91–97 of 97 posts
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Call me crazy, but since the DOGE hatchet-wielding started, I've redeemed all my US bonds. I just don't have confidence that the people needed to keep TreasuryDirect running will still have their jobs if/when I need to redeem them in the future.
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So far, this is a minor stock correction coupled with unprecedented political uncertainty. In my lifetime, there have been multiple -10+% single day drops, one -22%, and a bunch of -10% months. In that time though, no one has questioned the full faith and credit of the US government. However now -- The Supreme Court had to take a case to rule that the government had to pay contracts that had already been delivered on…
Not yet mentioned is that this is the first time the US is actively working against their allies, and it's not just the Europeans. If - or when? - the US leaves NATO, the EU will finally have a big incentive to buy local. Right now the EU buys most of their arms from the US. Germany's 100 billion Euro special fund created at the beginning of the war in Ukraine mostly went to US purchases. It's a Chinese article but I…
> BY the way, I am much more mad at the Europeans, my own German government(s) especially, than at Trump.
I would go even as far as saying that a significant part of German elites indirectly work for Russians or more generally they are part of the world corruption elite (and I don't mean AfD and BSW, I mean businesspeople and parts of CDU and SPD). Since the end of nuclear plants was announced around 2000, it was quite clear they will have to be replaced, and at least since 2009 (the first Russian gas stop) it was very clear Russia can't be trusted with the one thing (or anything else). But at every turn they managed to delay or destroy effective solutions and instead pushed for Nordstream 2 and so on. And the public let them do that.
Of course it can be much worse (I'm from Slovakia) but the past doesn't give me high hopes for the future.
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Meet Bob. Bob is the world’s worst market timer. https://awealthofcommonsense.com/2014/02/worlds-worst-market...
Bob also picked the best stock market to invest in. He would have done a lot worse investing in any other stock market. It's not surprising he did well, he picked the winner. What are the chances the US is going to have the best stock market over the next 50 years? It's possible, but doesn't seem likely.
A popular post that is often given to folks who are freaking out about drops in their portfolio: * https://awealthofcommonsense.com/2014/02/worlds-worst-market... And for those who want to sit on the sidelines, that's usually not a good idea: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co... The main folks that do have to worry about their portfolio are those who are about to retire, and those that ha…
There are a fair number of us not worried about the drop in our portfolio as much as we are worried that the current decisions will decrease the world's willingness to invest in American companies and markets permanently. What if your hypothesis is that the fundamentals have changed?
I news interview today suggested the tariffs were a new “equilibrium”.
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The bob scenario is educational, but isn't relevant here. The reason why bob is still fine is that the crashes all happen during the accumulation phase. What you don't want is a crash right as you retire, causing you to rapidly liquidate a much larger portion of your savings than expected.
But do you really liquidate „rapidly“ once you retire? You basically dollar-cost-average out of your portfolio when retirement begins. That’s not to say that timing isn’t an issue — it absolutely is. It’s just not a make-or-brake issue imho.
In the accumulation phase the value of your equities is likely to return. You never end up selling anything. But in the retirement phase you liquidate in order to pay your expenses. If you end up liquidating down too far there won't be enough future growth to cover your retirement needs.
Market crashes right after retirement are very dangerous for retirees.
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> While dollar cost averaging and index investing are solid strategies Dollar cost averaging is a psychological strategy, not a financial one. "The costly myth of dollar-cost averaging": https://web.archive.org/web/20050910142530/http://moneycentr... "Debunking the Myth of Dollar Cost Averaging": https://news.ycombinator.com/item?id=36271061
Doesn't that assume that you're sitting on a pile of cash already and deciding how to invest it? That's not the situation for working class investors who didn't inherit a lump sum or win the lottery. The optimal strategy for most retirement savers is "invest it as you get it" which is basically dollar cost averaging except in the rare cases when a pile of cash falls in your lap.
Meaning shifts, and now the term is also being used in web forums to describe the investment strategy of "in each paycheck, invest a bit of money." This creates confusion.
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Bob also picked the best stock market to invest in. He would have done a lot worse investing in any other stock market. It's not surprising he did well, he picked the winner. What are the chances the US is going to have the best stock market over the next 50 years? It's possible, but doesn't seem likely.
Sure, but the lesson is that the big story is what matters, way more than detailed RoR calculations. Bob made huge mistakes, but even then compounding was the stronger force and he ended up ahead.