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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

#171

Post by zaroth »

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.

Inflation is a good reason why long term capital gains rates are lower than income tax rates.

You can argue about the timeframe and getting the whole break after 1 year versus maybe giving larger breaks the longer you hold, but that’s the weeds.

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

#172

Post by MaxHoppersGhost »

dvt wrote: post #149
smallerfish wrote: post #102

Earlier quoted context omitted.

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 real estate market won't crash, and it especially won't crash in high-demand areas (Southern California, the Bay Area, Atlanta, SoFlo, Colorado, etc.). We'll likely see a steep-ish correction in "second-tier" markets, like the ones in Texas, Tennessee, and the Rust Belt (Pittsburgh comes to mind).

If history repeats itself you are dead wrong. During 2008 the Texas market barely flinched while California and Florida was tanking. I think Texas won’t budge much again considering the consistent flow of people and jobs to Texas in pretty much every major city.

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

#174

Post by GoldenStake »

FooBarWidget wrote: post #160
stavros wrote: post #154

Earlier quoted context omitted.

Are "buy" and "live in a car" the only two options?

You can rent, but that's money wasted. The longer you rent, the longer you didn't invest. Also rents are higher than mortgage payments, making it worse.

But are rents higher than the mortgage + insurance + maintenance + lack of liquidity + the potential home value changes. If the expectations is that the home value are dropping, the math seems pretty simple.

But in a different financial environment, maybe a few years from now, your expectations might be different and the math works out differently

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

#175

Post by nemo44x »

zaroth wrote: post #171
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.

Inflation is a good reason why long term capital gains rates are lower than income tax rates. You can argue about the timeframe and getting the whole break after 1 year versus maybe giving larger breaks the longer you hold, but that’s the weeds.

Principal should be adjusted for inflation. If I invest $10k and the investment is worth $11k today but we’ve experienced 10% inflation in that time then my actual profit is 0 and I should pay no tax on the $1k of proceeds.

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

#176

Post by jokethrowaway »

anon291 wrote: post #165
Carp wrote: post #128

Earlier quoted context omitted.

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.

Portland got some pretty negative press in the last few years.

I barely knew Portland existed before that and now I just know I wouldn't want to settle there.

Real estate seems still up in general, I assume because of a mix of inflation and BlackRock / investors overpaying for it to escape all the other failing assets

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

#177

Post by jen20 »

jl2718 wrote: post #168
mechanical_bear wrote: post #163

Earlier quoted context omitted.

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 apol…

I didn’t see it as a defense of religion (it did not express an opinion) - more as a correction of your post.

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

#178

Post by pedrosorio »

rm999 wrote: post #169
epgui wrote: post #156

Earlier quoted context omitted.

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

If we are trying to visualize the total return of a given asset since 1987, how is the price of a single stock (an arbitrary unit) in 1987 or any time since, relevant data?

The ROI expressed as a percentage on the y axis (with 0% at the beginning of the period) would be a much better visualization of the relative returns among asset classes throughout the period.

Currently I get USD The drawdown chart is even more confusing with the USD starting at -81%. If we were plotting a chart of drawdown of multiple currencies, the older ones would start lower (since they've had more time to be affected by inflation) which only makes it hard to visualize the answer to the question "how did they do since 1987".

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

#179

Post by x3sphere »

mywittyname wrote: post #166
smallerfish wrote: post #102

Earlier quoted context omitted.

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.

Housing prices are correcting now, at least in some areas. It's definitely happening in AZ. I've seen drops of almost 15%.

OpenDoor has been taking a loss on a lot of properties it bought over the past few months too.

Considering inventory is up over 2X YOY as well, I expect prices to fall even further here. I'm not sure if it'll get as bad as 08 though, but a 30-40% drop isn't out of the question the way things are headed imo.

The thing is though with rates as high as they are, housing prices dropping this much actually doesn't make affordability any better unless you can pay in cash.

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