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What to know about the stock market (2007)

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Re: What to know about the stock market (2007)

#131

Post by sokoloff »

pasabagi wrote: post #129
sokoloff wrote: post #119

Earlier quoted context omitted.

I think houses mostly do depreciate in value. The land underneath them does not and this can often mask the former. I live in a nice part of my city. My house is 100 years old, has terrible insulation, very old retrofit wiring, and needs constant maintenance to stave off decline. The house, with all the upgrades over the years, is likely worth about what it was when built. The land underneath it is a lot more valuabl…

Seems like semantics to me: you can't buy a house without essentially buying land. If you could, I absolutely would. The fundamental problem here is not one of economics, but of politics. You can't live in a stable, dignified manner without paying to be part of a state-run monopoly (land ownership), so everybody who can does, so land titles (note the word) become absurdly expensive. There is no real connection betwee…

It’s sensible though to think “Why don’t houses depreciate like used cars? After all, they also wear out.”

Side note 1: There are places where you can (sometimes only can) lease the land for 99 years. This has the predictable effect in terms of willingness to build/improve the land, especially as the lease term is drawing to an end.

Side note 2: these discussions almost inevitably summon the proponents of land-value-tax to encourage denser use of valuable land. They’ll be along shortly, I’m sure.

Re: What to know about the stock market (2007)

#132

Post by lotsofpulp »

andriesm wrote: post #106
cj wrote: post #103

Earlier quoted context omitted.

> Either way, sell early and buy the crash. Trying to time the market is akin to individual stock picking. When it works, it’s usually just luck.

No it can be skill. Was Warren Buffet and Charlie munger just lucky, year after year? Was Michael Burry of the Big Short just lucky to short the mortgage backed securities market, no he also side stepped the dot com crash and bought value stocks, recently he had very nice shorts on Kathy Woods ARKK... clearly he isn't just lucky, he has skill. I used to think I have skill yet my results were random for about a decade…

Buffet’s last good move was the deal he got for Goldman Sachs in 2007. Then he said he was not going to invest in tech companies because he did not invest in businesses he did not understand, then he dumped a bunch of money in IBM which obviously did terrible, then he relented and finally bought a ton of Apple in 2014 or 2015, which has single-handedly saved Berkshire and kept it relevant.

I also would like to see objective proof of how well Burry has done since 2008 compared to the basically risk-less and cost-less VOO or VTI.

Re: What to know about the stock market (2007)

#133

Post by lotsofpulp »

pjc50 wrote: post #37
bidirectional wrote: post #25

Earlier quoted context omitted.

Even with DB schemes their funding often relies on exposure to equities.

Yes, although the recipient is not supposed to be exposed to that - see the UCU strike starting today.

Everyone is exposed to it if they trade in the major currencies. The government will reduce the purchasing power of the currency to ensure the nominal returns to meet the defined benefit obligations are met. This, in turn, will boost the price of equities such as land and stocks, and eventually trickle down as inflation for food and fuel.

You will get your defined benefit pension, but how much you can buy with it is variable. And it is going to be less than you think. That is the only way the equation balances with lower economic growth (especially due to lower population growth) and increased competition for resources from the other 7B people in the world.

Re: What to know about the stock market (2007)

#134

Post by [deleted] »

baobabKoodaa wrote: post #109
3pt14159 wrote: post #99

Earlier quoted context omitted.

People keep telling me this, but I keep beating the market. It's been 20 years or so of applying very basic reasoning and getting ahead. 1. Commodities are bad long term bets because technology gets better. I remember people talking my ear off about peak oil and then the US turned into a net-exporter. Short term inelasticity, yes can sky rocket prices; but long term prices go down. 2. Physics based thinking. I knew e…

Since you claimed to have beaten the market for 20 years consistently, would you care to provide evidence for that claim?

[deleted]

Re: What to know about the stock market (2007)

#135

Post by thrav »

baobabKoodaa wrote: post #109
3pt14159 wrote: post #99

Earlier quoted context omitted.

People keep telling me this, but I keep beating the market. It's been 20 years or so of applying very basic reasoning and getting ahead. 1. Commodities are bad long term bets because technology gets better. I remember people talking my ear off about peak oil and then the US turned into a net-exporter. Short term inelasticity, yes can sky rocket prices; but long term prices go down. 2. Physics based thinking. I knew e…

Since you claimed to have beaten the market for 20 years consistently, would you care to provide evidence for that claim?

Their investment in Tesla alone would be more than enough evidence, if they got in near their IPO.

Throw in an investment in Apple when everyone started switching to Mac circa 2006 (I told everyone who would listen to buy it, but I was a college freshman, so no one listened, but it was so obvious), and you got a stew going.

It didn’t take anything fancy to crush the market if you started 20 years ago and were dialed into tech.

Re: What to know about the stock market (2007)

#136

Post by christophilus »

lotsofpulp wrote: post #132
andriesm wrote: post #106

Earlier quoted context omitted.

No it can be skill. Was Warren Buffet and Charlie munger just lucky, year after year? Was Michael Burry of the Big Short just lucky to short the mortgage backed securities market, no he also side stepped the dot com crash and bought value stocks, recently he had very nice shorts on Kathy Woods ARKK... clearly he isn't just lucky, he has skill. I used to think I have skill yet my results were random for about a decade…

Buffet’s last good move was the deal he got for Goldman Sachs in 2007. Then he said he was not going to invest in tech companies because he did not invest in businesses he did not understand, then he dumped a bunch of money in IBM which obviously did terrible, then he relented and finally bought a ton of Apple in 2014 or 2015, which has single-handedly saved Berkshire and kept it relevant. I also would like to see ob…

Apple, in absolute terms, has been his best investment (iirc). But yeah. The law of large numbers has gotten him. When you have to invest hundreds of billions, it’s impossible to keep compounding at high rates. I’d put a lot of money on Buffett beating the market if he was managing $50M.

Re: What to know about the stock market (2007)

#137

Post by lotsofpulp »

iso1631 wrote: post #86
hericium wrote: post #5

Earlier quoted context omitted.

Fully agree, especially during current instability. I think that everyone got used to constant "it's about to crash" news but the volatility and uncertainty are visible in recent months. I don't remember when inflation numbers releases were that impactful. The good coming out of this is the visibility of how strongly dependant cryptocoins are.

The "Stock Market" is down since July, it might not have crashed but it's not going up Ukraine kicking off is not going to help in a sane world, but it's not a sane world so I half expect all time highs while Odessa burns

One aspect of buying securities and currency is the stability. People like stability, they will pay extra for secure cash flows, consistent courts, and rule of law that is predictable. In which case, because of its practical distance from Russia I would be optimistic about the US’s relative position, even if nominal equity values decline, they will maintain their relative value assuming the US does remains relatively more stable than other countries.

Re: What to know about the stock market (2007)

#138

Post by the-dude »

pasabagi wrote: post #98
sokoloff wrote: post #88

Earlier quoted context omitted.

I think the act of buying a house to live in should be considered more an act of consumption than of investment . It’s not 100% consumption, but it’s almost surely we’ll over 50% consumption and yet people get confused by the fact that a slice of it is forced savings and a sliver of it is an investment and they focus on these latter two more than is appropriate and in so doing are prone to less rational decisions tha…

I wish it was just consumption! If houses always depreciated in value, then they would cost about as much as it costs to build them. Unfortunately, because a bunch of political factors, they endlessly balloon in price.

I believe in Japan houses are considered fungible. There even might be a taboo in living in a 'used' house.

Re: What to know about the stock market (2007)

#139

Post by lotsofpulp »

christophilus wrote: post #136
lotsofpulp wrote: post #132

Earlier quoted context omitted.

Buffet’s last good move was the deal he got for Goldman Sachs in 2007. Then he said he was not going to invest in tech companies because he did not invest in businesses he did not understand, then he dumped a bunch of money in IBM which obviously did terrible, then he relented and finally bought a ton of Apple in 2014 or 2015, which has single-handedly saved Berkshire and kept it relevant. I also would like to see ob…

Apple, in absolute terms, has been his best investment (iirc). But yeah. The law of large numbers has gotten him. When you have to invest hundreds of billions, it’s impossible to keep compounding at high rates. I’d put a lot of money on Buffett beating the market if he was managing $50M.

It is possible the parameters of the world changed so much that Buffett’s expertise is not as useful as it once was.

Re: What to know about the stock market (2007)

#140

Post by nly »

andriesm wrote: post #113
ericmay wrote: post #102

Earlier quoted context omitted.

> Picking individual investments is mostly a sucker's game. Kind of. What you have to remember is what game you’re playing. While financial firms can outspend and out-research you at an individual level, they can’t take the same risks you can or move as quickly as you can. If I decide I want to go all-in on some company I can just do that. Your friendly neighborhood hedge fund? Not so much. Most people should buy ind…

I agree - most people should buy low cost index funds but that is not enough - they have to space it out as monthly contributions over many years. If you put all your money in at thr wrong moment, like say the Nasdaq in 99 then you waited 13 years just to break even. But if you bought monthly you would have done very well because you averaged into the market. The alternative is if you really understand valuations, di…

You give this advice like it's a choice.

I invest monthly because I get paid monthly.

I invest lump sums when I get windfalls, like bonuses, likely because I haven't invested as much as I want because my repayment mortgage (saving me 2-3%/annum) eats all my monthly income.

I sell everything when I need to buy a property because I'm not rich enough to use my stocks as collateral.

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