In honor of tax season, we at DQYDJ annually post savings rate and asset allocation summaries. Unfortunately, I find mine particularly boring. I am young enough and have enough time left in the market that it has pretty much become throw it all in stocks and wait. Because of that (and that I’ve been at […]
Every year – usually, conveniently, around tax time – we like to evaluate the total picture of our personal finances. DQYDJ is (at least occasionally) a personal finance web site, so that usually means an asset allocation post and a savings rate post. Today, I’ll share our broad asset allocation snapshot. If it helps with […]
Much has been written about the recent run-up in stock market valuations so I do not want to rehash many of the arguments about what is driving the bull market in US stocks besides listing some of the hypotheses: Higher inflation expectations Expectation of deregulation Expectation of faster interest rate increases Continued consumer confidence Expectation […]
Here’s the short answer: no. You should not remain in 100% stocks for your entire career. For the longer answer, you’ll have to read the whole piece – and no, the answer isn’t because I believe typical people can “time the market”. The real answer boils down to a difference in preferences, in that different […]
Over the Thanksgiving weekend, I decided to play around with Morning Star’s X-Ray tool. The tool takes your entire portfolio and analyzes the asset allocation by geography, by risk level, by asset class as well as by type (growth vs. value, etc.). Here is what my current asset allocation across my portfolio is (asset type): […]
Well, we just finished our longest series to date here on DQYDJ, about market valuation (and don’t be scared if you find this post after 2013 – the calculations are either still sound or you’re in some kind of a planet of the apes scenario. Good luck either way). Our conclusion? More than around 3% […]
The idea of lifestyle creep is the slow build-up of “necessary” expenses as your income increases. I myself have experienced a bit of it in my career, noticing small purchases that I used to consider luxuries as being more commonplace. What I want to touch on in this article, however, is something I think is […]
The Kelly Criterion is the brilliant summation of a betting strategy first discovered by Information Theorist John Kelly. Kelly came up with a betting system, his criterion, which optimizes bankroll growth based upon known odds and a definite payout. Roughly, if you can find an exploitable, repeatable edge… Kelly’s system tells the maximum you should bet based upon that criteria.
“Finance is the art of passing money from hand to hand until it finally disappears.” – Robert W. Sarnoff.
From the “it’s about time” category, I present the Supreme Court case Jones v. Harris Associates. The case was filed because a group of investors felt:
1. The board of directors wasn’t sufficiently neutral (the law requires 40% of advisors to be “disinterested”).
2. The fund didn’t disclose the advisers’ financial links to the trustees
3. Compensation for the adviser should be controlled by a majority of the disinterested advisers
As Jason Zweig of the Wall Street Journal writes, the Supreme court has no business setting fees. However, the disclosure rules on mutual funds stem from older laws. Is it time for reform in fund disclosure?
The way the financial community seems to be covering it, we are currently attending the funeral of Asset Allocation. Long live Asset Allocation!
A common topic on financial pages world wide web wide (a cheer for alliteration?) is about the supposed death of asset allocation. Asset Allocation is the idea that the best retirement play for most investors is to allocate financial resources among a number of investment baskets. Supposedly by spreading one’s investments across a diverse set of asset classes it is possible to catch the hot performance in any corner of the market while absorbing any shocks in other corners. Of course, the uninspiring performance of asset classes during the ‘Great Recession’ seem to throw this theory into question. Read on and decide for yourself if we need to find some pallbearers for this financial heavyweight.