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Pricing Money: A beginner's guide to money, bonds, futures and swaps

jdawiseman.com

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Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#311

Post by Breza »

alecco wrote: post #295
vecinu wrote: post #277

Earlier quoted context omitted.

Hot take but I'll bite, what's your rationale? We're only ~9% down from VTI's ATH and what happens now doesn't matter when your investing horizon is 15+ years.

This is terrible advice BTW. I got it in 2007, also HN and FT forums convinced me. So I put significant savings in a couple of index funds. I lost 40% within months. Left it there and recovered only after 8 years (and that's not even adjusting for inflation or MM rate). Please be a bit more self-aware. I spent many years in finance and the more I learned, the more I realized how much I don't know.

If you're investing a chunk of every paycheck, you'll keep plowing money into the index fund through every dip, which historically makes up for the money you add at peaks. You can spend a few years derisking as you approach retirement, which is similarly not that susceptible to recessions.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#312

Post by Breza »

vecinu wrote: post #304
alecco wrote: post #292

Earlier quoted context omitted.

- Core inflation not going down - Recession now undeniably starting (several friends in Tech are losing their jobs in companies doing well) - Ballooning deficits and debt at every level - High rates making debt ballooning faster - USD dominance decreasing That's known and now not matter of opinion but hard facts. Now, where to invest? I have no idea (and I'm pretty sure traditional investment knowledge doesn't work a…

Core inflation is going down, just not as fast as other sectors. People losing their jobs is not a hard fact of a recession, we have one of the lowest unemployment rates in history. I'm just indexing and staying happy, worry free, it worked for the last 100 years and I'm sure it'll work for my lifetime.

I have a similar outlook. If the stock market starts losing against inflation over my time horizon (several decades) then we have bigger problems. There will be recessions in the future. I'll keep tossing money into index funds through the bottoms and enjoy coming out the other side. Every three months, I get a statement in the mail telling me how much money I've made or lost. That's all the attention I need to pay to my longterm finances.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#313

Post by Breza »

gretch wrote: post #25

I read a couple of pages and it looks good. I’m not a complete beginner but it’s still filling in some gaps in my knowledge. I appreciate the author’s work and giving it away for free. That said I feel like it’s skipping some explanation for what’s supposed to be a beginner’s guide. One thing that sticks out to me is that it jumps straight into talking about interest rates without explaining the time value of money a…

It's not a book, but Advanced Investments from The Great Courses starts at the basics and gets into the weedy details of bond pricing, etc.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#314

Post by nullindividual »

rfrey wrote: post #134
nullindividual wrote: post #131

Earlier quoted context omitted.

It’s not a choice to be part of the insurance market for the vast majority of American homeowners. What you describe is choice in name only.

Your parent literally said if, for example, your liquid net worth is 100x the replacement cost of your home. and for the vast majority of people, rebuilding their home is not feasible with their current net worth.

Insurance is required by the lender (yes, I understand people purchase with cash outright, but that's a vanishingly small portion of the population).

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#315

Post by alecco »

Breza wrote: post #311
alecco wrote: post #295

Earlier quoted context omitted.

This is terrible advice BTW. I got it in 2007, also HN and FT forums convinced me. So I put significant savings in a couple of index funds. I lost 40% within months. Left it there and recovered only after 8 years (and that's not even adjusting for inflation or MM rate). Please be a bit more self-aware. I spent many years in finance and the more I learned, the more I realized how much I don't know.

If you're investing a chunk of every paycheck, you'll keep plowing money into the index fund through every dip, which historically makes up for the money you add at peaks. You can spend a few years derisking as you approach retirement, which is similarly not that susceptible to recessions.

> This is a terrible moment for index funds.

I meant to put money in index funds right now. Not ongoing investment over a long time.

And going back further to my original point, if I had money in funds now I'd move it to Money Market accounts because the risk of a stock market downturn is big (1987/2001/2008 style). You are not Soros/Buffett/Munger or a multi-billion dollar hedge fund.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#316

Post by alecco »

vecinu wrote: post #303
alecco wrote: post #295

Earlier quoted context omitted.

This is terrible advice BTW. I got it in 2007, also HN and FT forums convinced me. So I put significant savings in a couple of index funds. I lost 40% within months. Left it there and recovered only after 8 years (and that's not even adjusting for inflation or MM rate). Please be a bit more self-aware. I spent many years in finance and the more I learned, the more I realized how much I don't know.

I don't think I'm following, you didn't "lose" anything if you didn't sell. Even if you invested in 2007 at the peak and lost 50% of a 100% S&P500 portfolio by 2009, by now you'd be extremely wealthy, adjusting for inflation. A $10k investment in 2007 is now worth $27k and that assumes you didn't contribute another penny for 16 years.

> I don't think I'm following, you didn't "lose" anything if you didn't sell.

This is the same reasoning as Banks avoiding mark-to-market.

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