End of Golden Era for Investors Spells Troubles • Hacker News Board

Re: End of Golden Era for Investors Spells Troubles

#51

Post by kspaans » Thu, Apr 28, 2016, 9:34 AM UTC

darawk wrote: post #28

peteretep wrote: post #22

> "A coming collapse in investment returns" And yet McKinley are writing research about it, rather than liquidating the company to take short positions, which should tell you something about the pinch of salt required.

I don't think they're claiming that prices will collapse (which is what you would want to short on), but rather that returns will collapse. That over time, the return of say, the S&P 500 will be half of what it has been over the previous 20 years.

I'd be careful about how you word that. They are predicting the average return of US equities would be about 1% lower over the next 20 years. Compound interest over time is what means you have to save twice as much to end up with the same amount of savings.

Re: End of Golden Era for Investors Spells Troubles

#52

Post by jakobegger » Thu, Apr 28, 2016, 9:35 AM UTC

this makes me feel good about my habit of spending all my money right away :)

Re: End of Golden Era for Investors Spells Troubles

#53

Post by trhway » Thu, Apr 28, 2016, 9:36 AM UTC

ap22213 wrote: post #49

trhway wrote: post #15

Earlier quoted context omitted.

>All those 40ish looking people that look weirdly out of place in their uniform shirt? Yeah, that's us since the boomers nuked domestic manufacturing and construction wages made a run for the bottom. technology and economy do change. The changes can't be stopped. The question is how you adapt to them. When many people suddenly lost their job as soldiers 70 years ago there was in particular GI bill created to help man…

Or, as they say, hindsight is 20/20. Concepts like exponential change and globalization certainly weren't mainstream in the 80s when I was a child. In fact, I'd bet that most adults at the time still worked at the same company, in the same town, for most of their adult life. Companies at the time were still providing pensions and health care and middle class salaries, and employees (owners, bosses, and workers) gener…

>However, at a certain point, even the most well-trained Human will reach an adaptive limit.

when it happened to apes, humans emerged, and the same way new species of humans will emerge too :)

Re: End of Golden Era for Investors Spells Troubles

#54

Post by gruez » Thu, Apr 28, 2016, 9:42 AM UTC

RobertoG wrote: post #19

cm2187 wrote: post #14

I think it can get much worse than that. I don't know why people think the current levels of accumulation of debt are sustainable but there is a limit to what even the US can roll in term of debt. All developped nations are at around 100% debt to GDP, more than 200% if you include private debt, and growing at 3-5% per annum. Now does anyone really think that sometime soon any developped country will start making publ…

Massive defaults of states doesn't make sense. A country that have debt in its sovereign currency have not need to default. Inflation is not precisely the problem now, is it?

>A country that have debt in its sovereign currency have not need to default.

How did that work out for Argentina?

Re: End of Golden Era for Investors Spells Troubles

#55

Post by RobertoG » Thu, Apr 28, 2016, 9:43 AM UTC

cm2187 wrote: post #50

RobertoG wrote: post #19

Earlier quoted context omitted.

Massive defaults of states doesn't make sense. A country that have debt in its sovereign currency have not need to default. Inflation is not precisely the problem now, is it?

Then if you do not believe in default or inflation, what exactly do you think will happen? 1000% debt to GDP?

I believe in inflation. I just said it is not the problem now.

Inflation happens when there is more demand from the economy that economy can satisfy or when there are too much strong demand of imported goods.

What it is a fiction is public debt in monetary sovereign governments: http://bilbo.economicoutlook.net/blog/?p=31715

Re: End of Golden Era for Investors Spells Troubles

#56

Post by RobertoG » Thu, Apr 28, 2016, 9:48 AM UTC

gruez wrote: post #54

RobertoG wrote: post #19

Earlier quoted context omitted.

Massive defaults of states doesn't make sense. A country that have debt in its sovereign currency have not need to default. Inflation is not precisely the problem now, is it?

>A country that have debt in its sovereign currency have not need to default. How did that work out for Argentina?

Argentina currency was pegged to the Dollar, so not so sovereign.

Also, a lot of their public and private debt was denominated in foreign currency. Again, not so sovereign.

Re: End of Golden Era for Investors Spells Troubles

#57

Post by oolongCat » Thu, Apr 28, 2016, 9:53 AM UTC

jakobegger wrote: post #52

this makes me feel good about my habit of spending all my money right away :)

While I get the sarcasm in your comment, if you really are serious about you not saving, then this means you need to be even more scared about what would happen to people with no savings, in a situation as described in the article.

Re: End of Golden Era for Investors Spells Troubles

#58

Post by kspaans » Thu, Apr 28, 2016, 9:57 AM UTC

SyneRyder wrote: post #47

justinjlynn wrote: post #8

Earlier quoted context omitted.

Well, I didn't say that Gen X got nothing at all. We all got hurt in some way by the GFC. Of course to generalise about an entire generation people is egregiously pointless. At the same time, simply due to the luck of timing, it feels as though Gen X had more of a chance to do something about it. However, they did not and in fact they had much more of an opportunity to take advantage of the selfish and short-sighted…

"We all got hurt in some way by the GFC." Worth noting that the GFC was one of the best times in history to buy stocks. I'd be in a terrible situation right now if it wasn't for the GFC: I bought some brand name stocks (supermarkets, mining, banking) at huge discounts. One of them more than tripled in price in 5 years and is still throwing off a 20% cash dividend every year. Don't give up. You never know when a Black…

Not to mention many indexes completely recovered within a year or two of the GFC.

Re: End of Golden Era for Investors Spells Troubles

#59

Post by kspaans » Thu, Apr 28, 2016, 10:00 AM UTC

darawk wrote: post #43

Ntrails wrote: post #39

Earlier quoted context omitted.

>* there is no better place to put your money* I'm not sure I buy into that in the slightest, alternative asset classes exist for the very purpose of allowing diversity when market returns are poor. Some of them are rough to access as an individual, but others are not. The real kicker is that the absolute size of a retirement pot is utterly meaningless without reference to the interest and inflation rates during reti…

No, the point of the article is that all asset classes across the board will experience lower than normal returns. Diversification will not help you. Whether or not its thrust is correct is hard to say, but that appears to be their thesis.

I only see bonds, and equities specifically mentioned.

Re: End of Golden Era for Investors Spells Troubles

#60

Post by tonyedgecombe » Thu, Apr 28, 2016, 10:08 AM UTC

darawk wrote: post #28

peteretep wrote: post #22

> "A coming collapse in investment returns" And yet McKinley are writing research about it, rather than liquidating the company to take short positions, which should tell you something about the pinch of salt required.

I don't think they're claiming that prices will collapse (which is what you would want to short on), but rather that returns will collapse. That over time, the return of say, the S&P 500 will be half of what it has been over the previous 20 years.

If returns collapse then prices will too, investments are made based on expected returns, if those returns aren't available then the investments won't be made.