Full Circle’s Mutterings on Money
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28-02-2016, 11:55 PM
RE: Full Circle’s Mutterings on Money
(28-02-2016 11:00 PM)Imathinker Wrote:  On that topic, to what degree do you think consumers could have lessened the impact of the financial crisis? It would be crazy to blame it all on uninformed people, but at the core of the housing bubble is people using more credit than they can afford, right? I'm just not clear on how much an impact that made.

I’ve vacilated over time on who was most at fault, the predatory lenders giving away money or the greedy and/or uniformed schmucks who took the money.

I could make a case for either but as they say, it takes two to tango.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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29-02-2016, 07:27 PM
RE: Full Circle’s Mutterings on Money
Indeed it does.

A man should not believe in an ism, he should believe in himself. -Ferris Bueller

That's what a ship is, you know. It's not just a keel and a hull and a deck and sails, that's what a ship needs but what a ship is... what the Black Pearl really is... is freedom. -Jack Sparrow
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09-04-2016, 10:52 AM
RE: Full Circle’s Mutterings on Money
Good advice.

Harold Pollack, whose index card of financial advice went viral, explains how he dug himself out of his own money hole.

[Image: MW-EJ385_index__20160404160333_ZH.jpg?uu...15c588dfa6]

http://www.marketwatch.com/story/6-hard-...2016-04-09

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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13-04-2016, 10:05 AM
RE: Full Circle’s Mutterings on Money
Trying to get up to speed here

(01-02-2016 11:40 AM)Full Circle Wrote:  I’ll get into rebalancing soon enough.

I just looked and my 401k is a "re-balance upon request" kinda thing... I don't think I've ever requested a re-balance before?

How much damage have I done to myself for never doing this?
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13-04-2016, 10:21 AM (This post was last modified: 13-04-2016 12:02 PM by Full Circle.)
RE: Full Circle’s Mutterings on Money
(13-04-2016 10:05 AM)Grassy Knoll Wrote:  Trying to get up to speed here

(01-02-2016 11:40 AM)Full Circle Wrote:  I’ll get into rebalancing soon enough.

I just looked and my 401k is a "re-balance upon request" kinda thing... I don't think I've ever requested a re-balance before?

How much damage have I done to myself for never doing this?

The honest answer is “hard to say".

Studies and historical data have shown that rebalancing once a year decreases risk, this happens because you don’t allow any one position to become too large a percentage of your portfolio.
And sometimes increases returns. This happens because it forces you to sell high and buy low, something us humans are very poor at doing.

It is quite possible that never having rebalanced had a positive outcome for your portfolio. I prefer to bring all my positions back to my original allocation percentages once a year for the two reasons given above.

Primer:
http://www.forbes.com/sites/greggfisher/...aaaee36e3e
https://personal.vanguard.com/pdf/flgprtp.pdf

In Depth:
http://www.efficientfrontier.com/ef/996/rebal.htm
http://www.investopedia.com/articles/pf/05/051105.asp

ps From the Vanguard paper, “Just as there is no universally optimal asset allocation, there is no universally optimal rebalancing strategy."

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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13-04-2016, 12:12 PM
RE: Full Circle’s Mutterings on Money
Follow up on the Vanguard paper.

The summation reads (bolding mine)

"Interpretations of rebalancing data in trending and mean-reverting markets
In certain market environments, rebalancing produces superior risk control but inferior returns. This disjunction can challenge an institution’s commitment to rebalancing. It’s important to recognize, however, that whether the prospective market environment will be trending or mean-reverting is rarely clear in advance. Rebalancing’s risk-control benefits, by contrast, are a certainty. Commitment to a long-term rebalancing strategy requires absolute clarity about the institution’s goals and risk tolerance, as well as the simple recognition that rebalancing will at times produce inferior returns.
An alternative interpretation of our simulation results is that managers who can predict return patterns can rebalance tactically to increase a portfolio’s return and reduce the portfolio’s risk. Although there is weak evidence for short-term trending and long-term mean-reverting in equity markets, both practical and academic evidence show that this predictability is very hard to exploit (Campbell, Lo, and MacKinlay, 1996).”

The main reason to rebalance is to limit your risk exposure. Sometimes rebalancing will produce a better return and at other times it won’t but what it ALWAYS does is reduce your risk exposure (assuming your asset allocation is balanced between non-corrolated asset classes).

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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13-04-2016, 01:34 PM
RE: Full Circle’s Mutterings on Money
It looks to me that if I rebalance now, I'd be selling too low on some of my investments. That seems counter intuitive but I suppose it would eliminate further risk.

I did gain last quarter but not much. I'm prolly just gonna wait for now. Thanks
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13-04-2016, 01:52 PM
RE: Full Circle’s Mutterings on Money
(13-04-2016 01:34 PM)Grassy Knoll Wrote:  It looks to me that if I rebalance now, I'd be selling too low on some of my investments. That seems counter intuitive but I suppose it would eliminate further risk.

I did gain last quarter but not much. I'm prolly just gonna wait for now. Thanks

Only you can decide what is best for you.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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13-04-2016, 03:11 PM
RE: Full Circle’s Mutterings on Money
Do people in the US get a lump sum on their retirement? It can be quite a significant amount here in Greece (or at least it was in the past) and, combined with a pension, it's definitely more than enough for a normal life.

Loans seem to be the problem everywhere. I hate loans. I hope I will never need one. I honestly don't get why people can't simply wait until they've saved enough money to buy a house or whatever. Banks are fucking evil and most of the times, they will end up being paid back tenfold (or more).

Also, what kind of third world country doesn't have free education? Getting a loan before you're even an adult is fucking insane. How can you guys not stand up to that? You either have to be rich, poor or uneducated?

"Behind every great pirate, there is a great butt."
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13-04-2016, 05:15 PM
RE: Full Circle’s Mutterings on Money
(13-04-2016 03:11 PM)undergroundp Wrote:  Do people in the US get a lump sum on their retirement? It can be quite a significant amount here in Greece (or at least it was in the past) and, combined with a pension, it's definitely more than enough for a normal life.

Loans seem to be the problem everywhere. I hate loans. I hope I will never need one. I honestly don't get why people can't simply wait until they've saved enough money to buy a house or whatever. Banks are fucking evil and most of the times, they will end up being paid back tenfold (or more).

Also, what kind of third world country doesn't have free education? Getting a loan before you're even an adult is fucking insane. How can you guys not stand up to that? You either have to be rich, poor or uneducated?

underground,

I’m afraid most of the points you bring up are outside the scope of this thread. I’d prefer not to derail it if you don’t mind. Thanks.
As for retirement lump sums, every company is different. The government pays you social security benefits on an ongoing basis.

FC

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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