All about Investments!

[Wade1865]

2 hours ago, DireWolfSpirit said:

So I've been surprised to learn recently that the Bond market is actually larger than the equities market, both domestically and Worldwide I believe.

 

DireWolfSpirit -- I was too! after being first exposed to bonds about a decade and a half or so ago after reading, The Ascent of Money, Niall Ferguson. Phenomenal book. Niall goes into detail about the origin of bonds, explaining why it was such a revolutionary form of finance. He wrote, "'War', declared the ancient Greek philosopher Heraclitus, 'is the father of all things'." More importantly to me (at that point in my life), Niall continues, "[War] was certainly the father of the bond market." Excited just re-reading that!!!

The mutuality of war and bonds is why I'm so intereseted in pursuing it sometime in the future, after more technical study. While stocks have been lucrative, and real estate hyper-lucrative; what I'd really like to get into is the bond market -- I suspect there's opportunity for volatility? And I also suspect old money -- especially families (notably, the Rothschilds) who could be rated as the moneyed interest -- hold much if not most of their wealth there.

Not being a trained economist, I suppose the greater size difference is due to the (much older) bond being a matter of debts, while the (much newer) stock is about ownership. Additionally, while governments and corporations both issue bonds, only corporations issue stock. I don't think governments issue stock. Just musing in this last paragraph.

[Heartofice]

I can’t remember where I heard it, maybe the Ezra Klein podcast, but in a discussion on inflation someone said that there was a narrative we could have this loose moneteary policy, lots of QE but never saw any inflation. Except we did see inflation, it was just in assets that were good for rich people, like stocks and housing.

I’ve of course made sure to track a number of markets and invest in them slowly and regularly, but I’m always concerned that the house of cards is gonna fall down at some point. The trend line for stocks makes little real sense over the last decade or so.

[mcbigski]

14 hours ago, Wade1865 said:

DireWolfSpirit -- I was too! after being first exposed to bonds about a decade and a half or so ago after reading, The Ascent of Money, Niall Ferguson. Phenomenal book. Niall goes into detail about the origin of bonds, explaining why it was such a revolutionary form of finance. He wrote, "'War', declared the ancient Greek philosopher Heraclitus, 'is the father of all things'." More importantly to me (at that point in my life), Niall continues, "[War] was certainly the father of the bond market." Excited just re-reading that!!!

The mutuality of war and bonds is why I'm so intereseted in pursuing it sometime in the future, after more technical study. While stocks have been lucrative, and real estate hyper-lucrative; what I'd really like to get into is the bond market -- I suspect there's opportunity for volatility? And I also suspect old money -- especially families (notably, the Rothschilds) who could be rated as the moneyed interest -- hold much if not most of their wealth there.

Not being a trained economist, I suppose the greater size difference is due to the (much older) bond being a matter of debts, while the (much newer) stock is about ownership. Additionally, while governments and corporations both issue bonds, only corporations issue stock. I don't think governments issue stock. Just musing in this last paragraph.

Equity is generally better for growing wealth.  And a better hedge against inflation.  But if you already have crap tons of money then bonds are probably better for preserving wealth.  Mostly depends on how much you need to beat cost of living increases by.  If you've already got hundreds of millions then yeah just clip the coupons but even guys like Bill Gross who I'm assuming made billions in bonds, did it by managing other people's money rather than just running up a small stake.  

13 hours ago, Heartofice said:

I can’t remember where I heard it, maybe the Ezra Klein podcast, but in a discussion on inflation someone said that there was a narrative we could have this loose moneteary policy, lots of QE but never saw any inflation. Except we did see inflation, it was just in assets that were good for rich people, like stocks and housing.

Is that a reference to modern monetary theory?  And those sorts of guys called cutting taxes to improve prosperity voodoo economics.  wtf?

On 8/9/2022 at 2:54 PM, Rippounet said:

Agree 200%.

That's what silly beliefs in fantasies like "free markets" get you.

It seems at odds that you agree with the first, that top down management is bad, but disagree with the second, that bottom up decision making is good economics wise.   

[Iskaral Pust]

17 hours ago, DireWolfSpirit said:

So I've been surprised to learn recently that the Bond market is actually larger than the equities market, both domestically and Worldwide I believe.

 

 

15 hours ago, Chataya de Fleury said:

Yes, equities markets are the tip of an iceberg. The bond market is the iceberg.

Most consumer debt (credit cards, car loans, student loans) gets bundled up into securitized bonds and sold.

That needs some context.  Traditionally they were similar in size.  But then bond market has approximately tripled since the GFC and much of that has been absorbed by newly printed money by central banks, not by actual investors.  And during that period, more and more companies have delisted (moved from public listed equity to private equity), which shrinks the apparent size of the stock market, especially since more and more start-up companies stayed private rather than going public via IPO, even when they were valued at more than $1bn.  Only publicly traded stocks are counted “in the stock market”.

But yes, the bond market is huge.  All of the govt’s enormous fiscal debt is in bonds, most US mortgage lending gets converted into bonds, most student loans and auto loans too, and corporations massively expanded their debt issuance to finance stock buybacks (as they were incentivized by the Fed).  All those bonds are mostly purchased by central banks (Quantitative Easing), commercial banks, insurance companies, pension plans and money market funds.  Such large institutional investors mostly required to hold bonds creates a large captive market for them, so it keeps the bond market huge.

Outside of public markets, private equity and private credit (usually mid market 5yr direct loans by non-banks) have expanded a lot over the past decade, but neither are counted in the measurement of the stock market and bond market.

Also, at the global level, the Chinese stock and bond markets have grown A LOT over he past ten years too.  Those are now the second largest after the US.

 

[Alarich II]

Wrt the OP:

I have 3 main Investments:

1. My own practice of which I hope to sell 50% next year, the other 50% when I retire, the liquidity from the first 50% goes in parts into paying off the rest of the mortgage for

2. our house, including 6,5 acres of land of which 4 acres are unser lease to a local farmer (I need to renegotiate this year, but he seems not very interested in a discount for organic farming, so I'll just take a surcharge for conventional farming).

3. regular monthly savings as well as surplus liquidity that isn't needed for the emergency fund or paying off debt goes into a portfolio of different ETFs:

- Indices are FTSE All-World and MSCI ACWI (75%)

- MSCI World Small Caps and MSCI EM IMI to spread a bit more into small caps and EM (10%)

- 3 different Dividend ETFs (USA, Europe, Asia), mainly for tax purposes and to counter the overweight of Tech titles in the "world Indices" (15%)

No Crypto as long as there's no convincing use case besides organized crime.

Edited August 11, 2022 by Alarich II

[Rippounet]

On 8/11/2022 at 4:44 AM, mcbigski said:

It seems at odds that you agree with the first, that top down management is bad, but disagree with the second, that bottom up decision making is good economics wise.   

Why would you think that "free markets" mean "bottom up decision making" ?
I know the free market ideology likes to pretend that the market is a magic calculator in which buyers and sellers have more or less equal power, but I assume all grown-ups are aware that real life doesn't quite work that way.
Funnily enough, we do seem to agree on the "problem" to some extent. I just don't get why you'd preach about the "free market" ; that's a bit as if I was fighting for marxism-leninism: rather anachronistic at this point.

[BigFatCoward]

I'm going to have to cash in most of my investments to turn the heating on this winter by the looks of it.

[Larry of the Lawn]

I am investing every cent I own into raw milk futures.  

[maarsen]

2 hours ago, Rippounet said:

Why would you think that "free markets" mean "bottom up decision making" ?
I know the free market ideology likes to pretend that the market is a magic calculator in which buyers and sellers have more or less equal power, but I assume all grown-ups are aware that real life doesn't quite work that way.
Funnily enough, we do seem to agree on the "problem" to some extent. I just don't get why you'd preach about the "free market" ; that's a bit as if I was fighting for marxism-leninism: rather anachronistic at this point.

Has no one here read The Business by Iain Banks? I always thought he postulated a rather interesting model of a free market. I mean the Firm did own the Roman Empire for a day or so. Larry of the Lake, you were reading Banks. His non SF stuff is fun too.

[Rippounet]

1 hour ago, maarsen said:

Has no one here read The Business by Iain Banks?

Sounds good, I'll try to get my hands on it.
I'm still working my way through the Culture novels (about to start Look to windward). Thanks to @Tywin et al. for bringing my attention to the series btw.

[Larry of the Lawn]

2 hours ago, maarsen said:

Has no one here read The Business by Iain Banks? I always thought he postulated a rather interesting model of a free market. I mean the Firm did own the Roman Empire for a day or so. Larry of the Lake, you were reading Banks. His non SF stuff is fun too.

Love The Business!  And quick fun read too!

[Wade1865]

5 hours ago, Rippounet said:

Why would you think that "free markets" mean "bottom up decision making" ?
I know the free market ideology likes to pretend that the market is a magic calculator in which buyers and sellers have more or less equal power, but I assume all grown-ups are aware that real life doesn't quite work that way.
Funnily enough, we do seem to agree on the "problem" to some extent. I just don't get why you'd preach about the "free market" ; that's a bit as if I was fighting for marxism-leninism: rather anachronistic at this point.

Rippounet -- again, I find your thoughts interesting. Speaking for all Americans, I can say we don't pretend the free market ideal results in equality. In fact, it's the prime reason for wealth inequailty. We know this, yet we actively pursue it because the good life is compelling. It goes back to your thoughts on how an alternative may find us (because we won't seek it out, not seriously); and yet its implementation would retard most countries outside the US and other developed nations -- seems unfair to the rest of the world, though, more recently find economic success?

[Wade1865]

5 hours ago, BigFatCoward said:

I'm going to have to cash in most of my investments to turn the heating on this winter by the looks of it.

BigFatCoward -- I was worried for my (English and Irish) cousins in the greatest empire the world has ever seen, but I'm starting to get a sense of hope. US gas prices have dropped significantly, is it not getting better over there?

[Wade1865]

5 hours ago, Rippounet said:

Funnily enough, we do seem to agree on the "problem" to some extent. I just don't get why you'd preach about the "free market" ; that's a bit as if I was fighting for marxism-leninism: rather anachronistic at this point.

Rippounet -- the only thing I'd be willing to come out of retirement for would be to fight in support of Chaiwan. If the neo-communists come after me in the US, however, I'd flee to Malta or Switzerland..

[BigFatCoward]

25 minutes ago, Wade1865 said:

BigFatCoward -- I was worried for my (English and Irish) cousins in the greatest empire the world has ever seen, but I'm starting to get a sense of hope. US gas prices have dropped significantly, is it not getting better over there?

Worse. Much fucking worse. There is going to be blood on the streets probably. 

[Mr. Chatywin et al.]

2 hours ago, Rippounet said:

Sounds good, I'll try to get my hands on it.
I'm still working my way through the Culture novels (about to start Look to windward). Thanks to @Tywin et al. for bringing my attention to the series btw.

You sure that was me?

[Rippounet]

15 hours ago, Tywin et al. said:

You sure that was me?

I do believe you mentioned it in passing as an ideal future for humanity, something like five years ago (I have long reading lists).

16 hours ago, Wade1865 said:

We know this, yet we actively pursue it because the good life is compelling. It goes back to your thoughts on how an alternative may find us (because we won't seek it out, not seriously); and yet its implementation would retard most countries outside the US and other developed nations -- seems unfair to the rest of the world, though, more recently find economic success?

You're confusing at least two different things, possibly three.
Productivism is what can be said the "good life." But while productivism is at the heart of capitalism, they are not synonymous.
Free markets are yet something else though, and it's perfectly possible to have capitalism (and thus production) with seriously regulated markets. Most Asian economies are generally said to be proof of that.
 

 

[Wade1865]

20 minutes ago, Rippounet said:

You're confusing at least two different things, possibly three.
Productivism is what can be said the "good life." But while productivism is at the heart of capitalism, they are not synonymous.
Free markets are yet something else though, and it's perfectly possible to have capitalism (and thus production) with seriously regulated markets. Most Asian economies are generally said to be proof of that.

Rippounet -- that was helpful. I wasn't tracking productivism, but it does reflect what I'd call the good life. Agreed, it's not just at the heart of capitalism but practiced by other market systems, too. Also agreed, on heavily regulated markets, the PRC easily comes to mind, and it's the second most powerful economy in the world.

What I'd like to know is, what market system minimizes wealth inequality and is compatible with the health of the earth. So here's my question (below). Although it's framed as a joke, it's not intended to offend; I use it because I'm a noob when it comes to economics:

If capitalism is where I have two cows, but sell one and buy a bull;

and socialism is where I have two cows, but give one to my neighbor;

and communism is where I have two cows, but give both to the government, and receive milk in exchange;

what system, and how would the cows be distributed, in your ideal market economy?

[DireWolfSpirit]

Regarding those bonds-

You may have heard of the inverted yield curve, how its a harbinger of economic downturn and so forth.

The entire treasury market is currently upside down with short term yields higher than the long term yields.

Check it out, this is twisted- 1yr and 2yr with a higher yield than the 30yr long bond!

TICKER	COMPANY	YIELD	CHANGE	%CHANGE
US3M	U.S. 3 Month Treasury	2.563	0.005	0
US1Y	U.S. 1 Year Treasury	3.255	0.002	0
US2Y	U.S. 2 Year Treasury	3.25	0.021	0
US5Y	U.S. 5 Year Treasury	2.965	-0.023	0
US10Y	U.S. 10 Year Treasury	2.842	-0.046	0
US30Y	U.S. 30 Year Treasury	3.114	-0.045

Edited August 14, 2022 by DireWolfSpirit

[Mr. Chatywin et al.]

On 8/13/2022 at 5:46 AM, Rippounet said:

I do believe you mentioned it in passing as an ideal future for humanity, something like five years ago (I have long reading lists).

Lol, that does sound like me. Glad you're enjoying something I never got around to. Currently I'm reading King of the World, Thunderball and All-Star Superman.