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Why in the world would you own bonds?

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Re: Why in the world would you own bonds?

#321

Post by DebtDeflation »

Leherenn wrote: post #304
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…

Not that you are necessarily wrong, but I am not sure your examples really show that. The Dow Jones is at an all time high, even adjusting for inflation, and not by a little. Yes, there are dips, but over the long term it seems to hold. As far as I can tell, the following holds true, ∀ t ∈ [1930, now], V(t) > V(t - 30) where V is the inflation-adjusted value of Dow Jones that year.

>over the long term it seems to hold

Certainly, but as Keynes said, "in the long term we're all dead". Less dramatically, average annual returns over long periods of time depend dramatically on when you start and stop the calculation. At some point, people want to retire and live off their savings and "wait another 10 years and you'll recover your principal loss" isn't a comforting message.

Re: Why in the world would you own bonds?

#322

Post by iSnow »

randomopining wrote: post #311
iSnow wrote: post #268

Earlier quoted context omitted.

The fiat on/off-ramps are the choke points of the whole crypto world. Yes, you could use your BTC to buy Teslas and drugs, but that's it. You can't pay at the supermarket or on the web directly, it all goes through payment providers who are regulated.

Can you not just go p2p/otc with the crypto and buy a hard asset plus some paper fiat? It’s like cash but even more effective for this purpose.

Someone needs to cash it out in the end to buy raw materials or bulk purchase food. That's the idea of hyper-Bitcoinization that this step would go away, but I don't see any indication for that.

Regarding localbitcoins or other OTC in person deals I certainly wouldn't want to meet with a stranger and carry $1000 with me in cash to buy his Bitcoins. And localbitcoins was forced to implement KYC, so if Bitcoin gets outlawed or heavily taxed, the state will have a look into their customers.

Re: Why in the world would you own bonds?

#323

Post by TuringNYC »

pc86 wrote: post #314
TuringNYC wrote: post #294

Earlier quoted context omitted.

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…

> Another very accurate movie: "Margin Call" Jeremy Irons is fantastic in this film. The entire board room scene is amazing.

The distinct personalities in the movie also perfectly represent the typical archetypes in these situations and firms.

Re: Why in the world would you own bonds?

#324

Post by AYBABTME »

Hammershaft wrote: post #158
AYBABTME wrote: post #125

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.

I think there will be displacement, but over many years/decades as opposed to a single large event. That's why I'm not strongly confident in a migration crisis. I don't say this with confidence, but it doesn't seem likely to be as bad as say, a World War forcing 150M refugees overnight.

Re: Why in the world would you own bonds?

#325

Post by michaelt »

xkjkls wrote: post #172
wskish wrote: 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…

> If you see an opportunity to make money for yourself or your clients, and aren't doing it, then... what are you doing?

Most other industries have a clear separation between the people who make and sell the product, and the people who publicly opine on the product.

Film journalists aren't film makers, car journalists aren't car makers, games journalists aren't game makers. And if the CEO of EA Games announces the next Madden game is their best ever, you'd take that with a pinch of salt.

Of course, conflict-of-interest-free journalism ain't exactly a growth industry these days, so this probably isn't the model of future stock tips.

Re: Why in the world would you own bonds?

#326

Post by skolos »

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…

Your point is anecdotal. I actually ran the analysis and found that if you are long term investor - stocks beat bonds hands down. See it here: https://www.investingrus.com/blog/safest-bet/

"Even if you had to sell your stocks at the bottom of the Great Depression, but held them for more than 20 years before that, you would not suffer a loss in value of your portfolio"

Re: Why in the world would you own bonds?

#327

Post by SyzygistSix »

nostrademons wrote: post #138
AYBABTME wrote: post #125

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…

I've been predicting something like this since about 2005, long before recent events. It just it felt like it was far off in the future, not something happening right now . The other major factor is a demographic crisis: worldwide, we have a large bulge in the number of people who are just about hitting 30 in 2020. Historically, when a lot of people reach reproductive years and there aren't the resources needed to su…

Recent generations in the US are pretty meek and well-mannered, and not exactly dripping with confidence.

Re: Why in the world would you own bonds?

#328

Post by jksmith »

nlh wrote: 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…

Well I think if he made that statement, it's probably fair regardless of what's in his book.

Re: Why in the world would you own bonds?

#329

Post by dominotw »

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…

> Similar views were expressed about houses/real estate in 2007.

Don't they always go up on average though? Even the much hyped 'housing crash' of 2008 only last for all of 3 yrs till 2011 after which they went zooming past the previous highs.

Re: Why in the world would you own bonds?

#330

Post by DebtDeflation »

reader_mode wrote: post #313
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…

Crash or inflation ?

Not mutually exclusive. Inflation could tick up to 5-6% per annum, forcing the Fed to get back to positive real rates, and in the process bring about an economic crash. I actually think that's the most likely sequence of events.
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