111–120 of 279 posts
Which inflation? If I am earning a thousand bucks a month and all my money goes on fixed costs, and those double, my inflation is 100%.
Everyone has their own personal inflation rate, mine in 2021 was 1%. We will see how 2022 turns out, but I'm betting it will go up for me.
I don't understand the details on how inflation is measured here, but I expected the US Dollar curve to be a constant 1, after the normalization. However, it seems to go down. What does that mean? That the dollar loses value faster than "money is printed"?
Wish it had the 70s, or ideally, the whole 20th century. The 80s-2010s has been a period of unusually low inflation and consistent market returns, buoyed by the end of the Cold War and entry of the developing world into the world economy. There's a good chance that we revert to the mean going forwards and see much more geopolitical instability and resource constraints.
So, what does a young person do these days? First few years out of college were just "max out 401k contributions into some target fund" + build emergency fund, but now that I've amassed more cash than what an emergency fund requires, what does one do? Originally, my plan was to use it for a house down-payment, but with the mortgage rates having nearly doubled in the last 6 months, that's kind of out of the question a…
I first came to Palo Alto in 1984. All the houses were underwater (worth less than their mortgages). The tech boom was over and consensus was that it wasn’t coming back. Too bad you missed that!
Just keep investing (dollar cost averaging). Pick your poison: “barbell” as some other comments have suggested or just a couple of very broad index funds. Since you have a long time ahead of you, I’d recommend the latter. You can spend some of it on a down payment when that makes sense to you.
Earlier quoted context omitted.
So, what does a young person do these days? First few years out of college were just "max out 401k contributions into some target fund" + build emergency fund, but now that I've amassed more cash than what an emergency fund requires, what does one do? Originally, my plan was to use it for a house down-payment, but with the mortgage rates having nearly doubled in the last 6 months, that's kind of out of the question a…
> So, what does a young person do these days? Barbell investing from Taleb makes the most sense to me. Cap your downside, go balls out with the rest. And prioritize long-term assets over cashflow. Revenue generating assets are best.
This doesn’t mean anything to me. Can you elaborate? Also, why are revenue generating assets better, and doesn’t pursuing revenue generating assets imply prioritizing cash flow? Sorry for the noob questions.
Having all lines normalized so they start from a common point at x = 0 would be helpful. That would allow reading the total returns as percentage of the initial (1987) investment and compare them. Similarly in the drawdown chart, if it starts at 1987, it makes no sense to start the dollar at -81%. If I am looking at a chart from 1987 to 2022, I want to see how the dollar did compared to other assets in that time peri…
Very nice!
Earlier quoted context omitted.
So, what does a young person do these days? First few years out of college were just "max out 401k contributions into some target fund" + build emergency fund, but now that I've amassed more cash than what an emergency fund requires, what does one do? Originally, my plan was to use it for a house down-payment, but with the mortgage rates having nearly doubled in the last 6 months, that's kind of out of the question a…
Go for the house down payment and refinance once the rates go down. A few percentage points aren’t going to make much difference near term.
I don't understand the details on how inflation is measured here, but I expected the US Dollar curve to be a constant 1, after the normalization. However, it seems to go down. What does that mean? That the dollar loses value faster than "money is printed"?
You're thinking of the inflation adjustment the wrong way around. A dollar earned in 1980, if, saved until today, buys less than it would have then.
I guess I imagined the inflation-adjusted value of X to be defined at time t to be something like: value(X, t) / value(USD, t). So, when I substitute USD for X, I get constant 1.