Really illustrates how well dollar holds to inflation.
Show HN: Inflation-adjusted stock charts – Total Real Returns
31–40 of 279 posts
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#32Earlier quoted context omitted.
The book is an asset in this example. CPI isn't relevant, because trading the book does not affect it.
The book doesn't represent any invested capital, so let's not say that it is an asset. Instead, let's say that there are shares in a book making company, tracked in the index, and also books, which will be in the CPI. The value of being able to make one book per day is linked to the price of a book, which means that on the island, the CPI and the stock market have to rise and fall together. That causes the stock mark…
Do you want an answer to your original question or do you want to try and argue that the stock market and currency move inversely?
Because if you want an answer, you aren't making changes to the example that will help you understand. You're introducing confusing factors that are not needed. The original example gave a neat little illustration of how wealth-as-measured can drop without money disappearing. Don't bring CPI in to it (and stock prices don't drive the CPI so that is a reasonable assumption).
If you want to argue that the two move inversely then go ahead and don't mind me, but you might like to add in some evidence or case studies. And you'll need to be precise about real vs nominal, and probably start modelling other effects.
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#33Needs a way to specify the time range. As you mention on the page, the trend lines are very dependent on the time range.
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#34Where can I see the percent return inflation adjusted not just the trend line?
I'm not currently showing this directly because it's so sensitive to the specific start and end dates. :-/ (Is there a good UX for that?)
For now you could calculate it by mousing-over the dates your interested in and reading the values off the chart legend.
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#35The trick is the to get those inflation-adjusted returns you need 100% time exposure. No selling because circumstances force you to. No selling because you get spooked at a 50% drawdown. Not many people can tolerate even a 20% hit, which explains a lot about the situation the world economy finds itself in.
This is why I don't follow how my portfolio is doing, knowing doesn't give me much actual information and can often encourage bad behavior (admittedly I don't have many investments compared to many).
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#36How can everything go down at once, doesn't the money have to go somewhere? Best hypotheses so far along with how to test them: 1. Perhaps the parts of the CPI that companies in the stock market can produce are being outpaced by the components that are not produced, like real estate, and so can't contribute to an increase in share prices. (How to check: Look up changes in the CPI components, which are detailed in the…
Andrew and Barney are shipwrecked on an island with nothing but their clothes, the cash in their wallets, and a book Andrew has. Barney pays Andrew $100 for the book since he hasn't read it but Andrew already had. Later, after finishing it Andrew is able to buy it back for $80 because it's old to both of them but has a bit of sentimental value for Andrew. The dollar denominated wealth on the island has gone down by $…
I would expect the demand for the book to go down since the entire population has read it.
Of course, you could use the pages to help start a fire for warmth or cooking fish you will be catching.
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#37Thank you for creating this. I appreciate its value and encourage you to keep going.
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#38Earlier quoted context omitted.
The book doesn't represent any invested capital, so let's not say that it is an asset. Instead, let's say that there are shares in a book making company, tracked in the index, and also books, which will be in the CPI. The value of being able to make one book per day is linked to the price of a book, which means that on the island, the CPI and the stock market have to rise and fall together. That causes the stock mark…
Do you want an answer to your original question or do you want to try and argue that the stock market and currency move inversely? Because if you want an answer, you aren't making changes to the example that will help you understand. You're introducing confusing factors that are not needed. The original example gave a neat little illustration of how wealth-as-measured can drop without money disappearing. Don't bring…
My original question was how wealth-as-measured could disappear when dollars were included, not how demand for stocks could shift to demand for dollars. In a market with one good, the value of a dollar must move inversely with the value of the good (no examples needed, it's mathematically tautological) - and that is not what we see happening on the linked page. That's what my question is.
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#39The trick is the to get those inflation-adjusted returns you need 100% time exposure. No selling because circumstances force you to. No selling because you get spooked at a 50% drawdown. Not many people can tolerate even a 20% hit, which explains a lot about the situation the world economy finds itself in.
You're right, and the conventional advice has been to have a mix of stocks and bonds, with bonds to reduce volatility and preserve some of the wealth that you might need to access in the shorter term. However, what's unusual about the past few months is that bonds have been getting whacked too!
Here's a comparison of four Vanguard funds, with stock:bond ratios of 80:20, 60:40, 40:60, 20:80 respectively: https://totalrealreturns.com/s/VASGX,VSMGX,VSCGX,VASIX What I find interesting is that they are all experiencing significant and comparable drawdowns right now.
Here are treasury bonds with a comparison between duration: https://totalrealreturns.com/s/VFISX,VFITX,VUSTX
And here are corporate bonds with a comparison between duration: https://totalrealreturns.com/s/VFSTX,VFICX,VWESX
Even inflation-protected bonds (TIPS) are in trouble: https://totalrealreturns.com/s/VIPSX
So right now, bonds are not doing much to provide the short-term real wealth preservation that lets people take the 100% time exposure risk.
Re: Show HN: Inflation-adjusted stock charts – Total Real Returns
#40How can everything go down at once, doesn't the money have to go somewhere? Best hypotheses so far along with how to test them: 1. Perhaps the parts of the CPI that companies in the stock market can produce are being outpaced by the components that are not produced, like real estate, and so can't contribute to an increase in share prices. (How to check: Look up changes in the CPI components, which are detailed in the…
> How can everything go down at once, doesn't the money have to go somewhere?
How can everything go up at once, doesn't the money have to come from somewhere?
Certainly we can have everything go up whenever we find more resources than we consume. Natural resources, when exploited create value for all. A more energy and resource rich world causes everything to go up.
Why is it so hard to understand that increasing energy and resource constraints causes everything to go down?
And, more specific to our situation, much of the perceived value is credit. If I owe you $100,000, as long as you know I'll pay, you can consider that part of your value. But if I don't make enough to pay you, suddenly you aren't going to get that money.
Our entire global economy is massively over-leveraged and the only way to maintain that is perpetual growth, in a real sense of having access to ever more energy and resources. When the future delivers less than expected we start seeing that value disappear from the books.