This is really an idiotic position unworthy of PoliGAF, which is supposed to be a thread for people who have even a vague interest in or understanding of politics. If you're not old enough to vote, why post in a thread about it?
-
Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.
PoliGAF 2013 |OT1| Never mind, Wheeeeeeeeeeeeeeee
- Thread starter ClovingWestbrook
- Start date
- Status
This is really an idiotic position unworthy of PoliGAF, which is supposed to be a thread for people who have even a vague interest in or understanding of politics. If you're not old enough to vote, why post in a thread about it?
Okay, I think we did that dance long enough and at the end of the day, this is your retirement, you definitely know more about it than anyone here on GAF.
I will however say this, I don't know what "virtually risk free" mean, but it strongly suggests that you don't understand what risk really is in that context.
And again, unless you have a firm knowledge of bond correlation (which is not a simple thing), even if you understand bayesian statistics, you won't be able to assess the real diversified risk of your bond fund.
So once again we're back to trusting someone to not fuck you over, which is pretty much what most Americans do, and I think history had taught us it doesn't work too well.
p.s.
I should probably note that I think it's a terrible idea to get retirement advices from random people on the internet, so at most, I hope it will make you re-check your numbers, worst case scenario you gain more confidence that your'e doing the right thing.
I know I was wrong about more important things than the what is the best retirement vehicle.
He's using the term to mean "very low risk", which is how I'd describe it. But he provided enough qualifiers and descriptions that I think he understands perfectly well that "virtually risk free" is just that - very low risk.
Which a well diversified, well researched fund is. Low risk does not mean you can't get screwed, just that it's less likely relative to other options.
Manmademan
Member
I just explained it to you. "Risk free" in a financial sense means a US savings bond. "virtually risk free" means that the investment was very close to a US savings bond in terms of stability, but not quite there.
I think your issue isn't one of retirement and theoretical risk, but instead one of being paranoid that financial institutions are out to get you. To that, i really don't think there's any investment vehicle that will put your mind at ease. Literally everything you do will require trusting someone to hold up their end of the bargain re: your money- it might be a private company like Vanguard, it might be a non-profit like your bank, it might be the US government. none of these are foolproof and corruption can exist anywhere.
How the fuck can you research it though?
The only thing I can do is "make sure it's on different states so you don't get fucked if the entire state go into the shitter", but then you start reading seriously about municipal bonds and you understand it's significantly more complicated.
Even assessing the individual risk is amazingly difficult.
I honestly don't think the whole "trust the expert/rating agency" is all that good of an idea, and we've just seen how great the market is at assessing risk.
Are you making the case that all municipal bond funds are great, always and by definition?
I don't know anything about vanguard, but the way those organization screw customers is pretty much always the same -
Fuck you with fees and direct you investment tools based on the kickbacks they're getting rather than your own best interests.
A democracy in theory when it works at least has mechanisms for accountability and course correction, at least more so than corporations which take every chance they can to fuck over anyone to gain a dollar.
Manmademan, as for $1000 a month for SS, wouldn't the people in your ideal have already paid off their mortgage by the time they start receiving it, if so why are you talking about paying rent? That's not to say that I don't think they should be receiving much more. We should treat our elderly much better than we do, having them live in fear of potential financial ruin due to not being able to cover living expenses is near the top of my list of fucked up shit this country does.
Manmademan, as for $1000 a month for SS, wouldn't the people in your ideal have already paid off their mortgage by the time they start receiving it, if so why are you talking about paying rent? That's not to say that I don't think they should be receiving much more. We should treat our elderly much better than we do, having them live in fear of potential financial ruin due to not being able to cover living expenses is near the top of my list of fucked up shit this country does.
Jack Remington
Banned
This kind of ad hominem shit, really? I would say that personal insults like that are far less worthy of this thread than any of my opinions on this subject. Unbecoming personal attacks aside, do you really want a hyper-liberal echo chamber?
The media's coverage of this non-story has been disgraceful. I'm sorry you feel the need to join the outrage olympics.
Manmademan
Member
fair enough, but I think I explained myself pretty well by what I meant by that.
Well, when using that specific example it was of an individual that did not have a mortgage at that age and was paying rent. Remember, homeownership is out of reach for a lot of americans. a quick and dirty search puts it at about 67%, so about 1 in 3 households are rented, not owned.
consider also that even among those that own, second or third mortgages are common, and even among those that own outright- there's still property tax to consider. I'm in a pricy area, but my property taxes are about 8K a year, plus I have utilities. even when i'm paid off, 1K a month isn't enough to keep living here.
I don't think it's unreasonable to think a large portion of SS is going to go towards housing for many people.
And how do you know that Vanguard doesn't fuck you over?
That's the whole point, they have economic interest to fuck you over (which is an assholish way to say that they want to maximize their fees and direct you to vehicles that makes them money, directly or indirectly) and most people can't figure out if and when they do it.
So arguing that they don't, it's pretty damn close to arguing that they don't like maximizing their profits.
Manmademan
Member
7 was at the high end. The funds I was thinking of (through vanguard) paid 6-7% specifically in PA. some states are higher (and some were lower), but I don't believe I'd be exempt from state tax for california bonds.
We're off topic, but If you'd like me to PM the details to you I'd be happy to at a later date.
edit: actually, here's an example of the fund I was thinking of. This is NOT the one where I have my money, but I'm strongly considering it-
https://personal.vanguard.com/us/funds/snapshot?FundId=0077&FundIntExt=INT
for me, something like this would be "very low risk". your personal definition might vary.
Maybe sit with yourself for a few minutes and really think about this statement.
Personally, I view PoliGAF as a place for interesting and thoughtful discussion. Comments like "outrage olympics," "non-story" or "inane" aren't interesting or thoughtful discussion. They're really, well, self-absorbed outrage, of an especially ironic flavor! If that's all you can contribute to the thread, I'd just as soon you not post in it. We have plenty of self-absorbed outrage already, what with chained CPI.
Our society has fundamental issues with sexism, including the fact that women are often judged on their looks regardless of their success. Regardless of any other factors, Obama's statement could easily be read as playing into that narrative. Now, personally, I'm not sure it was a big deal, as big deals go (though I didn't realize beforehand how much he loves to talk about how good looking the people he works with are). But the easiest way to ensure it's not a big deal is to quickly apologize -- especially assuming that you recognize the fundamental issues of sexism in our society!
Manmademan
Member
Never said they were. this was actually brought up because Chichikov wasn't aware that there were stable investment vehicles outside of the stock market or index funds.
in comparison to the stock market, a fund LIKE this provides a good return, tax free, at a lower risk. They are not a magic bullet, nothing is. But it IS possible to look at investment vehicles that aren't subject to the ups and downs of the dow jones on a daily basis- I originally thought his objection was to the stock market in particular, but it appears i was wrong and it was instead to any private financial institutions period, and I'm not willing to go down that road with him.
how we got wildly off topic from there and into semantics about "virtually risk free" vs. "very low risk" etc I don't know.
You know it, you know how to verify it, and that's great, it really is, but most people can't, and that's the problem (though personally, my confidence in assessing such things was greatly shaken by the great recession).
Well, I also have a problem that I'm force to research such bullshit, time I could've used to learn Chinese or something, but that's a different (and much smaller) issue.
Jack Remington
Banned
You aren't a moderator, and this thread isn't your personal sandbox. I realize you've read a few books on economics and political science, but please ditch the ego.
Fact: we have a sensationalist media that desperately tries to play up every minor story into a major scandal. Just today I had to suffer through some idiot on ESPN seriously comparing the Rutgers coach to Jerry Sandusky. It would be nice to see politicians not play that game.
empty vessel
Member
I actually don't think that's a smaller issue. For me, it is the main issue (although there are certainly other important problems with it). I want to spend my free time outside of work doing things I enjoy. Investment in markets or bonds should be reserved for people who enjoy and/or want to invest in markets and bonds, not imposed on people as a condition of comfortable retirement, especially when there are simpler and safer mechanisms for providing that for people who spend their whole lives working. I fucking hate unnecessary maintenance rituals, one of the reasons I loathe how the US taxes. I don't want to spend multiple weekends tracking my income and expenses to minimize my tax payments. I'd much rather be learning something fulfilling. We're here for a short period of time. Spending substantial time on inane bullshit just to get by pisses me off when there are far simpler ways of organizing society.
Don't get me started on taxes, this shit pisses me off so much.
I'm all for taxes, I'll gladly pay them, but how about you fucking tell me how much I owe?
Instead, I need to pay someone (or something) to figure that out and if I happen to get it wrong, I can get thrown to jail (okay no one is getting thrown to jail for an honest tax mistake, but the dramatic effect! will somebody please think of the dramatic effect!).
Even economically it's fucking bad, because it's a system that at best rewards the best tax planner and at worst, the best cheater.
Not exactly the traits we want to promote, right?
And once again, on a macro level this is a wealth transfer from the real economy to the financial service industry.
p.s.
Don't tell me "but taxes are simple, I do EZ1040 by hand", I got ESPP, unless you're rainman, you're not doing that by hand.
Angry Fork
Member
Are there any countries that has the government do people's taxes for them? Then just sends a bill or something? What is the purpose of having people do it on their own if most people have no clue what they're doing?
If I were to guess as to the reason, it would look something like this:
The poor are uninformed on tax policy and are likely to make errors and over pay.
The rich are informed (or employ those informed) on tax loopholes and are able to minimize how much they pay.
Manmademan
Member
to be fair, turbotax or tax act can handle most tax situations pretty easily for all but the most complicated forms, and is free for most middle income to low income users.
outside of sending a CPA to everyone's home, it's the next best thing.
edit: you can't just "send a bill" because there's no way for the government to estimate deductions and credits, etc. You could advocate a flat tax, but that has its own issues.
In Israel if you're not self employed you don't need to do anything, your employers take care if it for you.
You can file an adjustment with the IRS if you overpaid (which usually only happen if your a part of a year).
It's not a perfect system by any stretch of imagination by the way, but on a personal level, it's much better than doing your taxes like in the US.
But why do I need to pay money so I can figure out what the law say I should be paying?
Can you imagine having to pay money to figure out what's the speed limit on a road?
We can and should create a better system, I think we can easily do something that will save that hassle for most Americans (some people in unique situations would probably still need to do it by hand though).
That's not a law of nature, that's a function of our convoluted tax code (I'm also not sure how true that statement is, after all, the government can totally find out if you owe them taxes, at least if you're a normal person without an aggressive tax avoidance plan).
And I'm certainly not advocating a flat tax system.
Manmademan
Member
TaxAct is free for everyone for federal filing.
Turbotax is free under a certain threshhold, also for federal.
Both of these do all the work for you, just plug in how much you made in the appropriate boxes and hit "file."
state taxes aren't free, but there's nothing stopping you from using a paper and pencil for those.
Jack Remington
Banned
This is true IF, by virtue of using this system, the overall economy does not grow more quickly than it otherwise would.
I'd be interested to see a serious macroeconomic study on this issue.
Please explain to me how the economy can grow more quickly because of tax planning.
If you think taxation is too high, then you should advocate reducing the tax rate, not creating a system wherein those who can afford the best accountant pay less.
And it's not even about morality (at least not only about morality) you want companies to compete on quality of products, customer services etc. not on who can get the best tax lawyers.
I personally cannot do my taxes by hand, nor can I use something like the free version of turbo tax for it (even though I live in a state without income tax).
I'm not alone in this situation, and I actually knows how to read my w-2 (which I would imagine put me head and shoulders above most taxpayers), and I think that's fucked up.
Edit: quick question - do you think it's impossible to create an easier system to pay our taxes or do you just believe that we shouldn't?
Manmademan
Member
hard to believe, but they're your taxes. Curious what it is that's so complicated that it's totally out of the realm of turbotax.
Is it POSSIBLE to create an easier system? maybe. You could cut out all deductions, but that would hurt businesses. You could eliminate credits, but that would hurt the poor. You could just slap a "flat" tax on everyone, but that's regressive and also hurts the poor.
edit: and when I say "deductions", the government has no idea how much you spent on your business in a given year. no way to estimate it either. without deductions for business expenses (computers, mileage, personnel costs, etc), businesses and independent contractors end up paying substantially more than they would otherwise.
any "simplification" is probably going to end up with someone paying more than they currently are.
So because they're "my taxes" I'm forced to spend a weekend every year laboring over stupid forms to comply with the law?
And I work in the software industry and I worked in numerous companies that all gave me stocks as part of their compensation packages, depending on how you get paid, that can get quite complicated.
It's definitley possible -
Though I think we can do a much better job than even that.
And by the way, I think what we should focus first on how we report the income, all of it should be done in a single, easy to aggregate form, not like now where you have to not only be able to read your w-2 (which is too fucking obfuscated in its own right) but your 1099s and the w-* you might have.
Jack Remington
Banned
Oh, I was talking about 401ks and other retirement funds that are handled by the financial industry. And I was wondering aloud (in text?), not actually putting forth an opinion. I was saying that it's possible that the way we're starting to fund retirement generates more economic activity and growth than we would see in, say, a completely public pension system. But I'd really like to see a good study on this issue.
FYI, my views are quite liberal on most issues and are more or less in line with most people in this thread, my disdain for sensationalist hyper-PCism in the media aside.
I think that if you're inflicting that level of stress (and potential pain) on your population, the burden of proof that it helps is on you (not you personally, but supporters of the 401k model).
And I think the macroeconomic effect of this system is also negative, I tried to articulate the reasons here.
Vanguard is set up different than any other brokerage firm. Vanguard is owned by the funds themselves, so, they are owned by the investors in the funds. You arent enriching some wall street shmuck by investing with vanguard (well, not nearly as much as other firms) because Vanguard funds are run at cost
As for fucking you over, just go to their website. They pimp how low cost their are and direct people to their all in one funds or create a personalized asset allocation by investing in the big 3 core funds.
Their website doesnt push you into their actively managed funds, and even then, their actively managed funds are lower cost than other firms
I agree that it is a stupid method to save for retirement and doesnt work based the evidence. It is also a bit disingenuous to say that how to invest smartly is easy to find when CNBC and all of these other programs, magainzes, sites, and commercials are telling you how they got the tips or stock tools that you will make you a smart investor and beat the market. The smart thing to do is simply follow the market, but that doesnt make any of those guys any money
The thing with those countries (i think) is that they employ extremely efficient, but regressive taxes like VATs, but then spend that money very progressively. If we did it like that, which i think makes the most sense, I would be perfectly fine with it
As for fucking you over, just go to their website. They pimp how low cost their are and direct people to their all in one funds or create a personalized asset allocation by investing in the big 3 core funds.
Their website doesnt push you into their actively managed funds, and even then, their actively managed funds are lower cost than other firms
I agree that it is a stupid method to save for retirement and doesnt work based the evidence. It is also a bit disingenuous to say that how to invest smartly is easy to find when CNBC and all of these other programs, magainzes, sites, and commercials are telling you how they got the tips or stock tools that you will make you a smart investor and beat the market. The smart thing to do is simply follow the market, but that doesnt make any of those guys any money
The thing with those countries (i think) is that they employ extremely efficient, but regressive taxes like VATs, but then spend that money very progressively. If we did it like that, which i think makes the most sense, I would be perfectly fine with it
Women don't hold office for their looks, but in the days before they were able to be taken seriously in the workplace, they did. It's that simple.
Retirement funds also are often not about investing with an eye towards beating the market. Most people really should just be using index funds, but index funds don't rely on distributed information or anything like that. To the extent that it is useful to bid up the share price of all companies more-or-less uniformly, the government could do that really easily; there's no inefficiency introduced by having the government do it. The government could also do a better job of setting the optimal level of index investment, since it seems unlikely that the optimal level is just whatever the citizenry collectively decides it wants to put away for retirement that year (why would anyone think those two are linked?).
Aaron Strife
Banned
So who of the red state senate democrats do you all think will lose re-election/their seats next year? I think Begich and Landrieu are (relatively) safe, while Pryor, Hagan and Baucus are at least favored, in that order. SD is going to be a tough hold however unless Stephanie Herseth-Sandlin runs, and WV seems like a lost cause if Shelly Moore Capito makes it through the Republican primary (a successful tea party challenge is always a possibility). Wish Manchin had a twin.
I'm not worried about like, Iowa, Michigan etc. The media spent all of last year concern trolling Obama's chances in those states and he won them handily. Democrats would probably pick up Georgia before Republicans picked up Michigan.
I'm not worried about like, Iowa, Michigan etc. The media spent all of last year concern trolling Obama's chances in those states and he won them handily. Democrats would probably pick up Georgia before Republicans picked up Michigan.
Carpe Libertatem
Member
At this point I think South Dakota and West Virginia are losses. Then again, we said that about Missouri and North Dakota in 2012 - plus who would've thought we would pick up Indiana
I would be worried about Begich if Governor Parnell runs - but Begich looks pretty solid otherwise. Landrieu not too sure about, I think it'll definitely help that Jindal is immensely unpopular there (unfortunately the gubernatorial election is in 2015, though)
I think Pryor and Baucus can maneuver themselves well enough to pull out victories, although I would prefer Schweitzer to primary Baucus (Schweitzer would have a better chance of winning the general and honestly would be a much better Senator). Hagan's polling looks really solid - above 50 on most every Republican, but I think it depends on who the opponent is
Also beginning to worry about Lautenberg - if he waits until after August to leave Congress because he's sick then Christie appoints a Republican to fill his place until 2014. At that point the Republican has been an incumbent for over a year, although Booker could probably still beat him
soul creator
Member
well, this is part of the reason taxes are as complex as they are: How the Maker of TurboTax Fought Free, Simple Tax Filing
Not surprising, pretty much everything that is fucked up with the US when you look into it is due to corporate meddling.
It's really not that hard. You sound almost paranoid to make any investment at all.
I just got through a major rebalancing of my portolio, shuffling funds and moving to a different fund company (Fidelity). Over two months I did the following to pick new funds to invest in:
1) I look at the 10 and lifetime returns on the fund, and only buy into funds that have been around along time and have had consistent returns.
2) I look at the composition of the fund - it's holdings - to see how well diversified it is. A mix of asset classes, and across industries. (I had a municipal bond fund, but liquidated it for a different strategy for the next few years.)
3) I look at the expense ratio, to see how much the management of the fund is costing.
4) I research the fun holding company. I recently shifted over to Fidelity, myself.
Among a few other metrics. It's not rocket science. I realize you were talking about municipal or government bond funds, but the same approach applies. So long as no one state/municipality has a big chunk of the fund, the risk is low. (Not zero - low.)
With Fidelity I'm paying no fees. Nothing to open the accounts, nothing to buy, nothing to sell, no annual fees. Zero, nada, nill. (My old company did have fees, which is why I left.) I was directed into absolutely nothing - I did all my independent research. In my many conversations with Fidelity reps, I got exactly zero push to do anything I didn't want to do. You are paranoid well beyond reason.
Personally, I think the first step in tax reform is to get rid of deductions and turn the impossible to get rid of deductions (mortgage and charitable giving) into tax credits
Deductions kinda suck for low-mid earners, but are a huge giveaway for the wealthy. Tax credits are great for low-mid earners, and don't balloon to absurd amounts like deductions can.
Deductions kinda suck for low-mid earners, but are a huge giveaway for the wealthy. Tax credits are great for low-mid earners, and don't balloon to absurd amounts like deductions can.
TacticalFox88
Banned
The fuck happened in this thread?
o.o
o.o
But how can I figure out bond correlation?
I'm seriously asking, without it, I can't build any sort of diversification risk modelling, and again, I'm actually a guy who know how to do that mathematically, which I'm certain put me ahead of 99% of the population.
Now I'm not a crazy person who put his money under the mattress, in fact, I follow pretty much the exact process that you describe to pick my muni bonds fund, but at the same time, I don't forget that at the end of the day, my only option is to accept their risk assessment pretty much as is.
And considering we just went through a catastrophic economic collapse that was fueled in large part by financial institutions inability to assess risk, that does not make me too happy.
I think I'm going to be fine, but I make a good living and I'm a well read person, but surely you can see how this system is immensely problematic to the vast majority of the population.
You don't figure out the bond correlation. You don't buy bonds, you buy shares of bond funds if you want the lower risk, lower yield investment option.
401ks have been terrible for the average American. Someone claims that its simple to invest smartly for retirement. Apparently the average American too stupid to understand something that simple then
Course, the big problem is that people simply don't save enough money to invest towards retirement. Should we teach them responsibility in their old age, when they are too old and infirm to really do anything about it besides piss in their diapers? Or should we accept that the average american sucks at saving, sucks at investing, and sucks at putting enough away for retirement and design a system around that evidence?
As for Bonds, I personally just go with Vanguard's Total Bond. It doesn't hit everything (no special ones like Munis or TIPS, i think), but it has a shit ton of bonds of varying maturities to keep you diversified
But if I don't do that, I can't verify the risk assessment, and therefore I can't know if I'm getting ripped, right?
Which is my entire point, we built a system where most people have to pretty much take blind trust in institutions that (for the most part) has the economic incentives to break that trust.
And it's not even about selling you junk, it can about something as simple as paying you less than the risk would suggest.
I think the whole "the wisdom of the market will correct such distortions" argument has lost a lot of its credibility after 2008.
Edit: how would you feel if there is was no odometer in cars and you had to take the dealership word for the milage?
Yeah, you can kinda figure it out from the model age and the wear and tear, and why are you so paranoid, just go to dealership with a good name that you know you can trust and it's not like milage is the only important thing.
It's pretty much the same thing, only with higher stakes.
I certainly can't. I don't model this stuff. I look at the diversification and draw my own conclusions. Personally, I don't need to in order to get comfortable with the level of risk I'm taking.
I think we just have different risk tolerances.
All that said - I've said many times today how badly I think the system is set up, and how difficult it is for even people well educated in finance to navigate it. So I wholeheartedly agree with your last statement.
Yes, you can. I don't need to do a statistical analysis to gauge a fund.
Listen, I'm not some hippie idealist who refuse to play the game of the man, man.
I actually made out like bandit in the great recession, I'm a pussy so I took all money out from pretty much everything when Bear Stearns went under and kept it in the most conservative shit ever, as a result I lost very little, less than inflation, so I had lots of money to put back in the market when shit started to settle, and you can imagine how well that worked for me.
In fact, my retirement outlook is so nice right now that I reduced my exposure to the stock market to pretty much nothing (hence my boring knowledge of municipal bonds), and I can ride very safe investment vehicles to a pretty early retirement.
But at the same time, I do rigorous risk analysis for myself, it's not too complicated, it just involve literally my least favorite field in math, and I'm well aware of the exact assumption this whole house of cards is based on (and I'm talking in mathematical terms here, not stuff like "rational actor" or "my bank wants what best for me").
Edit: I think I'm trying to be cute here with the language and I don't explain it well enough (and just make it sound like black magic, and I hate it when people do that, boo me!) I'm talking about risk, you need to put it in your equations, and you can also really easily model the impact of bias in those risk numbers (that you have no way of verifying), and even my sweet ass retirement portfolio's outlook can get destroyed by variations smaller than the one we've seen in '07-'08.
Am I comfortable with those assumptions?
Yeah, but those are exactly the type of assumptions that have been proven tragically wrong in the last crash, and the one before it and the one before it and the one before.
Personally, I sleep pretty well at night, I think I sorted my finance as good as I can possibly hope for and I don't believe in stressing over shit you can do nothing about, but when you think about it in policy terms, how the fuck can a family making the median income can hope to retire under such system?
Even if they're perfectly educated on all that stuff and have the time and access to research it, they get to make one mistake and they're done.
Because let me tell you, I can put 52k (or whatever the median household income) into my Excel spreadsheet, and I can even assume they get stocks like I do, and man, that shit is still the stuff of nightmares, it's unconscionable, if people knew, they would be rioting, but they'll find out when their bones are weak and brittle.
I actually made out like bandit in the great recession, I'm a pussy so I took all money out from pretty much everything when Bear Stearns went under and kept it in the most conservative shit ever, as a result I lost very little, less than inflation, so I had lots of money to put back in the market when shit started to settle, and you can imagine how well that worked for me.
In fact, my retirement outlook is so nice right now that I reduced my exposure to the stock market to pretty much nothing (hence my boring knowledge of municipal bonds), and I can ride very safe investment vehicles to a pretty early retirement.
But at the same time, I do rigorous risk analysis for myself, it's not too complicated, it just involve literally my least favorite field in math, and I'm well aware of the exact assumption this whole house of cards is based on (and I'm talking in mathematical terms here, not stuff like "rational actor" or "my bank wants what best for me").
Edit: I think I'm trying to be cute here with the language and I don't explain it well enough (and just make it sound like black magic, and I hate it when people do that, boo me!) I'm talking about risk, you need to put it in your equations, and you can also really easily model the impact of bias in those risk numbers (that you have no way of verifying), and even my sweet ass retirement portfolio's outlook can get destroyed by variations smaller than the one we've seen in '07-'08.
Am I comfortable with those assumptions?
Yeah, but those are exactly the type of assumptions that have been proven tragically wrong in the last crash, and the one before it and the one before it and the one before.
Personally, I sleep pretty well at night, I think I sorted my finance as good as I can possibly hope for and I don't believe in stressing over shit you can do nothing about, but when you think about it in policy terms, how the fuck can a family making the median income can hope to retire under such system?
Even if they're perfectly educated on all that stuff and have the time and access to research it, they get to make one mistake and they're done.
Because let me tell you, I can put 52k (or whatever the median household income) into my Excel spreadsheet, and I can even assume they get stocks like I do, and man, that shit is still the stuff of nightmares, it's unconscionable, if people knew, they would be rioting, but they'll find out when their bones are weak and brittle.
My only point in this exchange has been that I don't need to do that kind of analysis to get comfortable that something has "very low risk". That's all. I keep saying that, and you kept replying that you can't make that assessment without doing a deep statistical analysis. I disagree.
Would your assessment of the risk be different if you didn't make as much money as you currently do?
And my point is that you're effectively betting that the wrong type crash wouldn't happen at the wrong time, and again, I'm not talking about unprecedented stuff, at least in terms of magnitude, and you're doing it pretty much blindly.
And again, I'm talking about pure numbers here.
Maybe some clarification though, I really don't want to try to pass this stuff as some super advance magical stuff, I think this type of modelling is terribly misunderstood by the general public, so I hope you pardon this boring sidetracking from this pretty boring subject.
This type of modelling only talk about risk (or in less retarded terms, probability), not really outcomes, so at most it can say stuff like - you went from 1% chance of running out of money before dying to 80% chance.
Edit: ugh, I just realized I might be giving you guys economic nightmares on a Saturday night, so to sooth your panic, if you actually model the odds of a crash of that magnitude (based on past frequency) and you make some very conservatives assumptions about what random risk parameters would this bubble prove were wrong, you can see that personally, you're not very likely to get hit with the perfect storm, but you can also see that a whole lot of theoretical people who were just as smart as you got fucked.
If you want an even more boring bond fund, you could simply dump all of your money into TIPS
The problem with a heavy bond allocation is that it doesnt do a great job of protecting you against inflation. Well, you don't have to worry about that if all your bonds are TIPS. Plus, TIPS are US Govt bonds. Thats about as secure/risk averse as you can get in terms of bonds
My assessment might not, but my risk tolerance, perhaps. The more money I've made, the less risk I've been willing to take. Though that's been largely a function of experience.
When I first started investing, I didn't know what I was doing and I got screwed in exactly the ways Chichikov has described by the system. Bad adviser, money put into pet stocks, commissions eating up profits, ect. Since then, partly from that experience and partly as I got more educated on finance, I've become increasingly more conservative. I have a pretty conservative portfolio. Not quite as much as Chichikov, but I totally understand and respect his approach.
Chickikov, you have no idea what my investments are, how they've fared or how I select them (though I did touch on that last one a bit). You have no basis to make assertions like this.
- Status