Search found 8726 matches

by ghariton
14 Jan 2024 21:06
Forum: Financial Planning and Building Portfolios
Topic: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg
Replies: 49
Views: 3197

Re: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg

speciarderivery wrote: 14 Jan 2024 19:32 I wasn't alive for the 70s but wasn't there a significant rise in interest rates as well? How did the 60/40 do through the 70s vs 100% equity?
I dunno about 60/40, but after getting burned badly with 100% equities in the 1960s, I switched to 100% bonds in the 1970s. That was disastrous. Luckily I was a student and had very little money to spare for the markets, so lost very little (looking back -- it seemed like a lot at the time).

As a result, I have never held a nominal bond again. (I do hold RRBs, i.e. inflation-indexed bonds).

The 1970s and early 1980s drummed into me the lesson that Prof. Cederburg teaches. Nominal bonds, especially long nominal bonds, bring exposure to significant inflation risk. I would never hold any.

George
by ghariton
13 Jan 2024 21:16
Forum: Financial News, Policy and Economics
Topic: Sitting in cash and GICs was the wrong move last year.
Replies: 27
Views: 2340

Re: Sitting in cash and GICs was the wrong move last year.

Marcus Aurelius wrote: 13 Jan 2024 16:12 I think the main point is:

1) Use fixed income to achieve your fixed income goals.

2) Use equities to achieve your equity goals.

3) However, don't run around changing your allocations year to year based on nominal interest rates.

That is the subtext I read in the article.
That is what I got out of the article as well.

Or, in my shorthand, stick to your IPS even if you see attractive short-term opportunities elsewhere.

George
by ghariton
13 Jan 2024 21:05
Forum: Financial Planning and Building Portfolios
Topic: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg
Replies: 49
Views: 3197

Re: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg

My takeaway (perhaps wrong) was that including earlier data did not make a material difference to their conclusions, while providing a more 'complete' dataset for analysis? Thank you for the link. I found that comment somewhat cryptic. Perhaps he has documented his result in a working paper or some such. I will search for it. Ben Felix ... and the others at PWL Capital are among the few in the business who are enthusiastic about digging into investing and sharing their learnings freely with other Canadians without having to wade through some 'sales' slant. Yes. I'm a fan. I used to read a lot of the academic financial literature, and posted summaries here from time to time. But with the passage of time, I find that my interests have turned...
by ghariton
13 Jan 2024 19:19
Forum: Financial Planning and Building Portfolios
Topic: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg
Replies: 49
Views: 3197

Re: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg

Marcus Aurelius wrote: 12 Jan 2024 23:37 They actually call their system a "block bootstrap" method as explained in the paper:
Yes, thank you. That makes sense. Interesting application of the bootstrap (perhaps the most useful statistical innovation of the twentieth century).

I very much like that all of Cederburg's analyses are in real (as opposed to nominal) terms.

George
by ghariton
12 Jan 2024 23:17
Forum: Financial Planning and Building Portfolios
Topic: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg
Replies: 49
Views: 3197

Re: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg

Marcus Aurelius wrote: 11 Jan 2024 00:43 I believe Cederburg's innovation is the better way they model overlapping periods, so that the time correlations aren't lost. This was a big criticism I had of monte carlo simulations (and the like) since all connections through time are broken in the simulation.
Doesn't the use of overlapping periods introduce autocorrelation in the data? (This is a concern that I have long had with the way financial analyses are generally done,)

When I look at6 current papers, I seldom see discussions of autocorrelations or heteroscedasticity. The use of Generalized Least Squares seems to have almost disappeared.

George
by ghariton
12 Jan 2024 23:03
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 129
Views: 10331

Re: Clippings 2024

My argument isn't about Hertz's situation. It's about EVs in general. Increased competition is bringing prices down. That should spur more sales of EVs. That should be good for consumers, good for automakers--and good for EV battery makers like VW and Fiat in Ontario. I see, thanks. Presumably all involved, including Herz and Tesla, expected prices of EVs to drop as the learning curve and economies of scale kicked in. But they were also counting on a certain level of demand at different price points, and it seems that demand is not materializing. From the quoted passages: The move is the latest example of a swift retrenchment by the car business on EVs. After years spent outlining aggressive expansion plans, automakers in recent months hav...
by ghariton
12 Jan 2024 22:07
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 129
Views: 10331

Re: Clippings 2024

Hertz has faced higher repair costs on its EVs, and price cuts for Tesla cars have dented the value of its electrified fleet. The company said Thursday it would still offer EVs to customers and was working to improve profitability on its remaining fleet by expanding charging infrastructure and working with EV makers to access more-affordable parts. The company said it would log a $245 million incremental net depreciation expense related to the sale of the 20,000 electric vehicles. Hertz sells its used rental vehicles directly on its website. So they got clobbered as a result of EV competition driving down car prices and thus reducing the resale value of their fleet. Bad for Hertz but good for consumers and the EV industry in the long run. ...
by ghariton
12 Jan 2024 21:55
Forum: Financial Planning and Building Portfolios
Topic: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg
Replies: 49
Views: 3197

Re: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg

OTOH, there is a recent study based on extending stock and bond data back to ~1800 that indicates stocks and bonds provided roughly equal returns over the very long run (or at least longer run). So, forget about the rosy base-rate returns starting in ~1900 because the historical record isn't nearly so kind to stocks. Dial back those return expectations ... Isn't there a problem/risk of going back too far in history? Are financial products, markets, and investor attitudes of another era really relevant? As I recall, it was only just before World War II that trustees were legally allowed to place trust funds into equities. A prudent portfolio would consist of mortgages and perhaps some government bonds (or so the courts were still ruling in ...
by ghariton
12 Jan 2024 21:29
Forum: Financial News, Policy and Economics
Topic: Sitting in cash and GICs was the wrong move last year.
Replies: 27
Views: 2340

Re: Sitting in cash and GICs was the wrong move last year.

Buy and hold. If your IPS indicates an allocation to equities -- and very few IPS don't -- you should continue to hold them. Don't be side-tracked by ephemera.

At the beginning of each year I sell enough equities to pay income taxes on my minimum RRIF withdrawals and to fund projected expenses over the coming year. Then I stop trading.

But I guess that it is difficult to charge much for that type of advice.

George
by ghariton
12 Jan 2024 21:16
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 129
Views: 10331

Re: Clippings 2024

WSJ (paywall) Hertz is selling about a third of its global electric-vehicle fleet, a major reversal for the rental-car company after it positioned itself as a champion of the technology with plans to vastly grow its fleet of plug-in models. Hertz said Thursday that it would sell about 20,000 EVs in the U.S., and use some of the proceeds to purchase internal-combustion-engine vehicles. The company in a regulatory filing cited weaker demand for electrics, and their higher operating costs. The move is the latest example of a swift retrenchment by the car business on EVs. After years spent outlining aggressive expansion plans, automakers in recent months have put some EV projects on ice and dialed back production forecasts, citing signs that U...
by ghariton
11 Jan 2024 23:02
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Toronto Dominion Bank (Symbol TD)
Replies: 182
Views: 26552

Re: Toronto Dominion Bank (Symbol TD)

Price is still going down. Is that in response to the U.S. inflation numbers and the consequent Fed reluctance to cut interest rates aggressively?

I don't currently own TD, but I use it for Norbert's Gambits, and so it is on my watch list. But if this keeps up, I will start using a less volatile interlisted stock -- say SHOP. :wink:

George
by ghariton
08 Jan 2024 17:33
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: TD Direct Investing (was Waterhouse) Service
Replies: 3927
Views: 433373

Re: TD Direct Investing (was Waterhouse) Service

Went to withdraw my annual minimum from my LIF (or whatever TD calls the account into which my LIRA was converted six years ago). The account is in CAD. TD does not have USD accounts for the LIF. So my VTI are held in a CAD account. Any transactions are in CAD and subject to a "wash" program that puts the proceeds into a US Money Market Fund (saving conversion fees). The proceeds are then available for purchase of another security in USD. This year I decided to make my withdrawal in kind, specifically units of VTY. I sold VTI and, as expected, the proceeds showed up in a TD US Money Market Fund. Good, I thought, I can now withdraw the Money Market Fund, transferring the units to a USD margin account and buy back the VTI. No, the s...
by ghariton
08 Jan 2024 17:06
Forum: Financial Planning and Building Portfolios
Topic: How did you do in 2023?
Replies: 97
Views: 7491

Re: How did you do in 2023?

OnlyMyOpinion wrote: 08 Jan 2024 10:36 Sheesh, I'm starting to warm up to formerpatriot's "piles" approach.
Something like:
Pile at start of year = X
Pile at end of year = Y
If Y is greater than X, all is good. :wink:
That's close to my rough and ready calculation. In my case, it's [PW(end of year) - PW(beginning of year) - cash flows during year] as compared to (4% plus inflation) of PW(beginning of year). Since for me the cash flow term is relatively very small and mostly happens in the first week of a year, the calculation is good enough.

George
by ghariton
07 Jan 2024 16:48
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 129
Views: 10331

Clippings 2024

A profile of Cliff Asness, intertwined with a commentary on the present state of factor investing, in the Financial Times (soft paywall).

George
by ghariton
02 Jan 2024 23:27
Forum: Financial Planning and Building Portfolios
Topic: How did you do in 2023?
Replies: 97
Views: 7491

Re: How did you do in 2023?

Nominal returns 1 year 28.2% 5 years 8.2% 10 years 10.8% Real returns (using November 2022 to November 2023 CPI to approximate 2023 inflation) 1 year 25.1% 5 years 4.8% 10 years 8.0% Note the volatility. 2022 was a truly horrible year. I was down 20.7% nominal and 27.0% real. This was a much worse year for me than 2008, when I was down 9.8% nominal. I run a buy-and-hold portfolio, rebalancing every five years. I also have some legacy QQQ, which I have been reluctant to sell because of the uncrystalized capital gain. I did sell some 60% of the position in dribs and drabs over the years, mostly to fund gifts to the children, but then they all ended up with houses much nicer than mine, and so I stopped. Unfortunately (or fortunately) the lack ...
by ghariton
31 Dec 2023 11:58
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32755

Re: Clippings 2023

How Much Are You Hurting Your Returns?
"The way to judge yourself is inertia analysis. Run your January 1 portfolio for the full year without any changes and compare it to your actual results. It's awful because some years you realize all you did was subtract value when you went into the office."
George
by ghariton
26 Dec 2023 11:36
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32755

Re: Clippings 2023

Canadian companies are still importing and exporting. Surely someone in Ottawa has a dust covered binder to pull out and update. Yes. But to the traditional irritant of softwood lumber, there is now the added irritant of supply management. Canada won the latest appeal for arbitration by the U.S., but that was on a technicality (language that appears in the CPTPP and CETA does not appear in the USMCA). Then there is Canada's attempt to obtain money from big tech firms. The most problematic for the U.S. is Canada unilaterally imposing a digital services tax, retroactive to 2022. This despite the OECD's initiative to develop such a tax that would be levied by all members starting in 2025. I think it's unwise for Canada to lead the way on this...
by ghariton
25 Dec 2023 23:03
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32755

Re: Clippings 2023

I know that the Liberals are taking seriously (internally) the possibility of a Trump re-election and increased protectionism. But my sources suggest that there are no plans, nor the beginnings of any.

If this comes to pass, Canadian equities may face severe headwinds. Time to diversify, yes, but where? To U.S. equities? To global markets? Perhaps emerging markets, which might be overlooked in any trade wars?

George
by ghariton
25 Dec 2023 10:09
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32755

Re: Clippings 2023

Peter Zeihan on Canada after America.

What happens as American protectionism increases?

George
by ghariton
19 Dec 2023 16:45
Forum: Financial Planning and Building Portfolios
Topic: Stocks versus ETFs
Replies: 102
Views: 6779

Re: Stocks versus ETFs

scomac wrote: 19 Dec 2023 13:05 Perhaps the OP can allow changing the pick?
Done

George
by ghariton
18 Dec 2023 11:35
Forum: Financial Planning and Building Portfolios
Topic: Stocks versus ETFs
Replies: 102
Views: 6779

Stocks versus ETFs

Watching trends in posts, it seems that posters are moving away from individual stock picking and toward all-in-ones such as VBAL. I thought it useful to get a snapshot today, so as to compare with the situation a few years from now.

George
by ghariton
18 Dec 2023 11:00
Forum: Retirement, Pensions and Peace of Mind
Topic: Annuities
Replies: 134
Views: 11112

Re: Annuities

Shante wrote: 18 Dec 2023 06:12 Fear of loss is a powerful motivator. The price of reassurance that the buyer is not being a chump. With the same psychology that leads 44% of Canadians to take early CPP as soon as they're eligible.
A very good point and analogy.

George
by ghariton
17 Dec 2023 22:29
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32755

Re: Clippings 2023

Further to P_I's post, a picture is worth a lot of words...
im-901924.png
im-901924.png (71.31 KiB) Viewed 674 times
Illustrating yet again that the vast majority of equity gains come from a handful of stocks. I believe that finding them ahead of time is like finding a needle in a haystack. So I don't search... I buy the haystack.

George
by ghariton
17 Dec 2023 16:32
Forum: Retirement, Pensions and Peace of Mind
Topic: Annuities
Replies: 134
Views: 11112

Re: Annuities

Also bear in mind that the person buying an annuity is paying a cost both up front and in opportunity cost of forgone investments to buy a little security of outcome. Is it any surprise that the person who decided to buy that security is willing to pay a little more to buy a little more security of outcome? I think that you are mixing up several different types of security of outcome. The annuity ensures a certain security of outcome for the annuitant, in that it reduces (or eliminates) longevity risk. The annuity can also do this for a spouse, if a joint annuity is purchased. Presumably spouses care a great deal about each other, and reducing risk for a spouse is tantamount to reducing risk for oneself. A guarantee offers some security of...
by ghariton
17 Dec 2023 10:31
Forum: Retirement, Pensions and Peace of Mind
Topic: Annuities
Replies: 134
Views: 11112

Re: Annuities

Bruce, you can get a life annuity with or without a 10 year guarantee. See this site for examples of quotes. Going with the first provider in the list, for a male at age 65, the 10 year guarantee costs $8 per month for each $100k of capital. For the second provider, it's $13 a month. Thanks for the link. Since I'm lazy, I just looked at the first issuer listed, BMO, for a 75 year old male (me). With 10-year guarantee, the monthly payout is 718. With no guarantee, the payout is 794. Intuitively, term insurance from age 65 to age 75 should be cheap, almost negligible if one abstracts from administration fees. As one gets older, the spread should increase dramatically. Upon reflection, perhaps an annuity with 10 year guarantee at age 65 is re...