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> If its not completely clear by now: no, these companies can't promise you 8% APY without essentially running a ponzi scheme. I'm sure even Madoff had some goo
by zhdc1 4y ago
> If its not completely clear by now: no, these companies can't promise you 8% APY without essentially running a ponzi scheme. I'm sure even Madoff had some good years during bull runs
It's almost impossible to beat the market after fees. Anyone who promises to do so, consistently, is full of it. French (2008) and a whole body of literature before and after.
- xorcist 4y agoWhich market? I own some bonds that yields 8%.
- chollida1 4y agoYield to maturity is far different that yearly yield. though it is possible to find some bonds that have an annual yield of 8%. Though no one would expect them all to make it maturity without any credit issues.
- bombcar 4y agoYou can find a very few. But they are limited in some way, and almost always government-funded. https://treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/ https://treasurydirect.gov/savings-bonds/i-bonds/i-bonds-int... iBonds hit above 8% return in a year if you bought at just the right time this year, IIRC. Of course, if you calculate real return then you will have a sad.
- arcticfox 4y agoThere’s also a very real counterparty risk in bonds that need to give 8%. Inflation bonds are kind of an exception there, since if inflation is 8% the market should be doing much better than that on average.
- NotYourLawyer 4y agoAre they Venezuela or Zimbabwe?
- mrDmrTmrJ 4y agoUS federal funds rate hit 19.39 percent in April 1980. As a result long-term state bond did very well for their owners as inflation came down. My mom told stories about "Massachusetts Nines" with legendary 9% yields. Utilities and co-ops issued ~15% paper which also did extremely well for those who purchased it in the early 80s.
- NotYourLawyer 4y agoSure, back then. But I’m guessing these are not 50+ year maturities still paying out.
- everybodyknows 4y agoKnow offhand what the 30-year yielded back in '80? For reference, the 30 is now at about 100bp less than shorter treasuries: https://www.marketwatch.com/market-data/rates https://www.marketwatch.com/market-data/rates
- mcguire 4y ago~11% (https://www.govinfo.gov/content/pkg/ERP-2012/pdf/ERP-2012-table73.pdf https://www.govinfo.gov/content/pkg/ERP-2012/pdf/ERP-2012-ta...)
- baobabKoodaa 4y ago> It's almost impossible to beat the market after fees. Anyone who promises to do so, consistently, is full of it. French (2008) and a whole body of literature before and after. Not this dead horse again. Yes, academics have written a lot of papers claiming things that turned out to be false. See Renaissance Medallion Fund and Berkshire Hathaway for references.
- mcguire 4y agoI'm not sure Berkshire Hathaway is comparable to anything in the crypto sphere.
- baobabKoodaa 4y agoParent was referring to French (2008). Bitcoin was created in 2009, so the whole crypto sphere didn't exist in 2008. The reference was in relation to stock markets (and also to some extent derivative markets and bond markets etc.). Berkshire Hathaway is a good example of how stock markets are not efficient.
- lottin 4y agoWhat exactly turned out to be false?
- baobabKoodaa 4y agoEfficient markets hypothesis in the context of stock and derivatives markets.
- lottin 4y agoHas it been disproven? As far as I know the best performing model of stock returns is the Fama-French 5-factor model which assumes efficient markets.
- baobabKoodaa 4y ago