MG
FarmerD wrote: That's a prime reason why I can't understand why Swedroe prefers a commodities basket over physical gold.
Moderator: Global Moderator
FarmerD wrote: That's a prime reason why I can't understand why Swedroe prefers a commodities basket over physical gold.
Three years later and he hasn't.Reub wrote: Something tells me that Larry will be back.
MachineGhost,MachineGhost wrote:
That's really rich coming from Larry. Hypocrite?
Bottom line: Does Larry live in a bigger house and drive a better car than you do?
Fortunately, I don't need a good memory when I can just go back and read the thread - luckily, because my memory was trashed after I went through residency. Great discussion!stone wrote: It is amazing to me that he apparently didn't get the concept of opposing volatilities and rebalancing gains
Gold is for negative real interest rates when STT are failing to keep up with inflation and for currency exchange rate swings (such as for Iceland in 2008 or to a lesser extent for UK or Australia etc in 2008).
The enemy of my enemy is my friend? I can live with that.EdwardjK wrote: CraigR had previously closed off new comments on this post because of comments such as yours. Swedrow has along history of helping people learn how to invest and not get caught up in the hype of some financial advisors.
You and I may be better educated than some on investing, but do not criticize those who are out there trying to help and, yes, make a living doing it. All-in-all, I and many other people believe Swedrow is one of the better and honest advisors out there.
Was this Larry Swedroe's only appearance ever in this forum?larryswedroe wrote: ↑Thu Jan 12, 2012 8:38 pm Just thought I would make a few comments as one of the Bogleheads pointed this out to me.
One time post for me though. Just not enough hours in the day
It never ceases to amaze me how people make statements about which they know little, making assumptions without any basis.
First, I am quite familiar with the PP.
Second, it is likely that I know as much about financial history as any other person on this site, and likely far more
Third, I know all about correlations, and the benefits of diversification across asset classes as well as rebalancing benefits (diversification return). I have written many books on the subject
Fourth, no one talks or writes more about the fact that returns are not normally distributed, that there are fat tails, etc. I even give a speech specifically on that subject, providing the evidence.
Fifth, I write all the time about people making the mistake of treating the unlikely as impossible and the likely as certain. In fact, those mistakes are covered specifically in my books, including the new book Investment Mistakes Even Smart People Make and How to Avoid Them
Sixth, when it comes to fixed income we in fact don't even use mutual funds, we use laddered portfolios and often as one poster noted taxables are better on the short end.
But I was addressing the PP which uses funds
Seventh, I specifically stated gold doesn't hedge inflation, which is one reason, many, if not most people buy gold, so I wanted to make sure that point was made. Gold does have other hedging benefits, hedging geopolitical risks, but not inflation. It is not a source of inflation, while commodities, a broad basket, is and does hedge inflation well, in fact is the second best hedge of inflation after TIPS.l
Eighth, I would highly recommend TIPS as superior to other FI investments for tax advantaged accounts as they hedge both inflation and deflation, while LT bonds only hedge deflation. And the literature on the subject is all on that side, TIPS should be the preferred choice for tas advantaged accounts
Bottom line is while there are worse strategies IMO there are superior strategies, diversifying across other sources of risks, not just beta, and using broad CCF instead of gold and using TIPS. For those really interested in the latest thinking from the academic community on building portfolios across multiple sources of returns I would highly recommend reading Antti Illmanen's Expected Returns.
I hope the above is helpful and straightens out at least the assumptions that people made.
Best wishes
Larry
Yup. His one and only appearance.
I think if part of the cash portion of the PP was replaced with short-term TIPS that would be a potential improvement. Interest rates on cash/short-term bonds do respond to increasing inflation, but typically with a lag. So TIPS could help to ameliorate that problem.MangoMan wrote: ↑Tue Jan 14, 2020 2:11 pmAnyone have any thoughts on this?larryswedroe wrote: ↑Thu Jan 12, 2012 8:38 pm I would highly recommend TIPS as superior to other Fixed Income investments for tax advantaged accounts as they hedge both inflation and deflation, while LT bonds only hedge deflation. And the literature on the subject is all on that side, TIPS should be the preferred choice for tax advantaged accounts
Well that's mud on my face.MangoMan wrote: ↑Tue Jan 14, 2020 2:35 pm I'm not talking about TIPS as a replacement for gold, but as I think Larry meant, as a replacement for Long Term Treasuries.
larryswedroe wrote: ↑Thu Jan 12, 2012 8:38 pm I would highly recommend TIPS as superior to other Fixed Income investments for tax advantaged accounts as they hedge both inflation and deflation, while LT bonds only hedge deflation. And the literature on the subject is all on that side, TIPS should be the preferred choice for tax advantaged accounts
I see where he's coming from, but I personally think TIPS are overrated.MangoMan wrote: ↑Tue Jan 14, 2020 2:11 pmAnyone have any thoughts on this?larryswedroe wrote: ↑Thu Jan 12, 2012 8:38 pm I would highly recommend TIPS as superior to other Fixed Income investments for tax advantaged accounts as they hedge both inflation and deflation, while LT bonds only hedge deflation. And the literature on the subject is all on that side, TIPS should be the preferred choice for tax advantaged accounts