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"It beggars belief that a free market would decide that there are nearly no risks in the future. Risks are the highest they've been in the last 30 years." Why?
by perl4ever 7y ago
"It beggars belief that a free market would decide that there are nearly no risks in the future. Risks are the highest they've been in the last 30 years."
Why? If you put your retirement savings in VT, do you think there is a risk of losing your money, outside the end of the world or a temporary decline when you happen to want to withdraw?
I don't think it is fruitful to argue this is true or not, I'm just presenting this as something plausible I think many if not most investors believe these days, explicitly or implicitly.
But if you really have no chance of losing your money in the stock market as a whole, why should it give you extra returns over bonds? Maybe it doesn't?
- deleted 7y ago[deleted]
- roenxi 7y agoYou tricked me; I didn't reread my original comment and wrote up something irrelevant. Fixed now. If you read it closely you may discover that it said interest rates are too low; nothing to do with stock markets. They are taking their lead from interest rates though so I doubt they are well prices. The idea that stocks and bonds should give the same return is bad; the risk in stock is measurably higher than in bonds. In stock, legally nothing strange has to happen for an investor to come out with less money than the initial principle. In bonds; someone has to go broke. There is a clear difference in the level of risk involved. > do you think there is a risk of losing your money, outside the end of the world or a temporary decline when you happen to want to withdraw? If we handwave away the risk of having less money at the time of selling then at purchase time then yes, I suppose stocks would be riskless. If we assume the risks won't eventuate; anything appears to be riskless. Eating uncooked chicken is perfectly safe if we assume that there aren't any bacteria in it. That handwave is wholly unreasonable.