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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35379  
Subject: Re: Bonds vs Bond Funds--Again Date: 12/30/2009 12:39 AM
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I know every single cost of my port. Do you?

Aye, I do and over long periods I outperform with cost included but that is a different argument.

For me, indexed bond funds are better than individual bonds.

A)If that is the game you are comfortable with and know how to play it effectively then by all means run with it. There are many ways to use indexed bond funds successfully and like any asset class there are dangers/risks that need to be accounted for. If you believe your risks are adequately accounted for within your system then have at it.

B)Have you ever run the numbers of your whole port substituting a rolling bond ladder for the bond component? As an indexer you might find the exercise interesting. Hint: many of the studies done do not use this method; following an index is a much easier model build.

My favorite quote: "Before the deduction of the costs of investing, beating the stock market is a zero-sum game. After the costs of investing, beating the stock market is a LOSER'S game.

Even more so for bonds!


Back that statement up. Why is it more so far bonds. Costs are costs, it doesn't matter the market: index funds, ETFs, bonds, stocks, commodities, FOREX. If one understand the costs of their system and thus is managing their costs why are bonds pickers worse off then stock pickers or indexers? Big claim, it deserves more than a line, show us the data. Please don't just point to the low fees of passive management because that is only half the equation.

That's why Junkie is a loser who doesn't realize it YET

I know you don't like his tone or methods or his fervor for his cause, that is fine nor are you required in any way to follow his methods. He has laid his case out, what he does, how well he does it and when buys go south. If you look at the numbers he's posted he isn't loosing. He controls his costs and keeps his money working in a system that he has built and shaped for decades, he has built a system that works for him.

Again, you are under no obligation to agree with his results but he has worked out the numbers on the impact of inflation on multiple ports. I have seen few factual rebuttals of his estimates of impact of inflation. Where many disagree with Charlie is on the follow on conclusion of his that we would all be better off running a system that is more aggressive.

I believe it is eminently fair to disagree with his follow on conclusion on many merits but dragging the follow on into the inflation impact conclusion and then disagreeing with both is faulty logic.

Don't mistake your dislike of the person's combative, bristly nature for a bad argument backed only by his nature and don't let that deter you from the data laid out. To scoff at the data because of the author without providing a reasonable counter argument backed by similar data is a foolish way to manage ones finances and certainly stands on no higher ground then combative author's.

jack
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