- Dec 28, 2008
- Reaction score
As someone that drives sports cars, seeing investment bros get into hoarding as an alt investment makes me mad.
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sure. so why bother with any point-to-point analysis, you concede the evidence and then cite it anyway.Like I said, you can always pick arbitrary points... I literally conceded that in my post. The point is, on average, over the normal investor's lifetime, they will see gains. Sure, throwing a ton of money in before a black swan event will have large short/medium-term losses. I don't think anyone is arguing it is a sure thing or there aren't periods where you could lose money.
I agree, it would be a humdinger, and probably sets the worst of the worse case scenarios, butSure, a 40% "correction" could come, but that would make it among the worst bear markets in 100 years.
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There's always a time frame problem in any of these discussions, but an investor buying at the bottom in 2009 to now would have made 400% in a decade. There was a 28% drop, so they still would have been up 288% at the 2020 trough.
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You do you, but I rather risk buying and losing 40% overnight than sit out and risk missing out on huge gains while I wait for that inevitable drop.
But that's just it. Feb/March was panic, fear and flight to safer assets. Yes, we are coming towards a light at the end of the tunnel, but from a long term perspective what does that mean? It doesn't somehow manage to magically elevate growth around the world above pre-Covid levels. On the contrary, long term growth rates may be less now than they were pre-Covid for many reasons. What has had me concerned was the question of just what I was buying when I invested an incremental dollar in equity markets, especially U.S. equity markets. I don't invest in stock for the benefit of being sent notices of shareholder meetings. Hell, we don't even get those fancy stock certificates you used to see in the 30s. No, I am buying an asset that is supposed to pay me a cash return, either in the form of dividends or capital gains through share buybacks or outright sales, because someone believes those dividends will grow at some rate in the future that makes them worth more than they are now. There are hundreds of metrics people will look at to inform them on markets and relative value. My favorite is Shiller's cyclically-adjusted PE or CAPE ratio. Right now, this metric sits at about 37. It has only been that high in one other period in the last 100 years, and that was in the run up to the tech bubble in 2000, after which the S&P lost 44% of its value. Before the meltdown that kicked off the Great Depression it was 33. Generally, CAPE will reach higher points when the economy is doing great. I don't think we can describe today's economy in those terms, and the deferred taxes that will come in the form of higher taxes down the road to pay for all these stimulus and infrastructure bills will have to have some impacts. At least infrastructure, if done right and not just pork disguised as infrastructure, will yield societal returns that could be greater than their cost. Stimulus is literally like loading our mortgage, car payments, and grocery bills on to our credit cards. It has little lasting impacts except the debt that needs to be sold to finance them. Here is a good recent read, and it highlights one of the points that have made me grit my teeth whenever I see another high being set. Namely, the market can be ridiculously overvalued and can continue to rise, significantly, for months if not years. I am not so silly as to believe one can pick tops and bottoms. I doubt it is even possible to choose the right quarter in which these will fall, but I am convinced we are in for a huge correction in 2021, and just don't want the prospect of multi years of 2 to 3% returns simply because I got greedy and ignored the fundamentals.And I just don't see the 40% thesis. Or even the 25% thesis.
February/March 2020? Sure. I'd question it, but I can at least see the thesis. Global pandemic is about to cripple international trade, drive everyone out of work, and kill a bunch of people.
But today? After we've started to figure out how to live and work with it and have come up with functional vaccines? What's going to cause the drop?
At this point it might as well have been sitting in 2017 and saying "I think a crash is coming". It would take some unexpected event out of left field--another pandemic that's worse, war breaks out, lithium ion batteries suddenly all stop working.
Since 1973 (because that is the data set I could find easily), there hasn't been a single year where you wouldn't have positive returns over 15 or 20 years with an S&P index fund. While the difference between the worst case scenario and the best case scenario is large, I still rather take the worst case scenario than sitting out. To each their own.sure. so why bother with any point-to-point analysis, you concede the evidence and then cite it anyway.
whether equities make sense vs alternative would come down to terms of the investor, i know that's rote but so is 'equities gain over the long term'
you seem to be making the case that index funds make the most sense over say the first third of investment careerSince 1973 (because that is the data set I could find easily), there hasn't been a single year where you wouldn't have positive returns over 15 or 20 years with an S&P index fund. While the difference between the worst case scenario and the best case scenario is large, I still rather take the worst case scenario than sitting out. To each their own.
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Actually I still invest close to 20% of my income into equity indexes on the margin, it’s a poor man’s hedge that my view on valuations may be wrong.Do people sitting out save the same % as if they were investing? Through many anecdotal conversations with peers, I can say those who haven't prioritized investing almost never save as much as peers who do.
However, for those who have prioritized and actively invested before, since you've pulled money out, have you continued to save the same %? Do you have a separate account that's identical as if it were invested or was some pissed away on dinners, hobbies, vacation etc?