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

Re: Why in the world would you own bonds?

#411

Post by ravi-delia » Wed, Mar 17, 2021, 4:54 PM UTC

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…

The thing is, in general stocks do go up. If you are young, your money should be in stocks, letting the risk average out over time. However, unless you really enjoy investing for its own sake, your time is better spent elsewhere while some sort of index or autotrading fund manages it for you. As time goes on you should switch more and more over into lower and lower risk investments.

Re: Why in the world would you own bonds?

#412

Post by hattmall » Wed, Mar 17, 2021, 4:55 PM UTC

partiallypro wrote: post #385

bluetwo wrote: post #358

Earlier quoted context omitted.

Since the beginning of 401ks, the yearly amount being locked away exceeded the amount being cashed out. Thanks to baby boomers retiring, a couple of years ago that reversed, and will stay reversed for the rest of our lives. The first condition creates a natural headwind to increase stock values. The current condition will reverse that.

But generational wealth is increasing, as boomers die their kids get the money...which they then reinvest. The money doesn't just disappear.

[dead]

Re: Why in the world would you own bonds?

#413

Post by kmeisthax » Wed, Mar 17, 2021, 4:55 PM UTC

partiallypro wrote: post #383

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…

We still live in a generation where people think "real estate only goes up." I have so many people bragging about how they've nearly doubled the equity in their home around here in Nashville. 2007 didn't change anything, it was just a blip. People are still flipping houses and leveraging their existing homes to buy new ones. In the long run though, the saying hasn't really been proven false, asset prices tend to alwa…

Real estate is a bit different because the government actively restricts the supply of developable land and legally-buildable housing units on that land.

The crash will come once average suburbanites stop protesting everything denser than a half-acre single-family home and city councils realize that mixed-zoning is far more sustainable.

Re: Why in the world would you own bonds?

#414

Post by SamuelAdams » Wed, Mar 17, 2021, 4:56 PM UTC

cainxinth wrote: post #301

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…

> We seem to have an entire generation of people who think "stonks can only go up" I'm not denying the existence of bubbles, busts, and crashes, but historically and on average, the stock market does only go up. This market is overvalued and will likely correct, but that doesn't mean it won't continue to rise on the aggregate.

Exactly. Look at the stock market from 1970 to today. 2001 and 2008 are a blip on the radar.

What this is missing is the amount of time investors are investing in. Day traders don’t care about tomorrow, they care about the difference between 9 am and 4 pm. Options traders might care about the next few weeks. If you are investing for 20+ years in a retirement account, you don’t care about the bubble. It will self correct over a year and by the time you withdraw, stocks are significantly up.

Bonds make sense if you are investing for 1 month to say 3 years.

Re: Why in the world would you own bonds?

#415

Post by [deleted] » Wed, Mar 17, 2021, 4:58 PM UTC

Hammershaft wrote: post #155

nostrademons wrote: post #140

Earlier quoted context omitted.

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…

> But imagine that you make your remote weapons 1/100th the size, 1/100,000th the cost, and build 100,000x more of them. The transistor is the only physical process that I know of that has improved at that pace. What makes you think drones can improve to that magnitude?

[deleted]

Re: Why in the world would you own bonds?

#416

Post by Maken » Wed, Mar 17, 2021, 5:00 PM UTC

Arrath wrote: post #360

GenerocUsername wrote: post #346

Earlier quoted context omitted.

Probably has more to do with the fact that society on the whole tends to build more than it destroys. More value is created over time than lost.

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

None of that has a stock exchange listing.

Re: Why in the world would you own bonds?

#417

Post by 1_player » Wed, Mar 17, 2021, 5:00 PM UTC

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…

> SWE, BSCS, 4 YOE, $800K TC

What is this supposed to mean to mere mortals?

Re: Why in the world would you own bonds?

#418

Post by elefanten » Wed, Mar 17, 2021, 5:01 PM UTC

stevievee wrote: post #270

darawk wrote: post #131

Earlier quoted context omitted.

The idea that Dalio published this in order to move markets in his favor is patently absurd if you know anything at all about the markets in question. The markets that would have to move here are the world's most liquid by a mile. Retail investors reading this blog post are not going to move them at all . And institutional managers are not getting their market takes from blogs like this. The only purpose of this essa…

The ideas and narratives put forth by Bridgewater/Dalio over the past 1-3 years are permeating markets and shaping investor sentiment more than you think. Both retail and institutional.

Got any links or sources to read up on this? Or any particular narratives you're referring? Asking out of curiosity

Re: Why in the world would you own bonds?

#419

Post by harryh » Wed, Mar 17, 2021, 5:01 PM UTC

dakna wrote: post #382

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…

I recommend 3 movies to every family member willing to deal with financial topics as a form of edutainment. The Big Short and Margin Call are two of them. The 3rd one is 99 Homes. The key line is: "Don't get emotional about real estate." What is sold as a place for family memories for some, is just another asset class for others.

Too Big To Fail is also quite good and the third leg of my personal "Great Recession Trifecta."

https://en.wikipedia.org/wiki/Too_Big_to_Fail_(film)

Re: Why in the world would you own bonds?

#420

Post by _ink_ » Wed, Mar 17, 2021, 5:02 PM UTC

> For these reasons 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 that is heavily skewed to US dollars.

What exactly is he proposing? I think he is proposing to borrow cash, but can somebody ELI5 what is meant by non-debt, non-dollar assets?