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Old 04-15-2012, 02:24 AM
 
Location: Conejo Valley, CA
12,167 posts, read 9,535,902 times
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Quote:
Originally Posted by mathjak107 View Post
nothing is written in stone or guaranteed but certain investments are a better bet on certain economic outcomes than others and stand a very good chance of reacting the way they should.
Right, "the way they should", which is just to say that you're speculating on the behavior of the markets under certain economic scenarios.
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Old 04-15-2012, 02:30 AM
 
Location: Conejo Valley, CA
12,167 posts, read 9,535,902 times
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Quote:
Originally Posted by ragnarkar View Post
My point is you'd need to "bet on all the horses".. if several horses has a good chance of winning when inflation is high, you bet on them all to hedge that risk. Read my previous post if you happen to need a refresher on my analogy.
I know what your point is, but you're ignore the real issue. Not only does betting "on all them" have consequences if inflation doesn't occur, but the very ways you're investing is root on speculation about how certain assets response to certain events.

So as I said, you guys think you've taken the speculation out of investing, but all you've done is hide it in places that you don't recognize it.
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Old 04-15-2012, 03:08 AM
 
27,327 posts, read 22,779,072 times
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Quote:
Originally Posted by user_id View Post
Right, "the way they should", which is just to say that you're speculating on the behavior of the markets under certain economic scenarios.
investing is always a speculation that "this time is different"

the fact is its now over 100 years of history and things have not been different as far as response to economic events so thats about as close to a minimum amount of speculation as i can get.
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Old 04-15-2012, 11:19 AM
 
Location: Pasadena, CA
4,777 posts, read 4,437,253 times
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Quote:
Originally Posted by user_id View Post
I know what your point is, but you're ignore the real issue. Not only does betting "on all them" have consequences if inflation doesn't occur, but the very ways you're investing is root on speculation about how certain assets response to certain events.

So as I said, you guys think you've taken the speculation out of investing, but all you've done is hide it in places that you don't recognize it.
Fine, but we can't choose not to bet.. I haven't found anything better than betting on all of them so this is what we're choosing (after all, we MUST make a decision.)

Also, you don't seem to get my point either.. I never said I knew for sure how certain assets respond to certain events.. if I'm forced to invest (and I am being forced to.. even if it means choosing to go 100% cash), I'd rather buy a broad range of assets with my limited knowledge of the future.

If we had a better sense how certain assets perform under certain circumstances (say gold under inflation, stocks under a boom, etc.), and we have a reasonable sense what the future holds, then we can weight our "bets" more towards those circumstances. But clearly, you've proven that we have no idea so it's better just to give up and make a neutral bet among all the "horses".

Time isn't gonna stop for you when you still need to figure out your investment plan.. sometimes you just have to go with what you think is best until you figure out something better.

Last edited by ragnarkar; 04-15-2012 at 11:29 AM..
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Old 04-15-2012, 11:59 AM
 
Location: Conejo Valley, CA
12,167 posts, read 9,535,902 times
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Quote:
Originally Posted by mathjak107 View Post
the fact is its now over 100 years of history and things have not been different as far as response to economic events so thats about as close to a minimum amount of speculation as i can get.
What are you even talking about? Assets have not responded in any sort of uniform fashion over the last 100 years, most of the market-myths you love to talk about are derived from market data over the last 2~3 decades. That is, during the boomer bubble, look further and everything gets much more murky.

The primary problem is that your market-myths are too simple, where as real economic events have complex causes.
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Old 04-15-2012, 12:16 PM
 
Location: Conejo Valley, CA
12,167 posts, read 9,535,902 times
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Quote:
Originally Posted by ragnarkar View Post
But clearly, you've proven that we have no idea so it's better just to give up and make a neutral bet among all the "horses".
This really makes no sense. So you have no real idea how various assets will respond to major macroeconomic events and yet your solution to this is to just buy assets that may or may not respond favorably and just hope for the best....

But sure, people have to pick something, but when that something isn't even conceptually coherent its time to go back to the drawing board. At least the "buy and hold index funds" is based on some actual theory, namely the efficient market hypothesis. Now, it may be a largely discredited theory, but at least its conceptually consistent.

Anyhow, inflation can be caused by a number of underlying factors and it these factors that will effect the markets, not the inflation itself. As a result buying assets that supposedly respond well to inflation is just folly, each insistence of inflation has a set of unique causes. The same can be said of all major marcoeconomic events.

Regardless, you folks like to run around preaching your market-religions to people. I'm not trying to advocate for any particular strategy here, just pointing out that your strategies are just as speculative as what traders, etc are doing.
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Old 04-15-2012, 01:02 PM
 
27,327 posts, read 22,779,072 times
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Quote:
Originally Posted by user_id View Post
What are you even talking about? Assets have not responded in any sort of uniform fashion over the last 100 years, most of the market-myths you love to talk about are derived from market data over the last 2~3 decades. That is, during the boomer bubble, look further and everything gets much more murky.

The primary problem is that your market-myths are too simple, where as real economic events have complex causes.

really, only the last few years? you are joking right?

can you find any point in history rates were cut during a recession and treasuries didnt rise? i cant.

were there any times we went through prosperity in growth periods and stocks didnt do well? not to my knowledge?

in fact i dont really want to post 40 years of data but i can show you that with the exception of gold which is tied to the dollar things have held true and reacted just as events dictated for more than 40 years.

like i said show us a recession when rates were cut that didnt have treasuries soar. even the high inflation of the early 80,s had gold taking off and filling in the drop in stocks and bonds beautifully.

can you think of periods of a really weak dollar and gold wasnt up? not that i know of.

Last edited by mathjak107; 04-15-2012 at 01:28 PM..
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Old 04-15-2012, 01:23 PM
 
Location: Conejo Valley, CA
12,167 posts, read 9,535,902 times
Reputation: 3933
Quote:
Originally Posted by mathjak107 View Post
can you find any point in history rates were cut during a recession and treasuries didnt rise? i cant.

were there any times we went through prosperity in growth periods and stocks didnt do well? not to my knowledge?
Why are you asking me? Haven't you looked into this sort of stuff, I mean, its the basis of your investment strategy. But since you're obviously unwilling to do the research, here are some examples:

Here are some recessions where treasury yields increased (and hence bonds decreased):

- The 1960~61 recession.
- The 1973~75 recession.
- The early 1990's recession (yields were stagnate).

As for stocks, stocks were largely stagnant between 1965 and 1980 despite strong economic growth during that period.

As I said, your market-myths are derived from the last 2~3 decades of behavior, essentially the market behavior during the boomer bubble. If you look beyond, you quickly find counterexamples.
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Old 04-15-2012, 01:24 PM
 
Location: Pasadena, CA
4,777 posts, read 4,437,253 times
Reputation: 3018
Quote:
Originally Posted by user_id View Post
This really makes no sense. So you have no real idea how various assets will respond to major macroeconomic events and yet your solution to this is to just buy assets that may or may not respond favorably and just hope for the best....

But sure, people have to pick something, but when that something isn't even conceptually coherent its time to go back to the drawing board. At least the "buy and hold index funds" is based on some actual theory, namely the efficient market hypothesis. Now, it may be a largely discredited theory, but at least its conceptually consistent.

Anyhow, inflation can be caused by a number of underlying factors and it these factors that will effect the markets, not the inflation itself. As a result buying assets that supposedly respond well to inflation is just folly, each insistence of inflation has a set of unique causes. The same can be said of all major marcoeconomic events.

Regardless, you folks like to run around preaching your market-religions to people. I'm not trying to advocate for any particular strategy here, just pointing out that your strategies are just as speculative as what traders, etc are doing.
Funny you mention "buy and hold index funds" because that's exactly what I've been doing and advocating for very similar reasons (regarding market efficiency.) Only diffierence is that I buy index funds in a variety of asset classes rather than simply spy or qqq (just the stock index funds.) Now I don't believe market efficiency holds 100% of the time, I have yet to find a way to safely profit from inefficient markets. Until then, I'd rather use my index fund portfolio to "bet on everything" and suffer whatever adverse consequences may lurk than to suffer the consequences of betting on 1-2 circumstances and not have that particular circumstance come true; examples such as: hold cash (bet on no inflation), hold stocks alone, hold bonds alone, hold 60/40 stocks/bonds, etc.
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Old 04-15-2012, 01:39 PM
 
27,327 posts, read 22,779,072 times
Reputation: 14322
Quote:
Originally Posted by user_id View Post
Why are you asking me? Haven't you looked into this sort of stuff, I mean, its the basis of your investment strategy. But since you're obviously unwilling to do the research, here are some examples:

Here are some recessions where treasury yields increased (and hence bonds decreased):

- The 1960~61 recession.
- The 1973~75 recession.
- The early 1990's recession (yields were stagnate).

As for stocks, stocks were largely stagnant between 1965 and 1980 despite strong economic growth during that period.

As I said, your market-myths are derived from the last 2~3 decades of behavior, essentially the market behavior during the boomer bubble. If you look beyond, you quickly find counterexamples.
like i said are you joking? here are the total returns for the 30 year treasury

1960 long term treasury up 11.6%
1961 up 2.06%

1973 long term treasury bonds down 1%
1974 bonds up 5%
1975 bonds up 10%


bonds stagnant for the early 1990's???????????????

1989 long term tresuries up 17%
1990 long term treasury up 5.8%
1991 up 17.4
1992 up 7.4
1993 up 16.8
1994 -7
1995 up 30%


1965 -1980 prosperity? sorry but that time frame was called the "great inflation" the oil shock of 1973 and 1979 was a disaster . i remember not even being able to get gas to fill our company vans to make service calls. we had to wait on lines for hours as gasoline was rationed. not once but 2x ,once in 1973 and then all over again in 1979.

inflation started life in 1965 at a little over 1% and escalated every single year by big jumps peaking at almost 15% in 1980. it more than doubled in one year from 1973 to 1974.

hardley times of prosperity. gold ran with the ball fairly well over that time frame again carrying the mix through.

Last edited by mathjak107; 04-15-2012 at 02:30 PM..
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