4 ms·

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

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.

DebtDeflation 6y ago
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.
- o-__-o 6y ago
  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)
- alasdair_ 6y ago
  This hit home for me during the mini-crash a year ago. I was convinced assets like bitcoin or gold or bonds would hold value when the stock market tanked but instead saw everything fall at the same time. I understand the concept of undiversifiable risk, but seeing it play out in practice was eye opening.
  - reducesuffering 6y ago
    Long term US Govt. Bonds like VGLT did very well, increasing in value, in both 08 and Mar '20 covid crash.
    - alasdair_ 6y ago
      This is good to know. I think most of the modelling I looked at in the past used medium duration bonds as a proxy for the bond market as a whole. I wonder what TIPS did during the same timeframe actually. EDIT: I looked at VGLT and the mean annual return is extremely low, roughly 0.75%. I like the seemingly negative correlation with equities but I'll need to do some modelling to see if it's worth the massive hit in average expected return.
      - reducesuffering 6y ago
        The best estimated guess for a bond ETF’s returns going forward are it’s SEC yield, not past returns. This is because efficient market hypothesis postulates that the aggregate of bond buyers and sellers has reached equilibrium at its current interest rate. So it’s our best guess at the average of interest rate increases and decreases and their likelihood of happening. Given that, we assume the return going forward is what it’s currently yielding, and in VGLT’s case, it’s 2.15%. When cash is yielding 0.5% max, these can be a useful way of further protecting against equity downturns (assuming VGLT increases in downturns, negatively correlated to equities, true the past 30 years, mixed truth over 70 years), while still providing much better yield than cash.
JohnJamesRambo 6y ago
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-buffett-s-favorite-valuation-metric-is-ringing-an-alarm 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.

DebtDeflation 6y ago

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.

o-__-o 6y ago
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)
alasdair_ 6y ago
This hit home for me during the mini-crash a year ago. I was convinced assets like bitcoin or gold or bonds would hold value when the stock market tanked but instead saw everything fall at the same time. I understand the concept of undiversifiable risk, but seeing it play out in practice was eye opening.
- reducesuffering 6y ago
  Long term US Govt. Bonds like VGLT did very well, increasing in value, in both 08 and Mar '20 covid crash.
  - alasdair_ 6y ago
    This is good to know. I think most of the modelling I looked at in the past used medium duration bonds as a proxy for the bond market as a whole. I wonder what TIPS did during the same timeframe actually. EDIT: I looked at VGLT and the mean annual return is extremely low, roughly 0.75%. I like the seemingly negative correlation with equities but I'll need to do some modelling to see if it's worth the massive hit in average expected return.
    - reducesuffering 6y ago
      The best estimated guess for a bond ETF’s returns going forward are it’s SEC yield, not past returns. This is because efficient market hypothesis postulates that the aggregate of bond buyers and sellers has reached equilibrium at its current interest rate. So it’s our best guess at the average of interest rate increases and decreases and their likelihood of happening. Given that, we assume the return going forward is what it’s currently yielding, and in VGLT’s case, it’s 2.15%. When cash is yielding 0.5% max, these can be a useful way of further protecting against equity downturns (assuming VGLT increases in downturns, negatively correlated to equities, true the past 30 years, mixed truth over 70 years), while still providing much better yield than cash.

JohnJamesRambo 6y ago

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-buffett-s-favorite-valuation-metric-is-ringing-an-alarm 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.