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extremebanker

extremebanker
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  • Low Inflation Taper Theory [View article]
    South:

    As you say, most of the benefit of low interest rates has worked it's way through the system.

    The biggest problem we see is the competition from the GSE's. Fannie and Freddie, FHA, USDA, Farm Credit and others are still making loans that banks can't compete with. Financing in excess of 100% is still commonplace. These organizations are using taxpayer support to fund low interest rate loans on borrowers who have no skin in the game. Banks are not allowed to make loans under this criteria unless they are made to sell in the secondary market.
    Apr 16 01:12 PM | Likes Like |Link to Comment
  • The Four Horsemen Of The Stock Market Apocalypse [View article]
    South:

    Your numbers are very solid. Mine are not as impressive. I am up 2.2% as of today at noon.

    My interest in benchmarks has to do with a number of conversations I've had with Larry Swedroe. He is a noted author and favors passive investing. I have made changes to my benchmarks as a result of our conversations. I have divided my portfolios into growth and income categories. I have developed an index for each which I track and then compare to my performance. For example, my growth index is VOO,VO,VB,VEA,VWO,VNQ,DBC and GLD. I calculate 25% in VOO and it moves down to 5% in GLD and DBC. This is what my growth portfolio competes against. My growth index or benchmark is what I think an RIA would recommend for a passive investor. I wanted to be sure I am outperforming the passive benchmark. If not, then why bother. I have other things I can do rather than manage investments.

    Hope this makes some sense.
    Apr 15 02:37 PM | 1 Like Like |Link to Comment
  • The Four Horsemen Of The Stock Market Apocalypse [View article]
    T:

    Our paths may have crossed at one time. I was at Mcintire Commerce College for the summer of 72. Were you at UVA at that time? Did you make any of the NCAA games?
    Apr 15 10:40 AM | Likes Like |Link to Comment
  • The Four Horsemen Of The Stock Market Apocalypse [View article]
    Tack: I agree they are apples and oranges. I have more trouble analyzing a portfolio of loans rather than munis or preferred stock. Therefore, I would require a higher yield to purchase a loan portfolio.

    Each to his own.
    Apr 15 10:20 AM | Likes Like |Link to Comment
  • The Four Horsemen Of The Stock Market Apocalypse [View article]
    South and Tack: I am a little surprised at your purchases of AIF with internal security ratings that are non investment grade and a yield less than 8%. A leveraged junk fund would have to be high risk IMO. A yield less than 8% does not justify such risk taking when much higher yields are available in funds with much better ratings. I.E. FFC and NIO.
    Apr 15 09:38 AM | Likes Like |Link to Comment
  • Actually It Is All About Total Return...Totally! [View article]
    Cross:

    Thanks for your reply. I was curious how you calculated "alpha". I am doing some work on the benchmarks I use and wondered what you did based on a previous comment.

    Thanks again!
    Apr 9 08:15 PM | Likes Like |Link to Comment
  • Actually It Is All About Total Return...Totally! [View article]
    Cross:

    You state in a previous comment how you calculate your alpha each month. I am curious as to your process. How do you calculate your alpha? Do you cull poor performers? Are you using relative strength to improve performance?

    Momentum has been shown to exist across asset classes and globally. Are you using some type of momentum indicator to improve alpha?

    Thank you.
    Apr 9 11:18 AM | Likes Like |Link to Comment
  • Safety, Stability And High Income For The Retired Dividend Growth Investor [View article]
    South:

    You are correct that leveraged munis can be very volatile securities. It is best to keep a close eye on these investments. However, they can be very profitable to own for long periods of time.

    My interest rate forecast is less robust than yours. I think we had a wager about this although I don't remember the details.

    I invest in a number of exchange traded funds and closed end funds as trend investments which will be sold when interest rates rise and prices fall

    http://bit.ly/1hdnJIm

    The section on income will describe one of my strategies.
    Apr 8 03:02 PM | Likes Like |Link to Comment
  • Safety, Stability And High Income For The Retired Dividend Growth Investor [View article]
    Be here now:

    Your analysis does not impact my numbers since I consider tax payments as part of my expense budget. It is paid from my withdrawal percentage. Also, qualified dividends get a tax advantage and munis are federal tax free.

    You are correct in that it may be difficult to find new investments at 6% but so far I can. If you have 5% inflation I would certainly expect higher rates to average up the portfolio.

    I agree that inflation is the enemy. However, at 62 I do not have as long to worry about inflation as I used too. I don't see any real inflation (over 3% ) over the next few years.
    Apr 8 02:55 PM | Likes Like |Link to Comment
  • Actually It Is All About Total Return...Totally! [View article]
    One would have been better rewarded on a total return basis for the last 5 years to purchase SPY rather than the portfolio of six stocks you mention.
    Apr 8 02:19 PM | 3 Likes Like |Link to Comment
  • Safety, Stability And High Income For The Retired Dividend Growth Investor [View article]
    Hi South:

    The two places I get over 6% now is equity preferred stock and muni bonds. There are a number of investment grade preferred issues trading at 6% or better. You know who they are. Also, NUV is a non leveraged muni trading with a tax free yield of 4.56%. This translates to a 6.9% TEY for one in the 34% bracket. I also purchase several of the investment grade leveraged muni funds yielding over 6% tax free.

    I consider taxes as part of my annual expenses. In other words it comes out of my annual income or the 3% withdrawal.
    Apr 8 01:59 PM | Likes Like |Link to Comment
  • Safety, Stability And High Income For The Retired Dividend Growth Investor [View article]
    A fixed income portfolio yielding 6% (think preferred stock or muni bonds) can keep up with reasonable inflation.

    During the accumulation phase a 6% yield will certainly outperform inflation as long as that inflation is below 6%.

    During the distribution phase a 6% yield will keep up with inflation as long as inflation and the withdrawal rate do not exceed 6%.

    For example, a retiree who withdraws 3% to live on has 3% to reinvest to keep up with inflation. A million dollar portfolio paying 6% or $60,000 per year can provide $30000 for income and $30000 to invest. Year 2 has a balance of $1,030,000 which at 6% increases income to $61,800 per year or 3% higher than the previous year.
    Apr 8 10:10 AM | 1 Like Like |Link to Comment
  • GROWTH [View instapost]
    The four funds selected for investment returned 34.9% in 2013. For the first 3 months of 2014 they returned 3.95% as compared to 2.7% for a passive benchmark of eight exchange traded growth funds.
    Apr 2 10:07 AM | Likes Like |Link to Comment
  • The Rally Nobody Noticed: Municipal Bonds [View article]
    Guardian:

    I will generally buy long term munis rather than long term taxable bonds. The tax free nature of the coupon will usually (but not always) have less interest rate risk than their taxable counterparts. Munis will usually have less volatility than an equivalent taxable bond. If taxable interest rates move 3% then muni rates will usually move 2%. Of course the spreads between taxable and tax free does not always stay the same as was explained in the article.
    Apr 1 09:26 AM | Likes Like |Link to Comment
  • The Rally Nobody Noticed: Municipal Bonds [View article]
    E:

    GO bonds mean general obligation bonds. They are backed by the taxing power of the authority that issued them. They can tax citizens to pay these bonds. Extremely low default rate.
    Apr 1 09:20 AM | 1 Like Like |Link to Comment
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