6 ms·
My favorite line from the article is "There are simply no alternatives" as people build cash reserves and buy stores of value like gold and Bitcoin. People are
by d0gbread 6y ago
My favorite line from the article is "There are simply no alternatives" as people build cash reserves and buy stores of value like gold and Bitcoin. People are hungry for an alternative, but yes I suppose if you only consider stocks and bonds this article has a point.
- SigmundA 6y agoThis, I want an alternative, high interest savings accounts and CD used to be a good safe place for some savings, now your losing value relative to inflation. A mixed portfolio makes no sense. Nobody has a pension, everyones retirement is in the market, none of this seems good to me long term, all very fragile. Either your in stocks or Bitcoin at this point or your at negative rates relative to inflation.
- bgorman 6y agoWhat about real estate? Unlike stocks, land/buildings have some inherent value
- jordache 6y agowho is going to predict the post covid future of commercial real-estate market?
- scarmig 6y agoWell, if someone predicts accurately the future of commercial real estate, that who is likely to be a fair bit richer than they are today.
- nightski 6y agoStocks have inherent value as well, due to dividends. Price growth is not the only way to make money in the market.
- nerfhammer 6y agoalso, book value, though it's usually much smaller than market cap. if a stock ever fell below its book value you could buy it out and liquidate its assets to make money, so the book value should be a price floor for the stock.
- sgerenser 6y agoThis is extremely uncommon these days, but back in the dark days of the 1980s buying stocks below book value was a common way that people like Warren Buffet made a lot of money.
- jcpham2 6y agoI'm in real estate (rental properties), an IRA spread across 5 growth funds, and maybe 10-20% bitcoin at this point. Edit: Exited my stock positions this year
- programmertote 6y agoAs a novice to bitcoin investing, could you share the best (most secure/trusted) way to buy bitcoin? Thank you!
- qes 6y agoDepends somewhat where you live and what you plan to do with the Bitcoin (long term hold or actively trade).. but major exchanges in major countries are pretty trustworthy these days. Kraken, Gemini, and Coinbase are all quite trustworthy, if any of those are available in your locale. Buying and holding for 4+ years has produced amazing gains in Bitcoin since its inception. Trading often and fooling around with alt coins has caused many great losses and pain. Don't invest more than you can stomach losing or holding in the red for a few years.
- programmertote 6y agoThank you for the info. I live in the US and plan to buy and hold (for diversification) with the money I can stomach to lose. I'll try out Coinbase because it's the one that is the most familiar to me. Happy holidays!
- tradertef 6y agoCoinbase is the easiest to buy. But, I suggest you try another option. Coinbase's whole goal is to make money (surprise!) by selling many "coins" easily. Swanbitcoin or kraken are my suggestions. DYR.
- jcpham2 6y agoFor reference to support parent: that tax implications of the bitcoin I owned and sold after 7 years of sitting on it was much simpler than the bitcoin I bought and sold over and over again trying to make money on both sides of an order book during high volatility. I am a US citizen. I have fully complied with tax law as I understand it. To my knowledge, I’ve never been involved in any darknet marketplaces. I’ve seen an opportunity much sooner than my peers. I have been waiting for the current price volatility since the last ATH spike in January 2019 since exiting a majority of my bitcoin positions. The block reward halving last summer combined with an ever increasing mining difficulty is a no brainer to me. Good luck There’s 7000 shitcoin trading on an infinite number of shitcoin exchanges providing infinite liquidity; that’s what I see. What is there to stop bitcoin?
- waynecochran 6y agoI had the same question. "And that could explain why investors don’t shy away from stocks even at record valuations. There are simply no alternatives." To repeat the question, why isn't real estate considered as an option?
- jfengel 6y agoReal estate was the last bubble.
- peteradio 6y agoThat was a lending bubble. Real money could be driving up the price this time.
- njarboe 6y agoReal estate is going up, and now it is happening everywhere in the US, not just in the hot coastal cities.
- imtringued 6y agoThe real question is why aren't they allowed to build more housing? I mean come on. All the profitable activities are basically banned. Building housing gets banned. Although I am in favor of environmental laws they basically ban certain profitable activities which now have to be done abroad. To be honest all that excess of money should be invested into renewables. No country can have too much renewables because they are low maintenance. The excess energy can be used to create more profitable employment opportunities.
- marvin 6y agoWhat you'd really want is a machine you can buy that provides you useful goods and services at almost-zero maintenance cost. The stock market is sort of a proxy for this wish: You have excess capital, and you want to invest it in something that yields a return. Maybe that's a machine producing goods you can sell, maybe it's a machine that produces food and gives medical aid to you, the owner. You don't want to operate such a machine (if it is available at all), so you outsource the responsibility for a percentage of your return. It seems almost absurd that the world can end up in a state where it is impossible to invest capital in a way that provides any significant return at all. All is relative, but people still want to eat and get shelter from the rain.
- dv_dt 6y agoThe stock market is increasingly disconnected from investments in real-world improvements of productivity and even if they manage to invest there in some tiny measure, it's not delivered to most people in the economy. That's the highest risk item in this whole discussion.
- marvin 6y agoI've had the sense that growth investments are almost completely closed to the public in the United States. This trend has been gradually solidifying ever since the dot-com bubble, and has reached its logical conclusion today. The only IPOs happen when companies reach 100-billion dollar valuations, and sometimes not even then. IPOs seem more likely for private companies that have lost their growth potential. There's certainly some potential for growth and returns still available when companies reach this stage, but the lion's share is taken out already. The index funds are also often at the ass end of this phenomenon, buying in only at very high valuations. The most absurd example happening a week ago, with Tesla entering the S&P500 as the sixth biggest company. I'd like the possibility of investing in a fund of unlisted companies. The growth sector that's not represented in the major indexes is far too big to ignore. I try to compensate by having a portion of my wealth in "small cap" companies, but there is still a very significant sector that's completely missing.
- 6y ago
- raiyu 6y agoBut this is the issue with zero interest rates. There is no incentive to save, but alternatively, it also pushes interest rates on mortgages to near zero which increases the demand side by opening up home ownership to people that before couldn't afford it which pushes up prices. The same occurs with stocks, with no returns in other asset classes everyone floods in to stocks and pushes the prices higher. This is definitely the new normal going forward, because you can't increase interest rates without dramatically reducing purchasing power, which in turn leads to slow down across many areas of the market.
- peteradio 6y agoMaybe investment in real but non-liquid assets would make sense. If stocks are bogus valued then the real money would be "in-the-know" asset purchases. Personally I am trying to get what I see is under-valued unique rural property in a locale favored by an apparently changing climate.
- fzzzy 6y agoBetter act fast, the rural property markets are on fire. Where I grew up I can always remember hundreds of for sale signs as long as I lived here because there just weren't any jobs. Now, everything sold last fall. It's unprecedented.
- Apocryphon 6y agoWhat do the property owners plan on doing with that land if there aren't any jobs? Or are there jobs there now?
- SpaceRaccoon 6y agoRemote work is my guess.
- bergie 6y agoThanks to COVID there are now jobs everywhere where there is an Internet connection
- derekp7 6y agoMy concern is when retirement comes, and it is time to start selling off stocks. If there are more retirees than employees buying stocks via their 401k, won't that cause a price crash?
- bostik 6y agoAnnuity buy-backs, anyone? Someone at Wall Street must have thought of that and pitched the securitisation already. Think about it - large companies agreeing up front to spend a minimum of X billion a year buying back their stock. And then WS banks parceling both sides of the risk and exposure to investors seeking anything with non-negligible yield.
- nerfhammer 6y agoslowly transition your assets away from growth stocks to bonds and dividend-issuing stocks as you age
- sgerenser 6y agoNot really, because the process is very gradual. You don’t sell all your stocks the day you retire, you gradually wind down until you hit some reasonably conservative allocation in your 80s or so like 30% stock/70% bonds. This certainly can put some downward pressure on the stock market if the rate of this winding down is higher than the rate that young people are adding to their 401ks but it’s counterbalanced by many other forces.
- imtringued 6y agoRetirees generally only liquidate a portion of their funds. They start withdrawing something like 4% per year roughly half a decade ahead (to avoid withdrawing during a crash) of retirement. As others said they also shift away from risky investments.
- chadash 6y agoGold has terrible historical returns compared to equities. If you bought gold 30 years ago and sold now, you'd have about a 5x return. You would have done significantly better if you bought stocks 30 years ago and sold them at the bottom of the market in March. If you sold now, you'd have done more than twice as well. BTC might go up, might go down. But it's a risky asset and there's only so much money that can flow into a non-productive asset.
- david927 6y agoYou could have said the same in 1929. The last 30 years has had an expanding market. We're now facing a deeply contracting market. Equities will lose most of their value; gold will do the opposite.
- fredophile 6y agoGold and bitcoin won't help you. When stock prices move down, correlations between stocks go up. If you look at the last couple downturns you can see that this correlation between assets and asset classes has increased. Stocks dropping leads to people selling their bitcoin and gold which causes those prices to drop. Falling prices make speculators get scared and sell to cut their losses which drives prices down further and the cycle continues. What you really want to find is an asset that is negatively correlated to the stock market while stocks are dropping.
- pcdoodle 6y agoPlease share an example of something that has this property.
- jmalicki 6y agoFor a long time timber (as in, owning a forest and letting people log it occasionally) has been one of the favorites of large endowments and hedge funds. https://investmentsandwealth.org/getattachment/cc0f7589-7411-41d8-82c2-f287892ac2da/IWM15SepOct-SeeingForestForTrees.pdf https://investmentsandwealth.org/getattachment/cc0f7589-7411...
- fredophile 6y agoThere aren't many examples. Volatility is the best one I'm aware of. However, if you're regularly buying volatility to hedge your stock exposure you're going to lose a lot of money that way.
- reducesuffering 6y agoLong term US bonds are definitely the most prominent example for the last 40 years. Past 100 years though, not really. Check the ETF TLT compared to total US stock market, VTI, on https://www.portfoliovisualizer.com/backtest-portfolio https://www.portfoliovisualizer.com/backtest-portfolio or the asset classes on https://www.portfoliovisualizer.com/backtest-asset-class-allocation https://www.portfoliovisualizer.com/backtest-asset-class-all... Their negative correlation zig-zag is remarkable the past few decades. Some research postulates that in a decreasing interest rate environment (past 40 years), they’re negatively correlated, while in a rising rate environment they’re positively correlated, leading to the past 100 years minimal (almost 0) long term correlation.