Why in the world would you own bonds? • Hacker News Board

Re: Why in the world would you own bonds?

#301

Post by cainxinth » Wed, Mar 17, 2021, 2:55 PM UTC

DebtDeflation wrote: post #276

We seem to have an entire generation of people who think "stonks can only go up". Similar views were expressed about houses/real estate in 2007. At 47, I'm probably substantially older than the average HN poster, but having lived through the 2001 dotcom implosion and the 2008 financial crisis has given me some perspective. I'm getting some really bad vibes about the sustainability of the the economy and asset markets…

> We seem to have an entire generation of people who think "stonks can only go up"

I'm not denying the existence of bubbles, busts, and crashes, but historically and on average, the stock market does only go up.

This market is overvalued and will likely correct, but that doesn't mean it won't continue to rise on the aggregate.

Re: Why in the world would you own bonds?

#302

Post by JoshuaLelon » Wed, Mar 17, 2021, 2:56 PM UTC

floor2 wrote: post #285

pmastela wrote: post #64

Earlier quoted context omitted.

I don’t know a whole lot about professional investing, but if watching The Big Short has taught me anything it’s that the pros will say one thing publicly but do the opposite in private until it’s to their advantage to do a 180 and make their private stance actually public. Recently this was Jamie Dimon lambasting Bitcoin all the while a cryptocurrency trading desk was being set up at Chase. The following exchange fr…

It's great that you recognize professional investing isn't something you know a lot about. It's a bit concerning that people believe a hollywood movie has taught them how the industry works. Keep in mind how hollywood portrays "hackers" or "scientists" or "Russians" or whatever group is an outsider or opposition to the protagonist and realize they're doing the same to finance.

Related: Gell Mann Amnesia

https://www.epsilontheory.com/gell-mann-amnesia/

Re: Why in the world would you own bonds?

#303

Post by o-__-o » Wed, Mar 17, 2021, 2:56 PM UTC

DebtDeflation wrote: post #297

nealdotpy wrote: post #287

Earlier quoted context omitted.

I'm definitely far younger than you; however, I agree. The problem is that there's no timing it. So positioning yourself such that you leverage other factors to make money in a market (e.g. delta-neutral positions that are long/short time/volatility) are all you can do if you want to play the game without having high directional risk.

So, I actually have an MS in Quant Finance despite having worked in tech my whole career. There's an old saying, "during a time of crisis all correlations go to 1". People found this out the hard way in 2008. There are all sorts of risks that you can't hedge for or that negate hedges you have in place for other risks, counterparty risk being one of the better known ones.

Found this out last year after waiting patiently since 2008. Volatility ruined the prospect of large quick gains. I now have no specific strategy to trade the next crash except buy and hold the fundamentally sound stocks (same strategy as normal investing heh)

Re: Why in the world would you own bonds?

#304

Post by Leherenn » Wed, Mar 17, 2021, 2:59 PM UTC

DebtDeflation wrote: post #276

We seem to have an entire generation of people who think "stonks can only go up". Similar views were expressed about houses/real estate in 2007. At 47, I'm probably substantially older than the average HN poster, but having lived through the 2001 dotcom implosion and the 2008 financial crisis has given me some perspective. I'm getting some really bad vibes about the sustainability of the the economy and asset markets…

Not that you are necessarily wrong, but I am not sure your examples really show that. The Dow Jones is at an all time high, even adjusting for inflation, and not by a little. Yes, there are dips, but over the long term it seems to hold. As far as I can tell, the following holds true, ∀ t ∈ [1930, now], V(t) > V(t - 30) where V is the inflation-adjusted value of Dow Jones that year.

Re: Why in the world would you own bonds?

#305

Post by OldHand2018 » Wed, Mar 17, 2021, 3:01 PM UTC

everybodyknows wrote: post #157

dragontamer wrote: post #50

Earlier quoted context omitted.

> Consider US tax-free municipal bonds (munies). They are safe Are they? COVID19 has destroyed the tax-budgets of many states and cities. Deficit spending / stimulus is the current plan, but how long can States keep it up? I know there's been a stimulus bill just passed. But is it enough to get state budgets back in order after a tough year?

All state bonds are well positioned for generous bailout terms from Washington.

Are you talking about the recent $1.9T stimulus package? Because there are strings attached to it. Republicans are angry because they aren't allowed to use the money to finance tax cuts. Democrats are angry because they aren't allowed to use the money to pay pension contributions.

Re: Why in the world would you own bonds?

#306

Post by BitwiseFool » Wed, Mar 17, 2021, 3:02 PM UTC

cainxinth wrote: post #301

DebtDeflation wrote: post #276

We seem to have an entire generation of people who think "stonks can only go up". Similar views were expressed about houses/real estate in 2007. At 47, I'm probably substantially older than the average HN poster, but having lived through the 2001 dotcom implosion and the 2008 financial crisis has given me some perspective. I'm getting some really bad vibes about the sustainability of the the economy and asset markets…

> We seem to have an entire generation of people who think "stonks can only go up" I'm not denying the existence of bubbles, busts, and crashes, but historically and on average, the stock market does only go up. This market is overvalued and will likely correct, but that doesn't mean it won't continue to rise on the aggregate.

Markets do seem to only go up, but the stocks on the market today are very different from 10, 20, 30+ years ago. I know that poorly performing stocks are eventually removed from indices and exchanges and they are replaced with new ones. Is it the case the market always going up in the long run is actually due to survivorship bias?

Re: Why in the world would you own bonds?

#307

Post by JohnJamesRambo » Wed, Mar 17, 2021, 3:05 PM UTC

nealdotpy wrote: post #287

DebtDeflation wrote: post #276

We seem to have an entire generation of people who think "stonks can only go up". Similar views were expressed about houses/real estate in 2007. At 47, I'm probably substantially older than the average HN poster, but having lived through the 2001 dotcom implosion and the 2008 financial crisis has given me some perspective. I'm getting some really bad vibes about the sustainability of the the economy and asset markets…

I'm definitely far younger than you; however, I agree. The problem is that there's no timing it. So positioning yourself such that you leverage other factors to make money in a market (e.g. delta-neutral positions that are long/short time/volatility) are all you can do if you want to play the game without having high directional risk.

I don’t buy the “you can’t time it” argument. For short time periods yes, but we are at monumental levels of overextended. Longer trades like these people do time.

https://www.bloomberg.com/news/articles/2021-02-12/warren-bu...

I keep seeing that graph when I even entertain the idea of being in the stock market right now.

Re: Why in the world would you own bonds?

#308

Post by obmelvin » Wed, Mar 17, 2021, 3:05 PM UTC

jgalt212 wrote: post #239

pmastela wrote: post #64

Earlier quoted context omitted.

I don’t know a whole lot about professional investing, but if watching The Big Short has taught me anything it’s that the pros will say one thing publicly but do the opposite in private until it’s to their advantage to do a 180 and make their private stance actually public. Recently this was Jamie Dimon lambasting Bitcoin all the while a cryptocurrency trading desk was being set up at Chase. The following exchange fr…

> Recently this was Jamie Dimon lambasting Bitcoin all the while a cryptocurrency trading desk was being set up at Chase. JPM Chase has 250K employees. Do you think Jamie was made aware every time the markets division took a hard look at crypto?

Considering he said in 2017 [0] that he would fire anyone trading Bitcoin for being "stupid", yes, the GP's astonishment about Jamie Dimon is well placed.

[0] - https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-...

Re: Why in the world would you own bonds?

#309

Post by randomopining » Wed, Mar 17, 2021, 3:06 PM UTC

jljljl wrote: post #56

rawtxapp wrote: post #49

Earlier quoted context omitted.

This was the part that caught my attention as well, it would be super interesting to see it play in real-time. For one, how would they even put capital movements controls on crypto? For example, I just have to remember my 12 word seed and I can hop on a plane to another country and my crypto comes with me. The other part is, wouldn't those capital controls be the last nail in the coffin of "we lost complete control o…

If the USG (or Europe, or China) still have a strong military, or a lot of influence over the financial sector at that point, you may have a tough time finding a bank to convert your crypto into Fiat. At that point, you’d have to find a country that accepts Bitcoin directly as a payment method or whose financial system can shrug off regulations. That might be harder to find than you think, or might require a signific…

Can you not just go p2p/otc with the crypto and buy a hard asset plus some paper fiat?

It’s like cash but even more effective for this purpose.

Re: Why in the world would you own bonds?

#310

Post by randomopining » Wed, Mar 17, 2021, 3:06 PM UTC

missedthecue wrote: post #211

rawtxapp wrote: post #49

Earlier quoted context omitted.

This was the part that caught my attention as well, it would be super interesting to see it play in real-time. For one, how would they even put capital movements controls on crypto? For example, I just have to remember my 12 word seed and I can hop on a plane to another country and my crypto comes with me. The other part is, wouldn't those capital controls be the last nail in the coffin of "we lost complete control o…

Bitcoin is only useful if you can turn it into fiat relatively easily. Government can very easily control almost all of those channels.

Can you not just go p2p/otc with the crypto and buy a hard asset plus some paper fiat?

It’s like cash but even more effective for this purpose.