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So for non-finance-experts, what should we be doing with our money? Investing in what? Keeping in the bank? It sounds from your comment like there is _nothing_

So for non-finance-experts, what should we be doing with our money? Investing in what? Keeping in the bank? It sounds from your comment like there is _nothing_ that won't be devalued, even gold. Is real estate worthwhile? (Note: I am in the EU not US.)

deleted 4y ago
[deleted]
ptero 4y ago
If you think that there is some major economic turmoil ahead with dropping asset values across the board (and I personally this is fairly likely), the general advice is to aim for a positive alpha. That is, if you are moderately well off or better, invest to "go down less than your neighbors". Assets across the board lose value, but if at the end of the fall you preserved a higher fraction of your money to invest than your neighbors and are willing to pick the best assets after the collapse you can reap huge benefits. The counter argument to this is that the above approach absolutely requires an iron discipline. And without experience non-professionals are prone to making very costly mistakes (e.g., invest on feelings, double down inappropriately, etc.). So, a general audience advice is usually: do not invest money you need within 5-10 years and do not make rash decisions; it is better to ride this train down and then hopefully back up than jump randomly. And diversify (across countries, economies, asset classes, etc.). Just my 2c; not an investment advice!
- nradov 4y ago
  The general advice is always to aim for a positive alpha. No investor aims for a negative alpha, regardless of the economic climate.
  - etrautmann 4y ago
    Yes, but it's unclear how to intersect this with a reasonable tax strategy for many retail investors. i.e. do I sell everything and pay capital gains or sit?
  - ptero 4y ago
    > The general advice is always to aim for a positive alpha. On the contrary, for the past 20+ years the general advice has been to specifically aim for the alpha of zero ("just use index funds"), not for a positive alpha ("don't try to beat the market", etc.). > No investor aims for a negative alpha, regardless of the economic climate. Factors other than alpha are way more important for most people. Many retirees put a high value on low volatility or stability of dividends and are perfectly OK with getting a small negative alpha as part of the package. Original hedge funds (before they joined a cutthroat trading jungle) set up with a similar goal in mind: a small negative alpha, but protected against the loss of the principal. And had plenty of wealthy investors who were happy with this deal. Alpha becomes the critical parameter to optimize for when actively investing in times of turmoil (then a negative total return on a positive alpha on the down leg is a success). But few people actually do that, so few care about alpha.
- spicyusername 4y ago
  I think this is probably the most useful wisdom for the average person: > do not invest money you need within 5-10 years and do not make rash decisions; it is better to ride this train down and then hopefully back up than jump randomly. Gaming the market successfully requires a ton of skill and knowledge, and even then you are not guaranteed success. Most people are better off focusing on asset-class diversification (i.e. spreading money across many different kinds of asset classes - i.e. physical assets, securities, commodities, cash, etc) than playing just the stock market. And even when playing the stock market, most people are better off focusing on "time-in-the-market" vs "timing the market".
  - thechao 4y ago
    Right; so my plan of having 60% of my wealth tied up in unvested stocks in a single company is really coming to fruition!
    - FollowingTheDao 4y ago
      Oh man, so sorry.
      - quickthrower2 4y ago
        Not really, if they go to zero, then he/she will be in the same situation as most (99.9%) of employees who get no stock.
        thechao 4y ago
        We call it the lottery — the last ~5 years we "won"; this year? Maybe not so much.
        quickthrower2 4y ago
        “We” meaning a subset of “not me”
    - 4y ago
soared 4y ago
Unless you’re retiring in the next 10 years, or planning on purchasing a house in the next few years, then just make your emergency fund a little bigger and hold on to your job. Follow your normal financial planning. You’re not going to outplay market trends, and if you’re young/middle aged then it doesn’t matter any way.
- fny 4y ago
  Yes it does. If you invested near the dot com peak or the japan peak, you still haven't made your money back. This notion of passive investing that has been pounded into peoples heads for years is complete bullshit and has only worked because there was always someone else ready to pay more for the same asset and because rates were perpetually held low. Some points to consider: (1) You have fewer millennials than baby boomers, as the baby boomers cash out from their vanguard accounts, who makes up for the difference? (2) If the S&P 500 contains companies built for a certain macro regime (low inflation, low interest rates), and the macro regime is shifting, you can be penalized by owning a set of assets that do not provide adequate returns (Tesla is currently the 5th largest weighting in the S&P, they don't pay you squat.) Go look at charts of the S&P 500 beyond the last 40 years when rates were more variable, you'll see the market can at times be a shit investment vehicle that might not give you a return by the time you retire and on an inflation adjusted basis has a negative return! Buy low, sell high. Save cash and be patient.
  - thematrixturtle 4y ago
    The obvious issue with the obvious plan is that you can only tell what's "high" and what's "low" in retrospect, and if you time your lump sum investment wrong (dot com peak, Japan peak etc), you end up negative for a long, long time. Whereas DCA or equivalent guarantees that you capture the ups as well as the downs.
  - PaulDavisThe1st 4y ago
    > If you invested near the dot com peak or the japan peak, you still haven't made your money back. What does this even mean? That you invested the only money you ever invested entirely in the relatively brief period of the dot com peak? Who does that? (Obviously not nobody, but ...) To all effects and purposes, nobody does that. So what it really means is "the money you invested during that one period (perhaps a year or so), and likely only the money you invested in dot com and adjacent stocks, has yet to be made back". In the meantime, the other money you invested before and after the dot com peak has done rather well, unless you specifically made some particularly disastrous choices.
jimmaswell 4y ago
Same as always, keep investing in a well-diversified spread. The stock market as a whole will always bounce back. That or society collapses and your numbers in a computer are worthless anyway. This is the first big downturn I've been prepared to invest in, so personally I'm going to buy more than usual. I see it as stocks being on sale.
- acover 4y ago
  Why does it need to be collapse or all time highs? Stagnation and decay seem entirely possible. Negative real returns seem entirely possible when bonds had negative nominal returns.
- danhak 4y ago
  > The stock market as a whole will always bounce back Japan is the common counterexample. It is entirely possible the stock market will stagnate in the future as the era of American economic hegemony comes to an end.
  - mrits 4y ago
    There are more signs that the American economic power is just really ramping up.
    - danhak 4y ago
      Like what for example?
      - mrits 4y ago
        For example, the fastest growing economy in my lifetime last year.
        danhak 4y ago
        It's true that 2021 saw the highest rate of GDP growth in 30 years, but that came immediately after the largest GDP decline in 30 years during 2020. So that can be explained as an aberration due to the pandemic shutdowns and subsequent rebound: https://www.statista.com/statistics/188165/annual-gdp-growth-of-the-united-states-since-1990/ https://www.statista.com/statistics/188165/annual-gdp-growth... At any rate, GDP growth is currently negative for 2022 and China's economy is still projected to overtake the U.S. in a matter of years.
spicyusername 4y ago
As others have said, portfolio diversification (i.e. spreading your money around between lots of different asset classes) is more important than playing the stock market well. Most people cannot play the stock market well, and even those who make it their day-job often don't end up playing it well. The reality is that the stock market is just too random to game reliably.
fny 4y ago
I actually don't have a good answer for this. Not financial advice. Talk to a fiduciary. The problem with inflation is that you need to protect yourself before the fact, and at this point, it's difficult to read to what extend the fed will respond with rate hikes and how much inflation we get going forward. In my personal view, it would be stupid to hike to 10% since that will also cut off the needed supply response: this will decapitate energy, farm, and housing expansion while at the same time decimating all forms of wealth. But there is a possibility depending on how trigger happy the fed becomes. More likely than not, they raise rates, but it stays below the rate of inflation (3-5%), so anything that yields above that range is a good investment. Anything below would be protective. As for stocks, I'm looking at individual companies that are cheap with high cash flow that have macro tailwinds, but I'm still waiting. There are always bull markets inside of bears, but you have to look for them. Mind you, bear markets have vicious rally from time to time which fool people into getting an all clear signal. A bear markets job is to bleed everyones money dry, which is why I'd recommend people stay away until no one is interested in stocks anymore. You need complete despair.
- BigBubbleButt 4y ago
  > In my personal view, it would be stupid to hike to 10% since that will also cut off the needed supply response: this will decapitate energy, farm, and housing expansion while at the same time decimating all forms of wealth. But there is a possibility depending on how trigger happy the fed becomes. The only reason Volcker managed to bring down inflation is because he was willing to actually do what needed to be done. If borrowing money is cheaper than inflation, why would anybody not just continue to borrow money indefinitely? The Federal Reserve can fight inflation or it can fight a recession; it cannot do both simultaneously. You have to decide which is a bigger problem: a recession, or inflation. The notion that you can walk a tight rope between the two is disconnected from reality. And while you continue to make inflation worse, you only make the inevitable recession worse. Tick tock. > You need complete despair. I agree. We are fucked.
  - PaulDavisThe1st 4y ago
    Lots of assumption buried in your comment/worldview about what's actually causing inflation. Is it actually just a slow accretion of growing costs for resources, distribution? Is it companies deciding that now would be a great time to increase prices "because inflation" and thus get ahead of the nascent wage growth that was threatening to take off post-pandemic? Clearly it's a mixture of the two but the implications are completely different if its 90/10 vs 10/90.
walleeee 4y ago
instead of pursuing speculative gains consider investing it in yourself or in your immediate locale or region, in the economic and ecological transformation we all sorely need devaluation of everything is a consequence of unsustainable economics and the fix is not to find a convenient hidey-hole for your money but to invest time, money and attention building a future sans witless speculation, profligate consumption, public and corporate unaccountability, and consumer monoculture
- ketzo 4y ago
  I appreciate this comment. I think the way that it’s written might drive off, say, a more traditional conservative — but I think if rephrased, they would agree. “Spend time at your church, and spend money to invest in a local private school” would line up perfectly w/ 75% of Republicans that I know, (and, if I may assume your views, probably does not line up with them); and yet I think it is a very similar line of thinking. I am trying to orientate the way that I spend my money and my time more towards my local community. It’s surprisingly difficult. Not everyone does it. And we would be better off if they did!
  - walleeee 4y ago
    I wrote it to try to appeal to traditionalists and progressives and people of all political persuasions! spending time building a religious or spiritual community is fine by me, especially if it provides material services to the locality and a sense of civic responsibility also fine with private schools although I do think they should cater to students without the means to pay exorbitant tuition (some provide tuition aid, in fact I went to one that did) and I think there is something to be said for allowing public schools some degree of curricular independence, which might make them more appealing to those who presently prefer private alternatives really I think there's a lot most people can agree on and I hope we can begin to identify less with team R or D and reason from principles in our politics > It’s surprisingly difficult. Not everyone does it. And we would be better off if they did! totally agree, it's difficult but worthwhile!
    - deleted 4y ago
Buttons840 4y ago
If all assets are dead, you can spend your assets now to improve yourself or family. If you've been wanting some time to go to school or pursue some other self improvement, maybe spend some assets now to do so. Education and skills are an asset like any other, and can also be devalued though. I wonder how personal skills will fare in the coming years?
- walleeee 4y ago
  > Education and skills are an asset like any other, and can also be devalued though good point some skills will fare better or worse than others, the question is which
plonk 4y ago
Sounds like the right time to buy stocks? Assets likely won't stay dead for the next forty years.
deepsun 4y ago
I've lived through hyper-inflation -- spend your money on anything or take loans/mortgage.
baxtr 4y ago
I've invested through bull and bear markets in the last 15 years. I’ve always put most of my money into ETFs, mainly S&P500. It has served me well so far. Just be prepared to be down with your portfolio for some time.
- FearTheTrees 4y ago
  Serious question: Instead of riding the ETFs down, what if I sell investments now and move to cash/gold? Cash would lose value at the rate of inflation, while ETFs can drop 30-40% more if the FED makes mistakes.
  - baxtr 4y ago
    I don’t we see another 30-40% loss, 20% the most. We’re already at a point where you could argue that an overreaction has happened. But hey, it’s the future, so no one can really say anything about it :) I at least am gonna see through this one.
unicornmama 4y ago
I would be very scared to hold Euros. Either CHF or USD, or a mix. It is paradoxically better to hold cash than to invest in equity, bonds or real estate.
- racked 4y ago
  This is interesting. Can you elaborate a bit: - What do you expect to happen with EUR? - Why do you think USD or CHF are safer to hold than say, gold?
  - unicornmama 4y ago
    This is a concise explanation, ignore the clickbait title. https://youtu.be/BbU7LkzV79g https://youtu.be/BbU7LkzV79g
lazide 4y ago
Real estate is going to be gutted - increasing mortgage rates (already have been happening) will decimate qualified buyers. Decreasing prices will further decimate those willing to Hail Mary with cash offers hoping to get something after years of frustration.
- PaulDavisThe1st 4y ago
  But the effective, on-the-ground housing shortage is going to continue to keep demand for housing extremely high in almost all areas with reasonable economic options or amenity migration destinations.
  - neilparikh 4y ago
    Wouldn't this demand be priced into existing housing prices though (and thus not be worth acting on)?
  - lazide 4y ago
    The only reason there is a housing shortage is because there is an excess of jobs and money in that place. Which is changing. Houses in sunnyvale went from 750k-1m and impossible to find one for sale to 350k (yes really!) and on the market for years around ‘08.
    - PaulDavisThe1st 4y ago
      > "an excess of jobs and money in that place" Nope. For one thing, there's the largest generation of the 20th century at peak retirement, cashing out of family houses that have gained huge amounts of value, and looking to move to amenity-rich locations. For another thing, the investment industry, short of other options, has started buying houses to rent them (short or long term), squeezing supply and driving up prices in many markets. For another thing, short term rentals (AirBnb, VRBO etc.) have had profound impacts on the availability of property in heavily visited areas (in fact, it's not so much absolute visitation rates, but vists-per-resident that characterizes this). Other factors too. That doesn't mean the market can't crash, but it will be something very different from what happened in 2008.
boppo1 4y ago
Have useful, rare skills. Preferably in a more tangible field (doctors will get through this better than VR graphics programmers).
- quickthrower2 4y ago
  I am bullish for software developers. Since 2001 I have not been fired or laid off. I have been able to get a job within 4 weeks the whole time. (Probably 1 week if not fussy and just need money). Software is still eating the world, it just might have a bit of constipation during this period. Developers can save companies money - handy in a recession. Developers can sell their skills globally (that has negatives too though...). And if a software company is still running it needs developers to fix the bugs, support the system.
  - boppo1 4y ago
    I sure hope so because I'm out here reading Stroustrup and CLRS to start a career at 30. But it really seems like there's a glut of tech companies with investment capital paying people 300k to make apps for stuff that's trivial. Juicero tier stuff, all over the place. I worry it will collapse and SWE is gonna be your run of the mill 45k job from then on.
    - 8n4vidtmkvmk 4y ago
      I don't think so.. good software engineers are still somewhat rare and you need good ones to not blow up your code base once it reaches a certain size/complexity. Any high school kid can make a website, but if you want your app to grow for 3 or more years, it has to be built well-ish.
      - nebula8804 4y ago
        Good devs are only really needed by good companies. Majority of companies are not FAANG. Everyone else will take whatever trash they can find and those companies will probably pursue downward pricing pressure.
dustingetz 4y ago
invest in your education and personal development if you are young. start a startup. invest in your career. have children and invest in them. this is all real economic growth; money number is fake right now. if you are old and need financial security, invest your time in learning about future relevant sectors like energy, climate, bio. commodities. toilet paper. trash bags.
YZF 4y ago
Long term your best bet is still stocks. Stocks naturally resist inflation- when inflation goes up earnings will go up with them. The current P/E is high but it's not insanely high. Sure, stocks can still go down 10% or 20% (or 30% or 40% though less likely) but your cash is also going to get eroded by that much over the next few years and at least you have a productive investment. Whether real estate is worthwhile depends on your local markets. In some parts of Europe it might be. If you need a place to live, and you think the prices are reasonable (e.g. it's a market that hasn't seen crazy prices due to QE and low rates) and you can afford it then I'd definitely consider keeping in mind that it's also a long term play, not a short term one. If it's purely investment property the calculation is different.
- comex 4y ago
  > Sure, stocks can still go down 10% or 20% (or 30% or 40% though less likely) but your cash is also going to get eroded by that much over the next few years and at least you have a productive investment. The current trend is that stocks are going down in dollar value, not just in real value after adjusting for inflation. Are you saying you expect that to reverse?
  - majormajor 4y ago
    I'm not convinced the current trend is going to go particularly negative from a 2+ year perspective. Things got super overheated in 2020-2021 but demand is still strong, so I wouldn't be surprised if things level back off after the steam is let out.
  - YZF 4y ago
    Ofcourse it will reverse. Sure, the P/E is on the high side and so the expected returns won't be as good as they can be but hey, you're already 20% down (or more in real terms). If we we're going to see 8% inflation over the next few years then sitting in cash is going to see your money get erased. Bond rates are still way too low. Housing is somewhat inflation resistant but it has also been terribly inflated. So stocks look like the best option right now, if we go more down they'll be even better ;) EDIT: Just to be more specific, I'm pretty sure that in ~5 years you'll at least maintain your real value and in 10 years you'll have a decent real return. Pretty decent probability anyways. In 10 years you'll beat the 10 year bond and the housing market (or gold, or cash or bitcoin). I'm sure some sectors will over-perform and some will under.

deleted 4y ago

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ptero 4y ago

If you think that there is some major economic turmoil ahead with dropping asset values across the board (and I personally this is fairly likely), the general advice is to aim for a positive alpha. That is, if you are moderately well off or better, invest to "go down less than your neighbors". Assets across the board lose value, but if at the end of the fall you preserved a higher fraction of your money to invest than your neighbors and are willing to pick the best assets after the collapse you can reap huge benefits. The counter argument to this is that the above approach absolutely requires an iron discipline. And without experience non-professionals are prone to making very costly mistakes (e.g., invest on feelings, double down inappropriately, etc.). So, a general audience advice is usually: do not invest money you need within 5-10 years and do not make rash decisions; it is better to ride this train down and then hopefully back up than jump randomly. And diversify (across countries, economies, asset classes, etc.). Just my 2c; not an investment advice!

nradov 4y ago
The general advice is always to aim for a positive alpha. No investor aims for a negative alpha, regardless of the economic climate.
- etrautmann 4y ago
  Yes, but it's unclear how to intersect this with a reasonable tax strategy for many retail investors. i.e. do I sell everything and pay capital gains or sit?
- ptero 4y ago
  > The general advice is always to aim for a positive alpha. On the contrary, for the past 20+ years the general advice has been to specifically aim for the alpha of zero ("just use index funds"), not for a positive alpha ("don't try to beat the market", etc.). > No investor aims for a negative alpha, regardless of the economic climate. Factors other than alpha are way more important for most people. Many retirees put a high value on low volatility or stability of dividends and are perfectly OK with getting a small negative alpha as part of the package. Original hedge funds (before they joined a cutthroat trading jungle) set up with a similar goal in mind: a small negative alpha, but protected against the loss of the principal. And had plenty of wealthy investors who were happy with this deal. Alpha becomes the critical parameter to optimize for when actively investing in times of turmoil (then a negative total return on a positive alpha on the down leg is a success). But few people actually do that, so few care about alpha.
spicyusername 4y ago
I think this is probably the most useful wisdom for the average person: > do not invest money you need within 5-10 years and do not make rash decisions; it is better to ride this train down and then hopefully back up than jump randomly. Gaming the market successfully requires a ton of skill and knowledge, and even then you are not guaranteed success. Most people are better off focusing on asset-class diversification (i.e. spreading money across many different kinds of asset classes - i.e. physical assets, securities, commodities, cash, etc) than playing just the stock market. And even when playing the stock market, most people are better off focusing on "time-in-the-market" vs "timing the market".
- thechao 4y ago
  Right; so my plan of having 60% of my wealth tied up in unvested stocks in a single company is really coming to fruition!
  - FollowingTheDao 4y ago
    Oh man, so sorry.
    - quickthrower2 4y ago
      Not really, if they go to zero, then he/she will be in the same situation as most (99.9%) of employees who get no stock.
      - thechao 4y ago
        We call it the lottery — the last ~5 years we "won"; this year? Maybe not so much.
        quickthrower2 4y ago
        “We” meaning a subset of “not me”
  - 4y ago

soared 4y ago

Unless you’re retiring in the next 10 years, or planning on purchasing a house in the next few years, then just make your emergency fund a little bigger and hold on to your job. Follow your normal financial planning. You’re not going to outplay market trends, and if you’re young/middle aged then it doesn’t matter any way.

fny 4y ago
Yes it does. If you invested near the dot com peak or the japan peak, you still haven't made your money back. This notion of passive investing that has been pounded into peoples heads for years is complete bullshit and has only worked because there was always someone else ready to pay more for the same asset and because rates were perpetually held low. Some points to consider: (1) You have fewer millennials than baby boomers, as the baby boomers cash out from their vanguard accounts, who makes up for the difference? (2) If the S&P 500 contains companies built for a certain macro regime (low inflation, low interest rates), and the macro regime is shifting, you can be penalized by owning a set of assets that do not provide adequate returns (Tesla is currently the 5th largest weighting in the S&P, they don't pay you squat.) Go look at charts of the S&P 500 beyond the last 40 years when rates were more variable, you'll see the market can at times be a shit investment vehicle that might not give you a return by the time you retire and on an inflation adjusted basis has a negative return! Buy low, sell high. Save cash and be patient.
- thematrixturtle 4y ago
  The obvious issue with the obvious plan is that you can only tell what's "high" and what's "low" in retrospect, and if you time your lump sum investment wrong (dot com peak, Japan peak etc), you end up negative for a long, long time. Whereas DCA or equivalent guarantees that you capture the ups as well as the downs.
- PaulDavisThe1st 4y ago
  > If you invested near the dot com peak or the japan peak, you still haven't made your money back. What does this even mean? That you invested the only money you ever invested entirely in the relatively brief period of the dot com peak? Who does that? (Obviously not nobody, but ...) To all effects and purposes, nobody does that. So what it really means is "the money you invested during that one period (perhaps a year or so), and likely only the money you invested in dot com and adjacent stocks, has yet to be made back". In the meantime, the other money you invested before and after the dot com peak has done rather well, unless you specifically made some particularly disastrous choices.

jimmaswell 4y ago

Same as always, keep investing in a well-diversified spread. The stock market as a whole will always bounce back. That or society collapses and your numbers in a computer are worthless anyway. This is the first big downturn I've been prepared to invest in, so personally I'm going to buy more than usual. I see it as stocks being on sale.

acover 4y ago
Why does it need to be collapse or all time highs? Stagnation and decay seem entirely possible. Negative real returns seem entirely possible when bonds had negative nominal returns.
danhak 4y ago
> The stock market as a whole will always bounce back Japan is the common counterexample. It is entirely possible the stock market will stagnate in the future as the era of American economic hegemony comes to an end.
- mrits 4y ago
  There are more signs that the American economic power is just really ramping up.
  - danhak 4y ago
    Like what for example?
    - mrits 4y ago
      For example, the fastest growing economy in my lifetime last year.
      - danhak 4y ago
        It's true that 2021 saw the highest rate of GDP growth in 30 years, but that came immediately after the largest GDP decline in 30 years during 2020. So that can be explained as an aberration due to the pandemic shutdowns and subsequent rebound: https://www.statista.com/statistics/188165/annual-gdp-growth-of-the-united-states-since-1990/ https://www.statista.com/statistics/188165/annual-gdp-growth... At any rate, GDP growth is currently negative for 2022 and China's economy is still projected to overtake the U.S. in a matter of years.

spicyusername 4y ago

As others have said, portfolio diversification (i.e. spreading your money around between lots of different asset classes) is more important than playing the stock market well. Most people cannot play the stock market well, and even those who make it their day-job often don't end up playing it well. The reality is that the stock market is just too random to game reliably.

fny 4y ago

I actually don't have a good answer for this. Not financial advice. Talk to a fiduciary. The problem with inflation is that you need to protect yourself before the fact, and at this point, it's difficult to read to what extend the fed will respond with rate hikes and how much inflation we get going forward. In my personal view, it would be stupid to hike to 10% since that will also cut off the needed supply response: this will decapitate energy, farm, and housing expansion while at the same time decimating all forms of wealth. But there is a possibility depending on how trigger happy the fed becomes. More likely than not, they raise rates, but it stays below the rate of inflation (3-5%), so anything that yields above that range is a good investment. Anything below would be protective. As for stocks, I'm looking at individual companies that are cheap with high cash flow that have macro tailwinds, but I'm still waiting. There are always bull markets inside of bears, but you have to look for them. Mind you, bear markets have vicious rally from time to time which fool people into getting an all clear signal. A bear markets job is to bleed everyones money dry, which is why I'd recommend people stay away until no one is interested in stocks anymore. You need complete despair.

BigBubbleButt 4y ago
> In my personal view, it would be stupid to hike to 10% since that will also cut off the needed supply response: this will decapitate energy, farm, and housing expansion while at the same time decimating all forms of wealth. But there is a possibility depending on how trigger happy the fed becomes. The only reason Volcker managed to bring down inflation is because he was willing to actually do what needed to be done. If borrowing money is cheaper than inflation, why would anybody not just continue to borrow money indefinitely? The Federal Reserve can fight inflation or it can fight a recession; it cannot do both simultaneously. You have to decide which is a bigger problem: a recession, or inflation. The notion that you can walk a tight rope between the two is disconnected from reality. And while you continue to make inflation worse, you only make the inevitable recession worse. Tick tock. > You need complete despair. I agree. We are fucked.
- PaulDavisThe1st 4y ago
  Lots of assumption buried in your comment/worldview about what's actually causing inflation. Is it actually just a slow accretion of growing costs for resources, distribution? Is it companies deciding that now would be a great time to increase prices "because inflation" and thus get ahead of the nascent wage growth that was threatening to take off post-pandemic? Clearly it's a mixture of the two but the implications are completely different if its 90/10 vs 10/90.

walleeee 4y ago

instead of pursuing speculative gains consider investing it in yourself or in your immediate locale or region, in the economic and ecological transformation we all sorely need devaluation of everything is a consequence of unsustainable economics and the fix is not to find a convenient hidey-hole for your money but to invest time, money and attention building a future sans witless speculation, profligate consumption, public and corporate unaccountability, and consumer monoculture

ketzo 4y ago
I appreciate this comment. I think the way that it’s written might drive off, say, a more traditional conservative — but I think if rephrased, they would agree. “Spend time at your church, and spend money to invest in a local private school” would line up perfectly w/ 75% of Republicans that I know, (and, if I may assume your views, probably does not line up with them); and yet I think it is a very similar line of thinking. I am trying to orientate the way that I spend my money and my time more towards my local community. It’s surprisingly difficult. Not everyone does it. And we would be better off if they did!
- walleeee 4y ago
  I wrote it to try to appeal to traditionalists and progressives and people of all political persuasions! spending time building a religious or spiritual community is fine by me, especially if it provides material services to the locality and a sense of civic responsibility also fine with private schools although I do think they should cater to students without the means to pay exorbitant tuition (some provide tuition aid, in fact I went to one that did) and I think there is something to be said for allowing public schools some degree of curricular independence, which might make them more appealing to those who presently prefer private alternatives really I think there's a lot most people can agree on and I hope we can begin to identify less with team R or D and reason from principles in our politics > It’s surprisingly difficult. Not everyone does it. And we would be better off if they did! totally agree, it's difficult but worthwhile!
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Buttons840 4y ago

If all assets are dead, you can spend your assets now to improve yourself or family. If you've been wanting some time to go to school or pursue some other self improvement, maybe spend some assets now to do so. Education and skills are an asset like any other, and can also be devalued though. I wonder how personal skills will fare in the coming years?

walleeee 4y ago
> Education and skills are an asset like any other, and can also be devalued though good point some skills will fare better or worse than others, the question is which

plonk 4y ago

Sounds like the right time to buy stocks? Assets likely won't stay dead for the next forty years.

deepsun 4y ago

I've lived through hyper-inflation -- spend your money on anything or take loans/mortgage.

baxtr 4y ago

I've invested through bull and bear markets in the last 15 years. I’ve always put most of my money into ETFs, mainly S&P500. It has served me well so far. Just be prepared to be down with your portfolio for some time.

FearTheTrees 4y ago
Serious question: Instead of riding the ETFs down, what if I sell investments now and move to cash/gold? Cash would lose value at the rate of inflation, while ETFs can drop 30-40% more if the FED makes mistakes.
- baxtr 4y ago
  I don’t we see another 30-40% loss, 20% the most. We’re already at a point where you could argue that an overreaction has happened. But hey, it’s the future, so no one can really say anything about it :) I at least am gonna see through this one.

unicornmama 4y ago

I would be very scared to hold Euros. Either CHF or USD, or a mix. It is paradoxically better to hold cash than to invest in equity, bonds or real estate.

racked 4y ago
This is interesting. Can you elaborate a bit: - What do you expect to happen with EUR? - Why do you think USD or CHF are safer to hold than say, gold?
- unicornmama 4y ago
  This is a concise explanation, ignore the clickbait title. https://youtu.be/BbU7LkzV79g https://youtu.be/BbU7LkzV79g

lazide 4y ago

Real estate is going to be gutted - increasing mortgage rates (already have been happening) will decimate qualified buyers. Decreasing prices will further decimate those willing to Hail Mary with cash offers hoping to get something after years of frustration.

PaulDavisThe1st 4y ago
But the effective, on-the-ground housing shortage is going to continue to keep demand for housing extremely high in almost all areas with reasonable economic options or amenity migration destinations.
- neilparikh 4y ago
  Wouldn't this demand be priced into existing housing prices though (and thus not be worth acting on)?
- lazide 4y ago
  The only reason there is a housing shortage is because there is an excess of jobs and money in that place. Which is changing. Houses in sunnyvale went from 750k-1m and impossible to find one for sale to 350k (yes really!) and on the market for years around ‘08.
  - PaulDavisThe1st 4y ago
    > "an excess of jobs and money in that place" Nope. For one thing, there's the largest generation of the 20th century at peak retirement, cashing out of family houses that have gained huge amounts of value, and looking to move to amenity-rich locations. For another thing, the investment industry, short of other options, has started buying houses to rent them (short or long term), squeezing supply and driving up prices in many markets. For another thing, short term rentals (AirBnb, VRBO etc.) have had profound impacts on the availability of property in heavily visited areas (in fact, it's not so much absolute visitation rates, but vists-per-resident that characterizes this). Other factors too. That doesn't mean the market can't crash, but it will be something very different from what happened in 2008.

boppo1 4y ago

Have useful, rare skills. Preferably in a more tangible field (doctors will get through this better than VR graphics programmers).

quickthrower2 4y ago
I am bullish for software developers. Since 2001 I have not been fired or laid off. I have been able to get a job within 4 weeks the whole time. (Probably 1 week if not fussy and just need money). Software is still eating the world, it just might have a bit of constipation during this period. Developers can save companies money - handy in a recession. Developers can sell their skills globally (that has negatives too though...). And if a software company is still running it needs developers to fix the bugs, support the system.
- boppo1 4y ago
  I sure hope so because I'm out here reading Stroustrup and CLRS to start a career at 30. But it really seems like there's a glut of tech companies with investment capital paying people 300k to make apps for stuff that's trivial. Juicero tier stuff, all over the place. I worry it will collapse and SWE is gonna be your run of the mill 45k job from then on.
  - 8n4vidtmkvmk 4y ago
    I don't think so.. good software engineers are still somewhat rare and you need good ones to not blow up your code base once it reaches a certain size/complexity. Any high school kid can make a website, but if you want your app to grow for 3 or more years, it has to be built well-ish.
    - nebula8804 4y ago
      Good devs are only really needed by good companies. Majority of companies are not FAANG. Everyone else will take whatever trash they can find and those companies will probably pursue downward pricing pressure.

dustingetz 4y ago

invest in your education and personal development if you are young. start a startup. invest in your career. have children and invest in them. this is all real economic growth; money number is fake right now. if you are old and need financial security, invest your time in learning about future relevant sectors like energy, climate, bio. commodities. toilet paper. trash bags.

YZF 4y ago

Long term your best bet is still stocks. Stocks naturally resist inflation- when inflation goes up earnings will go up with them. The current P/E is high but it's not insanely high. Sure, stocks can still go down 10% or 20% (or 30% or 40% though less likely) but your cash is also going to get eroded by that much over the next few years and at least you have a productive investment. Whether real estate is worthwhile depends on your local markets. In some parts of Europe it might be. If you need a place to live, and you think the prices are reasonable (e.g. it's a market that hasn't seen crazy prices due to QE and low rates) and you can afford it then I'd definitely consider keeping in mind that it's also a long term play, not a short term one. If it's purely investment property the calculation is different.

comex 4y ago
> Sure, stocks can still go down 10% or 20% (or 30% or 40% though less likely) but your cash is also going to get eroded by that much over the next few years and at least you have a productive investment. The current trend is that stocks are going down in dollar value, not just in real value after adjusting for inflation. Are you saying you expect that to reverse?
- majormajor 4y ago
  I'm not convinced the current trend is going to go particularly negative from a 2+ year perspective. Things got super overheated in 2020-2021 but demand is still strong, so I wouldn't be surprised if things level back off after the steam is let out.
- YZF 4y ago
  Ofcourse it will reverse. Sure, the P/E is on the high side and so the expected returns won't be as good as they can be but hey, you're already 20% down (or more in real terms). If we we're going to see 8% inflation over the next few years then sitting in cash is going to see your money get erased. Bond rates are still way too low. Housing is somewhat inflation resistant but it has also been terribly inflated. So stocks look like the best option right now, if we go more down they'll be even better ;) EDIT: Just to be more specific, I'm pretty sure that in ~5 years you'll at least maintain your real value and in 10 years you'll have a decent real return. Pretty decent probability anyways. In 10 years you'll beat the 10 year bond and the housing market (or gold, or cash or bitcoin). I'm sure some sectors will over-perform and some will under.