Harry Browne’s Rules of Financial Safety (1999) • Hacker News Board

Re: Harry Browne’s Rules of Financial Safety (1999)

#121

Post by ghaff » Sun, Sep 03, 2023, 4:52 PM UTC

throwaway290 wrote: post #110

ghaff wrote: post #92

Earlier quoted context omitted.

Like everyone else, a liquid and very low risk (modulo inflation) financial instrument. (The definition is often a bit broader in financial statements.) I'd posit that, in this day and age, $100K (or whatever) in bank notes is going to do you very little good if you lose access to all your accounts.

> Like everyone else, a liquid and very low risk (modulo inflation) financial instrument. You clearly misread my question. I'll rephrase for legibility then: What is the word for cash (as in "physical money not in a bank") if you use "cash" to mean the opposite ("money in a bank")? Is it now a concept so rarely used that term is unnecessary? Also wow, didn't know you can't buy a car or a house with cash in US anymore…

It depends on the context. In the context of paying for your dinner, it means bills/notes. In the context of personal or corporate finances, it means liquid, low-risk investments.

>Also wow, didn't know you can't buy a car or a house with cash in US anymore, interesting times. Which year did it become illegal?

It's not illegal but I'd guess in a lot of situations involving (legal) high dollar transactions, the seller is probably going to tell you to take your briefcase of $100 bills to the bank and get a cashier's check--which will also kick off some raised eyebrows and financial reporting obligations.

Re: Harry Browne’s Rules of Financial Safety (1999)

#122

Post by pjfin123 » Sun, Sep 03, 2023, 4:53 PM UTC

andruby wrote: post #100

dennis_jeeves1 wrote: post #67

16. Have relationships with functional/reliable people who will help you in a crisis. ( easier said than done)

This seems to have been easier in the past than it is now. Family traditionally played that role and I hope for a lot of us still does. We do seem to be living in a society more disconnected than before.

Yeah financial crises wouldn't be as bad if more of people's economic activity was more embedded in a family or local community with people they know personally.

Re: Harry Browne’s Rules of Financial Safety (1999)

#123

Post by OrvalWintermute » Sun, Sep 03, 2023, 4:56 PM UTC

throw0101a wrote: post #116

With regards to Rule 11, especially: > GOLD not only does well during times of intense inflation, it does very well. No, it does not: * https://www.nber.org/papers/w18706 * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 From Roy Jastram's The Golden Constant: The English and American Experience 1560 to 1976 : > Andre Sharon, head of the international research department at Drexel Burnham, Inc., notes, “t…

Gold is the least bad currency option when compared to all the fiat currencies.

Re: Harry Browne’s Rules of Financial Safety (1999)

#124

Post by sgerenser » Sun, Sep 03, 2023, 4:57 PM UTC

ghaff wrote: post #41

kaycebasques wrote: post #22

Rule #1 (your career creates your wealth) is a gem. Rule #8 (make your own decisions) lacks self-awareness, especially after you read Rule #11 (bulletproof portfolio). I have been on a quest for a truly bulletproof portfolio for years. It's not easy. TANSTAAFL. Rule #11 also contradicts Rules #6 (no trading system works forever) and #9 (only do things you understand). That criticism aside, the author did a service to…

Where I've ended up is keeping some money aside to scratch whatever (mostly pretty conservative) investing itch I have and leaving the rest to a financial advisor. He's done stuff for my family for years and my feeling is that especially if I'm not going to actively manage my full portfolio, I'm better off with someone else doing it than just throwing the money into some index funds and calling it a day. (Though ther…

People with “a guy” always think he’s doing something super clever. In reality, the best ones are just investing your money in index funds. The best they can do is help to save you from yourself, like avoiding selling stocks and moving to cash in 2008 or 2020.

Re: Harry Browne’s Rules of Financial Safety (1999)

#125

Post by dehrmann » Sun, Sep 03, 2023, 4:58 PM UTC

dalyons wrote: post #77

glutamate wrote: post #13

Missing: If the promised interest rate is higher than the market rate for bank accounts, there is an implied risk of default, in which case you would likely lose your entire investment.

Not missing. “ The cash portion should be kept in a money market fund investing only in short-term U.S. Treasury securities, so that you don’t have to evaluate credit risk. These securities are safer than bank accounts”

The funny lesson I got from SVB was why bother putting cash in a bank when they're just going to put it in treasuries, MBSes, etc. It's not exactly insured, but a short-term government money market fund seems safer, or a state muni fund if you're worried about the federal government defaulting.

Re: Harry Browne’s Rules of Financial Safety (1999)

#126

Post by ghaff » Sun, Sep 03, 2023, 5:04 PM UTC

Ekaros wrote: post #66

soared wrote: post #36

Earlier quoted context omitted.

Investing in gold now seems real not smart, same with that much cash.

I think we might be in point of time where cash could make lot of sense. It is uncertain if we are in an other long running bull market yet. And certain sectors might be approaching a top already. Namely the biggest technology stocks.

As someone on the older side, I generally agree with that. The tech sector has been very good for me over the past 10+ years and I still have a fair bit invested but I look at my portfolio and go "that's probably enough." I've been around long enough so that "Don't get greedy" is pretty ingrained.

On the other hand, getting 5% on basically a treasuries fund looks pretty good on a risk-adjusted basis.

Re: Harry Browne’s Rules of Financial Safety (1999)

#127

Post by threadweaver34 » Sun, Sep 03, 2023, 5:04 PM UTC

Racing0461 wrote: post #84

ttul wrote: post #81

Rule #0: Be born into a privileged family. Your parents will raise you in a wealthier suburb where the schools are good and you network with other similarly privileged kids. The crime rate is low, so you’re less likely to end up injured or killed by violence. Air pollution is also likely lower, so less odds of death by asthma. Privilege gets you into college, where you study with other even more privileged kids, obta…

How are white males a privileged class? The top 1% sure, but the average white male? If anything, white females are a privileged class.

I'm a solid white male engineer at a FAANG. If I were a woman, the company would bend over backwards to make sure I advance. 80th percentile as a male, they're happy to keep me, but investing in me isn't a priority.

Re: Harry Browne’s Rules of Financial Safety (1999)

#128

Post by ajross » Sun, Sep 03, 2023, 5:06 PM UTC

matsemann wrote: post #26

ajross wrote: post #10

Earlier quoted context omitted.

That kind of scam is exactly why securities trading is regulated. Before the IPO though, all bets are off and unless you're the VC writing the term sheet, you're the sucker.

It doesn't have to be a scam. The pie got bigger, but perhaps because other people added more stuffing (money) to it. So one's original piece remained mostly the same.

The point is that with public securities, the SEC makes sure that it's not a scam. A public company can't just decide one day to issue a ton of stock and hand it over to an arbitrary entity, there's a regulatory process and legislated veto power held by the shareholders/board.

When you buy an unregulated security (like shares in a "crowdfunded" startup), that's the protection you're not getting. Most people in this community tend to see the SEC as the enemy, but this is the value it provides.

Re: Harry Browne’s Rules of Financial Safety (1999)

#129

Post by c0pium » Sun, Sep 03, 2023, 5:07 PM UTC

ghaff wrote: post #104

c0pium wrote: post #68

Earlier quoted context omitted.

Have you back tested this hypothesis? It’s very unlikely to be true over a long period, say 15 years.

Hard to say. Everything invested in the NASDAQ over the past 15 years would have been a great strategy. (Edit: high return strategy. Not necessarily a "good" one.) The 15 years before that probably not as good. Putting money in a small number of index funds and not even looking at them probably isn't a bad strategy and the costs are pretty low. But it's not bulletproof. I look at the financial advisor/firm as a form…

It’s not hard to say though, back testing is trivial. There are very few market-beating advisors, and the longer you look the longer the odds get.

Re: Harry Browne’s Rules of Financial Safety (1999)

#130

Post by liquidpele » Sun, Sep 03, 2023, 5:13 PM UTC

DennisP wrote: post #93

liquidpele wrote: post #90

Earlier quoted context omitted.

“When stocks are great”… ie buy low sell high, easy to say but damn near impossible to do.

Timing the market is hard but periodically rebalancing your portfolio is easy, and generally recommended.

Rebalancing according to risk is recommended, not doing it because you think you know what the market is going to do. For instance, let's say right now, the market is headed up. When is the right time to "re-balance" to more cash? This is just assuming that the market is going to go lower than it currently is, which is just as much a gamble as thinking it'll go up for the next year.

In short, don't try to guess the market and keep some magical percent of cash/investments unless you have the means to gamble that money. Talk to a financial advisor and choose a risk-based investment strategy that makes sense for your point in life.