Show HN: Inflation-adjusted stock charts – Total Real Returns • Hacker News Board

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

#161

Post by wing-_-nuts » Wed, Jul 13, 2022, 9:25 PM UTC

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…

I'm of the old school bogleheads mentality. I've typically been ageInBonds since I started investing after the great recession. While I expect poor stock performance, I am pretty shook by the poor returns on bonds. I accepted years of poor performance with the expectation that they would cushion the blow during the next recession, and they have done nothing.

I don't know how long, or how bad this recession will be, but I will likely be much less willing to hold bonds going forward.

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

#162

Post by danuker » Wed, Jul 13, 2022, 9:30 PM UTC

nemo44x wrote: post #124

As of today, you need about 12% returns to break even after inflation and the IRS eat your return. Anything less than that and you are effectively losing. Especially annoying that capital gains taxes will be paid on any profits, even those less than inflation. Time for a new rule.

You can get ROIs better than the stock market.

Some examples are education, and if you own a home, an energy audit.

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

#163

Post by mechanical_bear » Wed, Jul 13, 2022, 9:30 PM UTC

jl2718 wrote: post #127

This period has been very special because of the 401k, which is itself part of the growth story of the corporate legal structure. I think this is coming to an end. Corporate boards and officers no longer represent the best long-term interests of the companies and shareholders they represent. It’s also a very precarious legal status as an arbitrary judicial ruling can make or break a company. Finally, and perhaps most…

I liked your explanation but you undermine your write up by discussing something you clearly have no business discussing:

>> People tithe and sacrifice to their church for a promise of rewards in the afterlife.

This is a fundamental misunderstanding of tithing and I’m not going to get into that at the moment, but it makes me consider if you are discussing other things in your write up that you don’t have experience with as well.

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

#164

Post by mywittyname » Wed, Jul 13, 2022, 9:43 PM UTC

gumby wrote: post #115

Teknoman117 wrote: post #85

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…

> Everything I've seen in the news for last few months just seems to say "sorry, the last 50 years was a gravy train, it'll never work that way again, you're screwed". 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 po…

People tend to not appreciate the struggles that the people before us had. We are looking at their situation with the absolute knowledge that things got better.

We distort the lives of those in the past much in the same way do the people we follow on social media.

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

#165

Post by anon291 » Wed, Jul 13, 2022, 9:45 PM UTC

Carp wrote: post #128

anon291 wrote: post #126

Earlier quoted context omitted.

> 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 at this point (especially having moved to a higher property value area to be closer to friends and family). Higher interest rates lead to lower home prices, which should make it easier to make a down payment. Interest rates may double, but mortgage pa…

That's what my plan is. Just waiting/hoping housing prices drop within the next year or two. Been waiting a while now though so who knows if they'll actually come down

Home prices are coming down in my area of Portland, OR, which was already an overpriced market. Homes have been on the market much longer, and several homes have had price reductions in my neighborhood. Ultimately though, I wouldn't try timing the market, if you can afford the down payment, and the monthly, and like the house, I'd go for it. Always time to refinance later.

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

#166

Post by mywittyname » Wed, Jul 13, 2022, 9:49 PM UTC

smallerfish wrote: post #102

Teknoman117 wrote: post #85

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…

Don't buy a house until the real estate market crashes. Then buy. I bought a fixer-upper in 2008 for 200k; sold it for 425k 5 years later. Recently it sold for 650k (we still get redfin notifications.) In the meantime I bought a house for 625k (nice house with some rough edges) and sold it 18 months ago in covid real estate madness for 950k. We certainly put money into both houses over time, but we'd never have been…

> Wait a year or two.

The Great Financial Crisis will be the only event of this nature in our lifetimes. The country would need to overbuild like crazy to cause housing to crash like that again.

Everyone is expecting housing prices to fall in "a year or two." I've been hearing this for two years now. The market has a habit of doing the opposite of what people expect it to.

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

#167

Post by notahacker » Wed, Jul 13, 2022, 9:53 PM UTC

whatshisface wrote: post #145

notahacker wrote: post #98

Earlier quoted context omitted.

Except that you've got a Federal Reserve actively ensuring that there aren't too many (or too few) dollars in circulation for the level of interest rate they want to maintain. They do it by buying and selling bonds rather than stocks, but the principle is the same. So we don't have to worry about shifts in portfolio preferences leading to an unexpected oversupply or undersupply of dollars But more people wanting to h…

Maintaining an interest rate isn't the same as maintaining a fixed rate of CPI growth, especially not in the short run.

Sure, but we're not talking about fixing the rate of CPI growth (stock prices aren't a constituent part of that and don't have a fixed relationship with it).

We're talking about the effect of wealth holders wanting more of their investments in stocks or more of them in cash on the USD. An increase in demand for the liquidity of currency holdings, or an increase in demand for stocks due to perceived improved returns could affect the dollar through knockon effects on availability of credit, but the interest rate for that credit is the price of the bit the Fed fixes.

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

#168

Post by jl2718 » Wed, Jul 13, 2022, 10:03 PM UTC

mechanical_bear wrote: post #163

jl2718 wrote: post #127

This period has been very special because of the 401k, which is itself part of the growth story of the corporate legal structure. I think this is coming to an end. Corporate boards and officers no longer represent the best long-term interests of the companies and shareholders they represent. It’s also a very precarious legal status as an arbitrary judicial ruling can make or break a company. Finally, and perhaps most…

I liked your explanation but you undermine your write up by discussing something you clearly have no business discussing: >> People tithe and sacrifice to their church for a promise of rewards in the afterlife. This is a fundamental misunderstanding of tithing and I’m not going to get into that at the moment, but it makes me consider if you are discussing other things in your write up that you don’t have experience w…

Actually I'm heartened to see people defending religion on HN. Tithing to a church you truly belong to is probably a better use of your money, even purely by personal benefit, than tithing Wall Street. I hope that I've introduced some of those ideas in the text by making a negative comparison to the church. But yes; it was sloppy and possibly interpreted as disparaging of religious practice itself, so for that I apologize.

Meta: this is what I like about Hacker News. I get challenged to maintain disciplined thinking, often at the boundaries of the argument where I casually drift.

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

#169

Post by rm999 » Wed, Jul 13, 2022, 10:09 PM UTC

epgui wrote: post #156

nonethewiser wrote: post #117

Earlier quoted context omitted.

Is that even possible? Wouldn't that suggest something that is not true?

How is it not true? All these numbers are relative, and you can make the choice of comparing them to whatever reference point you want.

The y-axis has actual meaning: it tells you the purchasing power of a public stock, which will never be 0.

What you could do is normalize it by the value of the stock at the start of the chart, which would make the charts start at 1. On a log plot this is the equivalent of dividing all the values by the starting value, which moves the lines up/down but does not change their shape. This could make it easier to compare the lines, but in doing so, you throw out information (the real value of the y axis).

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

#170

Post by jl2718 » Wed, Jul 13, 2022, 10:09 PM UTC

mistrial9 wrote: post #150

jl2718 wrote: post #127

This period has been very special because of the 401k, which is itself part of the growth story of the corporate legal structure. I think this is coming to an end. Corporate boards and officers no longer represent the best long-term interests of the companies and shareholders they represent. It’s also a very precarious legal status as an arbitrary judicial ruling can make or break a company. Finally, and perhaps most…

> People tithe and sacrifice to their church for a promise of rewards in the afterlife. could you strengthen your argument by omitting casual broad-brush explanations of religion, please?

Well, I can't anymore, but, I might have instead said something about how religion is commonly maligned for such practices. This is only to show that modern investment practices bear strong elements of ritualistic faith. Your response is most welcome. Thank you.