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Why in the world would you own bonds?

bridgewater.com

211–220 of 532 posts

Re: Why in the world would you own bonds?

#211
post #20

The conclusion kind of scares me, especially coming from Dalio. > so they could very well impose prohibitions against capital movements to other assets (e.g., gold, Bitcoin, etc.) and other locations. These tax changes could be more shocking than expected. Who truly believes this is a likely scenario? A number of folks I know are already considering fleeing the US but if this was to pass, that number would skyrocket…

This was the part that caught my attention as well, it would be super interesting to see it play in real-time. For one, how would they even put capital movements controls on crypto? For example, I just have to remember my 12 word seed and I can hop on a plane to another country and my crypto comes with me. The other part is, wouldn't those capital controls be the last nail in the coffin of "we lost complete control o…

Bitcoin is only useful if you can turn it into fiat relatively easily.

Government can very easily control almost all of those channels.

Re: Why in the world would you own bonds?

#212
post #172
post #102

Earlier quoted context omitted.

It doesn't make them wrong, but nothing can exclude the possibility that an investor believes that they have the ability to convince others via their media platform that X is a great investment without actually believing X is /otherwise/ a great investment. In which case the investment thesis could be purely "access to greater fools"...

Ok, but how should we treat someone's investment advice if they are advising for investments that they are not personally committed to? I find far more reasons for skepticism there. If you see an opportunity to make money for yourself or your clients, and aren't doing it, then... what are you doing? We should be skeptical of all investment advice. For a specific fact to make us more skeptical of investment advice, we…

Mostly agree, but that logic breaks down when investments are not just liquid entries on a spreadsheet.

One example: I recommended real estate rentals through the 2008-2015 range to several friends despite having none myself. Why? Because it was possible for them to generate significant leverage otherwise unavailable to them and they were in a much better position than me to work the second job of being a landlord.

Re: Why in the world would you own bonds?

#213
post #128

Earlier quoted context omitted.

I actually believe something far scarier. I think we're going to see a worldwide disintegration of governments and then sort of a feudal anarchy - basically the Syrian Civil War, but spread across the globe. People will stop taking the government seriously and just go do what they want, with a lot of local bullies and warlords springing up to take their place. The financial picture Dalio paints is the first stage of…

I’m curious, since you seem to have thought a lot about this - any suggestions for defensible locations with plenty of natural resources? I’m guessing suburbia generally doesn’t meet that definition.

People are just going to set your house on fire unless you have a 24-hour patrol. A bit of a fantasy to imagine you can just escape the total collapse of society.

Re: Why in the world would you own bonds?

#214

Earlier quoted context omitted.

While interesting, I have a feeling that your prediction may be subject to recency and availability bias. If I picture myself looking from within the US, your scenario sure resonates. But looking from outside, I'm not convinced it does. From the other side of the planet, it looks like the US is having a moment but the other governments aren't sitting idle and letting entropy increase. I'm also not sure that 50 years…

In Bangladesh alone 150 million people are projected to be displaced by rising sea levels by 2050. Many South American countries are suffering from spiking rates of kidney failure as the climate warms, which is already a factor in the US border crisis as an increasing proportion of migrants suffer from kidney disease.

Dikes are cheap 12th century technology.

Re: Why in the world would you own bonds?

#215
post #34

Earlier quoted context omitted.

He doesn't recommend particular companies. Are you suggesting that Ray Dalio thinks he's so powerful that he can make Asian equities in general do better, just because he says he likes them?

"I like the stock"

“Blue Horseshoe loves Anacott Steel”

Re: Why in the world would you own bonds?

#216

Earlier quoted context omitted.

I believe that every dollar the Fed has "printed" went into bonds because that is how the US financial system works. The government gets money from the Fed by selling them bonds in exchange for cash.

That's not how the U.S. financial system works. The government doesn't "get money from the Fed" - it gets money from the Treasury, which either collects it from taxes or issues government debt to raise funds. The Fed participates in open market operations, and one of the markets they participate in is the Treasury bond auction. But they participate in others as well: notably, they've recently been major participants…

That was a clarification, not a refutation.

Re: Why in the world would you own bonds?

#217

Earlier quoted context omitted.

I don’t know a whole lot about professional investing, but if watching The Big Short has taught me anything it’s that the pros will say one thing publicly but do the opposite in private until it’s to their advantage to do a 180 and make their private stance actually public. Recently this was Jamie Dimon lambasting Bitcoin all the while a cryptocurrency trading desk was being set up at Chase. The following exchange fr…

Unless they are trying to move markets, which they do all the time. I mean, the entire WSB subreddit is basically dedicated to this.

I’ve been watching WSB with interest for a bit. This has not been what they’ve been about until January of this year. Before it was basically a place where the one eyed were leading the blind: someone would post their research on a particular play, like buying TSLA options for a particular date at a particular price because they think the phase of the moon and the mood of the CEO will line up to give the stock price a bump, and then everyone putting their 401k savings all into that play because it sounded plausible. Sometimes it would pay off, often it resulted in people losing lots of money. The “specialness” of the community came from when people posted “loss porn” aka screenshots of their accounts with huge losses, people would basically be really encouraging towards the poster. It was a sort of sign of respect that you risked it all and lost.

Actually buying stock and not just options is brand new to that group, and they have nearly doubled in size since January so it seems to be going through serious transitions. Now they are doing what they can to put the thumb on the scale to squeeze hedge funds out of their GME positions. The crux of it is whether enough shorts have been made to make this possible and the rumor de jour is that hedge funds misreport their positions. Whether this is true or not, well if you look at WSB posts they’ll say it’s obviously true. I am not convinced personally.

To be clear, WSB to me appears to be doing absolutely nothing illegal or wrong to manipulate the market. The only coordinated effort is to buy GME and AMC and not sell the stock unless it seriously goes up in value (current posts think it’ll go to $10k-100k). They suspect hedge funds are performing ladder attacks to lower the price, so every time the price dips the advice is to buy more. I don’t see how simply buying stock at market price is market manipulation except that it does have an effect on the volume of a particular stock.

Re: Why in the world would you own bonds?

#218
post #24

One thing I've learned about professional investors is that no matter what, at the end of the day they're talking their book. So whether you buy these arguments or not, Ray Dalio is simply promoting a position that Bridgewater no doubt has taken. So when he says: "I believe a well-diversified portfolio of non-debt and non-dollar assets along with a short cash position is preferable to a traditional stock/bond mix tha…

I don’t know a whole lot about professional investing, but if watching The Big Short has taught me anything it’s that the pros will say one thing publicly but do the opposite in private until it’s to their advantage to do a 180 and make their private stance actually public. Recently this was Jamie Dimon lambasting Bitcoin all the while a cryptocurrency trading desk was being set up at Chase. The following exchange fr…

I wouldn't rely on the Big Short for anything..

Re: Why in the world would you own bonds?

#219

Earlier quoted context omitted.

Unless they are trying to move markets, which they do all the time. I mean, the entire WSB subreddit is basically dedicated to this.

I’ve been watching WSB with interest for a bit. This has not been what they’ve been about until January of this year. Before it was basically a place where the one eyed were leading the blind: someone would post their research on a particular play, like buying TSLA options for a particular date at a particular price because they think the phase of the moon and the mood of the CEO will line up to give the stock price…

What's a ladder attack?

Re: Why in the world would you own bonds?

#220

People like Ray Dalio keep saying this, and scores of others have been talking about how fiat currency will fail, but it won't. Globally, no one that matters wants it to fail, therefore it won't. People like Paul Tudor Jones have been saying that the USD will fail for decades and people should buy gold. Even Peter Schiff has been talking about gold and hyperinflation since before the Great Recssion. All the bears hav…

Gold has performed almost as well as the S&P 500 has over the past 15 years or so. Or even outperformed it depending on your starting date. This is amazing given that it’s literally just an inert metal vs the 500 biggest American Corporations. (Comparing GLD vs SPY starting around 2005.)

It looks like GLD has underperformed SPY overall, with a lower Sharpe ratio (risk adjusted return). Gold did have a good run between 2010-2013 though!

https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...

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