tag:blogger.com,1999:blog-5465015914589377788.post3168332878865127168..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: An Indexer Answers Investing QuestionsMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-5465015914589377788.post-77663400826418722692015-02-22T20:25:27.829-05:002015-02-22T20:25:27.829-05:00@Anonymous: I don't think it's really that...@Anonymous: I don't think it's really that much risk. For $5000/month fro 5 years, that's $300,000 in GICs or HISAs or cash. That's quite a buffer against a downturn. As for the downturn in Japan, I have my investments spread across the whole world. <br /><br />It's true that my wife is risk-averse. If I die, she's likely to sell everything and put it all in GICs. But with me around she seems comfortable enough with our current strategy.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-54502231787662431482015-02-22T16:38:30.457-05:002015-02-22T16:38:30.457-05:00Do you really need that much risk?
Does your requ...Do you really need that much risk? <br />Does your required rate of portfolio return in retirement need that much equity risk? A Japanese type deflationary spiral of 1990 which saw the Nikkei plunge from 40000 to 10000 and just now starting to recover is possible here given the debt madness! Like you I too survived our own 2008 downturn without selling my stocks but now I'm much nearer to retirement and I know my wife could not handle a prolonged deflationary cycle and so I'm hampered by her different risk tolerance. How do you convince your wife :)?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-72245562448084060082015-02-21T16:31:55.348-05:002015-02-21T16:31:55.348-05:00@Anonymous: My asset allocation is for money I do...@Anonymous: My asset allocation is for money I don't need for 5 years or more. I intend for this allocation to stay the same in retirement. But what will change is that I'll need 5 years worth of spending within 5 years. So, that money will be in safe investments like GICs, HISAs, or cash. If you look at everything together, then the asset allocation will look like it has changed, but I view short- and medium-term savings as separate from long-term investments.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-15212490694900243742015-02-21T13:39:17.359-05:002015-02-21T13:39:17.359-05:00Wondering if you plan to change your asset allocat...Wondering if you plan to change your asset allocation? I mean at some point as you are approaching retirement or when you retire? Or is that not necessary because you have enough pension such that it doesn't matter if your portfolio drops by 50% and stays that way for 10 years you can still cover your fixed expenses?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-5741055462870827342015-02-18T20:33:51.187-05:002015-02-18T20:33:51.187-05:00@Mark: It's kind of a long test, but if you m...@Mark: It's kind of a long test, but if you make it through, I'll be interested to have a read of your answers.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-3880411794243191262015-02-18T18:03:30.983-05:002015-02-18T18:03:30.983-05:00Too funny :)
"Index investor. Maybe for the r...Too funny :)<br />"Index investor. Maybe for the rest of the 30 seconds I’ll practice juggling."<br /><br />Nice work Michael, I enjoyed this one. <br /><br />I think my answers wouldn't be as straightforward. Maybe I need to take the same test. We can compare notes!<br /><br />Cheers,<br />MarkMy Own Advisorhttp://www.myownadvisor.canoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-31867115395486413132015-02-18T16:43:13.901-05:002015-02-18T16:43:13.901-05:00@Grant: The following article explains my reasoni...@Grant: The following article explains my reasoning for my asset allocation:<br /><br />http://www.michaeljamesonmoney.com/2014/10/my-asset-allocation.html<br /><br />I never seriously investigated a small value tilt with international stocks. I find the MER plus withholding taxes on VXUS painful enough. Perhaps DLS isn't worse but I haven't checked.<br /><br />Here is an article I wrote on the subject of historical stock and bond long-term volatility:<br /><br />http://www.michaeljamesonmoney.com/2014/12/seeking-reason-to-own-bonds-for-long-run.html<br /><br />Long-term volatilities were also discussed in a book I reviewed:<br /><br />http://www.michaeljamesonmoney.com/2014/01/stocks-for-long-run.htmlMichael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-89746638117521685812015-02-18T15:52:06.455-05:002015-02-18T15:52:06.455-05:00Love your answers! A couple of slitting hairs type...Love your answers! A couple of slitting hairs type questions. I am curious as to how you came to your allocation between Canadian, US and International equity. Why not just 1/3 each? As you have chosen a small value tilt with US equities, why not do the same with international with eg. DLS? It's the one Rick Ferri recommends, so although is is a bit expensive the high factor loadings, I believe, make it worthwhile.<br /><br />Could you expand on the subject of there being not much difference in the historical volatililty of bonds and stocks over 20 years or more, or direct me to a resource? I couldn't find much on the subject via google. Thanks!Grantnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-9589980437498631452015-02-18T14:27:28.166-05:002015-02-18T14:27:28.166-05:00@J: Paying attention to such measures is a form of...@J: Paying attention to such measures is a form of market timing, but with just a fraction of your portfolio. I've stopped paying attention to any such measures. They all sound intelligent, and maybe some of them actually have some value, but I can't tell which. I go on the theory that any moves I make have the expectation of costing me money. Your mileage may vary.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-2754737027416618722015-02-18T14:13:27.622-05:002015-02-18T14:13:27.622-05:00MJ, what's your view of the various "obje...MJ, what's your view of the various "objective" valuation measures like Schiller's PE, the sorts of measures cited by value investors like John Hussman, Jeremy Grantham, etc? I'm not suggesting they be used to time the market in the short term, but I do find them hard to resist in terms of making some broad decisions about how much of my total portfolio should presently be in equities. Mr. Hussman, for example, projects 10 year nominal returns for the S&P 500 of less than 2% and offers some pretty persuasive arguments supporting the notion that, historically speaking, we're very near (if not at) another market top. I'm an indexer but can't seem to convince myself to push all my chips in until a significant correction occurs. So like many I suspect, I'm one foot in, one foot out, most likely to my own detriment.Jnoreply@blogger.com