Why in the world would you own bonds? • Hacker News Board

Re: Why in the world would you own bonds?

#291

Post by emodendroket » Wed, Mar 17, 2021, 2:43 PM UTC

ericd wrote: post #264

emodendroket wrote: post #213

Earlier quoted context omitted.

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.

I don’t think what they’re describing is full Mad Max/total collapse, more like regional collapses/nation states breaking into states or city states.

Oh well in that case New England can't feed itself so you're still kind of fucked. Kind of hard to parse this out though since all of these regions have suburbs.

Re: Why in the world would you own bonds?

#292

Post by Ekaros » Wed, Mar 17, 2021, 2:44 PM UTC

nostrademons wrote: post #140

Hammershaft wrote: post #110

Earlier quoted context omitted.

> There's a pending military technology shift where cheap autonomous weaponry fundamentally changes the power balance between large nation states and small insurgencies. It would seem to me that this shift towards remote weapons would favor the military, not insurgents in the event of civil strife.

Autonomous/remote weapons let you take the human out of the weapon system, which lets you drastically shrink the weapon system. We haven't really seen the full effect of this yet, because we haven't expanded along the dimensions of freedom this allows: cost, quantity, expendability, scalability, and taking the human out of the kill loop. So far our remote weapons look basically like our piloted weapons, just with a c…

I wonder what is actual realistic minimum size and mass for effective drone in warfare. We are still using essentially projectile weapons, be it bullets or missiles. These have minimum effective mass not to forget delivery system. Even theoretical energy weapons have to get the power from somewhere...

Re: Why in the world would you own bonds?

#293

Post by everybodyknows » Wed, Mar 17, 2021, 2:46 PM UTC

emodendroket wrote: post #208

everybodyknows wrote: post #157

Earlier quoted context omitted.

All state bonds are well positioned for generous bailout terms from Washington.

Forcing a fiscal crisis is a great way of accomplishing some political goals so I wouldn't be complacent about this risk.

Fair enough — I’d wager large city bankruptcies remain quite possible under the next GOP Administration. The most liberal Republican POTUS of my own lifetime said “No” to NYC:

https://www.nydailynews.com/new-york/president-ford-announce...

Re: Why in the world would you own bonds?

#294

Post by TuringNYC » Wed, Mar 17, 2021, 2:47 PM UTC

floor2 wrote: post #285

pmastela wrote: post #64

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…

It's great that you recognize professional investing isn't something you know a lot about. It's a bit concerning that people believe a hollywood movie has taught them how the industry works. Keep in mind how hollywood portrays "hackers" or "scientists" or "Russians" or whatever group is an outsider or opposition to the protagonist and realize they're doing the same to finance.

While clearly not all of Hollywood portrays the industry accurately, from my perspective the movie was incredibly reflective of the players in the space, and the dynamics.

I worked in the mortgage/CDO/CDS industry for 10yrs during that period (2005-2015).

If anything, the movie was too positive. There aren't as many players like Steve Carell's character who are worried about the world, they are usually worried about how to liquidate their book at the right time.

The bit about getting marked the wrong way was especially spot on.

Another very accurate movie: "Margin Call"

Re: Why in the world would you own bonds?

#295

Post by makomk » Wed, Mar 17, 2021, 2:47 PM UTC

atweiden wrote: post #176

nostrademons wrote: post #90

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 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. Your perspective on this seems to be a bit U.S.-centric. No developed country in the world botched its national response to Covid-19 as badly as the United States did. In several countries — like Australia and New Zealand — public trust in government h…

I know the US press has been busy telling you that your country handled this uniquely terribly compared to everyone else, and this idea has spread to the rest of the planet just like all your other politics. Meanwhile in the real world, the country everyone was pointing to as the big European success story that proved everyone else had fucked it up not so long ago - the Czech Republic - is actually the one with a worse Covid death rate than pretty much everywhere else on the planet, and the other countries in the region aren't doing too great either. (Also, all along the comparisions used misleading tricks like comparing the number of detected Covid cases when the US had much more widespread testing for it than Europe.)

Re: Why in the world would you own bonds?

#296

Post by okprod » Wed, Mar 17, 2021, 2:49 PM UTC

I'm close with someone at Bridgewater and have read Dalio's books, obviously he's a smart person, but he does have positions and his public views tend to shift, which is understandable. I remember when he was negative on crypto.

Re: Why in the world would you own bonds?

#297

Post by DebtDeflation » Wed, Mar 17, 2021, 2:51 PM UTC

nealdotpy wrote: post #287

DebtDeflation wrote: post #276

We seem to have an entire generation of people who think "stonks can only go up". Similar views were expressed about houses/real estate in 2007. At 47, I'm probably substantially older than the average HN poster, but having lived through the 2001 dotcom implosion and the 2008 financial crisis has given me some perspective. I'm getting some really bad vibes about the sustainability of the the economy and asset markets…

I'm definitely far younger than you; however, I agree. The problem is that there's no timing it. So positioning yourself such that you leverage other factors to make money in a market (e.g. delta-neutral positions that are long/short time/volatility) are all you can do if you want to play the game without having high directional risk.

So, I actually have an MS in Quant Finance despite having worked in tech my whole career. There's an old saying, "during a time of crisis all correlations go to 1". People found this out the hard way in 2008. There are all sorts of risks that you can't hedge for or that negate hedges you have in place for other risks, counterparty risk being one of the better known ones.

Re: Why in the world would you own bonds?

#298

Post by IgorPartola » Wed, Mar 17, 2021, 2:52 PM UTC

altcognito wrote: post #265

IgorPartola wrote: post #217

Earlier quoted context omitted.

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…

WSB is an "extreme" example. I think it happens ALL the time in very common places (including HN). Some types of market manipulation are truly a bad thing. I'm sure someone engaging in some of the more egregious cases could rationalize their behavior as "it's just guerilla marketing, everybody does that". That's not wholly wrong -- the intent is really more important than the action in these cases. Were people buying…

From what I can tell, currently WSB is riding the bubble. Or rather their thesis is that a short squeeze will happen. In some conversations they try to justify that the company will actually turn itself around using the capital raised from selling the new generation of consoles, but quickly the conversation turns to the prospect of the squeeze. In other words, most people who are buying GME from WSB advice aren't there to hold the stock long term because they think it'll grow 2-5% per year because of the company doing well. They are in it to overnight have it grow by 10,000% or some such because "when the squeeze happens every single investor can name their price for the shares they own because hedge funds will need to buy every share available".

I am not a financial expert, but to me this seems extremely bogus. I am not certain where exactly the math is wrong, but it seems like a hedge fund can just buy the shares from the people they borrowed from, and those people will be willing to sell because the price had risen a bit. WSB on the other hand has no strategy beyond "a squeeze will happen". There is no agreed up on price at which to sell, which will lead to some people going right past, say, $10k/share price point holding out for $100k/share, and then the price falling back down to earth while they are left holding the bag, having bought in at $300/share or whatever.

Re: Why in the world would you own bonds?

#299

Post by jplr8922 » Wed, Mar 17, 2021, 2:52 PM UTC

The more Dalio gets public, the more I'm doubting his game.

His book ''principles'' is interesting, however with time its starting to look like an elaborate marketing plan. I have no doubt that he his serious about his principles and business culture, but there are second order effects to make everyting public. In the case of his firm culture (which claims to be an idea meritocracy), it will attract certain kind of people.

The same can be said about marketing his financial views. The guy is already rich. He is smart. Why does he needs to post everything on linkedin, suddenly?

I have a hard time understanding the underlying strategy of his public persona. Earlier this year he made a long post about the way he used his principles to deal with the accidental death of his son. I mean, why would he do that?

Does he wants people to think like him? Why?

Re: Why in the world would you own bonds?

#300

Post by ericmay » Wed, Mar 17, 2021, 2:53 PM UTC

floor2 wrote: post #285

pmastela wrote: post #64

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…

It's great that you recognize professional investing isn't something you know a lot about. It's a bit concerning that people believe a hollywood movie has taught them how the industry works. Keep in mind how hollywood portrays "hackers" or "scientists" or "Russians" or whatever group is an outsider or opposition to the protagonist and realize they're doing the same to finance.

Certainly the movie is a bit exaggerated, but I'm not sure what your exact point of contention is with that scenario?

OTC or seldom traded securities may not operate in the same way that a highly traded stock like Apple does from a price standpoint. For a boutique security that is created for a customer, the price is whatever the market is willing to pay - but the discovery of that price can quite literally happen over the phone because in the market there might only be one customer and if you sell to them... that's the price!

So assuming that Michael Burry (in this instance) actually had Goldman Sachs create a boutique security, price discovery may very well have happened over the phone in just such a manner. I don't know the details but I'm also not sure why you would think that this can't happen? Please feel free to educate me. I don't know much about professional investing either.