6 ms·
History has shown us that the concentration in any one asset class, in any one country, in any one anything, really, is dangerous.
by joubert 6y ago
History has shown us that the concentration in any one asset class, in any one country, in any one anything, really, is dangerous.
- greesil 6y agoI think this asset class is crazy on the west coast of the US. Putting all your money in an illiquid asset, in a place where it might experience a significant earthquake, just to hedge against inflation. What could possibly go wrong? But.... It's the one asset class where normal people are allowed to leverage themselves heavily. And you can live in it.
- MiroF 6y ago> It's the one asset class where normal people are allowed to leverage themselves heavily Which is... a good thing?
- greesil 6y agoIt is, if you like to live dangerously.
- joubert 6y agoWhen you buy a house to live in, it magnifies the tension between maximizing lifestyle (schools, work, amenities, friends, family, etc.) and maximizing returns. In practice, by and large, you have to balance towards the former, which means your financial returns tend to be lower.
- ac29 6y agoEarthquakes are not a significant risk to most single family homes on the US west coast. Yes, there is more than zero risk, but its nothing like areas prone to tornados, hurricanes, floods, or wildfires which can and fairly regularly do destroy entire neighborhoods.
- greesil 6y agoAn 8 in the Bay area, or a 9 in Seattle, what would that do?
- suzakus 6y agoSignificant risk includes likelihood, not just damage. If you want to hedge bets against highly unlikely events best hold as few physical belongings as possible
- greesil 6y agoI know how to compute the expected value. No, if I want to hedge I'd spend a lot of money on earthquake insurance and hope it actually pays out. Damaging earthquakes are not unlikely event in these locales. In the next 20 years a 6+ magnitude quake is above 90% in the Bay. Something like 60% for a 7+. Cascadia subduction zone produces 9s almost periodically, and it is overdue as well.
- jliptzin 6y agoWarren Buffet has argued the opposite as long as you know what you are doing.
- optimiz3 6y agoBuy puts on the house you own then (insurance, etc.).
- aeternum 6y agoBuy small houses in multiple countries.