Google’s strategy is to weaken other companies’ businesses (say, email) by offering something quite good or good enough for free, take over that market, and then use their new dominant position to rake in advertising revenue
Android Isn’t About Building a Mobile Platform | TightWind January 8, 2011
Samsung not pulling any stops to sell TVs in 2011 January 7, 2011
Looks extremely cheesy show, but interesting to se where the money is.
I do not believe in TV as the media hub (well, unless it is a two box TV, but then it is a small computer and a display), but Samsung did not pull any stop (and apparently offered many free TVs to Dreamworks to help them develop 3D BD).
DreamWorks now using Samsung TVs to make all of their films. “We need the best displays possible to capture every nuance… not some special model, but rather the same ones you’ll find at your local Best Buy.”
UBS – Prices and Earnings 2010: check your city January 6, 2011
Prices and Earnings 2010 update
ETFs 20% allocation blocks only? (max 5 allocations) January 4, 2011
Freak wrote:Hello Desperatekid and choozmDesperatekid wrote:Thanks Freak for your replies. If I’m not wrong, you seem to be valuing fees, taxes and expenses much more over the importance of diversification. Is that really a good strategy over long term? Your recommendations only point towards the main broad indexes of Europe and US so far.choozm wrote:Summary of your post:
Over the long term, mkt coverage of 100% vs 85% vs 60% return similarly, so given the choice, you would go for the solution with the lower cost of investing. In the case of Europe equity, though EUN mkt coverage (60%) is smaller than EFA (85%), its cost of investing is lower thus attractive to you. Am I correct to say so?
Back to Desperatekid’s question: Is that really a good strategy over long term? Is it because of efficient market hypothesis?
Why broad base and not value/growth
First of all, a broad base index is more diversified than value/growth/dividend index. Although there are research showed that value outperformed growth, the value premium is not very stable and reliable. For US stocks, the post tax value premium can be zero over 25 years. For European stocks, my own studies found that value premium seemed to be very stable and positive over time for UK and France stocks. However, value premium is almost zero for Switzerland stocks. For Germany, the value premium over 30 years was positive. However, all the value premium occurred in the last 10 years. Is Germany value premium a one time thing?
Personally, I find value vs growth a very interesting topic. However, more research is needed. Currently, I would rather stick to broad base index rather than overweight value. Note that the moment we invest in value ETF, we have a more concentrated portfolio rather than more diversified portfolio.
What about midcap/small cap?
I love to include midcap and small cap stocks. That why I favour VTI rather than SPY or IVV.
Why Dow Jones Stoxx 50 index rather than MSCI Europe?
Infinity is about 0.5% more expensive than EUN. For EUN (top 60%) and Infinity to give the same return, the bottom (85%-60%)/85%=30% of the stock in MSCI Europe has to outperform the top 70% by 0.5%/((85%-60%)/85%) = 1.7%.
Taking data from “stock for the long run”, from 1926 to 1997, US small cap stocks outperformed S&P 500 by a debatable 1.5%. It is debatable because the main bulk of the extra return occurred in 1975 to 1983. Hence, it maybe a one time thing.
If we assume the (bottom 30% return = top 70% return), then EUN outperforms Infinity.
If we assume the (bottom 30% return = top 70% return + 1.5%), then EUN outperforms Infinity.
If we assume the (bottom 30% return = top 70% return + 1.7%), then both EUN and infinity have comparable return.
By the way, the bottom 30% of the stocks in MSCI Europe is not even small cap stocks yet. They are only mid cap stocks. Hence, for EUN and Infinity have the same return, the European mid cap premium must be higher than the debatable US small cap premium. In this case, I rather use EUN.
Why US and Europe rather than the rest of the world
It is not (US + Europe) VS the rest of the world. In a portfolio, we can replace the US unit trusts and European unit trusts with ETF. For “the rest of the world” unit trusts, there are more things to consider.
First of all, due to ETF portfolio constraint (see below), it is very difficult to use single country ETF, eg Korea. For more detail, see below under “ETF portfolio constraint”. This means we must go for regional EM ETF. For example, global EM and Far East exclude Japan ETF. Note that India is not part of Far East.
Since EM Asia make up 50% of EM Global, an investor who invests in both Asia exclude Japan and EM Global has high exposure to EM Asia. I notice there is greater acceptance of indexing today (at least @ sgforum) as compared to the old FSM days. Even for emerging market, we are talking about indexing.
We need to consider
1) (EM Global + SG + HK) VS (EM Europe + EM America + Asia exclude Japan)
2) Do we want to exchange Aberdeen Pacific Equity for iShare Far East Exclude Japan ETF or Emerging Market VIPERs?
I usually talk about US and Europe is simply because the condition is simpler.
Discard our US unit trusts and replace with VTI.
Discard our European unit trusts and replace with EUN.
It is one to one exchange. The discussion is more that fund level rather than portfolio level.
For “the rest of the world”, we have more things to consider. An ETF investor does not mean he has to invest in ETF only. He can have a portfolio of ETF and unit trusts.
ETF portfolio constraint
Assume an investor makes 4 trades per year for ETF listed in US. If he invests 5% in Korea (using rebalance by new cash), he roughly has 1 Korean ETF trade every 5 years. It is very difficult to maintain the asset allocation of the portfolio at such a low trading frequency. Most of the time, the allocation will be either too low or too high. Hence, we can only use ETF for funds with big allocation in our asset allocation (eg 20%).
For the above reason, ETFs like mid cap, small cap, Korea, Japan, HK, EM Europe, EM America etc are generally not suitable unless one invest 20% of the portfolio in just one of them. For these region, we still need to use unit trusts.
8 Lazy ETF Portfolios December 23, 2010
I’m a firm believer that investing doesn’t have to be complicated and that it doesn’t have to require a great deal of ongoing effort. In that vein, I’m always drawn to “lazy portfolios.” The following are ETF renditions of some of the most popular lazy portfolios.Most of them could be done just as well using regular Vanguard index funds. The ETF versions simply allow you to implement the portfolios at your brokerage firm of choice, and perhaps reduce costs and taxes somewhat.
1. Allan Roth’s Second Grader Portfolio
- 60% Vanguard Total Stock Market ETF (VTI)
- 30% Vanguard FTSE All-World Ex-U.S. ETF (VEU)
- 10% Vanguard Total Bond Market ETF (BND)
The asset allocation between the funds is clearly intended for a younger, more aggressive investor. But Roth’s idea of keeping it simple applies to everyone. Even for investors close to (or in) retirement, these three ETFs should get the job done.
2. David Swenson’s Ivy League Portfolio
- 30% Vanguard Total Stock Market ETF (VTI)
- 5% Vanguard Emerging Mkts ETF (VWO)
- 15% Vanguard Europe Pacific ETF (VEA)
- 20% Vanguard REIT ETF (VNQ)
- 15% Vanguard Intermediate-Term Government Bond ETF (VGIT)
- 15% (TIP)
David Swenson, the Chief Investment Officer at Yale University, recommends the above portfolio (a 70/30 stock/bond allocation) in his Unconventional Success. He is a big proponent of equity-oriented allocations for investors with long time horizons.
3. Rick Ferri’s Core Four Portfolio
- 36% Vanguard Total Stock Market ETF (VTI)
- 18% Vanguard FTSE All-World Ex-U.S. ETF (VEU)
- 6% Vanguard REIT ETF (VNQ)
- 40% Vanguard Total Bond Market ETF (BND)
“You only need a few asset classes in your portfolio, and after that there are diminishing returns. The mutual funds you choose to represent those asset classes should be the lowest cost funds you can buy.” –Rick Ferri, CFA on the Bogleheads Forum
4. Bill Schultheis’ Coffeehouse Portfolio
- 10% Vanguard S&P 500 Index ETF (VOO)
- 10% Vanguard Value ETF (VTV)
- 10% Vanguard Small-Cap ETF (VB)
- 10% Vanguard Small-Cap Value ETF (VBR)
- 10% Vanguard FTSE All-World Ex-U.S. ETF (VEU)
- 10% Vanguard REIT ETF (VNQ)
- 40% Vanguard Total Bond Market ETF (BND)
The title of Bill’s book, “The New Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get on with Your Life” is spot on. The above portfolio is intended to be rebalanced once per year and otherwise left alone. Sounds good to me.
5. Larry Swedroe’s Big Rocks Portfolio
- 9% Vanguard S&P 500 Index ETF (VOO)
- 9% Vanguard Value ETF (VTV)
- 9% Vanguard Small-Cap ETF (VB)
- 9% Vanguard Small-Cap Value ETF (VBR)
- 6% Vanguard REIT ETF (VNQ)
- 3% Vanguard FTSE All-World Ex-U.S. ETF (VEU)
- 6% SPDR S&P International Dividend (DWX)
- 3% Vanguard FTSE AW ex-US Sm-Cap ETF (VSS)
- 3% WisdomTree International SmallCap Div (DLS)
- 3% Vanguard Emerging Mkts ETF (VWO)
- 40% Vanguard Short-Term Bond ETF (BSV)
You’ll note that Swedroe’s portfolio is significantly tilted toward small-cap and value equities (with the reasoning that their higher risk levels should bring higher expected returns). It’s more funds than I’d personally like, but Swedroe makes a valid point that if you’re only rebalancing annually, the additional effort required by having a few more funds in your portfolio is pretty minor.
6. Harry Browne’s Permanent Portfolio
- 25% Vanguard S&P 500 Index ETF (VOO)
- 25% Vanguard Long-Term Government Bond ETF (VGLT)
- 25% Cash (i.e., money market funds)
- 25% SPDR Gold Trust ETF (GLD)
The idea behind Browne’s Permanent Portfolio is that the four asset classes have sufficiently low correlation that the portfolio should be able to put up modest gains each year under just about any circumstance imaginable.
7. William Bernstein’s No Brainer Portfolio
- 25% Vanguard S&P 500 Index ETF (VOO)
- 25% Vanguard Small-Cap ETF (VB)
- 25% Vanguard FTSE All-World Ex-U.S. ETF (VEU)
- 25% Vanguard Total Bond Market ETF (BND)
Bernstein, author of The Four Pillars of Investing, suggests the above portfolio for investors with a long time horizon. Note that it’s very similar to the first portfolio mentioned above (Roth’s Second Grader Portfolio), but with a much heavier allocation toward small-cap domestic stocks.
8. Harry Markowitz’s “Father of Modern Portfolio Theory” Portfolio
- 50% Vanguard Total World Stock ETF (VT)
- 50% Vanguard Total Bond Market ETF (BND)
Harry Markowitz–Nobel Prize winner and originator of Modern Portfolio Theory–when asked about his personal portfolio once replied, “I should have computed the historical co-variances of the asset classes and drawn an efficient frontier…Instead, I split my contributions 50/50 between bonds and equities.” The above portfolio is a somewhat tongue-in-cheek implementation of Markowitz’s approach.
Some people need to get with the program! December 22, 2010
Seems some have not yet realised there is something called “globalisation” happening
How do I use YNAB with multiple currencies?
YNAB can handle virtually any single foreign currency, but it does not support multiple currencies in a single budget file. We have our eyes on this functionality for a future release, but do not have a specific date set.One workaround is to set up a budget file for each currency. While this isn’t as elegant as having it all in one file, it’s the best we have to offer at this point.
Keep track of the margin December 20, 2010
I am not sure R&D numbers are comparable across companies as companies tend to aggregate different things in there, but the article makes a good read. I certainly never understood how RIM stayed in the phone business (vs. the services)
Yeah, I know there are some people who like the Torch. But there were also people who thought MS-DOS was easy to use.