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

Why in the world would you own bonds?

bridgewater.com

Post reply on HN
Print view View original

401–410 of 532 posts

Re: Why in the world would you own bonds?

#401

Post by jeffreyrogers »

skolos wrote: post #379
jeffreyrogers wrote: post #353

Earlier quoted context omitted.

The problem with this is it assumes the macroeconomic conditions stay constant. But the macroeconomic conditions since 2008/2009 have been wildly different than ever before.

This is almost 150 years of data. There were regimes with very different macroeconomic conditions (great depression, wars). However I do agree with you that there is a chance that we will see something even more exotic.

Your data is only for the US though. What happens if you try the Weimar Republic? That's an extreme case, but I imagine other countries have had similar, but less severe events, and certainly the US in in uncharted territory right now.

Re: Why in the world would you own bonds?

#402

Post by wintermutestwin »

BenoitEssiambre wrote: post #224
paulmd wrote: post #42

> …The economics of investing in bonds (and most financial assets) has become stupid ... Rather than get paid less than inflation why not instead buy stuff—any stuff—that will equal inflation or better? That is indeed the point of driving interest rates low or negative - to force people into economic activity. If holding a bond makes you negative money, you might as well buy something with it, which goes back into th…

Also note that you can save by buying stuff. Materialize your savings for a 2% a year compounding tax free return. Get discounts by buying in bulk. Urban dwellers might be more limited but for people who have unused or underused space, this is a way to get a return on that space. Buy all you will need for the next decade of: Salt, sugar, socks, underwear, under-shirts, vinegar, soap bars, toothbrushes, razor blades,…

This raises an interesting point in the inflation discussion: Inflation is always relative to the things you purchase now and in the future.

Standardized measurements of inflation might not apply to your situation at all. Instead why not track the inflation of the things you actually purchase?

Re: Why in the world would you own bonds?

#403

Post by nostrademons »

AYBABTME wrote: post #324
Hammershaft wrote: post #158

Earlier quoted context omitted.

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.

I think there will be a few levels of displacement and migration waves from climate change.

Things like sea level rise, rising temperatures, and more frequent blizzards or cold snaps act over decades. That'll be a gradual shift in migration patterns, not a crisis.

But a lot of the second-order effects operate on much smaller timescales. Hurricanes can cause large dislocation on the timescale of a week: look at Rita & Katrina in 2005, which cut the population of New Orleans in half and gridlocked all the freeways out of Houston for days. Wildfires also can trigger large migrations within a matter of weeks. We've been lucky that most of the West Coast wildfires have been in relatively unpopulated areas, but if one were ever to jump highway 280 in the Bay Area or get into the Pasadena/Glendale/Burbank area by LA, we could have a mass evacuation crisis. Crop failures too: that's what's driving a lot of the Middle East migration. If it happened in the U.S. or China millions of people would starve.

There's also violence caused by resource constraints. We see that in Central America now, in the Middle East, and increasingly in the middle of U.S. cities.

Re: Why in the world would you own bonds?

#404

Post by nostrademons »

emodendroket wrote: post #291
ericd wrote: post #264

Earlier quoted context omitted.

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.

New England can feed itself minus the cities. That's what they did for hundreds of years - New England was almost entirely farmland until the 20th century. A lot of folks still have small-scale subsistence farms or vegetable gardens in Vermont, New Hampshire, even central/western Massachusetts.

Re: Why in the world would you own bonds?

#405

Post by gowld »

elefanten wrote: post #367
Arrath wrote: post #360

Earlier quoted context omitted.

More _economic_ value, sure. But at what cost to the environment, biodiversity, our dwindling resources, societal health, our psyches? When does this become unsustainable?

It's not even close to being unsustainable now and it may ultimately remain sustainable for timescales that are difficult for us to relate to.

That's an extreme claim.

Re: Why in the world would you own bonds?

#406

Post by meowfly »

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 mean it isn't that people actually think "stocks only go up", it's that the donor class own stocks and that then means political landscape is designed to always bail them out.

I'm closer to your age and experienced those recessions but my take away isn't that stocks go down, it's that the government will pull every tool it has to keep the wealthy wealthy.

Re: Why in the world would you own bonds?

#407

Post by gowld »

DebtDeflation wrote: post #321
Leherenn wrote: post #304

Earlier quoted context omitted.

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.

You're misunderstanding.

Taking a haircut after 30years of gains is OK.

Re: Why in the world would you own bonds?

#408

Post by harambae »

em500 wrote: post #261
BenoitEssiambre wrote: post #224

Earlier quoted context omitted.

Also note that you can save by buying stuff. Materialize your savings for a 2% a year compounding tax free return. Get discounts by buying in bulk. Urban dwellers might be more limited but for people who have unused or underused space, this is a way to get a return on that space. Buy all you will need for the next decade of: Salt, sugar, socks, underwear, under-shirts, vinegar, soap bars, toothbrushes, razor blades,…

It's hard to tell if this post was satire or something the author genuinely believes.

I was trying to figure this out myself. I don't think you need to stockpile 10 years worth of firewood because firewood may be too expensive in 9 years. I think this is insane on a few levels, but to each their own.

Re: Why in the world would you own bonds?

#409

Post by emodendroket »

nostrademons wrote: post #404
emodendroket wrote: post #291

Earlier quoted context omitted.

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.

New England can feed itself minus the cities. That's what they did for hundreds of years - New England was almost entirely farmland until the 20th century. A lot of folks still have small-scale subsistence farms or vegetable gardens in Vermont, New Hampshire, even central/western Massachusetts.

And in this collapse scenario the cities -- incidentally where a lot of wealth and power tend to be concentrated -- simply consent to starve to death? Or are you defending against them too?

Re: Why in the world would you own bonds?

#410

Post by tchvil »

thatfrenchguy wrote: post #375
tchvil wrote: post #352

Earlier quoted context omitted.

Say you confidently bought the roaring Eurostox 600 in March 2000. You saw it coming back to its value in July 2007. Then reach 1% gain in March 2015. And a 7% gain in Feb 2020. Buying S&P, or the Apple, Amazon and Tesla ones is another story. Looking at the average can be misleading.

You’re not counting dividends here.

Thanks for the note. This change indeed the result. https://www.justetf.com/en/etf-profile.html?isin=DE000263530...
Post reply on HN