Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Maybe Warren Buffett Is Warning Us About Something

bloomberg.com

Post reply on HN
Print view View original

51–60 of 103 posts

Re: Maybe Warren Buffett Is Warning Us About Something

#51

Post by whatshisface »

hacknat wrote: post #11

It’s important to remember that the stock market != the economy. You know who would be the first to say that? Warren Buffet. Warren Buffet is actually a big believer in not making macro economic predictions. It just so happens that if you pick stocks like he does (based on fundamentals and a certain proprietary “discount”) you’ll probably avoid having your investments tagged in a recession. Stocks in the Great Recess…

By the way, if you buy a stock and then short sell an index, you can be guaranteed to make money in a market downturn so long as the stock you picked does better than the index. But good luck picking a stock that consistently outperforms the market! Warren Buffet can do that, though.

Re: Maybe Warren Buffett Is Warning Us About Something

#52

Post by roenxi »

chosenbreed37 wrote: post #35
xiphias2 wrote: post #21

Earlier quoted context omitted.

If you want to diversify in a non correlated assets, you can put a part of your money from stocks into commodities, like gold/silver/Bitcoin (housing market is highly correlated with the stock market, so it's not a good diversification). All asset (and storage) types have their advantages / problems, you should read about it of course.

> All asset (and storage) types have their advantages / problems, you should read about it of course. Am I right in thinking that gold/silver are widely thought to be inflation proof? So I wasn't so concerned about growth could I just park my money in gold?

Depends what you want to call inflation. Gold's price movements don't track anticipated inflation in any meaningful sense [0].

That being said, over very long time horizons it is difficult to see why the real price of gold would change. They probably aren't going to mine it any cheaper and it isn't crazy to handwave an argument that demand can't drop all that far from where it is now. On that basis it easily outperforms cash.

If interest rates stay near 0 or drop negative gold might outperform bonds too. It is hard to say; the central banks do strange things to the bond markets.

Also, note that all these graphs only go back to the 1970s. Bit of a mystery why [1]. Gold's value tends to transcend such short-term concerns as the current global financial regime and that is a draw for some. Personally I think the current US dollar system is getting a bit long in the tooth. The biggest draw in this regard is that gold is a real expensive thing that is exceptionally easy to store (ignoring theft risks) and it is just hard to see how it could become less valuable than it is right now (short of government bans on gold trading).

[0] https://upfina.com/gold-vs-inflation/ particularly "Longer Term Correlation Between Real Gold & TIPS Doesn’t Hold Up"

[1] That was when the last monetary system failed https://en.wikipedia.org/wiki/Bretton_Woods_system

Re: Maybe Warren Buffett Is Warning Us About Something

#53

Post by whatshisface »

lbotos wrote: post #20
digitalsushi wrote: post #2

I have no idea how money works. I have a 401k, it's got more in it than the median 60 year old in the united states, and I'm 20 years from that. And I am terrified of how little I know about how it exists or survives. I read these articles and get a sense of overwhelming urgency that, without any explicit indication, I should do something with my nest egg to make it safer to survive a crash. And then I keep reading,…

Money is time, bottled. Stocks/Bonds are money converted into "abstract human output". You are taking a bet that the group of humans that work at the companies that you've invested in will continue to become more advanced and efficient as to "generate value". The stock market is "sentiment". It is collective group think as to what those companies are up to. This is why you see people say "don't touch it". If you don'…

>black swan events could change the exposure

Strictly speaking your exposure never changes, only your perception of your exposure as your sure-bet real estate portfolio crashes to zero.

Re: Maybe Warren Buffett Is Warning Us About Something

#54

Post by JohnJamesRambo »

avn2109 wrote: post #38
lethologica wrote: post #7

Earlier quoted context omitted.

Educate yourself. You don't need to know the intricacies of how markets operate, but a little financial understanding is, I believe, a must for everyone. Also, be aware that even when you do educate yourself and you do everything you think is in your power to 'safe guard' your nest egg, that there are are still a billion and one ways that it can all be wiped out tomorrow. Micro managing you're finances if you don't k…

A bunch of people have given well intentioned but super vague answers to your question, such as "watch videos on khan academy" or "read newspapers." These are Bad Answers and instead you just need to read and obey two books and two books only: 1) https://www.amazon.com/Bogleheads-Guide-Retirement-Planning/... 2) https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Lar... If you do this, it will prevent you from b…

>You will also not become flamboyantly rich overnight in the way that Crypto speculators do.

Yeah who would want that???

Re: Maybe Warren Buffett Is Warning Us About Something

#56

Post by ravenstine »

digitalsushi wrote: post #2

I have no idea how money works. I have a 401k, it's got more in it than the median 60 year old in the united states, and I'm 20 years from that. And I am terrified of how little I know about how it exists or survives. I read these articles and get a sense of overwhelming urgency that, without any explicit indication, I should do something with my nest egg to make it safer to survive a crash. And then I keep reading,…

I'll tell you something that nobody wants to admit to:

Nobody really knows how money works.

The average 401k holder has one because they don't have a good idea of how money works or what they should do with it. If they really understood their 401k, they'd know that they're probably getting ripped off in fees over their lifetime.

If economists and financial analysts completely understood money, they wouldn't be in such disagreement all the time over basic things. A financial advisor might tell you to leave your money in a 401k, and the next one might tell you the same, but it's not that hard to find one who will tell you to get your money out of your 401k ASAP for a variety of reasons.

At the end of the day, you have to trust your own judgment. People don't get rich doing the easy thing.

By the way, here's some things you should think about with 401ks:

- Someone with an average salary pays $138,336 in 401k management fees over their lifetime. Not only are you the only party taking a risk, but you're getting charged for taking that risk. Advisors and broker dealers aren't risking anything except your money.

- You don't own the money in your 401k. Read the fine print and you will find "FBO" (For Benefit Of). The tax code makes it technically owned by the government, but provided for your benefit. In a crisis, the government can confiscate any amount of your 401k to pay off debt and pensions.

- 401k teaches people to cluelessly invest. Do you know if your money is being invested in big tobacco or big oil?

- The government has the advantage with your money. Because you can't cash out without penalties, when you die, whatever's left over for your children is not only subject to income tax but to estate tax as well. They want your 401k money to be gifted to someone else because that means they don't get to cash in on your pile of money.

Re: Maybe Warren Buffett Is Warning Us About Something

#57

Post by wbl »

digitalsushi wrote: post #2

I have no idea how money works. I have a 401k, it's got more in it than the median 60 year old in the united states, and I'm 20 years from that. And I am terrified of how little I know about how it exists or survives. I read these articles and get a sense of overwhelming urgency that, without any explicit indication, I should do something with my nest egg to make it safer to survive a crash. And then I keep reading,…

Have no idea the retirement account exists. 20 years from now a recession won't matter because the economy will have recovered.

Re: Maybe Warren Buffett Is Warning Us About Something

#58

Post by bananasbandanas »

avn2109 wrote: post #38
lethologica wrote: post #7

Earlier quoted context omitted.

Educate yourself. You don't need to know the intricacies of how markets operate, but a little financial understanding is, I believe, a must for everyone. Also, be aware that even when you do educate yourself and you do everything you think is in your power to 'safe guard' your nest egg, that there are are still a billion and one ways that it can all be wiped out tomorrow. Micro managing you're finances if you don't k…

A bunch of people have given well intentioned but super vague answers to your question, such as "watch videos on khan academy" or "read newspapers." These are Bad Answers and instead you just need to read and obey two books and two books only: 1) https://www.amazon.com/Bogleheads-Guide-Retirement-Planning/... 2) https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Lar... If you do this, it will prevent you from b…

You might also want to check out the Bogleheads Wiki [1] first. It gives a good overview of what these books are about.

[1] https://www.bogleheads.org/wiki/Main_Page

Re: Maybe Warren Buffett Is Warning Us About Something

#59

Post by wbl »

chii wrote: post #30
lethologica wrote: post #7

Earlier quoted context omitted.

Educate yourself. You don't need to know the intricacies of how markets operate, but a little financial understanding is, I believe, a must for everyone. Also, be aware that even when you do educate yourself and you do everything you think is in your power to 'safe guard' your nest egg, that there are are still a billion and one ways that it can all be wiped out tomorrow. Micro managing you're finances if you don't k…

so to sum it up, don't do anything, and hope? Because even if you attempt to educate yourself, it'd be like trying to learn to do your own surgery. Not impossible, but... What i want to really know is what people with a lot of money actually do - and when i say a lot, i meant a lot. networth in excess of 8-9 digits. What do they invest in? What diversification measures do they do? Which country? And finally, how they…

Put it all in the S&P 500. I lived on a street with a bunch of Wall Street higher ups growing up. They all were Vanguard customers.

Re: Maybe Warren Buffett Is Warning Us About Something

#60

Post by ruvis »

digitalsushi wrote: post #2

I have no idea how money works. I have a 401k, it's got more in it than the median 60 year old in the united states, and I'm 20 years from that. And I am terrified of how little I know about how it exists or survives. I read these articles and get a sense of overwhelming urgency that, without any explicit indication, I should do something with my nest egg to make it safer to survive a crash. And then I keep reading,…

> What's the best strategy for someone like me, who has absolutely no idea how their retirement account exists?

Stop reading the news.

Post reply on HN