The ultimate point of these discussions is coming to a conclusion about "what should we do?". I can give you quite a few reasons why dumping all your money in market index funds could end in disaster. I'm not under the illusion these gains are guaranteed. But what the hell else am I going to do?
As long as you realize that you're choosing the least bad of a bunch of bad options. Far too many people are claiming that stocks are safe.
You're right: stock picking, index funds, bonds, crypto, cash, real estate, collectibles -- they're all bad options in 2021. Myself I would recommend holding a sizable portion in cash. Unlike many, I'm not overly worried about cash holdings getting destroyed by inflation, but I do believe that coming interest rate hikes will make stocks cheaper soon.
In other words putting 10% in the riskiest things with highest potential returns (shitcoins on DEXes for example) and 90% in the safest things would be strictly better than putting ANY money in the middle between the extremes.
It depends what assets you want to spend your cash on.
Will home prices go up after this crisis?
Will there be demand once small companies start firing people and close down and we run out of government incentives?
Sure, big companies have more money, but that is likely to be hoarded or invested (and I doubt it will be in real estate, given it's a hassle to manage) - it won't go back in the economy.
I'm not sure what relevance that has to my assertion? If a/the market goes up 50% you'd be poorly advised to hold cash rather than put it in the market.
No one should ever hold cash long term as an investment, but the graph shows pretty clearly there is nothing at the moment that has not been the trend for literally 50+ years.
Calling that "Cash is being decimated by asset inflation before our very eyes" seems to be undue hysteria.
Our political system is unable/unwilling to address housing needs. Home owners vote for whatever it takes to increase prices. Renters and young people looking to buy their first homes don't have as much political clout. The reality of the situation is sad but the results are clear!
Real estate is one of the worst asset classes right now. If anything is due for a crash it’s real estate prices. And the amount of protection that tenants have been getting during the pandemic doesn’t inspire confidence in being a landlord. On top of that, people seem to get so leveraged in real estate, it’s a recipe for bankruptcy. I never hear about people investing in stocks going bankrupt unless they do something extraordinarily stupid, but I hear about real estate investors going bankrupt all the time despite simply following best practices.
We might very well be in a housing-bubble. So put your money only in there if you can miss it and if it is safe for you. And always consider spreading your money.
E.g. consider paying off mortgage, which could be seen as a safe version of "investing in real estate". As well as putting aside some cash, and buying in on some ETFs.
Could be demographics driving the housing demand, also. The large millennial generation are now in the housing market, and the baby boomers haven't sold yet. In 20-30 years the baby boomers will not be around. That will change the demand for housing. Could be quite a difference.
Personally I'm taking some money that could go into the stock market and investing in increasing the energy efficiency of my home to reduce my future costs, buying items I'll need in bulk (things like 200 pairs of socks so I'm set for life) and other things that will improve my QOL without ongoing costs.
I'm going to take your awesome joke seriously. You can invest in the "consumer staples" index which is relatively counter-cyclical. People buy a similar number of socks every year whether they're doing well or badly.
Do you think the globe as a whole will outperform the US market?
I don't think our collective future as a planet is any better than the US outlook, personally. If anything, the United States is probably better situated to win future dystopian contests than most, too.
If international stocks are undervalued because U.S. stock are in a bubble or overvalued international will outperform, in theory it has little to do with who is "better".
Do you just buy stock X because you think it will do well, or do you buy a broad ETF because you believe in passive investing and diversification?
If the latter, well, the same applies to countries and asset classes. You can take your best guess on who the winners will be, or you can just buy the market. It doesn't mean you think "the globe will outperform the US," any more than buying VTSAX means you think VTSAX will outperform Apple.
And it also bears mentioning that if you're buying a market cap weighted fund then you aren't really missing out too much on US equity dominance, since for example VTWAX holds ~60% US stocks.
How about hiring a person to research and buy the latest shitcoins on Uniswap and Pancakeswap? I can name several in the last month that have each been up 500% in 24 hours. For example, see these:
By the time you hit these links, you may be astonished to see that the assets have risen in one day nearly half of the 900% the guy says the stock market would do in 30 years.
I mean, isn’t the goal of growth investing to get the biggest returns? This seems to be that, massively accelerated.
Then retire LOL.
But seriously... the smallest cap projects in the newest industries — especially now that trading is available to anyone with no intemediaries — presents massive opportunities for huge crowds to descend on one thing or another, and if you are early to the party you make a lot. I find it a very strange aspect of capitalism, that seems to reward meme marketing and attracting crowds to fads, rather than actual value for society.
Great! Now you have your retirement stash. You'll have to protect it for decades to come. How? Which brings you to the beginning: how do you invest your money?
The point is that your retirement stash can at that point just be kept in regular assets for decades because you have made a ton of gains through a fast sprint.
Or you can take some of that to hire various money managers to repeat this strategy for years whenever the opportunities present themselves.
