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comment by kleinbl00
kleinbl00  ·  2126 days ago  ·  link  ·    ·  parent  ·  post: Ask Hubski: I just inherited $40,000 - what do I do?

"Dangerously lazy?" Really?

I've been largely in cash for 18 months. Backtestimg my portfolio to what I liquidated demonstrates that I would have made 1.7% if I'd stayed invested. Wanna make money in this market? Keep pumping FAANG even further past the point of sanity or stand ready to buy low.

"Dangerously lazy?" It's somehow lazy to spend ten hours a week parsing financial data and commentary and then share that analysis because what? It's contrary to what Jim Cramer says?

"Dangerously lazy?" Because it's not the consensus of the eTrade crew? Of the dozen analysts whose writings I read, one of them hasn't called the top of the market.

David Rosenberg, one of the few guys to loudly and vociferously call the 2008 crash before it happened (an act that cost him his job) is saying this one could be worse.

But somehow, when I say it, it's "dangerously lazy."





nowaypablo  ·  2125 days ago  ·  link  ·  

The right answer to OP's advice is probably "Don't take other peoples' financial advice to make decisions with your own money."

But if you do offer advice, it's certainly more valuable to lay out their options. If I'm not mistaken you wrote a comment a day or two ago about your 5+ IRAs and a list of other non-cash positions. Not to mention the fact that we don't know any financial or other relevant information about OP, except that he's in college and is not in the market for a house.

So if lazy is an unfair adjective, pick your favorite. The point is that you're shying an impressionable stranger away from knowing their options, which includes making their money illiquid if they're not financially responsible.

kleinbl00  ·  2125 days ago  ·  link  ·  

What the actual fuck, man.

Spence comes in and says, basically, I've come into money and have selected a basket of diversified ETFs. I say, basically, hang onto your money for the time being and somehow I'm the dangerous one.

- Not the girl saying "spend it on rent."

- Not the guy saying "blow it on bitcoin."

- Not the guy saying "lock it up in CDs."

- Not the guy saying "buy a nice suit."

I'm sorry, but I'ma guess Spence knows his options. One does not paint up a diversified ETF portfolio without at least the sense of knowledge. And you know what? If he's got it as cash in a brokerage fund (that's what "go to cash" means, by the way) he can turn all of it into exactly the portfolio he desires in approximately eleven seconds. For that matter if he set 180-day triggers and targets on the ETFs of his choice he'd find himself owning equities at the price of his choice without even knowing it until he checked his email.

    The right answer to OP's advice is probably "Don't take other peoples' financial advice to make decisions with your own money."

Sure. But if he actually wants that advice, how is "wait" the one suggestion that offends you enough to pick a fight?

Somebody who's picked a percentage of bonds v. equities v. domestic v. foreign has thought about this a lot. I ain't about to upset the apple cart on that one. All I can do is suggest that the timing matters.

And I am honestly flummoxed that this has earned your opprobrium.

WanderingEng  ·  2126 days ago  ·  link  ·  

Are there any predictions out there on what industr(ies) are more likely to be impacted? In 2008 it seemed to be centered around the financial industries and housing. Is that overly simplistic? Might we see a similar trend today? Partly I'm just curious, but partly I'm curious if I might find a good deal on a house.

For what it's worth, I'm partly in cash. Every few weeks I move a bit of investment to cash, trying to average myself into reducing risk. Fidelity sends me emails about being overly conservative, and I ignore them. I remember 2008 well. While I was invested in several different types of mutual funds, all went down at roughly the same percentages. In a bear market, being diverse doesn't change much. I also remember how much my retirement was worth. I don't remember exactly, but I think it was somewhere around an eighth of what it is today. The slide then didn't hurt much because my biweekly 401k contributions crushed it when the market recovered. Today it would hurt more.

kleinbl00  ·  2126 days ago  ·  link  ·  

    Are there any predictions out there on what industr(ies) are more likely to be impacted?

The current betting pool has (1) convertible bonds (2) ETFs (3) subprime auto loans as the three most likely straws to break the camel's back.

CONVERTIBLES - there's a lot of yield seeking out there right now and people are buying convertibles as if they weren't convertible. The bond market, as always, is huge compared to the stock market and there's over $218b in convertible bonds out there as of March. The US bond market itself is like $35t so it's not like ZOMG all of it. There were $400b in subprime mortgages in 2008 when it started to rip.

ETFs - The problem with ETFs is they're not as liquid as the underlying securities. Not only that they're a derivative - there's an equation that makes up an ETF and the stakeholders have to buy and sell to keep the blend at the algorithm. They're supposed to be advantaged by the arbitrage opportunities but on an average day, $18b in SPY trades hands. On a hot day? Fuggedaboudit. I've got a little biotech I own because they make my daughter's peanut allergy medicine. The day they released news that their clinical trials worked and they pretty much holy shit cured peanut allergy their value went down eight percent because Aetna had a bad day. And Aetna is the healthcare market as far as ETFs are concerned. It's a tiny little stock and it's in 24 different ETFs. So if people decide to sell, the bottom is likely to fall out of ETFs at an even more precipitous rate than the underlying stocks.

SUBPRIME AUTOS - people are defaulting like crazy There's about $40b out there.

FWIW, Rosenberg said recently that recessions happen because the Fed makes them happen. I believe the language he used was "puts a gun to the market's head and pulls the trigger" or something equally florid.

https://twitter.com/EconguyRosie/status/1009780224316276736

steve  ·  2125 days ago  ·  link  ·  

    CONVERTIBLES

for a half second I thought you were going to recommend a used porsche...

kleinbl00  ·  2125 days ago  ·  link  ·  

Not as an investment vehicle, no, despite the fact that it would cost me more to buy my car now than it did last October.

The car market has been stupid for years now and so long as the rich keep getting richer, it'll just get stupider. Had I bought a '97 Carrera 4 in '97, driven it 5k a year, performed all maintenance and sold it last year, I would have made $40k.

Or more.