Nomination for Best of Web

Comments on “Investor’s Best of the Web 2019,” by AAII Staff in the October 2019 AAII Journal:

I think the “Odd Lots” podcast from Bloomberg (www.bloomberg.com/podcasts/odd_lots) can be interesting, especially regarding “market structure” issues.
—Doug from New York

Top ETFs Are Low Yielders

Comments on “The Best- and Worst-Performing Exchange-Traded Funds,” by Charles Rotblut, CFA, in the October 2019 AAII Journal:

It is nice to see ETFs that are what they say they are. Low volatility does better in the flat market we have had for the past 12 months.
—Phil from New York

Interesting to see that the top 10—except for the Legg Mason Low Volatility High Div ETF (LVHD)—have pretty meager yields.
—Frank from Texas

A Deep Dive Into Merriman ETF Models

Comments on “Choosing Best-in-Class ETFs,” by Chris Pedersen in the October 2019 AAII Journal:

I have gone to the Merriman link provided in the article. There is a total of six models with compositions of different ETFs with corresponding weights. I attempted to optimize them by using a tool available in www.portfoliovisualizer.com. I could work out 12 more combinations made out of the six models: six basic combination models as shown originally on the Merriman webpage with specific weights; six more models by using the same above combination of ETFs but without giving any weights and then arriving at maximum Sharpe ratio; and six basic combination models with equal weight. The least desirable model combination is the Best-in-Class Taxable Ultimate Buy & Hold ETF portfolio, with CAGR of only 5.48% and expected return of only 6.27%. The most desirable model combination is Best-in-Class Taxable All-Small-Cap-Value ETF portfolio, with CAGR of 6.14% and expected return of 8.00%. But if one would be willing to take a concentrated bet by combining only two ETFs, the best result is the combination of the Vanguard Total Stock Market ETF (VTI)—57%—and the Vanguard Real Estate ETF (VNQ)—43%—for a CAGR 10.87% and expected return 11.53%.
—Prakash Joshi from Virginia

Chris Pedersen responds:
Thanks for digging into this, Prakash! As you point out, there are many other ways to select assets for a portfolio. If you’re not following a recipe like Merriman’s, you can find a much wider range of recommendations, including the two-fund solution you found. I think it’s important that we not over-optimize for the backtest though. Often what’s done well recently is not what’s going to do well going forward. Am I worried that the Best-in-Class Taxable Ultimate Buy & Hold portfolio was the “least desirable” in your backtests? Not really. The reason I’m not worried is that the small and value premiums have underperformed in recent years and there’s a good chance that they will improve as they revert to their historical means.

Buyback Yield Versus Dividend Yield

Comments on “Stocks With the Highest Shareholder Yield,” by Charles Rotblut, CFA, in the October 2019 AAII Journal:

Interesting article and chart. I’d like to see a quarterly or, even better, a monthly chart like that. Sure gives one a lot of good options to research!
—Jane from Florida

Would it be fair to say buyback yield is backward-looking and dividend yield is forward-looking? I should think significant buybacks would only be occasional, but dividends can easily continue as long as the company makes money.
—Hugh from Washington

Hugh is absolutely correct. What is the highest shareholder stock list based on dividend yields without buybacks?
—Richard from Florida

Family Health Influence on Early Retirement

Comments on “The Two Indicators of Post-Retirement Health,” by AAII Staff in the October 2019 AAII Journal:

In my case, the decision to retire early was predicated on a set of family circumstances where my father and one of his brothers both died in their mid-40s. Little did I know that the third brother would live to be 97! Here I am at almost 81 years old but enjoying my 25-year long retirement so far. My health is excellent. Both the third brother (my uncle) and I are/were non-smokers, whereas my father and the other brother were not.
—Walt from Indiana