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OK, then what actually happened? I'm curious, just dropping in and posting that another explanation is wrong isn't super helpful.
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May 14, 2022 17:59
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Ramrod Hotshot posted:Do you have an account there? I went to two credit unions to do it today and they told me I had to be a member. Maybe at a regular bank it doesn't matter? This is from awhile back and long moot now, but just to answer in case it helps anyone else - yes I do have an account there (BofA), although they didn't actually ask if I was a customer - they just filled out the form.
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May 14, 2022 18:32
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moana posted:OK, then what actually happened? I'm curious, just dropping in and posting that another explanation is wrong isn't super helpful. https://www.bloomberg.com/opinion/articles/2022-05-10/another-algorithmic-stablecoin-isn-t like most weird meme and crypto events, matt levin has a pretty good explainer https://www.investopedia.com/terms/d/deathspiral.asp a general explanation of the phenomena in equities as to why the death spiral kicked off now, it could be at the machination of someone looking to profit (though it being black rock is a stretch), but it could also just have been the general unease sweeping all the markets this week leading people to look for the exits on their crypto. people weren't selling terra for luna, or luna for terra, they were just selling both simultaneously for dollars. that broke the peg, and on this kind of scheme once the peg is broken in a panicky environment, it's almost inevitable that the whole thing goes to zero. allegedly the exact same thing happened to the founders previous algo stable coin. of course it's easier for folks who have lost everything in the span of a few days to tell themselves that they were a victim of powerful and monolithic corporations, and not that they went in on a financial instrument that they didn't understand which then exploded in their face
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May 14, 2022 19:05
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moana posted:OK, then what actually happened? I'm curious, just dropping in and posting that another explanation is wrong isn't super helpful. Not an expert but I've been reading the GBS crypto thread: They had two coins: Terra, which was "pegged" to a fixed value, and Luna, which could fluctuate. The idea was they could always use 1 Terra to buy/sell $1 of Luna. If Terra's value got too high, they would automatically mint more to keep it in line. If the value dropped, they would burn coins to make it worth more. This worked only as long as Luna's number went up. A crash in Luna* made everyone remember why Actual Finance calls this model "Death Spiral Funding." IOW, they reinvented a thing that always fails, but added the words "algorithm" and "Blockchain" and made a ton of money from willing marks until the music stopped. *Depending on your level of  this crash came from (((old money trying to bring them down))), the founders cashing out, or crypto crashing along with the stock market.e:f;b
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May 14, 2022 19:05
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moana posted:OK, then what actually happened? I'm curious, just dropping in and posting that another explanation is wrong isn't super helpful. So posting 4chan conspiracy poo poo with zero supporting evidence is totally fine, and anyone who objects has to post a detailed analysis of why, exactly, the 4chan conspiracy poo poo is wrong despite, again, zero supporting evidence in the original post? What a cool way to run a forum!
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May 14, 2022 19:16
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I think the theme here is all Crypyo is really loving stupid.
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May 14, 2022 19:22
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Duckman2008 posted:I think the theme here is all Crypyo is really loving stupid. Oh, 100%. It is funny sometimes, just not when normal people are getting scammed out of their retirement/rent money. That part feels pretty bad.
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May 14, 2022 19:28
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moana posted:OK, then what actually happened? I'm curious, just dropping in and posting that another explanation is wrong isn't super helpful.
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May 14, 2022 20:30
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I have a kind of an investing x housing question. (I asked this in the Canadian investing thread as there are some Canadian specific details to mortgages, but I feel this thread probably has more traffic. I'll try to clarify at some points to make the question more generic) At what point could it make sense to take some portion of money out of your investment account and use it to pay down/refinance mortgage? For a very long time the low interest rate environment and bull market made investing I think the obvious winner without much thought, but with interest rates rising and the market looking very choppy, it's not so clear and maybe the question now should involve a bit of back of the envelope math to figure out the right answer. On one hand if one takes money out of the market at this moment they risk missing out on the upside when the bull market returns. On the other hand, it is possible that the savings in cash flow from reducing the size of the mortgage in a refinance could exceed the gains from if the cash had been left in the market should the bear market continue. Additionally as interest rates rise, one might want that extra cash flow that comes with lower payments for peace of mind. In my situation in Canada, if the cash is in a TFSA, a tax free savings vehicle, then there's no tax implications from selling equities and withdrawing it. There's penalties if one refinances, but not so if the mortgage has reached end of its term (this is the situation I'm in). (A further note here that in Canada, mortgage terms end every 5 years. We can't lock in a rate for 30 years, and so we get more penalty-free refinance opportunities). Just looking at TD's mortgage calculator right now, if I were to take $20k out of my TFSA and reduce the size of my loan by $20k, I'd save ~$100 a month on payments. So I suppose this is in a way converting that $20k into $1200 a year of extra cash flow that doesn't go to the bank ($6000 over the 5 year term of the mortgage). If that $20k was left in the market, it's certainly not terribly clear if we're going to see a positive return this year, but I'd say the odds of positive return increase over the next four years. A compound interest rate calculator I found online suggests that for 20k to grow to 26k over five years, I'd need a rate of return of 5.25%. So is the question of whether investing is better whether one wants to bet that the S&P500 returns on average more than 5.25% for the next five years? Or is my math wrong and there's a better approach to how one should evaluate this? I'm not sure what sort of math I should do to compare these concepts directly to see which comes ahead in return. Femtosecond fucked around with this message at 20:58 on May 14, 2022 |
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May 14, 2022 20:53
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Femtosecond posted:I have a kind of an investing x housing question. Make a spreadsheet.
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May 14, 2022 21:00
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Femtosecond posted:At what point could it make sense to take some portion of money out of your investment account and use it to pay down/refinance mortgage? It makes sense, numerically, when the expected return on the investment, relative to its risk level, is worse than the return on paying down the loan early. Some examples (all figures unadjusted for inflation): A savings account currently pays 0.6% with no risk. For US citizens Ibonds pay equal to inflation (9% this year but probably less next year) with no risk (can't actually lose money) A 10yr treasury bill yields 2.9% with some risk because its market value can fall due to changes in interest rates. You might lose 15% of your money in one year with this instrument. The S&P 500 yields the amount of profit its corporations make (~4% currently) plus the avg amount of growth of those profits (~GDP growth in the countries they earn profits from, so about 8% currently due to inflation), for an expected return of about 12% currently. But you might lose 60% of your money in one year. Paying off my 2.5% APR car loan gives a return of...2.5%, with zero risk. So it clearly beats a savings account, and is competitive with treasuries, but on a long time horizon is it unlikely to beat stocks. It might be worth it if I am pulling money out of treasuries to pay the loan, but generally this is only ever viable for higher interest debt like credit cards or student loans. There are non-math reasons to avoid doing this though, like not getting into the habit of raiding your retirement funds.
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May 14, 2022 21:14
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Eyes Only posted:It makes sense, numerically, when the expected return on the investment, relative to its risk level, is worse than the return on paying down the loan early. I'd heard of this approach of thinking about it (and also the note about treasuries is very relevant too). This makes sense to me. With the mortgage you would be paying yeah let's say 2.5% on that 20k, but if you pay it off in a lump sum, now you're not, so there's your return on investment. This is the way that I'd looked at this in the past and I'd always kept the mortgage as is and dumped everything into investing. It has always seemed like in the long time horizon the S&P500 was going to be doing better than 2.5%. With this framing it certainly seems that paying down mortgage is the weaker investment. The approach I sketched out in my earlier post isn't this, and that's why I wanted to post about it because I was just fooling around with pen and paper and I didn't know if my math was misguided or what. I expected a slam dunk outcome that investing in equities was still better, and my back of the envelope math didn't feel like that, so I figured "ahh I've messed this up somehow and am looking at this wrong." Femtosecond fucked around with this message at 23:01 on May 14, 2022 |
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May 14, 2022 22:54
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Loucks posted:So posting 4chan conspiracy poo poo with zero supporting evidence is totally fine, and anyone who objects has to post a detailed analysis of why, exactly, the 4chan conspiracy poo poo is wrong despite, again, zero supporting evidence in the original post? What a cool way to run a forum! Since I posted the reddit snippet and then went away, I feel like I ought to weigh in here. I'm sorry for posting what was basically false accusations if that led anyone to think that an image of a reddit post was credible. I posted a screenshot of a Reddit post of a rumor which I explicitly declaimed when I posted it as "a thing going around" and no more than that. All three parties have publicly denied it: https://www.investing.com/news/cryptocurrency-news/gemini-blackrock-and-citadel-publicly-deny-luna-manipulation-2823312 So it's 100% bullshit. My intention when posting that though was to highlight the entirely plausible market manipulation described in that post (irrespective of the actual identities involved), because... well, because it's loving hilarious? And tragic too, yes, but jesus christ, people are pouring millions, even billions of real world money into an ongoing series of horseshit schemes, and the only credibility of these schemes is that they're "crypto" and as we can all tell from television commercials these days, "crypto" is HOT, because hollywood actors and NBA players say so! And because there's a a Big Named Guy who r/wallstreet can totally trust, for serious guys! These are private individuals creating novel crypto out of wholecloth and then making big public spectacles intended to show how this time, it's all very secure and good, because of complex reasons and backing assets and Bitcoin is involved somehow (Kwon was apparently accumulating Bitcoin as an asset to back Luna?) But actually instead of trusting the magic trustiness of Blockchain, you're just trusting that Guy, who - if he wasn't totally above board and super straight and narrow - can absolutely engage in trades and loans that would result in billion-dollar paychecks for himself or counterparties at the expense of the "investors" who bought in. Or maybe even just be tricked, because poo poo man, people make mistakes, you know? Anyone who is willing to stake millions of his own money on a ridiculous experiment like this Luna thing is either too dumb to be trusted at best, or is intentionally trying to scam everyone at worst. Nobody in this thread should go anywhere near any of this poo poo, and the occasional high-profile explosion like this one is why. When you buy an individual stock of a company like Tesla, you are, to some degree, staking your money against the trustworthiness of Elon Musk, and where you should not; but Tesla also has billions of dollars of assets, it actually makes things and has patents and technologies etc. Most real companies are less tied to a cultish figure. And around here we advocate mutual funds, spreading your risk across even more people, industries, etc. So yeah. Sorry for posting a bullshit Reddit rumor, I hope nobody took it seriously, but LOL @ Luna and everyone who bought some of it at any point and thought they were being Very Smart. Don't touch the poop.
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May 14, 2022 23:06
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What you posted was fine. You said in the post that you didn’t know if it was true, and it was an interesting claim that nevertheless for several obvious reasons shouldn’t be taken super seriously absent additional proof. My objection is that responding with effectively “nah, that’s nonsense” is completely reasonable and shouldn’t require a lengthy and complete debunking with well-cited sources or whatever was expected there. It doesn’t actually matter and there’s no reason for anyone to get upset about any of this in any way, but that mod response was risible and deserved to be mocked.
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May 14, 2022 23:45
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Yeah, it just kind of irked me that the dude parachuted in and was dickish about it to Leperflesh, who is consistently such a good and helpful poster. I shouldn't have let it get to me.
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May 15, 2022 00:21
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moana posted:Yeah, it just kind of irked me that the dude parachuted in and was dickish about it to Leperflesh, who is consistently such a good and helpful poster. I shouldn't have let it get to me. I tried to offer the helpful alternative but it didn’t stand out. doingitwrong posted:I doubt that the conspiracy theory the Blackrock is taking down crypto is the accurate post. The explainer seems clearer and more plausible/backed up with sources. https://www.todayintabs.com/p/unstable?s=r Reposting because it’s great reading.
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May 15, 2022 01:00
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what is driving me nuts about my question is that I keep googling this question, finding all sorts of blog spam, and they always give some breezy answer without explaining the math, and I can never get the goddamn math to add up. eg. quote:Suppose you were considering making a $25,000 payment on your $200,000 mortgage with a 3% interest rate. Over the life of a 30-year loan, this would save you about $12,800. But in an investment account with an 8% annual return, that same $25,000 could earn you nearly $250,000 over 30 years. Absolutely it's easy enough with a compound interest calculator to see how 25k at 8% over 30 years becomes $250k. Sure fine. I absolutely cannot recreate their other claim, that cutting the mortgage by the same amount saves $12,800. If I look at the differences between a 200k and 175k mortgage, the difference in payments over 30 years is $37,800. How do they come up with $12,800? Edit: I suppose since part of that $37,800 not paid to the bank is principal and part is interest. So presumably only the 12,800 is the interest? I have no idea. So of course the overall thesis doesn't change, that an 8% investment is superior, but man I wish this dumb blog spam would show their math because obviously they're coming about this a totally different way than me.. Femtosecond fucked around with this message at 18:10 on May 15, 2022 |
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May 15, 2022 17:57
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Femtosecond posted:If I look at the differences between a 200k and 175k mortgage, the difference in payments over 30 years is $37,800. How do they come up with $12,800? You still have to pay the 25k. The difference between a 200k mortgage and a 175k mortgage + 25k down payment is $37,800 in payments - $25,000 down payment
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May 15, 2022 18:29
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I have no idea how they came up with 12,800. The real number is about 30,000. 31,367 to be exact if you make the lump payment during the first month of your mortgage. I'm pretty sure you just can’t take numbers from two mortgage amounts and subtract one from the other. With the 200k mortgage (plus lump 25k payment) even if your principal balance is 175k after the first month, for the next 24 years and change you’re still going to be making larger principal payments every month.
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May 15, 2022 21:07
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The calculator is telling you how much interest you save, not how much lower your overall accumulated payments are, because your overall accumulated payments include the principal and you're pre-paying part of the principal, not literally erasing it from the books. Another way to look at it is to see how much interest a $25k loan accumulates over 30 years:  The interest on the loan is about $13k so if you opt to pay that $25k in cash instead of borrowing it, you avoid paying about $13k in interest.
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May 16, 2022 17:45
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Leperflesh posted:wise words My buddy texted me a photo of an arena in LA now being called "crypto dot com" arena or whatever, and thought this was really good evidence that crypto is here to stay and is "the future" in some nebulous way. It's insane how otherwise smart and reasonable people are getting suckered into this poo poo. It just wreaks of another dot com bubble, it's just like a 1:1 comparison.
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May 16, 2022 17:52
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hobbez posted:My buddy texted me a photo of an arena in LA now being called "crypto dot com" arena or whatever, and thought this was really good evidence that crypto is here to stay and is "the future" in some nebulous way. It's insane how otherwise smart and reasonable people are getting suckered into this poo poo. Aren't you afraid you'll miss out on all these mad crypto gains? Crypto is so profitable they bought the pets.com stadium. Think about that. Think about what that means.
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May 16, 2022 18:00
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It likely means that after this generation's crypto crash, an analogue to chewy.com will be a viable and reasonable thing, in 20 years. E.g. the concept of cryptographically-generated/secured exchangeable tokens of some kind is likely here to stay; what is definitely not reliable is that this generation's crypto poo poo will survive, vs. some better, more timely successor.
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May 16, 2022 18:07
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If you bought Amazon you're a genius but pets.com and you're as rear end in a top hat. But could anyone really tell which was going where?
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May 16, 2022 18:08
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Xguard86 posted:If you bought Amazon you're a genius but pets.com and you're as rear end in a top hat. At least I could buy dogfood at pets.com, more then I could ever say for crypto.
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May 16, 2022 18:22
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Yeah at that time, Amazon was an online book seller, and that was a more viable use case because shipping books was cheaper and you didn't need to do it monthly. The big problem with a lot of the companies that imploded in the dot com bust wasn't that their basic idea was untenable, but because there wasn't the penetration of high-speed internet and comfort with online shopping nation/world-wide yet. People were skeptical of the safety of using a credit card online, a huge segment of the country was still using dial-up and another big chunk had no internet access at all, and people had not yet developed a habit of going to the internet as the first place for shopping for stuff. The situation with crypto isn't really analogous, because anonymous financial transactions are fundamentally a terrible idea, but I admit that some future implementation of blockchain (perhaps proof-of-stake rather than proof-of-work to avoid idiotic waste of electricity?) could find an application I can't anticipate that makes it a useful idea. And we're already at a point where people treat digital goods created by private corporations that can be taken away at any time as being worth money (see also: in-app purchases, gacha games, etc.) and maybe that's not going away ever? Another useful parallel might be the proliferation of marijuana companies. Maybe eventually it'll be legalized at the federal level. Does that mean that the specific grow/sale op you invested in will win out, vs. competitors? Or will Phillip Morris wind up winning and your investment goes to zero?  just because you think this is inevitable (and it may not be), doesn't mean you picked a winner, or that any of the current players will be winners.
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May 16, 2022 18:30
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Xguard86 posted:If you bought Amazon you're a genius but pets.com and you're as rear end in a top hat. IPET was a dumpster fire. AMZN was probably the bluest blue chip of online retailers, but even it was pretty hairy during the depths of the dot-com bust:  You had to be pretty farsighted to buy AMZN in 2000 or 2001, but by 2002 the true quality of Amazon was starting to reveal itself to those who were paying attention. (If you were dumb, like me, you thought even then that it was horribly overvalued and stayed far away from it.)
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May 16, 2022 18:55
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Agronox posted:IPET was a dumpster fire. AMZN was probably the bluest blue chip of online retailers, but even it was pretty hairy during the depths of the dot-com bust: Charles Stross wrote an article about why disintermediation was so powerful for Amazon: http://www.antipope.org/charlie/blog-static/2012/04/understanding-amazons-strategy.html
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May 16, 2022 19:00
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I just saw some folks talk about VTSAX having issues - still gotta follow posts back to get the details, but VTASX is a big chunk of my post-tax brokerage portfolio. I've already maxed my 401k/HSA/backdoor Roth for the year. Should I be tax loss harvesting from VTSAX into VBTLX? I stopped doing big long-term savings in post-tax a year or so ago - everything's gone into said 401k/HSA/backdoor Roths, so this would be a rebalance to increase my holdings in bonds. Been only around 8% in bonds for the last 7 or 8 years, I figure now's the time to take that to 10-12%. Or should I just let VTSAX sit and hold regardless?
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May 16, 2022 19:43
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MJP posted:I just saw some folks talk about VTSAX having issues - still gotta follow posts back to get the details, but VTASX is a big chunk of my post-tax brokerage portfolio. I've already maxed my 401k/HSA/backdoor Roth for the year. Should I be tax loss harvesting from VTSAX into VBTLX? I stopped doing big long-term savings in post-tax a year or so ago - everything's gone into said 401k/HSA/backdoor Roths, so this would be a rebalance to increase my holdings in bonds. Been only around 8% in bonds for the last 7 or 8 years, I figure now's the time to take that to 10-12%. I'm not aware of any issues with VTSAX. What are you concerned about?
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May 16, 2022 20:00
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CubicalSucrose posted:I'm not aware of any issues with VTSAX. What are you concerned about? I could well be overthinking the current market downturn. I'm going based off of Loucks' posts on 5/11 and 5/12, and Ersatz's posts on 5/12 as well. "Folks" being "two posters on something awful" is probably overthinking it. Should I even consider TLHing to rebalance from VTSAX to VBTLX? Or just continue contributing to VBTLX if and when I do put long-term money into post-tax?
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May 16, 2022 20:50
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Post-tax brokerages should not hold target date funds, but VTSAX is just a total market fund. What you might want to do is hold the ETF in your brokerage account instead. A mutual fund has both churn and pays out dividends. The churn is because the fund managers have to buy and sell shares in order to accommodate the growing (or, occasionally, shrinking) amount of money that depositors have invested in the fund, plus decisions by the fund manager to accumulate or sell off assets of the fund (and this applies to index funds as well, as stocks move on and off the index). The churn results in capital gains, which you have to pay cap gains tax on. Dividends are also paid out and you have to pay taxes on the dividends. An ETF does not avoid the dividend question but it does avoid the potential cap gains hits on churn. https://www.investopedia.com/articles/exchangetradedfunds/08/etf-mutual-fund-difference.asp#toc-etf-creation-and-redemption However I think you might be thinking of the big issue some investors got hit with for holding a Vanguard target-date fund which was essentially dissolved and exchanged for the same fund but admiral class shares; this resulted in a huge cap gains tax hit for everyone holding it in a brokerage account. https://www.cnbc.com/2022/03/15/vanguard-created-big-tax-bills-for-target-date-fund-investors-lawsuit-claims.html Given how much heat Vanguard caught for that, it's unlikely to happen again, and since target date funds shift a large portion of assets from stocks toward bonds every year, they'd incur more tax hit annually than you'd want to pay anyway. Don't hold target date mutual funds in a taxable brokerage account. e. Also, bonds pay coupons and you should try to avoid holding bonds or bond funds in your taxable accounts unless they're the special, tax-free type (e.g. tax-free treasuries and, depending on your state, maybe tax-free munis). Also you should not shift from stocks to bonds randomly, your allocation to stocks vs. bonds should be set based on your long-term investing horizon and chosen asset allocation/risk profile.
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May 16, 2022 20:58
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Hypothetical question (which might not be hypothetical next year): If I want to contribute the full $6k to my Roth IRA but I am cash poor, I can't afford to contribute that much, though I do have a couple ten thousand in equities (VTI & VXUS) in a brokerage account - does it make sense to use that money for my IRA? Yeah it's just shifting investments around, but the IRA is tax sheltered and if I have a loss on those equities (which may well be the case even by next year) I would maybe not be paying taxes by selling them?
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May 16, 2022 21:24
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MJP posted:I could well be overthinking the current market downturn. I'm going based off of Loucks' posts on 5/11 and 5/12, and Ersatz's posts on 5/12 as well. "Folks" being "two posters on something awful" is probably overthinking it. TLH and Rebalancing might best be thought of as separate operations. Typically, TLH refers to selling and rebuying something kinda similar. So you might TLH by selling some VTSAX and rebuying ITOT or something. That's kinda independent of whether or not your current asset allocation is no longer close to what your target asset allocation is. What are your current and target asset allocations? In general, when stocks go down (and so you'd want to TLH), the typical rebalancing operation would also be "buy even more stocks." Which is why your post seems confusing to me. But I dunno when you bought any of your things so maybe it's both the right time for you to rebalance and maybe also a good time to TLH?
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May 16, 2022 21:56
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MJP posted:I could well be overthinking the current market downturn. I'm going based off of Loucks' posts on 5/11 and 5/12, and Ersatz's posts on 5/12 as well. "Folks" being "two posters on something awful" is probably overthinking it. From there, I recognized an opportunity to tax loss harvest by exchanging from VTSAX to a different fund that's 99% the same in terms of its outlook - from a broad stock fund to another broad stock fund. No one really knows whether investing in VTSAX in the short term is wise (it might be buying the dip and getting a discount, or it might be throwing money into a fund that's about to drop further). That said, I'm looking to grow my money long term through a heavy stock allocation, and VTSAX is a solid vehicle for that. Ersatz fucked around with this message at 22:42 on May 16, 2022 |
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May 16, 2022 22:20
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Again, though, unless you have a strong reason not to, please consider VTI instead of VTSAX, in a taxable brokerage account. The difference is marginal, but nonzero, and VTI is exactly the same basket of stocks at exactly the same proportions as VTSAX.
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May 16, 2022 23:43
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Leperflesh posted:Again, though, unless you have a strong reason not to, please consider VTI instead of VTSAX, in a taxable brokerage account. The difference is marginal, but nonzero, and VTI is exactly the same basket of stocks at exactly the same proportions as VTSAX. Check out this bid-ask-spread payer. (Sarcasm of course, I very marginally regret not buying VTI in my Vanguard account).
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May 17, 2022 00:03
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Leperflesh posted:Again, though, unless you have a strong reason not to, please consider VTI instead of VTSAX, in a taxable brokerage account. The difference is marginal, but nonzero, and VTI is exactly the same basket of stocks at exactly the same proportions as VTSAX. Could you remind us why? I’m lazy and like using monthly auto buys.
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May 17, 2022 00:03
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Residency Evil posted:Could you remind us why? I’m lazy and like using monthly auto buys. This is not usually an issue for vanguard because they have a special patented method to avoid issuing capital gains to mutual fund holders, but their method has limits and in certain scenarios they can be forced to issue cap gains. Probably the most likely one (but still pretty unlikely) is a mass exodus of investors from VTSAX causing them to have to sell a lot of the underlying shares.
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May 17, 2022 00:56
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Residency Evil posted:Could you remind us why? I’m lazy and like using monthly auto buys. A .01% difference in expense ratios. The mutual fund has a convenience fee.
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May 17, 2022 00:57
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