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 Even the poor dummies investing on the eve of the Great Depression would have seen ~8% average annual rate of return over a 30-year time window. Speculating about the imminent global economic crisis is fun, but it probably shouldn't stop anyone from contributing to long-term investments. Assuming you can handle becoming a member of the parasitic capitalist class.
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Mar 8, 2017 05:41
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Mozi posted:Well, my problem is that I don't believe that to be true. If you don't think that equities will have a positive return on a 30 year timescale, where are you putting your money? Real estate? Dried food? Asbestos mines?
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Mar 8, 2017 05:44
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Squalid posted:I recommend you get a copy of the book The Intelligent Investor by Benjamin Graham, your gut feelings are not your friend. You will never successfully time the market. Best advice and best book on the subject.
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Mar 8, 2017 05:48
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Dawncloack posted:A buttery pastry explained my point perfectly, that's what I meant. Am I wrong in thinking that it means trade is on the downswing? I seem to remember someone in this thread commenting that the shipping line in which they worked was going from global to regional. The problem with the shipping index is that it can just easily be predicated on an oversupply of shipping as it is a lack of demand. If shipping companies increase capacity because they overestimate a demand increase then the index goes down, even if demand is still at healthy levels. That it's lower than 2008 in isolation doesn't really tell me anything, nor that its been hovering around the same level since 2014. However, if we'd talk signs of the economy not being in great condition, you could look at other at other indicators such as growing household debt in the recovering northern economies, FIRE increasing its share of GDP in every recovering economy and financial markets rapidly outpacing economic growth. That's not even getting into political discontent or the parts of the West that never really recovered like Spain or Greece were youth unemployment is still at record highs due to the complete failure of the Eurogroup's and IMF's structural reforms. Not that any of this helps us accurately predict a crash. I'm actually not as worried this year as I was last. Trump is going to keep being a horrible poo poo on immigration but when it comes to the economy all that the republican party seems to be willing to let through is the policies that benefit them. Tariffs would probably be pretty horrible but on the other hand tax cuts and financial de-regulation will push the date of the crash forward. Le Pen is another concern but that's not yet in a couple of months. Uber is a legitimate worry as the market has been getting increasingly exposed in the last funding runs but who knows. Proud Christian Mom posted:Its almost like gambling on the market isnt a real long term retirement solution Incremental long-term investment into index funds isn't gambling. You could lose everything, but in that situation the United States and the world as we know it will no longer exist in which case you won't need the money anyway. Assuming that the world doesn't collapse (or full communism is around the corner) those savings are going to be the difference between you having a comfortable living or ending up in the streets.
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Mar 8, 2017 06:25
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MiddleOne posted:The problem with the shipping index is that it can just easily be predicated on an oversupply of shipping as it is a lack of demand. If shipping companies increase capacity because they overestimate a demand increase then the index goes down, even if demand is still at healthy levels. That it's lower than 2008 in isolation doesn't really tell me anything, Complicating matters further, shipyard overcapacity reinforces vessel overcapacity. When demand for new vessels falls, shipyards drop new build prices to keep operating and then owners keep buying!
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Mar 8, 2017 06:41
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Don't get personal investing advice from D&D. And sucks to be anyone out of the markets anytime since the GFC. Even a broad market index like the S&P500 has been averaging 15% annually since then.
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Mar 8, 2017 07:30
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shrike82 posted:Don't get personal investing advice from D&D. Are you giving investing advice in d&d
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Mar 8, 2017 07:37
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Past performance yada yada. Just observing that we've had posts/threads every year since 08 about how this time is the big one. I still remember peak oil being something seriously discussed here.
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Mar 8, 2017 07:41
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shrike82 posted:Past performance yada yada. Market prediction is a bitch as it turns out. General savings advice is all fine and dandy but anytime someone starts talking about timing stuff you better know that you're playing with fire if you listen.
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Mar 8, 2017 07:46
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Twerk from Home posted:If you don't think that equities will have a positive return on a 30 year timescale, where are you putting your money? Real estate? Dried food? Asbestos mines? Granted, the question is if you have a 30 year time scale, it is now a good time to invest? It is a difficult question to answer, it is possible we could see another run-up as we had after the election of Trump or it could be significantly less positive. I know several once red hot housing markets are starting to show some signs of slowing, and unemployment data is still unclear (February data is coming out on the 10th). However, there is little sign of an immediate crash either. Moreover, There is certainly a logic with the way the market has acted since November 8th (and it clearly started with the election itself). Trump almost certainly was going to regulate both financial markets and most industries he could get a hand on. How long that will last though is more debatable. Another big issue that hasn't been addressed, is it is very difficult to predict what will happen after such an extended period of constant low to zero interest rates. Nothing like that has really happened before to the same degree and we are indeed in uncharted territory. Ardennes fucked around with this message at 12:13 on Mar 8, 2017 |
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Mar 8, 2017 11:46
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Yes, time in market matters a lot more than market timing. There's a shitload of literature on this. An example is a study finding that the vast majority of the S&P's gains over 20 year time periods are concentrated in about a percent of the total trading days.
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Mar 8, 2017 12:54
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Of course all this analysis assumes you actually do have a thirty-year window in all conditions: in other words your job is recession-proof or you have sufficient assets to live off of for a few years plus weather unexpected catastrophes without having to dip into your retirement fund and liquidate the equities therein at firesale prices at the bottom of the market. In other words, not most people. Which is why putting everyone's retirement in the stock market is just a wealth transfer from the poor, who can only afford to buy in the good times but become insolvent and fall out of the market in a crash to the very rich who can afford to stay in the market and buy up everyone's life savings at a bargain.
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Mar 8, 2017 15:44
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VitalSigns posted:Of course all this analysis assumes you actually do have a thirty-year window in all conditions: in other words your job is recession-proof or you have sufficient assets to live off of for a few years plus weather unexpected catastrophes without having to dip into your retirement fund and liquidate the equities therein at firesale prices at the bottom of the market. In other words, not most people. It's more plausible if you live a country with a less hosed-up healthcare and unemployment insurance situation than the US.
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Mar 8, 2017 15:51
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Honestly they should just increase Social Security payments up to a guaranteed living wage (including poor people who didn't make a lot over their lives) so that retirement planning is about making your senior years nicer rather than desperately trying to avoid dying in poverty.
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Mar 8, 2017 15:56
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readingatwork posted:Honestly they should just increase Social Security payments up to a guaranteed living wage so that retirement planning is about making your senior years nicer rather than desperately trying to avoid dying in poverty. That was the intention of most baseline state pension system's when they were originally instituted. Living wage + a bonus based on contributions. It's just that since payouts weren't adjusted for inflation but rather on budget decisions when the 80's ended the bottom-line largely stopped being increased. Eventually, this lead to the situation of today were poverty amongst the elderly is increasing rapdily in countries like Sweden. MiddleOne fucked around with this message at 16:04 on Mar 8, 2017 |
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Mar 8, 2017 16:00
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Twerk from Home posted:If you don't think that equities will have a positive return on a 30 year timescale, where are you putting your money? Real estate? Dried food? Asbestos mines? I think the world in 30 years is going to look massively different and not much of what we're talking about now will have any relevance. Not really something you can plan for an investment strategy. Mainly to protect against a near-term correction I've moved some money out of large and small cap index funds into money market accounts just to have a safety net, but long-term, I think it's more about building up your knowledge and experience to increase self-reliance or community-based sufficiency than planning out an investment strategy.
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Mar 8, 2017 17:13
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you can and will continue to be able to become rich by investing if you have the correct ratio of time to assets. For most people, the correct investing strategy (which is a mix of stock ETF and bonds), does not lead to being rich in their lifetime because they have too little cash. Sadly, there is no investment strategy that will get you predictable, higher returns. And if you think you can time the market or follow advice X or strategy Y or learn about metaphysical chart reading, you are really just a sucker for either the hope industry, or for the big players. As a single investor, you can't play the game and win with pretty much the same mechanic as playing at a casino. Yeah you could walk out with some money, but in the long run they own you. All you can really do is own part of the economic growth. Which is cool and good, but doesn't help if you only have 10k in cash. something something policy intervention necessary
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Mar 8, 2017 18:15
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caps on caps on caps posted:you can and will continue to be able to become rich by investing if you have the correct ratio of time to assets. Savings doesn't in any way fix the problem of wealth inequality, it only alleviates your own problems by making you yourself part of the problem.
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Mar 8, 2017 18:20
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the trump tutelage posted:Aren't near-term corrections only an issue if you're an aspiring day trader? Anyone who's worried that their timing is bad is probably motivated by the wrong ideas. I get what you're saying, but if we're really entering a period where climate change and automation will be drastically changing the face of society and the economy, we can't rely on the 20th century as a great historical model. Plus, if you sold right before the '08 crash and then bought at the bottom, you'd have probably made up for decades of saving.
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Mar 8, 2017 19:07
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call to action posted:I get what you're saying, but if we're really entering a period where climate change and automation will be drastically changing the face of society and the economy, we can't rely on the 20th century as a great historical model. Plus, if you sold right before the '08 crash and then bought at the bottom, you'd have probably made up for decades of saving. That could be said about any century. Also no you wouldn't, because like most of America you'd be drowning in interest payments while being fired from work. Even if you weren't timing downturns is in no way easier than timing busts. Amazingly this thread is somehow despite all the stupidity still higher in financial literacy than the average middle class neighborhood.
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Mar 8, 2017 19:10
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Um, no, you can't talk about labor eliminating automation and anthropogenic climate change in any century. And even though it's not likely you'd be able to do it accurately, the point stands that if you timed the market properly, you would have made *a lot* of money. And we're all well aware what "financial literacy" means in America - maxing Roth IRAs first, then maxing 401(k) deferrals, use low expense ratio funds that are broadly diversified, whatever. Christ, you sound just like a fresh Econ grad trying to explain "ECON 101, GEEZ" to a socialist or something. As someone who enjoys reading their history, the blatant myopia of "look, PROOF that the stock market won't fail!!" using a graph that doesn't even cover a full human lifetime is just kinda funny.
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Mar 8, 2017 19:15
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Because clearly gambling on the end of the world as we know it is the rational choice. Like you wouldn't have bigger problems than losing your savings if things actually came to that point.
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Mar 8, 2017 19:19
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If ifs and buts, etc. And no to climate change and automation, but every generation has had relatively monumental change facing it. I'm sure there were a lot of firekeepers wringing their hands the first time Ogg discovered the science of rubbing sticks together.
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Mar 8, 2017 19:19
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MiddleOne posted:Because clearly gambling on the end of the world as we know it is the rational choice. Like you wouldn't have bigger problems than losing your savings if things actually came to that point. Who said anything about the end of the world? More likely it's going to be a slow, painful reversion to the global mean - and that's a very, very long fall. the trump tutelage posted:If ifs and buts, etc. And yet, the only data anyone can really show me is post-WW I through present, as if that's somehow a representative period for all of human history.
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Mar 8, 2017 19:20
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call to action posted:Who said anything about the end of the world? More likely it's going to be a slow, painful reversion to the global mean - and that's a very, very long fall. And in that situation you are better off having no capital how again...? Seriously did you stumble out of the climate thread? That's were doomsaying goes. call to action posted:And yet, the only data anyone can really show me is post-WW I through present, as if that's somehow a representative period for all of human history. Once again, you're making an argument predicated on the end of modern civilization as we know it. Or you know, the end of everything as we know it. I'll repeat myself, and in that situation you are better off having no capital how again...?
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Mar 8, 2017 19:26
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MiddleOne posted:And in that situation you are better off having no capital how again...? The smart people in this scenario got out of the market and parked their capital in chickens.
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Mar 8, 2017 20:44
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MiddleOne posted:Once again, you're making an argument predicated on the end of modern civilization as we know it. Or you know, the end of everything as we know it. I'll repeat myself, and in that situation you are better off having no capital how again...? I think you may be afflicted with a disease that turns the phrase "grinding, slow decline" into "global apocalypse now".
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Mar 8, 2017 20:56
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VitalSigns posted:Of course all this analysis assumes you actually do have a thirty-year window in all conditions: in other words your job is recession-proof or you have sufficient assets to live off of for a few years plus weather unexpected catastrophes without having to dip into your retirement fund and liquidate the equities therein at firesale prices at the bottom of the market. In other words, not most people. Yep exactly. Unless you have hundreds of thousands of dollars (ie wealthy) to invest, it doesn't make sense for the majority of people since they lack the incomes to make investments in retirement accounts meaningful. Why let the volatility of the market determine retirement outcomes? 3/4 of retirees depend on SS as the primary source of income, so let's expand that and address the insecurities our seniors have about retirement. I'm not keen on being proud of a country that doesn't take care of older generations who worked to provide the infrastructure that allow younger generations to enjoy a better quality of life (yes, yes I know "gently caress boomers" and we have a lot of work to do still). Instead of squeezing money from working Americans who don't even have the income to save and put it in some 401k or wahtever, you give them more money to spend in the economy (take away healthcare costs for an even bigger boon). Buying goods and services results in the incentive to produce more and thus for investors to invest (currently the wealthy are sinking their money in toxic high risk "bets" that produce nothing). That's why we try to encourage consumption. Consumer behavior of average Americans is what drives the economy, if they are buying GDP expands; if they aren't, it doesn't. That's why it's important to make sure workers have high income and have lots of government services, paid for by the rich.
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Mar 8, 2017 23:16
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Confounding Factor posted:Yep exactly. Unless you have hundreds of thousands of dollars (ie wealthy) to invest, it doesn't make sense for the majority of people since they lack the incomes to make investments in retirement accounts meaningful. Why let the volatility of the market determine retirement outcomes? 3/4 of retirees depend on SS as the primary source of income, so let's expand that and address the insecurities our seniors have about retirement. I'm not keen on being proud of a country that doesn't take care of older generations who worked to provide the infrastructure that allow younger generations to enjoy a better quality of life (yes, yes I know "gently caress boomers" and we have a lot of work to do still). What is this demand-side BS? I kid, I kid. But we're kind of stuck in a political climate that values the supply-side above all else, even above the health of the suppliers.
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Mar 14, 2017 16:17
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anonumos posted:What is this demand-side BS? In only slightly-unrelated news: Time for another Federal Reserve rate bump. The text of this article is so... wavery? Its tone is like "The decision was made on expectations that X and Y, in spite of there not being much evidence of X or Y."
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Mar 15, 2017 22:01
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The labor market is tight enough to raise interest rates, but not wages. Why'd that be?
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Mar 15, 2017 22:24
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call to action posted:The labor market is tight enough to raise interest rates, but not wages. Why'd that be? The federal reserve targets employment, not wages. Wage growth is caused by productivity and technological improvement, not monetary policy
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Mar 15, 2017 22:55
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icantfindaname posted:Wage growth is caused by productivity and technological improvement
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Mar 15, 2017 22:58
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Wage growth is caused by better bargaining positions Guns at capitalists necks, bombs thrown in haymarket squares: deffo good bargaining position for workers who don't do that In the last 40 years, no good bargaining positions for workers
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Mar 15, 2017 22:58
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icantfindaname posted:The federal reserve targets employment, not wages. Wage growth is caused by productivity and technological improvement, not monetary policy Oh wow and here I thought that affecting employment would affect wages, silly me
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Mar 15, 2017 23:02
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call to action posted:Oh wow and here I thought that affecting employment would affect wages, silly me Is there any recent evidence that this is the case?
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Mar 15, 2017 23:08
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call to action posted:Oh wow and here I thought that affecting employment would affect wages, silly me Going beyond full employment causes wages to rise, but the purchasing power of those wages doesn't necessarily rise. There will just be inflation instead unless there is productivity growth
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Mar 15, 2017 23:11
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Wage growth requires sunlight, carbon dioxide and fertile soil
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Mar 15, 2017 23:12
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icantfindaname posted:Going beyond full employment causes wages to rise, but the purchasing power of those wages doesn't necessarily rise. There will just be inflation instead unless there is productivity growth Yeah I did Econ 101 too, it was definitely a great course in "how to explain why we can't help workers" Remember when people could buy a house with a job and a high school education? In reality, that didn't happen due to inflation
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Mar 15, 2017 23:16
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 employers hire workers when having the worker will earn them more money than not having the worker wages settle at the lowest rate at which an employer anticipates an employee with the desired attributes will be willing to sell their labor to the employer Wages have no real correlation to an employee's productivity or how much value they bring to the business. Just as the price of consumer goods is not really correlated with the usefulness of those goods.
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Mar 15, 2017 23:18
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