6 ms·

How I view the market: Short term: high volatility and uncertainty, feels more like gambling at a casino Medium term: the world is too unstable, best to hold

by sph 3mo ago

How I view the market: Short term: high volatility and uncertainty, feels more like gambling at a casino Medium term: the world is too unstable, best to hold cash Long term: dollar cost averaging and time in the market always win so depending how long your horizon is, it’s a good time as any to invest Longer term: we all die

cmiles8 3mo ago
Good advice. Ironically most long term folks that just buy low cost index funds and take a nap outperform most of the market stressing out daily on their next move. That’s the cruel reality of investing. When you factor in the opportunity cost of all that stress and managing an active portfolio the percentage of successful active portfolio managers likely falls down to single digits. Invest early, invest consistently and often in up or down markets, and the math says you will do very well.
- sph 3mo ago
  Though I keep wondering if the ‘invest consistently whether the market goes up or down’ defeats the point of a stock market in the first place. People effectively keep throwing money at mediocre or failing endeavours, which magnifies any structural problem, and everything seems to keep going up whether it’s good news or bad news, until the bottom falls out. My reading might be wrong, but since 2020 there is no bad news that seems to faze the market by an iota.
  - blitzar 3mo ago
    Always bet on black at the roulette table, over and over and over again.
  - pfortuny 3mo ago
    Well, that is what markets do: behave. Rationally or not. The 1929 panic was also irrational but it happened. There is no way to solve that. Panics happen and bubbles too, and in the meantime, very long term investments tend to grow (in average), as long as the economy works as expected (improving in average, long-term). Of course, catastrophes are not impossible (the Black Death, the French Revolution, World Wars...).
  - baal80spam 3mo ago
    > My reading might be wrong, but since 2020 there is no bad news that seems to faze the market by an iota. Or maybe - because it's the bad news that sells - there is much more of the good (or neutral) news that outvalue the bad news, that is just unknown to you?
- WJW 3mo ago
  It's almost the inverse of a cruel reality? Just stick it all in low cost index funds and go to the beach. You'll do as good or better than 99% of actively invested funds. That's not cruel at all, that's actually a pretty comfy reality.
- plomme 3mo ago
  This has been my investment philosophy as well, but I'm starting to realize that this is forgetting that "past performance does not guarantee future results". It only works when the index goes up, and I don't see any fundamental reason that should be true on the long term. I don't know of a better alternative though.
  - redwood 3mo ago
    Well the fundamental reason boils down to the idea that these companies that you're investing in employ a bunch of sophisticated professionals who wake up everyday aiming to grow the success of their businesses. In other words you're really investing in their potential. Compare that to for example something that's purely speculative like gold.. a useless piece of metal that just sits there. Buffett has really helped me see this difference
    - plomme 3mo ago
      Does it follow that the price of the index should go up in perpetuity because workers are motivated?
      - redwood 3mo ago
        I would expect the earnings and or growth of those companies to go up at the very least. Whether that translates to higher valuation for ownership shares in those companies is probably more a question of whether there's anything else more appealing out there to invest in. What's your take? What's more appealing?
        plomme 3mo ago
        I wish I knew! My money is still mostly in index funds and real estate. My sneaking doubt is whether the index can keep growing, because doesn’t that depend on infinite growth based ultimately on mostly finite natural resources, manpower, and land? But maybe we can always extract and produce more with new technology, and that manpower may get leveraged or extended by AI and robotics. Or maybe just financial magic beyond my understanding. Regardless I have been thinking a lot about what aging and declining populations might do to the economy in the medium-long term. I only know that I know nothing.
abc123abc123 3mo ago
You do, your children will live. Or, if you don't have children, your non-profit does not. I wish people would stop using this "we all die" slogan when it comes to their financial lives, and think a bit about the people who will be left after you retire.
- cindyllm 3mo ago
  [dead]
- inigyou 3mo ago
  I hate that having children is apparently the only purpose anyone has in life because I don't have children or a purpose in life and I'm pretty sure I would be even more depressed if I had children.
  - abc123abc123 3mo ago
    Note that I am not arguing that children is the purpose in life for everyone. For some it is, for others it is not. I believe that the majority of child bearers are "on program" driven by their biological imperatives. I believe that among the voluntary non-children people (of which I am one) there's plenty of values, goals, hopes and aspirations. In fact, for me, life is so rich that that is why I do not want children. There's billions of people all over the planet to carry the burden for me. Sure, if we were in an extinction scenario, I might reconsider, but we're far, far from it. So while I continue to enjoy life and full freedom, I'll let the people who are "on program" deal with the poop and worry for their offspring. That does not, however, mean I do not have to care about people. If anything, the fact that I do not have children, gives me the opportunity to care _more_ about people in general, than the people who are busy with raising children. Hence my idea about a non-profit, that will outlast me for some time.
    - inigyou 3mo ago
      Yeah, I used to feel life was rich too, and then I very suddenly became aware that it was finite and anything I could possibly do is just leading towards the same fixed point ending. I think mentally healthy humans have ways to avoid thinking about this.
nerdralph 3mo ago
Instead of cash, I like debt like mortgage funds. High single-digit returns with low volatility.
AnimalMuppet 3mo ago
If short term is high volatility and the medium term is too unstable, why is the VIX as low as it is? Am I missing something, or is the VIX mispriced?
CuriouslyC 3mo ago
Holding cash is a terrible strategy, the US dollar is going to get devalued by the end of the Orange Troll's term due to money printing/bond market repression/trade hijinks. We're in the pump of a pump and dump by the richest people in the world, who are trying to engineer exit liquidity in a way that doesn't immediately crash the market. They're going to cycle their holdings several times before things go to shit to avoid the brunt of it, we'll be able to see the wave on the horizon. I don't think just the SpaceX dumping will trigger a broader loss of confidence, but Anthropic + OpenAI dumping post IPO will ripple through to the neoclouds, which will ripple through to the semis, and probably tank things. In the short term (pre AI IPO) the market is volatile but pretty safe IMO, so just trade techically. In the medium-long term I'd hold a mix of mining/industrial equipment/etc stocks in Euros, and Chinese AI/renewables stocks in Renminbi. The Euro stocks are safer and a significant portion of their increased valuation will come from currency shifts, and the Chinese stocks are riskier but have a big upside and are likely to benefit from Renminbi revaluation as China onshores "finishing"/final assembly of products (which much of the world is going to push them to do).
bryanlarsen 3mo ago
> always win That's not true. It's only been true on American stock markets, and we only have ~100 years of data. Many other major stock markets in the world have had ~20 year periods where you would have been better off with your money in bonds than in stocks. I think the average world stock market is a much better predictor of American stock markets over the next 100 years than past performance of American stock markets. The last 100 years have been exceptional for America vs the world -- it seems very likely that the next 100 years won't be. The most extreme example is Germany 1914. If you would have invested in the German stock market in 1914 it would have taken you 100 years to break even. I'm not saying that American stock markets will be that bad, but it's an example that disproves the thesis that long term stock markets always win.

by sph 3mo ago

cmiles8 3mo ago

Good advice. Ironically most long term folks that just buy low cost index funds and take a nap outperform most of the market stressing out daily on their next move. That’s the cruel reality of investing. When you factor in the opportunity cost of all that stress and managing an active portfolio the percentage of successful active portfolio managers likely falls down to single digits. Invest early, invest consistently and often in up or down markets, and the math says you will do very well.

sph 3mo ago
Though I keep wondering if the ‘invest consistently whether the market goes up or down’ defeats the point of a stock market in the first place. People effectively keep throwing money at mediocre or failing endeavours, which magnifies any structural problem, and everything seems to keep going up whether it’s good news or bad news, until the bottom falls out. My reading might be wrong, but since 2020 there is no bad news that seems to faze the market by an iota.
- blitzar 3mo ago
  Always bet on black at the roulette table, over and over and over again.
- pfortuny 3mo ago
  Well, that is what markets do: behave. Rationally or not. The 1929 panic was also irrational but it happened. There is no way to solve that. Panics happen and bubbles too, and in the meantime, very long term investments tend to grow (in average), as long as the economy works as expected (improving in average, long-term). Of course, catastrophes are not impossible (the Black Death, the French Revolution, World Wars...).
- baal80spam 3mo ago
  > My reading might be wrong, but since 2020 there is no bad news that seems to faze the market by an iota. Or maybe - because it's the bad news that sells - there is much more of the good (or neutral) news that outvalue the bad news, that is just unknown to you?
WJW 3mo ago
It's almost the inverse of a cruel reality? Just stick it all in low cost index funds and go to the beach. You'll do as good or better than 99% of actively invested funds. That's not cruel at all, that's actually a pretty comfy reality.
plomme 3mo ago
This has been my investment philosophy as well, but I'm starting to realize that this is forgetting that "past performance does not guarantee future results". It only works when the index goes up, and I don't see any fundamental reason that should be true on the long term. I don't know of a better alternative though.
- redwood 3mo ago
  Well the fundamental reason boils down to the idea that these companies that you're investing in employ a bunch of sophisticated professionals who wake up everyday aiming to grow the success of their businesses. In other words you're really investing in their potential. Compare that to for example something that's purely speculative like gold.. a useless piece of metal that just sits there. Buffett has really helped me see this difference
  - plomme 3mo ago
    Does it follow that the price of the index should go up in perpetuity because workers are motivated?
    - redwood 3mo ago
      I would expect the earnings and or growth of those companies to go up at the very least. Whether that translates to higher valuation for ownership shares in those companies is probably more a question of whether there's anything else more appealing out there to invest in. What's your take? What's more appealing?
      - plomme 3mo ago
        I wish I knew! My money is still mostly in index funds and real estate. My sneaking doubt is whether the index can keep growing, because doesn’t that depend on infinite growth based ultimately on mostly finite natural resources, manpower, and land? But maybe we can always extract and produce more with new technology, and that manpower may get leveraged or extended by AI and robotics. Or maybe just financial magic beyond my understanding. Regardless I have been thinking a lot about what aging and declining populations might do to the economy in the medium-long term. I only know that I know nothing.

abc123abc123 3mo ago

You do, your children will live. Or, if you don't have children, your non-profit does not. I wish people would stop using this "we all die" slogan when it comes to their financial lives, and think a bit about the people who will be left after you retire.

cindyllm 3mo ago
[dead]
inigyou 3mo ago
I hate that having children is apparently the only purpose anyone has in life because I don't have children or a purpose in life and I'm pretty sure I would be even more depressed if I had children.
- abc123abc123 3mo ago
  Note that I am not arguing that children is the purpose in life for everyone. For some it is, for others it is not. I believe that the majority of child bearers are "on program" driven by their biological imperatives. I believe that among the voluntary non-children people (of which I am one) there's plenty of values, goals, hopes and aspirations. In fact, for me, life is so rich that that is why I do not want children. There's billions of people all over the planet to carry the burden for me. Sure, if we were in an extinction scenario, I might reconsider, but we're far, far from it. So while I continue to enjoy life and full freedom, I'll let the people who are "on program" deal with the poop and worry for their offspring. That does not, however, mean I do not have to care about people. If anything, the fact that I do not have children, gives me the opportunity to care _more_ about people in general, than the people who are busy with raising children. Hence my idea about a non-profit, that will outlast me for some time.
  - inigyou 3mo ago
    Yeah, I used to feel life was rich too, and then I very suddenly became aware that it was finite and anything I could possibly do is just leading towards the same fixed point ending. I think mentally healthy humans have ways to avoid thinking about this.

nerdralph 3mo ago

Instead of cash, I like debt like mortgage funds. High single-digit returns with low volatility.

AnimalMuppet 3mo ago

If short term is high volatility and the medium term is too unstable, why is the VIX as low as it is? Am I missing something, or is the VIX mispriced?

CuriouslyC 3mo ago

Holding cash is a terrible strategy, the US dollar is going to get devalued by the end of the Orange Troll's term due to money printing/bond market repression/trade hijinks. We're in the pump of a pump and dump by the richest people in the world, who are trying to engineer exit liquidity in a way that doesn't immediately crash the market. They're going to cycle their holdings several times before things go to shit to avoid the brunt of it, we'll be able to see the wave on the horizon. I don't think just the SpaceX dumping will trigger a broader loss of confidence, but Anthropic + OpenAI dumping post IPO will ripple through to the neoclouds, which will ripple through to the semis, and probably tank things. In the short term (pre AI IPO) the market is volatile but pretty safe IMO, so just trade techically. In the medium-long term I'd hold a mix of mining/industrial equipment/etc stocks in Euros, and Chinese AI/renewables stocks in Renminbi. The Euro stocks are safer and a significant portion of their increased valuation will come from currency shifts, and the Chinese stocks are riskier but have a big upside and are likely to benefit from Renminbi revaluation as China onshores "finishing"/final assembly of products (which much of the world is going to push them to do).

bryanlarsen 3mo ago

> always win That's not true. It's only been true on American stock markets, and we only have ~100 years of data. Many other major stock markets in the world have had ~20 year periods where you would have been better off with your money in bonds than in stocks. I think the average world stock market is a much better predictor of American stock markets over the next 100 years than past performance of American stock markets. The last 100 years have been exceptional for America vs the world -- it seems very likely that the next 100 years won't be. The most extreme example is Germany 1914. If you would have invested in the German stock market in 1914 it would have taken you 100 years to break even. I'm not saying that American stock markets will be that bad, but it's an example that disproves the thesis that long term stock markets always win.