is worth it. Dividend-oriented stocks can...
by Northern Flicker
Sat Apr 17, 2021 8:57 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 23
Views: 1657

Re: Is passive investing leading to bigger market inefficiencies?

Stocks are more liquid today than when indexing was less pervasive. Illiquidity is a barrier to arbitrage. Liquid markets are generally more efficient than less liquid markets, so I would guess that the market is more efficient today than when index investing was a smaller slice of market activity. ...
by Northern Flicker
Sat Apr 17, 2021 8:22 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

It is very difficult to imagine what retirement portfolio and income management will look like when someone is say 35-40. But a portfolio of stocks with s higher than average dividend yield may drive more realized income than you want or need, push you into a higher medicare IRMAA bracket, and have...
by Northern Flicker
Sat Apr 17, 2021 8:17 pm
Forum: Investing - Theory, News & General
Topic: “Take risk on equity side”
Replies: 28
Views: 1938

Re: “Take risk on equity side”

Tingting1013 wrote: Sat Apr 17, 2021 12:29 pm It means don’t hold long term bonds.

It’s terrible advice.
Actually it refers to not taking risk on the bond side that has equity correlation, especially not taking credit exposure risk.
by Northern Flicker
Sat Apr 17, 2021 6:09 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

Well, there is a behavioral component to dividends. Investors receiving regular higher dividends might be, from a behavioral perspective, more likely to stay the course. The biggest enemy to the average investor's performance is themselves by far - selling low (fear), buying high (FOMO), they often...
by Northern Flicker
Sat Apr 17, 2021 3:45 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

It is true that depletion of shares would not follow a straight line for 25 years because everything is not static. I was not offering the pount to be taken literally, but to demonstrate that buybacks at a high enough level harm liquidity. The flaw in the logic is not that buybacks increase the valu...
by Northern Flicker
Sat Apr 17, 2021 3:10 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

Stock buybacks have limitations. Share buybacks reduce liquidity of the remaining shares. Consider a utikity company that has a history of delivering about a 4% dividend. Stock buybacks would buy back all of the shares in 25 years. At some point in the process liquidity problems would make share buy...
by Northern Flicker
Sat Apr 17, 2021 2:03 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

Well, there is a behavioral component to dividends. Investors receiving regular higher dividends might be, from a behavioral perspective, more likely to stay the course. The biggest enemy to the average investor's performance is themselves by far - selling low (fear), buying high (FOMO), they often...
by Northern Flicker
Sat Apr 17, 2021 2:00 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

No, but a company with Y dollars of cash on hand is worth Y-Z more than if it instead had Z dollars of cash on hand, all else equal with Z < Y. Cash on hand unquestionably adds value to the conpany relative to not having it. Another way to see it is if you buy a share of stock at the moment before ...
by Northern Flicker
Sat Apr 17, 2021 2:43 am
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

Company values aren’t based entirely on the total cash on hand, or cash on hand minus debt. No, but a company with Y dollars of cash on hand is worth Y-Z more than if it instead had Z dollars of cash on hand, all else equal with Z < Y. Cash on hand unquestionably adds value to the company relative ...
by Northern Flicker
Sat Apr 17, 2021 2:08 am
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

Company has a value of X dollars. Company distributes Y dollars of cash from its coffers. Company then has a value of X - Y.
by Northern Flicker
Sat Apr 17, 2021 12:45 am
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

Kenneth French has studied the dividend phenomenon and has documented that, historically, dividend paying stocks have provided higher total returns, with lower standard deviation of those returns, compared to non-dividend paying stocks. This may be a case of investors being willing to pay a higher ...
by Northern Flicker
Fri Apr 16, 2021 11:46 pm
Forum: Investing - Theory, News & General
Topic: Value etf’s that actually contain value?
Replies: 39
Views: 2188

Re: Value etf’s that actually contain value?

If I’ve missed other threads on this, feel free to re-direct me to those threads! I’ve been looking at various value etf’s for lcv, scv, and international value. The problem that I’m seeing is that many of the holdings aren’t value stocks, they’re just bad companies that are cheap for a reason. Are...
by Northern Flicker
Fri Apr 16, 2021 11:39 pm
Forum: Personal Investments
Topic: Most secure Two factor authentication out of Fidelity, Vanguard, Charles Schwab?
Replies: 20
Views: 2277

Re: Most secure Two factor authentication out of Fidelity, Vanguard, Charles Schwab?

All of my taxable investments are Vanguard index fund ETFs and I am interested in moving them to do a different custodian. Vanguard offers the use of hardware keys (Yubikey) but since they allow a SMS backup, it doesn't provide any additional security. (SMS two factor authentication has its own set...
by Northern Flicker
Fri Apr 16, 2021 11:18 pm
Forum: Investing - Theory, News & General
Topic: For those adding Crypto as an asset class to their AA
Replies: 139
Views: 7369

Re: For those adding Crypto as an asset class to their AA

What size allocation are you targeting? I don't know how people model crypto using the usual MPT analysis tools to even begin to answer this question in an empirical manner. Well one problem is that even a small amount of crypto has in the past caused a sharp increase in volatility. It is not a div...
by Northern Flicker
Fri Apr 16, 2021 10:30 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 137
Views: 7852

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

In general, TDFs throughout the industry have increased the stock percentages at a given age (i.e. implemented a glide path that is less steep over a large segment of life course. This has been motivated by observations about lifespan, length of retirement etc. that define a longer horizon than pre...
by Northern Flicker
Fri Apr 16, 2021 8:13 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 137
Views: 7852

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

Looking at 2040 funds... T Rowe Price's 2040 fund is about 76% stock: https://www.troweprice.com/literature/public/country/us/language/en/literature-type/quarterly-factsheet/sub-type/mf-single-class?productCode=TRJ&currency=USD FWIW, T. Rowe Price has two series of target date funds. The above ...
by Northern Flicker
Fri Apr 16, 2021 2:39 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 137
Views: 7852

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

Vanguard is neither actively managing the allocation for these funds nor timing the markets with the allocation. They increased their int'l stock allocation and added int'l bonds in response to research they did on how it may reduce volatility. These were strategic changes. Strategic changes have ti...
by Northern Flicker
Fri Apr 16, 2021 1:00 am
Forum: Personal Finance (Not Investing)
Topic: Does it make sense that a car dealer needs to do a hard pull if you pay in full by check (cash)?
Replies: 79
Views: 7053

Re: Does it make sense that a car dealer needs to do a hard pull if you pay in full by check (cash)?

Wire the money. No pull, no wait, $30 or whatever (or free if you have money at Fidelity or many brokerages). Or, and this is probably what I would do, call their bluff and walk. "I'm not thawing my credit, I don't remember my PINs and I drove 2.5 hours to get here. If I leave I'm not coming b...
by Northern Flicker
Fri Apr 16, 2021 12:55 am
Forum: Personal Finance (Not Investing)
Topic: Before Medicare begins: Use your HSA tax free funding distribution
Replies: 13
Views: 1226

Re: Before Medicare begins: Use your HSA tax free funding distribution

Also, if you have the cash to do the HSA contribution but are just trying to convert the tIRA funds, you can do an HSA contribution and Roth conversion for the same amount. There is no net taxable income, and it is equivalent to the QHSAFD plus a Roth contribution in the same amount, but you don't n...
by Northern Flicker
Thu Apr 15, 2021 11:28 pm
Forum: Personal Investments
Topic: thinking about adding some REIT
Replies: 100
Views: 5194

Re: thinking about adding some REIT

CloseEnough wrote: Thu Apr 15, 2021 7:22 am Suggest taking a look at TIREX (TIAA Cref real estate fund). I think a small but meaningful allocation to REIT is good for diversification.
All you need is a large enough portfolio to meet the $2M minimum for TIREX with your REIT allocation. TCREX has a $2500 minimum.
by Northern Flicker
Thu Apr 15, 2021 11:14 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

abuss368 wrote: Thu Apr 15, 2021 8:32 pm I believe in many respects we are dancing on the head of a pin. It simply does not matter.

Tony
That certainly is not the case if you buy individual health insurance on an ACA exchange and qualify for a premium tax credit, or are on medicare and trying to stay under IRMAA limits.
by Northern Flicker
Thu Apr 15, 2021 11:11 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 216
Views: 11446

Re: What’s the problem with dividends?

Dividends force you to realize those gains based on their schedule. So, if everything else is equivalent, as you mentioned, selling stock is better than dividends. There is a reason to prefer capital gains and no reason to prefer dividends. Agreed. There also is a 2nd issue. Suppose a mutual fund i...
by Northern Flicker
Wed Apr 14, 2021 11:51 pm
Forum: Personal Investments
Topic: thinking about adding some REIT
Replies: 100
Views: 5194

Re: thinking about adding some REIT

Do you have a reason for buying REITs other than a comment from your advisor? I find his stated rationale ("you have cash"), while it might be a good point to invest in *something*, I find the pivot to REITs, *specifically*, to be worthy of more elaboration for investing in a particular s...
by Northern Flicker
Wed Apr 14, 2021 11:38 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 137
Views: 7852

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

...Intentionally or not, Vanguard is effectively burying the cost of managing their Target Retirement and LifeStrategy funds within the cost of the underlying funds, and the amount isn't small. In fact, it's probably 5 or 6 bps of expenses being reported on the financial statements of the underlyin...
by Northern Flicker
Wed Apr 14, 2021 11:24 pm
Forum: Personal Finance (Not Investing)
Topic: Does it make sense that a car dealer needs to do a hard pull if you pay in full by check (cash)?
Replies: 79
Views: 7053

Re: Does it make sense that a car dealer needs to do a hard pull if you pay in full by check (cash)?

Wire the money. No pull, no wait, $30 or whatever (or free if you have money at Fidelity or many brokerages). Or, and this is probably what I would do, call their bluff and walk. "I'm not thawing my credit, I don't remember my PINs and I drove 2.5 hours to get here. If I leave I'm not coming b...
by Northern Flicker
Wed Apr 14, 2021 5:39 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 137
Views: 7852

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

And I believe it was Alex who raised an interesting point, why the heck are the expense ratios on the Target Retirement funds more than their underlying funds? Example: Target 2025 fee is 0.13%; TSM is approx. 0.04%, International Index is 0.11% and Total Bond is 0.05% - so HOW do they arrive at a ...
by Northern Flicker
Wed Apr 14, 2021 3:42 pm
Forum: Personal Investments
Topic: thinking about adding some REIT
Replies: 100
Views: 5194

Re: thinking about adding some REIT

If you have zero REIT exposure, then you are not holding a market index fund. Whether you add a REIT fund can only be answered in the context of reviewing the portfolio. If sidelined cash needs to be deployed, and you are not just deploying into an existing asset allocation, then that is implying th...
by Northern Flicker
Tue Apr 13, 2021 8:20 pm
Forum: Personal Investments
Topic: Multiple years of expenses in cash when starting retirement
Replies: 91
Views: 6316

Re: Multiple years of expenses in cash when starting retirement

What they should consider is instead of having a few years of low taxes followed by high taxes for the rest of their lives (after 72), it may be better to "level" their Taxable Income throughout all their reaming years, in order to "level" out their taxes. They can make a big di...
by Northern Flicker
Tue Apr 13, 2021 8:17 pm
Forum: Personal Investments
Topic: Multiple years of expenses in cash when starting retirement
Replies: 91
Views: 6316

Re: Multiple years of expenses in cash when starting retirement

It is currently set up to convert our 401(k)s to Roth which will hurt us from a subsidy viewpoint. We will make the calculations at that point to determine which is more valuable to us. Have you considered that maybe it would be worth it to give up a year or two of subsidies (costing you an additio...
by Northern Flicker
Tue Apr 13, 2021 6:08 pm
Forum: Investing - Theory, News & General
Topic: When can you put bonds in a taxable account?
Replies: 11
Views: 1419

Re: When can you put bonds in a taxable account?

Holding a treasury fund instead of packaging treasuries in BND makes their interest state-tax-free.
by Northern Flicker
Tue Apr 13, 2021 3:33 pm
Forum: Personal Investments
Topic: Multiple years of expenses in cash when starting retirement
Replies: 91
Views: 6316

Re: Multiple years of expenses in cash when starting retirement

Your asset level also means you likely don't need to make that tradeoff. But cash is not the lowest risk asset for funding the first 17 years of a retirement. Color me curious... What do you view as lower risk? That said, I'm not approaching this from a "lowest risk" viewpoint. More "...
by Northern Flicker
Tue Apr 13, 2021 3:04 pm
Forum: Personal Investments
Topic: Multiple years of expenses in cash when starting retirement
Replies: 91
Views: 6316

Re: Multiple years of expenses in cash when starting retirement

My view is that if portfolio liquidity is properly managed, a very large cash position will just be a drag on returns while meeting a need for more liquidity than is required. If the portfolio has N years of expenses in intermediate treasuries and N years of expenses in some combination of i-bonds,...
by Northern Flicker
Tue Apr 13, 2021 2:13 pm
Forum: Personal Investments
Topic: Multiple years of expenses in cash when starting retirement
Replies: 91
Views: 6316

Re: Multiple years of expenses in cash when starting retirement

My view is that if portfolio liquidity is properly managed, a very large cash position will just be a drag on returns while meeting a need for more liquidity than is required. If the portfolio has at least N years of expenses in intermediate treasuries and M years of expenses in some combination of ...
by Northern Flicker
Tue Apr 13, 2021 1:00 am
Forum: Investing - Theory, News & General
Topic: Stone Ridge All Asset Variance Risk Premium Fund
Replies: 133
Views: 6746

Re: Stone Ridge All Asset Variance Risk Premium Fund

Asset allocation changes have market timing risk. Nobody can predict the future. I don't think this was an active management decision so much as a change in market position of the product. It is still undesirable for investors in the fund.
by Northern Flicker
Tue Apr 13, 2021 12:53 am
Forum: Personal Finance (Not Investing)
Topic: Any happy lawyers out there?
Replies: 115
Views: 10581

Re: Any happy lawyers out there?

If you don't want to be an attorney, maybe a master's in legal studies is worth considering? Here is some info and an example:

https://legalstudiesmastersonline.northeastern.edu

Attorneys posting to the thread may be able to offer an opinion of such a degree.
by Northern Flicker
Tue Apr 13, 2021 12:20 am
Forum: Investing - Theory, News & General
Topic: International is in meltdown
Replies: 410
Views: 35178

Re: International is in meltdown

VNM is +1.72%. Good morning, Vietnam stonks! I wonder how long it will take before people stop turning up their noses at these markets. So far 35 years and counting. Tony 35 years? FM and VNM haven't been investable that long. Believe Portfolio Visualizer goes back to 1986!😂🤣 Tony With which countr...
by Northern Flicker
Mon Apr 12, 2021 11:27 pm
Forum: Investing - Theory, News & General
Topic: Stone Ridge All Asset Variance Risk Premium Fund
Replies: 133
Views: 6746

Re: Stone Ridge All Asset Variance Risk Premium Fund

It had been in existence for over 25 years when they made the change.
by Northern Flicker
Mon Apr 12, 2021 11:24 pm
Forum: Personal Finance (Not Investing)
Topic: HSA advice Jane Quinn How to Make Your Money Last
Replies: 62
Views: 5712

Re: HSA advice Jane Quinn How to Make Your Money Last

This I don't understand. Don't we have to be employed with a high deductible health plan to contribute to an HSA? Can a retired person (not employed) with a high deductible health plan (if there are such things) contribute to an HSA? You can contribute to an HSA and get the deduction whether or not...
by Northern Flicker
Mon Apr 12, 2021 11:16 pm
Forum: Personal Finance (Not Investing)
Topic: HSA advice Jane Quinn How to Make Your Money Last
Replies: 62
Views: 5712

Re: HSA advice Jane Quinn How to Make Your Money Last

One other thing to be aware of: There is a “once per lifetime” annual funding option [“Qualified HSA funding distribution” in IRS-speak, see Publication 969] from a tIRA which moves money directly from tax-deferred to tax-free. I did that in 2020. The once per lifetime is a technicality. All this r...
by Northern Flicker
Mon Apr 12, 2021 10:57 pm
Forum: Investing - Theory, News & General
Topic: Stone Ridge All Asset Variance Risk Premium Fund
Replies: 133
Views: 6746

Re: Stone Ridge All Asset Variance Risk Premium Fund

000 wrote: Even Vanguard has bailed on strategies in its fairly tame active funds (Precious Metals / Mining fund...
That fund originated in 1984.
by Northern Flicker
Mon Apr 12, 2021 10:52 pm
Forum: Personal Consumer Issues
Topic: Bird Repellent Methods
Replies: 15
Views: 1111

Re: Bird Repellent Methods

If living in or near natural or wooded areas but not wanting birds nearby, where do you propose that the birds should live?
by Northern Flicker
Mon Apr 12, 2021 8:17 pm
Forum: Investing - Theory, News & General
Topic: How is it not QE when the Fed buys treasury bills?
Replies: 23
Views: 2577

Re: How is it not QE when the Fed buys treasury bills?

Seasonal wrote: Doing things to improve the economy tends to help stocks and other assets.
Improving the economy also tends to increase tax revenues for the govt.
by Northern Flicker
Mon Apr 12, 2021 2:05 pm
Forum: Investing - Theory, News & General
Topic: How is it not QE when the Fed buys treasury bills?
Replies: 23
Views: 2577

Re: How is it not QE when the Fed buys treasury bills?

It doesn’t matter what you call it, this is just one of the many tools the Fed and the government have to print more money—stimulus checks, lowering taxes, buying t bills, it’s all just adding to money supply. We have been printing money very aggressively since 2009. Stimulus checks and tax cuts th...
by Northern Flicker
Mon Apr 12, 2021 1:53 pm
Forum: Investing - Theory, News & General
Topic: Stone Ridge All Asset Variance Risk Premium Fund
Replies: 133
Views: 6746

Re: Stone Ridge All Asset Variance Risk Premium Fund

My main issue with VPGDX is that the asset allocation has been actively managed to an extent that it seems like tactical asset allocation to me. Until 2020, it had held int'l stock at well above global market cap. I think the change to the current portfolio was in June 2020 but the change from month...
by Northern Flicker
Mon Apr 12, 2021 12:54 am
Forum: Investing - Theory, News & General
Topic: Stone Ridge All Asset Variance Risk Premium Fund
Replies: 133
Views: 6746

Re: Stone Ridge All Asset Variance Risk Premium Fund

They did hold some CAT bonds the last time I looked at their portfolio, but it was somewhere around 15% of assets if I remember correctly. They do say this in the prospectus, which suggests they may rely on the risk modeling done by the seller or broker for what they are buying if I am interpreting ...
by Northern Flicker
Sun Apr 11, 2021 10:51 pm
Forum: Investing - Theory, News & General
Topic: How is it not QE when the Fed buys treasury bills?
Replies: 23
Views: 2577

Re: How is it not QE when the Fed buys treasury bills?

It doesn’t matter what you call it, this is just one of the many tools the Fed and the government have to print more money—stimulus checks, lowering taxes, buying t bills, it’s all just adding to money supply. We have been printing money very aggressively since 2009. Stimulus checks and tax cuts th...
by Northern Flicker
Sun Apr 11, 2021 10:21 pm
Forum: Investing - Theory, News & General
Topic: Stone Ridge All Asset Variance Risk Premium Fund
Replies: 133
Views: 6746

Re: Stone Ridge All Asset Variance Risk Premium Fund

As I understand it, reinsurance companies sell slices of their reinsurance portfolio with contracts that would essentially be de facto actuarial risk swaps. There is unlikely to be much of a secondary market for these, so this depends on the interval structure functioning as expected. The asymmetry ...
by Northern Flicker
Sun Apr 11, 2021 6:12 pm
Forum: Investing - Theory, News & General
Topic: Stone Ridge All Asset Variance Risk Premium Fund
Replies: 133
Views: 6746

Re: Stone Ridge All Asset Variance Risk Premium Fund

I would like more information about this. Who actually managed the fund and did they use actuaries? It would seem to me that properly valuing reinsurance contracts would be a big part of the business and it is hard for me to believe that Stone Ridge left this out. Sort of like running an actively m...