What if we just stopped being so greedy and just bought/invested in what we actually need instead of playing silly games ? Find a plot of land, build a house, &c. a safe space for your kids and their kids.
I know people stressing 24/7 about their money, diversifying their crypto shitcoins into pokemon card collections, buying watches or old apple computers in the hope they'll be able to sell them for more to the next sucker, buying and selling defense company stocks secretly hoping more poor souls will get annihilated in Ukraine or Gaza because it's good for their $$$. They're loaded like never before but I've never seen them so tired and miserable, I bet they don't even know why they want more money, hairless apes seem to like when numbers are getting bigger
And on top of that if shit truly hits the fan the vast majority of these will be completely useless.
But I can't even afford 1 single house unless I buy it on margin (and my bank won't give me margin). The minimum quantity is too high. It's like the problem with options trading but worse. (A single options contract can be worth $X,XXX to $XX,XXX and the ones on the lower end of that range are the ones most likely to expire worthless)
Because unless you are very lucky you simply will not be able to retire, or at worst just run out of money with no healthcare or shelter.
If everyone you know stressing about money would actually be fine if they stopped stressing they are all very privileged. That's not reality for most people. This is not a silly game, and it's frankly ridiculous for your advice to be "find plot of land, build a house."
There are many options to hedge the known market risks today (as for hedging black swans, tail hedging is also an option, although more explicitly negative value adding long-term).
I'm assuming you are talking longer term.
A permanent allocation to gold is one option. These days it can also be done via overlays so that equity exposure can stay the same.
TIPS work as inflation protection. Move some bond exposure to TIPS.
CTA/trend following is a great addition to a portfolio when it comes to protecting against stagflationary scenarios. Again, this is fairly easy to access via ETFs these days.
How about international diversification? This is something even super conservative voices like Bogle would recommend. Again, easy to access via ETFs.
Another good idea if hedging is on the mind is stepping away from the market cap weighted indexes to some degree. Add some small-cap value for example.
There are other options as well that can be done on a portfolio level, but it can get more advanced from there.
The most important thing is to have a consistent framework that one can stick with for decades. Especially when it comes to having a truly diversified portfolio, it tends to be that unfortunately some people have a hard time handling it. If you are truly diversified you should always have assets in a portfolio that are performing poorly, and performance may be bad for entire decade-long market cycle or two. Ex: if trend is performing badly during a strong equity boom, it was protecting against lines that didn't happen to play out, but that doesn't mean that the realized situation nullifies the holistic diversification benefits.
Also, it gets more difficult if part of the equation is matching or exceeding S&P returns on an absolute basis. S&P has high returns but sees high drawdowns up to 50%, well more diversified approaches maybe less volatile and see more mild drawdowns. Because of that, usually most people would be better off with some mild leverage if they take a more diversified approach that switches out equity for less volatile assets like gold. Ex: 60/30/20/20/10 (equity/bonds/CTA/Gold/TIPS).
Yuan is a pegged currency. This is a widowmaker trade even for a hedge fund. The average investor would be far, far better off taking actual positions in Chinese stocks rather than getting into the global macro hedge fund style position on pegged currency unwinds (where metrics such as carry and convexity dominate the trade considerations, not the actual binary directional view).
And it's also worth noting that there has been strong divergence between the ADR Chinese market and the onshore Chinese market that westerners don't generally have access to, so tread lightly there as well because there is no guarantee the ADR paper trades as it "should".
At this point I have no idea what would be proper hedge bet... Certainly not crypto. Maybe gold is least insane, but I somewhat doubt even that.
What if we just stopped being so greedy and just bought/invested in what we actually need instead of playing silly games ? Find a plot of land, build a house, &c. a safe space for your kids and their kids.
I know people stressing 24/7 about their money, diversifying their crypto shitcoins into pokemon card collections, buying watches or old apple computers in the hope they'll be able to sell them for more to the next sucker, buying and selling defense company stocks secretly hoping more poor souls will get annihilated in Ukraine or Gaza because it's good for their $$$. They're loaded like never before but I've never seen them so tired and miserable, I bet they don't even know why they want more money, hairless apes seem to like when numbers are getting bigger
And on top of that if shit truly hits the fan the vast majority of these will be completely useless.
But I can't even afford 1 single house unless I buy it on margin (and my bank won't give me margin). The minimum quantity is too high. It's like the problem with options trading but worse. (A single options contract can be worth $X,XXX to $XX,XXX and the ones on the lower end of that range are the ones most likely to expire worthless)
> Find a plot of land, build a house
So we’re back to 2007 now.
Because unless you are very lucky you simply will not be able to retire, or at worst just run out of money with no healthcare or shelter.
If everyone you know stressing about money would actually be fine if they stopped stressing they are all very privileged. That's not reality for most people. This is not a silly game, and it's frankly ridiculous for your advice to be "find plot of land, build a house."
2 replies →
There are many options to hedge the known market risks today (as for hedging black swans, tail hedging is also an option, although more explicitly negative value adding long-term).
I'm assuming you are talking longer term.
A permanent allocation to gold is one option. These days it can also be done via overlays so that equity exposure can stay the same.
TIPS work as inflation protection. Move some bond exposure to TIPS.
CTA/trend following is a great addition to a portfolio when it comes to protecting against stagflationary scenarios. Again, this is fairly easy to access via ETFs these days.
How about international diversification? This is something even super conservative voices like Bogle would recommend. Again, easy to access via ETFs.
Another good idea if hedging is on the mind is stepping away from the market cap weighted indexes to some degree. Add some small-cap value for example.
There are other options as well that can be done on a portfolio level, but it can get more advanced from there.
The most important thing is to have a consistent framework that one can stick with for decades. Especially when it comes to having a truly diversified portfolio, it tends to be that unfortunately some people have a hard time handling it. If you are truly diversified you should always have assets in a portfolio that are performing poorly, and performance may be bad for entire decade-long market cycle or two. Ex: if trend is performing badly during a strong equity boom, it was protecting against lines that didn't happen to play out, but that doesn't mean that the realized situation nullifies the holistic diversification benefits.
Also, it gets more difficult if part of the equation is matching or exceeding S&P returns on an absolute basis. S&P has high returns but sees high drawdowns up to 50%, well more diversified approaches maybe less volatile and see more mild drawdowns. Because of that, usually most people would be better off with some mild leverage if they take a more diversified approach that switches out equity for less volatile assets like gold. Ex: 60/30/20/20/10 (equity/bonds/CTA/Gold/TIPS).
Chinese Yuan. Have a better idea?
Yuan is a pegged currency. This is a widowmaker trade even for a hedge fund. The average investor would be far, far better off taking actual positions in Chinese stocks rather than getting into the global macro hedge fund style position on pegged currency unwinds (where metrics such as carry and convexity dominate the trade considerations, not the actual binary directional view).
And it's also worth noting that there has been strong divergence between the ADR Chinese market and the onshore Chinese market that westerners don't generally have access to, so tread lightly there as well because there is no guarantee the ADR paper trades as it "should".
2 replies →
gold is overvalued too!