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Typical PE deal is funded with a substantial amount of debt that is assigned to the business. The PE firm is the lender, not a bank. The PE firm has firm control of management and the loans have restrictive financial covenants. They will drain cash out of the business. They will install their own management who “claim” they are industry experts - “questionable” depending on just who is buying managerial control. Some firms are better than others, but they all want the cash. What is the most expensive line item on your P&L? Typically it’s labor - they will look to cut that - in that field, if you don’t have the right staff, the business will suffer. As an owner, you will not want to work for someone else. It’s like night and day. You bu...

This might be a dumb question, but could you sell 49% of the business to PE? Take a quick cash infusion to help the business continue to grow, cash out and put some money in the bank for your own personal financial security, and continue to own the majority of the business and continue being your own boss, etc? Not sure how these things work, but maybe you could sell less than half the business and maintain majority control, while still cashing in personally? The PE firm will structure their investment to give them effective control. For example, they will put 90% of their money in in the form of Loan Stock, say paying 8%. That's a debt instrument, and it will suck up any spare cash flow the business will have. That Loan Stock will have a ...

UpperNwGuy wrote: ↑Fri Mar 24, 2023 4:32 pm What's in those ETFs? Is it office buildings? Shopping malls? Apartment buildings? Something else?

Compared to the US index much more conventional office buildings, retail property and industrial property. I don't think you see much of the sorts of things you have in US index: cellular towers, healthcare properties etc.

Between Covid, energy crisis and weak economies, the demand for these traditional sorts of properties is probably pretty poor.

THY4373 wrote: ↑Fri Mar 24, 2023 5:05 pm Anecdotally I just got back from Europe and I didn't see much in Spain or Portugal that would lead me to believe real estate was melting down. There was lots of talk in Portugal about how expensive housing had gotten

Commercial and residential real estate are on very different tracks. I am aware of very few residential real estate companies that are listed in Europe. There are not, generally, the equivalent of "apartment REITs" that they have in the USA.

Lisbon has become the "hot" city in Europe to move to - people liken it to Berlin 10-15 years ago. So there is that. Also Portugal had a foreign investor visa programme, and that may have brought in residential property buyers.

One of the things I forgot to do in the move from the US to the UK. I know I need to file a W-8BEN to someone just not sure who. In the US I had Vanguard funds in a Vanguard brokerage account. I moved them to a US IBRK account and have now moved them to a UK IBRK account. So do I send the form to IBRK UK or Vanguard US ? I suspect this question has been asked before but search did not throw up any obvious questions. Also while I'm here - is it better/more cost effective to claim tax paid in the US on my UK tax return or can I (and would I want to) try and reclaim all US tax paid from the IRS. I could see that taking some time.It's taken the USCIS three months just to acknowledge receipt of my GC surrender form ! Probably be months before t...

I could see that a bank that is just under 250b doesn't want to go over. Those that are a lot under 250b would be taking a substantial risk and have less free capital. But what about banks already over 250b? Why no interest from them? The hassle? If you're already at $2T, the $100B of assets is only 5%. Plus you have to pony up the cash for the assets. When you're already making money hand-over-fist, why dither around with another 5%? There's a desire by regulators not to further increase the size of "Too Big to Fail" banks. So originally they were blocked out of the bidding, it appears. The US is "overbanked" compared to any other developed country. But evidence shows that in terms of local lending to companies and esp...

One cannot rely on dividend income from a stock portfolio. Nor can one rely upon stock prices. During the GFC, real dividends fell very briefly by 23%. During the Great Depression, real dividends fell by 50%, interestingly not dropping significantly until 1932, bottoming in 1935, then snapping back almost to normal 2 years later. (For those who are interested, there's a real dividend column in Bob Shiller's famous spreadsheet.) So, the last half of the above is certainly true, but the first half isn't; if you're spending half your stock dividends (ie, a 1% burn rate), you're probably OK. A small pad of T-bills is probably a good idea, as well. My point was a corporate governance one. Dividends are discretionary by law. Observed past behavi...

To be more direct, buyers of bonds, primary or secondary, bid a price in a market that obtains a given yield. What sets the yield that all the buyers and sellers arrive at, I have no idea. Said yield is hugely affected by the duration of the bond and by faith in the credit of the borrower. It originates in the prospect of future financial gain in lending or borrowing money. And also in some sense the future economic growth and inflation of the economy. At a root, it is a supply of funds from savers, and a demand for funds by borrowers. Central Banks have, in the era of Quantitative Easing (buying bonds up and down the maturity curve), quite a lot of power to move it at least in the short run. Question whether they have much control over re...

The Governor of the Bank of England, Andrew Bailey, has been in financial services regulation for over 30 years. He noted the SVB failure is the fastest seen since Barings went down over a weekend in 1995. Barings was the discovery of a £850m loss on derivatives trades in the Singapore office by a "rogue trader" named Nick Leeson. A tiny loss compared to SVB (which had something like $15bn of equity capital?). This is the social media & electronic world. A bank with hundreds of billions of deposits can be "run" in 24 hours. I am wondering, in a world with "artificial intelligence" whether things might take a further gear up. Your AI Treasury Manager decides that a bank is going down, and moves your money be...

I had a question on European ETF funds, recognizing that VGK is Vanguard's offering (and which I've had before), specifically the SPDR's SPEU and the hedged Franklin fund FLEH. (All use the same benchmark) VGK (inception 3/4/2005) 0.11% er, 22.5 B asset, std dev 23.6, Sharpe ratio 0.38 SPEU (inception 10/15/2002) 0.09% er, 386 M asset, std dev 22.4, Sharpe ratio 0.42 FLEH (inception 11/2/2017) 0.09% er, 14 M asset, std dev 17.58, Sharpe ratio 0.64 While I can see that SPDR's offering isn't really any significant improvement over Vanguard's fund, and that it has much less assets, I can't see why the Franklin offering with a better Sharpe ratio has such a minuscule asset base, since it's been open for over five years, so at least it's been o...

142 billion withdrawals over 2 days against 175million deposits. https://www.cnbc.com/2023/03/28/svb-customers-tried-to-pull-nearly-all-deposits-in-two-days-barr-says.html That bank runs in digital era can be over before it is known to common folks!!! I reality, I give them credit for their back-end systems being able to support that and not crashing. Maybe it didn't. The systems apparently didn't crash, but Planet Money had a podcast about the SVB bank run, and two small-business tech entrepreneurs were shocked when they thought they had withdrawn their money in time, only to discover that their withdrawals did not complete in time to beat the FDIC shutdown of SVB. I suspect they just slow walked it. Deliberately or due to overload. I bel...

harikaried wrote: ↑Tue Mar 28, 2023 2:19 pm

Valuethinker wrote: ↑Mon Mar 27, 2023 5:04 amCommercial Real Estate exposure is a risk for most US regional and small banks

We have money at a regional bank that we used to buy commercial real estate with an adjustable rate mortgage that balloons. Should we be doing something now?

Is it more than $250k?

I hate to spread stories. Your bank may be perfectly safe. It is almost certainly safe. Federal regulators will be crawling over the books of every bank to check that they are not in the SVB position.

Nonetheless the events do underscore the importance of spreading deposits (and CDs) in lump amounts of $250k or less.

By the way this ?First Citizens? bank which just bought SVB is a pretty good risk. They will have stripped clean any bad assets.

youngsters wrote: ↑Fri Mar 24, 2023 4:15 pm It's dramatic title but European real estate ETFs have gone down by 40% last 12 months. What's happening? I know market isn't strong globally and interest rates are going through the roof but elsewhere the real estate funds have been performing more in par with the other market.

Industrial real estate will be doing badly due to the energy crisis.

City centre offices are in trouble just about everywhere.

Retail is staggering.

Interest rate hit of course.

I don't know why Europe might be worse than North America, say. But it is not a pretty sector at the moment.

But, according to the insurance company, there's no way to "under insure" our home in the state of Massachusetts. If it did burn down, we would get a check for the replacement value and can build (or not) whatever we like. One could certainly under-insure by foregoing insurance altogether (not recommended). I have an elderly uncle in Mass who is doing just that. True enough, but I would not forego liability insurance under any circumstances. I don't think my insurer would write policies for the cars and umbrella without the house. Under no circumstances should any property owner forego liability insurance. The American legal system is just punitive on tort law. They will go after the insurer, but after you as well. Then your esta...

Be careful our city had a wild fire break out and burned hundreds of homes to their foundations. Many people found themselves under insured and tried to just abandon their lots after paying off the mortgage. The costs to remediate a lot back to a build-able condition was not inexpensive for some lots $60k to 100K+ in some cases. The city gave the home owners a several years to clean up their lots and ended up suing several. Im not sure the outcome of those lots that could not afford to remediate. I would think eventually they could sell the lots to a developer as real estate prices rose and their lots became worth more then then cleanup costs... Insurers usually pay out to rebuild, I believe. I believe they have clauses against paying out ...

If you have no plans to rebuild in the event of total loss, and there is substantially more value in the lot (land) than in the home structure, would it make sense to underinsure the dwelling coverage to reduce premiums? Especially given the relatively low likelihood of a total loss? Thoughts? Thanks. The loss adjuster will reduce your claim by the estimated degree of underinsurance. If you were 25% underinsured, say, your claim will also be reduced by 25%. Potentially I believe it could refuse the claim altogether, if it was underinsured. The way you "underinsure" is to have a high deductible. That's good economics - only insure for the losses you find hard or unable to bear. Unfortunately it's bad for insurance companies, so th...

I have a family member in India who needs a fairly substantial loan in the near future and is asking for my help. Let's say for argument that I am going to agree to loan them the money. I am based in the U.S. The loan will be money sent from a U.S. bank to a bank in India (not via Bitcoin (I think)). The loan amount will be anywhere from $9k to $25k. A bunch of questions: 1. Do I just walk into my local bank (Wells Fargo) and do a wire transfer? What is the preferred way to do this? 2. Is using a wire transfer company a less expensive way to do this (get a better exchange rate). Are they safe for this amount of money? 3. I understand that transfers of more than $10k will require filling out an IRS form. What about multiple transfers made t...

My allocation is 73% cash (a quarter of it in EUR, the rest in USD) and 27% international stocks (USD ETF). I am currently making no income as I am starting a company in a Eurozone country. In terms of my allocation, I am planning to: - Keep some cash available (30,000-50,000$) at all time (in checking/savings accounts) for the short-term as I have no income - Invest 150k+ (which is slighty over half my total net worth) in USD term deposits on HSBC Expat/Jersey (3.9-4.2% interest rate) for 3-6 months. - Invest the money from the expired time deposit into stocks if the market crashes by then, or extend the term deposit for another 3/6 months or 1 year if the market has not crashed. If I get solid and stable income from my company, I will st...

My allocation is 73% cash (a quarter of it in EUR, the rest in USD) and 27% international stocks (USD ETF). I am currently making no income as I am starting a company in a Eurozone country. In terms of my allocation, I am planning to: - Keep some cash available (30,000-50,000$) at all time (in checking/savings accounts) for the short-term as I have no income - Invest 150k+ (which is slighty over half my total net worth) in USD term deposits on HSBC Expat/Jersey (3.9-4.2% interest rate) for 3-6 months. - Invest the money from the expired time deposit into stocks if the market crashes by then, or extend the term deposit for another 3/6 months or 1 year if the market has not crashed. If I get solid and stable income from my company, I will st...

Hi, you’re right. I’ll give some more details. I owe ~27k on my other vehicle. That is my only other debt. I have no student loans or credit card debt. I owe no money on the sports car and I only drive it in the summer. We have bad winters here. My mortgage is at 3.25%. I make 120k a year. Single no kids. I contribute 15% of my income to my 401k, I don’t think I max it out ever year. I have about 150k saved in retirement. There's no need to repay the mortgage. This may be the cheapest mortgage finance that is available in your time as a mortgaged person. The car loan may be at a higher interest rate. I would say above 5%-6% then it's actually getting quite painful. It's more of a concern if you do not max out every year. Because of the way...

Are you commercial HVAC, residential service, and or residential new build? Reason I ask is the service side, as you likely know is nearly recession proof. I think this is very important in thinking about the next 5 years. If you were residential New build only I’d offload it at those numbers right now and start back up if you wanted later. Watching many business owners sell, I would highly recommend not retaining a percentage. That never seems to end well for the previous owner. The company will likely want to grow the business but will struggle to retain the ones who helped you get it where it is. But sounds like you own the building and if you can lock in a long term lease take that mail of money. Have you considered selling some percen...

The big dirty secret is that many, many undergrad programmes are the same at different colleges. Same textbooks. Same lecture content. Most of us would agree that for a kid with the talent to succeed at, say, MIT, the difference between MIT and their local community college or directional state U would be immense. Sure, the course titles, at least for the initial CS sequences, might be similar, and perhaps even some of the textbooks, but the difference in depth and pacing, the assumptions about student capabilities built into assignments, the peer interactions, etc. would be VERY different, and, financial issues aside, few parents would advise the MIT-capable (and admitted) kid to go to community college instead. But the difference between...

Love my Rav4 2021 mild hybrid. 41 mpg city 38 hwy claimed (and is what i am actually seeing). It is AWD and really peppy which is what sold my hubby on it (he is a track car guy). I understand even the F1 cars are hybrids! We are in Duluth MN which has snow for about 6 mo AND hills, so AWD is more important than in other parts of the country. Without AWD, the mpg is of course better. Has anyone else seen this great website: greencarreport.com ? They report on and rate new (and upcoming) hybrids and EVs. This website has just reported significant price drops in used EV car prices, especially Teslas. I would personally love an EV but first of all, the prices make me laugh they are so high, and with our driving round trips frequently 180 mi, ...

So everyone knows if the fed raises interest rate, bond value falls because existing bonds with lower interest rate are worth less. The reverse happen if the feds lowers rate. What if us bonds are downgraded? I would think the cost of borrowing would increase for the us resulting in a reduction in bond value. However in 2011, I recall a move toward quality ie treasuries after downgrade. I wonder if investor feel there would be more flight to quality. You can't predict whether a change in credit rating is "in the price", or something that surprises the market. Usually in my experience it is in the former. If there is a default risk premium in US govt securities, then it will have moved by the time the rating agency gets round to d...

I'm in the process of moving over my workplace pension fund over to a self managed one. I'm 46 and my pension will be available at age 60. Right now 70% of my monthly savings goes to my pension and 30% to my personal portfolio that I hold with IB. Due to the tax advantages of the pension fund, I believe it's best to hold 100% VWRA (Vanguard Global Fund) in my pension and make up the difference in my taxable personal portfolio (the pension currently holds 30% bonds which will be sold when moving over). When moving the pension over to self-managed and buying 100% VWRA my holistic portfolio will have an allocation of 90% equities and 10% bonds. The question is this - a) is my strategy wise, and b) should I simply sell off part of my VWRA unit...

Hi all How does the forum feel about a 50/50 portfolio of VTI and a CD ladder(5% interest, sounds good to me) for a 63 yr old. This is money in an IRA, with no plans to use this cash, until RMD kicks in. I have enough cash on had for several years and no Debit with a pension, which covers all expenses and no plans at this time to take my Social Security. just looking for simplicity. I know it has no foreign investments, but I am fine with that. I welcome all options. thanks This is perfectly fine. There is a suggestion here that you use Total World. Assuming that includes USA? I don't actually think it will make a big difference to your final outcome. Normally I suggest American investors hold 20-30% of their stocks (so around 15% in your ...

College professor here; please take the wise words of Valuethinker and BeanieMaker to heart. I am seeing about 20% of my students fail right now, not because they don't have the intellectual ability or academic skills to be successful but because they are academically disengaged. My campus is either not the right fit for them, they don't like the culture, or they are struggling with mental health challenges (side note: all families, please consider having a backup plan for mental health services for your child in place bc many college counseling centers are overwhelmed). Your child is in class 15-20 hours max per week. Both Purdue and Pitt have high-quality academics, but which one will provide the student-life environment that will allow ...

David76 wrote: ↑Sun Mar 26, 2023 12:39 pm I guess Paul Fussell was right when he called class [social and economic status] a "touchy" subject. I apologize for being insensitive. It was not my intention.

As in "Americans talk all the time about race, but not class. Brits talk all the time about class, but not race".

Class discussion is certainly an English obsession (if not necessarily a British one).

https://www.youtube.com/watch?v=UDIHrX-Jp2E

You certainly get a sense that in the North East of the USA there is an elaborate sense of class and some quite fine distinctions as to class. Connecticut v New Jersey. But ethnicity is also buried in that. I am not sure this is the case anywhere else in the USA? Perhaps in the Old South?

Guy has nearly $5mm net worth and over $1mm annual income at age 34. I think you can buy a $90k car and not worry much about it. This thread is ridiculous. Unless I missed it, OP’s gender has not been established. I do, fwiw, often miss a lot. Not sure if you missed it, but you seem to have missed the part where “guy” can refer to a person of unknown gender, a group of multiple genders, or a single gender. You’ve never said “that guy cut me off” without knowing the gender of the person doing the cutting off? You’ve never referred to a group of people as “guys”, even if the group had women, or was exclusively female? Perhaps you haven’t, but doesn’t mean others don’t. True enough, I'll sometimes say "hey guys" to a mixed gender gr...

... Thanks I supposed in the long run the currency fluctuations will even out and can even be good for diversification for equity . What is your opinion on global bonds? Unlike stocks the holding horizon is lower and the return might easily get wiped out by currency swings. In the early part of the 1900s the British pound was worth about $5.00 US. Today the British pound is worth around $1.25. So, a 75% drop in relative value over about a century but no reason to expect the fluctuations to even out with the pound strengthening tremendously going forward. I assumed, implicitly, that gavinsiu meant "even out with inflation". i.e. that the long run determinant of currency level between 2 countries is the relative inflation rate. Pur...

You have to make the hydrogen. Right now that is done in a very "ungreen" way by reforming natural gas. Then you have to transport the hydrogen. "ungreen" describes most people's electric also... and more so when more cars are dumped on a grid that can barely get thru summer without pleads to curb AC use in some places. That's even before you get to the manufacturing processes. I wish there was a real conversation but it's been taken over by electric is angelic and ICE is the devilish stuff. You've tried to confuse a discussion about Hydrogen v EVs with references to EV v ICE debates. My point was not about that. It was about the problems of getting a genuinely clean hydrogen energy system & energy efficiencies v EV...

Grt2bOutdoors wrote: ↑Sun Mar 26, 2023 9:58 pm You should not look at the cash flow statement in isolation. It’s best to read the income statement and balance sheet in conjunction with the cash flow statement to understand what the year over year changes were and how it affects the cash flow of the company. Reading the notes would be helpful to you as well.

As to your question if the company is unprofitable, the income statement shows the company is profitable.

Are you looking at this particular company for your schooling or for some other reason?

Cash flow on banks is a difficult measure in any case.

Movements in deposits & borrowings can be huge and dwarf any operational number.

There is no doubt a UK investor should use a globally diversified equity portfolio. On diversification grounds alone. After all, 60-70% of the profits of the FTSE100 are earned overseas. If we believe that is a desirable diversification away from the UK economy, then we should also consider that diversification into companies and sectors (like high technology) that the UK does not have, should be a good thing as well. The question is whether to hedge currency exposure for equities. That's harder, but because the UK is a relatively small & open economy (imports a lot of what it consumes) it's generally a benefit to have global currency diversification. UK prices will tend, in the long run, to track global prices. Your home equity, your ...

There is no doubt a UK investor should use a globally diversified equity portfolio. On diversification grounds alone. After all, 60-70% of the profits of the FTSE100 are earned overseas. If we believe that is a desirable diversification away from the UK economy, then we should also consider that diversification into companies and sectors (like high technology) that the UK does not have, should be a good thing as well. The question is whether to hedge currency exposure for equities. That's harder, but because the UK is a relatively small & open economy (imports a lot of what it consumes) it's generally a benefit to have global currency diversification. UK prices will tend, in the long run, to track global prices. Your home equity, your ...

Thanks for all of the info. One particular shocking stat. The safe withdraw rate for Japan is 0.26%. While Japan’s peak was in the 80s, I wouldn’t say it gone under. Yet, you can see this as a cautionary tale that could occur in the uk and the us. I wonder if a safe bet might be to take a global weighting. Like investing in the us there might be currency fluctuations in addition to mismatched inflation. Had the Japanese investor invested in a globally diversified portfolio they would have been in far better shape. Retirement in 1966 in US (or anywhere), 1929 or 2000 all posed particular challenges. High weightings in US Treasury bonds would have helped in 1929 or 2000 but not in 1966. Sequence of Return Risk is very real. There is no doubt...

Silicon Valley - there’s the takeover, long weekend for the FDIC I’m sure. https://www.fdic.gov/news/press-releases/2023/pr23023.html The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. So we can now put the question to rest -- This was a bailout. The depositors didn't buy private insurance but got FDIC insurance after the fact. Wouldn't it be nice if we could leave our house uninsured, have it burn down, then get paid anyway? :oops: The FDIC just set a dangerous precendent. They will have to do the same for future bank failures, otherwise it would be unfair. What do the FDIC-defenders say now about this not being a bailout? Depositors are not shareholders o...

So to the OP, your son will have many opportunities with a CS degree beyond programming. However, given his interest in 3D printing and circuit development, I would echo the recommendation that he consider electrical or computer engineering (EE or CE). While CS started as a blend of applied mathematics and engineering, it's moved farther away from its engineering roots. Alternatively, he should look closely at the required and elective courses at both Purdue and Pitt to see which one still retains more of its engineering roots with more coverage of hardware topics like logic circuits, memory layouts, assembly language, computer organization, and so on. He'd have to look at course descriptions, because a lot of CS programs still have "...

Our high school sends many kids to Purdue for engineering. Generally is is seen as a third tier choice for kids who could not get into the Ivies/MIT/CMU/CT, or more prestigious or more fun Big 10 flagships like UIUC, Michigan and Wisconsin or west coast flagships like UW, UCB and UCLA. That said, a mid 1500 SAT score would easily put him in the top quartile of students at Purdue. I would rate Purdue CS on par with if not higher than Michigan CS. I would pick Purdue over Harvard or Dartmouth for CS as well. It appears actual employers disagree with you. Early career salaries for CS majors from College Scorecard. Harvard - $163,896 Dartmouth - $128,856 Michigan - $117,745 Purdue - $94,727 In addition to controlling for differences in the stu...

We've taken both our Teslas with friends on 1500+ mile road trips as it was much preferred over driving ICE. I’ve heard tortured (and unconvincing) arguments that an EV is “as good” as ICE for a road trip, but preferable? By what stretch? This assertion needs a LOT of explanation. I’ve done dozens of ICE lengthy road trips. You hit the accelerator and quickly fill up as needed at endlessly available gas stations. How can that be improved on? EV should be cheaper to "fill er up". What will happen over time is the number of gas stations will shrink. I would reckon that is already the case - due to higher mileage/ mpg of cars these days, and higher costs of labor etc. But it will start to become more noticeable. Whereas hotels etc w...

Lexus has been selling the RX hybrids since 2004. They are extremely smooth and reliable. Hybrids barely account for 10% of the US market (as of Feb 2023). So nobody is forcing you to do anything. Hybrids are the best of both worlds and the worst. You can be ICE or electric during this transition to more charging stations for road trips. If you don't need to take long road trips in this car, you can skip the ICE and go EV. EV is infinitely simpler. Hybrid is least simple as you have two drive trains to manage and maintain. If you want cutting edge, get a Hydrogen car. Sales are inching up. The incoming Toyota CEO, Sato has changed course with Toyota. They had started to head towards EVs with their Bx4wxyz, which is co-branded with the Suba...

I did a search on this in the forums and couldn't find anything bout this topic. Looking to replace my 20 year old vehicle with 250K miles on it and the dealers have a lot more hybrid selection than straight gas. This is in CA. Are the hybrids the way to go? I've heard the batteries only last 10 years so I wouldn't be able to get 20 years out of it without replacing the battery. We're looking at the RAV4 or CRV/HRV. How interesting. Here in Ohio my wife wants a Rav4, preferably a plug in. Dealers currently say for a plug in they'll put you on a list, they get 1-2 every once in a while. For a hybrid you can order and it will be 8-10 months. (last summer they told us 6-8 months and we passed) Maybe we should look elsewhere in the US. Similar...

Hi, I did a search on this in the forums and couldn't find anything bout this topic. Looking to replace my 20 year old vehicle with 250K miles on it and the dealers have a lot more hybrid selection than straight gas. This is in CA. Are the hybrids the way to go? I've heard the batteries only last 10 years so I wouldn't be able to get 20 years out of it without replacing the battery. We're looking at the RAV4 or CRV/HRV. Help! Is hybrid the "boglehead" way to go now? I really try to avoid buying the latest tech or fads and haven't bought a car in 20 years so I'm out of the loop. My next purchase is going to be replacing my home rotary phone with a cell phone!! :happy Yes you should buy a hybrid. The reasoning being that California...

Just saw that First Republic's stock lost 90% of its value since the beginning of the month and hasn't recovered at all even after SVBs bailout and the treasury secretary's remarks. Can someone explain what problems FRB is facing? Similar to SVB? Credit Suisse? something else? 1. based in San Francisco 2. lending to the same sorts of people BUT w a big difference in risk (more traditional banking) 3. Commercial Real Estate exposure is a risk for most US regional and small banks. But especially so if they are based in Silicon Valley/ San Francisco 4. "It's irrational to start a bank run. It's rational to participate in one". Every large depositor will be reviewing their risks. FR will be high on the risk register. So pull the mone...

The 4% rule is often cited for estimating how much to save for retirement. However, it’s based on backtesting the us stock market which has higher historical return than the uk return. What would you use to estimate how much to save? https://www.youtube.com/watch?v=1FwgCRIS0Wg Nice (Canadian) deconstruction of the "4% rule". It's actually 2.7-2.8% if you use a broader set of data. 4% was an (accidental) cherrypick. For UK retirees, one of the key problems is the low yield on Index Linked Gilts (this may be better in a post tax situation, not sure). Basically it's extremely expensive (in terms of low real yields) to build a bomb-proof investment portfolio. You wind up having to have more equities, and that means more risk. Given t...

The 4% rule is often cited for estimating how much to save for retirement. However, it’s based on backtesting the us stock market which has higher historical return than the uk return. What would you use to estimate how much to save? The 4% empirical observation about US stock market returns goes back to about 1926. If you expect the UK to participate in a World War that exhausts the economy and then lose another empire sometime in the next 100 years then looking backwards is not a bad place to begin. Not a great place to begin, but not obviously horrible. But I don't think the UK is likely to lose an empire any time soon so that bit looks iffy. Political fragmentation of the "United" Kingdom of Great Britain and Northern Ireland...

whodidntante wrote: ↑Sun Mar 26, 2023 8:06 am A treasure room with traps is the most secure solution, so long as your threat model doesn't include Indiana Jones.

Or people who play Dungeons and Dragons a lot.

"You are in a maze of twisty corridors".

They are both 100% insured, so I don’t see the point. People are too panicked these days Who is providing insurance for option B? OP states, Option B - $250,000 in a money fund at Fidelity, which is NOT FDIC insured. But it is insured against almost everything. There is SIPC insurance in case the brokerage explodes and loses your shares, so the 250k would be recovered. Yes, under some very small set of situations the money market could “break the buck” temporarily, but that would be like a temporary <1% price movement, not a total loss It could however trigger a run on the MMF? Everyone races to get out, because they know redemptions will cause the sale of the more liquid/ higher quality securities in the MMF? aka "It's not rational t...

That's of course true. If your burn rate is, say, 1%, then you can live on the dividend yield, which should at least track inflation, of a 100% stock portfolio, and with a good margin of safety. That's the math half of investing. The Shakespeare half of investing, tho, is greatly bolstered by a nice pile of both TIPS and T-bills at any burn rate. At the risk of repeating myself way too many times, there's a reason why Berkshire keeps 20% of its assets in bills and cash equivalents. In the UK 1972-74 stocks dropped 80% in real terms (a bit over). Less in nominal terms. Stocks in the 1930s of course dropped something similar, 1929-1933? More in nominal terms but prices fell? Then staged a recovery, then dropped nearly as much in 1938? In bot...

Nisiprius has reminded me of what I thought of the "Risk parity" portfolios. What happens if: - we have high inflation, and interest rates go up (both), and gold does not act as an inflation hedge? - we have low inflation, low interest rates, and a go nowhere sort of stock market? I can keep inventing macroeconomic scenarios, and we have just been through one, where no part of the portfolio is really going to help you much. Stock market went down. Long bonds went down as much or more. Inflation went up so short term bonds (which also went down) did not do well in real terms. Gold wasn't a great hedge? Also. Never leverage. Charlie Munger (?) is right. If you lose your stake at the casino, that's it, you can never have those savin...

So I am super familiar with how things work in the US. The fund is a separate entity - at least in the US. In theory nothing should happen to the fund if the sponsor blows up. At least in the US the controls are super robust... Hi alex_686, Thanks for sharing your perspective. Were you following ETNs back in 2008, when Lehman Brothers filed for bankruptcy? It's my understanding that holders of Lehman's ETNs did not recover all their investment and were treated as unsecured creditors. How does that situation relate to what you wrote? Here is a link to a news article describing treatment of those ETN investors. In my understanding, ETNs are very different from ETFs? ETN is actually issued by the arranging bank, eg Lehman. It's a bet on Lehma...