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Ask HN: Is the stock market's growth largely anything more than inflation?

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Re: Ask HN: Is the stock market's growth largely anything more than inflation?

#71

Post by dragontamer »

PopAlongKid wrote: post #41
dragontamer wrote: post #11

Earlier quoted context omitted.

Two-portfolio theory is a good place to start. VTI (Vanguard Total Stock Market) + BND (Vanguard Total Bond Market). If you're saving for retirement, 30% BND + 70% VTI is a good starting point. Bonds grow slower than stocks, but stocks are riskier than bonds. Both grow over time. VTI charges a 0.03% fee/year. BND charges a 0.03% fee/year. These are very low fees. The management style is hands-off (which is why its so…

>If you're saving for something near term (ex: new car, new house) that's within 5 years A more conservative suggestion that I read once and have mostly adhered to says that any money you expect to need in the next five years should not be in the stock market at all. >BND (Vanguard Total Bond Market) Individual bonds and bond funds are two quite different types of investment and should not be considered equivalent.[0…

> Individual bonds and bond funds are two quite different types of investment and should not be considered equivalent.[0]

Bond funds move based off of the sum of bonds that are inside of them.

Much like we programmers study assembly code to understand the machine, even though we write code in C++ or Javascript, any bond fund owner should study bonds to understand the underlying mechanics and risks of the overall fund.

Re: Ask HN: Is the stock market's growth largely anything more than inflation?

#72

Post by SilverBirch »

mjevans wrote: post #44

Imagine a stock market where shares _had_ to be held for at least a week. Possibly even one where each day it was a dutch auction match of buyers and sellers during the overnight accounting. I think this would be a healthier form of investing in the ownership of companies.

I'm not sure what this has to do with this particularly question. However, what do you plan to do to tackle the massively increased spread due to lack of liquidity? Let's say I'm a market maker today. I can be a counter party to your trade safe in knowledge I can unload it in the next for microseconds. Under the new scheme I have to hold for atleast a day, this is a massive risk so I'll ask for an equally large premium on the price. Do you worry this head-wind on liquidity would damage the market?

I mean I can see the argument about the nature of nanosecond scale arbitrage, but hold times of a day would be quite wild.

Re: Ask HN: Is the stock market's growth largely anything more than inflation?

#73

Post by bardworx »

l30n4da5 wrote: post #70
svachalek wrote: post #59

Earlier quoted context omitted.

Can't or won't?

only so much space on an island. Japan is pretty crowded as it is, isn't it?

About the size of east coast, from Canada to Florida. It’s fairly large.

Tokyo is crowded, however.

Re: Ask HN: Is the stock market's growth largely anything more than inflation?

#74

Post by SilverBirch »

coned88 wrote: post #37
theandrewbailey wrote: post #10

> The more money the government prints the more the stock market goes up. I'm not an economist, but I have some speculation (no pun intended): When the government prints money, most of it ends up with the rich. The smart rich know that it's unwise to have lots of money lying around, so they buy investment assets, like real estate and stocks. When quantitative easing started in 2008-ish, guess what got more expensive?…

You're the one who seems to get what I'm saying exactly. It's like a big snowball that the more you feed it the more it grows as it rolls. I can't tell if this is good or bad or not. Because it seems like funny money to me.

I could be completely wrong about this, but the counter side of this is that when stock prices goes down (due to interest rates or whatever else) the value destruction is not equal to the money transacted. If you buy 1000 shares of TSLA for $1000 your position was $1m. When I buy 1 share for $5 after the crash you've lost 99.5% despite not transacting a penny. Hey presto! All that inflation disappeared!

Re: Ask HN: Is the stock market's growth largely anything more than inflation?

#76

Post by wahern »

arrosenberg wrote: post #66
svachalek wrote: post #59

Earlier quoted context omitted.

Can't or won't?

Would be much harder even if they wanted to. Lots of countries teach their kids English, only one teaches their kids Japanese.

You don't need to speak the local language to live and work some place. I wouldn't be surprised if the majority of migrant workers (temporary or permanent) around the world are unable to speak the local language upon entry.

Re: Ask HN: Is the stock market's growth largely anything more than inflation?

#77

Post by scottm01 »

coned88 wrote: post #38
ezconnect wrote: post #35

There's no other place to park cash right now. Central banks have zero and some negative interest rates. Having cash on bank is very expensive so the stock market is the new bank.

I'm worried about a complete crash that would plummet everything. Imagine if every year the stock market represented real industry and work and value. It would be strong and sturdy. But with this money being so loose. It's similar to if I just gave you decks of cards year after year and said build, build, build. That house of cards is not going to be great and can collapse. What happens in 80 years when milk is $34 a…

> What happens in 80 years when milk is $34 a gallon?

Milk was $0.14/gallon 80 years ago[1] ($.13/gallon 81 years ago), and $3.77/gallon last year[2].

$34/gallon in 80 years would seem to represent a slowdown of inflation.

[1] https://www.lmtonline.com/lifestyles/article/Milk-went-for-1... [2] https://www.ams.usda.gov/sites/default/files/media/2021Retai...

Re: Ask HN: Is the stock market's growth largely anything more than inflation?

#78

Post by itsoktocry »

MrPowers wrote: post #22

Yes, stock market growth is largely driven by the real growth in earnings and dividends. Nominal figures are not adjusted for inflation. "Real" numbers are adjusted for inflation (in economics-speak). The stock market (e.g. S&P 500 index) has real earnings that have consistently grown over time (although earnings are quite volatile). The real dividends paid by the companies that make up the stock market have also gro…

We don't have to speculate on this stuff, or base it on academic research from books: market P/E is easy to look up. Lo and behold it fluctuates dramatically. Same with stock returns. Averaging 7% doesn't mean you get that return annually, or ever for that matter.

Re: Ask HN: Is the stock market's growth largely anything more than inflation?

#79

Post by arrosenberg »

wahern wrote: post #76
arrosenberg wrote: post #66

Earlier quoted context omitted.

Would be much harder even if they wanted to. Lots of countries teach their kids English, only one teaches their kids Japanese.

You don't need to speak the local language to live and work some place. I wouldn't be surprised if the majority of migrant workers (temporary or permanent) around the world are unable to speak the local language upon entry.

That works in America and the UK because there are already large immigrant communities for you to arrive into. If you arrive in Japan speaking Spanish or Hindi today, how's that going to go?

It's not impossible, but it would take a lot of time and Japanese culture isn't exactly known for xenophilia.

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