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by watchnerd
Sun Mar 24, 2024 5:04 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

I've worked in both publicly traded high technology companies and venture capital backed tech startups for over 25 years. If you don't think there is a link between monetary policy and wealth / productivity creation, you don't understand how technology innovation is funded. I never said that there is no relation or no effect in the short run, and I don't need any background like yours to know that. But this is just a small piece in the puzzle, and this doesn't contradict my observations. I still stand by my observations, which I think are consistent with academic research (no citations immediately handy). The math is simple, and consistent with academic research and macro economics. And it also relates to DCF and the valuation of growth st...
by watchnerd
Sat Mar 23, 2024 10:56 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

I've worked in both publicly traded high technology companies and venture capital backed tech startups for over 25 years. If you don't think there is a link between monetary policy and wealth / productivity creation, you don't understand how technology innovation is funded. I never said that there is no relation or no effect in the short run, and I don't need any background like yours to know that. But this is just a small piece in the puzzle, and this doesn't contradict my observations. I still stand by my observations, which I think are consistent with academic research (no citations immediately handy). The math is simple, and consistent with academic research and macro economics. And it also relates to DCF and the valuation of growth st...
by watchnerd
Sat Mar 23, 2024 9:29 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

Like the WSJ alluded to, my understanding is that monetary policy can just re-allocate wealth in the short run - re-allocate between owners of real and paper assets, and/or between present and future economic activity, i.e. make people consume more now at the expense of future consumption or welfare. I think theoretically if a central bank or government prints more money, this would naturally lead to currency devaluation by rational market participants, all other things being equal. Setting aside some minor and questionable secondary effects, monetary policy cannot create wealth in the long run. Which kind of makes sense if you think of it really hard - you don't have to be an economist to do that: In aggregate, somebody has to create some...
by watchnerd
Sat Mar 23, 2024 5:48 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

Like the WSJ alluded to, my understanding is that monetary policy can just re-allocate wealth in the short run - re-allocate between owners of real and paper assets, and/or between present and future economic activity, i.e. make people consume more now at the expense of future consumption or welfare. I think theoretically if a central bank or government prints more money, this would naturally lead to currency devaluation by rational market participants, all other things being equal. Setting aside some minor and questionable secondary effects, monetary policy cannot create wealth in the long run. Which kind of makes sense if you think of it really hard - you don't have to be an economist to do that: In aggregate, somebody has to create some...
by watchnerd
Sat Mar 23, 2024 5:42 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

Nathan Drake wrote: Fri Mar 22, 2024 12:30 pm
  • TODAY in 2024, Real US expected returns are 3% (based on some calculation using inverse CAPE), which is SIGNIFICANTLY LESS THAN 7% the US received from 1950-2024. And significantly less than the Global Average of 5%
1.9% real yield on 10 YR TIPS looking pretty good right now.
by watchnerd
Sat Mar 16, 2024 6:04 pm
Forum: Investing - Theory, News & General
Topic: Why does the stock market go down after some bad news?
Replies: 35
Views: 3237

Re: Why does the stock market go down after some bad news?

Why would it not respond?

If investors didn't have different opinions on the future value of stocks, there would be no market.

Somebody has to sell for you to buy.

On down days, there are more sellers than buyers.
by watchnerd
Thu Mar 14, 2024 8:07 am
Forum: Personal Finance (Not Investing)
Topic: How Much Cash Do You Keep In Your Home?
Replies: 207
Views: 15481

Re: How Much Cash Do You Keep In Your Home?

We just stockpile a month's food at any time.
by watchnerd
Thu Mar 14, 2024 1:03 am
Forum: Personal Finance (Not Investing)
Topic: How Much Cash Do You Keep In Your Home?
Replies: 207
Views: 15481

Re: How Much Cash Do You Keep In Your Home?

Enough to get by if there’s a regional power outage, internet outage, etc. what would you do if your credit cards don’t work? How are you buying anything in a power outage? The cash registers won't work. And what did we do before cash registers. I have literally lived for multiple weeks with no line power multiple times. Guess what, people find a way to make cash work. Don't forget often folks will have generators to run the store but the necessary connecting infrastructure to make CC work is down. It's irrelevant what we did before we had cash registers. Modern grocery stores run on electronic POS systems. You can't buy stuff if the clerk can't ring it up. And the clerk can't ring it up if there is no electricity. And yet I have done it. ...
by watchnerd
Thu Mar 14, 2024 12:11 am
Forum: Personal Finance (Not Investing)
Topic: How Much Cash Do You Keep In Your Home?
Replies: 207
Views: 15481

Re: How Much Cash Do You Keep In Your Home?

LotsaGray wrote: Thu Mar 14, 2024 12:00 am
watchnerd wrote: Wed Mar 13, 2024 6:00 pm
Amien wrote: Wed Mar 13, 2024 11:42 am Enough to get by if there’s a regional power outage, internet outage, etc. what would you do if your credit cards don’t work?
How are you buying anything in a power outage?

The cash registers won't work.
And what did we do before cash registers.

I have literally lived for multiple weeks with no line power multiple times. Guess what, people find a way to make cash work. Don't forget often folks will have generators to run the store but the necessary connecting infrastructure to make CC work is down.
It's irrelevant what we did before we had cash registers.

Modern grocery stores run on electronic POS systems.

You can't buy stuff if the clerk can't ring it up.

And the clerk can't ring it up if there is no electricity.
by watchnerd
Wed Mar 13, 2024 6:00 pm
Forum: Personal Finance (Not Investing)
Topic: How Much Cash Do You Keep In Your Home?
Replies: 207
Views: 15481

Re: How Much Cash Do You Keep In Your Home?

Amien wrote: Wed Mar 13, 2024 11:42 am Enough to get by if there’s a regional power outage, internet outage, etc. what would you do if your credit cards don’t work?
How are you buying anything in a power outage?

The cash registers won't work.
by watchnerd
Tue Mar 12, 2024 10:44 pm
Forum: Personal Finance (Not Investing)
Topic: How Much Cash Do You Keep In Your Home?
Replies: 207
Views: 15481

Re: How Much Cash Do You Keep In Your Home?

Whatever is in my wife's wallet + the $40.

Basically almost nothing.
by watchnerd
Tue Mar 12, 2024 7:44 pm
Forum: Personal Investments
Topic: Gold and Risk Adjusted Return
Replies: 33
Views: 3859

Re: Gold and Risk Adjusted Return

That is because "inflation" as they call it means rising prices due to an increase in the issuance of currency and credit thus devaluing the purchasing power of the currency. Gold protects your purchasing power in that aspect of its return is 0% real because gold itself is the money. Currencies lose value over time against gold resulting in the "rising fiat price of gold". So I am in agreement with 10% allocation to gold to help risk adjusted returns. Yes, that is what inflation means -- depreciation of the value of fiat relative to real goods. However, gold is not a productive asset nor is it used as money in most countries. It is a store of value and a commodity. Gold is a tier one asset in accordance with Basel III. ...
by watchnerd
Mon Mar 11, 2024 12:28 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

When considering the recent US performance it is important to consider the extremely poor performance of some very good companies (especially in the tech sector) in 2022. Looking at some things over a 36 month period can provide some perspective that might be missed if only looking at an individual year. Volatility in US markets has been off the charts so smoothing things out over a longer period of time can be helpful. One of the premises here is that US equity out-performance has been pervasive since the Global Financial Crisis, starting around 2007. So it's been something like 16+ years now... not 1, or 3, or 5. Thus the elasticity and opaqueness of the term "recent". In the context of the entire post-WW2 period, 2007-2024 has...
by watchnerd
Mon Mar 11, 2024 12:19 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

Going to continue a conversation about Vanguard's aggressiveness with international allocations in their Target Date / LifeStrategy funds here. I was (wrongly) under the impression that Vanguards TDF / LifeStrategy funds were designed to hold something approximating a global index on the equity allocation side, but Vanguard's investment strategy is actually set to 60/40 - not to a global index. For example the Vanguard Lifestrategy Growth fund has an 80% equity allocation with 48% of that being US stocks and 32% being international stocks (60/40 or 1.5:1). Or Vanguard Target Retirement 2070 has a 90% equity allocation with 54% of that being US stocks and 36% of that being international stocks (also 60/40 or 1.5:1). With the recent US marke...
by watchnerd
Sat Mar 09, 2024 4:39 pm
Forum: Investing - Theory, News & General
Topic: William Bernstein On the Financial Industry
Replies: 81
Views: 10154

Re: William Bernstein On the Financial Industry

livesoft wrote: Fri Mar 08, 2024 9:35 am Or become one of the "piranhas."
Well, they referred to as bigger aquatic predators than that on "Shark Tank"
by watchnerd
Sat Mar 09, 2024 1:02 pm
Forum: Personal Investments
Topic: Should bond index funds still be part of our asset allocation?
Replies: 16
Views: 1520

Re: Should bond index funds still be part of our asset allocation?

I only use bond funds for non-Treasuries, where diversification is important.

I don't have any personal reason to prefer a Treasury bond fund over individual issues (T-Bills, TIPS).

I buy TIPS at auction and on the secondary market.
by watchnerd
Tue Mar 05, 2024 7:29 pm
Forum: Investing - Theory, News & General
Topic: Alternative Asset Classes
Replies: 12
Views: 1322

Re: Alternative Asset Classes

I think there is a super heavy specialization and skill component here that is hard to quantify numerically.

I collect watches, but I have little expertise in whole genres of watches. I have pretty good expertise in dive watches, generally, and very good expertise in mechanical dive watches from 1960s to present. So that's what I collect.

Same thing for LPs -- I have specific expertise in jazz LPs from about 1950 until about 1982. Anything else is outside my skill.

Collectibles should be viewed more like a 'hobby that pays for itself' and you're passionate about.
by watchnerd
Sun Mar 03, 2024 4:21 pm
Forum: Investing - Theory, News & General
Topic: High Yield Term Bond Ladder Crazy or Genius ?
Replies: 52
Views: 5703

Re: High Yield Term Bond Ladder Crazy or Genius ?

quattro73 wrote: Sun Mar 03, 2024 4:12 pm
watchnerd wrote: Sun Mar 03, 2024 3:46 pm Maybe the bond markets have moved enough since the OP, but I'm not seeing 8% yield.

7% seems to be the going rate for most of those listed.
They have. OP was looking at the time rate peaked in October at the height of higher for longer narrative and the 10 year Treasury almost hit 5.00%.

As an aside Ishares has removed their ladder tool for their Ibonds products for some reason.
This thread seems to be mostly about where one wants to place bets.

Does one think stocks will return >7% over the timeframe of an IG / HY bond ladder?
by watchnerd
Sun Mar 03, 2024 3:46 pm
Forum: Investing - Theory, News & General
Topic: High Yield Term Bond Ladder Crazy or Genius ?
Replies: 52
Views: 5703

Re: High Yield Term Bond Ladder Crazy or Genius ?

Maybe the bond markets have moved enough since the OP, but I'm not seeing 8% yield.

7% seems to be the going rate for most of those listed.
by watchnerd
Sun Mar 03, 2024 1:16 am
Forum: Investing - Theory, News & General
Topic: High Yield Term Bond Ladder Crazy or Genius ?
Replies: 52
Views: 5703

Re: High Yield Term Bond Ladder Crazy or Genius ?

I am looking at ibonds iShare term maturity bonds - high yield https://www.ishares.com/us/resources/tools/ibonds Can you guys tell me if it is genius or madness to make a bond ladder with these high yield etf bonds ? On paper they offer - 8 to 9% return with a yield around 6%. - guarentee return IF HELD TO MATURITY Does anybody here has experience and stories about the maturity not returning principal ? If this product does what it says and held to maturity I don't see the point of playing the stock market when I can get a 8% return, risk free ? I know I can hold these to maturity so WHY should I NOT do it :) ? I hope some with experience can chime in before I make the plunge. This link doesn't work anymore. What are you investing in?
by watchnerd
Wed Feb 28, 2024 3:30 pm
Forum: Investing - Theory, News & General
Topic: Stocks for the Long Run? Sometimes yes. Sometimes no.
Replies: 49
Views: 13422

Re: Stocks for the Long Run? Sometimes yes. Sometimes no.

I'm not sure why tracking stocks over a very long period is any more enlightening than tracking horse population, train miles travelled, electricity use, nuclear power use, solar energy use, computer power, etc. The world changes and conditions even 100 years ago are greatly dissimilar from conditions now. Because people do not invest their hard earned money based on tracking data of horse population, train miles travelled, electricity use, nuclear power use, solar energy use, computer power etc. Because all those things that you mentioned have little if not none actionable applicable relevance in deciding their asset allocation. I would propose that the dynamics of the investing population and stock exchanges in the late 19th and early 20...
by watchnerd
Wed Feb 28, 2024 6:39 am
Forum: Investing - Theory, News & General
Topic: Stocks for the Long Run? Sometimes yes. Sometimes no.
Replies: 49
Views: 13422

Re: Stocks for the Long Run? Sometimes yes. Sometimes no.

What is the takeaway for investors? That somehow businesses have been unusually profitable in the last 150 years, but based on data from 150-250 years ago we should expect them to mean revert? Public stocks are just a tool to raise capital to fund a business, and not the only one. Profitable businesses aren't required to use stocks to do so. Bank loans are more popular in some parts of the world, and private equity is a $23T market. Profitable businesses have existed for centuries before stocks even existed. Stocks, as we know them, can be traced back to the Amsterdam Stock Exchange in 1602 and the trading of the Dutch East India Company shares. Yet the wealth of Venice and Florence preceded this by more than a century. Capitalism and busi...
by watchnerd
Wed Feb 28, 2024 12:40 am
Forum: Investing - Theory, News & General
Topic: Do cap-weighted funds strictly align with BH philosophy?
Replies: 118
Views: 9126

Re: Do cap-weighted funds strictly align with BH philosophy?

A market cap fund is about as far away from stock "picking" as one can get... When 10 companies are weighted at 31% of 500, you are playing favorites. You are invested in frontrunners. You are choosing current winners and have only .03% invested in a company that could be the next Apple, so when it does sora, you wn't have been invested in it properly until *after* it does. This, in essence, goes against BH philosophy. You aren't following... If those 10 companies implode tomorrow, and represent 0% of the fund, "their 31%" doesn't "disappear" - it gets "reallocated". Something else will take their place. I won't care. I don't need those top 10 companies to succeed. I don't care if they fail. I don't ...
by watchnerd
Wed Feb 28, 2024 12:36 am
Forum: Investing - Theory, News & General
Topic: Do cap-weighted funds strictly align with BH philosophy?
Replies: 118
Views: 9126

Re: Do cap-weighted funds strictly align with BH philosophy?

A market cap fund is about as far away from stock "picking" as one can get... When 10 companies are weighted at 31% of 500, you are playing favorites. You are invested in frontrunners. You are choosing current winners and have only .03% invested in a company that could be the next Apple, so when it does sora, you wn't have been invested in it properly until *after* it does. This, in essence, goes against BH philosophy. It doesn't go against BH philosophy. You're assuming that you can identify 'the next Apple' better than the market can. That would be trying to pick winners, which goes against BH philosophy. By owning the whole market, you're already invested in the 'next Apple' at market weight. And when it grows bigger, you get ...
by watchnerd
Tue Feb 27, 2024 11:57 pm
Forum: Investing - Theory, News & General
Topic: Do cap-weighted funds strictly align with BH philosophy?
Replies: 118
Views: 9126

Re: Do cap-weighted funds strictly align with BH philosophy?

thatbrian wrote: Tue Feb 27, 2024 11:35 pm Please explain to me how owning cap-weighted index funds is not "picking stocks", because this seems like a glaring inconstancy to me.

Thank you!
In what way is it picking stocks?

The market is doing the weighting, not you, as an individual.
by watchnerd
Mon Feb 26, 2024 9:14 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

Billy C wrote: Mon Feb 26, 2024 9:07 pm
watchnerd wrote: Mon Feb 26, 2024 8:49 pm
21st century might end up being USA + Global South
You may be right.

Demographics are huge. It will create opportunities for some countries and major challenges for others.

AI might help countries with poor demographics maintain their productivity. The next few decades will be fascinating to see how it all plays out.
But AI doesn't consume goods and services.

Or, so far, pay social security or taxes.

We don't have an economic model for where a large part of the world is going.
by watchnerd
Mon Feb 26, 2024 8:52 pm
Forum: Personal Finance (Not Investing)
Topic: Tech Compensation
Replies: 39
Views: 5259

Re: Tech Compensation

You will get paid much more to do societally worthless but lucrative things such as selling ads, quick cat videos, or Amazon-branded doodads. I've done none of these things in my entire career in tech. I worked on cloud infrastrucure platforms and open source projects for most of it. Nvidia mostly sells chips for video games (so far). This is completely wrong. In the latest quarter, Nvidia made about 6x revenue in datacenter (AI) compared to gaming. Nvidia’s data center segment (AI) first surpassed gaming in mid 2022: Quarter ending May 2022: Gaming=$3.62b Datacenter(AI)=$3.75b Total Quarterly Revenue=$8.28b Quarter ending Jan 2024: Gaming=$2.90b Datacenter(AI)= $18.4b Total Quarterly Revenue=$22.0b The factual inaccuracy of thinking Nvidi...
by watchnerd
Mon Feb 26, 2024 8:49 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

Billy C wrote: Mon Feb 26, 2024 8:00 pm The relatively favorable demographics of India and the US already appear to be priced in by the market.

Image
21st century might end up being USA + Global South
by watchnerd
Mon Feb 26, 2024 7:31 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

One of the framing challenges is recency bias.

We tend to think of ex-US as being dominated by ex-US developed (UK, Europe, Japan) markets, with EM just occupying a small slice.

But the demographics of the not-so-distant future may change things.

Image

Granted, demography isn't the same as economic growth, nor stock market returns, but having less of an aging population is, all else being equal, a good thing.
by watchnerd
Mon Feb 26, 2024 4:00 pm
Forum: Investing - Theory, News & General
Topic: Dot.Com Era/AI Era?
Replies: 311
Views: 29852

Re: Dot.Com Era/AI Era?

It's all priced in.

Including the idea that AI may be overhyped -- that's also priced in.
by watchnerd
Mon Feb 26, 2024 9:08 am
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

valueinvestor wrote: Sun Feb 11, 2024 2:24 pm By publicly arguing your position, you are entrenching your conviction which you will need whenever your approach starts underperforming.
I you hold global market cap, you're always underperforming something.

It's behaviorally great.
by watchnerd
Sun Feb 25, 2024 10:24 am
Forum: Personal Investments
Topic: Gold and Risk Adjusted Return
Replies: 33
Views: 3859

Re: Gold and Risk Adjusted Return

naturewalker420 wrote: Sun Feb 25, 2024 10:18 am That is because "inflation" as they call it means rising prices due to an increase in the issuance of currency and credit thus devaluing the purchasing power of the currency. Gold protects your purchasing power in that aspect of its return is 0% real because gold itself is the money. Currencies lose value over time against gold resulting in the "rising fiat price of gold". So I am in agreement with 10% allocation to gold to help risk adjusted returns.
Yes, that is what inflation means -- depreciation of the value of fiat relative to real goods.

However, gold is not a productive asset nor is it used as money in most countries.

It is a store of value and a commodity.
by watchnerd
Sun Feb 25, 2024 5:07 am
Forum: Investing - Theory, News & General
Topic: LMP/TIPS Ladder Pros & Cons Master Thread
Replies: 71
Views: 6032

Re: LMP/TIPS Ladder Pros & Cons Master Thread

Kevin K wrote: Fri Feb 23, 2024 4:10 pm But does it have to be a TIPS ladder? What about using VTIP (or, like Jonathan Clements does, a barbell of VTIP and VGSH) instead.

Adam Collins did a series on TIPS back in 2019 that seems to me to do a good job of showing why shorter-duration TIPS have their place:

https://eversightwealth.com/how-to-hedg ... bond-risk/

Not a lot of market history with TIPS altogether but VTIP has outperformed all of the intermediate-term and longer TIPS funds and ETFs.
VTIP is only going to liability match for 2.5 years.
by watchnerd
Sun Feb 25, 2024 12:50 am
Forum: Investing - Theory, News & General
Topic: Has passive investing broken the market?
Replies: 136
Views: 16722

Re: Has passive investing broken the market?

It's an odd accusation.

Passive indexing doesn't prevent active investors from attempting price discovery, or finding "hidden gems".

There is nothing about the growth of passive investing that prevents active managers from potentially beating the index.
by watchnerd
Sat Feb 24, 2024 11:43 pm
Forum: Investing - Theory, News & General
Topic: "Even real technology revolutions do not guarantee benefits for investors" #fomo
Replies: 9
Views: 3252

Re: "Even real technology revolutions do not guarantee benefits for investors" #fomo

White Coat Investor wrote: Sat Feb 24, 2024 10:58 pm Same with canals, airplanes, and the internet booms.
Railroads, also.

There were more miles of railroad tracks at the height of the railroad boom than there are today.
by watchnerd
Sat Feb 24, 2024 10:39 pm
Forum: Personal Finance (Not Investing)
Topic: High Salary (>$500,000) careers
Replies: 244
Views: 29146

Re: High Salary (>$500,000) careers

Software engineers can make that much at the staff level at large tech companies. I'm at about $450k as a staff engineer and hope to get there in the next year or two. I only work about 35 hours a week and it's low stress. I'm at a third-tier tech company and work out of one of our Colorado offices. This is wild to me. What are you doing that's low stress that still makes $300/hour? Just writing code? I'm a professional civil engineer that's not yet 40 and feel very lucky to be making $70/hour. I should have expanded from my menial C++ class early in college :) You don't even need to be a coder. Marketers in big tech at your age / seniority frequently make more than double what you're making. My total comp as a product marketing director a...
by watchnerd
Sat Feb 24, 2024 10:25 pm
Forum: Personal Finance (Not Investing)
Topic: Tech Compensation
Replies: 39
Views: 5259

Re: Tech Compensation

You will get paid much more to do societally worthless but lucrative things such as selling ads, quick cat videos, or Amazon-branded doodads. I've done none of these things in my entire career in tech. I worked on cloud infrastrucure platforms and open source projects for most of it. Good. The business of the mag 7 is mostly that. Meta sells ads. Google sells ads. Amazon sells ads. Netflix sells TV. Apple does actually sell products. Nvidia mostly sells chips for video games (so far). Etc. I know lots of people who work for these companies, and though their work may seem only distantly related to these objectives, fundamentally it is not. Most NVIDIA chips are going into AI these days, actually. That's why their stock is booming, not becau...
by watchnerd
Sat Feb 24, 2024 10:18 pm
Forum: Personal Finance (Not Investing)
Topic: Tech Compensation
Replies: 39
Views: 5259

Re: Tech Compensation

snowday2022 wrote: Sat Feb 24, 2024 9:57 pm You will get paid much more to do societally worthless but lucrative things such as selling ads, quick cat videos, or Amazon-branded doodads.
I've done none of these things in my entire career in tech.

I worked on cloud infrastrucure platforms and open source projects for most of it.
by watchnerd
Sat Feb 24, 2024 9:25 pm
Forum: Personal Finance (Not Investing)
Topic: Tech Compensation
Replies: 39
Views: 5259

Re: Tech Compensation

Hi everyone, I spoke to someone who worked in the tech industry in the Bay Area. He said that it is a place where if one is a strong performer, they can stay at the same company over the course of multiple years and with promotions of base salary increases and RSU refresh grants being given, one can over time amass a rather significant chunk of change that more than compensates for the inflated cost of living & California taxes in the bay area. Apparently he walked away from 1 million in unvested RSU grants once he couldn't take working in his current position anymore and left the bay area. Is there any truth to what he said? If someone stays for a 3+ year period at a solid tech company with sufficient opportunities for technical and p...
by watchnerd
Sat Feb 10, 2024 4:52 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905846

Re: International (Non-US) versus US Equities (The "Arguments")

Tom_T wrote: Sat Feb 10, 2024 1:22 pm I don't think anyone is saying that U.S. will always outperform. I think the question for international is, why bother? If you've been heavy international for ten years, how much has it cost you, and how much will things have to reverse for you to make up for that?
How much did my home owner's insurance cost me and how much money did I waste because I didn't have a fire?
by watchnerd
Sat Feb 10, 2024 12:17 pm
Forum: Investing - Theory, News & General
Topic: Regression toward the mean: SP500 P/E
Replies: 10
Views: 1060

Re: Regression toward the mean: SP500 P/E

SimpleGift wrote: Sat Feb 10, 2024 11:53 am
It appears there is no preordained mean value at which stocks are destined to trade. The amount that investors are willing to pay for the same dollar of earnings seems to be fluid and non-stationary across different time periods and in different interest rate environments. Thus there is no long-term, fixed mean for stock valuations to revert back to.
Nor is there a reason to even theoretically expect a mean valuation.

Valuation is impacted by interest rates, for one thing.
by watchnerd
Sat Feb 10, 2024 12:14 pm
Forum: Investing - Theory, News & General
Topic: Why can't asset allocations also be passively managed by following the markets?
Replies: 51
Views: 3619

Re: Why can't asset allocations also be passively managed by following the markets?

It's already excluded from the $109T, which is the sum total of global equity markets. The discrepancy between the figures I cited and Vanguard's (and the underlying indexes') stock-bond ratios appears to be entirely explained by the fact that the bond indexes do not include sub-BBB-rated bonds. I don't know what source the $109T for global equities markets come from. But FTSE, MSCI, and S&P all come up with numbers for global float-adjusted stocks in the $77T-$80T range. https://docs.google.com/spreadsheets/d/e/2PACX-1vQShEGnLTHNk2_zgHWTiReXADEhmNvLR8SIaTsdGTdQJaa_F9ESrbo8bcsP0XEsVlBFtGEbjqUMO7g_/pubhtml# If you want to argue that the people who make indexes for a living are doing it wrong....okay..... But, personally, I find it reaso...
by watchnerd
Sat Feb 10, 2024 12:10 pm
Forum: Investing - Theory, News & General
Topic: Why can't asset allocations also be passively managed by following the markets?
Replies: 51
Views: 3619

Re: Why can't asset allocations also be passively managed by following the markets?

So are you adding to or subtracting Saudi Aramco from the $109 trillion? Subtract. If you can't invest in it, it's not part of the global market portfolio. That's the point of the global market portfolio -- it's the portfolio of highly liquid, marketable securities. Private equity, for example, is not included. Nor is privately held real estate. It's already excluded from the $109T, which is the sum total of global equity markets. The discrepancy between the figures I cited and Vanguard's (and the underlying indexes') stock-bond ratios appears to be entirely explained by the fact that the bond indexes do not include sub-BBB-rated bonds. I don't know what source the $109T for global equities markets come from. But FTSE, MSCI, and S&P al...
by watchnerd
Sat Feb 10, 2024 12:05 pm
Forum: Personal Finance (Not Investing)
Topic: Accumulators, what's your response to inflation?
Replies: 146
Views: 13104

Re: Accumulators, what's your response to inflation?

alpenglow wrote: Sat Feb 10, 2024 11:43 am
Nottingham wrote: Mon Feb 05, 2024 4:58 pm I stopped drinking my favorite booze as it's now $75 vs $40 pre-covid.
Alcohol is the biggest cut from the "budget" (I don't actually track/budget per se) for price and health reasons. Some craft brew prices are getting out of control IMO. I just can't justify spending $20+ on a 4 pack. We're also focusing on better value wines with great success. Don't even get me started on whisk(e)y prices.
Liquor is particularly expensive here in WA state, where it gets taxed more than wine and beer.
by watchnerd
Sat Feb 10, 2024 11:30 am
Forum: Personal Finance (Not Investing)
Topic: Accumulators, what's your response to inflation?
Replies: 146
Views: 13104

Re: Accumulators, what's your response to inflation?

Your Chicago comparison doesn’t tell the whole story. I live in the northern suburbs of Chicago (still Cook county). I bought my 900k house in 2019 and had a tax payment of 19k a year until I was reassessed last year and now pay 25k a year for a house that is now probably worth 1.3mm. The fiscal problems in IL have certainly kept a lid on our home price appreciation but taxes continue to rise. For what it’s worth, my home’s 2024 value of 1.3mm is what the prior owners paid in 2006. Looking back, the property tax payment on my house in 2006 was 12k. I think data and averages are more helpful then anecdotes. Your house is 3x to 4x the average price of Chicago houses, so you could probably find a cheaper house even within your own city. I wou...
by watchnerd
Sat Feb 10, 2024 11:20 am
Forum: Investing - Theory, News & General
Topic: New article casting doubt on index investing
Replies: 51
Views: 6623

Re: New article casting doubt on index investing

stan1 wrote: Sat Feb 10, 2024 11:16 am
watchnerd wrote: Sat Feb 10, 2024 10:11 am
stan1 wrote: Sat Feb 10, 2024 9:13 am It's all mental: if one views the S&P 500 as a global index because large US-based companies do business around the world then folks are good to go. Jack Bogle possibly felt this way when he said "international not needed".
The people who make the indices don't view the S&P500 as a global index.
Of course they don't, but everyone is an expert and can form their own opinion that's as valid as anyone else's, right? Have to justify and rationalize any belief we want to hold /sarcasm.
:sharebeer
by watchnerd
Sat Feb 10, 2024 11:17 am
Forum: Investing - Theory, News & General
Topic: Why can't asset allocations also be passively managed by following the markets?
Replies: 51
Views: 3619

Re: Why can't asset allocations also be passively managed by following the markets?

the_wiki wrote: Sat Feb 10, 2024 11:13 am How far do you want to take this?

Cash at market cap? Gold? Land?


As for passive asset allocation, target date funds try to do this.
Land is not a liquid, globally traded security...yet.

Gold can be argued to be included if one constrains the space to investment gold (ETFs, coins, bullion), but excludes central bank reserves. I include gold (see my sig), but it's a pretty small share of the global market -- it's only about $3.2T.

Sharpe excludes commodities (and other) futures as the net market position is zero.

https://web.stanford.edu/~wfsharpe/RISMAT/RISMAT-7.pdf
by watchnerd
Sat Feb 10, 2024 11:02 am
Forum: Investing - Theory, News & General
Topic: Why can't asset allocations also be passively managed by following the markets?
Replies: 51
Views: 3619

Re: Why can't asset allocations also be passively managed by following the markets?

That $109 trillion figure is just the sum of equity markets. If you want read up on why just adding up the numbers without adjusting for float is problematic, you can read how a Nobel winning economist tackles the question: https://web.stanford.edu/~wfsharpe/RISMAT/RISMAT-7.pdf So are you adding to or subtracting Saudi Aramco from the $109 trillion? Subtract. If you can't invest in it, it's not part of the global market portfolio. That's the point of the global market portfolio -- it's the portfolio of highly liquid, marketable securities. Private equity, for example, is not included. Nor is privately held real estate. It's already excluded from the $109T, which is the sum total of global equity markets. The discrepancy between the figures...