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Show HN: Inflation-adjusted stock charts – Total Real Returns

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Re: Show HN: Inflation-adjusted stock charts – Total Real Returns

#61

Post by rmah »

whatshisface wrote: post #5

How can everything go down at once, doesn't the money have to go somewhere? Best hypotheses so far along with how to test them: 1. Perhaps the parts of the CPI that companies in the stock market can produce are being outpaced by the components that are not produced, like real estate, and so can't contribute to an increase in share prices. (How to check: Look up changes in the CPI components, which are detailed in the…

No, the money doesn't have to go anywhere. Nor does it have to come from anywhere when everything goes up at once. Because there is no money involved. It's sort of like asking "where do the pounds go when I lose weight?"

You are conflating using "dollars" when used as a unit to measure the value something, with "dollars" as an asset in the economy when used to conduct trade. This confusion is easy to make (and widespread) because we use the same word for both things.

The vast majority of wealth in an economy is not in monetary form. It's in hard and soft assets: land, buildings, cars/trucks, factories, raw materials, home appliances, copyrights, patents, film libraries, etc. The economic value of all those things is just measured in dollars.

Re: Show HN: Inflation-adjusted stock charts – Total Real Returns

#62

Post by mrkstu »

whatshisface wrote: post #55
mrkstu wrote: post #43

Earlier quoted context omitted.

Because money is a notational bookkeeping exercise at this point in time and has been since the dollar went off the gold standard. It can't be affected by demand for things as small as stocks, but only its relative demand to other notational currencies.

The total US stock market cap is $45T[1] and M2 is $20T[2]. Are you sure currency prices can't be influenced by the stock market? [1] https://www.statista.com/statistics/1277195/nyse-nasdaq-comp... [2] https://www.federalreserve.gov/releases/h6/current/default.h...

I think that just furthers the point- there isn't enough 'money' in M2 to 'pay' for all the stocks in the stock market. Yet there that value sits and real estate is another 20+ trillion in land value.

In other words the actual 'money' is a transactional grease for the wheels of commerce- notational/bookkeeping mechanism.

The sale of Apple (the largest value stock in America) as a whole probably couldn't be accomplished in cash only, but even if it was, it'd be mostly notational numbers in an account somewhere and wouldn't 'flood the market' with dollars and crash the value of the currency.

Re: Show HN: Inflation-adjusted stock charts – Total Real Returns

#64

Post by zie »

loeg wrote: post #56
TameAntelope wrote: post #51

Earlier quoted context omitted.

> Portfolio emphasizing U.S. and foreign large- and mid-capitalization value stocks. VFINX is not composed exclusively of US stocks.

It’s an S&P500 fund; that is composed (exclusively) of large cap US stocks.

That's not true. It's MOSTLY large cap US stocks, but it has some mid-caps, pretty much regardless of how you define mid-caps.

Re: Show HN: Inflation-adjusted stock charts – Total Real Returns

#65

Post by tunesmith »

compumike wrote: post #39
Barrera wrote: post #29

The trick is the to get those inflation-adjusted returns you need 100% time exposure. No selling because circumstances force you to. No selling because you get spooked at a 50% drawdown. Not many people can tolerate even a 20% hit, which explains a lot about the situation the world economy finds itself in.

You're right, and the conventional advice has been to have a mix of stocks and bonds, with bonds to reduce volatility and preserve some of the wealth that you might need to access in the shorter term. However, what's unusual about the past few months is that bonds have been getting whacked too! Here's a comparison of four Vanguard funds, with stock:bond ratios of 80:20, 60:40, 40:60, 20:80 respectively: https://total…

Bond funds are different than bonds. With bonds, you can hold them to maturity and not get whacked.

Re: Show HN: Inflation-adjusted stock charts – Total Real Returns

#66

Post by adrianmsmith »

Visually it's a really nice looking site. If I may offer one suggestion, it would be to use a minus sign (unicode U+2212) for the negative numbers - by default, for historical pre-unicode reasons, computers tend to use a hyphen instead and it just doesn't look as good, at least to my eye!

Re: Show HN: Inflation-adjusted stock charts – Total Real Returns

#67

Post by s1artibartfast »

TheFreim wrote: post #35
Barrera wrote: post #29

The trick is the to get those inflation-adjusted returns you need 100% time exposure. No selling because circumstances force you to. No selling because you get spooked at a 50% drawdown. Not many people can tolerate even a 20% hit, which explains a lot about the situation the world economy finds itself in.

This is why I don't follow how my portfolio is doing, knowing doesn't give me much actual information and can often encourage bad behavior (admittedly I don't have many investments compared to many).

My philosophy is essentially buy low, hold forever.

I don't put money that I might realistically need in the market

Re: Show HN: Inflation-adjusted stock charts – Total Real Returns

#68

Post by [deleted] »

whatshisface wrote: post #59
chordalkeyboard wrote: post #54

Earlier quoted context omitted.

> In a market with one good, the value of a dollar must move inversely with the value of the good (no examples needed, it's mathematically tautological) this is incorrect

I mean the value of the dollar as measured by the CPI.

[deleted]

Re: Show HN: Inflation-adjusted stock charts – Total Real Returns

#70

Post by loeg »

zie wrote: post #64
loeg wrote: post #56

Earlier quoted context omitted.

It’s an S&P500 fund; that is composed (exclusively) of large cap US stocks.

That's not true. It's MOSTLY large cap US stocks, but it has some mid-caps, pretty much regardless of how you define mid-caps.

S&P publish a mid-cap index: the S&P400. It doesn't overlap the S&P500[1]. You have to have a generous definition of mid-cap to describe even the smallest S&P500 component as mid-cap. The 500th component has a market cap of ~$6B.

Regardless, they're all US stocks; the comment I was responding to claimed they were not.

[1]: https://www.spglobal.com/spdji/en/images/campaign/707133-us-...

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