5 ms·

Right now we have high prices. We're also in the boomer retirement period, of 2014-2023 or so. I wonder what it's going to take to cause boomers to get skittish

Right now we have high prices. We're also in the boomer retirement period, of 2014-2023 or so. I wonder what it's going to take to cause boomers to get skittish and panic sell their portfolio. In 2008, they still had time. Now it's a bit different.

makomk 9y ago
There's also apparently something interesting happening with the bond market. A fairly standard retirement strategy is to gradually move your investments into more stable bonds as your retirement date approaches. Except that because of boomer retirement, there's quite a lot of people doing this - mix in some quantitative easing, and suddenly a lot of money is chasing a limited pool of bonds, causing low yields and other interestingness: https://www.wsj.com/articles/decade-of-easy-cash-turns-bond-market-upside-down-1517308201?mod=ITP_businessandfinance_0&tesla=y https://www.wsj.com/articles/decade-of-easy-cash-turns-bond-... Fundamentally, I think there might be a deeper issue at play here. There's a common (and dubious) argument that Social Security is a ponzi scheme because the payments to retirees come from funds contributed by new investors. On some level, though, all of retirement is a little ponzi-like; ultimately you're always relying on the current working population to pay for your retirement, no matter what investments you put into your pension fund. What happens if that goes pop?
- konschubert 9y ago
  >ultimately you're always relying on the current working population to pay for your retirement, no matter what investments you put into your pension fund. What happens if that goes pop? Exactly. The corn you eat needs to be grown today.
- tnorthcutt 9y ago
  On some level, though, all of retirement is a little ponzi-like; ultimately you're always relying on the current working population to pay for your retirement, no matter what investments you put into your pension fund. Well, no, not really. You're relying on the fact that you own some assets, which you can sell to someone else who wants to own those assets. That's very much not "ponzi-like".
  - gibybo 9y ago
    Those assets only produce income because of the current working population. This isn't strictly required of course, but it has been the case for a long time and is likely to remain mostly true for the foreseeable future.
    - bduerst 9y ago
      This is some strange, broad descriptive logic that makes me think you just want to give credit to the working population for retirees. You could make similar claims about consumers or infrastructure being required for assets to make income, or any other facet of an economy. It doesn't make any of it like a ponzi scheme.
      - gibybo 9y ago
        Eh I don't think it's a ponzi scheme, I'm just defending that it does have an important property in common: new participants pay for old ones.
    - quickthrower2 9y ago
      Can't wait for post-scarcity. We need something to replace money. Not bitcoin, more something like community asset management.
  - davrosthedalek 9y ago
    It is, in the limited sense, that you need to find somebody to sell it to. That must be the current working populations in the end. Exception is if you just save money on account without interest.
  - graeme 9y ago
    You can't eat an asset. You can only eat what someone else produces, and then only if you can convince them to give you food in exchange for your asset. This is counterintuitive, but globally saving is not possible, in a financial sense. IIRC from economic models it nets out to investment. Which makes sense. Real world saving is amassing a grain store, or an oil stockpile in a strategic reserve, etc And we can't do very much of that. Monetary savings depends on the ability to buy things of value from a later generation of producers. A small country can use savings to buy from other countries. The larger the country, the less possible that is, as the large country becomes a significant portion of the world economy. A simpler way of looking at it is: if the future generation started producing half as much, you wouldn't expect monetary savings to command the same worth in terms of real goods that they used to.
encoderer 9y ago
Most people close to retirement who have been fortunate to build savings rotate slowly into a more conservative portfolio, and retirement is decades long not a binary event.

makomk 9y ago

There's also apparently something interesting happening with the bond market. A fairly standard retirement strategy is to gradually move your investments into more stable bonds as your retirement date approaches. Except that because of boomer retirement, there's quite a lot of people doing this - mix in some quantitative easing, and suddenly a lot of money is chasing a limited pool of bonds, causing low yields and other interestingness: https://www.wsj.com/articles/decade-of-easy-cash-turns-bond-market-upside-down-1517308201?mod=ITP_businessandfinance_0&tesla=y https://www.wsj.com/articles/decade-of-easy-cash-turns-bond-... Fundamentally, I think there might be a deeper issue at play here. There's a common (and dubious) argument that Social Security is a ponzi scheme because the payments to retirees come from funds contributed by new investors. On some level, though, all of retirement is a little ponzi-like; ultimately you're always relying on the current working population to pay for your retirement, no matter what investments you put into your pension fund. What happens if that goes pop?

konschubert 9y ago
>ultimately you're always relying on the current working population to pay for your retirement, no matter what investments you put into your pension fund. What happens if that goes pop? Exactly. The corn you eat needs to be grown today.
tnorthcutt 9y ago
On some level, though, all of retirement is a little ponzi-like; ultimately you're always relying on the current working population to pay for your retirement, no matter what investments you put into your pension fund. Well, no, not really. You're relying on the fact that you own some assets, which you can sell to someone else who wants to own those assets. That's very much not "ponzi-like".
- gibybo 9y ago
  Those assets only produce income because of the current working population. This isn't strictly required of course, but it has been the case for a long time and is likely to remain mostly true for the foreseeable future.
  - bduerst 9y ago
    This is some strange, broad descriptive logic that makes me think you just want to give credit to the working population for retirees. You could make similar claims about consumers or infrastructure being required for assets to make income, or any other facet of an economy. It doesn't make any of it like a ponzi scheme.
    - gibybo 9y ago
      Eh I don't think it's a ponzi scheme, I'm just defending that it does have an important property in common: new participants pay for old ones.
  - quickthrower2 9y ago
    Can't wait for post-scarcity. We need something to replace money. Not bitcoin, more something like community asset management.
- davrosthedalek 9y ago
  It is, in the limited sense, that you need to find somebody to sell it to. That must be the current working populations in the end. Exception is if you just save money on account without interest.
- graeme 9y ago
  You can't eat an asset. You can only eat what someone else produces, and then only if you can convince them to give you food in exchange for your asset. This is counterintuitive, but globally saving is not possible, in a financial sense. IIRC from economic models it nets out to investment. Which makes sense. Real world saving is amassing a grain store, or an oil stockpile in a strategic reserve, etc And we can't do very much of that. Monetary savings depends on the ability to buy things of value from a later generation of producers. A small country can use savings to buy from other countries. The larger the country, the less possible that is, as the large country becomes a significant portion of the world economy. A simpler way of looking at it is: if the future generation started producing half as much, you wouldn't expect monetary savings to command the same worth in terms of real goods that they used to.

encoderer 9y ago

Most people close to retirement who have been fortunate to build savings rotate slowly into a more conservative portfolio, and retirement is decades long not a binary event.