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Wait wait what's wrong about stock market? At least as long as we buy in gradually (from spare cash we have) over a time that's longer than a business cycle, id

Wait wait what's wrong about stock market? At least as long as we buy in gradually (from spare cash we have) over a time that's longer than a business cycle, ideally longer than 2 business cycles (which is the case with any normal retirement planning)? Also, no one suggests buying bonds for the sake of it. It makes no sense and never did. Bonds are little but a balancing component for stocks.

XorNot 3y ago
Moreover they're a safer vehicle as you approach retirement when your liquidity preference has a due date (the market might recover but you probably don't want to or can't delay 4 years waiting for it).
fullshark 3y ago
There was a lot of investment advice to buy bonds even when interest rates were zero as this "balancing component" as you say. That was pretty much "buy bonds for the sake of it." One reason is because it decreases volatility and most people freak out when their nest egg loses 40% of its value in a market downturn, but I do think a lot of it was just laziness and carrying over advice from before the zero interest rate days.
- zeroCalories 3y ago
  I think you're mixing up suggestions to buy bonds with the suggestions to buy US treasuries. There are plenty of other bonds that are safe and provide steady returns.
paganel 3y ago
> Wait wait what's wrong about stock market There’s also the possibility of the market going 1917 Russian collapse or 1949 Chinese collapse, in which case you’d be left with literally nothing over night. And not that dramatic, there’s also the chance of the Western market going October 1929, and not everyone is Lord Keynes in order to afford to ride that event out for the following 10-15 years (and I think Keynes was lucky there).
maest 3y ago
> Wait wait what's wrong about stock market? Just by virtue of being a stock market, it's not guaranteed to always keep going up (e.g. look at other stock markets like, let's say, Japan). In fact, the US stock market has been largely unique in the amount of long term growth it's seen. This means that the default advice of "put your money in the stock market because, long term, it will go up" is wrong. It is wrong in the sense that _even if_ the bet is positive EV, the reason for the advice is wrong. Instead, you'd have to argue about why the US market is special, what mechanism has allowed it to go up, and why that mechanism will persist in the future. The same is largely true for housing btw.
- anovikov 3y ago
  Well, claiming that is claiming that the entire idea of "private property" is bullshit, but it refutes the very foundation of our civilisation. Because stock market is a mechanism for facilitation "private property" in the purest sense - "ownership without physical control". Remove it, and you can only make money off what you can physically hold and defend, and that would be a scary world. Capital always generates return. If it doesn't it just moves to the other place where it does. If there is no stock market, there is no way to freely move that money and it means that private property is no more, and owning capital is more of a job of "being able to milk something for profit", rather than a passive income source. That means we no longer have capitalism. Do you claim the world is really a place like that? Or, do you claim that there are other mechanisms for that but the stock market. Which?
  - maest 3y ago
    Japan has private property, but the Japanese stock market has been going sideways for years.

XorNot 3y ago

Moreover they're a safer vehicle as you approach retirement when your liquidity preference has a due date (the market might recover but you probably don't want to or can't delay 4 years waiting for it).

fullshark 3y ago

There was a lot of investment advice to buy bonds even when interest rates were zero as this "balancing component" as you say. That was pretty much "buy bonds for the sake of it." One reason is because it decreases volatility and most people freak out when their nest egg loses 40% of its value in a market downturn, but I do think a lot of it was just laziness and carrying over advice from before the zero interest rate days.

zeroCalories 3y ago
I think you're mixing up suggestions to buy bonds with the suggestions to buy US treasuries. There are plenty of other bonds that are safe and provide steady returns.

paganel 3y ago

> Wait wait what's wrong about stock market There’s also the possibility of the market going 1917 Russian collapse or 1949 Chinese collapse, in which case you’d be left with literally nothing over night. And not that dramatic, there’s also the chance of the Western market going October 1929, and not everyone is Lord Keynes in order to afford to ride that event out for the following 10-15 years (and I think Keynes was lucky there).

maest 3y ago

> Wait wait what's wrong about stock market? Just by virtue of being a stock market, it's not guaranteed to always keep going up (e.g. look at other stock markets like, let's say, Japan). In fact, the US stock market has been largely unique in the amount of long term growth it's seen. This means that the default advice of "put your money in the stock market because, long term, it will go up" is wrong. It is wrong in the sense that _even if_ the bet is positive EV, the reason for the advice is wrong. Instead, you'd have to argue about why the US market is special, what mechanism has allowed it to go up, and why that mechanism will persist in the future. The same is largely true for housing btw.

anovikov 3y ago
Well, claiming that is claiming that the entire idea of "private property" is bullshit, but it refutes the very foundation of our civilisation. Because stock market is a mechanism for facilitation "private property" in the purest sense - "ownership without physical control". Remove it, and you can only make money off what you can physically hold and defend, and that would be a scary world. Capital always generates return. If it doesn't it just moves to the other place where it does. If there is no stock market, there is no way to freely move that money and it means that private property is no more, and owning capital is more of a job of "being able to milk something for profit", rather than a passive income source. That means we no longer have capitalism. Do you claim the world is really a place like that? Or, do you claim that there are other mechanisms for that but the stock market. Which?
- maest 3y ago
  Japan has private property, but the Japanese stock market has been going sideways for years.