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I think it’s a result of the concentration of wealth. Lots of wealthy people invest their capital and live off 2-3%, while the portfolio is expected to average

by sjducb 1y ago

I think it’s a result of the concentration of wealth. Lots of wealthy people invest their capital and live off 2-3%, while the portfolio is expected to average 7-11%. They choose this distribution strategy because they are trying to avoid a worst case scenario where they run out of money. The median return from this strategy is that their portfolio grows substantially. This growth of their portfolios is causing a concentration of wealth in the hands of the rich. Now anywhere that is a good place to park money is shooting up in value. This includes stocks, real estate, gold and crypto. My model predicts that everything investible will go up in value much faster than inflation. The passive investment argument doesn’t explain why crypto and real estate are increasing in value. Most passive investors are holding stock and bond indexes. Neither model can explain why bonds have crashed in value. Both models predict that bonds should be rocketing up like everything else.

jdlshore 1y ago
At least one popular passive investment guide, _A Random Walk Through Wall Street,_ explicitly recommends investing in a real estate fund. Or at least it did last time I looked.
- judahmeek 1y ago
  A comparison of XLRE or USRT to SPY across 5 years makes that seem like a terrible idea.
araes 1y ago
Real estate is partially explained by what you wrote. Wealth concentration passive investment. California is (19%) passive investment real estate, Hawaii (40%), Alaska (35%), Vermont (31%), West Virginia (30%), and Wyoming (30%). It's just wealthy people passive. Bond's don't go up fast enough to keep up with the S&P, and especially the top 7. Buying a few percent of every S&P is better than buying bonds. 1Y is 19.8%. Bonds are 4.2% (Hitchhiker joke). 5Y is ~13.5% Until 2022 bonds were less than 2%. They also look flat when you look at a line chart. Doesn't matter if the flat line means you make 4% a year. It looks flat. Also, personal view. The concentration of wealth is only part of it. Humans in most cases aren't really involved. It doesn't actually have that much to do with "human" fundamentals. It has to do with algorithms calculating. Even a lot of hedge funds and banks just push a button, turn on a trading algo and walk away to go have a beer. The numbers are too large, and far away to actually mean much. Line twiddling about $200T in stocks does not actually mean much to normal humans. It's kind of that Russ Hanneman joke if you've ever seen Silicon Valley. "No. Billion not Million. B not an M. It's a 1000 of those." The stock market situation's a bit like those auto-battlers that have taken over a lot of video gaming. "You want to actually play?" "No." "The game's going to play itself and you're not allowed to participate."

by sjducb 1y ago

jdlshore 1y ago

At least one popular passive investment guide, _A Random Walk Through Wall Street,_ explicitly recommends investing in a real estate fund. Or at least it did last time I looked.

judahmeek 1y ago
A comparison of XLRE or USRT to SPY across 5 years makes that seem like a terrible idea.

araes 1y ago

Real estate is partially explained by what you wrote. Wealth concentration passive investment. California is (19%) passive investment real estate, Hawaii (40%), Alaska (35%), Vermont (31%), West Virginia (30%), and Wyoming (30%). It's just wealthy people passive. Bond's don't go up fast enough to keep up with the S&P, and especially the top 7. Buying a few percent of every S&P is better than buying bonds. 1Y is 19.8%. Bonds are 4.2% (Hitchhiker joke). 5Y is ~13.5% Until 2022 bonds were less than 2%. They also look flat when you look at a line chart. Doesn't matter if the flat line means you make 4% a year. It looks flat. Also, personal view. The concentration of wealth is only part of it. Humans in most cases aren't really involved. It doesn't actually have that much to do with "human" fundamentals. It has to do with algorithms calculating. Even a lot of hedge funds and banks just push a button, turn on a trading algo and walk away to go have a beer. The numbers are too large, and far away to actually mean much. Line twiddling about $200T in stocks does not actually mean much to normal humans. It's kind of that Russ Hanneman joke if you've ever seen Silicon Valley. "No. Billion not Million. B not an M. It's a 1000 of those." The stock market situation's a bit like those auto-battlers that have taken over a lot of video gaming. "You want to actually play?" "No." "The game's going to play itself and you're not allowed to participate."