Beensabu wrote: ↑Fri Nov 19, 2021 2:56 pm
nedsaid wrote: ↑Fri Nov 19, 2021 12:37 pm
Beensabu wrote: ↑Fri Nov 19, 2021 12:29 pm
nedsaid wrote: ↑Fri Nov 19, 2021 11:32 am
You can't be arguing that bonds are efficiently priced right now because clearly they are not. Seven plus Trillion dollars of Fed intervention since 2008 has had a big impact on the markets... Fed intervention has so distorted the bond market that whatever it is signaling is just not accurate.
This is a fairly commonly expressed sentiment. Every time I see it, I think of Grantham's whole "deranged monetary activism" rant. He's been so wrong about stocks for so long because he simply could not bring himself to believe that such actions would be taken and then could not (and still cannot) believe that they would continue for so long.
What is the point at which Fed intervention is accepted as just the way it is now, and just the way it's going to be? Is it really a distortion? Or is it a reconfiguration due to the entry of an additional very large market participant? And what are the long-term implications of that just continuing on indefinitely? I mean, as long as we're talking about adapting to changing market conditions.
What you are admitting is that things have changed, a "new normal" as it where. Isn't that what I am saying?
The thing is, even the "new normal" of continued Fed intervention can't be assumed if this triggers higher and higher inflation. The "new normal" might not be sustainable.
The economy and the markets are dynamic.
Yes. But you're not looking at all of the moves together, even though you have been following them and spelled them out. You're disregarding the old narrative in favor of a new narrative, when it is all part of the same story. And it inevitably follows that the best thing to do, is not to do anything at all, because that story is always going to be changing in some new way that we can't anticipate. All we can do is either react or choose not to react.
You have been quite good at mostly not reacting to plot twists thus far, which is why you're catching some flak now
My knowledge, experience, and perception are all limited. We all think differently and we all perceive things differently.
Not sure that anyone 100% understands how the markets and the economy work, we all know something. Sort of like Rumsfeld's comments about the known knowns, the known unknowns, and the unknown unknowns. Or as the Apostle Paul put it, we see through a glass darkly. So I know what I know, I know there are things I should know but don't, but I can't know what should know but don't.
One reason that good discussion can be enlightening. We all know different things and we all have different life experiences.
What you have said works but we have to assume certain things. If we experience civilizational collapse, then all bets are off. We are assuming that things will continue within a certain range of outcomes, though we know we don't know the future. Another thing we assume is that the Equity Risk Premium will continue, I don't see any reason it shouldn't, but it is possible that it goes away. Dr. Bernstein said that over very, very long periods of time that the returns of stocks and bonds are identical.
I suppose another issue is that I don't hide my errors and mistakes. Also not afraid to think aloud.
The thing is, as much as we admire and love John Bogle, he departed from time to time from his philosophies. His adherence to his stated principles was not perfect.
Bogle turned Wellington Management from a conservatively oriented management company into a Go-Go Aggressive Growth Company and got fired for it.
Bogle once wrote a paper under a pseudonym defending active management.
Bogle advocated for limited tactical asset allocation during times of market extremes.
Bogle invested in his son's Quant fund.
He also bought shares of T Rowe Price.
He loved his legacy Wellington Funds.
He suggested a 5% Gold holding for the Blair Academy Endowment Fund.
Bogle famously market timed around the time of early 2000 Stock Market peak, one version of the story said that he went from 70% stocks to 30% stocks and the other version was that he went from 70% stocks to 50% stocks over two years, Bogle isn't with us anymore so we can't ask him. He told a Morningstar conference about what he did or was going to do.
Bogle made projections of the future returns of stocks and of bonds.
Despite being down as "Mr. Age in Bonds", Bogle said that most investors, including retirees invested too conservatively. He said that a 65% stock/35% bond portfolio was good for most investors. "Most" included retirees. In that context, he talked about considering Social Security as a bond.
I could go on.
I try to tell people that Mr. Bogle had a fertile and flexible mind, that he would think aloud, and thus would say rather surprising things in his interviews. He was not as doctrinaire as people here seem to think he was. Over his life, he said and did surprising things.
My Gosh, Bogle had the good sense not to post here very often. I am convinced that had he posted extensively with a pseudonym, he would have drawn criticism for not following Boglehead principles enough. Bogle not being Bogle enough.
So I am not Bogle, didn't accomplish in my life what he accomplished. But I suppose that it is shocking to people that Nedsaid will say and do surprising things. Heaven knows Bogle did.
A fool and his money are good for business.