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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

#191

Post by paulmd »

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…

Bonds have been the only thing backstopping my 401k from taking the bigger hit that equities have taken, the Vanguard 500 portion itself is down 21% or something and total I'm still down 16% or something like that YTD.

I'm guessing it's the "real returns with investment" that is painful here... bonds may not be losing (as) much but they're also not keeping pace with 10-15% annualized inflation either.

Due to the way energy prices (which are a massive component of everything else too) are factored out of CPI, even TIPS probably has negative real returns at this point compared to reality. Is there a non-CPI TIPS equivalent, lol?

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

#192

Post by jannyfer »

jen20 wrote: post #177
jl2718 wrote: post #168

Earlier quoted context omitted.

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.

Agreed, the reply makes me more sure that the comment suffers from non-expertise and that we should remember the Gell-Mann Amnesia Effect.

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

#193

Post by x3sphere »

gedy wrote: post #189
mywittyname wrote: post #166

Earlier quoted context omitted.

> 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.

Not sure where you are, but California at least has clear up/down cycles, but they take many years unlike a stock bubble. E.g. I the last housing bubble started popping in 2005-2006, but didn't bottom until about 2010-11

Yep, it'll take a long time to bottom. That said, I'm surprised how much things have already fallen in AZ. Some of the properties with 10% price cuts, have been sitting on the market for over 2 months. Demand has fallen off a cliff here. I can't see how it gets any better with the Fed continuing to rate rates.

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

#194

Post by someguydave »

whatshisface wrote: post #148
roenxi wrote: post #121

Earlier quoted context omitted.

You do mean that, but it doesn't have a lot of bearing on the correctness of your argument. I suspect you've assumed that wealth is neither created or destroyed somewhere in your logic, because what you are saying would make sense if that was an assumption. But that would be a poor assumption if you've made it. CPI is a tool for adjusting the value of a dollar, but it doesn't have any bearing on the value of the tota…

There are three charts on the linked website - bonds, dollars and stocks. None of them are exactly measures of wealth. My question is about how their properties as mutual numeraires could allow them to all fall at the same time.

People are willing to pay fewer dollars for each asset class.

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

#196

Post by imtringued »

icu wrote: post #195

So you used CPI as your inflation measure? I personally don't think CPI or RPI is a good inflation yardstick, because the calculations change over time. For consistency I would suggest you try Shadow Stats or the year on year growth of the M2 money supply.

Shadowstats doesn't know how exponential growth works. The people who believe in shadowstats don't understand it either.

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

#197

Post by skinnymuch »

TameAntelope wrote: post #159
loeg wrote: post #94

Earlier quoted context omitted.

Vanguard notoriously calls mid-caps "small," e.g., VB. Anyway, they're not the ones who select S&P500 index components. I love Vanguard, but this is one case where they're kind of off-base.

So Vanguard (venerated investment institution for 50 years) is wrong and you (random HN commenter) are right? Sure, okay.

This is a really weak way to think or see the the world. Regardless of who is correct in this specific situation.

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

#198

Post by icu »

wing-_-nuts wrote: post #161
compumike wrote: post #39

Earlier quoted context omitted.

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,…

Sorry for your investment woes.

I think part of the problem is established dogma (and regulatory regime) that believes bonds offer diversification from stocks. However this seems to have broken down post 2008, as they have become increasingly correlated.

Imho it's healthy to expect that market regimes change, especially since we do not operate in free market, but a semi-intervined market (where the Fed sets the price of money which is an incredibly important input to the global economy).

I also think it's important to not think of diversification in terms of asset classes anymore, but in terms of alpha source.

I know this is much harder to do because, as far as I know, only by actively trading can you isolate and quantify alpha sources like this.

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

#199

Post by imtringued »

This is offtopic but I am tired of pretentious people.

The money supply must grow exponentially because liquidity premiums aka interest payments. You can now either choose to eliminate liquidity premiums and hence abolish inflation and exponential growth in the money supply or you can choose to have inflation and an exponentially growing money supply with endless increases in public debt.

The fact that if the money supply is $100 and 2% interest must be paid which is then subsequently reinvested for compounding obviously requires the economy to keep track of $102. Hence compound interest which is caused by liquidity premiums results in a perpetual increase in the money supply. The fact that governments must borrow money is purely how we decided to run the system right now. You could in theory do helicopter money as well and it would amount to the same.

Now, since positive interest rates result in an increase in the money supply, reducing the money supply requires the opposite, i.e. negative interest rates.

Negative interest rates don't exist because of cash. That is the only reason. People don't want negative interest rates because they actually love the illusion of earning compound interest and subsequent inflation which cancels out the interest. People criticise inflation while simultaneously criticizing negative interest rates, the height of hypocrisy. After all, if you implement negative interest rates a while lot of people will have to work instead of living off the work of others. They say that it is unfair to not turn other people into debt slaves, while simultaneously criticizing how unjust it is, that their dreams of turning other nations and future generations into debt slaves is disrupted by so called defaults and debt restructuring. They yell out debt is bad while secretly desiring to have debt slaves of their own.

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

#200

Post by irae »

kaimaoi wrote: post #157
compumike wrote: post #18

Earlier quoted context omitted.

I think that's a reasonable idea and I may try including that option in the future. Right now, the start point is quite arbitrary: it's the first date where we have data for all the symbols requested. And date ranges dramatically affect any sort of relative performance comparison. So in the current code I decided to just normalize to today's nominal-dollar value so that the end values are relatable. What would the id…

Growth of $10K (growth of a hypothetical $10,000 investment) is a chart that is commonly-used to illustrate this. Your chart would then have VFINX, VBMFX, and USDOLLAR start with $10,000 on 1987-08-03 and go from there.

Showing $10k way back in the day would be a bit misleading since every graph starts in a different day and the whole idea is that inflation makes $10k translate to different real world value (baguettes) across time.

It could instead show how much back at the start date one would need for it to be todays $10k? Not sure. Maybe absulute dolar values should just be ommited and work only off percentages.

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